Massachusetts heat-pump owners will spend less to stay warm this winter, thanks to an innovative policy going into effect this weekend.
The state’s three investor-owned electric utilities — Eversource, National Grid, and Unitil — are all offering lower winter rates to the roughly 100,000 households with electric heat pumps, starting on Nov. 1 and running through April.
“It really is what matters to people — it reduces the cost of running a heat pump,” said Larry Chretien, executive director of the Green Energy Consumers Alliance, who is replacing his own gas-fueled heating system with heat pumps this week.
Massachusetts is the first state in which all the major utilities are offering these savings. The rates — ranging from 4.3 cents to 7.5 cents per kilowatt-hour lower than the standard winter price — could trim from $70 to $140 per month off the average bill, utilities estimate. The lower rate applies to all electricity used by participating homes during the winter months.
Households that received heat-pump rebates from state energy-efficiency program Mass Save since 2019 will be automatically enrolled in the new rate. Residents who installed heat pumps earlier or didn’t work with Mass Save can contact their utility to receive the lower rate.
Massachusetts, like other states with ambitious climate goals and cold winters, has made heat-pump adoption a key part of its decarbonization strategy. Today, more than half the homes in the state use natural-gas heating, and another 25% burn heating oil or propane. More than 90,000 homes installed heat pumps from January 2021 to July 2024, but annual adoption rates will need to double over the next five years if the state is to hit its goal of getting the systems into 500,000 homes between 2020 and 2030.
The cost of installing and operating heat pumps has traditionally been a major barrier preventing people from making the switch, particularly in Massachusetts, where electric rates are among the highest in the country. Under current default rates, just 45% of households that transition to air-source heat pumps — the most common version of the appliance — would save money on heating each month, according to a study from climate-policy think tank Switchbox.
Seasonal heat-pump rates change that calculation. Eligible customers will be charged a lower rate on the delivery portion of their bill, while power-supply rates will remain the same. That means that customers who buy power from a third-party supplier or through a municipal community choice program can still participate.
The result should be more savings for more people. Factoring in the discounts, Switchbox estimates roughly two-thirds of households switching to heat pumps would see lower bills, with average monthly savings of $90. The lower cost of operation should make heat pumps afeasible financial choice for more residents, Chretien said.
“This will just put wind in the sails of the heat-pump market,” hesaid.
Proponents of heat-pump rates say the lower prices are not being subsidized by other customers. Instead, the new approach is a “right-sizing” of currently inflated winter rates.
The delivery portion of autility bill pays for the poles, wires, transformers, and other infrastructure needed to, well, deliver power. The rate is determined, roughly, by adding up these costs and dividing the total by the number of kilowatt-hours the utility expects customers to use. That number, plus an allowed rate of return for the utility, becomes the finalrate.
The grid infrastructure is built to handle moments of peak demand, typically those hottest of summer days on which millions of air conditioners turn on at once. In the winter, demand usually reaches no more than 80% of the highest summer levels, meaning plenty of capacity is left unused.
In other words, the grid already has the room to accommodate winter demand from heat pumps, so no expensive upgrades are required. Therefore, it would be unfair to ask the heat-pump owner to pay more when they aren’t adding more cost, supporters say.
And while the lower rates can save consumers money, they shouldn’t cut into utilities’ revenue, as the increased use of electricity offsets the decreased price per kilowatt-hour.
“We could see heat-pump rates as leveling the playing field,” said Amanda Sachs, state policy manager for electrification advocacy group Rewiring America.
This winter’s lower rates may be just the beginning for Massachusetts residents. The state energy department in January asked utility regulators to mandate even steeper discounts, ranging from 12 cents to 17 cents per kilowatt-hour, for the heating season starting in November 2026. With these much deeper cuts, 82% of households switching to heat pumps would end up paying less for winter heating, with amedian annual savings of $687, according to the Switchbox analysis.
Seasonal heat-pump rates are not meant to be along-term strategy. The logic underpinning the rates only holds so long as peak demand happens in the summer, and the New England grid is expected to shift to awinter-peaking system in the 2030s. By then, though, utilities should have rolled out advanced meters that will allow more sophisticated and nuanced rate structures to replace current models.
“We’ll be able to be way more accurate about heat-pump usage,” Sachssaid.