The History of Energy Deregulation in Massachusetts
Like other states, Massachusetts energy deregulation was a response to high prices and unfair rate hikes for consumers. In the early 1990s, service contracts and rates increased every year for Mass residents. Consumers only had two utility providers, NSTAR (the result of the merger of Boston Edison, Commonwealth Edison, and Cambridge Edison) and the DTE (Department of Telecommunications and Energy).
In 1998, the state legislature began taking steps to introduce energy deregulation, encouraging healthy competition to drive down prices. Massachusetts has a few areas still serviced by electrical cooperatives, but overall, the Massachusetts program has been one of the most successful deregulation initiatives for both commercial and residential customers.
Another intent behind energy deregulation in Massachusetts was to encourage energy service providers to develop better customer service practices and promote energy solutions, customizable service packages, and a more cost-effective energy marketplace.
Overall, customers have saved over USD 1.5B since the utility market in MA was deregulated.
Massachusetts Electric Rates
Electricity prices in Massachusetts are among the highest in the US – in the latest data gathered by the Energy Information Administration (March 2021), the state has an average residential rate of 23.29 cents per kWh, while the average commercial tariff is 16.81 cents per kWh. For comparison, the US average residential tariff is 13.29 cents/kWh, and the commercial tariff is 11.13 cents/kWh. In other words, kWh prices in Massachusetts are 75% higher than the national average in the residential sector, and 51% higher in the commercial sector.
Natural gas is the main electricity source in Massachusetts, representing around two-thirds of total power generation. The rest of the electricity comes mostly from nuclear stations and renewables, and the state has been working hard to eliminate coal power.
Although electricity is expensive in Massachusetts, the state is also characterized by its numerous incentive programs for homes and businesses. These programs cover areas like solar power, energy efficiency, and even electric vehicle charging.
Solar Power Incentives in Massachusetts
Massachusetts has a state tax credit for residential solar power, which can be combined with the federal tax credit available nationwide. The solar tax credit covers 15% of system costs or $1,000, whichever is less, and it gets deducted from state income taxes. Since the federal tax credit is 26% until the end of 2022, a solar installation in Massachusetts can get a potential tax deduction of up to 37% when both incentives are combined. Consider the following example:
- Residential solar power systems have a typical cost of $3 per watt in the US, which means a 5-kW system would cost around $15,000.
- The 26% federal tax credit is $3,900 in this case.
- The state tax credit reaches the limit of $1,000, since 15% of $15,000 is $2,250.
- The total tax credit is $4,900 in this example, covering nearly 33% of system costs.
The Solar Massachusetts Renewable Target (SMART) was created in 2018, and it has become one of the best incentive programs for solar power in the US. The program was created with an original target of 1,600 MW, but this was doubled to 3,200 MW in April 2020. This solar megawatt target is divided among the three deregulated utilities in Massachusetts:
- Eversource = 1,711.543 MW
- National Grid = 1,456.383 MW
- Unitil = 32.074 MW
Solar owners in Massachusetts who qualify for the SMART program are paid an incentive for each kWh generated, which depends on the system capacity and utility company. The solar target for each utility company is divided into capacity “blocks”, and the incentive rate decreases as the blocks are filled.
- Based on these three factors (system size, utility company and block), the incentive rate varies from 9.1 to 39.1 cents/kWh. These rates include net metering, which means they are actually the sum of your solar savings and the SMART incentive.
- The incentive is paid for 10 years if the system capacity is up to 25 kW, and 20 years for larger systems.
For example, if the 5-kW solar PV system in the example above gets 30 cents/kWh with SMART, and its annual production is 6,000 kWh, it gets $1,800 per year. Since the cost of $15,000 is reduced to $10,100 with the tax credits, the payback period is only 5.6 years – this is great when you consider that solar panels last more than 25 years.
Even higher incentives are available for solar power systems that meet certain characteristics. For example, the SMART incentive is increased for solar installations with energy storage, and also for projects that are developed in brownfields.
The SMART program is only available for energy consumers in the service territories of deregulated utilities. However, if your electricity comes from a municipal utility, you may be eligible for the Municipal Light Plant Solar Rebate Program.
- Under this program, solar power systems with up to 25 kW of capacity are eligible for a rebate of $1.20 per watt, covering up to 50% of project costs.
- The Massachusetts Department of Energy Resources (DOER) has committed $2.3 million in funding for this program.
- The rebate program website shows the list of municipal utilities that are currently participating.
Energy Efficiency Incentives in Massachusetts
In addition to the solar tax credit and SMART, Massachusetts has multiple incentive programs for energy efficiency. The state government has created a detailed guide that covers these programs, and we will discuss their main features in this section.
Having multiple energy incentive programs is great, but it can also lead to confusion. However, the Massachusetts government has created the energyCENTS tool, which is a rebate finder that can help compare your options more easily.
Mass Save offers energy efficiency incentives for both homes and businesses. The incentives and benefits of this program are summarized in the following table:
|Type of Energy Consumer||Mass Save Incentives and Benefits|
-Home energy performance evaluations
-Energy incentives for renters
-Assistance for low-income households
-Incentives for new constructions, renovations and additions
-Energy assessments for small businesses
-Customized advice and incentives
Some properties have barriers that interfere with the weatherization and heating upgrades offered through Mass Save. You may be eligible for a barrier mitigation grant if this is your case, and the incentive depends on the type of barrier:
- Asbestos: Up to $4,000
- Knob and tube wiring: Up to $7,000
- Vermiculite: Up to $7,000
MuniHELPS is a useful resource that provides information about energy incentives offered by municipal utilities in Massachusetts. If your home or business is outside the service territory of deregulated utility companies, you can look for incentives on the MuniHELPS website.
