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State Energy Efficiency Policy Database

Massachusetts

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Offers efficiency programs for both new construction and existing facilities.
Advances the efficient use of energy in homes, buildings and industry in the northeastern United States.

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Summary

Massachusetts is a leading state with a long, successful record of implementing energy efficiency programs for all customer sectors. The state created an aggressive funding mechanism and required electric utilities to provide energy efficiency programs during its restructuring of the industry in 1997. The natural gas utilities in the state have offered energy efficiency programs to customers since the late 1980s.

In 2008, the governor signed Chapter 169 of the Acts of 2008, An Act Relative to Green Communities. The new law altered the approval process and timeline for electric and natural gas utility energy efficiency plans and required the utilities to file the plans every three years. The law required the state’s regulatory authority, the Department of Public Utilities, to ensure that energy efficiency programs “are delivered in a cost-effective manner capturing all available efficiency opportunities, minimizing administrative costs to the fullest extent practicable, and utilizing competitive procurement processes to the fullest extent practicable.” In addition, the law directed the DPU to appoint and convene an Energy Efficiency Advisory Council (EEAC), whose members play a key role in designing, approving, and monitoring the energy efficiency programs of Massachusetts' investor-owned utilities.  The EEAC’s primary mandate is achieving the goals outlined in the Green Communities Act and developing long-term vision, including recommendations concerning studies and research to achieve the goals of acquiring all cost-effective efficiency that is less than the cost of generation, and maximizing economic and environmental benefits that can be realized through increased energy efficiency.

Massachusetts' approach has resulted in one of the most ambitious fully-funded state savings targets, annual electric savings targets ramping up from 2.5% to 2.6% from 2013-2015. The state’s three year plan also includes gas savings of about 1.1% of retail sales annually. Utility companies in the state manage and implement efficiency programs. The low-income residential demand-side management and education programs are implemented through the state’s low-income weatherization and fuel assistance program.

Massachusetts has decoupling in place for all of its gas and electric utilities. Utility companies can earn a shareholder incentive of approximately 5% of energy efficiency program costs for meeting energy saving, benefit-cost, and market transformation goals.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Customer Energy Efficiency Programs

Massachusetts has a restructured utility industry with competitive generation and retail markets. The distribution companies remain regulated and are required to offer energy efficiency and other demand-side management programs. The law governing these programs is Massachusetts General Law, Chapter 25 §19. The distribution utilities administer their own energy efficiency programs with collaborative input and oversight from the state Division of Energy Resources (DOER) and Department of Public Utilities.

Large investor-owned utilities in Massachusetts have partnered together to sponsor the Mass Save initiative. These utilities work with the Massachusetts Department of Energy Resources to provide a wide range of services, incentives, trainings, and information promoting energy efficiency. A variety of electric and gas efficiency programs are also offered directly through IOUs and municipal utilities. Energy efficiency program funds must be allocated to customer classes, including the low-income residential subclass, in proportion to these customers’ contributions to those funds. At least 10% of the funding for electric energy efficiency programs and at least 20% of the funding for gas energy efficiency programs must be spent on low-income residential demand-side management and education programs.

In 2012, the state created a pilot program for large gas and electric customers. Five Largest Gas and Electric Customers Accelerated Rebate Pilot: Sections 5 and 54 of An Act Relative to Competitively Priced Electricity in the Commonwealth, requires the program administrators to implement a pilot program for their five largest gas and electric customers based upon specific customer locations in their respective service territories known as the voluntary accelerated rebate pilot program. Customers electing to participate shall be eligible for financial support of up to 100 per cent of the cost for qualified energy efficiency measures, as determined by the Program Administrator, using criteria included in the Three Year Plan. In addition, up to 15% of any accelerated rebate may be used for other improvements that support energy efficiency improvements made under a program approved by the department or emission reductions, including, but not limited to, infrastructure improvements, metering, circuit level technology and software

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

Links:

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November 8, 2013


Energy Efficiency Resource Standards

Summary: Electric: Annual savings targets began at 1.4% in 2010, ramping up to 2.6% by 2015.  Natural Gas: Targets began at 0.63% in 2010, ramping up to 1.14% by 2015.

