HOUSE DOCKET, NO. 3472        FILED ON: 2/19/2021

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 3298

The Commonwealth of Massachusetts

_________________

PRESENTED BY:

Lori A. Ehrlich and Cynthia Stone Creem

_________________

To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to the future of heat in the Commonwealth.

_______________

PETITION OF:

HOUSE DOCKET, NO. 3472        FILED ON: 2/19/2021

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 3298

The Commonwealth of Massachusetts

_______________

In the One Hundred and Ninety-Second General Court
(2021-2022)

_______________

An Act relative to the future of heat in the Commonwealth.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Section 9 of chapter 21N of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by striking out, in line 2, the word “utility”, and inserting in place thereof, the following words:- “company or a gas company”.

SECTION 2. Said section 9 of chapter 21N, as so appearing, is hereby amended by striking out, in line 3, the “.” after the word “service”, and inserting the following:-

“or with safe and reliable gas service, provided however that the department of public utilities shall actively encourage a transition from the use of gas or other emitting fuels to the use of non-emitting renewable sources of energy.”.

SECTION 3. Subsection (a) of section 3 of chapter 23J of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by striking out, in line 179, the word “and”.

SECTION 4. Said subsection (a) of section 3 of chapter 23J, as so appearing, is hereby amended by striking out, in line 180, the “.”, and inserting in place thereof the following:- “; and”.

SECTION 5. Said subsection (a) of section 3 of chapter 23J, as so appearing, is hereby amended by inserting after paragraph 31 the following paragraph:-

“(32) to issue gas transition bonds, as defined in section 145 of chapter 164, for the benefit of a gas company, as defined in section 1 of said chapter 164, determined by the department of public utilities to be eligible for said bond financing pursuant to section 145A of said chapter 164. Such gas transition bonds shall constitute "bonds" for purposes of subsections (d) to (k), inclusive, of section 8 and of section 9 of Chapter 23G.”.

SECTION 6. Subsection (b) of section 9 of said chapter 23J, as so appearing, is hereby amended by striking out, in line 33, the word “and”.

SECTION 7. Said subsection (b) of section 9 of chapter 23J, as so appearing, is hereby amended by striking out, in line 37, the “.”, and inserting in place thereof the following new clause:-

“; and (iv) by funding research, design, and evaluation of pilots to promote energy innovation.”.


SECTION 8. Subsection (c) of said section 9 of chapter 23J, as so appearing, is hereby amended by inserting after the word “of”, in line 40, the following word:- “non-emitting”.

SECTION 9. Said subsection (c) of section 9 of chapter 23J, as so appearing, is hereby amended by inserting after the word “facilities”, in line 45, the following:-

“and with the distribution and consumption of non-renewable or emitting fuels, including but not limited to, oil, hydrogen derived from fossil fuel, gases that contain methane, and other hydrocarbon fuels;”.

SECTION 10. Said subsection (c) of section 9 of chapter 23J, as so appearing, is hereby amended by inserting after the word “for,”, in line 53, the following word:- “non-emitting”.

SECTION 11. Subsection (d) of said section 9 of chapter 23J, as so appearing, is hereby amended by inserting after the word “the”, in line 75, the following word:- “non-emitting”.

SECTION 12. Said subsection (d) of section 9 of chapter 23J, as so appearing, is hereby amended by inserting after the words “of”, in line 76, the following word:- “non-emitting”.

SECTION 13. Said subsection (d) of section 9 of chapter 23J, as so appearing, is hereby amended by striking out, in line 77, the “;” after the word “commonwealth”, and inserting in place thereof the following:-

“and the use by gas customers in the commonwealth of non-emitting renewable thermal energy, including utility-scale geothermal energy, as the primary sources of energy;”.

