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By Magda Garncarz
Vice President, Government Affairs
The Massachusetts House of Representatives recently passed energy affordability legislation that seeks to curb rising energy costs, strengthen the oversight of existing energy and energy-efficiency programs, and support long-term clean-energy growth and grid-modernization initiatives.
The legislation seeks to provide ratepayers with near-term cost relief and cost containment measures through reductions to the Mass Save program and the return of Alternative Compliance Payments (ACPs) to customers.
It also proposes to advance several clean energy and transmission and distribution infrastructure initiatives to grow renewable resources and the ability to move that additional energy. The bill does not bring any meaningful relief to natural-gas supply constraints or the natural-gas price volatility we experience during periods of high energy demand.
Below is an overview of the major components of the legislation, entitled An Act Relative to Energy Affordability, Clean Power and Economic Competitiveness (H.5151), with a focus on the provisions that aim to reduce costs for ratepayers and the business community.
Mass Save
Mass Save is a state-wide energy efficiency program supported by a mandatory energy efficiency surcharge included on the gas and electric bills of Massachusetts ratepayers.
The most recent Mass-Save three-year plan was proposed at a cost of $5 billion but was reduced to $4.5 billion by the Department of Public Utilities. H.5151 seeks to lower it further by initiating a mid-term budget cut of $1 billion, bringing the budget for the current 2025-2027 plan to $3.5 billion. For comparison, the 2022-2024 plan had a total budget of $3.94 billion.
The bill directs cuts to marketing, advertising, and administrative expenses. It maintains core energy efficiency services in an effort to reduce the rising costs being borne by ratepayers.
This legislation also requires the Office of the Inspector General to conduct a comprehensive review of Mass Save to evaluate program effectiveness and efficiency. Furthermore, income eligibility verification would now be required to ensure that incentives are properly targeted. Together, these measures aim to improve program accountability and contain rising program costs.
Alternative Compliance Payments
Alternative Compliance Payments (ACPs) are payments made by electricity suppliers when they cannot comply with requirements that a certain percentage of the electricity that they purchase comes from renewable or alternative resources. This bill requires the Department of Energy Resources (DOER) to return 70% of ACPs to ratepayers through July 1, 2029. After this date, the bill creates an ACP ceiling that will trigger automatic ACP returns when collections surpass projections by 2%. By redirecting these funds to ratepayers in times of high energy-cost burdens, lawmakers seek to provide ratepayers with some amount of relief.
Electric Rates Task Force
The legislation creates an Electric Rates Task Force to conduct a comprehensive analysis of electric rates and bills in Massachusetts. The Task Force would be charged with breaking down each charge on an electric bill, analyzing how each charge has changed over the last decade, projecting its next ten-year trajectory, and identifying the purpose of each charge. The Task Force would be required to issue a report with legislative recommendations by September of 2027 and has the potential to help address structural cost drivers in the Commonwealth’s electric system.
Natural Gas and Thermal Energy Provisions
The bill allows commercial and industrial customers to receive natural gas produced by anaerobic digesters and landfills, delivered to their facilities through a gas utility’s distribution system. It also authorizes gas utilities to build, own, and operate geothermal heat loops and establishes labor and regulatory requirements for the construction of such projects. Both measures seek to diversify heating but do not make a measurable impact on increasing the supply of natural gas or the capacity of natural gas infrastructure.
Renewable Energy Provisions
The legislation supports the continued deployment of renewable energy resources:
Transmission, Interconnection, and Grid Modernization
Recognizing that grid infrastructure contributes significantly to overall system costs, the legislation seeks to streamline transmission siting and improve the interconnection process.
It authorizes the installation of high-voltage transmission lines along state highways and seeks to reign in cost increases by requiring transmission projects worth $25 million or more to be reviewed by the Energy Facilities Siting Board. The bill also encourages the utilization of surplus interconnection service (SIS), which is the extra “leftover” capacity in an existing project’s interconnection agreement.
It also requires electric utilities to offer flexible interconnection programs in order to reduce the costs of necessary infrastructure upgrades, and to better integrate renewable resources.
New Statutory Requirements for Certain Industries
The bill introduces new statutory requirements and pressures. It creates new compliance obligations for the competitive supply market and allows municipalities to opt-out of the competitive electric supply market for residential customers. The provisions do not affect commercial and industrial customers’ ability to enter into contracts with competitive suppliers.
The legislation also proposes new requirements for the procurement of renewable energy by data centers, and the establishment of a special data-center electricity tariff. These provisions seek to insulate ratepayers from the costs incurred by the growth of large-load customers, while aligning load growth with the state’s energy and related infrastructure objectives. As the bill advances, it will be critical that these statutory proposals balance these considerations with the Commonwealth’s desire to support economic development in burgeoning fields such as artificial intelligence.
AIM will continue to represent the business community to ensure that affordability, reliability, and competitiveness remain central considerations throughout the process.
