Bill S.2529

SENATE DOCKET, NO. 2748 FILED ON: 9/8/2023

SENATE . . . . . . . . . . . . . . No. 2529

By Mr. Barrett, a petition (accompanied by bill, Senate, No. 2529) (subject to Joint Rule 12) of Michael J. Barrett for legislation to reduce the financial penalty imposed on customers who shift to heat pumps, electric appliances, and electric vehicles. Telecommunications, Utilities and Energy.

The Commonwealth of Massachusetts

_______________

In the One Hundred and Ninety-Third General Court
(2023-2024)

_______________

An Act reducing the financial penalty imposed on customers who shift to heat pumps, electric appliances, and electric vehicles.

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. Chapter 25 of the General Laws is hereby amended by striking out section 18, as appearing in the 2022 Official Edition, and inserting in place thereof the following section:-

Section 18. For the purposes of this section, “fixed charge” shall mean any customer charge, basic service fee, demand-differentiated basic service fee, demand charge, or other charge that does not change substantially according to the monthly volume of electricity consumed, and “income-based” shall mean a set of fixed charges that vary by income and rely on no fewer than three income tiers, so that lower-income ratepayers in each service territory are assessed smaller fixed charges than higher-income ratepayers. The commission may make an assessment against each electric and gas company under the jurisdictional control of the department and each generation company and supplier licensed by the department to do business in the commonwealth, based upon the intrastate operating revenues subject to the jurisdiction of the department of each such company derived from sales within the commonwealth of electric and gas service, respectively, as shown in the annual report of each such company to the department. Said assessments shall be made at a rate not exceeding 0.3 per cent of such intrastate operating revenues, as shall be determined and certified annually by the commission as sufficient to reimburse the commonwealth for funds appropriated by the general court for the operation and general administration of the department, exclusive of funds appropriated by the general court for the transportation division and for the cost of fringe benefits as established by the commissioner of administration pursuant to section 5D of chapter 29, including group life and health insurance, retirement benefits, paid vacations, holidays and sick leave. An electric company recovering the costs of such assessments from customers shall recover a reasonable and substantial portion of said costs in the form of income-based fixed charges. The funds may be used to compensate consultants in hearings on petitions filed by companies subject to assessment under this section. Assessments made under this section may be credited to the normal operating cost of each company. Each company shall pay the amount assessed against it within 30 days after the date of the notice of assessment from the department. Such assessments shall be collected by the department and credited to the General Fund. Any funds unexpended in any fiscal year for the purposes for which such assessments were made shall be credited against the assessment to be made in the following fiscal year and the assessment in the following fiscal year shall be reduced by any such unexpended amount.

For the purpose of providing the department with additional operating funds for the regulation of electric companies, the commission may make a separate assessment proportionally against each electric company under the jurisdictional control of the department and each generation company and supplier licensed by the department to do business in the commonwealth, based upon the intrastate operating revenues subject to the jurisdiction of the department of each of such companies derived from sales within the commonwealth of electric service, as shown in the annual report of each of such companies to the department. Such assessment shall be made at a rate as shall be determined and certified annually by the commission as sufficient to produce an annual amount of not less than $2,438,000 commencing in fiscal year 1998 and in each fiscal year thereafter, plus the costs of fringe benefits and indirect costs as established by the commissioner of administration pursuant to section 5D of chapter 29, including group life and health insurance, retirement benefits, paid vacations, holidays and sick leave. An electric company recovering the costs of such assessments from customers shall recover a reasonable and substantial portion of said costs in the form of income-based fixed charges. The amount of such assessment may be increased by the commission annually by a rate not to exceed the most recent annual consumer price index as calculated for the northeast region for all urban consumers. Assessments made under this section may be credited to the normal operating cost of each company. Each company shall pay the amount assessed against it within 30 days after the date of the notice of assessment from the department. Such assessments shall be collected by the department and credited to the Department of Telecommunications and Energy Trust Fund established by section 12O.