SECTION 14. Chapter 23J of the General Laws is hereby amended by inserting after section 9 the following section:-

Section 9A. (a) There is hereby established and placed within the center a separate fund to be known as the gas transition trust fund. The center shall hold the gas transition trust fund in an account or accounts separate from other funds. There shall be credited to the gas transition trust fund (i) all cost savings allocated to the gas transition trust fund under section 145A of chapter 164 and (ii) any other funds directed to the gas transition trust fund. All amounts credited to the gas transition trust fund shall be held in trust and used solely for activities and expenditures consistent with the permitted purposes of the gas transition trust fund as set forth in subsection (b), including the ordinary and necessary expenses of administration and operation associated with the gas transition trust fund. Unless otherwise specified, all monies of the gas transition trust fund, from whatever source derived, shall be paid to the treasurer of the center. Such monies shall be deposited, in the first instance, by the treasurer in national banks, in trust companies, savings banks and cooperative banks chartered under the laws of the commonwealth, or in other banking companies in compliance with section 34 of chapter 29. Funds in these accounts shall be paid out on the warrant or other order of the treasurer of the center and the director of the gas transition trust fund or other person that the board may authorize to execute warrants. Any unexpended balance in the gas transition trust fund at the close of a fiscal year shall remain in the gas transition trust fund and shall be available for expenditure in the following fiscal year; provided however, that the gas transition trust fund shall not be in deficit at the end of any state fiscal year.

(b) The center may make expenditures from the gas transition trust fund for the following purposes:

(i) to replace gas appliances with electric appliances as needed to enable a customer to connect to the non-emitting renewable thermal infrastructure project as provided in section 145A of chapter 164 and to enable service to a building by a non-emitting renewable thermal infrastructure project.  The Massachusetts clean energy technology center shall be responsible for determining the cost to upgrade appliances and for overseeing the installation of such appliances. The Massachusetts clean energy technology center shall set a cap on compensation to the building owner or occupant for such new appliances; provided, however that a landlord shall certify in writing to the Massachusetts clean energy technology center that such landlord will not transfer the cost of appliances paid for by the gas transition trust fund to any tenant. The secretary of energy and environmental affairs may, within 12 months of enactment of this section, promulgate regulations or directives for the implementation of this requirement.  

(ii) to ensure that a low-income consumer has the opportunity to connect to the new non-emitting renewable thermal infrastructure project as provided in section 145A of chapter 164, including by adding or upgrading insulation, electric wiring and capacity as needed. The Massachusetts clean energy technology center shall set a cap on compensation to the building owner or occupant; provided, however, that a landlord shall certify in writing to the Massachusetts clean energy technology center that such landlord will not transfer the cost of upgrades paid for by the gas transition trust fund to any tenant. The secretary of energy and environmental affairs may, within 12 months of the enactment of this section, promulgate regulations or directives for the implementation of this requirement.

(iii) to retrain individuals who work on gas pipeline infrastructure. Such retraining shall support the transition from jobs on gas infrastructure to comparable jobs on thermal pipes or other aspects of a non-emitting renewable thermal infrastructure project. The Massachusetts clean energy technology center shall oversee such retraining program and may allocate funds to a training facility or a gas company for retraining of existing employees. 

(c) The center shall provide a report to the secretary and the department at the end of each fiscal year that summarizes expenditures from the gas transition trust fund over the prior 12 months.   

SECTION 15. Chapter 25 of the General Laws is hereby amended by inserting after section 1 the following new section:-


Section 1A. In discharging its responsibilities under this chapter and chapter 164, the department shall, with respect to itself and the entities it regulates, prioritize safety, security, reliability of service, affordability, equity and reductions in greenhouse gas emissions to meet statewide greenhouse gas emission limits and sublimits established pursuant to chapter 21N.

SECTION 16. Subsection (a) of section 19 of chapter 25 of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by striking out, in line 5, the “.” after the word “programs”, and inserting in place thereof the following:-

“, and renewable energy programs where the sole or primary sources of energy are non-emitting, including but not limited to heat pumps for heating and cooling.”.

SECTION 17. Said subsection (a) of section 19 of chapter 25, as so appearing, is hereby amended by striking out, in line 23, the word “and”.

