October 12, 2024
Mass. DPU Approves 1st Round of Utility Grid Modernization Plans
The Massachusetts State House in Boston
The Massachusetts State House in Boston | Shutterstock
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The Massachusetts Department of Public Utilities approved grid modernization plans from electric distribution companies to handle increasing electrification and the deployment of distributed resources.

The Massachusetts Department of Public Utilities has approved grid modernization plans from electric distribution companies that outline longer-term strategies for handling increased electrification and the deployment of distributed resources.

The electric sector modernization plans (ESMPs) include five- and 10-year load forecasts, investments to meet forecasted demand and boost resilience, and cost-benefit analyses for the proposed investments. Overall, the plans predict major new costs for ratepayers. (See Mass. Utilities Submit Grid Modernization Drafts.)

The plans were mandated by 2022 legislation requiring utilities to submit new ESMPs every five years, along with two reports per year providing updates on investments and forecasts.

“The department expects the ESMPs to be each utility’s roadmap outlining how the discrete investments proposed will achieve the statutory objectives,” the DPU wrote in its Aug. 29 ruling.

The DPU largely accepted the utilities’ proposals, despite concerns raised by the Massachusetts Attorney General’s Office, Department of Energy Resources, and several environmental and consumer advocacy groups.

While the Grid Modernization Advisory Council, a stakeholder group set up to provide recommendations on the plans, advised that the ESMPs “should be the central distribution system planning document” for “whole-of-business” electric utility planning, the DPU rejected this suggestion.

“This approach would add requirements that the 2022 climate law does not envision,” the DPU ruled, writing that their review of the plans “is limited to the new, discrete and incremental investments proposed in the ESMP.”

The department did note the difficulties “regarding the need to monitor and attempt to influence multiple department proceedings that touch upon distribution system planning.” It wrote that it “sees value in the companies reporting high-level, informational-only data in the ESMP reports relating to non-ESMP investments.”

The investments proposed by the utilities are significant: Eversource Energy presented more than $600 million in additional spending over five years, while National Grid proposed more than $2 billion. The mounting costs are in part a reflection of projected growth in peak demand. Eversource anticipates a 21% increase in electricity demand over the next 10 years, while National Grid forecasts about a 29% increase.

The department’s approval of the plans is not a preapproval of the investments. The DPU wrote in a February 2024 interlocutory order that it will review the proposals “in the context of strategic planning documents only.”

However, the scale of the investment spurred concerns from advocacy groups and the AGO, which wrote that “the magnitude of the planned EDC investments is a sobering challenge to ratemaking and to affordability for ratepayers.”

Representatives of climate and environmental justice organizations expressed disappointment that the DPU did not take a broader approach to the ESMP proceeding.

“I wish they had gone further,” Kyle Murray of the Acadia Center told RTO Insider. There were “not a lot of significant changes from what the companies proposed,” and the DPU “didn’t take a lot of suggestions from the intervenors.”

However, Murray said the move toward long-term planning is a step in the right direction, and he applauded the DPU’s decision to lengthen the stakeholder process for the next round of ESMPs.

Larry Chretien of the Green Energy Consumers Alliance said the DPU’s decision not to use the ESMPs as central planning documents could make it difficult for the department and intervening organizations to evaluate and engage with proposals across separate dockets, filings and stakeholder advisory groups.

“The oversight is going to be tremendous, and it’s going to be every year,” Chretien said. “It’s just not practical to think that the public interest groups and the EJ groups will have the bandwidth to play this game over time.”

Demand Forecasting

The AGO and the DOER both expressed concern about deficiencies in the utilities’ load growth forecasts, writing that they lack consistent inputs and do not account for certain peak load reductions strategies.

“The forecasts offered by the companies fail to meet the standards established; are not transparent; are not comparable across the companies; do not provide a full accounting for underlying assumptions; and lack consideration of important tools like load management, which can reduce costs for ratepayers,” the DOER wrote.

The DOER argued that the EDCs appear to underestimate the potential of peak demand reduction strategies including managed electric vehicle charging, new rate designs, new building codes and energy storage.

The DPU ruled that ESMP load forecasting complied with the law, and that variance between the utilities’ approaches could help accommodate differences in the characteristics of their respective service areas.

“The department finds that each company’s forecasting method and assumptions are reasonable, appropriate and reliable,” the DPU found.

To evaluate the accuracy of future forecasts, the DPU directed the companies to include a comparison of forecasted and actual demand in their biannual filings, and to compare their ESMP five- and 10-year forecasts with their more recent figures. The DPU also required utilities to include separate modeling of demand reduction and energy efficiency programs in the next round of ESMPs.

Climate Resilience

The state’s 2022 climate law also required utilities to detail their plans to prepare the grid for the effects of climate change. The DPU determined the utilities’ proposals complied with the requirements of the law but found “the need for greater consistency in the climate vulnerability assessments prepared by the utilities.”

The DPU noted the utilities proposed different horizons for their climate projections and included limited detail on how they plan to mitigate the risks identified in climate vulnerability assessments. It directed utilities to identify resilience investments using “major event-inclusive performance data” to analyze cost-effectiveness and account for the location of critical facilities.

“In their biannual ESMP reports, the companies shall provide updates on their progress toward finalizing their frameworks for climate vulnerability risk assessments as well as on their targeted resiliency investment identification and prioritization method,” the DPU wrote.

Gas Planning

Environmental advocacy groups expressed concern that the plans do not include enough information on coordinated gas-electric planning and wrote that aspects of the plans citing the potential of hybrid heating systems and blending alternative fuels in the gas network are not compliant with a recent DPU order on the future of gas (20-80-B). (See Massachusetts Moves to Limit New Gas Infrastructure.)

The DPU wrote that it cannot rule on the viability of the gas companies’ decarbonization strategies in the ESMP proceeding, and that it will evaluate these proposals when the companies submit their Climate Compliance Plans in spring 2025.

The department did note that it expects the EDCs to be compliant with orders on gas decarbonization in ESMP filings and directed the companies to “account for any future department decisions on the propriety of these technologies in their future ESMPs.”

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