51st State Perspectives MASSACHUSETTS: A GREAT CLEAN ENERGY STORY— DERs AND THE NEXT CHAPTER IN PARTNERSHIP WITH JULY 2018 51ST STATE PERSPECTIVES TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................................................................................4 INTRODUCTION ...........................................................................................................................................................................5 § DERs in Massachusetts ..................................................................................................................................................7 CURRENT STATE OF THE MASSACHUSETTS ELECTRICITY MARKET ........................................................................ 11 § Retail Market Design .................................................................................................................................................... 12 § Wholesale Market Design ........................................................................................................................................... 16 § Utility Business Model .................................................................................................................................................. 19 § Rates and Regulation ................................................................................................................................................... 20 § Asset Deployment and Information Technology ............................................................................................... 22 DEGREES OF TRANSFORMATION IN MASSACHUSETTS .............................................................................................. 25 § Doctrine 1: Promote Efficiencies .............................................................................................................................. 25 § Doctrine 2: Clearly Define Roles ............................................................................................................................... 26 § Doctrine 3: Principles of Ratemaking ..................................................................................................................... 27 § Doctrine 4: Foster Customer Choice ....................................................................................................................... 28 CONCLUSION ............................................................................................................................................................................. 29 APPENDIX .................................................................................................................................................................................... 31 LIST OF TABLES TABLE 1: SOLAR PHOTOVOLTAIC (PV) INSTALLED CAPACITY BY SECTOR, IN MEGAWATTS (MWDC) .............8 TABLE 2: STATE STORAGE TARGETS ....................................................................................................................................9 TABLE 3: RANKINGS OF STATES WITH HIGHEST AVERAGE RETAIL ELECTRICITY PRICES IN RESIDENTIAL SECTOR, FEBRUARY 2018 (CENTS/KWH) .......................................................................................... 13 TABLE 4: GENERAL PROGRAM NET METERING CAPS (THROUGH MAY 1, 2018) ................................................ 15 TABLE 5: GRID MODERNIZATION PLANS: A COMPARISON ...................................................................................... 23 TABLE 6: PRE-AUTHORIZED BUDGETS AND INVESTMENTS OUTLINED IN THE DPU GMP ORDER, MAY 2018 ......................................................................................................................................................... 24 TABLE 7: PERFORMANCE METRICS FOR ELECTRIC COMPANIES— CUSTOMER SERVICE AND SATISFACTION ........................................................................................................................ 31 TABLE 8: PERFORMANCE METRICS FOR ELECTRIC COMPANIES— RELIABILITY AND SAFETY ....................................................................................................................................................... 32 2 51ST STATE | PERSPECTIVES LIST OF FIGURES FIGURE 1: MOR-EV REBATES BY MONTH, JUNE 2018 .................................................................................................. 10 FIGURE 2: ACEEE 2017 STATE ENERGY EFFICIENCY SCORECARD ............................................................................ 12 FIGURE 3: RETAIL CUSTOMERS BY UTILITY, 2016 .......................................................................................................... 12 FIGURE 4: PERCENTAGE OF CUSTOMERS RECEIVING COMPETITIVE ELECTRIC SUPPLY, BY CUSTOMER CLASS .............................................................................................................................................................. 14 FIGURE 5: MASSACHUSETTS GENERATION SUPPLY MIX ............................................................................................ 16 COPYRIGHT ABOUT SCOTTMADDEN © Smart Electric Power Alliance and ScottMadden, For more than 30 years, ScottMadden has helped 2018. All rights reserved. This material may not be our clients transform the way they operate, plan, published, reproduced, broadcast, rewritten, or and maintain the grid and interact with their redistributed without permission. customers. The Grid Transformation practice focuses on helping clients adapt to the myriad of AUTHORS changes driven by the increasing penetration of Cristin Lyons, Partner and Energy Practice Leader, distributed energy resources, such as distributed ScottMadden, Inc. generation, storage, demand response, and Jennifer Nelson, Director, microgrids. We help our clients choose the path ScottMadden, Inc. that meets their reliability, customer, and regulatory goals, and then we help them implement it. Quentin Watkins, Manager, ScottMadden, Inc. ACKNOWLEDGEMENTS Chris Sturgill, Manager, SEPA and ScottMadden would like to recognize the ScottMadden, Inc. following individuals for their time and assistance Sharon Thomas, Senior Analyst, in developing this report: Vazken Kassakhian with Smart Electric Power Alliance Southern California Edison, Henry Yoshimura from ISO New England, Ian Springsteel with National Grid, ABOUT SEPA Steve Cowell with E4TheFuture, and Jonathan Raab The Smart Electric Power Alliance (SEPA) is an from Raab Associates, Ltd. We would also like to educational nonprofit working to facilitate the thank the following SEPA staff for their assistance utility industry’s transition to a clean energy future and review: Erika Myers, Chris Schroeder, through education, research, standards and Mike Kruger, Christine Stearn, Brenda Chew, collaboration. SEPA offers a range of research K. Kaufmann, and Daisy Chung. initiatives and resources, as well as conferences, educational events and professional networking opportunities. SEPA is founder and co-sponsor of Solar Power International and winner of the Keystone Policy Center’s 2016 Leadership in Energy Award. For more information, visit www.sepapower.org. MASSACHUSETTS: A GREAT CLEAN ENERGY STORY—DERs AND THE NEXT CHAPTER 3 51ST STATE PERSPECTIVES Executive Summary The Commonwealth of Massachusetts has long better understand their location and behavior on been a leader in the deployment of clean energy. the grid. It was an early adopter of a renewable portfolio Beyond retail deregulation, the emergence of DERs standard (RPS) and energy efficiency targets. has not significantly altered the utility business Massachusetts currently has an RPS for “all retail model in Massachusetts. NEM has been in place electric suppliers” of 15% by 2020 and 25% by since 1982 with high levels of enrollment, and the 2030. Eversource Massachusetts and National Commonwealth has seen the same challenges Grid Massachusetts both achieved more than with NEM as have emerged elsewhere in terms of 3% savings through energy efficiency programs appropriate compensation for excess generation 1 as a percentage of their retail sales in 2016. and utility delivery charges. Massachusetts The Commonwealth has a significant penetration continues to operate under traditional cost of of distributed generation and robust enrollment in service ratemaking; however, some innovative net energy metering (NEM) programs. In addition, it proposals were approved in the recent Eversource has a target for electric vehicles (EVs) of 300,000, or rate case, including changes to NEM and approval 15%, of all registered vehicles by 2020. The state’s of performance-based ratemaking (PBR). target for storage is 200 megawatt hours (MWh), also by 2020, supported by additional programs The Commonwealth opened a proceeding on grid and funding. Massachusetts has focused on the modernization in 2014, and the utilities filed grid reduction of greenhouse gas (GHG) emissions, modernization plans in 2015. In May 2018, the and this is reflected in the various programs Massachusetts Department of Public Utilities (DPU) implemented during the last 30 years. issued an order that approved utility proposals for grid-focused upgrades but not advanced The Commonwealth went through retail metering infrastructure (AMI). Grid modernization deregulation in 1997, leaving the investor-owned investments will enhance automation and visibility utilities as wires-only businesses. Retail choice of the grid and support the deployment of DERs; has been in effect