SECTION 18. Said subsection (a) of section 19 of chapter 25, as so appearing, is hereby amended by striking out, in line 25, the “.” after the word “consumers”, and inserting in place thereof the following new clause:-

“; and (iv) whether past programs have reduced greenhouse gas emissions in accordance with the mandates of chapter 21N.”.

SECTION 19. Subsection (b) of said section 19 of chapter 25, as so appearing, is hereby amended by striking out, in line 32, the “.” after the word “programs”, and inserting in place there of the following:-

“, renewable energy programs where the sole or primary sources of energy are non-emitting, including but not limited to heat pumps for heating and cooling.”.

SECTION 20. Said subsection (b) of section 19 of chapter 25, as so appearing, is hereby amended by striking out, in line 29, the “.” after the word “practicable” and inserting in place thereof the following:-

“, and maximizing the use of sources of non-emitting renewable energy and adopting climate change mitigation strategies to reduce greenhouse gas emissions pursuant to the mandates of chapter 21N.”.

SECTION 21. Subsection (a) of section 20 of said chapter 25, as so appearing, is hereby amended by inserting after the word “of”, in line 2, the following:-

“15 mills per therm for all gas customers and a mandatory charge of”.

SECTION 22. Subsection (a) of section 11F 1/2 of chapter 25A of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by striking out, in line 3, the “.” after the word “commonwealth”, and inserting in place thereof the following:-

“and for all retail gas suppliers selling gas for useful non-emitting renewable thermal energy to end-use customers in the commonwealth.”.

SECTION 23. Said subsection (a) of section 11F 1/2 of chapter 25A, as so appearing, is hereby amended by inserting after the word “sources.”, in line 11, the following:-

“Every such retail electric supplier and every such retail gas supplier shall obtain and retire annually alternative energy credits generated by non-emitting renewable thermal energy technologies.”.

SECTION 24. Said subsection (a) of section 11F 1/2 of chapter 25A, as so appearing, is hereby amended by inserting after the word “gas”, in line 30, the following:-

“and renewable natural gas, except renewable natural gas made from food waste or sewage and used on-site”.

SECTION 25. Said subsection (a) of section 11F 1/2 of chapter 25A, as so appearing, is hereby amended by inserting after the word “energy”, in line 31, the following:-

“used on-site”.

SECTION 26. Said subsection (a) of section 11F 1/2 of chapter 25A, as so appearing, is hereby amended by striking out, in line 33, the word “and” and inserting in place thereof the following:- “;”.

SECTION 27. Said subsection (a) of section 11F 1/2 of chapter 25A, as so appearing, is hereby by striking out, in line 33, the “.” after the word “power”, and inserting in place thereof the following:-

“; and (G) any combustion, burning or thermal gasification of liquid biofuel, hydrogen derived from fossil fuel and renewable natural gas, including biomass made from harvested trees.”.

SECTION 28. Said section 11F 1/2 of chapter 25A, as so appearing, is hereby amended by inserting after subsection (e), the following new subsection:-

“(f) The department shall determine the requirement for each retail electric supplier and each retail gas supplier to obtain and annually retire renewable thermal alternative energy credits, provided, however, that such requirement shall be proportional to the annual thermal energy purchased by each such supplier’s customers and shall be established so as to effect a transition for all customers in the commonwealth to non-emitting renewable thermal energy technologies by December 31, 2050.”.

SECTION 29. Section 1 of chapter 164 of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by inserting after the word “electricity”, in lines 203-204, the following:-

“provided, however, that such thermal energy will reduce emissions of greenhouse gases in accordance with chapter 21N; and provided further”.

SECTION 30. Said section 1 of chapter 164, as so appearing, is hereby amended by striking out, in line 204, the following words:- “provided, however,”.

SECTION 31. Section 1D of said chapter 164, as so appearing, is hereby amended by inserting after the word “program.”, in line 29, the following new paragraph:-

“Gas distribution companies shall include in their annual service quality standards reports submitted to the department under section 1I of this chapter the percentage and amount of funds allocated to each factor in the local distribution adjustment factors fund, including the following: energy efficiency, renewable energy, environmental response, consultants for the office of the attorney general under section 11E of chapter 12, and residential assistance. Such reports shall also include the costs of political or promotional advertising as defined by section 33A of this chapter, and the cost replacement of gas infrastructure under sections 145 and 145A of this chapter.”.

