§ 21 — Energy efficiency and demand reduction resources cost-effective or less expensive than supply preferred; energy and natural gas efficiency investment plans; failure to reasonably comply with plan

Massachusetts § 21

• Jurisdiction: Massachusetts
• Part I: ADMINISTRATION OF THE GOVERNMENT
• Title II: EXECUTIVE AND ADMINISTRATIVE OFFICERS OF THE COMMONWEALTH
• Ch. 25: DEPARTMENT OF PUBLIC UTILITIES

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Section 21. (a) To mitigate capacity and energy costs for all customers, the department shall ensure that, subject to subsection (c) of section 19, electric and natural gas resource needs shall first be met through all available energy efficiency and demand reduction resources that are cost effective or less expensive than supply; provided, however, that when determining cost-effectiveness, the calculation of benefits shall include calculations of the social value of greenhouse gas emissions reductions. The cost of supply shall be determined by the department with consideration of the average cost of generation to all customer classes over the previous 24 months.[Paragraphs (1) and (2) of subsection (b) applicable to energy efficiency plans beginning with the 2025 to 2027 plan. See 2022, 179, Sec. 94.]

(b)(1) Every 3 years, on or before March 31, the electric distribution companies and municipal aggregators with certified efficiency plans shall jointly prepare an energy efficiency investment plan and the natural gas distribution companies shall jointly prepare a natural gas efficiency investment plan. Each plan shall provide for the acquisition of all available energy efficiency and demand reduction resources that are cost effective or less expensive than supply and shall be prepared in coordination with the energy efficiency advisory council established by section 22; provided, however, that when determining cost-effectiveness, the calculation of benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling. Each plan shall provide for the acquisition, with the lowest reasonable customer contribution, of all of the cost effective energy efficiency and demand reduction resources that are available from municipalities and other governmental bodies; provided, however, that when determining cost-effectiveness, the calculation of benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling.

(2) A plan shall include: (i) an assessment of the estimated lifetime cost, reliability and magnitude of all available energy efficiency and demand reduction resources that are cost effective or less expensive than supply; provided, however, that when determining cost-effectiveness, the calculation of benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling; (ii) the amount of demand resources, including efficiency, conservation, demand response and load management, that are proposed to be acquired under the plan and the basis for this determination; (iii) the estimated energy cost savings that the acquisition of such resources will provide to electricity and natural gas consumers, including, but not limited to, reductions in capacity and energy costs and increases in rate stability and affordability for low-income customers; (iv) a description of programs, which may include, but which shall not be limited to: (A) efficiency and load management programs, including energy storage and other active demand management technologies, and strategic electrification, such as measures that are designed to result in cost-effective reductions in greenhouse gas emissions through the use of expanded electricity consumption while minimizing ratepayer costs; (B) demand response programs; (C) programs for research, development and commercialization of products or processes which are more energy-efficient than those generally available; (D) programs for development of markets for such products and processes, including recommendations for new appliance and product efficiency standards; (E) programs providing support for energy use assessment, real time monitoring systems, engineering studies and services related to new construction or major building renovation, including integration of such assessments, systems, studies and services with building energy codes programs and processes, or those regarding the development of high performance or sustainable buildings that exceed code; (F) programs for the design, manufacture, commercialization and purchase of energy-efficient appliances and heating, air conditioning and lighting devices; (G) programs for planning and evaluation; (H) programs providing commercial, industrial and institutional customers with greater flexibility and control over demand side investments funded by the programs at their facilities; (I) programs for public education regarding energy efficiency and demand management; and (J) programs that result in customers switching to renewable energy sources or other clean energy technologies including, but not limited to, programs that combine efficiency and electrification with renewable generation and storage; provided, however, that not more than 1 per cent of the fund shall be expended for items (C) and (D) collectively, without authorization from the advisory council; (v) a proposed mechanism which provides performance incentives to the companies based on their success in meeting or exceeding the goals in the plan; (vi) the budget that is needed to support the programs; (vii) a fully reconciling funding mechanism which may include, but which shall not be limited to, the charge authorized by section 19; (viii) the estimated amount of reduction in peak load that will be reduced from each option and any estimated economic benefits for such projects, including job retention, job growth or economic development; (ix) an estimate of the social value of greenhouse gas emissions reductions that will result from the plan, including a numerical value of the plan's contribution to meeting each statewide greenhouse gas emissions limit and sublimit set by statute or regulation, together with provisions for giving each value prominent display in communications and plan documents; (x) data showing the percentage of all monies collected that will be used for direct consumer benefit, such as incentives and technical assistance to carry the plan; (xi) no spending on incentives, programs or support for systems, equipment, workforce development or training as they relate to new fossil fuel equipment unless such spending is for low-income households, emergency facilities, hospitals, a backup thermal energy source for a heat pump, or hard to electrify uses, such as industrial processes; (xii) consideration of historic and present program participation by low and moderate-income households, including households that rent; (xiii) strategies and investments that the programs will undertake to achieve equitable access and reduce or eliminate any disparities in program uptake; and (xiv) a method for capturing the following data to assess the plan's services to low-income ratepayers: (A) the total number of ratepayers per municipality served; (B) the total energy efficiency surcharge dollars paid by ratepayers as part of their utility bills per municipality served; and (C) the total incentives provided by the program administrators by municipality served, delineated by utility and sector, including residential, residential low-income, commercial and industrial. With the approval of the council, the plan may also include a mechanism to prioritize projects that have substantial benefits in reducing peak load, reducing greenhouse gas emissions, reducing the energy consumption or costs of municipalities or other governmental bodies, maximizing net climate, environmental and equity impacts or that have economic development, job creation or job retention benefits.

