Webinar – Bridging the Power Gap: How Bidirectional Clean Energy Benefits the US Northeast and Eastern Canada

Last week Acadia Center, Environmental League of Massachusetts, and New England for Offshore Wind hosted a webinar – Bridging the Power Gap: How Bidirectional Clean Energy Benefits the US Northeast and Eastern Canada.

Panelists Hannes Pfeifenberger, Adrienne Downey and Emil Dimanchev shared their considerable expertise, and Acadia Center’s Senior Director of Climate and Clean Energy Programs, Jamie Dickerson, led a lively discussion on the possibilities of joint US/Canadian coordination and planning of energy resources, including enhanced reliability, cost and resiliency, as well as increased trade opportunities.

“Offshore wind is ‘pretty much a match made in heaven’ with hydropower when there is enough transmission capacity to enable hydro to firm up the intermittencies of wind.” – Adrienne Downey of Hexicon and Power Advisory

The presentation slides for the event can be found here: Bridging the Power Gap Slides

To stay engaged in the conversation, please follow Northeast Grid Planning Forum (NGPF), a joint effort of Acadia Center and Nergica, on LinkedIn. If you have questions, please reach out to Carolyn Dykema cdykema@acadiacenter.org.

Bridging the Gap: New England’s transmission planning and Order 1920

Transmission lines can carry electricity over long distances, delivering power across the U.S. and keeping the lights on. The electricity grid is changing, and we need to plan for new transmission that will meet the needs of the future, where clean energy will provide most of the power to meet growing demand. Long-term transmission planning is the process of evaluating future transmission needs and is essential to build a cost-effective grid that can support the clean energy transition. This past May, ISO New England (ISO-NE) took a major step forward when the Federal Energy Regulatory Commission (FERC) approved its Longer-Term Transmission Planning Process (LTTP). The LTTP is a monumental step forward, demonstrating the region’s commitment to building a future-ready grid. If all goes to plan, it will soon result in the construction of new, urgently needed transmission lines.

Just four days after ISO-NE filed its proposal for FERC approval, FERC issued its long-anticipated Order 1920. Order 1920 mandates that all planning regions implement a regular long-term transmission planning process. Grid planning entities, such as ISO-NE, now have until June 2025 to develop and align their processes to meet the requirements set forth in Order 1920.

Although the LTTP closely aligns with Order 1920, there are still some key differences, as NRDC, Acadia Center, and other partners highlighted in joint comments to FERC. This blog will explore and clarify these distinctions. ISO-NE and stakeholders in the New England region should leverage the LTTP to deliver transmission benefits in the near term while evolving toward a more robust long-term framework under FERC Order 1920, providing significant and lasting rewards for consumers and the climate.

Planning cycles

The first key difference between LTTP and Order 1920 lies in the regularity of the planning cycles. Order 1920 mandates that transmission providers conduct Long-Term Regional Transmission Planning at fixed five-year intervals. In contrast, ISO-NE’s current process is initiated only at the request of the New England States Committee on Electricity (NESCOE), which represents the collective perspective of the New England Governors. The LTTP planning horizon goes out to 2050. To comply with Order 1920, ISO-NE will need to establish a planning process that operates automatically at least every five years, independent of stakeholder requests, and incorporates a 20-year planning horizon. The planning intervals and horizon are critical given the fast pace of technological change and market conditions as well as the long timeframe for developing new transmission infrastructure.

In addition to having the authority to initiate the LTTP process, NESCOE also has the authority to terminate it. To comply with Order 1920, however, the planning process cannot be terminated at the request of the states. While the process must remain ongoing once initiated, it must also incorporate robust state input throughout.

Scenario planning

The future of the power system is uncertain, influenced by various factors such as projected demand, extreme weather events, the integration of more clean energy, and the retirement of fossil fuel resources. To address this uncertainty, Order 1920 requires grid planners to consider at least three plausible and diverse future “scenarios.” These scenarios must account for seven key inputs, the first three of which are mandatory and cannot be discounted.

ISO-NE’s transmission planning process consists of two key parts. The first part is triggered when NESCOE requests a “Longer Term Transmission Study” to assess the future needs of the power grid. While ISO-NE’s initial transmission study, released in early 2024, is a strong example of planning for uncertainty, future studies should incorporate at least three scenarios, utilizing the essential inputs mentioned earlier. Additionally, these studies should be shaped by robust stakeholder engagement to ensure that the inputs are well-informed and comprehensive.

Furthermore, Order 1920 mandates that each scenario includes an “extreme weather sensitivity” to ensure the grid’s resilience against climate-induced extreme weather events, such as severe winter storms. To comply with Order 1920, ISO-NE could leverage an existing model to develop extreme weather scenarios—the Probabilistic Energy Adequacy Tool—which can assess the risk of extreme weather events.

Benefits analysis

Once scenarios are developed, grid planning regions must evaluate potential transmission solutions. Order 1920 requires potential projects to be evaluated against seven “benefits,” which are detailed below. This process ensures that the final selected projects will provide the most comprehensive benefits to the region.

ISO-NE’s LTTP takes into account five key benefits, most of which align with those required by Order 1920. However, due to some combinations and overlap, there is one crucial benefit from Order 1920 that is missing and must be incorporated into ISO-NE’s process: the “mitigation of extreme weather and unexpected system conditions.” The table below provides a simple overview of these benefit categories. For a more nuanced side-by-side comparison of how the benefits in LTTP and Order 1920 correspond, a detailed table is available here.

