Massachusetts has moved to discourage new investment in natural gas infrastructure by blocking utilities from recovering costs unless they can show they first considered non-gas alternatives. 

The order issued Dec. 6 by the Department of Public Utilities in Docket No. 20-80 follows more than three years of work by the DPU to engineer a reduction in the state’s greenhouse gas emissions.  

But it is only a first step, an attempt to discourage and dissuade rather than to ban. Ratepayer discretion is preserved, and the order’s effectiveness will depend in large part on the decisions they make. 

There are many more steps to come as the DPU works to balance all the moving pieces, competing interests and still-unknown factors to create a climate-protection solution that is workable, affordable and equitable. 

The Acadia Center, which had been pushing for a strong statement by the DPU, applauded Wednesday’s order, calling it a potentially transformative measure that addresses many of the clean energy advocacy group’s priorities. 

Eversource Energy and National Grid, which combined have more than 1.5 million gas customers in the Bay State, said in separate statements they support the state’s net-zero goals and are reviewing details of the 140-page order. 

Consider the Options

With the order, the DPU no longer will allow a utility to recover what it spends on natural gas infrastructure unless the utility can prove it considered alternatives such as electrification or district geothermal heating. It also will not allow cost recovery for efforts to promote expansion of natural gas. 

It sets the framework for much more, including management of stranded costs for utilities, cost control for customers, environmental justice and workforce transition. 

In announcing the order, DPU Chair James Van Nostrand called it a “forward-thinking framework that charts a path for moving toward clean energy and enhancing the state’s ability to achieve its climate goals while ensuring a fair, equitable and orderly process.”   

The gas utilities will need to file climate compliance plans every five years and undertake pilot projects with the preferred alternatives to gas — electrification and networked geothermal. 

The order excludes renewable natural gas and hydrogen as potential decarbonization solutions. Concerns surround the cost, availability and carbon footprint of RNG and hydrogen. Both may well have a role in Massachusetts’ journey to net-zero status, the DPU said, but at this stage of the process, utilities cannot use them as an alternative to fossil natural gas to comply with Wednesday’s order.  

Some other components of the wide-ranging order: 

The gas utilities each have their own mechanism to calculate the cost of line extension; the DPU will move to standardize them. 

Close coordination will be required between gas and electric utilities because reduced gas use likely means increased electric use, and grid capacity may vary by region, or even from one neighborhood to the next. 

The cost of the clean energy transition may be considerable, but the need for the transition is too pressing to slow the timetable. Instead, the DPU in a separate proceeding will investigate solutions to the cost burden the transition will place on low- and middle-income ratepayers. A change in its statutory authority likely will be needed for it to carry out some of those solutions. 

Utilities will continue to recover the billions of dollars they have invested in natural gas infrastructure — the order affects future efforts, not past spending. But the DPU will scrutinize future infrastructure spending to limit future stranded costs. 

It is important, the order states, for gas utilities to move beyond “business as usual” and actively participate in developing innovative solutions in what is expected to be “an exceedingly complex undertaking.” 

The Massachusetts Clean Energy and Climate Plan calls for net zero greenhouse gas emissions by 2050, with an emissions reduction of at least 85% from 1990 levels. 

Reactions

Wednesday’s order prompted responses from some of those affected. 

National Grid said: “We support the commonwealth’s goals and are committed to achieving net zero emissions. Our proposed strategy will reduce energy use, right-size and decarbonize our network, and maintain affordability and reliability for customers, while recognizing the critical role the gas networks play in keeping people warm and our economy going. We are reviewing the order and will have more to say later how we think it achieves these outcomes.” 

Eversource said: “We are working every day to help the commonwealth achieve its nation-leading decarbonization goals and we remain fully engaged with other utilities and stakeholders to define a practical path forward to reach them. We are currently reviewing the order and are thankful to the Department of Public Utilities for bringing together all stakeholders in an open and transparent process. Our customers’ energy needs are diverse, and it’s important that the clean energy transition provides access to safe, reliable and affordable energy for everyone.” 

The Beyond Gas Coalition said: “Today’s ruling is a historic and transformative climate decision. Not only is the DPU’s decision a major victory for the millions of Massachusetts gas customers who would otherwise be stuck paying for risky, unproven gas utility ventures, but sets a precedent for utility regulators across the country to rein in gas utility spending. From the outset, it has been clear that plans to blend ‘renewable’ natural gas with hydrogen for home heating would not only fail to measurably reduce emissions, but would be dangerous, expensive and not feasible. Highly efficient electric equipment, paired with weatherization and better insulation, is the only viable way to affordably build healthier communities and meet Massachusetts’ ambitious climate goals. The DPU is absolutely right to throw cold water over these risky utility plans and instead protect consumers.” 

Gas Transition Allies said: “The Department makes clear that the commonwealth is committed to ensuring that there is a just transition that includes equity for both customers and gas workers. Gas companies must not only address the potential for stranded assets that risk leaving customers holding the bag for gas companies’ imprudent investments, they must also work with electric companies to develop integrated plans to decarbonize buildings through increased electrification.”   

The Acadia Center said: “The 20-80 order today from the DPU has the potential to be one of the most transformative decisions in Massachusetts climate history. … That being said, implementation and follow-through will be incredibly important, as always. Thoughtful planning by the Department and the commonwealth will be needed to ensure positive outcomes on key areas such as customer affordability, a just transition for gas workers, and infrastructure planning and management. This order therefore serves as an important midpoint in a multiyear process, as this decision will now lead to other key dominos like evaluation of gas utility stranded asset risk, decoupling mechanism revisions, systematic consideration of non-gas pipeline alternatives, and reassessment of gas utility policies on new and existing customer connections.”