Office of Energy Transformation Represents a Visionary Step Forward for Massachusetts

Navigating the phase-out of the sprawling natural gas system is a massive and complex undertaking, filled with thorny questions that could likely be the subject of years-long proceedings. To address this task (among other energy transition priorities), Massachusetts recently created the first-ever Office of Energy Transformation (OET), tasked with a duty “to accelerate the energy transformation, with a focus on gas-to-electric transition, electric grid readiness, and an affordable and just transition for workers, businesses, and communities.”  This office is intended to provide leadership in strategic planning, roadmap development, and stakeholder engagement to advance the transformation of the state’s energy system. Put simply, the OET is tasked with navigating those incredibly complicated questions that surround the transition, like how to decarbonize the peak and how to finance the transition. It will function as an invaluable connective tissue between the various branches of government and stakeholders.

A key component of the OET will be the Energy Transformation Advisory Board (ETAB), a board filled with a diverse cross-section of stakeholders that includes labor, environmental justice, utilities, building owners, finance, and others. This board will be crucial to guide and advise on the work of the OET. Acadia Center, which is a member of this board, recently attended the kick-off meeting for this board and was heartened by the impressive breadth of knowledge in the room and the resources that the Healey-Driscoll administration is devoting to the effort.

Work under the purview of the Office and ETAB will also be conducted in subgroups that focus on three priority issues. These issues are:

• Transitioning Away from Reliance on the Everett Marine Terminal LNG Facility,
• Decarbonizing the Peak, and
• Establishing Alternative Mechanisms to Finance the Finance/Fund EDC Distribution System Infrastructure Upgrades

Acadia Center appreciates that the OET has chosen three exceptionally complex topics that are worthy of extended consideration and debate. The Everett Marine Terminal is one of the longest-operating LNG facilities in the United States, and its supposed purpose is to provide gas system stability on the coldest few days of the year or if the energy supply is disrupted. However, Acadia Center analysis has called into question how necessary this facility is, how fully alternative solutions have been explored, and how much its continued operations should cost ratepayers. Next, peaker plants are power plant facilities that only operate when there is significant demand on the electric system that cannot be met with normal supply. These are facilities that often only run for a few days every year. Unfortunately, they are also some of the most polluting facilities, spewing emissions into already overburdened communities. Figuring out how to retire these facilities through the use of creative solutions such as demand response and battery storage would be of incredible benefit to the Commonwealth. Finally, identifying how to fully finance the electric infrastructure needed as we rapidly electrify our transportation systems and buildings and decarbonize our electric supply remains an unsolved question. Currently, much of these costs are borne by ratepayers, through electric bills. However, in the long-term, that approach simply may not be sustainable for ratepayers at least under current rate design and cost recovery paradigms.  These three workstreams, while seemingly disparate, are closely tied together by nature of the fact that they span all sectors of the economy.

Next Steps

While it is still quite early in the process, Acadia Center is optimistic that this new office and its stakeholder engagement apparatus will be able to tackle the enormous task it has before it. As other states in the region navigate the difficult questions posed by phasing out fossil gas systems, they should look to Massachusetts as a model. Acadia Center believes that other states would benefit from setting up similar infrastructure to deal with these weighty questions.

Additionally, the OET should eventually broaden its subgroups to include other pressing concerns, such as an evaluation of the potential for stranded assets, reforms to performance-based ratemaking, or a reassessment of gas utility tariffs, policies, and practices on new and existing customer connections.