As he’s crafting the Senate’s impending energy legislation, Senator Michael Barrett signaled an interest in finding savings by reforming a program that encourages and helps cover the costs for utilities to replace leak-prone gas pipes.
The program, Gas System Enhancement Plan or GSEP, was created in 2014 as part of a gas leaks law and creates a mechanism for companies to recoup the costs associated with replacing pipes.
Barrett, who chairs the Telecommunications, Utilities and Energy Committee which deals with climate and energy legislation, told the News Service that GSEP was created as an “exception to the rule” to deal with gas leaks, and now it is a rule that needs changing.
“As these numbers suggest, we created a loophole, and it’s become as big as a barn door and gas utilities are driving their spending right through it,” he said, pointing to a report from The Future of Heat Initiative ahead of a briefing on that data Thursday. “We probably should bring it back down to Earth, we can save people a big chunk of change if we do that.”
GSEP has grown into the “largest, most expensive” infrastructure project the state has undertaken, said Dorie Seavey, senior research scientist at the Future of Heat Initiative (FOHI), who on Thursday presented her findings on how to boost affordability for gas customers. Since 2014, GSEP has led to $6.2 billion in direct spending for pipeline replacement, she said, adding it is expected to cost $42 billion by the time the last replaced pipeline is fully paid for.
She said that Massachusetts is seeing a drop in gas customers, meanwhile, gas bills and capital spending are on the rise.
Seavey also presented data showing GSEP’s cost effectiveness has dropped since its inception. In 2015, 7.6 miles of gas main were replaced for a million dollars, compared with 2.7 miles today, according to FOHI’s analysis of Department of Public Utilities information. Also, the same data shows more money is spent per mile: operators spent $1.32 million per mile in 2015, compared with a forecast of $3.7 million per mile this year.
“In other words, there’s this strong inverse relationship between spending and output,” Seavey said.
Jamie Van Nostrand, who oversaw gas utilities for two and a half years as chair of the Department of Public Utilities under the Healey administration, is policy director at FOHI.
The typical Bay State residential gas customer uses 22% less gas today compared with 2014 and over the past five years, gas bills have increased 10% year-over-year, according to data from the U.S. Energy Information Administration.
To rein in utilities’ capital spending, Seavey suggested the state eliminate its subsidies for gas utilities to extend their gas system. She said these subsidies cost customers about $160 million in 2023.
She said DPU has been reviewing line extension allowances and is in the process of bringing them to a close but “the Legislature could really help” by supporting the move.
Additionally, Seavey said requiring companies to reduce their GSEP revenue caps could bring down gas bills. Last year, the DPU ordered companies to drop their caps from 3% to 2.5% and again to 2% this year. By 2027, the cap would drop to 1.5%, which DPU has said is the minimum allowed by state law.
The order garnered pushback from gas workers. New England Gas Workers Alliance president John Buonopane said last year the order would “put natural gas customers, utility workforce, first responders, and the public in harm’s way.” And others said it’s unwise to pullback investments in the gas system while renewable energy plans face headwinds.
The initial 0.5% GSEP revenue cap reduction lowered utilities’ planned capital spending for 2026 by 9.4%, according to data Seavey presented. Also, additional data Seavey presented shows phasing out the GSEP revenue cap by 2030 could save customers $2.5 billion over the next decade.
Asked about Seavey’s presentation, Barrett said lawmakers should take her findings into account in policies they’re crafting.
“There’s a degree to which we’re going to be held accountable for devising a policy that acknowledges them and is responsive to them,” he said.
“Energy affordability is the idea of the year. I don’t see how we dodge the math that she’s presenting to us which argues for taking down inflated gas spending,” Barrett continued.
Barrett has taken legislative aim at the GSEP program in recent sessions. The state’s 2024 energy and climate law included Senate-initiated measures meant to address wasteful spending in the GSEP program, to explicitly align it with the state climate mandates, and to shift the program’s focus away from pipe replacement and toward alternatives like pipe repair and networked geothermal.
Barrett also seemed hesitant to back a controversial provision in the House’s energy bill (H 5175) that cuts the MassSave budget by $1 billion, saying he’s heard “a lot of common sense defenses of MassSave’s current budget.”
“I’m going to have a hard time cutting the MassSave budget. I can’t find anyone who can poke holes in the math persuasively. So, I got to go elsewhere for my savings for my constituents. If I’m thinking about this rationally, I need to save them money,” he said.
Barrett noted senators have the luxury of more time to craft their policy and he hopes they can beat the House’s proposed savings of $9 billion over 10 years. As for when the policy will come out, Barrett said it’s moving along “slowly but sure.”
“If we’re going to act on [Seavey’s] research it’s going to be this year,” he said.