AFTER GAS BILLS spiked across Massachusetts, state officials are reducing the proposed budget for the Mass Save energy efficiency program by $500 million – a move environmentalists call “short-sighted” and argue will increase costs for residents in the long run.
The Department of Public Utilities approved a budget of $4.5 billion for Mass Save – which helps homes and businesses become more energy efficient through projects paid for by a surcharge on electricity and gas bills – for the next three years, after originally proposing a $5 billion budget. The reduction is expected to save residents and businesses about 25 percent on their gas bills and 15 percent on their electric bills, though exact amounts will vary, according to DPU officials.
Since 2013, when Mass Save launched, the program has provided $31 billion in total benefits to customers in terms of energy savings, with another $13.7 billion projected between 2025 and 2027. But as many saw their gas bills spike – some saw an increase of up to 30 percent – the program came under intense scrutiny because it accounted for about 60 percent of the rate increases for some gas bills.
“Like a lot of stuff in the climate world, this decision is going to save people money in the short term but cost us more money in the long term,” said Vickash Mohanka, head of the Massachusetts Sierra Club. “It’s saving $100 now, but 10 years from now we have to pay $1,000, which is how a lot of the math of climate cost works.”
Mass Save – which is run by six utility companies, including Eversource and National Grid – is an integral part of the state’s plan to become carbon neutral by 2050, which relies heavily on homeowners decarbonizing their heating systems. Within this framework, Massachusetts aims to convert 500,000 households to heat pumps by 2030, but even that target – which was set before Mass Save saw its budget pared back – would fall short of what the state needs to do to meet its climate goals.
“This plan, as ambitious as it is, actually only gets us to about half or less than half of the greenhouse gas reduction that we need to have according to our clean energy and climate plan,” said Kyle Murray, Massachusetts program director at the Acadia Center, a non-profit research and advocacy organization dedicated to combatting climate. “Even this plan is a compromise in itself.”
The sticker shock of the high gas bills is partly due to an unseasonably cold winter and the fact that Mass Save only increases its rate once every three years, Murray said. The increase in the Mass Save budget barely keeps up with inflation, he added, noting that the cuts were “disappointing” and “short-sighted.” (In the previous three-year plan, the program had a budget of $3.94 billion.)
Consumers see their rates increase every year thanks to a variety of factors, including the condition of gas pipeline infrastructure, the price of natural gas on the global market, and inflation.
There is little oversight of how utility companies charge for gas infrastructure maintenance and upgrades. Priya Gandbhir, a staff attorney at the nonprofit Conservation Law Foundation, argued that the Legislature should give the DPU more power to decide on whether proposed projects are truly necessary and look into possible alternatives that are more aligned with the state’s goals like geothermal. Building gas infrastructure, she said, is “a great way for the gas company to make money” because they are able to recover the cost and an additional percentage of profit from any gas pipelines they put in or maintain from ratepayers, which incentivizes more investments in fossil fuel infrastructure.
Other than the budget decrease, the department largely left the proposed Mass Save plan as is and directed the utilities that run the program to decide where to make cuts. The utilities will have until May 1 to come back to the department with suggestions.
The department did direct the utilities to seek forms of funding for the Mass Save program in addition to ratepayer funding by collaborating with the Legislature. Currently, the program is funded entirely by ratepayers.
“It is no longer sustainable for ratepayers alone to bear the full costs of the Commonwealth’s goals for building decarbonization,” the DPU order said. “Alternative sources of program funding, whether through legislative appropriations or bond authorizations, could supplement ratepayer funds to drive the more rapid achievement of savings and benefits from the programs. Federal funds, whether replacing or supplementing program funds, also carry great promise.”
Several environmental and climate leaders, including Murray, have advocated for alternative ways of funding the program but acknowledge the challenge of funding the program through the Legislature, particularly in an environment where federal funding for climate projects is at risk.
Climate advocates worry the budget cuts will affect the Mass Save initiatives designed to help lower-income and minority households. The plan, as it stood before the $500 million decrease, would invest $1.9 billion into equity-related efforts, including $1.3 billion in incentives for low- and moderate-income customers.
This is a large part of the proposed budget, and Mohanka said that this type of equity work requires a large budget and coordinated outreach.
But Mohanka emphasized the importance of Mass Save to Massachusetts’s climate goals even with the budget decrease.
“Even with this cut, it’s still going to be one of the biggest per capita energy efficiency programs in the country,” said Mohanka. “It will decrease the availability of some funding, but overall we’ll still have a lot of capacity for energy efficiency in the state.”
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