Energy Efficiency First Fuel Requirement (Gas and Electric)

OriginIn 2008, the Governor of Massachusetts signed a major energy reform bill, S.B. 2768, otherwise known as the Green Communities Act (GCA). This bill required electric and gas utilities to prioritize cost-effective energy efficiency and demand reduction resources oversupply 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 RequirementsHighlights of the targets and other features of the most recently approved statewide three-year plan for the years 2025-2027 can be seen in the table below. Utility Type Electric Gas 2030 Annual Emissions Reductions (MTCO2e; 2025-2027) 556,621 465,280 Proposed Net Annual Energy Savings (MMBtu; 2025-2027) 106,947,852 69,835,865 Performance Incentive (Total) $106.9 million $69.8 million Equity Savings Component Threshold (% of Proposed Savings Goals) 65% 65% Value Savings Component Threshold (% of Proposed Savings Goals)75%75% Standard Savings Component Threshold (% of Proposed Savings Goals) 60% 60% 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 TypeMassachusetts' electric and gas utilities implement the programs required for meeting the statewide targets of the GCA.Cost Effectiveness and Program EvaluationMassachusetts 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 ProvisionsAs 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 thresholds for the equity, electrification and standard component incentives under the 2022-2024 plan are the achievement of 85%, 60%, and 75% of the agreed-upon goals, respectively. In addition, the GCA requires Massachusetts' investor-owned utilities to transition to full decoupling of their revenues from their sales. Until a decoupling mechanism is put into place, these utilities may recover lost base revenues from incremental efficiency savings.Special ProvisionsLarge customers are permitted to "self-direct" the funds they would pay towards utility cost recovery for these programs for programs of their choosing.