The agency that regulates Massachusetts utility companies has revamped a state program meant to speed up repair of gas pipes for leaks and safety issues. It’s a move that should reduce gas bills and slow down massive spending by gas companies on new pipes at a time the state is transitioning toward clean energy.
The “gas system enhancement program,” or GSEP, was launched a decade ago with the idea that fast-tracking replacement of leak-prone pipes would keep the gas system safe.
But the program has been under increasing fire following sky-high energy bills this winter: Attorney General Andrea Campbell and environmental groups say the program is being abused to force residents to effectively pay to rebuild the state’s network of gas pipes, allowing the state’s six gas companies to reap enormous profits.
In ordering the changes on Wednesday, the Department of Public Utilities largely agreed. The moves will cut the financial incentives to lay new gas pipe and steer gas companies toward green energy alternatives.
“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,” Chairman James 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.”
The utility regulator said customers should expect to see some reduction in the delivery charge on their bills that arrive in June. Those decreases will vary depending on the gas company. And while reductions may not be dramatic in the immediate future, experts say the cost savings over time will bring more reductions to bills.
Under the program, the utilities are entitled by law to pass along the costs of gas pipe repair and replacement. But the cost of replacing gas pipes has more than doubled over the past decade to nearly $3.5 million to replace one mile of pipe, according to the regulator.
Annual spending through the program more than doubled from 2015 when the program started to about $580 million in 2023, the regulator said. The attorney general’s office projected that annual spending could rise to nearly $880 million in 2025.
Residents may not even know their energy bills are going toward paying for this large scale program. This cost is one of the highest components of the “delivery charge” that comes with gas bills.
The order aims to sharply curtail unnecessary investment in gas pipes that will be rendered obsolete within the next quarter of a century if the state meets its 2050 clean energy goal to dramatically reduce emissions below 1990 levels.
Campbell praised the order and said it would result in future reductions in gas bills.
“It is fundamentally unfair to charge ratepayers billions of dollars to prop up the gas system as the Commonwealth works to decarbonize,” the attorney general said in a statement. “Our office’s advocacy has resulted in significant reductions to the amount that gas companies can bill to customers for unnecessary investments in gas infrastructure that does nothing to achieve our climate goals.”
Dorie Seavey, a research economist with Groundwork Data, said that over time the program “has increasingly veered out of control” and she called the changes “a critical course correction.”
“It stops the drift of GSEP away from its core purpose which is to take a targeted approach to delivering cost-effective solutions to pipeline safety risks. The order will bring much needed cost containment to the program and will improve the safety scrutiny,” Seavey said in an email.
A project designed to incentivize gas companies to quickly address the riskiest pipes, in other words, has failed to do that — while also piling mounting costs on residents.
Energy companies, she said, are “spending higher and higher amounts per pipeline mile replaced but not achieving a faster pace and not systematically addressing the riskiest pipes.”
The changes are a step toward scaling back excessive spending for new natural gas pipes and forcing companies gas to prioritize the greatest safety risks.
To disincentivize spending on new pipes, the order immediately curtails the amount gas companies can recover for their capital spending on gas infrastructure, gradually reducing the amount by 50% over three years.
Clean energy advocates say these changes are a clear indication from the state that the goal is to shift away from gas.
“This decision is a win for anyone who pays a gas bill in the state of Massachusetts. Gas utilities have every incentive to overbuild the gas distribution system through programs like GSEP. The Department’s leadership with this decision will save customers money and maintain system safety both today and in the long run as Massachusetts moves away from fossil fuels,” said Sarah Krame of the Sierra Club.
Gas companies have denied they are needlessly replacing pipe and say replacements improve reliability and safety of the system.
Tricia Modifica, a spokesperson for Eversource, says the company’s priority is safety and reliability. She said the current program was “critical work” to improve the safety of the gas distribution system and to reduce leaks.
“Operating and maintaining a safe and reliable natural gas system for our customers is the top priority for Eversource. As we review the recent decision from the Department of Public Utilities, our work will continue on behalf of our customers to safely, efficiently, and cost-effectively address aging, leak-prone pipe across the state,” Modifica said.
The state regulator, though, disagreed with the program’s benefits and found there were “more affordable ways to address leak-prone pipe.”
“Fundamentally, the GSEP program has not yielded gains in public safety sufficient to justify the substantial cost,” the Department of Public Utilities said in their new order.
To get to a more affordable approach to leaks, gas companies will be required to evaluate “advanced leak repair technology” as an alternative to outright pipe replacement.
Gas companies will have 30 days to respond to these changes.
And there may be more change ahead that could lower gas bills.
The Department of Public Utilities said it will be looking into how the current program might create overbilling for removing old pipes as well as collecting costs for work gas companies are not doing.
