Greg Vasil
Massachusetts residents have a love-hate relationship with winter. Sure, we enjoy seasonal activities like skiing or sledding with the family – but at the same time we loathe the early darkness, shoveling, and driving on ice.
Now added to our winter woes are painfully high electric and gas bills, straining budgets already stretched thin by other increasing costs.
The 12,000 members of the Greater Boston Real Estate Board see the impact of these high costs daily in the faces of low- and even moderate-income homeowners and renters who experience these prohibitive costs in the form of higher utility payments, rents and taxes.
Businesses pass these high costs through in the form of higher prices. As a result, addressing energy affordability is now a priority of the Healey-Driscoll administration. Recent actions by the administration have been a mixed bag, however, with no permanent fixes, showing just how complex the problem is.
First, Gov. Maura Healey’s “energy affordability” bill filed last May fell flat with the Legislature, who are choosing to advance their own version. And while the Department of Public Utilities is now examining electric and gas distribution-related charges for reduction, the exercise won’t yield big savings.
Utilities use these revenues to maintain the electric and gas system, and that area is not amendable to big or quick revenue reductions. The electric system already needs major upgrades to accommodate increased load, and the gas system needs maintenance until electrification is complete – likely decades away.
On the plus side new winter “heat pump” electric rates will lower costs for those using electricity to heat their homes and the recent announcement of an additional $185 million of rebates to electric customers (in addition to the $125 million dispersed last April) should temporarily help.
New Fixes Mask Big Problem
But these quick fixes mask the real problem: Energy costs are unsustainable and deep changes must be made. The rebates are, in fact, monies previously paid by utility customers in earlier bills as a penalty for electric suppliers not meeting state mandates for renewable energy purchases. Some of the other “savings” are transferred to summer bills when customers will repay them.
Real reductions can only be accomplished if the governor and the Legislature look at changes in the “public policy” portion of electric and gas bills, which is the part most under their control. This portion includes dozens of charges that subsidize programs to meet the state’s climate goals, including energy efficiency and solar incentives, and yes, the program that generates the excess money the governor is giving back.
These programs have quietly grown to constitute about 30 percent of a typical residential electric bill (a little less for gas). That’s $75 per month on an average $250 electric bill.
Most have not been critically examined for many years – and some popular ones, energy efficiency and solar programs for example, may need to be reset.
It’s our only hope, at least in the near term. Supply costs – the other area that drives overall bills higher – are high because of years-long opposition to new gas supply pipelines. With clean alternatives stalled, gas supply into the region is restricted, particularly during the high-demand winter months, raising prices. This will likely continue for years, even though the Healey-Driscoll administration is now embracing gas as part of their “all-of-the above” strategy for affordability.
The state has a tall order, but one that needs to be done. Working together, the governor and the Legislature need to frame the conversation in a way that those impacted by changes understand that this reset is necessary to keep us on a path to a complete transition – and is not a ploy to take us off the path to a complete transition. Other states, including New York, are facing the same issue.
Property owners, businesses and consumers need real relief. While its already too late for reductions this winter, addressing this issue now will make the dark days of next winter a little bit brighter.
Greg Vasil is president and CEO of the Greater Boston Real Estate Board.