Project selection

After transmission solutions are evaluated using the seven benefits, the ISO selects a final project or portfolio of projects to move forward. Under LTTP, any project that meets a 1 to 1 benefit-to-cost ratio may be selected.  Order 1920 allows transmission providers to use a benefit-to-cost ratio as high as 1.25 to 1 to determine whether the benefits of a project outweigh the cost. LTTP’s benefit-to-cost ratio is compliant with Order 1920, ensuring that benefits will always be commensurate with costs and may even outweigh costs.

Second, under LTTP, NESCOE holds the authority to make the final decision on which projects that meet this threshold are selected and built. It can decide that a project that meets the 1 to 1 benefit-to-cost ratio should not be included in the transmission plan. This decision-making role reflects the strong leadership the New England states have demonstrated in public policy transmission planning. Similar to LTTP, Order 1920 does not mandate that projects that meet the benefit-to-cost ration be selected. However, a key difference is that Order 1920 allows transmission providers—such as ISO-NE (under the terminology of the Order)—the ultimate authority to select transmission projects.

Advanced transmission technologies

Order 1920 mandates that planning regions consider the use of “advanced transmission technologies,” which are innovations designed to enhance the efficiency and capacity of the grid. These technologies often involve upgrades to existing infrastructure, such as replacing older transmission lines with ones capable of carrying more power. LTTP does not have an explicit process to evaluate advanced transmission technologies. To comply with Order 1920, ISO-NE should develop a process to assess whether incorporating advanced transmission technologies into a project would be more cost-effective or efficient.

Cost allocation

Order 1920 resolves a long-standing question: who pays for transmission? Order 1920 requires transmission providers to include one or more “default” cost allocation methods for transmission projects that are selected. It also permits a subset of states to agree to pay for all of part of a transmission project if an agreement is struck.

One of the major breakthroughs of LTTP is the coordination among NESCOE states on cost allocation. By default, the costs of any project that is selected in LTTP are allocated across the region based on load. Additionally, LTTP includes a mechanism that allows states to voluntarily cover excess costs for projects that provide greater benefits to their state compared to others. LTTP meets the requirements of Order 1920 on cost allocation, and should inform Order 1920 compliance.

Stakeholder engagement

ISO-NE plays a crucial role in facilitating meaningful stakeholder engagement in transmission planning. While Order 1920 mandates stakeholder review of planning assumptions, transmission needs, and potential solutions, these requirements should be viewed as a minimum standard.

ISO-NE’s LTTP engages with stakeholders, but only those who are members of the New England Power Pool (NEPOOL), which is made up of generation owners, transmission owners, consumer advocates, and state officials. NEPOOL meetings are not open to the broader public. Long-term regional transmission projects will affect all of New England, not just NEPOOL members. Therefore, it is essential that all transmission planning meetings be open to the public, with materials presented in plain language to ensure meaningful engagement. ISO-NE’s Order 1920 planning process should also prioritize outreach to municipalities and local governments, as they play a critical role in permitting, environmental justice, and the development and enforcement of local laws and regulations.

Conclusion

New England’s LTTP has established a solid foundation for the region’s clean energy future. The upcoming months present exciting opportunities to implement this new process and identify and potentially select new public policy transmission solutions that will benefit the region. However, it is also crucial for ISO-NE to fully comply with Order 1920 to guarantee a resilient, clean, and affordable energy grid that will serve generations to come. LTTP is a solid foundation on which to build ISO-NE’s Order 1920 compliance. We look forward to collaborating with the New England States, ISO-NE, NEPOOL members, and other stakeholders to begin realizing this long-term vision now.

Legislative Roundup: State-Level Battles for Clean Energy Progress

Acadia Center prides itself on advocating for the clean energy future, including within state legislature across the region. While our work spans further across the Northeast, we wanted to highlight a few states to which we dedicated a significant amount of our advocacy efforts in this past year of legislative sessions – including Connecticut, Maine, Massachusetts, and Rhode Island. Not only is it worth examining the progress made in these states, but we also identify the areas we will push our advocacy toward for the following legislative sessions to come. Overall, despite some modest victories and points of progress, it was a difficult and disappointing year for legislative action on climate and clean energy across the board. Acadia Center will be offering more reactions on and responses to this lack of progress in the weeks ahead.

Connecticut

In the 2024 Connecticut Legislative Session, Acadia Center was a strong proponent and advocate for climate and clean energy policies that supported emissions reductions targets and advanced energy equity goals. One victory aligned with our mission was an update to the Home Environmental Improvement Revolving Loan Fund program, passed in 2023, that now allocates funding for grants to support retrofit projects in multifamily residences in environmental justice communities. Throughout the session, momentum for increased heat pumps deployment resulted in the passage of a deployment study and an outlined heat pump rebate program. Looking ahead, following the failure of the prominent “green monster” climate package, much is left to be desired on key Acadia Center priorities such as increased energy efficiency funding, reforms and proceedings at the Public Utilities Regulatory Authority, and grid modernization measures to support our clean energy transition. Acadia Center is ready to lead efforts and ensure the 2025 Legislative Session moves Connecticut closer to being a climate and clean energy leader once again.

Maine

Acadia Center advocated for Maine bills that promoted several important climate and clean energy goals and defended against other measures that would have threatened progress. Acadia Center has coordinated with other nonprofits in Maine where appropriate, with some notable successes. Earlier in the two-year session, Acadia Center helped advocate successfully for a bill entitled “An Act Regarding the Procurement of Energy from Offshore Wind resources.” This bill established a robust system for offshore wind (OSW) development and required that the State procure 3,000 megawatts of OSW energy by 2040, a major leap forward. More recently, in the second year of the two-year session, Acadia Center was instrumental in authoring and supporting eventual passage of a bill that requires the Maine Department of Environmental Protection to study and report on opportunities and barriers to electric vehicle adoption in Maine, helping salvage some progress in the wake of the unfortunate demise of advanced clean cars regulations.

