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Energy Efficiency Fund

Investor-Owned Utility
Municipal Utilities
Cooperative Utilities
Savings Category 
Geothermal Heat Pumps
Combined Heat & Power
Yes; specific technologies not identified
Geothermal Direct-Use
Program Info
Sector Name 
Funding Source 

Energy efficiency surcharge, revenues from the Forward Capacity Market and RGGI, other sources as approved

Program Type 
Public Benefits Fund

Massachusetts's 1997 electric utility restructuring legislation created separate public benefits funds to promote renewable energy and energy efficiency for all customer classes. Both funds were significantly revised by legislation enacted in July 2008 (The Green Communities Act, S.B. 2768). The 2008 Green Communities Act directs the electric and gas program administrators to “first acquire all available energy efficiency that is cost effective or less than the cost of supply."

The energy efficiency fund is authorized to support energy efficiency programs, including demand-side management (DSM) programs and low-income energy programs. It is funded by several sources: a non-bypassable surcharge of $0.0025 per kilowatt-hour (2.5 mills/kWh), imposed on customers of all investor-owned electric utilities in Massachusetts; amounts generated under the Forward Capacity Market program administered by ISO-New England; cap-and-trade pollution control programs, including the Regional Greenhouse Gas Initiative (RGGI) and the NOx Allowance Trading Program; and other sources approved by the Massachusetts Department of Energy Resources (DOER), the Energy Efficiency Advisory Council, and the Department of Public Utilities (DPU). The energy efficiency surcharge does not have an expiration date. The non-bypassable surcharge is subject to a reconciling factor to ensure that energy efficiency program costs are fully recovered.

Efficiency programs are administered by electric utilities and municipal aggregators, with approval by a state-appointed Energy Efficiency Advisory Council consisting of a broad group of stakeholders and the DPU. DOER is responsible for program oversight and evaluation. The Energy Efficiency Advisory Council's website includes minutes from meetings, information about upcoming meetings, as well as mid-term amendments to the energy efficiency plans.

The Energy Efficiency Advisory Council and the DPU are also authorized to approve and fund natural gas energy efficiency programs, including DSM programs and low-income energy programs, proposed by natural gas distribution companies. Energy efficiency activities eligible for funding through these programs include combined heat and power (CHP). Gas efficiency programs are administered by gas distribution companies. 

Electric and gas energy efficiency program funds are required to be allocated to customer classes, including the low-income residential subclass, in proportion to their contributions to those funds; provided, that at least 10% of the amount expended for electric energy efficiency programs and at least 20% of the amount expended for gas energy efficiency programs must be spent on comprehensive low-income residential DSM and education programs. The low-income residential DSM and education programs are being implemented through the state’s low-income weatherization and fuel assistance program network. 

In January 2016, the DPU approved the 2016-2018 Three-Year Energy Efficiency Plans for electric and gas utilities in the state. The joint statewide 2016-2018 plan can be found here. Results and updates are provided on the Energy Efficiency Advisory Council's website.