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Hybrid Action Suggested on RMLD Energy Credits

Still a contentious issue.

Sell them? Or retire them? Renewable energy credits (RECs), that is. The selectmen discussed options Tuesday with Tony Capobianco, the town’s representative to the Citizens Advisory Board of the  (RMLD). The decision could affect RMLD customers' rates.

The light department’s advisory board originally voted 4-1 to retire the RECs in the name of sustainability, Capobianco told the selectmen.  But, based on a “backlash” to that vote, the board voted to reconsider the vote, he said, and to meet with governing boards in the four communities that the light department serves: Reading, North Reading, Lynnfield and Wilmington.

After “agonizing” over the issue, Capobianco said he voted to retire the RECs because he supports sustainable energy.

But “everyone” wants the light department to sell the credits, Capobianco said.

Capobianco met with the selectmen to get their opinions on the issue.

Energy companies earn the credits when they buy energy from green sources.  Non-municipal energy companies must use a certain percentage of green energy, by government regulation. Companies can buy RECs to meet that requirement.

The value of the RMLD RECs, Capobianco said, is between $500,000 and $2 million this year – to customers, between $6 and $24 -- or 15 times that amount over a 15-year energy contract, Capobianco told Patch.  The credits’ value varies over time, according to Tuesday’s discussion, based on several factors, including demand.

Municipal power companies are not required to consume green power, Capobianco said.  He said he can foresee that rule changing.

RECs are created new every year, according to Town Manager Peter Hechenbleikner. “You don’t keep them like monopoly money.”

Sell at least some of the light department RECs, said several selectmen.  Make the best decision for ratepayers, said Selectman James Bonazoli and Selectman John Arena.

But from the audience, Ron D’Addario urged the exact opposite course of action. Selling RECs to large utility companies means they can still burn coal, for example, to make energy, he said.

You can’t say you’re sustainable if you sell RECs, Capobianco said.

In the end, the selectmen agreed by consensus with several suggestions from Hechenbleikner. The sell or retire decision can be a hybrid of both. Decisions to sell or retire REC’s should be reviewed every year.

A member of the RMLD Board of Commissioners, Philip Pacino, has proposed a plan for RECs.

Let the percent of customers in the RMLD’s Green Choice program determine how many of the RMLD’s RECs are retired and not sold. Pacino hopes “at least 5 percent” of customers would initially join this program, he wrote in a letter included in the selectmen’s meeting information packet.

Some RECs should be sold, Pacino wrote.  Money from the sale of those RECs should be “put aside” for renewable energy capital projects in the RMLD service district,”reducing the amount of energy consumed there.  Such a change would require some adjustment in the way rates are set, he wrote, because proceeds from the sale of RECs “must go back into the fuel charge fund and thus cannot be directly allocated to a renewable energy capital projects fund.”

Enrollment in the green program is “not high,” Capobianco told Patch Wednesday -- between 400 and 500 of what he estimated to be 100,000 ratepayers.

