Massachusetts Energy Bill Fosters Further Renewable Energy Development

Earlier this week, the Massachusetts Legislature passed new legislation that is currently awaiting Gov. Deval Patrick's signature and will provide further impetus for renewable energy development in the commonwealth. This new legislation, Senate Bill 2395, An Act relative to competitively priced electricity in the Commonwealth (the "Act"), will increase the amount of new renewable energy that would qualify for economically favorable treatment by utilities in Massachusetts. It also contains numerous other changes relating to electricity matters. This alert highlights key provisions in the Act affecting renewable energy generation. Net Metering Cap At its highest level, the concept of net metering allows electric customers to install generation on their property to serve their electric needs and to be paid in the form of credits on their bill by the local electric distribution company for electricity that generation produces in excess of the customer's needs. To qualify for net metering in Massachusetts, customers must install generating facilities within their distribution company's service territory that utilize either wind or solar or are used as part of an agricultural business. The amount of any electricity generated in surplus of a customer's needs in a month is reflected as a "Net Metering Credit" in that customer's future bills from its local electric distribution company. The amount of the Net Metering Credits depends upon both the generation output level and the technology employed to generate the electricity. The credits never expire and are assignable to others served by the same electric distribution company (with some other limits described below). In order to be able to net meter, a customer must apply for and be granted a net metering interconnection by its distribution company. Prior to the Act, there was a cap on the amount of new generation that each distribution company was required to allow for participation in the net metering program. That cap was set at 3 percent of the peak total energy demand from all customers in all service territories of the distribution company ("Peak Load"). The cap was allocated between the two types of net metering facilities - facilities where the customer is a municipality or governmental entity ("Government Facilities") and facilities where the customer is a private party ("Private Facilities"). Government Facilities were allotted two-thirds of the cap amount (2 percent of the Peak Load)...