A ruling today from the Massachusetts Supreme Judicial Court (SJC) is another great step toward cutting electricity ratepayers’ risks of natural gas overreliance. For a state with a heavy dependence on natural gas for power generation, it’s been a great summer.
What’s at stake
At issue was whether Massachusetts residents could be charged for new natural gas pipeline capacity through a surcharge on their electricity bills.
One challenge with this approach, though, is that Massachusetts is a restructured state, meaning that, as of the late 1990s, the electric distribution companies don’t own any power plants. Customers are supposed to be free to choose from a range of electricity suppliers, and not be tied to any one supplier or source.
Another challenge is natural gas overreliance. Last year, for electricity generation within New England, fully half was fueled by natural gas. Generation within Massachusetts itself is even more gas-heavy: more than 60% of in-state generation came from natural gas plants, continuing a long-standing trend toward gas.
As a UCS analysis of states and their natural gas use for electricity has found, if there’s a danger zone for natural gas overreliance, Massachusetts is probably solidly in it. There’s also the issue of the state’s long-term climate mandate under its Global Warming Solutions Act, and the impossibility of hitting the necessary reductions in global warming pollution with gas too fully in the picture.
So the idea of tying Massachusetts electricity customers even more strongly to natural gas—and for the long term—seemed… odd.
A move toward a stronger connection to natural gas is also at odds with the fine new legislation that came out of the Massachusetts State House just a couple of weeks ago. The new “Act to Promote Energy Diversity” has lots of pieces, around offshore wind, hydro power, and other land-based renewables, designed to move us away from reliance on a single fuel, while bringing a host of other benefits.
But none of that thinking stopped the Department of Public Utilities, or DPU.
Not so fast…
Fortunately, the Conservation Law Foundation (CLF) and its fellow plaintiff didn’t let last year’s DPU ruling just slide by; they took them to court.
And the SJC agreed. In what CLF’s lead attorney on the case, David Ismay, called “an incredibly important and timely decision,” the SJC today put the kibosh on this idea of electricity ratepayer commitments to enable pipelines. The SJC opinion even couches it (as UCS has done) firmly in terms of risk, in light of restructuring and the idea of moving the generation risk away from customers, to the private sector:
…[the DPU ruling] would undermine the main objectives of the [restructuring] act and reexpose ratepayers to the types of financial risks from which the Legislature sought to protect them.”
The ruling is quite clear that they see a distinction between this type of intervention in the restructured market and, say, legislative requirements to get more renewable energy built for Massachusetts (as in the recent Energy Diversity law).
What this ruling means
Congratulations and thanks are due to CLF and the other plaintiffs who brought this conversation to a head, and a positive conclusion. But what does this mean more broadly?
- Electricity ratepayers won’t be forced to pay for new pipeline capacity. If that means that new pipelines don’t get built, the power system will have to figure out what mix of technologies will keep things humming. Fortunately we have a range of options, for both the near and long terms; the new Massachusetts legislation, for example, should bring lots of new resources to bear over the next decade.
- Pipeline companies are bumming. They’ll have to find other ways to get the commitments they (or their investors) think they need before putting shovels in the ground. This ruling may push the market toward more incremental solutions, like new compressors or more gas storage, instead of whole new pipelines.
- For natural gas ratepayers, this ruling is maybe a mixed bag. New capacity has pluses for them, but less competition (from the power sector) for natural gas supplies also brings benefits.
- The legislature is off the hook (on this issue). The right thing to do would have been, as the Senate had proposed in its version of the omnibus energy bill, to clarify the original intent to point out how the DPU had misinterpreted it. Now, though, the legislature can turn its attention next session fully to the great stuff that didn’t make it into last month’s legislation.
- Similarly, the administration can now focus on implementing the recent law, and figuring out how to move us a quickly as possible further down the clean energy path. (The attorney general is certainly on board with that notion, calling this a “huge win for electric ratepayers and our clean energy future.”)
Given how much UCS’s supporters have focused on the issue of natural gas overreliance, and given the importance of Massachusetts as a model for other states, this is a clear victory for you, too.
Put this ruling together with the new energy law, and it adds up to a pretty solid summer of progress in the Bay State, and beyond. Congrats.
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