State approves new Mass Save plan, but slashes budget by $500 million

The Massachusetts Department of Public Utilities has approved an ambitious three-year plan to revamp the state’s energy efficiency program known as Mass Save — but with one large caveat.

Instead of letting the utilities that run the program spend $5 billion of ratepayer money as previously planned, the department is capping the budget at $4.5 billion. The current three-year plan had a $4 billion budget.

The department didn’t specify where to slash $500 million, and instead told the companies to report back with suggestions by May 1. It also directed the utilities to find alternative sources of funding, like asking the legislature to kick in money.

"When approving the use of ratepayer funds, the Department must assess the reasonableness of customer bill impacts, balanced against the long-term benefits that the investments will provide.” the order said. The commissioners went on to write that they support the utilities efforts to help the state meet its climate goals, "yet [we are] cautious about increasing ratepayer burdens."

Mass Save has come under fire in recent weeks as ratepayers across the state learned that growing demand for the program is part of the reason heating bills have been so high this winter.

When the utilities filed the new three-year plan for Mass Save last fall, they predicted it would result in extra fees on electric and gas bills ranging from a few cents to $38 a month.

It’s not clear what a $500 million budget cut would mean for peoples’ bills, though the commissioners wrote they “fully expect that revised [plan due on May 1] will show a lower bill impact for residential ratepayers.”

"The $500 million reduction in the Mass Save budget will mean real savings for people, while ensuring the vital money savings from energy efficiency can move forward," Gov. Maura Healey said in a statement. However, she added, more is needed to help lower energy costs in the state.

Also on Friday, the Department of Public Utilities approved a plan to temporarily cut gas bills by about 10% for March and April, and allow utilities to recoup that money over the summer.

Not everyone thinks the budget cuts for Mass Save are a smart move — Mark Dyen of Gas Transition Allies, a coalition of climate groups that want the state to reduce its dependence on fossil fuels, is one of them.

In an email, he accused the utilities of "scapegoating" Mass Save by focusing on how the growing program is contributing to higher residential heating bills. The ire, he said, should instead be aimed at another ratepayer funded program that gives gas utilities extra financial incentives to replace and repair gas pipes.

"The Massachusetts Department of Public Utilities’ decision to cut Mass Save’s next 3-year plan by $500 million instead of asking gas utilities, who are seeing record profits, to cut their own costly pipeline spending or meaningfully seek new revenue sources only costs consumers further,” he wrote.

Mass Save helps households conserve energy and reduce planet-warming emissions by switching to more efficient appliances. The program, which has been around since 2008, is funded through fees on customers' utility bills and is managed by a partnership of gas and electric utilities, as well as the Cape Light Compact, a municipal energy program.

Every three years, the program gets an update to reflect new technologies as well as any new state climate and clean energy goals. This next iteration of Mass Save, which covers 2025 through the end of 2027, included a few big changes.

For the first time, Mass Save will have the dual goal of helping homeowners and renters use less energy and reduce climate pollution. This means that, in addition to the plan’s traditional offerings like insulation and rebates on efficient windows, the program will help households swap out fossil-fuel powered appliances in favor of electric ones like heat pumps and induction stoves. Mass Save will also stop offering rebates for gas and oil furnaces or boilers, even if they’re highly energy efficient.

The plan calls forMass Save to weatherize about 184,000 homes in the state, and install 120,000 electric heat pumps, with much of that work directed at low-income and rental housing.

Achieving these targets, the utilities said, will reduce 1 million metric tons of planet-warming emissions over three years. Buildings emit about 23.3 million metric tons of emissions annually, according to the state.

The newly approved Mass Save plan also includes more customer outreach work, especially in low-income communities. The utilities plan to set up a statewide customer service center where residents can connect with an expert who will guide them through the program’s offerings, sort of like a case manager.

The plan also changes which ratepayers fund heat pumps and other Mass Save services. Historically, each utility has paid for the work it does in its territory by collecting money from its own ratepayers. Moving forward, all ratepayers will contribute to a statewide pool to fund the program. This means that a sudden uptake in heat pumps in, say, Springfield, isn’t felt disproportionately by ratepayers there.

In its order, the DPU commissioners wrote that the pooled funding proposal is “reasonable and appropriate as a coordinated effort to encourage heat pump adoption wherever it can be achieved.”

Equity is also a big focus of the new Mass Save plan — in fact, 40% of the requested budget was intended for programs that make weatherization and and climate-friendly appliances more accessible and affordable. Currently, low-income residents in the state qualify for free Mass Save services, and under the new iteration of the plan, more moderate-income residents will qualify for these services too.

“The department applauds [the utilities’] efforts to prioritize equity and incorporate distributive justice as a major tenet of the three-year plan to ensure all customers can access and benefit from energy savings opportunities,” the commissioners wrote in the order.

Responding to the order, Penni Conner, Eversource's executive Vice President of customer experience and energy strategy, commended the department for listening to customer complaints about high bills and making the "difficult" decision to cut the budget of Mass Save.

"Moving forward, we’re as committed as ever to the collaboration and hard work that will be required to provide impactful, long-term rate relief to customers while also advancing a clean energy future that addresses climate change," she said in a statement.