[co-author: Joshua Rosen, Summer Associate]
Maine, Massachusetts, and Maryland all passed legislation this summer that expands the raison d’etre of state utility regulatory bodies to include addressing the impacts of climate change. These efforts mark an emerging trend of legislative bodies directing utility regulators to help advance climate policies. This enhanced vision of utility regulation gives me hope in the fight against climate change.
Despite the fact that utility regulators play a huge role in our energy sector–the sector primarily responsible for historical U.S. greenhouse gas emissions–they have had little to do with addressing climate change. While several states have formally allowed regulators to work in an environmentally responsible manner, existing provisions have not specifically called out climate change. In most states, the job given by legislatures to utility regulators has been limited to ensuring the safety, reliability, and affordability of services offered by regulated utilities (and to ensure those utilities earn a reasonable return). Legislatures in three states have now revised regulators’ job description to include reducing greenhouse gas emissions and considering climate impacts in regulatory proceedings.
In Maine, Governor Janet Mills signed LD 1682, which adds the reduction of greenhouse gas emissions and mitigation of disproportionate energy burdens to the purposes of the Maine Public Utilities Commission (MPUC) and directs the MPUC to adopt rules to implement this new purpose. The bill also directs the PUC to prioritize proceedings that advance decarbonization of the utility sector and mitigate energy burdens 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 socioeconomic factors.
Massachusetts’ climate bill, signed by Governor Baker, makes similar climate policy strides within the Massachusetts Department of Public Utilities (DPU). In addition to sweeping changes made to emissions targets, building codes, renewable energy access, and other policy arenas, the bill expands the scope of the DPU to include security, equity, and the reduction of greenhouse gases.
The Maryland legislature recently passed HB 298. The bill, which became law without Governor Hogan’s signature, directs the Maryland Public Service Commission to consider “the protection of the global climate” and the maintenance of labor standards in supervising and regulating utilities. An earlier version of this bill was unsuccessful in the state’s prior legislative session.
It’s worth noting that the State of Connecticut established a similar directive for their utility regulators several years ago, but by a completely different mechanism. Public Utility Regulatory Authority decisions are statutorily guided by the state’s energy strategy. As part of their 2018 climate bill, Connecticut’s legislature formally tied the state’s energy strategy to the state’s climate targets.
Will the relatively simple legislative act of expanding utility regulatory mandates to include climate have the long-term decarbonization outcomes anticipated by climate advocates?
I’m hopeful for three reasons:
First, utility regulators in these states now have the authority to formally consider climate impacts in regulatory proceedings. Without this authority, regulators cannot formally consider climate impacts as a factor in their proceedings without the threat of being overruled by appellate courts for exceeding statutory authority.
Second, there is already some evidence that utility regulators are willing to act on such climate mandates. Through the 2018 Clean Energy Omnibus Act, the District of Columbia directed their Public Service Commission (PSC) to consider “the preservation of environmental quality, including effects on global climate change and the District’s public climate commitments.” According to one analysis by the Institute for Market Transformation:
the impact of the change was immediate; the PSC and stakeholders referenced the new, expanded mandate in cases and hearings, even before the legislation came into effect in March 2019.
The PSC went on to deny a rate-related case in late 2019, citing the climate mandate as a primary reason for the denial.
Lastly, I think it is fair to 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 path, as the existence of these trend-setters may normalize climate standards for utility regulation nationally. With any luck, PUCs will start the serious work of embedding climate issues into everything they do.
*This entry was also authored by Foley Hoag summer associate, Joshua Rosen.