Plan wrong for Massachusetts

Plan wrong for Massachusetts

AS I SEE IT

By Dan Dolan

The Massachusetts Legislature is currently considering a bill at the urging of the governor that would use the state electricity customer dollars to subsidize provincially owned Canadian hydropower companies. Even worse, the bill — H. 4187 — would result in higher electricity bills for consumers, not to mention its potential to undermine local innovation, investment and jobs.

To ensure Massachusetts families and businesses do not have to bear the burden of these costs, H. 4187 should not move forward.

House 4187 seeks to lock Massachusetts electricity consumers into decades-long contracts with Hydro Quebec (HQ) and Nalcor to have them supply one-third of the state's power demand. This is simply not the right path forward for Massachusetts.


These contracts would come in at an overwhelming cost — $660 million per year, or $13 billion over the life of a 20-year guaranteed contract. This works out to an additional $90 on the electric bills of every residential customer in Massachusetts annually for 20 to 25 years.

In addition to locking Massachusetts businesses and residents into billions of dollars in above-market electricity prices, H. 4187 has the potential to harm the jobs, innovation and economic growth that come from competitive electricity providers in the state that are operating without the help of these types of government subsidies.

In fact, power generators in the state employ 1,600 workers and pay nearly $100 million per year in state and local taxes. Investments from these companies in Massachusetts stretch into the tens of billions of dollars.

These companies want to continue to drive job creation in Massachusetts and contribute to the state's economy, and H. 4187 would put the potential for billions in future investments at tremendous risk. Even worse, this bill imposes a very real threat to existing power-generation facilities here in Massachusetts and across New England that are economically viable today, but could be forced to shut down prematurely if they are undercut by an artificial subsidy. These are critical manufacturing hubs that are often the largest taxpayer and employer in their host communities.

Competitive power generators aren't seeking any special handouts, but instead want the opportunity to compete on a level playing field to provide the lowest cost, environmentally responsible and reliable power for consumers. Massachusetts has played a key role in supporting a competitive electricity market in the region, and it should continue to be a leader in encouraging opportunities for power suppliers to compete to provide the best service for customers.

What's more, the premise behind H. 4187 is shaky at best. While the bill is intended to bring lower carbon energy sources to the state, there is no way to guarantee that the power from these companies will be clean. This would also come in the midst of strong progress that's been made by other electricity generators in the state to reduce carbon emissions. In fact, carbon emissions have decreased in New England by 21 percent from 2001 to 2012.

Instead of passing H. 4187, Massachusetts lawmakers should focus on meeting the state's carbon emissions targets by crafting nondiscriminatory regulations that allow any resource that can qualify to compete. Virtually every successful emissions market has used this model, including the Regional Greenhouse Gas Initiative that all New England states participate in today.

Risky and restrictive long-term contracts are simply not the solution. Providing a guarantee to a provincially owned utility increases Massachusetts' electricity costs and undermines local innovation, investment and jobs.

This bill picks winners and losers. The winners are provincially owned Canadian utilities. The losers are Massachusetts consumers, who will be forced to pay higher electricity costs. Let's pick a winning energy future for Massachusetts by ensuring that H. 4187 does not move ahead.

Dan Dolan is President of the New England Power Generators Association (NEPGA), the trade association that represents the vast majority of the generating capacity in Massachusetts.