For the purpose of providing the department with additional operating funds for activities of the department in investigating the preparation for and responses to storm and other emergency events by the electric companies doing business in the commonwealth, the commission may make a separate assessment proportionally against each electric company under the jurisdictional control of the department, based upon the intrastate operating revenues subject to the jurisdiction of the department of each of the companies derived from sales within the commonwealth of electric service, as shown in the annual report of each of the companies to the department. This assessment shall be made at a rate that shall be determined and certified annually by the commission as sufficient to produce an annual amount of not less than $165,000, plus the costs of fringe benefits and indirect costs as established by the secretary of administration and finance under section 5D of chapter 29, including group life and health insurance, retirement benefits, paid vacations, holidays, and sick leave. An electric company recovering the costs of such assessments from customers shall recover a reasonable and substantial portion of said costs in the form of income-based fixed charges. The amount of the assessment may be increased by the commission annually by a rate not to exceed the most recent annual consumer price index as calculated for the northeast region for all urban consumers. Notwithstanding any general or special law to the contrary, no electric company may seek recovery of any assessments made under this paragraph in any rate proceeding before the department. Each company shall pay the amount assessed against it within 30 days after the date of the notice of assessment from the department. Such assessments shall be collected by the department and credited to the Department of Public Utilities Storm Trust Fund established in section 12P.

A schedule of filing fees shall be determined annually by the commissioner of administration under the provisions of section 3B of chapter 7 for the following: (i) petitions for certificates of environmental impact and public need, provided, however, that such filing fee for any municipal corporation empowered to operate a municipal lighting plant under the provisions of section 35 or 36 of chapter 164 shall not exceed a maximum amount; and (ii) notices of intention to construct an oil facility, with a maximum amount per oil facility to be graduated in accordance with the expected capital investment in the facility. An electric company recovering the costs of such fees from customers shall recover a reasonable and substantial portion of said costs in the form of income-based fixed charges.

SECTION 2. Said chapter 25 is hereby further amended by striking out section 19, as appearing in the 2022 Official Edition, and inserting in place thereof the following section:-

Section 19. (a) For the purposes of this section, “fixed charge” shall mean any customer charge, basic service fee, demand-differentiated basic service fee, demand charge, or other charge that does not change substantially according to the monthly volume of electricity consumed, and “income-based” shall mean a set of fixed charges that vary by income and rely on no fewer than three income tiers, so that lower-income ratepayers in each service territory are assessed smaller fixed charges than higher-income ratepayers. The department shall require a mandatory charge, a reasonable and substantial portion of which shall be in the form of an income-based fixed charge, for all electricity consumers, except those served by a municipal lighting plant, to fund energy efficiency programs including, but not limited to, demand side management programs. The programs shall be administered by the electric distribution companies and by municipal aggregators with energy plans certified by the department under subsection (b) of section 134 of chapter 164. In addition to the aforementioned mandatory charge, such programs shall also be funded, without further appropriation, by: (1) amounts generated by the distribution companies and municipal aggregators under the Forward Capacity Market program administered by ISO-NE, as defined in section 1 of chapter 164; and (2) cap and trade pollution control programs, including, but not limited to, and subject to section 22 of chapter 21A, not less than 80 per cent of amounts generated by the carbon dioxide allowance trading mechanism established under the Regional Greenhouse Gas Initiative Memorandum of Understanding, as defined in subsection (a) of section 22 of chapter 21A, and the NOx Allowance Trading Program; and (3) other funding as approved by the department after consideration of: (i) the effect of any rate increases on residential and commercial consumers; (ii) the availability of other private or public funds, utility administered or otherwise, that may be available for energy efficiency or demand resources; and (iii) whether past programs have lowered the cost of electricity to residential and commercial consumers. In authorizing such programs, the department shall ensure that they are delivered in a cost-effective manner capturing all available efficiency opportunities, minimizing administrative costs to the fullest extent practicable and utilizing competitive procurement processes to the fullest extent practicable; provided, however, that when determining cost-effectiveness, the calculation of program benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling.

