Energy Efficiency Fund

Massachusetts Public Benefit Funds

Massachusetts's 1997 electric utility restructuring legislation created two separate public benefit funds to promote renewable energy  and energy efficiency for all customer classes

Funding and Administration

The energy efficiency fund is authorized to support energy efficiency programs, including demand-side management (DSM) programs and low-income energy programs. It is funded by several sources: a non-bypassable surcharge of $0.0025 per kilowatt-hour (2.5 mills/kWh), imposed on customers of all investor-owned electric utilities in Massachusetts; amounts generated under the Forward Capacity Market program administered by ISO-New England; cap-and-trade pollution control programs, including the Regional Greenhouse Gas Initiative (RGGI) and the NOx Allowance Trading Program; and other sources approved by the Massachusetts Department of Energy Resources (DOER), the Energy Efficiency Advisory Council, and the Department of Public Utilities (DPU). The energy efficiency surcharge does not have an expiration date. The non-bypassable surcharge is subject to a reconciling factor to ensure that energy efficiency program costs are fully recovered.

Efficiency programs are administered by electric utilities and municipal aggregators, with approval by a state-appointed Energy Efficiency Advisory Council consisting of a broad group of stakeholders and the DPU. DOER is responsible for program oversight and evaluation. The Energy Efficiency Advisory Council's website includes minutes from meetings, information about upcoming meetings, as well as mid-term amendments to the energy efficiency plans.

Electric and gas energy efficiency program funds are required to be allocated to customer classes, including the low-income residential subclass, in proportion to their contributions to those funds; provided, that at least 10% of the amount expended for electric energy efficiency programs and at least 20% of the amount expended for gas energy efficiency programs must be spent on comprehensive low-income residential DSM and education programs. The low-income residential DSM and education programs are being implemented through the state’s low-income weatherization and fuel assistance program network. 

Programs 

The Energy Efficiency Advisory Council and the DPU are also authorized to approve and fund natural gas energy efficiency programs, including DSM programs and low-income energy programs, proposed by natural gas distribution companies. Energy efficiency activities eligible for funding through these programs include combined heat and power (CHP) and geothermal heating/cooling. Gas efficiency programs are administered by gas distribution companies.