(3) A program included in the plan shall be screened through cost-effectiveness testing which compares the value of program benefits to the program costs to ensure that the program is designed to obtain energy savings and other benefits with value greater than the costs of the program; provided, however, that when determining cost-effectiveness, the calculation of program benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling. Program cost effectiveness shall be reviewed periodically by the department and by the energy efficiency advisory council. For the purposes of reviewing cost effectiveness, programs shall be aggregated by sector. Any sector with a benefit cost ratio greater than 1.0 indicating benefits are greater than costs shall be considered cost-effective. If a sector fails the cost-effectiveness test as part of the review process, its component programs shall either be modified so that the sector meets the test or shall be terminated.

[Subsection (c) applicable to energy efficiency plans beginning with the 2025 to 2027 plan. See 2022, 179, Sec. 94.]

(c) Each plan prepared under subsection (b) shall be submitted for approval and comment by the energy efficiency advisory council every 3 years on or before March 31. The electric and natural gas distribution companies and municipal aggregators shall provide any additional information requested by the council that is relevant to the consideration of the plan. The council shall review the plan and any additional information and shall submit its approval or comments to the electric and natural gas distribution companies and municipal aggregators not later than 3 months after submission of the plan. The electric and natural gas distribution companies and municipal aggregators may make any changes or revisions to reflect the input of the council.

(d)(1) The electric and natural gas distribution companies and municipal aggregators shall submit their respective plans, together with the council's approval or comments and a statement of any unresolved issues, to the department every 3 years on or before October 31. The department shall consider the plans and shall provide an opportunity for interested parties to be heard in a public hearing.

[Paragraph (2) of subsection (d) applicable to energy efficiency plans beginning with the 2025 to 2027 plan. See 2022, 179, Sec. 94.]

(2) Not later than 120 days after submission of a plan, the department shall issue a decision on the plan which ensures that the electric and natural gas distribution companies have complied with the requirements of this section and considered climate, environmental and equity benefits, and shall approve, modify and approve, or reject and require the resubmission of the plan accordingly; provided, however, that when determining cost-effectiveness, the calculation of program benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling. The department shall approve a fully reconciling funding mechanism for the approved plan and, in the case of municipal aggregators, a fully reconciling funding mechanism that requires coordination between the distribution company and municipal aggregator to ensure that program costs are collected, allocated and distributed in a cost effective, fair and equitable manner. The department shall determine the effectiveness of the plan on an annual basis.

(3) Each electric and natural gas plan shall be in effect for 3 years.

(4) Notwithstanding the requirements of paragraph (1) of subsection (b), the plans shall be constructed to meet or exceed the goal set by the secretary pursuant to section 3B of chapter 21N.

(5) Not later than 15 months after the conclusion of the final year of each plan, the department, drawing upon the most accurate and most complete data and measurements then available, shall issue a statement in writing to the clerks of the house of representatives and the senate, the house and senate committees on ways and means, the joint committee on telecommunications, utilities and energy and the joint committee on the environment, natural resources and agriculture, indicating the degree to which the activities undertaken pursuant to the performance of each plan met the goal for the plan set by the secretary pursuant to section 3B of chapter 21N.

(e) If an electric or natural gas distribution company or municipal aggregator has not reasonably complied with the plan, the department may open an investigation. In any such investigation, the utility company or aggregator shall have the burden of proof to show whether it had good cause for failing to reasonably comply with the plan. If the utility company or aggregator does not meet its burden, the department may levy a fine of not more than the product of $0.05 per kilowatt-hour or $1 per therm times the shortfall of kilowatt-hours saved or therms saved, as applicable, depending upon the facts and circumstances and degree of fault, which shall be paid to the Massachusetts clean energy technology center within 60 days after the end of the year in which the department levies the fine. The fine shall not impact ratepayers. The department of energy resources shall oversee the use of the funds held by the Massachusetts clean energy technology center under this subsection so as to maximize the amount of energy efficiency achieved.

[Subsection (f) applicable to energy efficiency plans beginning with the 2025 to 2027 plan. See 2022, 179, Sec. 94.]

(f) The need for a program administrator to prepare for meetings with the council during the department's 120–day review period after submission of a plan shall not constitute good cause in a motion for an extension of time to respond to discovery or in a motion for an extension of time to respond to a record request.