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LETTER: Slattery Calls Keenan Amendment 'Bad Public Policy'

Despite good intentions in drafting the law, Slattery says it's bad public policy to give a for-profit private company a guaranteed long-term contract without threat of competition.

[The following letter was submitted by Massachusetts Senate candidate John Slattery.]

Representative Keenan’s good intentions in filing his amendment to the energy bill styled, “An Act Relative To Competitively Priced Electricity In The Commonwealth Of Massachusetts” aside, it is simply bad public policy to gift a for-profit private company, in this case, Footprint, with guaranteed long term energy contracts and a guaranteed market share outside of the competitive bidding process. Section 42, if passed, will force regional utilities to buy power from Footprint for a minimum of 15 years despite that competitor’s prices may be less.

What this means is that Footprint is protected from market forces in setting its rates. Proponents of Section 42 argue that Footprint’s rates under these long term contracts will have to pass muster with the Department of Public Utilities. However, nothing in Section 42 mandates that Footprint’s rates be competitively priced. Section 42 begs the question, if Footprint’s rates will be at or below market rates, why does it need protection from market competition for 15 years?

The region’s ratepayers should not be at risk of paying more than market price for power for the next 15 years. To protect ratepayers, such long-term contracts must be competitively bid.

Representative Keenan is to be commended for his efforts to provide Footprint with an incentive to clean up the current coal fired plant site. But Section 42 is not the answer. Not only is it unsound public policy, it appears unnecessary.

I attended a recent meeting with members of Salem Alliance for the Environment (“SAFE”), who confirmed that, prior to Representative Keenan unveiling Section 42, Footprint represented to SAFE that it already had funding in place to decommission the existing plant and remediate the site. Taking Footprint at its word, which I do, the company had no foreknowledge of Section 42 at the time it . Taking Footprint at its word, which I do, the company was not looking for, and does not need, a ratepayer subsidy to remediate the site.

Given these facts, Section 42 provides a needless potential windfall to a private company at the expense of ratepayers. Further, I have not heard of any analysis which compares the return Footprint can expect from passage of Section 42 with the anticipated cost of remediation. Without such an analysis, even if Footprint used the profits expected from Section 42 to remediate the site, we cannot know the number of years at which Footprint will break even.

Certainly, ratepayers are entitled to know that profits derived from a ratepayer subsidy shall cease when the purpose of the subsidy has been attained. Footprint has committed to buying the Dominion plant, decommissioning the building and remediating the site with the purpose of operating a cleaner gas fired plant. Footprint’s good faith commitment meets the city of Salem’s immediate need to replace tax revenues which will be lost if Dominion ceases operations without a successor.

There are alternatives to the ratepayer subsidy called for by Section 42 available to Footprint to help with redevelopment of the site. Private sector financing backed by public bonds under the Massachusetts Brownfields Redevelopment Access to Capital (BRAC) Program is available to help companies like Footprint, who did not contribute to the on-site contamination, redevelop the site.

Reasonable tax credits can be made available. Agreements on public investment in infrastructure beneficial to Footprint and the general public can be discussed. All are sound public policy alternatives. Holding ratepayers hostage for 15 years is not.

Very truly yours,

John Slattery

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