Acadia Center also successfully lobbied against bills that would have ended net energy billing, a Maine program that has successfully established a burgeoning solar and other clean energy resources in Maine, and also lobbied strongly against bills that would have unreasonably impeded the necessary development of electric transmission lines in Maine, while supporting improvements to developer-community engagement efforts.

Unfortunately, the Maine Legislature failed to pass a bill that would require the Public Utilities Commission to open a proceeding on Performance-Based Regulation (PBR). Acadia Center will continue to build support for PBR as a powerful tool for delivering better utility performance for Maine’s ratepayers.

Massachusetts

This legislative session, the Massachusetts House and Senate both passed legislation to reform the siting and permitting of clean energy projects in the Commonwealth in line with recommendations from the Commission on Energy Infrastructure Siting and Permitting. Both branches also included additional important climate measures in their packages.

For example, the Massachusetts Senate focused on reforms to the natural gas system which Acadia Center has championed and included measures that would reform the Gas System Enhancement Program (GSEP), a $40 billion gas replacement program, end the uniform right to gas service in the Commonwealth and require the Department of Public Utilities (DPU) to consider whether the expansion of gas service territory is reasonable and in the public interest. The Senate also banned competitive electric supply contracts for residential customers.

The House took a different approach and included provisions to specifically procure additional offshore wind resources and long-duration energy storage, ensure more widespread proliferation of EV chargers, and support fusion power.

Regrettably, negotiations between the two branches fell apart as the end of the formal legislative calendar approached, and they were unable to come to consensus – with disagreements reportedly centered on Competitive Electric Suppliers and the gas system reforms.

Rhode Island

Rhode Island’s 2024 legislative session yielded little action to tackle emissions in the building sector. Acadia Center’s top legislative priority, the Building Decarbonization Act (H7617/S2952), saw partial passage in the Senate and negotiations in the House resulted in the passage of a resolution to study benchmarking and building performance standards (BPS).

We were glad to celebrate the passage of S2952A in the Senate, an important statement on the value of benchmarking energy usage in our buildings. This amended version of the bill includes benchmarking and BPS for large public and private buildings but removes any requirements for all-electric new construction. What was retained was the requirement for electric ready construction of public buildings; this section also includes provisions for registered apprenticeship programs and project labor agreements.

Unfortunately, negotiations in the House and with other state leaders not only rejected all-electric new construction, but also pushed back on the concept of benchmarking and BPS. Acadia Center contributed to the development of H7617A, a joint resolution directing the Executive Climate Change Coordinating Council (EC4) to study the implementation of benchmarking and BPS. The resolution successfully passed both the House and the Senate on the last night of session, thereby becoming law. Ensuring that the EC4 produces a timely and valuable report by the deadline of February 15, 2025, will require accountability over the coming months.

One victory worth celebrating was the passage of S2499, the Energy Storage Systems Act, which sets a deployment target of 600 MW of energy storage capacity by 2033 – which will help Rhode Island save costs and emissions during peak periods.

Climate Plans and Equity and Environmental Justice Advisory Boards

Following years of research on the global impact of climate change, states in the Northeast and the nation at large have begun to pass laws aiming both to curb greenhouse emissions and to instill equity and environmental justice into emission reduction efforts. Being less than three decades from 2050, many states have codified their mandate to reduce greenhouse gas emissions (GHG) to 80-85% from 1990 levels and achieve net zero by that timeframe. To help keep states on track to achieve those goals, states have charged climate leadership governing bodies and/or state agencies to carefully guide the decision-making process and lead states to achieve their GHG reduction targets in the various sectors of the economy. Each state designates its climate leadership body slightly differently: for example, the Commonwealth of Massachusetts assembled the Global Warming Solutions Act (GWSA) Implementation Advisory Committee (IAC); Rhode Island refers to its governing body as the Executive Climate Change Coordinating Council (EC4); the state of Connecticut’s climate governing body is the Governor’s Council on Climate Change (GC3); and the Maine Climate Council (MCC) spearheads the climate plans for the state of Maine. Other variations exist in different states in the region.

Though these climate leadership councils are critical for comprehensive climate planning, they have been focused first and foremost on emissions reductions, and some of their members may have limited understanding or direct experience of underlying issues of inequity and environmental injustice in the context of climate action. This poses a challenge in properly crafting climate solutions for many communities that are in a disadvantaged or underserved position in the transition to a clean energy future. Many states, recognizing this limitation, began putting together a second similar council to provide equity and environmental justice guidance for climate solutions and work alongside the climate leadership councils/bodies. These equity and environmental justice forums were created by a mix of legislative and executive actions and were tasked with the responsibility of providing an equity and justice lens and guidance to the climate plans.^1,2,3 However, many states in the Northeast have formed these equity forums as either working groups or advisory bodies for input and consultation, which in turn has presented some limitations in the scope and effectiveness of their roles to influence and shape climate policy decision-making.

For the protection of low-income and environmental justice communities, equity-related barriers in the transition must be considered at the beginning of the formulation of the climate plans. Researching states’ climate plans showed that most of the input from the equity advisory councils and working groups were considered comments or recommendations in response to already-drafted climate plans, written separately by their states’ climate councils. While better than lacking recommendations, soliciting equity-focused feedback to already-crafted climate plans hinders innovative and well-thought-out solutions that could work better for environmental justice and low-income communities.

