Reading the Tea Leaves and Cracking Open the Books: What DOER’s CPS questions and MA Class II suggest about the CPS Program Review

This is the third blog in our “2024 Clean Peak Standard” blog series. Read the first blog here and the second blog here.

On March 25^th, DOER kicked off the 2024 Clean Peak Energy Standard (CPS) program review by seeking stakeholder responses (by May 3^rd!) a set of questions related to CPS. Given the magnitude of potential change, while risky, we can’t help but look for hints at what DOER may be considering. We’ll also take a brief trip down memory lane (MA Class II, specifically) to see what history might hint about actions DOER might be considering. 

DOER CPS questions 

The CPS regulations specify that, starting in 2024 (that’s this year!) and at least every four years thereafter, DOER must review and consider stakeholder input related to CPS multipliers, the minimum standard, and the ACP. This covers a lot of ground, but, it also defines the minimum of what DOER must consider. The enabling statute for CPS contains few policy details, leaving DOER (following appropriate rules for issuing and updating regulations) substantial authority to adjust the policy. 

So, what can we surmise from the comments? 

• DOER is clearly taking a comprehensive view. The questions run the gamut, from seeking process improvements to an open-ended question about the value of CPS overall. It makes clear that DOER is not limiting its review to the ACP, the minimum standard, and the multipliers. 
• DOER is looking to create alignment and consistency with other programs. Several questions are aimed at seeing how CPS can support the Commonwealth’s climate and energy goals, and work together with other related programs. One would expect that the role of storage in SMART will be top of mind for many respondents. 
• DOER is seeking to characterize the CPS pipeline. DOER asks for stakeholders to provide details on CPS-eligible projects they’re working on. This data could be used to help estimate supply over the next four years, which could be particularly useful in making adjustments to the minimum standard. Note – Clean Peak Market Outlook (CPMO) subscribers benefit from our rigorous projections of supply. 
• The last question raises, well, questions. DOER’s last question reads as follows: “Would any Clean Peak Resources or specific use cases for such Resources be better incentivized by a different program than CPS? If yes, please describe the proposed program and justify why the particular Clean Peak Resources and associated use cases would be better incentivized by such a program, with particular attention paid to added ratepayer benefits.” One could read this as a more targeted question, seeking ways to support, for instance, long-duration storage. One could also read it as seeking to understand the value of CPS overall. It’s hard to unring a bell like CPS (both because of the practicalities of winding down an active market and because elimination of the policy would require legislation). Still, implicit in the question is an acknowledgement that DOER is considering how other programs may at least complement CPS. 

A relevant anecdote: MA Class II 

DOER has, at multiple points, made adjustments to various components of the RPS. One that we find most relevant: the 2012-2014 adjustments to the Massachusetts Class II standard. As the graph below shows, in the initial years of the market, MA-II was heavily undersupplied, relying on primarily/almost exclusively on ACPs (sound familiar?). Following direction from the legislature to study the problem, DOER responded by slashing the minimum standard from 3.6% of load to 1.5% for the 2013 compliance year, and adopting a formulaically set minimum standard tied to market conditions that went into effect in 2016. 

There are important distinctions – MA-II is unique in that it targets existing resources and, in this instance, DOER was responding to direction from the legislature. Still, the similarities are compelling: an undersupplied market and concerns about overreliance on ACPs. The introduction to MA-II of a market-responsive minimum standard (the SREC 1 market also had a responsive minimum standard) is also mirrored in CPS’s market-responsive minimum standard.  

The implication? History confirms what is already intuitively clear: DOER is averse to large and persistent ACP collections. In the context of MA-II, this led to a reduction in the minimum standard, an attempt to reduce ACP collections without tanking the market. 

Learn more, get support, and stay in the loop. 

CPMO subscribers can access our detailed discussion of how the above may translate into changes to the CPS and what that implies for certificate pricing during our next briefing on April 30, 2024. To learn more about subscribing or if you’re interested in analytical support as you’re drafting your CPS questions, reach out to us at [email protected] 

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