Energy Efficiency First Fuel Requirement (Gas and Electric)
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In 2008, Governor Patrick signed a major energy reform bill, the Green Communities Act (S.B. 2768) (GCA). This bill required electric and gas utilities prioritize cost-effective energy efficiency and demand reduction resources over supply resources and ordered that utilities submit three-year plans outlining how they would meet the requirement. The bill also created the Energy Efficiency Advisory Council (EEAC) to play a key role in designing and reviewing utility plans designed to meet the requirements of the Green Communities Act.
Electric and Natural Gas Sales Reduction Requirements
Highlights of the targets and other features of the most recently approved statewide three-year plan for the years 2016-2018 can be seen in the table below.
|Proposed Energy Savings % of Forecasted Sales (2016-2018)||2.93%||1.24%|
|Proposed Energy Savings (MWh for electric, Dth for gas)||4,117,539||8,580,962|
|Performance Incentive at Design Level||$100 million||$18 million|
Threshold to Begin Earning Incentive in 2018
(% of Proposed Savings Goals)
|Performance Incentive Cap (% of Proposed Savings Goals)||125%||125%|
However, it is important to note that the plans are subject to "mid-term modifications" by each utility. To see the most recent plan and updates, as well as information on implementation to this point, please visit the EEAC's website. Funding to implement the plans comes from a variety of sources.
Program Administrator Type
Massachusetts' electric and gas utilities implement the programs required for meeting the statewide targets of the GCA.
Cost Effectiveness and Program Evaluation
Massachusetts uses the Total Resource Cost (TRC) test, one of the five "California tests" in the California Standard Practice Manual, as its primary cost-effectiveness test.
Utility Cost Recovery Provisions
As outlined in the Sales Reduction section above, investor-owned utilities in Massachusetts are permitted to receive a performance incentive capped at 125% achievement of their agreed-upon goals. The threshold for the incentive in 2018 is achievement of 75% of the agreed-upon goals.
In addition, the GCA requires Massachusetts' investor-owned utilities to transition to full decoupling of their revenues from their sales. Eversource Electric and Berkshire Gas do not yet have Department of Public Utilities-approved decoupling mechanisms. Until a decoupling mechanism is put into place, these utilities may recover lost base revenues from incremental efficiency savings.
Large customers are permitted to "self-direct" the funds they would pay towards utility cost recovery for these programs for programs of their choosing.