DPU chair: Gas system changes fit into guv's energy agenda

Yahoo

18-05-2025

BOSTON (SHNS) – The state's top utility regulator appeared before lawmakers Wednesday to explain a major policy shift limiting how much gas companies can charge customers for pipe replacement projects, aligning with the governor's new push to rein in energy costs.
Department of Public Utilities Chairman James Van Nostrand appeared before the Senate Committee on Climate Change and Global Warming one day after Gov. Maura Healey introduced legislation aimed at addressing consumer energy costs on Tuesday.
The DPU's sweeping order on the Gas System Enhancement Plan (GSEP) program dovetails with that effort, Van Nostrand explained, following a winter of sky-high heating bills and with the state's focus on the transition to clean energy.
'In the last few months, we've been working with [the Executive Office of Energy and Environmental Affairs] to talk about where the cost savings, the things we're doing at the DPU, how that translates into that overall affordability agenda,' Van Nostrand told the committee.
On April 30, the DPU issued an order reducing the maximum share of its annual revenue that gas utilities can recover from customers for work under the GSEP program, which was originally designed to accelerate the replacement of aging gas pipes. Van Nostrand said Wednesday that the program has been costing ratepayers too much.
'Our review has generally found that the utilities are not spending ratepayer funds wisely,' he said, adding that companies have 'over-relied on pipe replacement rather than repair or advanced leak technology, which can address the leak-prone pipe at a lower cost to customers.'
Since 2015, GSEP-related capital spending has increased by 21% annually, while the number of miles of pipe remediated has increased by less than 3% per year, Van Nostrand said. In 2015, utilities spent $1.32 million per mile replaced; by 2025, the utilities' planned spending per mile is $3.46 million.
'Stating it a bit differently, miles replaced per $10 million has declined from 7.59 miles in 2015 to 2.89 miles in 2025,' the DPU chair told senators on the committee. 'We've concluded, in the order, that the absence of meaningful incentives to control costs was contributing to unnecessary spending.'
Eversource, one of the largest energy companies in Massachusetts, says GSEP represents a small fraction of their customers' bills and was not a significant contributor to the recent winter gas spikes. Spokesperson William Hinkle said supply chain issues and inflation have driven cost increases for materials and construction since the pandemic began.
'This leak-prone, aging infrastructure requires thoughtful management to mitigate significant safety risks and environmental challenges posed by gas leaks, which contribute to both public safety hazards and greenhouse gas emissions,' Hinkle said.
He continued, 'Through GSEP, we are proud of our significant efforts to safely replace over 900 miles of aging, leaky pipes and eliminate more than four thousand identified leaks across Massachusetts ultimately enhancing public safety for Massachusetts residents and effectively limiting the amount of methane gas, escaping into the atmosphere.'
GSEP was never meant to be a safety program, Van Nostrand told lawmakers Wednesday.
'Our state and federal safety requirements remain rigorous and strictly enforced,' he said. 'In fact, we are proud that our pipeline safety division here at the DPU is considered to be one of the best in the nation.'
Sen. Cindy Creem, who chairs the Senate committee and sponsored legislation reforming the GSEP program last session, asked Van Nostrand if he had an estimate of what taxpayers will save on their bills due to the GSEP reform.
Under the new order, the allowable cap on recoverable GSEP spending will be reduced from 3% of a utility's revenue to 2.5% immediately, with further reductions scheduled — to 2% in 2026 and 1.5% in 2027. The 1.5% cap reflects the minimum threshold allowed by statute and aligns with the recommendations of a GSEP working group convened by the DPU in 2022 which filed recommendations on how to rein in the program. DPU had raised the cap from 1.5% to 3% in 2019.
Van Nostrand told Creem that just reducing the revenue cap from 3% to 2.5% could create a 17% reduction in the GSEP charge on customers' bills, assuming the gas company is spending at the 3% annual cap.
Sen. Michael Barrett, who chairs the Telecommunications, Utilities and Energy Committee which deals with climate and energy legislation, asked about the messaging around the new GSEP order, and how it fits into the governor's recently rolled out energy affordability legislation.
'Yesterday, the administration did have a press conference on energy affordability. There is a degree to which these very important cost-reduction steps being taken by the DPU are on a separate track. They haven't been factored into the cost savings that the administration seeks, and that I know the Legislature is going to be interested in seeking as well,' Barrett said. 'Your numbers, which are real numbers representing incredible work done by you and your staff, are outside that energy affordability conversation. And really, those numbers should be part of the conversation.'
Van Nostrand replied that 'to some extent' the DPU's work is a part of the administration's broader affordability plan. The DPU is an agency within the Executive Office of Energy and Environmental Affairs, all under the governor's purview.
'We were part of these discussions with Undersecretary [of Energy Michael] Judge and EEA developing that whole proposal. And those savings, for example, reducing from 3% to 2.5%, that's a meaningful reduction right there,' he said.
The governor's energy bill includes some measures that directly relate to the DPU, including an accountability-related section that authorizes the agency to audit the utilities and ban the use of ratepayer funds for costs not associated with providing energy to customers. And there is support elsewhere on Beacon Hill for legislative action related to GSEP.
Mary Gardner, assistant attorney general in the Energy and Ratepayer Advocacy Division, said the attorney general's office supports a 'gradual step down' of the GSEP program to 0% — effectively ending it — by 2030.
'The unintended consequences of accelerated cost recovery through GSEP is too expensive for rate payers, and it's working against our progress towards the climate mandates,' Gardner said.
The 2014 law that created GSEP set a statutory minimum of 1.5%, so any further reductions would require legislative action.
John Buonopane, president of the New England Gas Workers Alliance, said gas workers were 'intentionally' not invited to the committee's hearing on the new GSEP order.
'It's disappointing that this Senate committee held a hearing on a natural gas safety program but intentionally left out the perspective of the men and women who work with leak prone pipe on a daily basis,' Buonopane said in a statement Wednesday. 'As we re-evaluate the energy transition, we need to take a pragmatic approach to the infrastructure that provides safe heat to most Massachusetts residents. That's not what we heard today.'
WWLP-22News, an NBC affiliate, began broadcasting in March 1953 to provide local news, network, syndicated, and local programming to western Massachusetts. Watch the 22News Digital Edition weekdays at 4 p.m. on WWLP.com.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.