Governor Healey Unveils Energy Affordability, Independence & Innovation Act to Save Ratepayers $10 Billion
Legislation saves billions through getting costs off bills, implementing an all-of-the-above energy approach including nuclear, and holding the utilities accountable
Builds on actions already announced by the Healey-Driscoll Administration to save $6 billion for electric and gas customers over the coming years
LEOMINSTER – Today, at the Leominster Veterans Memorial Center, Governor Maura Healey filed the Energy Affordability, Independence & Innovation Act to bring down costs for residents and businesses.
The legislation saves customers money, brings more energy into Massachusetts, and increases accountability of the utilities and drives innovation. Key reforms include eliminating and reducing certain charges on the bill, taking steps to create accountability and ensure utilities aren’t passing unnecessary costs onto ratepayers, and reducing barriers to new cutting-edge nuclear technologies. The administration estimates that the bill will save Massachusetts customers approximately $10 billion over 10 years, on top of the $6 billion in savings estimated from her Energy Affordability Agenda announced in March.
“Our administration cut taxes and is working to lower costs on every front – from housing to child care to energy,” said Governor Healey. “Massachusetts families and businesses can’t afford big energy price spikes now, or in the future. This bill – along with our energy affordability agenda – gets costs off bills, saves people money, and adopts an all of the above strategy to bring new energy into Massachusetts.”
“We need to build more housing, attract new businesses and lower energy costs at the same time – that's what this legislation does,” said Lieutenant Governor Kim Driscoll. “We worked with businesses, energy experts, developers and universities to put forward the best ideas to drive down costs and get things built in Massachusetts. We’ll help new businesses and housing developments get the energy they need faster, protect ratepayers from subsidizing infrastructure that doesn’t serve them and drive efficiency, accountability, and transparency.”
“Our comprehensive proposal addresses head-on some of the biggest drivers of price spikes,” said Energy and Environmental Affairs Secretary Rebecca Tepper. “This legislation tackles Massachusetts' lack of homegrown energy, big charges on bills, and an absence of oversight of costly grid upgrades. We’re reining in those costs while still growing our economy and spurring new development across the state.”
Getting Costs Off Bills
The administration is proposing to eliminate or significantly reduce charges on the bill. Massachusetts has the highest net metering compensation rates for large, standalone facilities in the country. Reducing the value of net metering credits for new large net metering facilities will lead to a lower net metering surcharge, saving customers an estimated $380 million over 10 years. The legislation also phases out the Alternative Portfolio Standard charge, which costs ratepayers up to $60 million per year and is set to increase. To reduce bill volatility and rate shocks, the legislation requires the DPU to review and reform all charges on bills and establish of a cap on month-to-month bill increases.
Governor Healey’s proposal uses innovative financing mechanisms to lower the impact of infrastructure and program costs on customer bills without adding new fees or taxes. The legislation allows utilities to finance Mass Save, Electric Sector Modernization Plans, storm response, and other programs through rate reduction bonds, creating the ability to reduce ratepayer costs by up to $5 billion in the first 10 years.
Bringing More Energy into Massachusetts
This legislation continues the Governor’s all-of-the-above strategy to bring more energy into Massachusetts and meet rising demand. The bill allows Massachusetts to explore cutting edge nuclear technologies and expands the state’s authority to procure new sources of energy generation, energy storage, and demand response. These reforms will accelerate the development of low-cost electricity generation throughout the region. Giving the state authority to procure energy directly eliminates the fees the state is currently required to pay the utilities for entering into the same contracts, which will save ratepayers billions of dollars over the life of the contracts. The legislation also requires the utilities to update their interconnection process to reduce the time and cost for customers to connect new loads, solar, and storage projects to the grid.
Governor Healey also proposes to provide the DPU and electric utilities more flexibility in how electric power supply is purchased and prices are set by eliminating the requirement that forces utilities to buy electricity every six months, regardless of current market conditions. This will avoid situations where the utilities are forced to sign bad supply contracts.
Creating Accountability
Customers should only be charged for costs associated with delivering power to their homes and businesses. The legislation authorizes the DPU or an outside firm to audit the utilities’ management and operations. Governor Healey’s proposal also explicitly bans the use of ratepayer funds for advertising, lobbying, entertainment, and other costs. This legislation would also empower the DPU to fine the utilities for non-compliance.
Transmission costs are driving an increase in delivery charges. The bill provides new oversight authority to the Energy Facilities Siting Board to ensure that transmission projects are properly sited and permitted and do not result in unnecessary costs being passed onto ratepayers.
Powering Innovation & Smart Growth
The Healey-Driscoll Administration is working to maximize the electric grid. Governor Healey’s proposal establishes “Energy Ready Zones” to proactively build out utility infrastructure that supports housing and economic development without increasing costs to ratepayers at large.
Supporting the Customer
Governor Healey is putting forward a compromise proposal to end unscrupulous practices in the competitive supply industry. The legislation bars the most predatory marketing practices, eliminates automatic renewals and variable rate contracts, establishes new licensing requirements for door-to-door and telemarketing firms, and strengthens oversight. These reforms will help stop the industry from overcharging residential customers while retaining the ability for customers to shop for their own electricity supply.
The legislation also authorizes gas companies to own and operate geothermal heat loops that serve individual customers, helping support universities, hospitals, and other large building owners afford geothermal heating and cooling – the most efficient heating and cooling technology available – while insulating other ratepayers from associated costs.
Governor Healey’s bill prohibits utility shutoffs during periods of heat waves due to financial hardship. The bill also expands the moderate-income discount rate to gas customers, which will help hard-working people and families pay their heating bills.
Additionally, the Governor’s proposal authorizes the utilities to establish programs that allow individual customers to finance clean heating, weatherization and other home upgrades through their bills over time, reducing the need for up-front incentives paid for through utility rates.
The legislation builds on the Energy Affordability actions already announced by the Healey-Driscoll administration that lowered energy bills for Massachusetts residents by $220 million starting in April and will save nearly $6 billion for electric and gas customers over the coming years. This started with a $50 credit on electricity bills in April.
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