SECTION 32. Subsection (a) of section 1E of said chapter 164, as so appearing, is hereby amended by inserting after the word “standards”, in lines 6-7, the following word:- “for”.

SECTION 33. Section 76 of said chapter 164, as so appearing, is hereby amended by inserting after the word “the”, in line 5, the following public health and”.

SECTION 34. Section 141 of said chapter 164, as so appearing, is hereby amended by inserting after the word “efficiency,”, in line 4, the following:-

“, the replacement of gas infrastructure with utility-scale non-emitting renewable thermal energy infrastructure and the reduction of greenhouse gases as mandated by chapter 21N to reduce energy use, increase efficiency and encourage non-emitting renewable sources of energy, including the reduction of lost and unaccounted for gas as defined in section 147,”.

SECTION 35. Said section 141 of chapter 164, as so appearing, is hereby amended by inserting after the word “discount.”, in line 7, the following:-

“The department shall not approve a rate design or other plan that includes payment by a gas company or an electric company of fees or other costs associated with membership in a trade association or similar associations whose purpose is to promote natural gas or renewable gas as sources of clean energy, nor shall the department approve a rate design or other plan that includes costs for an advertising or public relations campaign that promotes natural gas or renewable gas as sources of clean energy without disclosing the public health and safety hazards of natural gas and renewable gas and their components and their effects on greenhouse gas emissions and the mandates of chapter 21N.”.

SECTION 36. Section 142 of said chapter 164, as so appearing, is hereby amended by inserting after the word “power”, in line 3, the following:- “and utility-scale non-emitting renewable thermal energy”.

SECTION 37. Said section 142 of chapter 164, as so appearing, is hereby amended by inserting after the word “manner.”, in line 5, the following:-

“The department shall issue regulations to expand municipal aggregation provided in section 134 of this chapter to authorize a municipality or group of municipalities to establish district energy where it will result in reducing greenhouse gas emissions, reducing consumer cost and improving public health and safety. The Department shall hold a public hearing regarding mechanisms for evaluating the public health effects of natural gas.”.

SECTION 38. Subsection (a) of section 145 of said chapter 164, as so appearing, is hereby amended by inserting after the word “public”, in line 7, the following:- “health and public”.

SECTION 39. Said subsection (a) of section 145 of  chapter 164, as so appearing, is hereby amended by inserting after the word “proceeding”, in line 14, the following:-

“Such eligible infrastructure replacement may include replacing gas infrastructure with utility-scale renewable thermal energy infrastructure, provided, however, that such utility-scale renewable thermal energy infrastructure (i) shall be exempt from the requirements of sections 69(G) through 69(S) of this chapter; (ii) shall be deemed to be both an energy transmission system and an energy generation system; and (iii) shall comply with the mandates of chapter 21N to reduce greenhouse gas emissions by reducing energy use, increasing efficiency and encouraging non-emitting renewable sources of energy.”

SECTION 40. Said subsection (a) of section 145 of  chapter 164, as so appearing, is hereby amended by inserting after the word “proceeding”, in line 14, the following:-

““Gas pipe life extension repair project”, a project that uses advanced pipe repair technology approved by the department to repair an existing fully depreciated leak-prone gas pipe to extend the useful life of such gas pipe by no less than 10 years.”

SECTION 41. Subsection (b) of said section 145 of  chapter 164, as so appearing, is hereby amended by striking out the word “may”, in line 19, and inserting in place thereof, the following word:- “shall”.

SECTION 42. Said subsection (b) of section 145 of  chapter 164, as so appearing, is hereby amended by inserting after the word “public”, in line 21, the following:- “health and public”.

SECTION 43. Subsection (c) of said section 145 of  chapter 164, as so appearing, is hereby amended by striking out the word “and”, in line 33.