(b) The department may approve and fund gas energy efficiency programs proposed by gas distribution companies including, but not limited to, demand side management programs. Energy efficiency activities eligible for funding under this section shall include combined heat and power and geothermal heating and cooling projects. Funding may be supplemented by funds authorized by section 21. The programs shall be administered by the gas distribution companies. In authorizing such programs, the department shall ensure that they are delivered in a cost-effective manner capturing all available efficiency opportunities, minimizing administrative costs to the fullest extent practicable and utilizing competitive procurement processes to the fullest extent practicable; provided, however, that when determining cost-effectiveness, the calculation of program benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling.

(c) Electric and gas energy efficiency program funds shall be allocated to customer classes, including the low-income residential subclass, in proportion to their contributions to those funds; provided, however, that at least 10 per cent of the amount expended for electric energy efficiency programs and at least 20 per cent of the amount expended for gas energy efficiency programs shall be spent on comprehensive low-income residential demand side management and education programs. The low-income residential demand side management and education programs shall be implemented through the low-income weatherization and fuel assistance program network and shall be coordinated with all electric and gas distribution companies in the commonwealth with the objective of standardizing implementation. Such programs shall be screened only through cost-effectiveness testing which compares the value of program benefits to program costs to ensure that a program is designed to obtain energy savings and system benefits with value greater than the costs of the program; provided, however, that when determining cost-effectiveness, the calculation of benefits shall include calculations of the social value of greenhouse gas emissions reductions, except in the cases of conversions from fossil fuel heating and cooling to fossil fuel heating and cooling.

(d) Notwithstanding any provision of this section to the contrary, the department shall annually direct the electric and gas distribution companies and municipal aggregators with certified energy plans to jointly transfer, on or before December 31, not less than $12,000,000 in funds collected pursuant to this section to the Massachusetts clean energy center for the clean energy equity workforce and market development program pursuant to subsection (b) of section 13 of chapter 23J; provided, however, such transfer shall not reduce the amount expended on low-income programs pursuant to subsection (c).

SECTION 3. Said chapter 25 is hereby further amended by striking out section 20, as appearing in the 2022 Official Edition, and inserting in place thereof the following section:-

Section 20. (a) For the purposes of this section, “fixed charge” shall mean any customer charge, basic service fee, demand-differentiated basic service fee, demand charge, or other charge that does not change substantially according to the monthly volume of electricity consumed, and “income-based” shall mean a set of fixed charges that vary by income and rely on no fewer than three income tiers, so that lower-income ratepayers in each service territory are assessed smaller fixed charges than higher-income ratepayers. The department shall require a mandatory charge, a reasonable and substantial portion of which shall be in the form of an income-based fixed charge, for all electricity consumers, except those served by a municipal lighting plant which does not supply generation service outside its own service territory or does not open its service territory to competition at the retail level, to support the development and promotion of renewable energy projects. All revenues generated by the mandatory charge shall be deposited into the Massachusetts Renewable Energy Trust Fund, established under section 9 of chapter 23J.

(b) Notwithstanding any general or special law to the contrary: (1) a municipal lighting plant which does not supply generation service outside its own service territory or does not open its service territory to competition may elect to assess and remit a mandatory charge, a reasonable and substantial portion of which shall be in the form of an income-based fixed charge, upon its electricity consumers on the same terms and conditions as apply to the charge imposed on consumers residing in competitive distribution service territories under this section; provided, however, that such an election by a municipal lighting plant shall be irrevocable and such a municipal lighting plant shall not be deemed to be supplying generation service outside its service territory or opening its service territory to competition at the retail level for the purposes of the first sentence of subsection (a); and (2) in administering the Massachusetts Renewable Energy Trust Fund, the Massachusetts clean energy technology center, shall not make any grant or loan or provide any subsidy from the trust fund to any municipal lighting plant or consumer residing in the distribution service territory of such municipal lighting plant unless: (A) a mandatory charge, a reasonable and substantial portion of which shall be in the form of an income-based fixed charge, is assessed against all consumers residing in the distribution service territory and remitted to the collaborative under the first sentence of subsection (a) or clause (1); or (B) the board of directors of the Massachusetts clean energy technology center, as a condition precedent to any such grant, loan or subsidy, shall have determined and incorporated into the minutes of its proceedings findings that: (i) any such grant, loan or subsidy is intended for the principal purpose of generating public benefits for those consumers who reside in distribution service territories in which the mandatory charge is so imposed and remitted and will generate only incidental private benefits to the recipient or others residing in a distribution service territory in which the mandatory charge is not so imposed and remitted; and (ii) the facts and circumstances associated with the recipient or the residence of the recipient provide unique or extraordinary opportunities to advance the public purposes of the trust fund over those opportunities available through grants or subsidies made to recipients residing in distribution service territories in which such a mandatory charge is assessed and remitted.

