Financial relief for natural gas ratepayers in Massachusetts is coming — though the changes won’t take effect until March.
On Thursday, the Department of Public Utilities ordered the six gas utilities in the state to slash delivery fees, by enough to reduce the average customer bill at least 5% over the next two months. The utilities can collect the deferred costs when the weather is warmer and gas bills tend to be much lower, DPU officials said.
Current gas prices are “unsustainable” and “warrant immediate measures to provide relief to consumers,” the department’s three commissioners wrote in a letter. “Customer affordability lies at the core of the Department of Public Utilities’ priorities, and we must use all available tools at our disposal.”
The department can only require a rate adjustment for future months, so residents will still be charged current delivery rates for gas they use in February.
The commissioners also said they plan to look into longer-term, more permanent changes to prevent the sort of sticker shock and price variability many customers have felt this winter.
Kyle Murray, Massachusetts program director at the nonprofit Acadia Center, said the rate cut could make a meaningful difference for people in Massachusetts.
“I appreciate the Department’s announced steps to lower energy costs for consumers, he wrote in an email. “These measures will begin to provide much-needed relief to households that have been struggling with persistently high heating bills”
A combination of cold weather and state-approved increases for the utilities’ supply and delivery charges have caused bills to skyrocket for many of the 1.4 million households in the state that heat with natural gas. Following a public outcry, Gov. Maura Healey and a group of lawmakers sent letters to the utility regulator asking for “relief” for ratepayers.
“I am deeply troubled by the recent spike in natural gas utility rates and the financial strain this unexpected rate hike is having on Massachusetts residents,” Healey wrote. “People did not plan for these extraordinary utility rate increases, and they can only do so much to stretch a budget.”
The exact details of how utilities will slash delivery rates to comply with the order remain unclear. The department gave companies until the end of the day Monday to submit their plans.
“Energy affordability is always a top priority for us, and any rate relief is always positive – especially in light of the higher-than-normal gas bill customers have been receiving this winter,” Eversource spokesperson William Hinkle wrote in an email. “We look forward to continued conversations with the Department of Public Utilities to keep affordability top-of-mind as we continue to pursue Massachusetts’ unprecedented clean energy transition in a cost-effective manner.”
In addition to cutting future delivery rates, the DPU encouraged utilities to do more to enroll financially struggling customers in assistance or debt forgiveness programs.
Find your gas utility using this Department of Public Utilities map:
Gas bills have two main charges: supply and delivery. The supply portion reflects the cost of actual gas the customer has consumed. The rate usually changes twice a year — Nov. 1 and May 1 — and is based on global market conditions. Utilities do not profit on this portion of the bill.
Delivery is the cost of everything else: building and maintaining infrastructure, supporting the state’s energy efficiency program, known as Mass Save, subsidizing discounted energy rates for low-income customers, and funding the gas system enhancement program, which incentivizes utilities to repair and replace leaky underground pipes.
National Grid and Eversource said they hiked delivery rates in the fall to help cover the cost of several state-mandated programs. Higher than expected participation in Mass Save services was among the biggest driver of cost increases. Other factors included the cost of gas pipe replacements and the low-income discount rate program.
In response to the DPU order to cut delivery rates, Larry Chretien, the executive director of the Green Energy Consumers Alliance, said the approach the commissioners took “makes sense.”
‘It’s difficult for the DPU to solve this problem immediately,” he wrote in an email. “Moreover, I’m certain that the DPU is working on concepts that would mitigate costs to consumers as much as possible over the longer run.”
Chretien, who said he is a strong supporter of Mass Save despite its costs, pointed out there are other ways the state could fund the program. For example, taxpayer money could be tapped instead of ratepayer charges.
Mass Save is run by gas and electric utilities and gets an overhaul every three years. The Department of Public Utilities is currently reviewing the 2025-2028 plan, and is expected to issue a decision by the end of the month.
If it is approved, the plan is expected to cost ratepayers $5 billion, up $1 billion from the prior three years. Mass Save helps households conserve energy, and the new plan would also prioritize incentives for residents switch from gas or oil heating to electric heat pumps to cut climate pollution.
More details on supply and delivery changes
Supply and delivery charges rise when a customer uses more gas, increasing the overall bill. Massachusetts residents have been using a lot of gas this winter. For example, the average Eversource customer used 19% more gas this January than last January.
In addition to increased energy usage, state-approved rate hikes took effect Nov. 1.
Here are the details of those changes for the three major gas territories in the state:
National Grid:
Current supply rate: $0.85/therm
Last winter’s supply rate: $0.81/therm
The supply rate increased about 5% from last winter
Current delivery rate: $1.65/therm
Last summer’s delivery rate: $1.01/therm
Last winter’s delivery rate: $1.4283
The delivery rate increased 63% on Nov. 1 and is up about 15% from last winter
Eversource Gas Company of Massachusetts:
Current supply rate: $0.94/therm
*Supply rate Nov. 1-Jan. 31: $0.79/therm
Last winter’s supply rate: $0.66/therm
The supply rate increased about 19% beginning Feb. 1; it is up 42% from last winter
Current delivery rate: $1.43/therm
Last summer’s delivery rate: $1.12/therm
Last winter’s delivery rate: $1.07
The delivery rate increased 28% on Nov. 1, and is up about 34% from last winter
Eversource’s NSTAR territory:
Current supply rate: $0.93/therm
*Supply rate Nov. 1-Jan. 31: $0.76/therm
Last winter’s supply rate: $0.70/therm
Supply went up about 22% beginning Feb. 1; it is up 33% from last winter
Current delivery rate: $1.61/therm
Last summer’s delivery rate: $1.30/therm
Last winter’s delivery rate: $1.23
The delivery rate increased 24% on Nov. 1, and is up about 31% from last winter
*State regulations require gas utilities to adjust supply rates if the market price for gas fluctuates by more than 5% in either direction. Eversource met this criteria and got state approval to adjust rates foor both of its territories beginning Feb. 1.