The Massachusetts DPU approved the applications of the three investor-owned electric distribution companies ("Companies") for each utility to enter into two power purchase agreements (PPAs) for energy and associated RECs from the Mayflower Wind 804 MW offshore wind energy generation project (Project).

The DPU noted that Section 83C provides that an electric distribution company shall be entitled to cost recovery of payments made under a long-term contract approved under this section. Section 83C and the Department's regulations at 220 CMR 23.06 provide that a distribution company may, after purchasing renewable energy, RECs, or both, (1) sell the energy to its basic service customers and retain RECs for the purpose of meeting its annual RPS requirements or (2) sell the energy into the wholesale electricity spot market, and sell the purchased RECs to minimize costs to ratepayers, provided that DOER has not notified the company that the RECs should be retained to reach emission reduction targets. If an electric distribution company chooses to sell the energy and/or RECs, the electric distribution company shall (1) calculate the net cost of payments made under the long-term PPAs against the proceeds obtained from the sale of energy and RECs and (2) credit or charge all distribution customers the difference between the contract payments and proceeds through a uniform, fully-reconciling factor. Section 83C; 220 CMR 23.06.

Each electric distribution company has a Department-approved tariff that addresses the recovery of costs related to the long-term renewable energy contracts approved pursuant to Section 83, Section 83A, Section 83C, and Section 83D. Under these tariffs, the Companies compare the actual payments under their Department approved renewable energy contracts, less actual net proceeds received from the sale of energy into the wholesale electricity market and/or RECs, plus actual remuneration (i.e., 4.00 percent for Section 83 contracts and 2.75 percent for Section 83A, Section 83C and Section 83D contracts), with actual revenues billed to customers through a LTRCA [Long-Term Renewable Energy Contract Adjustment Factor] factor (Exh. JU-1, at 45). Any over- or under-recovery is reconciled in the LTRCA factor applicable in the following year (Exh. JU-1, at 45).

The Companies proposed to sell the renewable energy procured under the PPAs through the ISO-NE wholesale market and to credit or charge the difference between the wholesale market revenues and the contract costs to each company's distribution customers (Exh. JU-1, at 16). In addition, the Companies proposed to use the RECs procured pursuant to the PPAs to satisfy the RPS and CES requirements associated with their basic service offerings (Exh. JU-1, at 16-17, 43-44). If RPS or CES obligations for Class I RECs fall below the aggregate level of Class I RECs already under contract, the Companies proposed to sell excess RECs into the market and credit all distribution customers the difference between the PPA price and the sales price (Exh. JU-1, at 43-44).

"After review, the Department finds that the Companies' proposed treatment of energy and RECs to be purchased under the PPAs is consistent with Section 83C and 220 CMR 23.06," the DPU ruled

"Further, the Department finds that the Companies' method to recover costs related to the PPAs is consistent with Section 83C and will result in just and reasonable rates pursuant to G.L. c. 164, § 94. Under the PPAs, the Companies will incur the same types of costs as those which they are currently recovering or will recover for the previously approved contracts (Exh. JU-1, at 45)," the DPU said

"Consistent with Section 83C(g), the Department finds that the Companies have appropriately allocated the Project's output based on total energy demand from all distribution customers (Exhs. JU-3-A at 7; JU-3-C at 7; JU-3-E at 7). Accordingly, each company's apportioned share is as follows: (1) Eversource – 53.62 percent; (2) National Grid – 45.41 percent; and (3) Unitil – 0.97 percent (Exhs. JU-3-A at 7; JU-3-D at 7; JU-3-G at 7)," the DPU noted

D.P.U. 20-16; D.P.U. 20-17; D.P.U. 20-18

Tags:
Massachusetts   Offshore wind   Long-term contracts   Default service  

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