Another major limitation of the equity and environmental justice advisory council model in the Northeast is their role as advisory forums with limited capacity to spearhead the inclusion of equity causes in climate plans. States in the Northeast must find ways to establish both legal direction and agency resourcing/backing for environmental justice initiatives if there is to be a consistent, effective championing of equity and environmental justice as a concept with consequences throughout the development and implementation of each state’s climate plan. Creating agencies or offices and hiring full-time public servants dedicated to environmental justice is a first step. Massachusetts recently took this leap in 2023 with the creation of the Office of Environmental Justice and Equity within the Executive Office of Energy and Environmental Affairs (EEA). Another promising model was California’s Bureau of Environmental Justice within its state Department of Justice to provide state entities with a means to maintain accountability when equity standards are not upheld.  The Northeast can do even better; however, it begins by empowering equity and environmental justice councils as more than just advisory bodies but as partners in co-designing equitable climate solutions.

For more information:

Joy Yakie, Environmental Justice and Outreach Manager  jyakie@acadiacenter.org, 617–742-0054 x110

_{____________________________________}

1. _{About the Environmental Justice Council, MA: https://www.mass.gov/info-details/about-the-environmental-justice-council-ejc}
2. _{Maine Climate Council Equity Subcommittee: https://www.maine.gov/future/initiatives/climate/climate-council/equity-subcommittee}
3. _{New York State Climate Justice Working Group: https://climate.ny.gov/Resources/Climate-Justice-Working-Group}

Observations and Takeaways from the Vineyard Wind Blade Incident: An Unfortunate Episode for an Indispensable Energy Resource in the Northeast

Acadia Center has been monitoring the Vineyard Wind blade damage incident as it has unfolded off the coast of Nantucket over the last several weeks. We recognize and appreciate the impact that the incident has had on Nantucket residents and business owners, and wish to express the organization’s support to the response crews – both formal and informal – who continue to aid in the safe collection and removal of the resulting debris that came ashore.

The blade’s initial damage and subsequent breakdown in the ocean was an extremely unfortunate accident, and it comes at a challenging time for the nascent offshore wind industry in the United States. The underlying cause that led to the incident must be determined and remedied swiftly, and a full public accounting must be provided – recognizing that a complete diagnosis of the situation may take some time. Matters of health and safety are of paramount importance, and it is vital that the ongoing response efforts protect local communities, project workers, wildlife, ocean navigators, and others who stand to be directly affected. Measures must also be taken to avoid any chance of recurrence in the future, so offshore wind can continue forward in a sustainable and safe manner – and so that coastal communities can be reassured that this source of clean energy will not pose any safety or environmental threat.

More details continue to emerge about the underlying cause of the blade incident, with signs pointing to a manufacturing defect (e.g., inadequate fiberglass bonding) rather than damage sustained during installation. But even as the facts are still being gathered and an investigation remains underway, misinformation is already spreading online, with the images of a broken blade and fiberglass shards being manipulated via viral means, including by some that cheer the accident as a setback to offshore wind. This incident is a regrettable and newsworthy event, and we all must learn from it to strengthen the region’s offshore wind industry – with the many energy, environmental, and economic benefits it provides – while ensuring the safety and security of local communities. Nevertheless, a deliberative and purposeful approach must be taken as experts collectively diagnose, understand, and remedy this unfortunate episode.

Offshore wind is and will remain indispensable to meeting the Northeast’s energy needs and to the nation’s future. Offshore wind fills a crucial role in fighting to prevent the worst human and environmental impacts of a warming climate. It is also among the most cost-effective options the Northeast has at its disposal to deliver energy reliably during the winter, reducing the use of fossil fuels for power generation and providing clean electrons needed to keep families and businesses warm. Virtually all major studies examining the region’s changing energy mix forecast a major reliance on offshore wind, with 20 to 40+ gigawatts (GW) of offshore wind installed by 2050. By way of comparison, the power production capacity of all 400 of the region’s electric generating facilities is currently 29.7 GW. While offshore wind is relatively new in the United States, the industry is well established internationally, and incidents like this are very rare (although not unheard of). Actors across industry, government, and civil society have a role to play in ensuring this remains the case here in the U.S. as the industry continues to make inroads.

Everyone with a stake in the growth of offshore wind should learn from this incident. Acadia Center offers some observations and recommendations on steps that can be taken in the near future:

1. Establish and execute better, clearer communication protocols and lines of accountability during emergency response conditions: To keep communities, local officials, and the broader public better informed during unexpected incidents, project proponents must improve the timeliness, frequency, and level of detail of their communications. Establishing these protocols in advance and equipping local communities with designated emergency liaisons from the get-go are vital given the many different entities involved in situations such as this – from the project sponsor and the original equipment manufacturer (OEM) to the companies responsible for installation and continuous monitoring. Building trust requires bringing officials and the public into the circle of awareness as events unfold.
2. Strengthen and deepen low probability event planning in the federal permitting process for offshore energy resources (both clean and fossil): Currently, project proponents in offshore energy lease areas must follow an extensive application process governed by the Bureau of Ocean Energy Management (BOEM), housed within the Department of the Interior (DOI). Although these ‘construction and operations plan’ (COP) filings do contain some language on response activities for so-called ‘low probability events,’ those application materials must be strengthened considerably in light of the nature of this incident – which differs fundamentally from the existing focus on rare events like vessel collisions and allisions, fuel spills, and other accidental releases of liquids from construction equipment.
3. Consider a centralized regional monitoring and response infrastructure, right-sized for the need: For offshore wind, a centralized apparatus for the region as a whole, or at least coastal states, might be better suited to monitor conditions and coordinate response activities during rare events such as this. The Vineyard Wind incident happened to be a Massachusetts project (in federal waters) that primarily affected Massachusetts communities, but this may not always be the case. While a blade break of this nature will hopefully remain extremely rare or may never occur again in the region, some degree of multi-state or regional coordination on basic monitoring and emergency management activities would seem prudent, given the multi-gigawatt build-out that the region will need to see. Perhaps, there may already be readily available infrastructure to better make use of – for instance, via existing U.S. Coast Guard installations or NOAA offices in the region.
4. Leverage the region’s R&D/engineering prowess to drive safety with innovation: The Commonwealth of Massachusetts was an early pioneer in turbine blade testing and safety through the investments made at MassCEC’s Charlestown Wind Technology Testing Center (WTTC). As the root cause analysis is completed and lessons are learned, those learnings should be directly incorporated into the ongoing testing activities at the WTTC and other similar facilities. Other centers of applied offshore wind R&D around the region – including the National Offshore Wind R&D Consortium (NOWRDC), operated out of New York State – can and should also double down on their focus on safety and accident-prevention for the technologies the region will install in the decades ahead (see, e.g., an NOWRDC investment for a project verifying blade integrity during manufacture). Across the board, more of this work must be done, and the region should put its collective institutions and brain power to work to bring forward new engineering solutions that improve safety, reduce risk, and bolster resilience.

