In the last few weeks, there has been much written about rising natural gas rates in Massachusetts and some commentary about whether the state’s energy efficiency program, Mass Save, is at fault. Two factors have caused our total gas bills to spike: gas rates were increased on November 1st and this winter has had very cold weather that caused increased consumption. As a gas customer myself, that’s been my experience. But anger about Mass Save is misplaced. It’s true that the budget for Mass Save is likely to increase, but the program is a big part of the solution to our energy woes. And in fact, its existence benefits everyone financially – even folks who don’t take advantage of the Mass Save program offerings directly – by decreasing overall costs.

Benefits & Costs 

In both Massachusetts and Rhode Island, the calculated benefits of the efficiency programs far exceed the costs of those programs. The Mass Save program’s plan as proposed for 2025-2027 (known as “the Three-Year Plan”) would cost electricity and gas ratepayers $5 billion over three years, but deliver benefits of $13.6 billion. The Massachusetts Department of Public Utilities (DPU) is expected to render judgment on the plan by the end of this week. Not to disparage the media, but press coverage has focused more on the costs than the (considerable) benefits.

According to the Massachusetts Department of Energy Resources, the Three-Year Plan would deliver quantifiable and verifiable benefits as follows:

The math is easy. For every dollar invested in Mass Save, ratepayers are getting $2.72 in return over time.  

Energy Independence & Jobs 

The $13.6 billion in measurable benefits does not account for the fact that Mass Save helps us all trade fossil fuels, all of which we import from out-of-state, for locally “grown” energy-efficient services and products. When you buy fuel, it leaves the state. When you buy efficiency, the service provider might just be your neighbor. That broadens our tax base. And he or she just might buy something from you. This is called the multiplier effect and it has a big economic impact within a state or our region. 

One Family’s Experience 

• About 30 years ago, my family received a generous rebate from Mass Save for adding insulation and that has dramatically reduced our gas consumption. Local guys did the work.  

• About 19 years ago, my family replaced an old, inefficient gas boiler with a high-efficiency boiler. Another big drop in our gas use, brought to us by another Mass Save rebate, a local plumber and an American-made heating system. 

• A couple of years ago, we replaced our gas hot water heater (old and about to fail) with a much more efficient heat pump water heater. We received another Mass Save rebate and put another local plumber and electrician to work. 

• A few months ago, we replaced our gas stove with an electric induction stove. Yes, we received another Mass Save rebate and called in the plumber and an electrician once again. And we’re getting better indoor air quality.  

Our gas bill for December 16 – January 14. It was a lot higher than last winter, it would have been much higher if it were not for the energy improvements we made. The increase in the charge for Mass Save by National Grid came to $22 higher than last year. The colder weather accounted for more than that. 

Does everyone in Massachusetts have equal ability to make efficiency improvements like mine? No. It’s well documented that Mass Save does not serve renters well, for example. We’ve been advocating for years to make Mass Save more equitable. But the key point is: we all benefit when buildings are more efficient because system costs as a whole go down.

Looking Back & Looking Forward

My family harvested rebates from Mass Save, but we’ve been paying into Mass Save the whole time and will continue to do so. That’s a fair exchange. Now others may come along and participate in Mass Save. The Three-Year Plan under consideration right now has a greater emphasis on renters than ever before.

And according to Bruce Biewald, Chief Scientist at Synapse Energy Economics, "Today's annual gas consumption by residential customers in the Commonwealth would be about 13 percent higher, but for the Mass Save gas efficiency investments made on behalf of these customers from 2010-2023."

Let’s Not Forget About Global Warming 

It would be extremely remiss not to mention how Mass Save is such a cost-effective approach to addressing the truly existential climate crisis. The Three-Year Plan, if approved, would provide $5.5 billion in greenhouse gas benefits by avoiding greenhouse gas emissions that would further warm the planet and contribute to floods, droughts, and the whole host of climate change impacts we all increasingly have to deal with. (The term for those tremendous costs is the “social cost of carbon”.) We get to mitigate the damage caused by the combustion of fossil fuels and still get all those economic and other benefits as bonuses.

But The Bills Are Still High 

If you try reading your gas bill, it’s complicated. But when we dissect the gas bill this winter we will find that, more than Mass Save, the increased costs are coming mostly from the supply portion of the bill (the gas molecules themselves) and the cost of maintaining the gas infrastructure. That means the pipes – underground, out of sight, and generally out of mind. When we think of fossil fuels, we tend to think mostly about the commodities. But the utilities spend a lot of money repairing existing pipes and building new ones, socializing the cost across all gas ratepayers. Regulators allow the utilities to earn a percentage return on those investments, so the more they dig, build, and fix, the more the utilities profit. These distribution costs have risen significantly above the rate of inflation in recent years. Rightfully so, investments in infrastructure are receiving intense scrutiny by the DPU.

There Might Be Some Relief On Gas Rates 

Governor Healey has asked the DPU to find a way to ameliorate November’s increase on the delivery side of the gas rate. In turn, the DPU has asked the gas utilities for proposals to accomplish that. We will soon see what they come up with, but one thing we have our eye on is this: when the delivery rate was set in November, it was determined by looking at the total fixed costs of maintaining the pipes, Mass Save, and other items, and then dividing the total by an estimated amount of total gas usage for the heating season. The estimate was based upon a forecast of heating degree days (in other words, the estimate was based on an estimate of how cold the winter would be). Given that this winter has been quite cold (colder than expected), perhaps the gas utilities are over-collecting on the delivery side (when winters are warmer than expected, they under-collect). If that’s the case, there will be a reconciliation, which means that when gas rates rest from May through October, we should see some relief. Let’s see how this plays out.

What About Oil & Propane? 

About half of the homes in Massachusetts and Rhode Island are heated with gas. The rest are split among heating oil, propane, and electricity (mostly resistance heat, but heat pump adoption is increasing). It costs a lot more, hundreds of dollars per season, to heat a home with those resources, even with this winter’s increased gas rates.  

On the other hand, consumers of heating oil and propane do not pay into the efficiency programs in either Massachusetts or Rhode Island. The oil and propane savings you see above are achieved by spending by electric utilities with money collected from electric ratepayers. There’s a fairness issue there because gas customers pay for efficiency through both their gas and electric rates. That’s one big reason we have been calling for a Clean Heat Standard, a more holistic approach to building decarbonization

Are There Better Ways To Pay For Energy Efficiency? 

We are all better off because of the efficiency programs administered in Massachusetts and Rhode Island. The numbers do not lie. In fact, we need to expand the programs in order to meet our climate law obligations and to capture more of the benefits listed above. But equity is a real concern that needs to be addressed. An increase in energy costs hurts a working-class family more than the more affluent. So at some point, we need to look to the tax base, which is more progressive, as a supplemental funding source. We’re all in this together.