Why are MA Energy Costs rising? And how can you protect yourself?
By Rachel Gentile
Utility prices are increasing at an alarming rate, leaving customers on the hook for massive energy bills. In February, the Department of Public Utilities ordered the utilities to reduce costs to natural gas customers by 5%. Earlier in March, Governor Maura Healey announced a new “energy affordability agenda” which includes $50 electricity bill credits for all residential customers, a total of $125 MM redirected from funds collected to support clean energy.
Massachusetts is known for its high electricity prices, claiming the title for the third-highest residential electricity price in the nation in 2023. According to a report by the American Council for an Energy Efficient Economy, Boston has one of the highest energy burdens in the country. Some of our lowest-income residents are spending as much as 20% of their monthly income on energy costs, perpetuating the poverty cycle.
Massachusetts’ Unique Energy Challenges
Supply
Massachusetts’ dependence on electricity and natural gas imported from other states makes our electricity rates particularly susceptible to price spikes. Massachusetts is one of the most densely populated states in the country and we use a lot of energy. In recent years, Massachusetts has consumed twice as much energy as it produced, requiring additional electricity to be brought in via the regional grid, contributing to price volatility.
New England imports 5-6% of its electricity from Canada (primarily hydropower), which will be subject to tariffs recently put into place by the Trump Administration. Governor Healey was recently quoted saying that these tariffs could raise electricity costs by more than $200 million per year in the Bay State. A new hydropower transmission line, New England Clean Energy Connect, is expected to go online next year and will meet 20% of the Bay State’s electricity needs, which the Healey Administration expects will save ratepayers about $50 million annually.
There are challenges for the electricity we produce in-state as well. In 2023, 63% of Massachusetts’ in-state electricity generation came from natural gas plants. Since Massachusetts does not have any natural gas reserves or production, all of this fuel is brought in either by pipeline or as liquefied natural gas (LNG) in ships – in fact, the LNG terminal in Everett, MA is responsible for 87% of LNG imports nationwide. Since a significant amount of this gas is imported from overseas, these fuel resources are more susceptible to tariffs and supply chain-disrupting events. A prime example of this phenomenon can be seen in the chart below, when prices skyrocketed after the war in Ukraine broke out in 2022.
Delivery
Is MassSave the reason prices are so high?
Many critics have scapegoated the MassSave Program, the Commonwealth’s award-winning energy efficiency program, as the culprit for rising utility costs. MassSave’s budget is funded through delivery charges on customer bills, which have gone up substantially in recent years, and while the program is certainly a contributor to the current cost crisis, it is not the main driver of energy bill cost increases. In the long term, the energy efficiency measures supported by MassSave reduce customers’ energy bills. According to the Conservation Law Foundation, the recent $500 million cut to the MassSave program spurred by these rising costs will result in an almost $1.5 billion loss in benefits and cost savings to residents of the Commonwealth.
A narrow focus on the unit cost of electricity ($/kWh) can be misleading. As noted above, Massachusetts has the third highest $/kWh price of electricity in the country, but our per capita annual energy prices are quite low, 35th out of all states per the EIA. At $4,842 per year, our average per capita energy cost in Massachusetts is nearly 30% lower than what it is in Texas ($6,748), even though we have colder weather. This lower per capita energy cost can be directly attributed to statewide investments in MassSave and the solar incentive programs which reduce energy demand.
Utility Profit
In addition to funding state-mandated programs like MassSave, delivery charges cover the cost of building and maintaining infrastructure. These infrastructure projects are where utilities generate profit since electricity supply rates are set by the electricity wholesale market. Movements to increase resiliency through energy efficiency and distributed energy resources like solar reduce the need for traditional infrastructure investments. A recent study by the Maine Public Utilities Commission found that in 2023, the state’s net energy metering policy for distributed energy resources saved ratepayers $30 MM., By eliminating the need for new investments in the distribution grid by utility companies, these programs directly threaten utility companies’ profit. This helps to explain why utility companies like Eversource are willing to pay for lobbyists to call the benefits of these programs into question.
Opportunities to Reduce Your Energy Burden
For those of us who can’t afford lobbyists, it might feel like this energy system is too large and complex to disrupt, but there many ways that working people, small businesses and nonprofits can build energy independence. And the economics are on our side.
On-Site Solar
One of the most impactful ways for an organization to insulate itself from rising energy prices is to install on-site solar power, either through direct ownership or a no-cost power purchase agreement (PPA). In mid-2024, small-scale solar, including rooftop projects and small parking canopies, accounted for two-thirds of the solar capacity deployed in Massachusetts – yes, even more than those large utility-scale projects you see on the side of the highway. Under the new SMART Program (Solar Massachusetts Renewable Target), many of these smaller projects will benefit from higher state incentives, making solar even more affordable.
Solar ownership dramatically reduces the amount of electricity that your organization needs to buy from utility companies, protecting you from rising prices. If your solar array produces more energy than your building uses, like on a sunny summer day, you will receive credits on your bill. These bill credits can offset the electricity you use when the solar panels are not producing enough electricity, like at night. Credits from excess electricity can also be used to cover utility delivery fees, resulting in regular “No Payment Due” electric bills.
In a no-cost PPA, an organization contracts with a third-party financier who installs and owns the solar panels on their roof in exchange for discounted electricity. With a PPA contract, you lock in an electricity rate with a fixed yearly price escalator, usually 1%. In recent years, electricity rates have risen far faster than 1% per year with a national average rate increase of 3.6% in 2024, outpacing inflation. While the overall cost savings for a PPA are lower than solar ownership, it is a great option for cash-strapped organizations that still want to insulate themselves from rising utility costs, but without any upfront costs.
Finding Available Rebates and Incentives
Residents, businesses, and nonprofits can all benefit from the state’s energy rebates and incentives, like MassSave and SMART. If you haven’t yet, it’s a good idea to utilize the energyCENTS: Commonwealth Energy Tool for Savings tool to find out what kind of incentive or services you qualify for. As previously discussed, you’re already paying for these programs in your electric bill so you should take advantage of all cost savings available.
Sign up for Municipal Competitive Supply
Many municipalities in Massachusetts, including Boston, have created competitive supply programs, also known as Community Choice Aggregation (CCA). These programs allow the municipalities to negotiate electricity supply prices for residents and businesses which typically provides customers with lower and more stable pricing than the basic utility rate from National Grid or Eversource. Your electricity is still delivered the same way and your electricity bill will still come from the utility, but your $/kWh price will be set by your municipality’s competitive supply contract.
Talk to your lawmakers
Lastly, it may seem small, but talking to your lawmakers can make a difference. Public outcry following high prices in February led lawmakers to order changes from the DPU. We may be beholden to a large and unwieldy energy system, but that does not mean consumers are powerless.
Take action today to protect your organization from rising electricity rates and understand your building’s solar capacity and potential savings. Reach out to us here.