Maine PUC Establishes Integrated Grid Planning Process

On July 12, 2024, the Maine Public Utilities Commission (PUC) released the final Order in its Integrated Grid Planning (IGP) proceeding. The Order is the culmination of several years’ worth of effort from the PUC, the Legislature, Maine’s investor-owned utilities, nonprofit advocacy groups (including Acadia Center), the Governor’s Energy Office, the Office of the Public Advocate, Efficiency Maine Trust, and numerous other entities.

With its recent Order, the PUC lays the foundation for a formal 18–month grid planning process, which will occur every five years. As part of their planning efforts, Central Maine Power and Versant Power must develop a 10-year vision for Maine’s electric grid, as well as an investment roadmap for improving reliability and resiliency while keeping costs affordable and enabling the cost-effective achievement of Maine’s climate policies and greenhouse gas emissions reductions requirements. 

Integrated Grid Plans Offer a More Holistic View of Future Utility Investments

The required grid plans are intended to ensure that Maine’s investor-owned utilities are well prepared to meet the challenges of climate change and the needs of a rapid transition to clean energy. In developing their grid plans, the utilities are directed to place equity and environmental justice impacts more centrally within their planning efforts and to ensure greater transparency and stakeholder input compared to previous utility planning processes. 

The PUC directs the utilities to prioritize load flexibility through measures such as demand response that can shift energy demand to times of day when electricity is less expensive and less polluting. These kinds of load flexibility programs can enable more dynamic grid operations and reductions in peak demand. The plans must also identify strategies to accelerate the deployment of non-wires alternatives (NWA) like energy storage, which are often cleaner and cheaper than traditional infrastructure investments. And the utilities must develop a roadmap for more advanced modeling of the distribution system, which will allow for detailed analysis of the impact of electric vehicles, heat pumps, and other distributed energy resources on the grid.  

After the completion of an extensive modeling and forecasting process, the utilities will conduct a broad assessment of possible solutions to meet anticipated grid needs, including both traditional investments and a wide range of clean and distributed energy alternatives. The solutions identified in the grid plans will inform the utilities’ subsequent investment proposals, which they will put forth in rate cases before the PUC.  

Next Steps

Despite the PUC’s Order, there are still key questions left to be answered, such as the exact process for stakeholder input and review throughout the 18-month planning period, as well as concretely defining the equity and environmental justice metrics to be used in the solution evaluation scorecard. While advocates pushed for clear definitions throughout the PUC proceeding, the Order leaves it up to the utilities and other stakeholders to determine which definitions will be included and how the equity and environmental justice assessment will be conducted.

While the Integrated Grid Planning process will not address every challenge relevant to Maine’s energy and utility sectors, the PUC’s recent Order is an important milestone and marks a pivotal moment in the state’s clean energy transition. Acadia Center looks forward to continuing to work with the PUC, utilities, and other stakeholders as we finalize the details of the planning process and set the course for the years to come.  

Utility Rate Design Is a Key Piece of the Energy Transition Puzzle

What is Rate Design?

In order to deliver energy in the form of electricity and gas, utilities oversee and operate the wires, substations, pipelines, and other equipment that together make up the energy distribution systems. Utilities make regular investments in that infrastructure to help meet demand and maintain reliability. Utilities then recover the cost of those investments through customers’ monthly bills. Rate design is the process of determining how exactly to allocate those costs to ratepayers across the many residential, commercial, and industrial customers that make up a utility’s service territory.

As states consider how to accelerate the clean energy transition, utility rate design is a vital piece of the puzzle. Rate design is one of the fundamental tools that regulators have to ensure that utilities have sufficient revenues to bring power to our homes and businesses. But rate design is also a powerful lever for achieving policy goals related to clean energy, equity, affordability, and greenhouse gas emissions.

Why does Rate Design Matter?

Today, as customers face increasingly high utility bills, it is vital for regulators to get rate design right. In Massachusetts, for example, average energy burden (the percentage of household income spent on energy expenses) for low-income households is around 10 percent, and—remarkably—energy burden for some low-income households can reach as high as 31 percent.¹ Experts generally agree that customers are energy burdened if they spend 6% of their incomes or more on energy. It is important to note that recent increases in utility bills in the Northeast have been a direct result of an overreliance on gas in the region. Gas and other fossil fuels used to generate electricity are susceptible to price spikes, which we have seen especially during recent winters, and these costs are passed on directly to customers.²

Decisions over how to allocate energy system costs through rates have enormous implications not only for the energy burdens that customers face, but also for the success of building and transportation electrification, deployment of distributed energy resources like rooftop solar and battery storage, and many other programs and policies.