SECTION 44. Said subsection (c) of section 145 of  chapter 164, as so appearing, is hereby amended by striking out the “.”, in line 34, and inserting in place thereof the following new clauses:-


“; (vii) infrastructure proposed to be replaced, including replacement of gas infrastructure with utility-scale renewable thermal energy infrastructure where the primary source of energy is non-emitting; (viii) work plans including location by street segments of leak-prone infrastructure scheduled to be replaced as required by this section; (ix) how the replacement infrastructure complies with the mandates of chapter 21N to reduce greenhouse gas emissions by reducing energy use, increasing efficiency and encouraging non-emitting renewable sources of energy, (x) proposals for gas pipe life extension repair projects; and (xi) proposals for a specific repair on existing infrastructure that prevents the need to replace a pipe having a grade 3 leak identified as having a significant environmental impact as defined by section 144 (c), provided, however that such repair shall be cost effective and shall comply with applicable safety regulations related to pipeline infrastructure. Such plan filed with the department may include an alternative other than gas to provide renewable thermal energy where the primary sources of energy are non-emitting.”.

SECTION 45. Said subsection (c) of section 145 of  chapter 164, as so appearing, is hereby amended by striking out, in line 46, the “.” after the word “section”, and inserting in place thereof the following:-

“, provided, however, that no depreciation associated with the replacement of infrastructure delivering natural gas shall be claimed by such gas company after 2050 unless such infrastructure delivers thermal energy from non-emitting renewable sources of energy.”.

SECTION 46. Said subsection (c) of section 145 of  chapter 164, as so appearing, is hereby amended by inserting after the word “years”, in line 49, the following:-

“, a report of any remaining leak-prone infrastructure by street segment remaining in the service territory of the gas company”.

SECTION 47. Subsection (d) of said section 145 of  chapter 164, as so appearing, is hereby amended by inserting after the word “leaks”, in line 62, the following:-

", compliance with the mandates of chapter 21N to reduce greenhouse gas emissions by reducing energy use, increasing efficiency and encouraging non-emitting renewable sources of energy,”.

SECTION 48. Said subsection (d) of section 145 of  chapter 164, as so appearing, is hereby amended by inserting after the word “public, in line 63, the following words:- “health and public”.

SECTION 49. Subsection (h) of said section 145 of chapter 164, as so appearing, is hereby amended by inserting after the word “section.”, in line 111, the following:-

“Such regulations may permit and structure a performance-based financial incentive to a gas company to build utility-scale non-emitting renewable thermal energy infrastructure eligible under subsection (c)(2), provided, however, that such infrastructure complies with the mandates of chapter 21N to reduce greenhouse gas emissions by reducing energy use, increasing efficiency and encouraging non-emitting renewable sources of energy. Such regulations shall be promulgated within 12 months of the effective date of this provision.”.

SECTION 50. Said section 145 of chapter 164, as so appearing, is hereby amended by inserting after subsection (h), the following new subsections:-

“(i) The department shall authorize the use of advanced gas repair technologies in a gas pipe life extension repair project; such technologies may include repair of a joint by keyhole sealing, encapsulation or cast iron joint sealing robot (CISBOT), or pipe lining. The department shall determine necessary safety measures and monitoring for restored pipes.

(j) Within 30 days of receipt of any plan submitted to the department by a gas company for replacement or improvement of any existing infrastructure pursuant to this section, the department shall send such plan to the municipality whose service territory is covered by such plan. Within 30 days of approval of such plan, the department shall send such approval to the municipality whose service territory is covered by such plan.”

SECTION 51. Chapter 164 of the General Laws is hereby amended by inserting after section 145, the following new section:-

Section 145A. (a) For the purposes of this section, the following words shall have the following meanings:-

“Gas transition bond”, a bond, note, certificate of participation or beneficial interest, or other evidence of indebtedness or ownership, issued pursuant to an executed indenture financing document, or other agreement of the financing entity, secured by or payable from ratepayer payments.

