Under pressure for months over skyrocketing heating and electricity charges, Massachusetts House lawmakers last month took steps to check some of the nation’s highest utility bills.
And they’re not modest about the result: a whopping $9 billion in potential savings for ratepayers over the next decade, they claim, with immediate savings on the way.
Don’t cash that check just yet.
A number of critics of the legislation say the claimed savings are illusory, and even a key Beacon Hill leader has vacillated over whether ratepayers would see much benefit right away.
After the Massachusetts House passed its version of an energy bill in February, House Speaker Ron Mariano acknowledged in a television interview that, if enacted, the changes are “not going to help much at all” in the short term.
This, despite the previous claim of Democratic leaders the legislation would provide an “immediate” $1 billion in savings by slashing a number of charges on monthly energy bills that fund the state’s primary energy efficiency program. One expert said the effect of those cuts could equate to trimming a few bucks from a $300 utility bill.
As for the larger $9 billion in aggregate savings over time touted by legislators?
“I just would not call that a $9 billion package,” said Larry Chretien, executive director of the Green Energy Consumer’s Alliance. “The only thing we know for sure is the $1 billion cut to a Mass Save is going to cut Mass Save by $1 billion. But that’s also giving up the ratepayer savings that we would get from Mass Save.”
In unveiling her own energy legislation last year, Governor Maura Healey claimed even greater savings for ratepayers from changes and initiatives for how energy is bought, financed, and billed — $10 billion.
But putting a definitive price tag on comprehensive energy legislation is inherently complex, experts said. Oil and gas prices and costs for raw materials fluctuate, and external factors — as underscored by the current US-Israeli war with Iran — can cause prices to spike. And the federal government’s posture on energy can, and often does, shift from election to election.
“There’s a lot of unpredictability in this business. It can be difficult to anticipate with exact precision what some of these changes might actually do,” said Kyle Murray, Massachusetts program director for the advocacy group the Acadia Center.
Moreover the industry is governed by long-standing rules and practices, so that any changes in how energy is sourced, delivered, and charged can take a long time to work their way through to the ratepayers. Some proposals touted by lawmakers rely on either new energy sources or business practices whose promise has not yet been fully tested.
Asked during an interview on WCVB’s “On the Record” earlier in March about the potential implications for ratepayers next winter, Mariano said the “completely honest answer” is they won’t see a significant help on their energy bills next year. He also cited President Trump’s attack on clean energy programs as handicapping the state’s ability to diversify its energy sources.
Then on Wednesday, the Democrat from Quincy reversed himself, telling reporters at the State House he’s confident the bill would help people’s wallets in the short term.
“There is immediate savings in the bill, but there’s also $9 billion over 10 years, which is a significant savings,” Mariano said. “We wanted to highlight the significant savings while at the same time, knowing people will get a cut in their rate. But it was unfortunate that somehow it got muddled.”
According to a breakdown from the House budget committee, about one-third of that $9 billion would come from the cutting Mass Save, returning some ancillary payments to ratepayers and a raft of other initiatives.
Lawmakers expect to save another $5 billion by turning to new energy sources that would cost ratepayers less to buy than the current supplies.
And another $900 million or so would come from cracking down on utilities’ spending practices and reining in the controversial third-party energy supply industry.
The biggest impact is expected from a still-somewhat novel use that does have huge potential: energy storage. By offering incentives to develop new sources, the House bill estimates ratepayers could save as much as $3.13 billion over a decade from additional supplies hitting the market.
Another point of relief would come from refunding ratepayers payments they make to utilities to help with meeting renewable energy benchmarks. Trimming back these so-called alternative compliance payments would account for another $780 million in savings, in the House’s estimation.
Already, Healey earlier this year said she would use $180 million from those payments to temporarily cut energy costs for February and March. A similar refund a year ago led to customers getting a $50 credit on electric bills.
Another $1.27 billion in savings would come from the giving energy companies more flexibility to distribute electricity over the power grid in real time. However, an analysis commissioned by the Healey administration noted such a move would only have a short-term effect on ratepayers, saying “there would not be meaningful savings” from such efforts until after 2035.
The most immediate savings in the House bill, legislative leaders have said, remain the proposed $1 billion reduction in the budget of Mass Save, an energy efficiency program funded through surcharges on electric and gas bills. But that effort doesn’t necessarily equate to $1 billion saved on people’s utility bills, said Patrick Knight of Synapse Energy Economics, who helped craft the analysis of Healey’s bill.
Importantly, it doesn’t account for how much money those programs save ratepayers by reducing their energy consumption outright.
For example, a $1 billion reduction in Mass Save spending on efficiencies, Knight said, would also mean the state loses out on $1.1 billion benefits it gets from energy efficiency programs that reduce energy and fuel demands.
“You’re losing out on more savings over the next 10, 15 years,” he said.
Slashing the program’s budget may make a small difference in ratepayers’ bills. Mary Wambui, who sits on the state Energy Efficiency Advisory Council, estimated that a $1 billion cut to Mass Save would save about $12 on her roughly $300 electric bill.
The Department of Public Utilities last year already trimmed $500 million from the program’s three-year budget, cutting it from $5 billion to $4.5 billion for the 2025-27 period. It’s unclear how much savings that meant for the average ratepayers’ monthly bill.
Healey and state lawmakers are moving to address energy costs after a sharp spike in heating bills sparked outrage last winter. Steep gas and electric bills — and, more broadly, the high cost of living in Massachusetts — have become campaign talking points for the GOP candidates challenging Healey, who along every member of the Legislature is up for reelection this year. Healey on Tuesday signed an executive order directing her administration to find ways to add 10 gigawatts of power and five gigawatts of storage to the state’s supply, which her office said would help Massachusetts prepare for an increased demand in electricity over the next two decades.
But it’s the energy legislation that would write changes directly into state law. The House approved its version of the bill in February, roughly one year after Healey filed her bill. An earlier version the chamber weighed drew fierce backlash from environmental activists over a provision that would have made the state’s 2030 climate mandate to lower greenhouse gas emissions voluntary.
The House version isn’t final. The Senate is expected to respond with one of its own at some point in the coming months, though the timing is unclear. Lawmakers will then have to hash out any differences between the two versions before a bill makes it to Healey’s desk.