Deal reached in state energy suit

Power company challenged rules

By Erin Ailworth
Globe Staff / May 29, 2010

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The state has agreed to a partial settlement in a lawsuit challenging regulations meant to spur the clean energy industry in Massachusetts.

Last month, TransCanada Power, a Canadian energy company with operations in Westborough, sued five Massachusetts energy officials, including energy and environmental secretary Ian Bowles. The complaint questioned two state mandates: that utilities negotiate long-term contracts to buy renewable power from Massachusetts providers and that electricity suppliers buy power from local solar energy providers or pay a fee.

Under the US Constitution’s Commerce Clause, TransCanada argued, the state’s efforts to favor local renewable energy providers is discriminatory, and therefore, unconstitutional.

The partial settlement does not address the question of constitutionality, but Massachusetts officials said yesterday that TransCanada plans to drop claims against the state’s solar program in return for an agreement to grandfather electricity supply contracts signed before Jan. 1. That would allow suppliers with existing contracts to escape the higher fee imposed for being out of compliance with the state’s renewable energy goals.

“This settlement removes the cloud from the Commonwealth’s Solar Credit program and allows this innovative financing mechanism to go forward,’’ Bowles said. “As to the issues that were not resolved, I am confident that we will prevail.’’

Bill Taylor, senior vice president of US power for TransCanada, said the settlement “preserves the sanctity of contracts’’ and is “fair,’’ but doesn’t address all of his company’s concerns. Not resolved is TransCanada’s charge that the state’s mandate for utilities to make long-term deals with local renewable energy providers is unfair.

“We have really no objection to the state’s desire to promote renewables using long-term contracts,’’ Taylor said. “The concern we have is simply that they should not be doing so in a manner that is discriminatory to projects that just happen to be located outside of Massachusetts.’’

Some in the solar industry, who had feared that the TransCanada lawsuit would stall renewable energy projects in the pipeline, yesterday expressed relief at the settlement.

“The uncertainty created by the lawsuit has slowed down several of our solar projects, and we are looking forward to moving ahead and putting people back to work,’’ said Larry Hurwitz, chief executive of Broadway Electrical Co., an electrical construction firm headquartered in Boston.

Robert Rio, a senior vice president with the trade group Associated Industries of Massachusetts Inc., said he thinks the state’s requirement for suppliers to purchase locally generated solar energy is costly. He said the settlement is reassurance that customers paying for power under existing contracts won’t see any unexpected price increases.

Rio said he’ll wait to see how the rest of the TransCanada suit plays out.

“The most renewables at the cheapest price,’’ Rio said. “Whatever can get us there is what we want.’’

Erin Ailworth can be reached at