A coalition of twelve environmental and clean energy organizations¹, including Rewiring America, Acadia Center, Green Energy Consumers Alliance, Sierra Club, and Environmental Defense Fund, recently submitted a letter strongly supporting the Department of Public Utilities' (DPU) draft policy to end gas line extension allowances (LEAs)—subsidies that have long encouraged new gas service connections and expansion.

What Are Line Extension Allowances?

For decades, gas utilities have offered generous allowances—essentially subsidies paid by existing customers—to offset the cost of connecting new buildings to the gas system. According to a Groundwork Data analysis cited in the letter, in 2023 alone, the average price for adding a new customer to the gas network reached $9,000, with Massachusetts utilities collectively investing over $160 million in these connections.

In the past, these subsidies aligned with the state’s goals because they got people onto cheaper gas and away from more expensive heating fuels like oil and coal. It could be argued that they make economic sense because these new gas customers could be expected to stay on the gas system indefinitely, eventually allowing the utility to make back the money it lost originally.  

However, these subsidies are now at odds with Massachusetts' climate goals and foot customers with the bill for increasingly risky gas system investments. 

The Changing Energy Landscape

The letter cites some eye-opening statistics about Massachusetts' rapidly changing energy landscape:

• 12,556 gas customers fully moved off of gas and to electric heat pump systems in 2023 alone
• 64% of newly constructed homes that received Mass Save incentives in Q1 2024 used electricity as their primary heat source
• The two lowest-cost decarbonization scenarios analyzed in the state's Clean Energy and Climate Plan predict a 76%+ decline in gas sales from 2020 to 2050

Why This Policy Matters

Aligning with Climate Goals

Massachusetts law requires a 50% reduction in greenhouse gas emissions by 2030, 75% by 2040, and net-zero by 2050. The building sector alone must reduce emissions by 49% by 2030. Continuing to subsidize gas system expansion directly conflicts with these targets.

Protecting Consumers from Financial Risk

As more customers choose electric alternatives (heat pumps outsold gas furnaces nationally between 2022 and 2024) and building codes increasingly favor all-electric construction, gas system expansions represent increasingly risky investments. Declining gas usage, coupled with continued infrastructure investment, will lead to rising costs for remaining customers. California, Colorado, Oregon, and Washington have already limited or eliminated gas line subsidies. 

Key Recommendations

While the DPU’s proposal eliminates line extension allowances in most instances, and we strongly support the draft policy, the group of organizations offered several recommendations to strengthen it:

• Consider line extension allowance exceptions on a case-by-case basis, with no blanket approvals for customer categories
• Require projects seeking exceptions to meet all three criteria: demonstrably reducing GHG emissions, aligning with state climate targets, and having no feasible alternatives
• Implement changes swiftly rather than phasing them in
• Conduct further analysis of equity and employment impacts of the new policy

What This Means for Massachusetts Residents

If adopted, this policy would shift the full cost of new gas connections to developers and property owners choosing gas rather than spreading these costs among all gas customers. While this wouldn't prohibit new gas connections, it would remove a significant financial incentive that has artificially lowered the apparent cost of choosing gas over electric alternatives.

For current gas customers, the policy could help stabilize rates by preventing financially risky investments in infrastructure that may become underutilized as electrification accelerates. For prospective homebuyers, it may further accelerate the shift toward all-electric new construction, which is a cost-effective way to move away from fossil fuels because the cheapest time to go all-electric is when the house is being built.

Ending line extension allowances is also a matter of affordability in Massachusetts, as it will eliminate a regressive utility bill system that saddles customers with the cost of expensive and inefficient gas system upgrades.

The Bottom Line

Massachusetts' consideration of ending gas line subsidies represents an important step in the state's energy transition. This forward-looking policy makes meaningful progress towards the state’s energy and climate goals, protects customers from undue cost burden, and promotes the adoption of more efficient electric technologies.

The DPU's final decision could set an important precedent for other states grappling with the challenge of managing an orderly transition away from fossil fuel infrastructure while protecting consumers and meeting climate goals.

What do you think about Massachusetts' proposed policy? Let us know in the comments below.

¹ Comments were co-authored by Rewiring America and Acadia Center, and signed-on by Green Energy Consumers Alliance, Sierra Club, Environmental Defense Fund, Gas Transition Allies, Brookline Mothers Out Front, HEETlabs, ZeroCarbonMA, Vote Solar, Pipe Line Awareness Network for the Northeast, Inc, and the Environmental League Of Massachusetts in Response to the Department of Public Utilities Request for Comments Regarding the Draft Policy and Practices for Proposed Line Extension Allowances and Contributions in Aid of Construction for Gas Local Distribution Companies, D.P.U. 20-80.