Advocacy Win: DPU Halts Gas Line Extension Subsidies, Saving Customers Millions

On August 8th, the Massachusetts Department of Public Utilities (DPU) issued Order 20-80-E, closing a decades-old loophole that forced everyday gas customers to subsidize new fossil fuel hookups, costing ratepayers $160 million in 2023 alone ($9,000 per customer). The average cost of adding new customers was rising, specifically, 50 percent between 2020-2021 and another 50 percent in 2022-2023. 

This order was the latest from DPU docket 20-80, the “Future of Gas” docket investigating the future role of natural gas in Massachusetts as the Commonwealth works to achieve its climate mandates and address energy affordability. So far, the DPU has issued a number of impressive orders in this docket that have begun to transform the role of natural gas in Massachusetts and finally curtail its expansion.

This victory is a good example of how coordinated advocacy, grounded in data analysis, can shape precedent-setting regulatory outcomes. In April of this year, Acadia Center and Rewiring America co-authored group coalition comments that were generally supportive of the draft gas line extension policy but also contained specific recommendations for how to make the policy stronger. For example, the draft policy mentioned exception criteria projects would need to meet to receive a line extension subsidy, including one criterion describing how the project must have “….no feasible alternatives to the use of natural gas, including electrification.” In our comments, we argued “feasibility” should be defined as “technical feasibility” (a subtle yet crucial distinction), and the DPU agreed with us in their final decision, limiting allowances to projects that could prove there was no technically feasible alternative to natural gas in their specific building. How do we know we helped shape the outcome? Our letter was cited 18 times throughout the DPU’s decision. 

The order in DPU 20-80-E is about “Practices for Line Extension Allowances and Contributions in Aid of Construction for Gas Local Distribution Companies.” Put simply, it essentially looks at who should pay the costs associated with expanding gas service into new areas. Because the cost of gas infrastructure is extremely expensive, these costs had previously been borne mostly by existing ratepayers, with the understanding that the addition of the customer would pay for itself in the long term. However, forward-looking projections show this would no longer be the case. 

In practice, prior to this most recent decision, existing gas customers paid a disproportionate share of the costs for bringing new gas customers online. Since 2018, existing gas customers have footed the bill for 80 percent of all new gas customer connections — and these subsidies have driven up gas bills for everyone. In terms of projected future costs, according to a recent earnings report from Eversource, the company projects that its gas distribution costs across New England will increase 83 percent between 2023 and 2029, faster than either its electric transmission or distribution subsidiaries. A separate analysis commissioned by the Massachusetts attorney general’s office corroborated that a potentially vast and rapid gas system build-out – and associated impacts to ratepayer bills – could occur without state intervention. According to the AG’s analysis, the path we’re currently on could see the state’s gas rate base – the total value of gas system assets on which utilities are allowed to earn a rate of return – jump from $10 to $20 billion in a short span of roughly 10 years. 

The old system served as a massive subsidy to natural gas service, and incentivized the expansion of natural gas infrastructure. Massachusetts’ climate plans call for reduced reliance on the natural gas distribution system in the coming years, meaning that the old system of spreading the cost of connecting new gas customers across all customers was directly at odds with our climate plans. Further, with the knowledge that the gas system needs to be wound down, the prior “business as usual” policy would have continued to incentivize gas infrastructure expansion that would end up as stranded costs that all gas customers would be on the hook to pay for far into the future.

While the gas utilities, also known as local distribution companies (LDCs), argued in the docket that existing practices are consistent with state policies, most comments came down on the other side. Thankfully, the DPU overwhelmingly sided with the latter. It ordered the discontinuing of line extension allowances, except in certain instances where alternatives to gas service were simply technically infeasible. Based on the language in the order, we expect proposals for new gas hookups that meet this exception criteria to be very few and far between – for example, potentially some niche industrial customers with no technically viable alternative electric- or propane-based equipment available on the market would meet this exception criteria. 

This decision is crucial because the Commonwealth is already facing concerns about energy affordability. Costs associated with the gas system have steadily been rising, and continuing to subsidize new gas hook-ups would have only worsened the situation. This is one more step in reshaping Massachusetts’ energy system, but the fight isn’t over, and other subsidies and misaligned incentives exist for gas infrastructure. 

Now that the much anticipated decision around line extension allowances has been resolved, attention among advocates will turn towards the Climate Compliance Plans — the five-year strategic documents that local gas distribution companies (LDCs) must submit under the Future of Gas docket, showing how they plan to meet greenhouse gas (GHG) sublimits, prioritize affordability and equity, and use pilot projects, among other requirements. 