(c) Notwithstanding subsection (b), a municipality served by a municipal lighting plant that serves multiple municipalities that does not supply generation service outside its own service territory or does not open its service territory to competition at the retail level and that has not elected to assess and remit a mandatory charge pursuant to said subsection (b) may adopt a mandatory charge, a reasonable and substantial portion of which shall be in the form of an income-based fixed charge, upon its electricity consumers on the same terms and conditions as apply to the charge imposed on consumers residing in competitive distribution service territories under this section; provided, however, that the municipal light plant shall collect the charge from ratepayers through electric bills.

SECTION 4. Chapter 164 of the General Laws is hereby amended by striking out section 94, as appearing in the 2022 Official Edition, and inserting in place thereof the following section:-

Section 94. For the purposes of this section, “fixed charge” shall mean any customer charge, basic service fee, demand-differentiated basic service fee, demand charge, or other charge that does not change substantially according to the monthly volume of electricity consumed, “fixed cost” shall mean any cost that is substantially unchanged as a customer increases consumption, and “income-based” shall mean a set of fixed charges that vary by income and consist of no fewer than three income tiers, so that lower-income ratepayers in each service territory are assessed smaller fixed charges than higher-income ratepayers. Electric companies shall file with the department schedules, not less frequently than every 5 years, and gas companies shall file with the department schedules, not less frequently than every 10 years, under a filing schedule as prescribed by the department and in such form as the department shall prescribe, showing all rates, prices and charges to be charged or collected within the commonwealth for the sale and distribution of gas or electricity, together with all forms of contracts to be used in connection with such schedules; provided, however, that the requirement to file a schedule with the department not less frequently than every 5 or 10 years shall not apply to a company or corporation as defined in section 1 of chapter 165; provided, that such rates, prices, charges, and schedules thereof, shall (i) have a substantial likelihood of advancing compliance with the greenhouse gas emissions limits and sublimits set by the Commonwealth pursuant to chapter 21N of the General Laws; (ii) have a substantial likelihood of mitigating impacts on lower-income ratepayers; and (iii) in the case of electric companies and to the extent permitted by federal law, utilize income-based fixed charges, to an extent sufficient to recover through such charges a reasonable and substantial portion of the fixed costs of sales, delivery, and operations, including but not limited to the costs of distribution, transmission, the energy efficiency and renewable energy initiatives authorized in sections 19 and 20 of chapter 25 of the General Laws, metering technology, revenue decoupling, distributed solar promotion, and other public policies. Rates, prices and charges in such a schedule may be changed by any such company by filing a schedule setting forth the changed rates, prices and charges; provided, however, that until the effective date of any such change no different rate, price or charge shall be charged, received or collected by the company filing such a schedule from those specified in the schedule then in effect; provided, further, that a company may: (i) continue to charge, receive and collect rates, prices and charges under a contract lawfully entered into before the schedule takes effect or until the department otherwise orders, after notice to the company, a public hearing and makes a determination that the public interest so requires; and (ii) sell and distribute gas or electricity under a special contract hereafter made at rates or prices differing from those contained in a schedule in effect; provided, further, that a copy of the contract, in each instance, shall be filed with the department, except that a contract of a company whose sole business in the commonwealth is the supply of electricity in bulk need not file, except as may be required by the department.

