The Massachusetts Executive Office of Energy and Environmental Affairs (EEA) and Department of Environmental Protection (MassDEP) announced that proposed amendments to the state’s Clean Energy Standard (CES) were finalized earlier this month without substantive changes from draft language initially proposed by the agencies in April 2022.
The amendments are intended to accelerate progress towards decarbonization of the electricity sector and further ensure the state meets its goal of net zero emissions by 2050. Additionally, the agencies found that the amendments could result in long-term cost savings.
What’s the CES?
The CES, first enacted in 2017, requires retail sellers of electricity in Massachusetts to provide increasing quantities of clean electricity over time. The standard is based on a percent of total electricity sales, and in addition to certain eligibility requirements, requires that generators have commenced commercial operation after 2010.
The regulations were amended in 2020 to include a program for existing generation units, CES-E, which has several distinct requirements. CES-E was designed to maintain the state’s existing clean energy supply from nuclear and large hydroelectric generators with a nameplate capacity greater than 30 megawatts and whose commercial operations started prior to 2011. CES-E eligibility is further limited to existing generation units located in Massachusetts, New Hampshire, Connecticut, or one of several eastern Canadian provinces.
The CES relates to the state’s Renewable Energy Portfolio Standard (RPS) in several ways, including that compliance with RPS programs counts toward certain CES compliance obligations.
Why were these amendments made to the CES?
In its background document discussing the proposed amendments, EEA and MassDEP state that the amendments were necessary “to accelerate the schedule for decarbonizing the electricity supply” and that regulated entities needed “additional certainty regarding ACP [alternative compliance payment] rates.” The agencies further note that the accelerated schedule is consistent with the state’s greenhouse gas emissions goals, its 2030 Interim Clean Energy and Climate Plan, and its 2050 Decarbonization Roadmap.
What amendments were made to the CES?
- Raising the rate of annual increase of the CES standard from 2% to 6% for 2026 through 2030 and lowering the rate of annual increase from 2% to 1% for 2031 through 2050. These changes will set the CES standard at 60% in 2030 and 80% in 2050.
- Increasing the CES-E stringency from 20% to 25% of 2018 retail sales starting in 2023. The agencies report that this higher rate is intended to “better ‘lock in’ the historic contribution of existing clean energy resources into the future.”
- Setting the CES ACP rate at $35/MWh and the CES-E ACP rate at $10/MWh in 2022 through 2050. The rationale for setting ACP rates was to “establish a consistent relationship between [RPS and CES] and send a clear market signal that renewable energy remains the preferred source of clean energy.”
- Aligning capacity market requirements with the Massachusetts Department of Energy Resources’ (DOER) RPS requirements by removing the capacity obligation from the CES.
- Clarifying language related to banking of Clean Generation Attributes by aligning the regulation with language that has been included in the CES Frequently Asked Questions document since 2018. In general terms, clean generation attributes are characteristics associated with clean energy output that is derived from a qualified clean generation unit or that meets other certain statutory requirements. These attributes differentiate clean generation electrical output from commodity electricity.
We’ll continue to monitor these and other updates from the agencies.
About the Author
Josh Rosen is an associate at Foley Hoag, LLP. His practice focuses on energy and climate law, including regulatory, environmental permitting and compliance, due diligence, and transactional matters. Josh is a regular contributor to the Law & The Environment and Energy Climate Counsel blogs.