DPU Order Targets Natural Gas Expansion

DPU is also going to require distribution companies to file Climate Compliance Plans every five years (starting in 2025) to outline their plans for transitioning to clean energy and to ensure their compliance with the state's emissions limits, and the agency also will no longer allow gas distribution companies to recover costs for the promotion of natural gas use.

"As Massachusetts moves towards net zero emissions by 2050, the DPU must develop a regulatory structure for the gas sector befitting that requirement," DPU Chair James Van Nostrand said. "We are pleased to unveil a forward-thinking framework that charts a path for moving toward clean energy and enhancing the state's ability to achieve its climate goals while ensuring a fair, equitable, and orderly process."

The home construction industry and others, including former Gov. Charlie Baker, have cautioned for years that restricting natural gas could stall housing production -- one of Gov. Maura Healey's main priorities -- and add unnecessary expenses for residents.

DPU said its Wednesday order shouldn't have major impacts on housing affordability, but conceded that it could make it slightly harder for customers to install natural gas furnaces in new housing. But, the department said, that's the direction Massachusetts needs to go if it is going to achieve its greenhouse gas reduction targets.

In general, the order that DPU issued Wednesday does not directly address affordability. Instead, the department said it plans to launch another proceeding by the end of this year focused specifically on affordability and "energy burden," or the amount of a household's income that is spent on home energy bills.

"As in the case of the transition to clean energy in the electricity sector, the decarbonization of the natural gas industry may result in higher costs being imposed on ratepayers. Given the urgency of addressing the climate crisis, however, we are reluctant to slow the pace at which the transition must occur due to concerns about affordability for low- and moderate-income utility customers," DPU said in the order. "Rather, the Department will address these issues in a separate proceeding, to be commenced later this year, dedicated toward examining innovative solutions to address the energy burden and affordability, such as capping energy bills by percentage of income or offering varying levels of low-income discounts, that have been implemented in other jurisdictions."

The department said it is confident that it can develop a solution to address both decarbonization and affordability, but foreshadowed that getting there "likely will require a change in our statutory authority."

Last year, the final report from the Commission on Clean Heat recommended that Massachusetts develop and implement a "clean heat standard" that could incentivize cleaner heating technology and promote the electrification of building stock, encourage joint natural gas and electric system planning, and reorganize existing energy efficiency and clean energy transition programs to be more user-friendly for residents, businesses and contractors, among other proposals.