If the department receives notice of any changes proposed to be made in any schedule filed under this chapter which represent a general increase in rates, prices and charges for gas or electric service, it shall notify the attorney general immediately and shall hold a public hearing and make an investigation as to the propriety and effectiveness of such proposed changes after first causing notice of the time, place and the subject matter of such hearing to be published at least 21 days before such hearing in such local newspapers as the department may select. Unless the department otherwise authorizes, the rates, prices, and charges under the schedule of a gas or electric company shall not become effective until the first day of the month next after the expiration of 14 days from the filing of the petition; provided, that the department shall not authorize rates filed by an electric company under a proposed settlement agreement more than once in a 10-year period. Unless the department otherwise authorizes, the rates, prices and charges set forth in the schedule of a corporation or company, as defined in said section 1 of said chapter 165, shall not become effective until the first day of the month next after the expiration of 14 days from the filing of the petition. Such rates, prices and charges shall apply to the consumption shown by meter readings made after the effective date of such rates, prices, and charges, unless the department otherwise orders. So much of said schedules shall be printed in such form and distributed and published in such manner as the department may require.

The department, either upon complaint or upon its own motion, may investigate the propriety and effectiveness of any proposed rate, price, charge, or schedule thereof, including but not limited to the effectiveness of such rate, price, charge or schedule in (i) advancing compliance with the greenhouse gas emissions limits and sublimits set by the Commonwealth pursuant to chapter 21N of the General Laws; (ii) mitigating impacts on lower-income ratepayers; (iii) in the case of electric companies and to the extent permitted by federal law, utilizing income-based fixed charges, to an extent sufficient to recover through such charges a reasonable and substantial portion of the fixed costs of sales, delivery, and operations, including but not limited to the costs of distribution, transmission, the energy efficiency and renewable energy initiatives authorized in sections 19 and 20 of chapter 25 of the General Laws, metering technology, revenue decoupling, distributed solar promotion, and other public policies; and (iv) phasing in any increases in rates, prices and charges for any income tier in a reasonable manner. The department may, pending such investigation and decision thereon by order served upon the company affected thereby, suspend the taking effect thereof, from time to time, but not for a period longer than ten months beyond the time when such rate, price or charge would otherwise become effective. An order by the department directing a change in any schedule filed shall have the same effect as if a schedule with such changes were filed by the company and shall become effective from such time as the department shall order.

Unless the department otherwise orders, all contracts for the sale of gas or electricity by gas or electric companies, except contracts for sale by a company whose sole business in this commonwealth is the supply of electricity in bulk, shall be filed with the department and shall not become effective until thirty days after filing. The department may investigate the propriety and effectiveness of any such contract, both before and after such contract has become effective, and may, after notice and a public hearing, make such order relative to the rates, prices, charges, and practices covered by such contract as the public interest requires. Any order made under the provisions of this section or of section ninety-three, may be enforced as provided in section seventy-nine. This section shall not apply to contracts for the sale of electricity to an electric company made in accordance with the provisions of section ninety-four A except as therein provided. Generation companies and suppliers shall be exempt from the provisions of this section.

SECTION 5. (a) Notwithstanding any general or special law or regulation to the contrary and any filing schedule otherwise prescribed by the department of public utilities, electric companies shall, within 12 months of the effective date of this act, file a schedule of rates, prices, and charges with the department that complies with section 94 of chapter 164 of the General Laws, as amended by this act.

(b) Notwithstanding any general or special law or regulation to the contrary and any filing schedule it may have otherwise prescribed, the department of public utilities shall, within 20 months of the effective date of this act, and with respect to each electric company over which it has jurisdiction, approve or adopt rates, prices, and charges that comply with section 94 of chapter 164 of the General Laws, as amended by this act.

SECTION 6. The department may promulgate regulations to implement this act.

Name:	District/Address:
Michael J. Barrett	Third Middlesex