 The Green Communities Act requires that electric and gas utilities procure all cost-effective energy efficiency before more expense supply resources, requiring a three year planning cycle. In January 2013, the DPU approved the second 3-year (2013-2015) electric and gas energy efficiency plans under the Green Communities Act, continuing the state’s progress toward the most ambitious energy savings targets in the country. The first electric efficiency procurement plan called for savings 1.0% in 2009, 1.4% in 2010, 2.0% in 2011, and 2.4% in 2012.  The state’s second three-year plan calls for savings to increase to 2.6% in 2015. The energy efficiency investments in 2013-2015 are expected to save 3,703 GWh of electricity in 2015. The statewide totals are comprised of individual program administrator savings. 

The state’s natural gas plan will save 24.75 MMTherms in 2015, equivalent to 1.14 percent of retail natural gas sales in 2015. Overall, the fully funded 2013-2015 electric and natural gas efficiency procurement plans will yield net consumer savings of more than $6.2 billion. The energy savings proposed in the current three year plan represent a 55 percent increase compared to the energy savings achieved in previous three-year plans.


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August 12, 2013


Alternative Business Models

Massachusetts is currently implementing decoupling for all of its gas and electric utilities pursuant to DPU Docket 07-50-A (July 2008). Target revenues are determined on a utility-wide basis, and can be adjusted for inflation or capital spending requirements if necessary.  The Massachusetts DPU has approved decoupling plans for National Grid Electric Company (DPU 09-39), National Grid Gas Company (DPU 10-55), Bay State Gas Company (DPU 09-30) and Western Massachusetts Electric Company (DPU 10-70). Each distribution company is required to institute a decoupling mechanism with its next filed rate case.


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August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

Shareholder incentives are in place for electric and gas utilities. The shareholder incentive provides an opportunity for companies to earn about 5% of program costs as an incentive for meeting program goals. The incentive is based on a combination of elements including energy savings, benefit-cost, and market transformation results. The order that approved the incentive is DTE Order 98-100 (DTE is now DPU).


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August 21, 2013


Energy Efficiency as a Resource

The Green Communities Act requires that electric and gas utilities make acquiring all cost-effective energy efficiency a higher priority than using other resources. The Act created an Energy Efficiency Advisory Council (EEAC) that works with utility program administrators to establish statewide plans for gas and electric utilities for 3 years into the future. Utilities must “provide for the acquisition of all available energy efficiency and demand reduction resources that are cost effective or less expensive than supply” in coordination with the EEAC. Utilities prepare plans for the Department of Public Utilities that establish annual budgets and goals over a period of three years. This process is open to the public.


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August 12, 2013


Evaluation, Measurement & Verification

The evaluation of ratepayer-funded energy efficiency programs in Massachusetts relies on both legislative mandates (Green Communities Act of 2008) and regulatory orders (DPU 8-50-A). The order follows the legislation. Evaluations are mainly administered by the Energy Efficiency Program Administrators, however, the Massachusetts’s Energy Efficiency Advisory Council oversees the evaluations. Statewide evaluations are conducted, with the exception of PA-specific pilots. There are no specific legal requirements for these evaluations. Massachusetts uses benefit-cost tests in connection with their ratepayer-funded energy efficiency programs. Massachusetts relies on the Total Resource Cost (TRC) test and considers it to be its primary test for decision making. Resource and non-resource benefits are determined through the EM&V process to be included in the TRC and approved by the DPU. The rules for benefit-cost tests are stated in the Green Communities Act of 2008 and DPU 8-50-A. Benefit-cost tests are required at the overall portfolio and total program levels screening.


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August 13, 2013