Utility bills are made up of the 1) costs for the generating resources that provide power (e.g. a wind farm or a gas plant); 2) costs that cover building and operating the transmission and distribution systems; and 3) funding for range of important policies and programs, such as energy efficiency programs and bill assistance. These costs are recovered through a combination of fixed charges, which stay the same every month, and volumetric charges, which vary depending on the amount of electricity or gas a customer uses. The majority of a residential customer’s bill comes from volumetric charges (i.e. the volumetric rate times the amount of electricity or gas consumed), so energy efficiency improvements that reduce consumption are a primary way of lowering bills.

Smart Rate Design Can Accelerate the Clean Energy Transition

As states work to reduce greenhouse gas emissions, utility rates must enable affordable and efficient electrification of our buildings and transportation sectors. In an effort to incentivize customers to electrify their homes, some jurisdictions are considering higher fixed charges and lower average volumetric rates. This would mean that customers who install electric heat pumps, for example, would not be penalized for using more electricity. This may be a promising solution to enable broad electrification, but regulators must prioritize efficient electrification by ensuring that incentives for energy efficiency are preserved and that customers and installers right-size electrification measures and avoid unnecessary or overly expensive system upgrades.

Regulators must also be careful to consider potential knock-on effects for other customers. In the past, stakeholders, including Acadia Center, have rightly (and successfully) pushed back against higher fixed charges, which are unresponsive to changes in customers’ behavior and therefore stay the same no matter what a customer does to reduce their demand, such as installing more efficient lighting or appliances. Higher fixed charges can disproportionately burden lower income customers and create a disincentive for energy efficiency investments, which may become less financially attractive as volumetric charges are replaced by fixed charges.

At the same time, customers with rooftop solar may face different incentives, and rate designs that work in favor of electrification may have unintended negative consequences for those net metering customers. As fixed charges grow, the value of rooftop solar and the payments received for exporting excess power to the grid may decrease. As regulators consider the allocation of costs between fixed and volumetric charges, they must be sure to prioritize equity and affordability, while preserving sufficient price signals for energy efficiency and other distributed energy resources like rooftop solar and battery storage.

Although the rates paid over time for the electricity a heat pump or electric vehicle uses (i.e. the operational costs) are an important piece of the decision to electrify, the upfront costs of installation are perhaps an even greater barrier to customer adoption. States should pursue both rate design solutions and efforts to improve the upfront economics of electrification.

In designing rates to enable affordable electrification, regulators should explore all possible methods to help customers manage utility bills and reduce their energy burdens. This includes a broad set of solutions, such as low-income discount rates, as well as more comprehensive approaches, such as Percentage-of-Income Payment Plans, which cap energy costs as a percentage of household income (e.g. so that customers pay no more than 6% for energy, for example). Increased access to programs such as community solar can also help to reduce bills.

States in Northeast also have lots of room for growth in implementing rates that more closely track the changes in energy prices throughout the day. By creating an incentive for customers to adjust their demand throughout the day in response to clear price signals, time-varying rates can help customers lower their electricity bills while delivering benefits to the grid overall. Time-varying rates can help reduce peak demand, which in turn reduces the reliance on the dirtiest, most expensive sources of power used to meet periods of highest demand. The many consumer and system-wide benefits of electric vehicles, heat pumps, and other distributed energy resources cannot be fully realized without the use of time-varying rates.

The demand flexibility that time-varying rates enables—much of which can be automated—will become increasingly important as more renewable resources are deployed and more customers electrify. As regulators consider rate reforms to support affordable electrification, they must focus on making the transition as easy as possible for customers, providing actionable price signals that accurately capture the benefits of clean energy, and avoiding situations where customers are financially worse off if they choose to electrify.

As electrification becomes more common, regulators should explore innovative ways to pay for the transition away from gas and identify solutions to break down silos between gas and electric utilities, which can often frustrate electrification efforts. Regulators should pay close attention to the kinds of gas investments that are approved for cost recovery through customer rates. Gas infrastructure can last for decades, which means customers well into the future may still be paying for investment decisions made today, even if that equipment is no longer needed in light of states’ climate targets. Acadia Center is deeply involved in these complex issues in proceedings throughout the region and is focused on ensuring that regulators implement effective rate designs that help advance a clean and equitable energy system.

While rate design alone cannot ensure the success of the clean energy transition, it remains an essential tool that states should not neglect as they pursue a clean energy future.

1 Kimberly Clark, Metropolitan Area Planning Council, Reducing Energy Burden: Resources for Low-Income Residents (2022). https://www.mapc.org/planning101/reducing-energy-burden-resources-for-low-income-residents/

2 As an example of the relationship between gas and electricity prices, see: https://www.eia.gov/todayinenergy/detail.php?id=51158 and https://www.sciencedirect.com/science/article/pii/S2589004223028031#bib36

Myth Busting: Congestion Pricing

Congestion is a policy designed to reduce traffic in the most congested areas of cities by charging vehicles a fee to enter designated areas. Congestion pricing has been successfully used in London and other locations. New York City’s (NYC’s) created the first major congestion pricing plan in the United States. The plan imposes a charge on vehicles to enter the highly congested lower part of Manhattan below 60^th Street. The goal of this policy is to decrease traffic volume in the central business district (CBD) of Manhattan, improve air quality and generate revenue for public transportation improvements. Additionally, the plan is intended to improve walkability, capacity for bikes and increase funding for ADA accessibility to public transit, making multimodal transportation safer for everyone in NYC. The program was estimated to generate about $1 billion per year and finance $15 billion for infrastructure projects for the Metropolitan Transportation Authority (MTA), which is in urgent need of improvements to the city’s subway system.

