Electricity Prices are Rising and Politicians Are Concerned – The Institute for Energy Research

Report on Massachusetts Energy Policy and its Alignment with Sustainable Development Goals

Challenges to SDG 7: Affordable and Clean Energy

Massachusetts, a state with the third-highest electricity prices in the United States, is facing significant challenges in achieving the affordability target of Sustainable Development Goal 7 (Affordable and Clean Energy). In response to substantial energy price volatility, including a 50% rise in home heating bills and a 12% increase in electricity rates, the state governor has directed the Department of Public Utilities (DPU) to conduct a comprehensive review of all utility charges. The objective is to identify and eliminate or reduce any charges that are not justified, in an effort to mitigate the financial burden on consumers.

Several factors contribute to the state’s struggle with energy affordability:

• High Distribution Charges: A significant portion of consumer bills is composed of distribution charges levied by utility companies to cover energy infrastructure costs.
• Infrastructure Constraints: Past policy decisions, including the blockage of natural gas pipelines, have limited access to lower-cost domestic energy sources.
• Dependence on Imports: The lack of pipeline infrastructure necessitates the import of more expensive Liquefied Natural Gas (LNG), particularly during peak winter demand, further straining the affordability of energy for residents and communities, a key component of SDG 11 (Sustainable Cities and Communities).

State Mandates and their Impact on SDG 7 and SDG 9 (Industry, Innovation, and Infrastructure)

State-level energy policies, while aimed at promoting clean energy, have created complex challenges for energy affordability and infrastructure reliability, impacting both SDG 7 and SDG 9.

1. Renewable Portfolio Standard (RPS): Massachusetts mandates that 35% of its electricity must be generated from renewable sources by 2030. This policy prioritizes the “clean energy” aspect of SDG 7 but introduces economic and infrastructural complications.
2. Grid Reliability and Cost: The focus on intermittent renewable sources like wind and solar power requires parallel investment in backup generation or expensive battery storage to ensure a reliable energy supply, a core tenet of resilient infrastructure under SDG 9. These additional system costs are ultimately passed on to consumers.
3. Decommissioning of Baseload Power: The RPS and associated subsidies for renewables have contributed to the retirement of stable and cost-effective energy infrastructure. The state’s last nuclear facility, the Pilgrim Nuclear Power Station, was retired in 2019, and all 12 of its coal-generating stations are no longer operational.
4. Increased Consumer Costs for New Infrastructure: Consumers are funding the capital costs of new renewable projects, such as offshore wind developments, which are reported to be three times more expensive than onshore alternatives. This contrasts with the retired nuclear and coal plants, whose capital costs had already been paid off.

Policy Frameworks and Progress Toward SDG 13 (Climate Action)

Massachusetts participates in regional initiatives designed to advance SDG 13 (Climate Action), though these policies have direct consequences for energy affordability.

• Regional Greenhouse Gas Initiative (RGGI): As a member of this 11-state cooperative, Massachusetts participates in a cap-and-trade system to reduce carbon dioxide emissions from the power sector.
• Economic Impact on Consumers: Under RGGI, power generators must purchase allowances for their carbon emissions. This cost is integrated into electricity rates, functioning as a tax that increases consumer utility bills. This creates a direct tension between the goals of SDG 13 and the affordability target of SDG 7.
• Correlation with High Prices: Analysis indicates that seven of the ten U.S. states with the highest electricity prices are members of RGGI, suggesting that the current implementation of this climate action policy negatively impacts energy affordability for residents.

National Context and Implications for SDG 8 (Decent Work and Economic Growth)

National policies and structural issues further influence the state’s ability to provide affordable energy, which is a critical input for achieving SDG 8 (Decent Work and Economic Growth). A 25% increase in residential electricity prices has been observed nationally during a period of expanding renewable energy market share, supported by federal subsidies like those in the Inflation Reduction Act. These subsidies create market advantages for certain technologies while taxpayers and ratepayers bear the costs. The combination of state mandates, participation in emissions trading schemes, and infrastructure blockages places utilities in a difficult position, hindering the state’s ability to achieve its full economic potential by burdening households and industries with high energy costs. A reconsideration of these policies is necessary to balance progress on climate goals with the fundamental need for affordable, reliable energy that underpins sustainable economic growth.

Analysis of the Article in Relation to Sustainable Development Goals

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 13: Climate Action

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 7: Affordable and Clean Energy

   • Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services.
     
     The article’s central theme is the lack of affordable energy in Massachusetts, which has the “third highest electricity prices in the nation.” The governor’s call for a “comprehensive review of gas and electric rates and charges to lower consumer costs” directly addresses the affordability aspect of this target. The article also touches on reliability, noting that intermittent renewable sources like wind and solar “must be backed up by traditional generating technologies… to ensure reliability.”
   • Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix.
     
     The article explicitly mentions Massachusetts’s policy related to this target: “Massachusetts has a renewable portfolio standard that mandates that at least 35% of the state’s electricity be generated from renewable sources by 2030.” It also notes the national trend where “solar and wind increased their share of the market from a joint 10.7% to 15.6%.”

2. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development and human well-being, with a focus on affordable and equitable access for all.
     
     The article discusses energy infrastructure extensively. It highlights the decision to block “a pair of pipelines through the state, which would have lowered natural gas costs.” It also details the shift in infrastructure, including the retirement of the “Pilgrim Nuclear Power Station, in 2019” and the decommissioning of all coal plants, with locations like Brayton Point now “being used as a base for offshore wind.” This reflects a debate over which infrastructure is most reliable, sustainable, and affordable.

3. SDG 13: Climate Action

   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.
     
     The article describes several climate change policies implemented at the state level. Massachusetts’s membership in the “Regional Greenhouse Gas Initiative (RGGI), which is a cooperative effort among 11 states to cap and reduce carbon dioxide emissions from the power sector,” is a direct example of integrating climate measures into policy. The state’s renewable portfolio standard is another such policy discussed.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Target 7.1: Affordable and Reliable Energy

   • Indicator: Price of electricity and consumer energy costs.
     
     The article provides several quantitative measures of energy affordability. It states that Massachusetts has the “third highest electricity prices in the nation” and mentions specific price hikes, such as home heating bills rising “by upwards of 50%” and electric rates jumping “by 12% or more.” It also cites the national average residential electricity price of “17.47 cents per kilowatt hour.”

2. Target 7.2: Share of Renewable Energy

   • Indicator: Proportion of energy from renewable sources.
     
     The article provides a clear indicator for this target by citing the state mandate for “at least 35% of the state’s electricity be generated from renewable sources by 2030.” It also provides national figures, showing the share of solar and wind in the U.S. market increased from “10.7% to 15.6%.”

3. Target 9.1: Energy Infrastructure Development

   • Indicator (Implied): Mix of energy-generating infrastructure.
     
     The article implies this indicator by detailing the changes in Massachusetts’s energy infrastructure. It notes the retirement of its last nuclear plant in 2019 and the decommissioning of all 12 of its coal generating stations. This shift away from traditional power sources toward renewable infrastructure, such as offshore wind, serves as a measure of infrastructure development.

4. Target 13.2: Integration of Climate Policies

   • Indicator (Implied): Implementation of carbon reduction policies and their financial impact.
     
     The existence of the Regional Greenhouse Gas Initiative (RGGI) and its “cap and trade system” is a direct indicator of a climate policy being integrated. The article implies a way to measure its impact by describing how utilities “must purchase allowances at an auction to offset their excess emissions,” with the “cost of the allowances” acting as a tax passed on to consumers, which can be tracked.

4. Summary Table of SDGs, Targets, and Indicators

Source: instituteforenergyresearch.org