“Networked geothermal system”, a utility-scale renewable thermal energy distribution infrastructure consisting of underground distribution pipelines that connect distributed thermal sources and thermal storage, including geothermal boreholes, to provide customers with thermal energy for heating, or heating and cooling. Such a system may include heat pumps on the utility side of the meter that are owned by a gas company as part of its distribution infrastructure.

“Non-emitting renewable thermal infrastructure project”, a utility-scale project that replaces natural gas distribution infrastructure with distribution infrastructure that supplies heating, or heating and cooling, from fuel sources whose combustion does not emit greenhouse gases, as defined by section 1 of chapter 21N.  A non-emitting renewable thermal infrastructure project may include, but is not limited to, a networked geothermal system.

“Secretary”, the secretary of energy and environmental affairs.

(b) The department may approve the use of gas transition bonds issued by the Massachusetts development finance agency pursuant to section 3(a)(36) of chapter 23G for a plan proposed by a gas company pursuant to subsection (d) of this section.  A gas transition bond shall not constitute a debt or liability of the commonwealth or of any political subdivision thereof, other than the Massachusetts development finance agency, and shall not constitute a pledge of the full faith and credit of the commonwealth or any of its political subdivisions, other than the Massachusetts development finance agency, but shall be payable solely from the funds provided therefor pursuant to the provisions of this section. Each bond shall contain on the face thereof the following statement: Neither the full faith and credit nor the taxing power of the Commonwealth of Massachusetts is pledged to the payment of the principal of, or interest on, this bond.

(c) The issuance of a gas transition bond pursuant to section 3(a)(36) of chapter 23G and this section shall not obligate the commonwealth, or any political subdivision thereof, to levy or to pledge any form of taxation therefor or to make any appropriation for its payment. A gas transition bond shall be nonrecourse to the credit of the Massachusetts development finance agency as the financing entity or any assets of a gas company other than rate payments.

(d) (1) A plan filed by a gas company pursuant to subsection (b) of section 145 may include a proposal to use gas transition bonds to finance a non-emitting renewable thermal infrastructure project.  A non-emitting renewable thermal infrastructure project may connect to backup sources of power that use fuel sources whose combustion emit greenhouse gases.  Such plan shall include, but need not be limited to: (i) the information required by subsection (c) of section 145; (ii) the estimated cost savings as defined in subsection (f) of this section; (iii) the number of participating consumers and buildings; and (iv) the number of participating low-income consumers as determined by section 1F(4)(i).

(2) A consumer shall be deemed to be participating in a non-emitting renewable thermal infrastructure project if prior to such project the consumer had utilized natural gas or other carbon-based fuel and if such consumer upon completion of such project will receive service from such project or from an alternative non-greenhouse-gas emitting fuel source.

(3) A building shall be deemed to participate in a non-emitting renewable thermal infrastructure project if prior to the project the building had utilized natural gas or other carbon-based fuel and if such building upon completion of such project will receive heating from such project or from an alternative non-greenhouse-gas emitting fuel source.

(4) Notwithstanding anything to the contrary in section 145, a non-emitting renewable thermal infrastructure project financed in whole or in part by gas transition bonds may provide service to new customers.

(e) (1) The department may, within 12 months of enactment of this section, promulgate regulations or directives for the use of gas transition bonds for a non-emitting renewable thermal infrastructure project, provided, however, that such project meets the conditions required in subsections (e) (2) and (3) of this section.

(2) The department shall approve a plan by a gas company to use gas transition bonds for a non-emitting renewable thermal infrastructure project, provided that the project meets the following conditions: (i) that gas transition bonds must provide at least 65 percent of the funding for a non-emitting renewable thermal infrastructure project, provided, however, that the interest rate on such gas transition bonds is less than the rate of return on the equity of such gas company; (ii) that gas transition bonds must be rated AA or Aa or better by a national statistical rating organized recognized by the United States Securities and Exchange Commission at the time of issuance, provided, however, that the department may approve a different rating if it determines that such rating would promote the improvement of public health and public safety, reduce greenhouse gas emissions, address environmental justice, minimize financial risk, or maximize the costs savings of a project; (iii) that the gas company ensures that each consumer and building participating in a non-emitting renewable thermal infrastructure project will have a reliable source of non-emitting renewable thermal service; provided, however, that if a consumer or building owner chooses not to participate in a non-emitting renewable thermal infrastructure project for a reason other than technical infeasibility, then such consumer or building owner shall arrange and pay for an alternative thermal service; and (iv) that any additional conditions are met that the department may determine to be  appropriate to promote the improvement of public health and public safety, reducing greenhouse gas emissions, addressing environmental justice, minimizing financial risk, reducing the cost of energy to the consumer, or maximizing the costs savings of a project.

