SENATE DEMOCRATS ARE teeing up a vote next week on a sprawling legislative package that would take aim at the state’s extensive natural gas system while Mass Save, the politically endangered energy efficiency program that was targeted for cuts in the House, sneaks through largely unscathed.
The legislation, Senate leaders say, will save electric and gas customers $14 billion over 10 years at a time when energy affordability is a top household concern and Bay Staters are confronting power prices at double the national average.
The bill reveals just how deep a chasm has formed between the Legislature’s two Democratic-controlled branches over energy policy after the House passed its version in February. Gov. Maura Healey’s energy affordability bill, hailed as one of her signature legislative endeavors in response to soaring gas and electric costs, was filed more than a year ago but has since devolved into a process marred by tumult as she seeks reelection.
Whatever final product is ultimately agreed to, a messy conference committee where House and Senate leaders hash out differences is all but assured given how far apart the chambers are at this point. Lawmakers will be forced to reconcile those differences while balancing a complex mix of consumer angst, rising power demand, and ambitious climate commitments that require moving away from an energy system that is mostly dependent on natural gas.
One of the most explosive provisions of the bill is one that would end the Gas System Enhancement Program (GSEP) altogether by 2030 — a move likely to draw blowback from the state’s utilities and unions.
Concerns over the cost of GSEP have risen sharply, though, as high energy costs have taken center stage, and the Senate’s legislation signals new political appetite from top lawmakers to rein it in.
The program started in 2014 and allows gas companies to recover costs directly from ratepayers for work to replace aging, leaky pipes, which deliver gas to buildings for heating and cooking around the state through a network of 21,000 miles.
Spending under GSEP has ballooned since it took effect, even though the actual amount of pipe that’s been fixed has stayed relatively flat — turning the program that accounts for 8 to 11 percent of customer gas bills into a major flash point. State officials and environmental advocates have pounced on the utilities for, in their view, failing to move quickly enough away from expensive gas infrastructure.
Now, the Senate wants to pull the plug on the program entirely and, until then, narrow the scope of GSEP work to focus on repairing infrastructure without removing all old pipes — saving $1.46 billion in the process.
Regulators at the Department of Public Utilities have started to crack down on GSEP, too, limiting how much money the utilities are able to recover from ratepayers through the program. The DPU lowered the amount of money that the gas companies can collect from ratepayers through GSEP from a high of 3 percent down to 2 percent this year.
But questions have lingered over GSEP’s effectiveness at lowering emissions and whether it incentivizes the gas companies to replace gas pipes at high cost, locking homes into natural gas for years to come as climate targets that require a transition away from fossil fuels continue to draw closer.
“What the Senate does, in effect, is pick up where the DPU leaves off and continues the same downward progression to zero by the end of 2030,” Sen. Michael Barrett, a Democrat who leads the chamber’s energy committee, said in an interview. “The companies have taken a sweetener and decided that they really, really like [it], and that they can liberally redefine even their routine replacements to be GSEP replacements and earn a little extra money at ratepayer expense.”
Still, ending GSEP risks backlash from unions in the state that benefit from work on the gas system and could amount to a tough vote for labor-friendly Democrats in the Legislature — a political reality that Barrett acknowledged.
“It’s been a heavily debated option,” he said. “I’ve heard from organized labor myself, and I respect labor. Several of my colleagues have a lot of gas workers in their districts, and they’ve heard, too, that the workers are aligned with management on this one. That has complicated things for sure, but the process in the Senate has been very democratic. The overwhelming preoccupation is to reduce spending.”
Another area where the two chambers’ bills diverge sharply is Mass Save, a program with a current $4.5 billion budget that is funded through a charge on ratepayers’ bills based on energy usage and provides customers with low or no cost upgrades on home insulation, heat pumps, and other upgrades designed to decrease energy usage. The Senate bill would, however, cap Mass Save spending on planning and administration at 5 percent, scrutinize budget modifications, and install a new board to oversee program finances.
The House’s version would cut the program by $1 billion.
“Energy efficiency cannot do much about the initial price of an expensive fossil fuel. What energy efficiency can do is help people reduce consumption of the pricey fuel,” Barrett said. “You don’t blame the program that helps you reduce your dependence on something expensive for the expense itself. The real savings come from legacy pockets of money that sit here and there within the current cost structure and show up on your bill, but you can’t get at them without confronting utility power.”
The lion’s share of the ratepayer savings promised by the Senate — $7 billion — comes from allowing the DPU to lower the amount that the utilities borrow to finance infrastructure projects, thereby reducing charges for ratepayers.
The Senate bill also cites savings opportunities by cutting the fees associated with utilities’ energy procurements, cracking down on utility “price markups,” and expanding geothermal energy at large institutions.
Another point worth watching: nuclear energy. Healey has been looking to boost the prospects for nuclear power in Massachusetts as part of her “all of the above” approach to energy and included a repeal of a 1982 moratorium on new nuclear facilities in the original bill she filed. While the House included that provision in its bill, it’s absent in the Senate version, a potential sign of lingering hesitation toward the energy source that has seen a bipartisan resurgence around the country.
Healey has also expressed more openness to new natural gas supply as her pitch for a second term centers around affordability. Enbridge, a Canadian pipeline company, is now exploring a significant new expansion in New England.
The Senate legislation moves to ease how much renewable energy utilities are required to purchase each year. The state’s Renewable Portfolio Standard compels utilities to increase their purchase of clean energy by 3 percent each year for the next three years starting in 2027 but, in the face of the Trump administration halting new leases for offshore wind projects, that requirement would only tick up 1 percent under the Senate plan.
Still, there are some emerging areas of common ground. In both chambers, lawmakers are fed up with competitive electric suppliers.
While a full statewide prohibition has stalled on Beacon Hill in years past, a consensus is forming around language that paves the way for individual municipalities to ban competitive electric suppliers, which are alleged to prey upon low-income customers with false promises of lower energy rates. The attorney general’s office estimates consumers paid more than $700 million more over the last decade than they would have if they were enrolled through traditional utilities or municipal aggregation programs.
The Senate projects allowing municipalities to crack down on these suppliers will save ratepayers $650 million over the next decade.
It would also join the House in reducing compensation rates for large solar producers and setting a goal to procure 10 gigawatts of solar and offshore wind each by 2040.
Several months after the House laid down its marker, the Senate is preparing to draw its lines around the negotiation that is ultimately to come.
“The House is staked out a perspective on costs and on the climate project in general,” Barrett said in reference to a since-scrapped House plan to weaken the state’s 2030 climate commitments. “The Senate has a very different understanding of what’s driving costs and a different view, apparently, on the importance of staying the course on climate policy. Those two polar positions somehow need to be reconciled. I’m confident they will be.”
