Fair Competition Needed in Utility Energy Contracting
BOSTON, MA -Acadia Center joined with clean energy developers today in calling for fair consideration of alternatives to natural gas in meeting the region’s electricity needs. In a joint letter, Acadia Center and the other signatories request that utilities National Grid and Eversource redraft the solicitation to remove the current bias toward natural gas projects and ensure that a full array of cleaner, lower cost options are able to compete.
The letter is written in response to Requests for Proposals issued by the utilities on Friday October 23rd. The solicitation requires responses by November 13th – only a three week window – and seeks bids only from providers of liquefied natural gas, regional gas storage, and pipeline expansion projects. Eversource and National Grid are participants in at least one project that could qualify for contracts; the pipeline expansion and storage project Access Northeast.
The letter states: “In this RFP, the utilities limited their solicitation to a particular set of resources, gave notice to no other resources, and established a timeline so short, only their partners could submit timely responses. The RFP not only pre-judges the results by effectively barring competition, but also virtually guarantees that the Commonwealth’s ratepayers will pay more than necessary to achieve a reliable winter energy supply.”
The letter additionally notes that the proposed procurement does not appear to comply with Massachusetts Department of Public Utilities’ requirement that the proposed agreement compares favorably to “all energy resources reasonably available in the market that have the potential to address the objective of providing electricity at a reasonable cost and that compare favorably in terms of price and non-price factors.”
The procurement closes shortly before the expected release of a Regional Electrical Reliability Options Study undertaken by the Massachusetts Attorney General’s Office, and following the announcement of electricity rates for the winter of 2015-2016 that are lower than past years. Specifically, Eversource’s winter rate of 10.39 cents/kWh is 27% lower than last year, and National Grid’s rate of 13.03 cents/kWh is almost 25% lower than last year. In Rhode Island, National Grid’s proposed rate of 8.9 cents/kWh is over 20% lower than last winter’s basic service rates.
In an appendix to the letter, Acadia Center provides supporting information on the cost-effectiveness of energy efficiency as an alternative to natural gas supply. New England’s investments in energy efficiency have already proven valuable in winter: without the demand reductions achieved since 2000, ratepayers would have paid an additional $1.46B in winter 2014 alone. The appendix also describes how the region’s grid operator has consistently over-estimated future energy demand, potentially contributing to overbuilding of natural gas pipeline and other energy infrastructure. Specifically, Acadia Center demonstrates that ISO-NE has consistently overestimated energy consumption and peak demand, with actual energy demand coming in 17% lower in 2014 than the 2006 projection, and summer peak demand falling 20% in 2014 from 2006 predictions.
The letter and appendix can be found at: http://acadiacenter.org/document/joint-comments-on-massachusetts-utilities-gas-procurement/
Peter Shattuck, Clean Energy Initiative Director
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Kiernan Dunlop, Communications Associate
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Acadia Center is a non-profit, research and advocacy organization committed to advancing the clean energy future. Acadia Center is at the forefront of efforts to build clean, low-carbon and consumer-friendly economies. Acadia Center provides accurate and reliable information, and offers a real-world and comprehensive approach to problem solving through innovation and collaboration.