(3) The department shall prioritize environmental justice communities, as defined by the secretary, and low-income consumers in its approval of the use of gas transition bonds in financing a non-emitting renewable thermal infrastructure project.

(f)(1) The department shall calculate the cost savings from the use of gas transition bonds rather than traditional financing for projects approved under section 145 by using the provisions of subsection (f)(1)(A) and (B), and any additional provisions deemed appropriate by the department: 

(A) for the portion of a non-emitting renewable thermal infrastructure project that is financed by gas transition bonds, the difference in interest rate for such bonds and the interest rate on debt approved for other projects in the plan filed by a gas company pursuant to subsection (b) of section 145. If a plan filed pursuant to subsection (b) of said section 145 proposes only to use gas transition bonds for a non-emitting thermal infrastructure project, then the interest rate for such bonds shall be compared to the most recent interest rate on debt approved by the department for such gas company; and

(B) for the portion of a non-emitting renewable thermal infrastructure project that is financed by gas transition bonds but would otherwise be financed by the equity of a gas company, the difference between the interest rate for such gas transition bonds and the return on equity approved for other projects in the plan filed by a gas company pursuant to subsection (b) of said section145. If a plan filed pursuant to subsection (b) of said section 145 proposes only to use gas transition bonds for a non-emitting renewable thermal infrastructure project, then the return on equity shall be calculated as the most recent return on equity approved by the department for such gas company.

(2) For purposes of calculating cost savings under subsection (d)(1)(ii) of this section, a gas company may use the interest rates for debt and return on equity proposed in the plan filed pursuant to subsection (b) of said section 145.

(g) All cost savings generated by the use of gas transition bonds by a gas company shall be deposited by the department into the Gas Transition Trust Fund established under section [9A] of chapter 23J, and shall be used for the purposes outlined in section [9A] of chapter 23J.  A gas company shall provide the department and Massachusetts clean energy technology center details of an approved non-emitting renewable thermal infrastructure project, including the number of participating consumers and buildings and such other information requested by the Massachusetts clean energy technology center to determine the costs to install appliances and upgrade buildings to connect consumers and buildings to a non-emitting renewable thermal infrastructure project.

(h) A gas company shall submit an annual report to the department regarding the company’s use of gas transition bonds.  Such report shall include: (i) the costs and cost savings associated with the use of gas transition bonds; (ii) the total number of square footage of buildings transitioned to each non-emitting renewable thermal infrastructure project; (iii) the total number of consumers transitioned to each non-emitting renewable thermal infrastructure project; (iv) the number of low-income consumers transitioned to each non-emitting renewable thermal infrastructure project; (v) the impact of a non-emitting renewable thermal infrastructure project on greenhouse gas emissions, public health, ratepayer bills, and the reliability and safety of the thermal delivery system of such gas company; and (vi) such other information as required by the department. If a social cost of carbon is adopted by the secretary, such social cost of carbon shall be included in the calculation of costs and savings. Such annual reports may, under the discretion of the department, be incorporated into other filings by a gas company, provided that such reports shall be available for review by the public.

(i) Three years following the enactment of this section, the department shall collate data collected pursuant to subsection (h) of this section and shall file a report with the governor, the secretary of energy and environmental affairs, and the clerks of the house of representatives and the senate who shall forward such report to the president of the senate, the speaker of the house of representatives, the chairs of the house and senate committees on ways and means, and the house and senate chairs of the joint committee on telecommunications, utilities and energy on the use of gas transition bonds for non-emitting renewable thermal infrastructure projects. The department shall include in such report data collected by the Massachusetts clean energy technology center data on the use of funds pursuant to subsection (g) of this section.

