With heating electrification set to spur a transformative shift away from the gas distribution system and potentially more than double Massachusetts’ annual peak electricity demand, the state’s Department of Public Utilities (DPU) has launched an inquiry into affordability for gas and electric ratepayers.
The new docket (DPU 24-15) will consider improvements to the state’s affordability programs for low- and moderate-income ratepayers.
“We need to take action now to address the challenges people bear in paying their utility bills, especially as Massachusetts transitions away from volatile fossil fuels,” said DPU Chair James Van Nostrand in a press release. “Our investigation will look at the different models that exist to reduce the burden so many of our residents face in making ends meet.”
The state’s utilities currently offer 25% rate discounts for low-income gas customers and discounts that range by utility from 32% to 42% for qualifying electric ratepayers. The utilities also offer bill forgiveness programs for eligible low-income customers.
In the new inquiry, DPU is requesting public comments to help weigh the benefits of different affordability approaches, including whether programs should be specifically designed to help environmental justice communities and neighborhoods that host a “disproportionate burden of energy infrastructure.”
“The department is creating this opportunity to hear from many voices about how it can direct changes that will lower the energy burden for low- and moderate-income residents so that people are less likely to make choices between paying utility bills and covering other essential costs,” said DPU Commissioner Staci Rubin.
As electrification spurs an influx of major investments in new generation and grid infrastructure, residents could face significantly elevated energy costs. The region also will need to cope with the continued costs associated with maintaining the gas system while customers transition to electrified heating.
Eversource and National Grid, the state’s two largest electric utilities, projected their peak loads to increase by about 150% and 130%, respectively, by 2050. (See Mass. Utilities Submit Grid Modernization Drafts.)
“This clean energy transition is going to potentially be very expensive,” Van Nostrand said at an event in December. “Given the urgency of addressing climate change, I don’t think we can slow down. … But we definitely need to take measures to address affordability.”
The DPU chair added that “affordability and energy burden is a huge concern as people migrate away from a natural gas system toward electric heat pumps — you’re going to have the same level of fixed costs recovered through fewer therms.”
In early December, the DPU issued a ruling on a multiyear investigation into the future of the state’s natural gas system, calling for “a significant increase in the use of electrified and decarbonized heating technologies.” The DPU largely rejected gas utility calls to rely in part on alternative fuels like renewable natural gas. (See Massachusetts Moves to Limit New Gas Infrastructure.)
The ruling declined to endorse specific alternative cost recovery mechanisms for potentially stranded gas assets, saying it will address that issue in a future order. The order also called for additional programs to support low-income ratepayers in the clean energy transition.
Along with enhancements to the state’s existing affordability programs, the DPU’s affordability inquiry specifically mentioned the possibility of percentage-of-income payment plans (PIPPs), which would prevent energy bills from exceeding a certain portion of income. PIPPs have been implemented in states including California, Virginia, Connecticut and Maine.
The DPU also will consider comments on program cost recovery, as well as the “role of energy-efficiency programs, consumption reduction, investment in residential loan programs for photovoltaic and battery installations, and targeted educational programs in addressing energy affordability.”
Stakeholder comments are due March 1.
