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That utility bills are becoming unaffordable for many is front and center these days on local and national news and is driving legislative action. A cold winter like we’re experiencing now in Massachusetts creates dramatic spikes in our gas and electricity bills that raise many eyebrows and lead to unpaid bills.
The reasons behind the long-term annual increases in energy prices and the winter spikes are complex and the source of much debate. Some say that so-called policy costs, some of which are related to clean energy, are to blame while others point to ways that profit-hungry utilities are not doing all they can to provide their products at the lowest possible cost. Policy costs include funding for energy efficiency programs (Mass Save), providing lower rates for lower income customers, and incentives for utilities to purchase clean energy.
The Role of Clean Energy Policies
While it may be true that policies that support our efforts to reduce emissions are costing rate payers money, most of these policies are and will be driving reduced costs in the near and long term due to increased energy efficiency and the low cost of renewable energy. But for those who are not already benefiting personally from these incentives by accessing Mass Save rebates and who do not appreciate how programs like Mass Save do indirectly help keep rates down for all, it is easy to point fingers at clean energy policy charges on bills as the enemy.
Real Drivers of Increases in Energy Bills
Aside from modest, gradual increases in policy costs on energy bills, the main drivers of increased costs and spikes in energy prices are necessary and unnecessary spending by utilities on infrastructure development and market fluctuations in the supply of natural gas.
Our utilities are driven to propose infrastructure projects of limited or no value because this is how their investors make a guaranteed profit of around 10% at the expense of rate payers. The Acadia Center has fact sheets covering all these issues in detail here.
Programs Providing Immediate Relief
We also need to be aware that there are many programs aimed at addressing the needs of low and middle income rate payers. Our Attorney General has produced a document that enumerates all of these opportunities for rate payers in need to reduce their burden here.
Finally, there are already programs implemented by the state or in the pipeline that aim to prevent cost increases - and sometimes can reduce rates. Programs supporting energy storage are obviating the need for expensive infrastructure spending, while requirements for smart meters, demand response, and development of virtual power plants promise to save money in the near future. There are several proposals that ECA Mass is advocating for in the energy affordability bill that also promise to control costs (see the Legislative update in this and January’s newsletter).
We all need to be informed about the complex drivers of the challenge of energy affordability to be able to let our family, friends, and neighbors know that there are solutions that do not mean we have to abandon our efforts to achieve a clean energy future.
Roger Luckmann
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