Change in Law—Massachusetts Clean Energy Standard Expansion and Clean Peak Standard3 min read
At Constellation, we are supportive of clean energy and strive for transparency and to ensure that our customers are as knowledgeable as possible to make informed energy purchasing decisions. In this blog, we discuss changes related to some of the cost components included in electric supplier bills in Massachusetts and how upcoming change in law (CIL) events related to them will affect you.
What Elements Make up an Electric Supplier’s Price That Appears in Your Bill?
Included in your bill are, among others, the following line items:
- Capacity: Determined by prices set from independent system operation (ISO)-run auctions and customer capacity tags (peak usage). This is designed to provide grid reliability and ensure that there is enough generation available to the region.
- Renewable Portfolio Standards (RPS): These are mandates set by individual states for load-serving entities (LSEs), such as Constellation, to purchase a certain amount of renewable energy. They are determined by state-regulated compliance percentages and the financial market for renewable energy certificates (RECs). Each state has different RPS.
- Clean Energy Standard (CES): Similar to RPS but a Massachusetts-specific mechanism to incent new zero-emission generation such as nuclear and hydroelectric power and increase the procurement of new clean energy over time.
- Clean Energy Standard—Expansion (CES-E)*: Massachusetts state mandate for existing zero emission generation; CES-E puts emphasis on investment in existing nuclear and hydroelectric resources, whereas the focus was previously on only new
- Clean Peak Standard (CP)*: This was a mandate set by the state of Massachusetts to incentivize renewable and storage power supply during peak periods.
*Note: Massachusetts is the only state in the ISO-New England region with a Clean Energy Standard—Expansion (CES-E) and Clean Peak Standard (CP).
Why Were These Mandates Established?
The purpose of the regulations is to incentivize renewable and clean energy resources to help the Commonwealth of Massachusetts reduce carbon emissions and achieve its established greenhouse gas emissions reduction goals. The Clean Energy Standard will increase the level of clean electricity that is purchased from the regional electric grid for consumption in the state, while the Clean Peak Standard incentivizes renewable energy productions during peak energy usage periods. The Massachusetts RPS requires that retail electricity suppliers (both regulated distribution utilities and competitive suppliers) obtain a percentage of the electricity that they serve to their customers from qualifying clean energy facilities. Clean energy—energy that is produced through methods that do not release greenhouse gases or any other pollutants—can be generated from renewable resources (e.g., solar and wind) and resources not considered renewable (e.g., nuclear and hydroelectric power), and reduces reliance on carbon-emitting fossil fuels and can help mitigate climate change.
How Does This Affect You?
In Massachusetts, there have been recent regulatory changes affecting two cost components of your electricity bill:
- Clean Peak Standard (CP)—Filed by the Massachusetts Department of Energy Resources (DOER) and effective August 7, 2020, the CP standard regulations require all electricity suppliers, including utilities, to purchase clean peak energy certificates from qualified clean peak resources. Contracts executed prior to January 1, 2020, are exempt from the regulation through their initial term. Constellation customers who executed contracts after that date will see CP standards costs as part of their contract price.
- Clean Energy Standard Expansion (CES-E)—Massachusetts Department of Environmental Protection adopted an amendment to create the CES-E in July 2020. Per the regulations, if you purchased an energy contract with us on or after October 4, 2019, this incremental cost will be charged to you as a customer in early 2021 and appear as a cost component on your bill as of January 1, 2021. However, contracts entered into prior to October 4, 2019, are exempt from the increased cost and your cost is locked in with no charges until the end of its original term. CES-E charges will appear on your bill beginning in 2023.
What Will the Approximate Cost Be?
The price impact that CES-E will have on your total power bill will vary based on details of your account. The estimated cost impact for the CES-E is currently $0.85 but/MWh, however it’s important to note that passthrough costs are subject to market prices and can differ. Designed to maintain the historic contribution of existing clean generation units into the future, the CES-E amount for 2021 and 2022 was determined to represent approximately 20 percent of total CES-covered load in Massachusetts—the CES-E standard in those years is therefore set at 20 percent. Beginning in 2023, the regulation allows for adjustments to the percentage standard if load increases or decreases significantly and is based on load four years prior to a compliance year. As a customer, especially if working with multiple suppliers, you may want to clarify pricing components, assumptions and contract language when comparing bids.
Questions? Contact Us.
Constellation is committed to educating customers and helping you manage your energy strategy to reduce costs that may impact your business. If you have any questions, please contact your representative, account management team or the Customer Care Center at 1-844-6 ENERGY (1-844-636-3749) or email@example.com.