Massachusetts utilities, regulators, and lawmakers are beginning to chart their next steps following an order issued two months ago that signaled the beginning of the end of natural gas in the state.
While hailed as a transformational win by clean energy advocates, the Dec. 6 decision is light on specifics, instead laying out broad, guiding principles that stakeholders will need to convert into policy.
“The order poses the questions, but doesn’t answer them for the most part,” said state Sen. Michael Barrett, chair of the joint telecommunications, utilities, and energy committee. “It’s an opening statement in the huge conversation Massachusetts needs to have about truly reducing the footprint of the gas system in the state.”
The order tops off a three-year investigation into how gas utilities can help Massachusetts achieve its goal of net-zero carbon emissions by 2050. Released by the Department of Public Utilities, the document sets an explicit policy goal of transitioning from natural gas and rejects utilities’ proposal to integrate renewable natural gas as a route to decarbonization. It also calls for gas and electric utilities to coordinate their planning and requires policies to ensure the transition doesn’t financially burden lower-income residents.
“The most amazing part – and the part that I never thought I would see – is it’s actually saying we as a state need to reduce our emissions and you as a public utility need to be an active part of this,” says Amy Boyd Rabin, vice president of policy for the Environmental League of Massachusetts. “I think that’s the first time in this country that such a standard has been applied.”
Utility companies, the legislature, and state regulators still have to lay out concrete strategies for translating the ideas in the order into meaningful change, advocates said.
Utilities
Perhaps the most pressing question, advocates said, is the issue of coordination between electric and gas utilities. While the two providers often have the same name and corporate parent — National Grid or Eversource, for example — the gas and electric sides of the business are run as separate companies, with distinct leadership, decision-making, and regulatory requirements.
Though the gas and electric companies are legally allowed to share information and ideas, it is unclear how often they do so, Rabin said. The transition from gas, however, makes communication between the two essential: The electric side will need to do extensive planning to make sure it is ready to deal with surging demand as buildings transition from gas heat to electric heat pumps.
To some degree, this move is already underway: At the end of January, electric utilities filed state-mandated Electric System Modernization Plans that propose upgrades, investments, and programs to accommodate increased load on the grid over the next 10 years. The proposals promise billions of dollars in investments, call for dramatic expansion of grid capacity and technology upgrades, and outline plans to engage lower-income residents and communities of color in the ongoing process.
“They were already on the track of ‘everything is going to be electrified,’ so it should be relatively aligned,” said Caitlin Peale Sloan, vice president for Massachusetts at the Conservation Law Foundation. “Most of the changes are on the gas utilities, where they have to reformat their business model to deal with this.”
Efforts at coordination across utilities, however, need to look at more than the big picture, said Audrey Schulman, co-executive director of climate solutions nonprofit HEET. If the gas company needs to decide what to do about a length of leaky pipe, there should be processes in place for it to determine whether the wires and substations in that specific neighborhood could handle a switch from gas to electric, and how to get them ready for the change, she said.
“They need to ask: What is the best method by which this street can be transitioned to electricity for everything at the least cost and in the most efficient, synergistic way?” Schulman said. “My hope is it will force utilities to talk to each other.”
Regulators
Though the Department of Public Utilities was the one to issue the order, it also needs to modify some of its internal processes and policies to adhere to the guidelines it laid out. To some degree, the details will be worked out as the department is asked to rule on filings.
“There will be a first mover who ends up setting the precedent — the next one up to file a rate case will have to deal with some of these issues,” Rabin said.
Already, the utilities have submitted a joint request for the department to clarify certain details about the order’s requirement for considering alternatives to further pipeline investment, its timeline for certain provisions, and the methodology for calculating emissions reductions.
Additionally, however, regulators will likely need to start more of their own investigations, like the one that led to the December order. The department has already started this learning process: In early January, it launched an investigation into energy affordability with the goal of better understanding the cost burden on low-income households and how state programs can ease that weight, particularly as the clean energy transition could drive some costs higher.
More such formalized research will also be needed, Rabin said.
“There need to be more orders laying out exactly how this is going to happen, because it is a very different business proposition for certainly the gas utilities but also the electric utilities,” she said. “We should start laying out exactly how this stuff is going to work.”
Though the regulators have a lot of work ahead of them, advocates and other stakeholders expressed optimism that the department, under the administration of Gov. Maura Healey, is taking the need to move to clean energy more seriously than under previous governors.
“The most important thing here is that it signals a real turning of the page,” Barrett said.
Legislators
New legislation will likely be needed to enable and ease the way for some of the actions envisioned in the order.
Advocates pointed to several details that may need legislative intervention. State law, for example, includes an “obligation to serve” provision that some have interpreted as requiring the state to allow gas companies to provide connections; tweaks to this language would allow regulators to more firmly prevent extension of gas service. New legislation could also lay out ways for the state to stop utilities from passing on the cost of new hookups to its base of ratepayers.
Lawmakers will likely wait for specific guidance from regulators and the administration, however, before pushing these measures, Sloan said.
“The legislature is still looking largely to the [Department of Public Utilities] to tee up very specific statutory changes that might be needed,” she said. “Legislators feel that we need to proceed carefully and they’re going to want to hear from the administration.”
At the same time, Barrett said, the most important thing the legislature can do right now to help accelerate the transition away from natural gas is to address siting and permitting reform, making it easier to build renewable energy projects and deliver the power they generate. And the December order, he said, is a welcome sign that the administrative and regulatory climate is right for action.
“The [department] is saying that real steps need to be taken,” he said. “The legislature will welcome the moral clarity and will respond beginning in 2024.”