Seemingly everything was in line to start the program, including a state law passed back in 2019 and the approval from the federal government in 2023. But in an unexpected step, New York City’s congestion pricing program has been indefinitely paused by Governor Hochul, just weeks before its planned start date on June 30, 2024. The governor’s office cited concerns over affordability and the cost of living. Additionally, articles like one from Politico suggest that the decision was driven by public polls showing strong opposition to the initiative, especially among voters in the greater metropolitan region and suburbs.

Congestion pricing in NYC presented an excellent opportunity for such a transit-dependent city to keep reducing its collective carbon footprint and improve the quality of life for residents, but opponents to the program seem to perpetuate several myths about congestion pricing that contributed to the program being paused. So, let’s clear up some common myths and get to the facts about what congestion pricing could mean for the city.

Myth: Congestion Pricing Will Hurt the Economy

Fact: Unfortunately, much of the tolling infrastructure needed to implement the program has already been installed in NYC, at a cost of $507 million. Unless the Governor reverses course, this significant infrastructure investment will now go to waste, effectively flushing away taxpayer money. As a direct result of the congestion pricing pause, there is now a $15 billion shortfall in the MTA’s 2020 – 2024 Capital Program. The funds to compensate for this shortfall will now have to be sourced from elsewhere. Some sources like CNN believe it will likely come from increase in taxation either on individuals or on businesses.

NYC’s economy largely relies on public transportation, with 70% of residents commuting by subway, bike or by foot. Most NYC commuters wouldn’t be directly impacted by congestion pricing. Instead, not implementing it deprives public transit of essential funding, hurting the majority who rely on it.

Reducing congestion would also bring significant economic benefits. It improves productivity by decreasing the time spent stuck in traffic. Efficiency in transportation translated to cost savings for businesses that depend on timely deliver and punctuality. Less congestion means lower operating costs for businesses and workers including lower fuel consumptions. Furthermore, cleaner air from fewer emissions can lead to lower healthcare costs, fostering a healthier workforce and community.

Myth: Congestion Pricing Will Hurt Low-Income Drivers the Most.

Fact: According to MTA’s Environmental Assessment, over 91% of low-income commuters do not commute using a car.  The vast majority of the commuters who are low-income in NYC rely on public transportation. The data from that Assessment shows that among low-income commuters, 79% use public transit, 8% are vehicles from NY, 1% are vehicles from NJ and CT, and 12% use other means. Highlighting that low-income individuals in the tri-state area are unlikely to be impacted by congestion pricing and more likely to reap the benefits from improved public transit funded by the program.

F urthermore, exemptions and discounts were also planned by the MTA for Low-Income Drivers and for exemptions for Disability. A 50% discount would have been available for low-income vehicle owners enrolled in the Low-Income Discount Plan (LIDP) after the first 10 trips in a calendar month. With additional low-income tax credits for those whose earn a gross income under $60,000 would qualify for a tax credit equivalent to the amount of tolls paid. The Individual Disability Exemption Plan (IDEP) is available for individuals whose disabilities or health conditions prevent them from using transit. This exemption can apply to a vehicle registered to the applicant or a designated caregiver’s vehicle used to drive the applicant in the Congestion Relief Zone.

The suburb commuters who will benefit from halting congestion pricing are also the smallest percentage of commuters. By not implementing congestion pricing, the state is effectively prioritizing the needs of suburban residents over low-income commuters into NYC and the residents of NYC.

Myth: Congestion Pricing is Intentionally Punishing Commuters from Others States Like NJ and CT.

Fact: According to its Environmental Impact Assessment, the MTA found that from all the work trips entering the CBD only 3.2% of them where drivers from NJ and CT. The program also planned to have notable “crossing credits” which are reduced fees for tunnel users from NJ and Long Island. Congestion pricing could motivate CT and NJ to enhance their own transportation systems, directly benefiting their residents and addressing long-standing demands for better commuter options.

Myth: Suspending Congestion Pricing is Inconsequential

Fact: Congestion pricing is a proven and effective solution for reducing air pollution and improving urban living conditions. Congestion pricing tackles critical urban issues like enhancing public transportation, air quality, safety, walkability, or accessibility which are tangible benefits residents can appreciate.

Delaying congestion pricing indefinitely fosters distrust and delays the implementation of a program that is essential to achieving the State’s climate goals. For government to earn trust, it must be consistent. Changing course so suddenly has consequences for many, including state lawmakers who backed the law, government agencies who were counting on the funding and even the construction industry planning for the subway improvements funded by congestion pricing. The $507 million already spent on the tolling infrastructure risks appearing to be wasted, leaving many constituents feeling distrust of the decision-making process.

Recommendations

Acadia Center believes that the economic, climate, quality of life and equity benefits of the NYC Congestion Plan are clear and powerful. Gov. Hochul and other state and city leaders should work together now to implement a congestion pricing plan, avoid massive interruptions in funding needed for transportation infrastructure and send the right price signals around over reliance on cars in urban areas.

Join the Conversation

We encourage you to share your thoughts and questions about congestion pricing. Let’s work together to create a better, more sustainable tri-state area.

Paola Moncada Tamayo

Policy Analyst

ptamayo@acadiacenter.org

212-256-1535 ext.204

It’s time to talk about what decarbonization will cost

According to a 2022 poll, three-quarters of Massachusetts residents see climate change as a “very serious” or “somewhat serious” issue for the state to address. But if we’re to have any success at responding to climate change, we have to begin thinking about it as not only as a technical, behavioral, and infrastructure challenge – designing more efficient and cost-effective wind turbines and solar panels; getting more people to accept heat pumps; and building out the grid to move the power needed for all the EVs and air source heat pumps we expect to come on line – but as a major financial challenge for the state as well.

It is conservatively estimated that just converting all existing residential gas and oil heating systems to air source heat pumps will cost over $25 billion. Decarbonizing all customer sectors will require many billions more.

