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Incentives/Policies for Renewables & Efficiency

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Energy Efficiency Fund   

Last DSIRE Review: 11/27/2012
Program Overview:
State: Massachusetts
Incentive Type: Public Benefits Fund
Eligible Efficiency Technologies: CHP/Cogeneration, Unspecified Technologies
Eligible Renewable/Other Technologies: Geothermal Heat Pumps, (geothermal heating and cooling projects), Geothermal Direct-Use
Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Utility, Agricultural, Institutional, (no specific programs for Agriculture)
Types:Energy efficiency, low-income energy assistance
Total Fund:$1.09 billion collected during years 1998-2006;
Three year plans for 2010-2012 expected to be approximately $2.1 billion
Charge:$0.0025 per kilowatt-hour (2.5 mills/kWh); +
Proceeds from Forward Capacity Market (est @ $10 million in 2009); +
Proceeds from Regional Greenhouse Gas Initiative; and possibly other sources
Authority 1:
Date Enacted:
Date Effective:
M.G.L. ch. 25, § 19 (subsequently amended)
Authority 2:
M.G.L. ch. 25A § 11G
Authority 3:
Date Enacted:
DPU Order on Electric Three-Year Energy Efficiency Plans (2010-2012)
Authority 4:
Date Enacted:
DPU Order on Gas Three-Year Energy Efficiency Plans (2010-2012)

Note: The 2013 Three Year Efficiency Plans have not yet been approved. The process is underway. For the latest draft plan, review the Massachusetts Energy Efficiency Advisory Council web site. This summary will be updated once the Three Year Efficiency Plans have been approved in early 2013.


Massachusetts's 1997 electric-utility restructuring legislation created separate public benefits funds to promote renewable energy and energy efficiency for all customer classes. Both funds were significantly revised by legislation enacted in July 2008 (S.B. 2768). The 2008 Green Communities Act directs the electric and gas program administrators to “first acquire all available energy efficiency that is cost effective or less than the cost of supply."

The energy efficiency fund is authorized to support energy efficiency programs, including demand-side management (DSM) programs and low-income energy programs. It is funded by several sources: a non-bypassable surcharge of surcharge is $0.0025 per kilowatt-hour (2.5 mills/kWh), imposed on customers of all investor-owned electric utilities in Massachusetts; amounts generated under the Forward Capacity Market program administered by ISO-NE; cap-and-trade pollution-control programs, including the Regional Greenhouse Gas Initiative (RGGI) and the NOx Allowance Trading Program; and other sources approved by the Massachusetts Department of Energy Resources (DOER), the Energy Efficiency Advisory Council and the Department of Public Utilities (DPU). The energy efficiency surcharge does not have an expiration date.

Efficiency programs are administered by electric utilities and municipal aggregators, with approval by a state-appointed Energy Efficiency Advisory Council consisting of a broad group of stakeholders and the DPU. DOER is responsible for program oversight and evaluation. The Energy Efficiency Advisory Council's web site includes minutes from meetings, information about upcoming meetings, as well as mid-term amendments to the energy efficiency plans.

The Energy Efficiency Advisory Council and the DPU are also authorized to approve and fund natural gas energy efficiency programs, including DSM programs and low-income energy programs, proposed by natural gas distribution companies. Energy efficiency activities eligible for funding through these programs include combined heat and power (CHP). Gas efficiency programs are administered by gas distribution companies.

Electric and gas energy efficiency program funds are required to be allocated to customer classes, including the low-income residential subclass, in proportion to their contributions to those funds; provided, that at least 10% of the amount expended for electric energy efficiency programs and at least 20% of the amount expended for gas energy efficiency programs must be spent on comprehensive low-income residential DSM and education programs. The low-income residential DSM and education programs are be implemented through the state’s low-income weatherization and fuel assistance program network.

In October 2009, the Energy Efficiency Advisory Council approved the 2010-2012 Three-Year Energy Efficiency Plans for electric and gas utilities in the state after approximately 25 meetings held over the span of a year, with broad stakeholder input. And, later in January 2010, the DPU formally approved the plans. The DOER provides a summary of these plans. The Energy Efficiency Advisory Council issued a report in September 2012 summarizing 2011 program progress.

  Mike Sherman
Massachusetts Department of Energy Resources (DOER)
100 Cambridge St., Suite 1020
Boston, MA 02114
Phone: (617) 626-7387 Ext.40187
Fax: (617) 727-0030
Web Site: http://www.Mass.Gov/DOER
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

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