By William Opalka
Massachusetts Gov. Charlie Baker said last week that long-term contracts for hydropower are the quickest and most cost-effective way for the state to reduce rising energy costs and reach greenhouse gas reduction goals.
The first-term Republican testified before the legislature’s Joint Committee on Telecommunications, Utilities and Energy in support of his bill to mandate the state’s utilities seek long-term contracts to procure hydropower.
New England power generators have complained that elected officials’ urge to “do something” about rising power costs in the region risks market development just as power plant owners are willing to invest there. (See New England Generators: State Interventions Risk Market Development.)
Baker confronted that argument in his remarks that described how ISO-NE’s main concern is reliability and plant owners need to provide returns to their investors.
“When acting in line with their obligations, none of these players are primarily concerned with costs to the consumer or environmental considerations. That is the status quo,” he said. “We are left with the critical question of who addresses energy costs and environmental concerns. The answer to that question is us.”
The 2008 Global Warming Solutions Act mandates a reduction in greenhouse gas emissions of 25% from 1990 levels by 2020. A 2010 state energy plan said Massachusetts would need at least 1,200 MW of hydropower to reach the target.
“We are in danger of being out of compliance with our own law,” Baker said.
Hydropower on that scale would likely come from Canada, but nothing precludes hydro resources in the U.S. from bidding into any solicitations from the utilities, he said. Baker said hydro can be obtained under current law, but that is unlikely in the absence of long-term contracts.
The contracts would only be pursued if state regulators determined they were cost-effective, the governor said.
Baker also said he would consider testing the market for the viability of offshore wind projects and suggested the legislature could amend his bill to include that resource. The Cape Wind project in Nantucket Sound, under development for more than a decade, was halted after it failed to complete financing after a protracted legal battle.
The governor also repeated his call for action to reduce electricity costs, which are among the highest in the nation, through regional efforts. (See Baker: New England Must Sacrifice to Lower Costs.)