Bill H.3216

HOUSE DOCKET, NO. 2800 FILED ON: 1/19/2023

HOUSE . . . . . . . . . . . . . . . No. 3216

By Representative Roy of Franklin, a petition (accompanied by bill, House, No. 3216) of Jeffrey N. Roy relative to clean energy generation. Telecommunications, Utilities and Energy.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act relative to clean energy generation.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 83B of chapter 169 of the acts of 2008, as most recently amended by section 60 of chapter 179 of the acts of 2022, is hereby further amended by striking out, in line 1, the words “83C and 83D” and inserting in place thereof the following words:- 83C, 83D, and 83E

SECTION 2.  Section 83B of Chapter 169, as so appearing, is hereby further amended by striking out the definition of “clean energy generation” and inserting in place thereof the following definition:-

 “Clean energy generation”, (i) firm service hydroelectric generation from hydroelectric generation alone; (ii) new Class I RPS eligible resources that are firmed up with firm service hydroelectric generation; (iii) new Class I renewable portfolio standard eligible resources or (iv) nuclear power generation that is located in the control area of the regional independent system operator and commenced commercial operation before January 1, 2011.

SECTION 3. Said section 83B of chapter 169, as so appearing, is hereby further amended by inserting after the word “83D,” in line 12, the following words:- or 83E.

SECTION 4. Said chapter 169, as amended by chapter 188 of the acts of 2016, is hereby further amended by inserting after section 83D the following section:-

Section 83E. (a) For the purposes of this section, “Clean energy generation”, (i) firm service hydroelectric generation from hydroelectric generation alone; (ii) new Class I RPS eligible resources that are firmed up with firm service hydroelectric generation; (iii) new Class I renewable portfolio standard eligible resources or (iv) nuclear power generation that is located in the control area of the regional independent system operator and commenced commercial operation before January 1, 2011. In order to facilitate the financing or continued operation of clean energy generation resources, not later than December 31, 2025, every distribution company shall, in coordination with the department of energy resources, jointly and competitively solicit proposals for clean energy generation and, provided that reasonable proposals have been received, shall enter into cost-effective long-term contracts for clean energy generation for an annual amount of electricity up to approximately 9,450,000 megawatt-hours.  Long-term contracts executed pursuant to this section shall be subject to the approval of the department of public utilities and shall be apportioned among the distribution companies under this section.     

(b)  The timetable and method for solicitation of long-term contracts shall be proposed by the department of energy resources in coordination with the distribution companies using a competitive bidding process and shall be subject to review and approval by the department of public utilities. The department of energy resources shall consult with the distribution companies and the attorney general’s office regarding the choice of solicitation methods.  A solicitation may be coordinated and issued jointly with other New England states or entities designated by those states.  The distribution companies, in coordination with the department of energy resources, may conduct 1 or more competitive solicitations through a staggered procurement schedule developed by the department of energy resources; provided, that the schedule shall ensure that the distribution companies enter into cost-effective long-term contracts for the delivery of clean energy generation up to approximately 9,450,000  megawatt-hours by December 31, 2030. Proposals received pursuant to a solicitation under this section shall be subject to review by the department of energy resources and the executive office of housing and economic development in consultation with the independent evaluator and the electric distribution companies shall offer technical advice.  If the department of energy resources, in consultation with the independent evaluator, determines that reasonable proposals were not received pursuant to a solicitation, the department may terminate the solicitation, and may require additional solicitations to fulfill the requirements of this section.

     (c)  In developing proposed long-term contracts, the distribution companies shall consider long-term contracts for clean energy certificates, for energy and for a combination of both clean energy certificates and energy. A distribution company may decline to pursue a contract if the contract’s terms and conditions would require the contract obligation to place an unreasonable burden on the distribution company’s balance sheet after consultation with the department of energy resources; provided, however, that the distribution company shall take all reasonable actions to structure the contracts, pricing or administration of the products purchased under this section to prevent or mitigate an impact on the balance sheet or income statement of the distribution company or its parent company, subject to the approval of the department of public utilities; and provided further, that mitigation shall not increase costs to ratepayers. If a distribution company deems all contracts to be unreasonable, the distribution company shall consult with the department of energy resources and, within 20 days of the date of its decision, submit a filing to the department of public utilities. The filing shall include, in the form and detail prescribed by the department of public utilities, documentation supporting the distribution company’s decision to decline the contract. Following a distribution company’s filing, and within 4 months of the date of filing, the department of public utilities shall approve or reject the distribution company’s decision and may order the distribution company to reconsider any contract. The department of public utilities shall take into consideration the department of energy resources’ recommendations on the distribution company’s decision. The department of energy resources may require additional solicitations to fulfill the requirements of this section.

     (d)  The department of public utilities shall promulgate regulations consistent with this section. The regulations shall: (1) allow developers or owners of clean energy generation resources to submit proposals for long-term contracts; (2) require that contracts executed by the distribution companies under such proposals are filed with, and approved by, the department of public utilities before they become effective; (3) provide for an annual remuneration for the contracting distribution company equal to 2.25 per cent of the annual payments under the contract to compensate the company for accepting the financial obligation of the long-term contract; provided, however, that such provision shall be acted upon by the department of public utilities at the time of contract approval; (4); require associated transmission costs to be incorporated into a proposal; provided, however, that, to the extent there are regional or project-specific transmission costs included in a bid, the department of public utilities may, if it finds such recovery to be in the public interest, authorize or require the contracting parties to seek recovery of such transmission costs from other states or from benefitted entities or populations in other states through federal transmission rates, consistent with policies and tariffs of the Federal Energy Regulatory Commission and (5) require that the clean energy resources to be used by a developer or owner under the proposal meet the following criteria: (i) provide enhanced electricity reliability, system safety and energy security; (ii) contribute to reducing winter electricity spikes; (iii) are cost effective to electric ratepayers in the commonwealth over the term of the contract taking into consideration potential costs and benefits to the ratepayers, including potential economic and environmental benefits and opportunities to equitably allocate costs to, and equitably share costs with, other states and populations within other states that may benefit from clean energy generation procured by the commonwealth;; (iv) avoid line loss and mitigate transmission costs to the extent possible and ensure that transmission cost overruns, if any, are not borne by ratepayers; (iv) allow long-term contracts for clean energy generation resources to be paired with energy storage systems, including new and existing mid-duration and long-duration energy storage systems; (v) adequately demonstrate project viability in a commercially reasonable timeframe; (vi) include benefits to environmental justice populations and low-income ratepayers in the commonwealth ; and (vii) include opportunities for diversity, equity and inclusion, including, at a minimum, a workforce diversity plan and supplier diversity program plan.

