The Massachusetts Renewable Portfolio Standard (RPS) is designed to diversify the states electricity supply portfolio, stabilize rates, increase energy security, improve environmental quality, and invigorate the clean energy industry. The RPS was established as part of the 1997 Utility Restructuring Act and was refined by the 2008 Green Communities Act.
The state's Department of Energy Resources (DOER) is responsible for issuing and implementing the RPS regulations (225 CMR 14.00 and 225 CMR 15.00). The law established a renewable portfolio standard requiring that 1% of electricity sales in 2003 be generated from new renewables; the requirement increases to 4% by 2009 and by 1% each year thereafter.
However, under the regulations that took effect in April 2002, electricity suppliers can avoid the requirement by purchasing credits from the Massachusetts Technology Park Corporation, which administers the states Renewable Energy Trust. All retail suppliers licensed in Massachusetts must buy renewable energy certificates (RECs) produced by generating facilities that meet certain criteria. For each megawatt-hour of green electricity produced by these facilities, a REC is generated. Licensed suppliers must hold RPS-eligible RECs equivalent to a fixed percentage of the electricity that they sell to consumers each year, in megawatt-hours. For 2003, the credits will cost USD 50 per megawatt-hour, or 5 cents per kilowatt-hour, which is likely to be higher than the incremental cost of new renewable power sources.