Latest news with #GasSystemEnhancementPlan
Yahoo
18-05-2025
- Business
- Yahoo
DPU chair: Gas system changes fit into guv's energy agenda
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 Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
02-05-2025
- Business
- Yahoo
DPU squeezing utilities on gas pipe replacement front
BOSTON (SHNS) – Gas companies were told late Wednesday night they need to immediately begin ratcheting down the amount of money they can bill customers for efforts to replace old and leaking natural gas pipelines until reaching the lowest level allowed under state law in two years. Department of Public Utilities Chair James Van Nostrand said the orders his department issued mean that gas customers 'will be able realize these savings this year,' at a time when the high cost of energy is a top concern for residents and policymakers. The orders require companies to immediately reduce their Gas System Enhancement Plan (GSEP) revenue caps to 2.5%. The existing scheme limits utilities' GSEP charges on customer bills to 3% of the previous year's revenue. The orders also require the state's six local gas distribution utilities — Berkshire Gas, Eversource Gas of Massachusetts, Liberty Utilities, National Grid, NSTAR (owned by Eversource), and Unitil — to reduce those revenue caps to 2% next year and to 1.5% in 2027, which DPU said is the minimum allowed by state law. DPU had raised the cap from 1.5% to 3% in 2019. 'For far too long the gas companies have continued to spend on unnecessary GSEP projects, costing the state's ratepayers billions for over a decade. GSEP represents the second largest cost in the gas delivery charge, which spiked this winter,' Van Nostrand said. 'These changes will ensure a well-maintained gas system by requiring gas utilities to address the issue of leak-prone pipe in a more affordable manner.' DPU said customers whose gas provider is spending to the current 3% cap will see a GSEP surcharge that is 17% percent lower as a result of the order. GSEP was introduced as part of a 2014 gas leaks law and a 2019 examination of the safety of natural gas infrastructure in Massachusetts found the program had been 'a legislative and regulatory success.' The program encourages utilities to replace leak-prone pipes by maintaining a mechanism for companies to recover the costs associated with replacement. DPU said it determined the safety of the gas distribution system can be maintained at a lower level of GSEP spending and said there are more affordable ways to address leak-prone pipes. The orders direct gas utilities to consider repairs, the use of 'advanced leak technology,' and the implementation of non-pipeline alternatives instead of pipe replacement. Past discussions of changes to the GSEP program have been met with resistance in some corners, including from the New England Gas Workers Alliance and gas workers' unions. NEGWA President John Buonopane said Thursday afternoon that his union is 'alarmed' by DPU's approach to GSEP changes and charged that the department's order 'will put natural gas customers, utility workforce, first responders, and the public in harm's way.' Others have argued it would be unwise to reduce investment in the gas system at a time when renewable energy plans are stalling. A business-backed group suggested the change is being driven by a desire to shift completely away from natural gas. 'The DPU's order presumes that rather than replacing pipes to maintain a safe and reliable distribution system, the Commonwealth's entire natural gas network can be decommissioned over the next 3-to-5 years. This assumption is not only unrealistic – but dangerous given that only 15-17% of New England's electricity is renewable after nearly two decades of investment, projects in the pipeline are still falling far short of what is needed, and the current Administration in Washington's open hostility toward wind power,' the Mass Coalition for Sustainable Energy said in a statement. The group added, 'The Commonwealth's ability to pursue an urgent and robust housing and economic development agenda that benefits all of its residents and businesses depends on a safe and reliable natural gas system. Our coalition believes the DPU needs to reexamine this order and ignore unrealistic, ideologically driven assumptions that put our safety and economic future at risk.' DPU said capital spending covered under the GSEP program has increased by 21% annually since 2015, but the number of miles of pipe replaced has only increased by less than 3% annually over the same period. Utilities spent $1.32 million per mile of pipe replaced in 2015, and in 2025 are spending $3.46 million per mile, the department said. Put another way, the miles replaced per $10 million in GSEP spending has declined from 7.59 miles in 2015 to 2.89 miles in 2025. DPU said the 'fundamental issue' with the GSEP program as it has existed 'is the lack of any meaningful incentive for cost containment.' 