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In Massachusetts, many natural gas customers are receiving what they say are the highest utility bills they’ve ever faced.
The reasons for these spiking costs are complex, ranging from volatile gas supply prices to this winter’s unusually frigid weather. Less discussed, however, is the effect of utilities’ Gas System Enhancement Plans, or GSEPs. The state requires these annual plans in an effort to make the gas pipeline system safer, but many lawmakers and climate advocates argue that utilities are taking advantage of the GSEPs to boost profits and build out fossil-fuel infrastructure Massachusetts doesn’t really need as it transitions to clean energy. Most residents likely don’t even know GSEPs exist, but the costs have escalated in the 12 years they have been in effect, and now make up roughly a tenth of gas customers’ monthly bills.
The program was created in 2014 to address growing safety concerns about the dangers posed by leaks in Massachusetts’ natural gas pipes, which are among the oldest in the country: One out of every four miles of pipeline in the state was installed before 1940.
As gas pipes get older, they become more prone to catastrophic breaks that can cause explosions, like the one in San Bruno, California, in 2010. Natural gas leaks also release planet-warming methane and other hazardous compounds, like benzene and xylene, said Jonathan Buonocore, an assistant professor of environmental health at Boston University.
“Many of these are health-damaging pollutants, and some are carcinogenic,” he said.
Massachusetts decided to address the problem by, in short, allowing utilities to make more money, more quickly when they repair or replace leak-prone pipes.
In general, gas utilities’ profits come from the delivery portion of their rates. They invest in pipes, compressor stations, and other infrastructure, then recoup that money — plus a set rate of return — from customers over a span of 20 years or more. They can’t start recovering those costs, however, until they go through a rate case, in which state regulators spend nearly a year scrutinizing utilities’ calculations and determining whether their requested rates are justified. Massachusetts requires a new rate case for gas utilities only every 10 years, though the companies can file a request for rate changes more often.
By contrast, the state lets utilities get that money back faster for GSEP projects. Regulators must approve the plans within six months, and then utilities can start passing costs through to customers soon afterward. The law set an initial annual cap on GSEP spending of 1.5% of a company’s revenue, but utility regulators can — and have — increased that number. In 2019, the state raised the cap to 3%.
The costs of the program have climbed from $291 million in GSEP spending in 2015 to a proposed $880 million in 2025. The costs now account for 8% to 11% of customers’ bills.
Have these mounting expenses made the gas system safer? It’s unclear. Utilities argue that replacing pipes is the best way to achieve safer infrastructure. Skeptics of the program, however, say the lure of a quicker payback has encouraged utilities to replace pipes that could have been repaired or relined at much lower cost without any compromises on safety.
“Utilities are frankly getting sloppy on their risk prioritization,” said Jamie Van Nostrand, the policy director at the nonprofit Future of Heat Initiative and former chair of the Massachusetts Department of Public Utilities. ​“They responded the way you’d expect them to, and that’s to maximize spending on GSEPs. They have a bias in favor of replacement.”
Climate and consumer advocates are also concerned that the state’s decarbonization goals will lead to stranded costs: that customers will still be paying for this decade’s pipe replacements long after the infrastructure has been taken out of service because of state efforts to transition to clean energy and electrified heating.
Utility regulators issued an order in late 2023 outlining principles for transitioning the state off natural gas. Fully replacing pipes might therefore be unnecessary in many cases, as there’s no need to install — and pay for — equipment that will last 50 years when the system may become obsolete in 20 years, said Audrey Schulman, who founded HEET, a nonprofit that advocates for a transition away from natural gas, and is now executive director of climate-solutions incubator Black Swan Lab.
“Although the intent is to keep us safe, the problem is we probably will not be using gas in the same amount in the future,” Schulman said. ​“Let’s not keep replacing pipes as though we’re going to keep this system going everywhere, forever. It’s an unwise business choice.”
Some changes are underway. A 2022 law created a working group to assess the GSEP program and ensure the guidelines align with the state’s goal of reaching net-zero carbon emissions by 2050. The panel’s final report, released in early 2024, recommends a more rigorous system for prioritizing leaks and stronger rules for considering alternatives to natural gas, such as electrification or geothermal loops.
Last spring, regulators issued a decision lowering the GSEP revenue cap to 2.5% from 3%, a move celebrated by state Attorney General Andrea Campbell as reining in ​“fundamentally unfair” spending by gas utilities. And utilities should expect this level of scrutiny from regulators to continue, Van Nostrand said.
“We’re going to be taking a much closer look,” he said. ​“You need to show your work.”
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