(Rhode Islanders – this is a story about Massachusetts, but it applies to the Ocean State just as well, given the Act on Climate.) 

Mass Save is the Commonwealth’s major energy efficiency program. It’s jointly administered by the investor-owned gas and electric utilities and the Cape Light Compact. Gas and electricity ratepayers pay into the program, which includes information, services, and incentives. On February 28, the Massachusetts Department of Public Utilities (DPU) issued an order for Mass Save’s 2025-2027 Three Year Energy Efficiency Plan subject to some modifications and directives, including a $500 million reduction to the proposed $5 billion budget. In the order, the DPU wrote that the cut was made to protect ratepayers from excessive bill impacts. There’s a lot to unpack on the order.

Budget Cut Details 

In 2022-2024, Mass Save spent $4 billion. For 2025-2027, they proposed $5 billion. The DPU has approved $4.5 billion and ordered Mass Save to split the $500 million cut evenly between electricity and gas. The DPU stated that the cut is in response to concerns expressed by many that energy bills, particularly for gas, are too high this winter (which has been much colder than last).  

Our position is that rising energy bills this winter have several causes and that Mass Save is one of the best long-term answers to our energy problems. Furthermore, the proposed plan would have produced $13.6 billion in benefits over three years, meaning we put in a dollar and get $2.87 back. DPU didn’t specify where to cut, but it is pretty certain that the new benefits will be less than $13.6 billion.  

At $4.5 billion, the funding from 2025-2027 is 12.5 percent above that of 2022-2024, which is a significant but not exorbitant increase over three years.

Green Energy Consumers Intervened 

We intervened in the Mass Save case to make one major point, which is that the proposed Three-Year Plan failed to consider how the Department of Environmental Protection (DEP) has been moving towards establishing a Clean Heat Standard (CHS) for a couple of years now. The CHS would obligate sellers of gas, oil, propane, and possibly electricity to earn “Clean Heat Credits” each year. (We strongly recommend that electricity suppliers be exempt from the CHS because we need to keep electricity rates down to encourage people to buy EVs and install heat pumps, heat pump water heaters, induction stoves, and electric clothes dryers.)

A Clean Heat Standard would broaden the base of suppliers and consumers responsible for making the transition from fossil fuels to clean heat. Currently, most gas customers in the state pay into Mass Save twice – on the electricity side and the gas side. Customers of municipal utilities (about 15 percent of households) do not pay into Mass Save’s electricity program. Oil and propane customers (about 27 percent of households) only pay into Mass Save if they have an electric utility. Consequently, 30-40 percent of households are paying little or nothing in Mass Save. There’s an inherent unfairness with this system that a CHS could rectify. (Many municipal utilities have efficiency programs too, except for a couple, but those programs pale in comparison to Mass Save.)

As recently as October 2024, DEP stated they were going to create the standard in 2025 for implementation in 2026 or 2027. Our point was that there needs to be coordination and harmony between Mass Save and CHS. To that end, we suggested to DPU that they approve Mass Save’s plan for 2025 but hold off on 2026 and 2027 until more is known about what the CHS will look like. We understand DPU can’t create a CHS, which is why we encouraged a 1-year approval. We did not advocate for a budget cut. Unsurprisingly, the DPU rejected our suggestion. In their view, Mass Save should adapt to a CHS if and when it is established.

State Funding 

We were pleased that the DPU’s order expressed agreement with us and other stakeholders who called for funding sources other than electricity and gas rates. Financing efficiency and decarbonization from taxpayers would be less regressive than increasing utility rates. State budget appropriations are beyond the jurisdiction of the DPU, but including that message in the order will grab the attention of Governor Healey and legislators.  

Carbon Capture Sequestration & Embodied Carbon

The submitted proposal called for new programming that would allow the utilities to expend funds and to earn performance incentives for capturing carbon and reducing embodied carbon in construction. We opposed those programs on the grounds that Mass Save should focus on reducing energy use and that if the Commonwealth wants to create programs in those areas, it should not depend upon investor-owned monopolies. We are also certain that 2025 is MANY years too soon to begin playing with carbon capture. This will be an easy area to cut from the budget, but it’s not big money. 

Pooled Electrification

The 2025-2027 plan’s major emphasis was on increasing support for electrification – mainly heat pump adoption. They proposed a new system called “Pooled Electrification.” In our testimony, our main objection to that proposal as written was that the utilities and Cape Light Compact would not just pool funding for electrification, but it would also pool accountability, meaning that they would share performance incentives (profits) based upon the total number of heat pumps adopted (sounds like a cartel). We suggested that each utility should be held accountable for its planned share of heat pump installations. To our pleasure, the DPU ordered each utility to be responsible for its own quota. 

Climate Reality Check 

While we understand the need to make energy more affordable, we must also keep score on our progress on greenhouse gas emission reduction. State laws say that by 2030, emissions in the building sector must be 49% below the level in 1990. And to do that, the state’s Clean Energy & Climate Plan says we have to install about 100,000 heat pumps per year. The 2025-2027 efficiency plan presented to the DPU was going to enable 103,000 heat pump installations over three years, far short of what we need. Cutting the budget by $500 million means that the ramp-up from 2028 will have to be even steeper now. If we are blinking today, what will we do in 2028?

We Have More Tools 

This episode with Mass Save makes it imperative that the Commonwealth quickly formulate and implement new building decarbonization policies that would supplement and complement Mass Save.  

For example, DPU has ordered Until and National Grid to offer lower, winter-time electricity rates to customers with heat pumps. DPU will require Eversource to follow suit. In brief, the point of a seasonal heat pump rate is to make electrification less expensive to operate. This is another way to encourage consumers to switch from fossil fuels. This is good policy, but we are very pleased to see that the Department of Energy Resources has petitioned the DPU (case # 25-08) to consider a seasonal heat pump rate that has a greater distinction between winter and other seasons than the currently approved rates provide. This will help ensure that customers’ heating costs don’t increase significantly in the wintertime, which could discourage them from transitioning from gas heating to electric heat pumps. We like this approach and would add that lower seasonal heat pump rates would also provide appropriate incentives to customers currently heating with oil, propane, and electric resistance heat. Incentives in this fashion would not come at the expense of consumers who do not have heat pumps. 

Legislation is also needed to require more fossil fuel-free new construction. Currently, ten cities and towns have been given this authority, but that’s not enough. The more we allow new construction to build with natural gas, the more gas ratepayers will have to pay to maintain and decommission infrastructure. Meanwhile, an increasing number of communities are adopting the Specialized Stretch Code. 

Aside from Mass Save, another way to reduce emissions from existing buildings is by establishing Building Performance Standards for large buildings. These standards would require large building owners to reduce emissions over time. This type of policy is both effective at meeting climate goals and fair with respect to carrying some of the decarbonization load now carried by residential consumers.

Next Steps

One thing we know is that we cannot reach our climate goals without Mass Save or just with Mass Save alone. Whether you like or dislike the DPU’s order on Mass Save, it’s done. So we now must focus on other ways to make energy more affordable and free from fossil fuels. Action is happening all over – DPU, DOER, DEP, and the legislature. Dig into the issue that interests you the most and watch this space for information on these topics as they develop further.