Massachusetts Clean Energy Center
The Massachusetts Clean Energy Center also manages incentive programs, focusing on clean heating and cooling. The program has offered rebates for multiple technologies, but is currently focusing on air-source heat pumps, which achieve energy savings of 40-70% compared with electric resistance heaters. In the past, the program has also offered rebates for solar hot water, automated wood heating, wood stove upgrades and ground-source heat pumps.
Merrimack Valley Clean Energy & Energy Efficiency Programs
The Merrimack Valley Clean Energy & Energy Efficiency Programs were created in July 2020, in response to the gas explosions that affected the Merrimack Valley in 2018. To compensate for the incident, Columbia Gas (now part of Eversource) is providing 41 million for energy incentive programs, which include:
- Debt relief for gas bills in low-income households
- Clean energy incentives for homes and commercial buildings
- Energy efficiency incentives for homes and commercial buildings
These programs are available in Lawrence, Andover and North Andover. The $41 million fund will be distributed as follows:
|Municipal Clean or Efficient Energy||$6 million|
|Geothermal Microgrid||$4 million|
|Removing Energy Efficiency Barriers and Increased Access to Efficient and Clean Energy for Low and Moderate||$21 million|
|Energy Efficiency and Heat Pumps for Market Rate Residential Housing||$3.5 million|
|Public Affordable Housing Energy Efficiency||$3 million|
|Private Affordable Housing Energy Efficiency||$1.5 million|
|Small Business Energy Efficiency and Heat Pump||$2 million|
Home Energy Assistance Programs
There are three home energy assistance programs in Massachusetts, available for households below 60% of the state median income:
- Low Income Home Energy Assistance Program (LIHEAP)
- Heating System Repair & Replacement Program (HEARTWAP)
- Weatherization Assistance Program (WAP)
LIHEAP is also known as the Fuel Assistance program, and it helps low-income households pay their winter heating bills from November 1 to April 30. The energy sources covered by this program include oil, electricity, natural gas, propane, kerosene, wood and coal.
HEARTWAP also focuses on low-income households, and it provides emergency assistance to repair or replace heating systems. This program focuses on homeowners, since renters are covered by the Massachusetts State Sanitary Code, which makes landlords responsible for maintenance and emergency repairs.
WAP provides funding for weatherization measures like air sealing, attic insulation, sidewall insulation, floor insulation, pipe and duct insulation, and certain energy repairs. Homes also receive a professional evaluation of their heating systems and combustion appliances along with the weatherization measures.
Connected Solutions – Demand Response Program
ConnectedSolutions is a demand response program that focuses on reducing air conditioning demand during peak hours with smart thermostats.
- When a thermostat is enrolled in the program, homes are pre-cooled before high demand hours.
- The temperature setting is then increased by no more than 4°F to reduce consumption.
- The program is active between June 1 and September 30, from 2:00 to 7:00 PM.
The incentive is $25 for enrollment, and then $20/year for each smart thermostat controlling a central air conditioning system. This incentive program is available for homeowners, renters and small business owners.
Electric Vehicle Incentives in Massachusetts
To complete the list of energy incentive programs, Massachusetts also offers rebates for electric vehicles and their charging stations.
The MOR-EV program offers incentives for purchasing or leasing new electric vehicles:
- Up to $2,500 for a battery EV or fuel-cell EV.
- Up to $1,500 for a plug-in hybrid EV.
The MOR-EV Trucks program provides incentives for medium and heavy duty vehicles. The program covers battery and fuel cell EVs with a price of over $50,000 and a gross vehicle weight rating of over 8,500 lb, manufactured no earlier than February 16, 2021. The starting rebates range from $7,500 to $90,000 per vehicle, depending on its weight, and they will be gradually reduced as more vehicles get the rebate.
The MassEVIP program focuses on EV chargers for multifamily buildings and educational campuses. The program focuses on Level 1 and Level 2 EV charging stations, covering up to 60% of their cost, with a maximum incentive of $50,000 per street address. Multifamily buildings with at least five units and campuses with at least 15 students are eligible.
Energy Providers in Massachusetts
This Exelon company is a leading competitive supplier of power, natural gas, and energy products and services for homes and businesses across the United States and Canada. It serves over 90,000 residential and commercial/ industrial customers.
Corporate Address: 20 N Upper Wacker Dr. Suite 2100 2110B, Chicago, IL 60601
Phone Number: (855) 465-1244
Direct Energy serves over 6 million commercial, industrial, and residential customers. It offers customized plans and is the largest competitive energy and related services retailer in North America.
Corporate Address: 859 Willard St, Quincy, MA 02169
Phone Number: (888) 955-8824
This is a newer company with an innovative approach to consumer energy service, serving multiple states in New England.
Corporate Address: 6 Armstrong Rd 3rd Floor, Shelton, CT 06484
Phone Number: (203) 929-3200
This company is one of the state leaders in seeking alternatives to fossil fuels and pursuing renewable energy instead.
Corporate Address: 20 Glover Ave, Norwalk, CT 06850
Phone Number: (877) 572-0442
Spark is one of the earliest pioneers of the retail energy business, serving 16 states, including Massachusetts, and is based in Texas.
Corporate Address: 12140 Wickchester Ln STE 100, Houston, TX 77079
Phone Number: (877) 547-7275
Sunwave focuses on making the energy service industry simple for consumers. IT offers customized plans and an app to pay bills, switch services, and report outages.
Corporate Address: 100 Cambridge St, Boston, MA 02114
Phone Number: (855) 478-6928
Map of US Energy Deregulation
Massachusetts is one of 26 US States that have some form of energy deregulation whether it be electricity, natural gas or both. Use our interactive map to get more information on deregulated energy states in America.