The Supreme Judicial Court today struck down a Baker-administration plan to tax electric users to pay for new natural-gas pipelines to feed Massachusetts power plants.
In its ruling, the state's highest court said the proposed tax would violate a 1998 revision of state laws regulating utilities, which sought to shift the costs of new construction away from consumers and onto the companies that would benefit from them.
Last year, Baker's Department of Energy Resources and the Department of Public Utilities proposed a way to reduce volatility in Massachusetts electric rates, especially in the winter: Expand the the capacity of the state's natural-gas pipeline system, through a tax that would be added to electric bills.
The court said that by shifting all of the costs onto consumers, the state would be moving back towards a regulated system, when the intent of the 1998 law was to recognize and expand competition in the electricity market in the state.
Both the DOER and the department noted that gas-fired generating businesses are unwilling to assume the risks associated with long-term gas pipeline capacity contracts because there "is no means by which they can" assure recovery of those contract costs. Shifting that risk onto the electric ratepayers of the Commonwealth, however, is entirely contrary to the risk-allocation design of the restructuring act. ...
The department's interpretation of the statute as permitting electric distribution companies to shift the entire risk of the investment to the ratepayers is unreasonable, as it is precisely this type of shift that the Legislature sought to preclude through the restructuring act.