   (e)  A proposed long-term contract shall be subject to the review and approval of the department of public utilities and shall be apportioned among the distribution companies. As part of its approval process, the department of public utilities shall consider recommendations by the attorney general, which shall be submitted to the department within 45 days following the filing of a proposed long-term contract with the department. The department of public utilities shall take into consideration the department of energy resources’ recommendations on the potential costs and benefits to the rate payers, including opportunities to equitably allocate costs to, and equitably share costs with, other states and populations within other states that may benefit from clean energy generation procured by the commonwealth, and the requirements of chapter 298 of the acts of 2008 and chapter 21N of the General Laws. The department of public utilities shall consider the potential costs and benefits of the proposed long-term contract and shall approve a proposed long-term contract if the department finds that the proposed contract is in the public interest and is a cost-effective mechanism for procuring beneficial, reliable clean energy on a long-term basis, taking into account the factors outlined in this section. A distribution company shall be entitled to cost recovery of payments made under a long-term contract approved under this section.

     (f)  The department of energy resources and the attorney general shall jointly select, and the department of energy resources shall contract with, an independent evaluator to monitor and report on the solicitation and bid selection process in order to assist the department of energy resources in determining whether a proposal received pursuant to subsection (b) is reasonable and to assist the department of public utilities in its consideration of long-term contracts or filed for approval. To ensure an open, fair and transparent solicitation and bid selection process that is not unduly influenced by an affiliated company, the independent evaluator shall: (1) issue a report to the department of public utilities analyzing the timetable and method of solicitation and the solicitation process implemented by the distribution companies and the department of energy resources under subsection (b) and include recommendations, if any, for improving the process; and (2) upon the opening of an investigation by the department of public utilities into a proposed long-term contract for a winning bid proposal, file a report with the department of public utilities summarizing and analyzing the solicitation and the bid selection process, and providing its independent assessment of whether all bids were evaluated in a fair and non-discriminatory manner. The independent evaluator shall have access to all information and data related to the competitive solicitation and bid selection process necessary to fulfill the purposes of this subsection but shall ensure all proprietary information remains confidential. The department of public utilities shall consider the findings of the independent evaluator and may adopt recommendations made by the independent evaluator as a condition for approval.  If the independent evaluator concludes in the findings that the solicitation and bid selection of a long-term contract was not fair and objective and that the process was substantially prejudiced as a result, the department of public utilities shall reject the contract.

     (g)  The distribution companies shall each enter into a contract with the winning bidders for their apportioned share of the market products being purchased from the project. The apportioned share shall be calculated and based upon the total energy demand from all distribution customers in each service territory of the distribution companies.

     (h)  An electric distribution company may elect to use any energy purchased under such contracts for resale to its customers, and may elect to retain clean energy certificates to meet any applicable annual portfolio standard requirements, including section 11F of said chapter 25A, and other clean energy compliance standards as applicable. If the energy and clean energy certificates are not so used, such companies shall sell such purchased energy into the wholesale market and shall sell such purchased clean energy certificates attributed to any applicable portfolio standard eligible resources to minimize the costs to ratepayers under the contract. The department of energy resources shall conduct periodic reviews to determine the impact on the energy and clean energy certificate markets of the disposition of energy and clean energy certificates under this section and may issue reports recommending legislative changes if it determines that actions are being taken that will adversely affect the energy and clean energy certificate markets.

     (i)  If a distribution company sells the purchased energy into the wholesale spot market and auctions the clean energy certificates as described in this section, the distribution company shall net the cost of payments made to projects under the long-term contracts against the net proceeds obtained from the sale of energy and clean energy certificates, and the difference shall be credited or charged to all distribution customers through a uniform fully reconciling annual factor in distribution rates, subject to review and approval of the department of public utilities.

     (j)  A long-term contract procured under this section shall utilize an appropriate tracking system to ensure a unit specific accounting of the delivery of clean energy, to enable the department of environmental protection, in consultation with the department of energy resources, to accurately measure progress in achieving the commonwealth’s goals under chapter 298 of the acts of 2008 or chapter 21N of the General Laws.

     (k)  The department of energy resources and the department of public utilities may jointly develop requirements for a bond or other security to ensure performance with requirements under this section.

     (l)  The department of energy resources may promulgate regulations necessary to implement this section.

     (m)  If this section is subjected to a legal challenge, the department of public utilities may suspend the applicability of the challenged provision during the pendency of the action until a final resolution, including any appeals, is obtained and shall issue an order and take other actions as are necessary to ensure that the provisions not subject to the challenge are implemented expeditiously to achieve the public purposes of this section.

Name:	District/Address:	Date Added:
Jeffrey N. Roy	10th Norfolk	1/19/2023
James C. Arena-DeRosa	8th Middlesex	6/8/2023
Carmine Lawrence Gentile	13th Middlesex	8/3/2023