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The Department of Public Utilities late Wednesday night ordered that gas companies will have to ratchet down the amount of money they can bill customers for efforts to replace old and leaking natural gas pipelines.
DPU Chair James Van Nostrand said customers “will be able realize these savings this year” as a result of orders that require companies to immediately reduce their Gas System Enhancement Plan (GSEP) revenue caps to 2.5 percent. The existing scheme limits utilities’ GSEP charges on customer bills to 3 percent of the previous year’s revenue.
The orders also require gas utilities to reduce those revenue caps to 2 percent next year and to 1.5 percent in 2027, which DPU said is the minimum allowed by state law.
“For far too long the gas companies have continued to spend on unnecessary GSEP projects, costing the state’s ratepayers billions for over a decade. GSEP represents the second largest cost in the gas delivery charge, which spiked this winter,” Van Nostrand said. “These changes will ensure a well-maintained gas system by requiring gas utilities to address the issue of leak-prone pipe in a more affordable manner.”
GSEP was introduced as part of a 2014 gas leaks law and a 2019 examination of the safety of natural gas infrastructure in Massachusetts found the program has been “a legislative and regulatory success.” The program encourages utilities to replace leak-prone pipes by maintaining a mechanism for companies to recover the costs associated with replacement.
Past discussions of changes to the GSEP program have been met with resistance in some corners, including from the New England Gas Workers Alliance and gas workers’ unions. Others have argued it would be unwise to reduce investment in the gas system at a time when renewable energy plans are stalling.
DPU said it determined the safety of the gas distribution system can be maintained at a lower level of GSEP spending and said there are more affordable ways to address leak-prone pipes. The orders direct gas utilities to consider repairs, the use of “advanced leak technology,” and the implementation of non-pipeline alternatives instead of pipe replacement.