Tony Capobianco March 15, 2012 at 01:01 PM
Hi Nadine, Thank you very much for covering this complicated and important issue. This is a great article, however I feel the phrase: 'After “agonizing” over the issue, Capobianco said he voted to retire the RECs because he supports sustainable energy.' Omits a key point. While it is correct that I vigorously support clean/sustainable energy, during my deliberation concerning this issue I took an inventory of sustainable/green efforts presently underway in our community: - mandatory recycling - styrofoam recycling available at the DPW - water efficiency rebate program - subsidized rain barrels - subsidized compost kits - energystar appliance rebate program - municipal buildings undertaking energy conservation retrofits - town engineering department drives hybrid truck(s) - LED Christmas lights - curbside leaf/Christmas tree pickup (reduces trips to compost center, reducing CO2 emissions) - I'm sure I'm missing some These programs demonstrate that Reading is a progressive community concerned with sustainability. Any claim that I casually dismissed the financial ramifications of this decision are incorrect. In fact, it appeared to me that given the vast amount of sustainable efforts undertaken by the town, an additional $6-$24/year on the ratepayers bills was a cost the ratepayers were willing to assume in the name of sustainability. If this had been in the neighborhood of $50-$100, then this would be a very different discussion.
Tony Capobianco March 15, 2012 at 01:01 PM
(continued) I would like to see the RMLD Board of Commissioners adopt a progressive policy mandating a certain percentage of our power portfolio come from renewable sources. This percentage would increase on an annual basis and the sale of RECs could offset the initial higher price of these non-conventional power sources. Commissioner Pacino also has an excellent idea on investing the proceeds in sustainable/green capital projects within the service area. I welcome and encourage all comments and opinions on this matter. My goal is to make recommendations to the RMLD Board that best serve my neighbors in the town of Reading. Thanks for your time. Tony Capobianco
Fred Van Magness Sr. March 16, 2012 at 12:09 AM
Tony, Thanks for taking the time to explain in further detail your deliberative process. However, I must respectfully disagree with some of your assumptions. Yes, reading is very conscious of trying to offset adverse impacts to the environment. But your examples all pale in comparison to the potential for saving $2 million per year. The largest one...mandatory recycling was done to save money....not increase taxpayer costs. The rest of the programs you mention are all fine, but relatively small dollar costs. $2 million os in a league of its own and over 15 years, amounts to over $30 million. Sustainable/green is already being done by the RMLD through the ability of people to purchase Green power options monthly and the department is also buying green power. You are stuck on bragging rights vs. real dollars. Phil Pacino has the right idea. When I look at all the programs you mention, the cost to Reading taxpayers for all of your list probably adds less than $0.50 to their TOTAL property tax bills. And the biggest cost item...curbside leaf and Christmas tree pickup was in response to resident requests for the service, not to be green. Your decision cost all residents between $6 and $24 dollars per year so some can say RMLD is green. Please reconsider and support Phil Pacino's proposed solution.
Barry Berman March 16, 2012 at 11:16 AM
If the major issue is protecting the rate payer, then RMLD should not buy ANY green power, since sustainable energy is more expensive to produce. I don't think anyone is making the argument to abandon the practice of purchasing green power. In fact it is implied that in the future, municipals like RMLD might soon be required to buy green power. I believe green power today represents only 2% of our energy portfolio. If retiring the RECs forces the investor owned utilities to purchase more green power (rather than getting credit for buying our RECs), then $6-$24 dollars a year is a small price to pay to support a sustainable energy policy. If Recs are sold I do like Phil Pacino's idea of directly investing in sustainable energy locally, but I would need to see more details on what and how this will be done. Lastly, I am still trying to figure out how to sign up for the Green Energy program. Perhaps RMLD can do a little marketing on the program
Jeanne Borawski March 16, 2012 at 01:50 PM
From what I've read on this issue, there is a way to both encourage green energy and protect the ratepayer. Commissioner Pacino's proposal seems fair and thoughtful. Sell the RECs and use some of the proceeds for green improvements in the RMLD service area (bonus points if these "green improvements" lead to lower energy costs for consumers!). The ratepayer is protected and green initiatives are supported. Retire the RECs that represent the ratepayers who voluntarily pay more for green energy. These are people who are committed to reducing their carbon footprint and are willing and able to pay a little bit more to do so. If we moved to this model, my family would absolutely sign up for the green choice program. I like the idea of targeting an initial 5% enrollment rate - it's a great way to get people directly involved in protecting the environment.
Barry Berman March 17, 2012 at 12:16 PM
All good comments here. Let,s all be thankful that we are served by RMLD rather than NSar. What they are doing to their customers is criminal
Karl Weld March 17, 2012 at 12:35 PM
Yes, thankful indeed. But the State is aiding in that criminal beahvior, what with forcing NStar to buy Cape Wind power at $0.18/kw instead of hydro at $0.06/kw. I wonder who gets to foot the bill for that increase in price? Oh yeah, the rate payers. I also wonder how long until the Big Boys get Beacon Hill to force municipal utilities into the same bad deals to make things "fair".
Barry Berman March 19, 2012 at 12:06 PM
Karl, not even a stretch to suggest poor customer service is tied to buying green power. Nice try though.
Karl Weld March 19, 2012 at 05:02 PM
Could you clarify this comment. I'm not sure what you're driving at. I thought you were talking about how much more expensive their electricity is compared to ours. If not, please tell what you were referring to.
Barry Berman March 20, 2012 at 12:26 PM
My initial point was we are blessed to be served by a utility company which gives excellent customer service. As you may have read, NStar didn't keep customers informed during the blackout, did not have the proper generators on hand, and they refuse to reimburse businesses for the losses they incurred. As for rates, I believe our rates are about 20% less than a comparable NStar bill. You are off base to link that higher cost to the purchase of green energy. I understood that the state requires investor owned utilities to have 7% green power in their portfolio. We have 2%. That difference does not explain the wide gap in the average bill. RMLD is run leaner, is better managed, and does not give huge bonuses to its executives - again something we should be thankful for.
Karl Weld March 20, 2012 at 01:52 PM
Paying higher costs for Green energy certainly isn't going to lower rates. And when there are cheaper Green sources, mandating that the utility buy it from a Green source that costs 3 times as much certainly won't lower rates. So government is indeed affecting electric prices. Your point about management compensation affecting rates is spot on since salaries are part of operating costs which are paid for by rates. So, with regards to RMLD running more efficiently and with lower operating costs, we are indeed very lucky. Their customer service is a greatly appreciated bonus.

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