(j) Three years following the enactment of this act, the secretary of energy and environmental affairs, in consultation with the department of public utilities, the department of energy resources, and the attorney general, shall determine whether the use of gas transition bonds should be expanded.  When making this determination, the secretary shall consider: (i) the maximum amount of gas transition bonds that can be utilized; (ii) the types of projects that can be financed with gas transition bonds; (iii) additional use of funds for a non-emitting renewable thermal infrastructure project from (A) the MassSave program pursuant to section 19 of chapter 25, (B) the Massachusetts Clean Energy Technology Center, or (C) the department of energy resources; and (iv) other conditions as determined by the secretary.  The determination by the secretary shall be made in a proceeding that is open to comment by the public. 

(k) The department may, within 12 months of the enactment of this section, promulgate regulations or directives as needed to implement the requirements of this section.

SECTION 52. Chapter 164 of the General Laws is hereby amended by inserting after section 145, the following new section:-


Section 145B. (a) For the purposes of this section, the following words shall have the following meanings:-

“Gas transition bond”, a bond, note, certificate of participation or beneficial interest, or other evidence of indebtedness or ownership, issued pursuant to an executed indenture financing document, or other agreement of the financing entity, secured by or payable from ratepayer payments.

“Non-emitting renewable thermal infrastructure project”, a utility-scale project that replaces natural gas distribution infrastructure with distribution infrastructure that supplies heating, or heating and cooling, from fuel sources whose combustion does not emit greenhouse gases, as defined by section 1 of chapter 21N.  A non-emitting renewable thermal infrastructure project may include, but is not limited to, a networked geothermal system.


(b) The department may approve a proposal by a gas company to use gas transition bonds to finance a non-emitting renewable thermal infrastructure project for a new building or multi-building development.

(c) The department may promulgate regulations or directives as needed to implement this section.

SECTION 53. Chapter 164 of the General Laws is hereby amended by inserting after section 147, the following new section:-

Section 147A. (a) For the purposes of this section, the following words shall have the following meanings:-

“Non-emitting renewable thermal infrastructure project,” a utility-scale project that replaces natural gas distribution infrastructure with distribution infrastructure that supplies heating, or heating and cooling, from fuel sources whose combustion does not emit greenhouse gases, as defined by section 1 of chapter 21N.  A non-emitting renewable thermal infrastructure project may include, but is not limited to, a networked geothermal system.


(b) a gas company shall submit an annual report to the department regarding the company’s plan to transition its existing gas infrastructure to non-emitting renewable thermal infrastructure projects that advance the greenhouse gas emission reduction requirements of chapter 21N of the General Laws. Such report shall include the following information: (i) the company’s plan to abandon existing gas infrastructure that is not cost effective to transition to a non-emitting renewable thermal infrastructure project; (ii) the company’s plan to evolve existing gas infrastructure that is cost effective to transition to a non-emitting renewable thermal infrastructure project; (iii) the company’s plan to (A) maintain existing gas infrastructure that provides service to a use for which, at the time that the report is prepared, there is no technical option to transition to a non-emitting renewable thermal infrastructure project and (B) reduce greenhouse gas emissions from existing gas infrastructure that the gas company plans to maintain; and (iv) such other information as the department may require. 

(c) In determining whether it is cost effective to transition existing gas infrastructure to non-emitting renewable thermal infrastructure, a gas company shall consider factors such as the existing infrastructure’s leak status, current depreciation, schedule of future depreciation, impact on public health and public safety, and the impact of transitioning to a non-emitting renewable thermal infrastructure on the reduction of greenhouse gas emissions as required by chapter 21N.

(d) A report required by subsection (b) may, under the discretion of the department, be incorporated into other filings by a gas company, provided that such reports shall be available for review by the public.

(e) The department shall, within 12 months of the enactment of this section, promulgate regulations or directives as needed to implement the requirements of this section.