Maine, Massachusetts, and Maryland are expanding energy management mandates to incorporate climate considerations, marking an emerging trend in state lawmakers – energy and natural resources
Maine, Massachusetts and Maryland passed all laws this summer to expand the raison d’être of state utility regulators to deal with the effects of climate change. These efforts mark an emerging trend for lawmakers to mandate utility regulators to drive climate change policies. This expanded vision of supply regulation gives me hope in the fight against climate change.
Despite the fact that utility regulators play a major role in our energy sector – the sector primarily responsible for historic US greenhouse gas emissions – they have had little to do with tackling climate change. While several states have officially allowed regulators to be environmentally conscious, existing regulations have not specifically addressed climate change. In most states, the role that law enforces on utility regulators is limited to ensuring the safety, reliability, and affordability of the services provided by regulated utility companies (and ensuring that those utility companies get a reasonable return on investment). Legislators in three states have now revised the job descriptions of the regulators to include the reduction of greenhouse gas emissions and the consideration of climate impacts in regulatory processes.
In Maine, Governor Janet Mills signed LD 1682 adding greenhouse gas emission reduction and disproportionate energy pollution for the purposes of the Maine Public Utilities Commission (MPUC) and directing the MPUC to establish rules to implement this new purpose. The bill also instructs the PUC to prioritize practices that will drive decarbonization of the utilities sector and reduce the energy burden on:
Environmental justice populations, frontline communities, and utility customers who are underserved by utility or electricity policies, programs, and systems due to geography, race, income, or other socio-economic factors.
The Massachusetts Climate Change Act, signed by Governor Baker, is making similar advances in climate policy within the Massachusetts Department of Public Utilities (DPU). In addition to extensive changes to emissions targets, building regulations, access to renewable energies and other political arenas, the draft law extends the scope of the DPU to include safety, equity and the reduction of greenhouse gases.
The Maryland Legislature recently passed HB 298. The bill, which went into effect without Governor Hogan’s signature, instructs the Maryland Public Service Commission to “consider protecting the global climate” and compliance with labor standards in the supervision and regulation of utilities. An earlier version of this bill was unsuccessful in the state’s previous term.
It’s worth noting that the state of Connecticut enacted a similar policy for its utility regulators a few years ago, but under a completely different mechanism. The decisions of the municipal utility regulatory authority are based on the state’s energy strategy. As part of their 2018 Climate Change Act, Connecticut legislature formally tied the state’s energy strategy to the state’s climate goals.
Will the relatively straightforward legislative act to extend utility regulatory mandates to climate change have the long-term decarbonization results that climate advocates expect?
I hope for three reasons:
Firstly, the supply supervisory authorities in these states now have the power to formally take climate impacts into account in regulatory processes. Without this power, regulators cannot formally consider climate impacts as a factor in their proceedings without the appellate courts being overruled for overriding legal powers.
Second, there is already some evidence that utility regulators are ready to respond to such climate mandates. Through the Clean Energy Omnibus Act of 2018, the District of Columbia directed its Public Service Commission (PSC) to review “the preservation of environmental quality, including the impact on global climate change and the district’s public climate commitments.” According to an analysis by the Institute for Market Transformation:
the effects of the change were immediate; The PSC and stakeholders referred to the new, expanded mandate in cases and hearings even before the law came into force in March 2019.
The PSC rejected a tariff-related case at the end of 2019 and cited the climate mandate as the main reason for the rejection.
In conclusion, I can safely say that these three states are very likely the beginning of the trend rather than its end. It is likely that more states will take this route, as the existence of these trendsetters could normalize climate standards for regulating utilities at the national level. With luck, PUCs will do some serious work to embed climate issues into everything they do.
Co-authored by Joshua Rosen, Summer Associate
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