Lawmakers have been coy about when Bay Staters can expect to start seeing meaningful savings on their utility bills as a result of the energy legislation that’s been talked about on Beacon Hill for nearly a year.
But one thing is for sure — nothing will change until the House and Senate reconcile their vastly different approaches to energy affordability and send a compromise to Gov. Maura Healey’s desk. Energy policy negotiations have been among the trickiest for lawmakers to settle in recent sessions, and the divide between this year’s bills poses a daunting challenge.
Just before 10:30 p.m. Wednesday, the Senate passed its energy affordability package (S 3143) on a 32-8 vote, charting out a path to wind down a program that helps cover the cost of utilities to replace leak-prone gas pipes, restrict Mass Save’s spending on planning and administrative expenses, impose clean energy requirements on data centers, and more.
A Sen. Jamie Eldridge amendment (#77) seeking to end subsidies for gas line extension infrastructure was defeated on an usually divided 19-20 vote. It had the support of bill architect Sen. Michael Barrett but was vocally rebuked by Sen. John Cronin of Fitchburg.
“Line extensions are new gas distribution infrastructure that connects a new customer to the existing gas distribution system,” Eldridge said. “While more cost-effective and clean alternatives should be explored prior to building out additional fossil fuel infrastructure, providers lack an incentive to do so, rather than costing utilities or new customers.”
The Acton Democrat said the extensions are largely funded through a “line extension allowance.”
“This subsidy is extended to the new customer, the cost of which is entered by the gas company into its rate base, and then paid for by existing ratepayers,” said Eldridge, who added that ending the subsidies could save about $1.6 billion over the next decade.
Cronin said he had “serious concerns” the proposal would impede new housing development, as he pointed to a Fitchburg project that’s struggled to cobble together funding.
Cronin requested that his colleagues wait until a regional analysis is produced, which prompted Barrett to invoke a 2022 report commissioned by former Gov. Charlie Baker. According to Barrett, the Worcester-focused report found heat pumps are cheaper when it comes to building different types of housing. Cronin pushed back that the study is “incomplete.”
“This is a vote to save people money, and that is to remove the subsidy or to cost ratepayers more money,” Barrett replied. “I have no problem with the case that ratepayers across Massachusetts should pay for Fitchburg’s multi-unit developments. That is a position I would defend if I were the state senator from Fitchburg. But make no mistake about it: You are costing every ratepayer in Massachusetts more money by maintaining your position.”
Senate Minority Leader Bruce Tarr intervened in the back-and-forth debate.
“If we’re going to get on that path, then perhaps we need to postpone consideration of this bill, so that we can fully look at who’s subsidizing what,” Tarr said. “And I would like to take another look at the study that the gentleman has been offering.”
Ratepayers are eager for relief. Bay State electric bills have climbed from roughly $130 to $160 a month a decade ago to a peak around $250, while a typical winter gas bill has jumped from about $140 to more than $320, according to utility filings with the Department of Public Utilities.
Healey, who filed her own energy affordability plan more than a year ago and faces reelection in November as heating season picks back up, is also eager to sign an energy affordability bill. It was the first topic she mentioned this week when asked what legislation she wants shipped her way by July 31.
Senate leaders predict savings of more than $14 billion over 10 years if their bill becomes law, compared with the roughly $9 billion over a decade the House claimed for its version. But no one has been able to say when residents’ bills will actually be affected.
“Well, I think it really will depend on what the final version is,” House Ways and Means Chairman Aaron Michlewitz said this week when asked about real savings for real people.
While the House bill seeks to cut about $1 billion from the Mass Save budget, which critics say will mean significantly less money going toward energy efficiency projects, the Senate instead makes mostly administrative tweaks to Mass Save while leaving its funding level untouched.
Barrett said the Senate bill was built around the idea that it needs to help ratepayers reduce energy consumption to help offset the high cost of the energy supply.
“We can’t control the cost of supply. Worldwide market conditions, national market conditions, the fact that we have no fossil fuel resources in New England are always going to mean that supplies are relatively more expensive for New Englanders, and they always have been. A strategy is to use energy efficiency and other tools to help reduce consumption,” he said. “The reason you never want to go after something like Mass Save is, you never want to make the mistake of assuming that reducing consumption is responsible for the cost of fuel on the front end. Energy efficiency can’t really do much about the initial price of fossil fuels for New England. There are some things we can do, and we undertake them in this bill, but as I say, a lot of factors bear on the initial price of energy. What we can do is help people reduce their consumption of the thing that’s become pricey.”
The Senate-backed phase out of the Gas System Enhancement Program by 2030 stands as another major conference committee topic. By winding GSEP down, the committee bill is estimated to save ratepayers about $1.46 billion, the largest single chunk of savings on the gas side of the Senate’s ledger.
GSEP was not a target of the House bill, but Barrett said the plan to narrow the program to leak-prone pipe now and eventually end the wholesale replacement of all old pipe that critics say inflates costs is another structural pillar of the Senate bill.
“The second key idea is that we, we really, of course, need to build all the infrastructure the economy needs, and our people need, but we want to make sure that we build only the infrastructure we need,” he said.
With the conference committee tasked with deciding whether or not to adopt an entirely new policy, rather than trying to find middle ground between two proposals, the GSEP provisions of the bill could be among the trickiest for negotiators to reconcile and the work is likely to unfold amid sustained contractor and union lobbying in support of the program.
The differences go deeper. Barrett pointed to six parts of the Senate bill that he said will save ratepayers the greatest amount of money: letting utilities securitize, or refinance at lower cost, certain grid modernization, storm recovery and gas transition expenses (estimated 10-year savings of up to $7.1 billion, or about half of the Senate proposal); moving towards a streamlined comprehensive distribution planning (estimated savings of $1.79 billion), phasing out GSEP (estimated $1.46 billion savings), directing the DPU to investigate price markups realized in basic service procurements (estimated $1 billion savings), removing the six-month limit on basic service contracts negotiated by utilities ($780 million savings), and ordering the DPU to review rate reforms that cut bills ($750 million savings).
Of those six ideas, Barrett said the House bill included only the removal of the six-month limit on basic service contracts.
“If you’re going to leave all that money on the table — and it is true that essentially all of the top six are problematic in the eyes of the gas and electric utilities — then you’re not going to be able to cut bills in a serious way,” he said. “You can’t find enough alternatives to being fair but tough on the current system of charging and overcharging. You just can’t do the job. You’ve got to take on these very difficult and hard to penetrate sources of cost.”
Colin Young is the deputy editor for State House News Service and State Affairs Pro Massachusetts. Reach him at colin.young@statehousenews.com. Alison Kuznitz is a reporter for State House News Service and State Affairs Pro Massachusetts. Reach her at akuznitz@stateaffairs.com.