'Given the 4,049 miles of leak-prone pipe still remaining to be replaced, it will cost an estimated $13.7 billion in additional GSEP spending if the [gas companies] continue down the current path of relying primarily on pipe replacement and failing to control costs in any meaningful manner,' DPU wrote in the order. It added, 'Ratepayers simply cannot afford to continue down this path, and the Department would be failing our obligation under the GSEP statute to ensure that plans operate in a balanced manner, if we do not take significant action in these proceedings to reform the GSEP process.' Last year's energy and climate law included Senate-initiated measures meant to address what some said was wasteful spending in the GSEP program, to explicitly align it with the state climate mandates, and to shift the GSEP program's focus away from pipe replacement and toward alternatives like pipe repair and networked geothermal. 'Yesterday's order shows that the DPU is taking implementation of that new law seriously,' Senate Majority Leader Cindy Creem, who sponsored legislation reforming the GSEP program last session, said. 'I'm grateful to the DPU for taking action that will both reduce cots for Massachusetts residents and advance our climate goals.' There were approximately 1.7 million natural gas customers in Massachusetts as of a 2019 'Future of Gas' report, with 91% being served by either National Grid or Eversource. Berkshire Gas Company, Liberty Utilities and Unitil together served another 7% of customers while the state's four municipal gas companies served the remaining 2%. Kaitlyn Woods, an Eversource spokesperson, said the company will 'continue on behalf of our customers to safely, efficiently, and cost-effectively address aging, leak-prone pipe across the state' while it reviews the decision from DPU. 'Massachusetts' gas distribution system contains a disproportionately higher percentage of leak-prone (and aging) infrastructure when compared to the national average due to when the system was constructed. This critical work aligns with legislation that was enacted to improve the safety of the gas distribution system as well as the state's mandated emissions reduction goals, which has resulted in the amount of gas leaks across Massachusetts being cut in half since 2014,' she said. 'Eversource will remain vigilant in prioritizing the safety of our gas system for our customers and the public.' In a statement late Thursday afternoon, National Grid said it is 'dedicated to exploring viable alternatives to gas infrastructure for heating, including targeted electrification and networked geothermal.' The company said it was reviewing the DPU order and would 'remain focused on maintaining our existing network' serving more than 950,000 customers. 'By taking steps to incentivize gas companies to control costs, to evaluate more affordable solutions to replacing leak-prone pipes, and to explore non-gas pipeline alternatives, the DPU sent clear direction to the gas industry that it is time to move beyond gas,' Marilyn Ray Smith of Gas Transition Allies said. 'Over the past 10 years, the Gas System Enhancement Program has enabled gas companies to spend ratepayer money at a premium to replace outdated methane gas pipes, undermining Massachusetts's climate goals and driving up gas bills as a result.' Attorney General Andrea Campbell said the DPU orders reflect 'nearly all of our office's recommendations' to rein in GSEP spending. 'It is fundamentally unfair to charge ratepayers billions of dollars to prop up the gas system as the Commonwealth works to decarbonize,' Campbell said. 'Gas bills skyrocketed this winter, and ratepayers need relief. Our office's advocacy has resulted in significant reductions to the amount that gas companies can bill to customers for unnecessary investments in gas infrastructure that does nothing to achieve our climate goals.' Another Gas Transition Allies member, Audrey Schulman, likened the GSEP program to 'investing our children's money in infrastructure they aren't likely to be able to use.' But others are less certain that Massachusetts is ready to shun fossil fuels. Hours before the DPU filed its orders, the House's point person for energy policy cracked open the door to possibility of changes to the state's commitment to reach net-zero emissions by 2050 in light of major federal policy changes. 'While we have passed major climate legislation the past few sessions, we are in the process of reviewing all of our climate and emission mandates, goals and plans. With the new administration in Washington pulling funding, and with the president's executive order preventing the development of new offshore wind, we must reevaluate and try to figure out the new reality of meeting our climate change goals without a federal partner and without our planned energy diversification,' Telecommunications, Utilities and Energy Committee Chair Rep. Mark Cusack said. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
