Amendment ID: S2819-94

Amendment 94

Allowing Innovation in the Energy Market

Mr. Tarr moves that the proposed new text be amended by striking Section 39 and inserting in place thereof the following:-

SECTION 39. Section 83C of said chapter 169, as most recently amended by section 69 of chapter 24 of the acts of 2021, is hereby further amended by striking out subsections (a) to (e), inclusive, and inserting in place thereof the following 5 subsections:-

(a) To facilitate the financing of offshore wind energy generation resources in the commonwealth, every distribution company shall jointly and competitively, in coordination with the department of energy resources, solicit proposals for offshore wind energy generation. If reasonable proposals have been received, each distribution company shall enter into long-term contracts that are cost-effective and promote economic development in the commonwealth. 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.

(b) The timetable and method for solicitations 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 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, however, that the schedule shall ensure that the distribution companies enter into cost-effective long-term contracts for offshore wind energy generation equal to approximately 5,600 megawatts of aggregate nameplate capacity not later than June 30, 2027, including capacity authorized pursuant to section 21 of chapter 227 of the acts of 2018; and provided further, that individual solicitations shall seek proposals for not less than 400 megawatts of aggregate nameplate capacity of offshore wind energy generation resources. The staggered procurement schedule shall be developed by the department of energy resources and shall specify that any subsequent solicitation shall occur within 24 months of a previous solicitation. 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 for technical advice. The department of energy resources shall, in consultation with the independent evaluator, issue a final, binding determination of the winning bid; provided, however, that the final contract executed shall be subject to review by the department of public utilities. The department of energy resources may require additional solicitations to fulfill the requirements of this section. 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 renewable energy certificates, for energy and for a combination of both renewable 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: (i) allow offshore wind developers of offshore wind energy generation to submit proposals for long-term contracts consistent with this section; (ii) require that a proposed long-term contract executed by the distribution companies under a proposal be filed with and approved by the department of public utilities before becoming effective; (iii) provide for an annual remuneration for the contracting distribution company of 1.25 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; (iv) require associated transmission costs to be incorporated into a proposal; provided, however, that, to the extent there are transmission costs included in a bid, the department of public utilities may authorize or require the contracting parties to seek recovery of such transmission costs of the project through federal transmission rates, consistent with policies and tariffs of the Federal Energy Regulatory Commission if the department finds such recovery is in the public interest; and (v) require that offshore wind energy generating resources to be used by a developer under the proposal: (A) where feasible, create and foster employment and economic development in the commonwealth; (B) provide enhanced electricity reliability, system safety and energy security; (C) contribute to reducing winter electricity price spikes; (D) are cost effective and beneficial 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; (E) avoid line loss and mitigate transmission costs to the extent possible and ensure that transmission cost overruns, if any, are not borne by ratepayers; (F) adequately demonstrate project viability in a commercially reasonable timeframe; (G) allow offshore wind energy generation resources to be paired with energy storage systems; (H) include an initial environmental and fisheries mitigation plan for the construction and operation of such offshore wind facilities; and (I) mitigate impacts to the marine environment by providing financial and technical assistance to support robust monitoring of wildlife and habitat through contributions to regional research efforts. The department of energy resources shall give preference to proposals that demonstrate benefits from: (i) documented, direct or performance-based economic development and employment activity, including opportunities for diversity, equity and inclusion; (ii) mitigation and avoidance of detrimental environmental and socioeconomic impacts; and (iii) benefits to environmental justice communities and low-income ratepayers in the commonwealth.

(e) A proposed long-term contract shall be subject to the review and approval of the department of public utilities. 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 of public utilities within 45 days following the filing of a proposed long-term contract with the department of public utilities. 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 economic and environmental benefits, 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 a cost-effective mechanism for procuring beneficial, reliable renewable 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."