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Global Credit Research - 06 Apr 2017
New York, April 06, 2017 -- Massachusetts (Aa1 stable) will outpace New York (Aa1 stable) in clean
power development as both states seek to emulate California's (Aa3
stable) renewable energy policies, according to a new report from
Moody's Investors Service. The report examines both states'
efforts to ramp up the generation of renewable energy to power their grids,
using California's regulatory mandate as a benchmark.
In the second half of 2016, Massachusetts and New York made definitive
statements about their sustainability aspirations. In August,
Massachusetts passed "An Act to Promote Energy Diversity,"
which requires utilities to generate at least 2,800 megawatts of
clean energy over the next decade. On the same day, New York
adopted a Clean Energy Standard, which requires 50% of electricity
to come from renewable energy sources by 2030.
"Both states have a long way to go to catch up to California,
which is well on its way to achieving its goal of 50% renewable
energy by 2030," says Toby Shea, a vice president and
senior credit officer at Moody's. "Emulating California's
plan won't be easy for Massachusetts and New York."
Massachusetts will produce more immediate and certain results, according
to the report. Its targets are legislatively mandated, and
its initiatives are tied to carbon emission reduction goals. The
state stands to benefit from several transmission projects aimed at delivering
hydroelectric and wind generation from Canada (Aaa stable), Maine
(Aa2 stable) and Vermont (Aaa stable).
New York has substantial onshore wind resources, but based on its
track record of renewable generation procurement, remains unlikely
to achieve its 2030 target. The state would need to procure around
1.9 terawatt-hours per year between 2017 and 2021 to meet
its goal, and has averaged approximately 0.78 terawatt-hours
annually since 2005.
Renewable development in Massachusetts will place significant downward
pressure on the New England wholesale power market. Companies with
significant merchant exposure include Dynegy, Inc (B2 stable),
Exelon Corporation (Baa2 stable), NextEra Energy (Baa1 stable),
Dominion Resources (Baa2 stable) and Calpine Corporation (Ba3 stable).
Similarly, New York's renewable development will depress power
prices in the upstate region of the New York Independent System Operator
(NYISO), a credit negative for Empire Generating (B2 negative),
Talen's Millennium plant, Dynegy's Independence plant
and PSEG Power LLC's (Baa1 stable) Bethlehem Energy Center.
The downstate region will not see near-term power price declines
due to land and transmission constraints.
Regulated utilities operating in Massachusetts and New York including
Eversource Energy (Baa1 stable), Consolidated Edison (A3 stable),
National Grid USA (Baa1 stable) and AVANGRID RENEWABLES Holdings,
Inc. (Baa1 positive) stand to benefit from building out their renewable
"Unlike the challenges presented for merchant generators,
renewable development presents credit positive growth opportunities for
some of the largest regulated utilities in both states," says
The report, "US -- Utilities and Power Companies:
Massachusetts and New York Seek to Emulate California's Renewable
Progress," is available to Moody's subscribers at:
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VP - Senior Credit Officer
Public Project & Infrastructure
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
MD - Utilities
Public Project & Infrastructure
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
No Related Data.
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