SIGNIFICANT OBSTACLES are looming in the Northeast’s attempts to reduce its carbon footprint.
News that New York won’t reach its short-term emissions reductions goals, for example, should be a wake-up call for regulators who face consistent pressure to speed up the clean energy evolution while squeezing utilities’ ability to recover the cost for the very infrastructure upgrades necessary to safeguard reliability and economic vitality.
Meanwhile, in Connecticut, relations between utilities and a regulator have deteriorated significantly, imperiling millions in critical investments without which the grid won’t be able to accommodate rising power demands driven by electrification.
In Massachusetts, the state Legislature’s failure to address the Commonwealth’s byzantine energy infrastructure permitting and siting rules before ending its formal session last month risks delaying – or even derailing – the work that must begin soon to keep the state on track toward its decarbonization goals.
To regain a sure footing and ensure forward momentum, states must ensure regulatory stability, fostering a positive climate that preserves utilities’ ability to raise the capital needed to fund infrastructure investments without sacrificing customer affordability and reliability.
The Bay State’s Electric Sector Modernization Plan process tasked utilities with developing investment strategies that accommodate growth while ensuring customers are not further overburdened by cost. Essential to that has been the requirement that utilities bring stakeholders — developers, community activists, environmental justice advocates, business leaders and more — to the table when developing those plans so they address the needs of communities across the Commonwealth.
A healthy regulatory environment — one in which the state and utilities are open to honest discussion about balancing long-term projects and consumer costs — attracts capital investment that fuels infrastructure development. Thus far, Massachusetts is sending a positive signal to the market that stands in contrast to its neighbors. Hopefully, this continues.
There are troubling indications of what will happen if it doesn’t. In Connecticut, Eversource was forced this year to cancel $500 million in planned infrastructure projects after state regulators scaled back its latest rate request. Moody’s later downgraded the utility’s rating outlook, citing “an inconsistent and unpredictable regulatory environment” as a key deciding factor.
That downgrade will undoubtedly impact the utility’s ability to raise capital for clean energy projects and grid improvements, by making the utilities’ borrowing costs higher, which ends up being passed on to ratepayers.
Rather than learn from the lesson about the cascading problems that stem from creating a harsh regulatory climate, Connecticut’s Public Utility Regulatory Authority remains locked in a pitched battled with Avangrid over whether the PURA chairwoman has put her thumb on the scale of what is supposed to be an objective, independent review of a gas rate case. The ultimate outcome may not matter here. The skirmish itself only adds to the narrative about the state’s “inconsistent and unpredictable regulatory environment.”
To the west, New York has attracted significant investment in growth industries like semiconductors and data centers, in part because of a promise of abundant power around the state, which already benefits from diverse generation sources. But cracks are showing as the governor has now admitted the state won’t meet its ambitious goals on the originally established timeline, citing rising costs and interest rates. Additionally, a state comptroller audit determined that regulators relied on outdated data and made miscalculations about the Empire State’s ability to achieve its climate law’s energy mandates. Reality, physics and cost is crashing headlong in ambition.
An unstable regulatory environment only makes it harder to realize state efforts to bring renewables online. Ultimately, consumers will suffer — not only through higher power bills, but also discontinued investment in critical infrastructure.
Massachusetts Governor Maura Healey has acknowledged the connection between a strong credit rating and the ability to fund projects. Speaking to the Boston Chamber of Commerce in March about building new affordable housing, she said the Commonwealth’s bond rating serves to “unlock important capital investment opportunities in the fundamentals that will ensure our future success.”
The same is true for unlocking investment in energy infrastructure necessary to reach the Commonwealth’s renewable energy goals.
Nearly every state across the region has claimed to be nation-leading in setting clean energy and carbon footprint reduction goals. Massachusetts is poised to claim that mantle, as long as it keeps doing what’s necessary to assure investors that major infrastructure plans aren’t being built on top of shifting sands.
Marc Brown is vice president, state affairs, at Consumer Energy Alliance.