RI Energy Seeking to Trim Efficiency Incentives and Rebates for Residents

PROVIDENCE — Environmental groups are warning state officials that proposed cuts to Rhode Island’s energy efficiency programs will raise utility bills, spark inflation, and put residents out of work.

Rhode Island’s energy efficiency programs offer residents a buffet of incentives and rebates aimed at saving on their home energy use. They range from purchasing energy-saving major appliances to weatherizing households to conserve energy.

Emily Koo, Rhode Island program director for the Acadia Center, told council members the budget cuts outlined in the draft plan were a disservice to Rhode Islanders, and that state officials should push back against cuts.

“The original three-year plan cuts in the second draft are a 30% budget reduction,” said Koo. “It will eliminate an estimated $92 million in benefits to all of Rhode Island.”

Koo and the Acadia Center also noted each energy efficiency plan was required to conduct a cost-benefit analysis for each program, and that neither the gas nor the electric program had shown to cost more than the benefits received from the program.

To read the full article from ecoRI, click here.

New report reveals effective solution to avoiding blackouts during 100+ degree days: ‘Something … replicable by other utilities in the country’

As summer temperatures force residents in New England to crank up their air conditioners, the use of solar energy appears to have helped take the heat off regional power grids.

During the dog days of summer, millions of people usually attempt to find relief from the scorching heat in any way that they can. That usually means turning to air conditioning, which can often lead to a surge of electricity usage, sometimes resulting in the occasional regional blackout.

In a recent report from the Acadia Center, the use of behind-the-meter solar likely helped prevent a potential loss of power June 24, when much of the region saw temperatures soar above 100 degrees.

“Five-plus gigawatts of BTM solar helped the region’s power grid ride through one of the hottest days of the year, which tested the grid’s reliability with the highest peak demand in several years,” the report read.

To read the full article from the Cool Down, click here.

‘Natural gas is not in the future’: Could a ban on new gas hookups come to Aquidneck Island?

NEWPORT – When state regulators extended the life of a controversial liquefied natural gas facility in Portsmouth last year, they did so with less than whole-hearted support.

The members of the Energy Facility Siting Board accepted Rhode Island Energy’s argument that the LNG storage and vaporization plant on Old Mill Lane in Portsmouth is necessary, at least for the foreseeable future, to back up Aquidneck Island’s natural gas system, which may be vulnerable to disruptions because it’s located at an endpoint of the region’s network of supply pipelines.

In 2021, the environmental groups Conservation Law Foundation and the Acadia Center argued a ban was justified after passage of the Act on Climate, the state law that requires Rhode Island to reach net-zero emissions by 2050.

To read the full article from the Providence Journal, click here.

What to know about Mass.’ new electricity rates for heat pump users

Using an electric heat pump in Massachusetts is about to become more affordable.

Beginning in November, the state’s three big electric utilities — Eversource, National Grid and Unitil — will offer cheaper electric rates during the coldest months of the year for households that use a heat pump.

“Part of the reason it has been difficult to get owners to switch from gas to electric is that the math hasn’t always penciled out in terms of cost savings,” said Kyle Murray, Massachusetts program director for the Acadia Center, a nonprofit that advocates for clean energy policies. Murray said the new winter rates “will likely make heat pumps significantly more affordable.”

A recent report commissioned by several environmental groups, including the Acadia Center, found that with the new rates, 45% of households would reduce their heating bill by installing a heat pump. The Department of Public Utilities, which ordered the utilities to implement these rates, said the average household with a heat pump should save about $540 this winter.

To read the full article from wbur, click here.

Why a new gas pipeline into New England may (or may not) lower energy bills

New England is at an energy crossroads: Demand for electricity is expected to rise for the first time in nearly 20 years. Offshore wind and other renewables aren’t being built at the speed and price once predicted. And many people still have sticker shock after a winter of exceptionally high utility bills.

On the other side of the debate are those who say a new gas pipeline is simply a bad investment — for energy prices and the planet.

“There really is no economic case for expanded gas pipeline capacity in the region, and that’s because we think consumers are going to be left worse off as a result,” said Jamie Dickerson,  senior director for climate and clean energy programs at the Acadia Center, a Boston-based research and advocacy nonprofit.

While there hasn’t been a new interstate pipeline into New England in a long time, several developers have expanded the diameter of some existing pipes and built new compressor stations to push more gas through. Since 2014, the total capacity on major pipelines into the region has increased 51%, Dickerson said. And during that time frame, the cost of gas has gone up for utility customers.

Kyle Murray, Massachusetts program director at the Acadia Center, had a challenge for anyone supporting new pipeline along economic lines.

“ I would say, ‘Prove your case, show your math,’ ” he said. “Because I don’t think the math bears out.”