The challenges are so multi-dimensional that it can be hard to get all of the relevant stakeholders to focus on the many solutions we need to develop. But we believe the financial challenges have perhaps received the least attention. After all, we have the MassSAVE program to address customer behavior. We have major programs for the state to procure massive amounts of wind power. The price of solar panels is projected to decline by 40 percent between now and 2028. And the pending climate bills will squarely address the need to expedite infrastructure siting.

A relatively new coalition, the Commonwealth Coalition for Decarbonization, is pressing the Legislature to pass language that would require the administration to take a first, essential step regarding the financial challenges to reaching our mandated climate goals. Separately, but moving in a similar direction, the MassSAVE “program administrators” (the state’s electric and gas utilities, and the Cape Light Compact) are also developing an estimate of the funding that will be required to meet our climate goals. Simply put, there currently isn’t enough funding.

We know how much carbon we emit, with reasonable accuracy. We know how much carbon we need to stop emitting. We know much about the carbon-free resources we need to procure. Now we just need to know the cost to the Commonwealth.

Once we know what is available from all actual and likely sources and what the cost will be to achieve our goals, we’ll know how much more funding needs to be procured. At that point, we can begin the difficult work of figuring out how to pay for our climate plan. Without that information and funding, we will hit a dead end.

The 14-member Commonwealth Coalition for Decarbonization includes advocates from low-income non-profits, environmental groups, labor, and the utilities who participate in MassSAVE as well as others. Despite our quite diverse interests, we all work together to move the state in the direction of implementing practical policy approaches and solutions. We hope to monitor progress toward the ambitious climate goals that the Legislature has set, and especially keep banging the drum about getting more information about available and needed funding.

Much is being done to drive uptake of energy efficiency measures and decarbonization investments. But until we know where we stand on the funding need, we will be unable to sustain the efforts needed to maintain Massachusetts as a leader in the country in addressing climate change. We have decades of important and challenging work ahead of us.

Charlie Harak is a senior attorney at the National Consumer Law Center. Kyle Murray is director of state program implementation at the Acadia Center, a nonprofit climate advocacy group.

Originally published in CommonWealth. Click here to read it there.

Navigating Home Weatherization with Acadia Center

We all want our homes to be safe and temperature-controlled, and for our energy bills to be lower. However, making your home more energy efficient can feel like a complicated – and expensive – undertaking. As a first-time homeowner, I felt intimidated when I set out to make my 1950s Cape more energy efficient, but I found a place to begin that was easy, effective, and didn’t break the bank thanks to my state’s incentives – weatherization.

Weatherization includes multiple efforts to make homes more energy efficient by preventing air leakage to reduce energy consumption and optimize energy efficiency. Everything from insulation to replacing windows and doors, to utilizing caulk to better seal air leaks around vents can fall under the umbrella of weatherization. According to Energy Star, air leakage accounts for between 25 percent and 40 percent of the energy used for heating and cooling in a typical residence. By plugging up those leaks, our heating and cooling systems have an easier time keeping our homes comfortable, and our energy bills reasonable throughout temperature spikes and drops.

The first step I took to weatherize my home was looking into any incentives given by the state that could help me foot the bill for the cost. As a resident of Massachusetts, a small part of energy bills are already going towards a program called MassSAVE, a collaboration of Massachusetts’ electric and natural gas utilities and energy efficiency service providers. MassSAVE can give residents who pay in (as most do who don’t live in municipal light plant areas) discounts and rebates on energy efficiency upgrades made to homes through a pool of money provided by utility bill payers. I had already been paying into MassSAVE since I had started paying for the electricity in my first apartment, and I was now able to use those funds in my first home.

Through MassSAVE I had an approved contractor come to my home to give a free energy assessment. He told me that my home contained next to no insulation, which was part of the reason my second floor was so much hotter than my first. He recommended insulation throughout the home, in addition to new weather stripping on our exterior doors. He estimated that these efforts would cost around $5,000 total, but with MassSAVE’s help, we’d only be paying about $1,000 out of pocket. We jumped on the deal immediately and the next week, our insulation was being installed.

The insulation process took about a day, and for the vast majority of the time the contractors were working either on the exterior of the house or in the basement. They were able to remove our siding and install insulation for the exterior of the home, although they warned that not all homes have this option. They did have to drill some holes in our front walls to ensure we were properly insulated, but they patched the holes and cleaned the dust before leaving. In total, the project cost $5,161, and MassSAVE paid for $3,983, meaning we paid only $1,178 out of pocket for a home that uses significantly less energy – and a noticeably cooler upstairs too.

MassSAVE incentives are also available for renters. Renters are eligible to receive rebates for energy-saving appliances and products, like room air conditioners, room air purifiers, advanced power strips, dehumidifiers, and more. Renters may also coordinate with their landlords to use MassSAVE incentives to make larger upgrades throughout their buildings.

And for non-Massachusetts residents, weatherization is also within your grasp! Most states have some kind of energy efficiency incentive program, such as Efficiency Maine or Energize Connecticut. In Rhode Island, the State Office of Energy Resources provides rebates and incentives for processes like what I did in my home.

There are many steps one can take on the road to energy efficiency – next on my path might be heat pumps or solar panels – but weatherization efforts are an important and often necessary first step. Even purchasing caulk and weatherization strips to install yourself can go a long way toward making your home more comfortable while driving your energy bill lower. The most important lesson I learned from this experience is that there are resources out there to make this process simpler! Don’t let the potentially complicated world of efficiency stop you from taking the first step.

If you are looking to do energy efficiency work in your home, you can always consider Acadia Center to be a resource. We would be happy to provide you with more information and insights into the processes of weatherization and electrification.