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Mass. Senate bill would cap electricity rate hikes

Bill also backs small energy producers

Leaders of the Massachusetts Senate are proposing to cap rate increases by utilities and require them to buy more power from small-scale producers as part of an effort to control the high cost of electricity in the state.

The legislation, scheduled for debate in the Senate Thursday, includes a number of provisions to update Massachusetts’ Green Communities Act, adopted four years ago to encourage greater energy conservation and increased production of renewable sources of power, such as solar and wind.

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“The bill does not change any clean energy goals - only requires that we get to them in a more cost-effective manner,’’ said Robert Rio, senior vice president of Associated Industries of Massachusetts, the state’s largest business trade group. “Getting renewable power in a more cost-effective manner will be good for Massachusetts business and ratepayers, and it will also allow us to meet clean energy goals faster.’’

But the measure also takes aim at the persistent high cost of electricity in Massachusetts, where the average price of 14.24 cents per kilowatt hour is well above the national average of 10 cents.

Senate leaders said they want to limit how much utilities can raise rates each year and subject their charges to more regular scrutiny from regulators. Under the legislation, utilities would not be able to raise rates more than 10 percent, unless authorized by the Department of Public Utilities. If approved, any rate increase greater than 10 percent would have to be spread over two years to minimize sticker shock to consumers.

The rate-limit would apply to the utilities’ distribution costs of delivering electricity, not the purchase price of the underlying power. Utilities’ rates would also be reviewed by regulators at least once every three years, and more long-term contracts for renewable energy would be opened up to competitive bidding.

The legislation would expand the so-called net metering program, which encourages small-scale, local generation of power by allowing producers to sell excess power to utilities during peak load periods. Current law caps that amount at 3 percent of the system’s peak load needs; the legislation would increase the cap to 6 percent. Individual consumers who have on-site power generation, such as a small solar array, and government-owned facilities would also be allowed to sell more excess power to the grid.

Larry Chretien, executive director of the Energy Consumers Alliance of New England, said requiring utilities to buy more electricity would be a big boost to alternative generators.

“It’s one of the key things that will support the development of wind and solar projects based in Massachusetts,’’ Chretien said.

D.C. Denison can be reached at denison@globe.com.
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