If ratepayers in the region are going to pay for energy infrastructure to bolster the supply of electricity in the short-term and help control costs, Dickerson, of the Acadia Center, said they’d be better off funding more electric transmission lines, like a project in Maine slated to come online later this year.

“If there’s a desire to spend a billion dollars on linear infrastructure,” he said, “I think there’s no doubt about it that transmission is going to be a wiser course than a gas pipeline.”

To read the full article from wbur, click here.

Win-wins are key to securing interregional transmission buy-in: experts

Cost allocation for these projects is “one of the hardest things to agree on, if not the hardest,” said Anya Poplavska, a senior policy advocate at the Acadia Center. “I don’t think it’s a stretch to say that this is a huge limitation and reason that interregional projects just don’t get pursued as much.”

Poplavska noted that there are opportunities for more regional collaboration between the Northeastern states and Canada, thanks not only to geography but also to mutually ambitious carbon-reduction goals. In July, Nova Scotia designated four offshore areas for future offshore wind development, and it’s exploring the idea of exporting some of that power to New England, CBC News reported. The move comes as President Donald Trump is working to limit U.S. offshore wind development.

“Given what’s going on at the federal level with us right now … Obviously, that’s massive,” Poplavska said. “We need to take advantage of the opportunities that we have cross-border in light of domestic limitations.”

To read the full article from Utility Dive, click here.

States’ Interregional Transmission Efforts Examined

The American Council on Renewable Energy hosted “Powering Progress: States Leading on Transmission Collaboration” to examine the outcome of past multistate efforts and the drive for further collaboration. 

ACORE’s Kevin O’Rourke was joined by Silverman, an assistant research scholar with the Ralph O’Connor Sustainable Energy Institute at Johns Hopkins University; Anya Poplavska, senior policy advocate at the Acadia Center; and Beth Soholt, executive director of the Clean Grid Alliance.

Poplavska spoke about the Northeast Grid Planning Forum, convened by the Acadia Center and Nergica to lay the groundwork for collaboration to meet what is projected to be a 100% increase in power demand over the next quarter century – and to loop in neighboring parts of Canada, which has a deep and long-standing infrastructure connection with the U.S. Northeast.

There is only piecemeal and fragmented decision-making now, she said. “And [the forum is] really born of the synergies between Canada and the Northeastern states. The whole point of it is to really create a framework across these different regions that facilitates planning, coordination and decision making.”

Poplavska identified three steps in the process: identification of needs; design and selection of projects; and, most difficult of all, allocation of costs.

“How are costs going to be borne across different regions?” she said. “I don’t think it’s a stretch to say that this is a hige limitation and reason that interregional projects just don’t get pursued as much.”

To read the full article from RTO Insider, click here.

Massachusetts Seeks to End Ratepayer-Funded Subsidy for New Natural Gas Connections

A new Massachusetts Department of Public Utilities policy designed to discourage continued growth in the use of natural gas would end existing subsidies for gas utility lines in all newly constructed homes and buildings.

Under the new policy, developers, home builders or home buyers who wanted gas heat would have to pay the full cost of the connection, which is currently around $9,000 per home. Under the state’s existing policy, utilities pass the cost of those gas hook-ups along to their existing customers in small monthly surcharges on their bills.

“At a time when we know we should be actually winding down the gas system, we have continued to expand it, and ratepayers have been the ones who have borne the brunt of that,” Kyle Murray, the state program implementation director at Acadia Center, an environmental organization based in Rockport, Maine, said. “This is just a really great decision for energy affordability and a really great win for climate as well.”

To read the full article from Inside Climate News, click here.

RGGI market rebounds from program review bearishness

Regional Greenhouse Gas Initiative (RGGI) allowances have mostly recovered since plunging immediately after the member states finished their third program review as summer power demand looms larger in the market.

As a result, various stakeholders view the latest changes to RGGI as a compromise, while those concerns likely contributed to the length of the review process.

“If this is the way to get consensus then I can’t really complain too much,” said Paola Tamayo, a senior policy and data analyst at the Acadia Center, a non-profit clean energy research group.

In addition, member states may have accounted for increased uncertainty with regards to the resource mix for the region, said Jamie Dickerson, senior director of climate and clean energy programs at the Acadia Center, citing, for example, recent roadblocks to offshore wind development.

As a result, the size of the combined CCRs relative to the emissions cap is “partly a reflection of that sort of medium-term uncertainty around what resources will be available” and which resources will be left to buy allowances, Dickerson said.

In addition, interim climate goals — which, for many states, are approaching in 2030 — could be a large driver of conversations. Member states likely will take a fresh look at the “evolution of the power mix, where technology costs are, [and] where the policy landscape” is at the federal level, Dickerson said.

To read the full article from Argus Media, click here.