Massachusetts has some of the highest electric rates in the country, and every year, many residents struggle to pay their utility bills. To help to make energy more affordable, utilities offer “discounted rates” for low-income residents, which cover roughly a third of a customer's total electric bill.
It’s a generous discount by national standards, but it’s often not enough, said Karsten Barde, director of policy and strategy for National Grid.
“You still see large numbers of customers at the lower end of the income distribution for whom that level of assistance isn’t adequate to keep their energy burden to a manageable level,” he said.
This week, National Grid proposed a substantial overhaul of its discount rate structure. Instead of offering a flat 32% discount to qualifying customers, the company wants to implement a tiered structure that would offer up to a 55% discount on bills each month.
Barde called the proposal “more equitable” and “more responsive” to what customers actually need. And it he said it should go a long way to reducing the "energy burden" many in the state currently face.
A household is considered "energy burdened" if it spends more than 6% of its monthly income on utility bills. Barde said that even with the existing discount rate, some National Grid customers spend about 20% of their income on energy.
While the change wouldn't technically cap a household's energy bills at 6% of its income, the company predicts that will be the net effect for most low-income customers.
If approved, the new rates would go into effect on Oct. 1, 2024.
Charlie Harak, a senior attorney at the National Consumer Law Center who specializes in energy and utility issues in Massachusetts, said tiered discounts “better target deeper assistance to those most in need,” and that implementing this proposal would be “an improvement” over the current flat rate.
National Grid proposed these changes as part of the electric rate case it filed this week with the state’s Department of Public Utilities. Rate cases are the formal process by which the state determines how utilities can recover costs from customers. They are huge, complicated regulatory proceedings that last about 10 months and only happen once or twice a decade — National Grid’s last electric rate case was in 2018.
While this rate case only covers the electric side of National Grid’s business in Massachusetts, John Lamontagne, a National Grid spokesperson, said the company would like to change its discount rate program for gas customers too.
Currently, customers who qualify for discounted gas rates can 25% of their total monthly bill knocked off. But when, and if, a change to gas rates might happen, remains to be seen — National Grid’s most recent gas rate case was finalized in 2021, and Lamontagne said the company probably won’t file another until at least 2025.
National Grid serves 1.3 million electric and gas customers in Massachusetts. While approximately 259,000 customers received discounted energy rates as of last month, many more people are likely eligible.
“We absolutely believe there are thousands of people out there who might be eligible but either aren’t aware they are eligible or don’t know a discount program exists,” Lamontagne said. “It’s why we’ve asked as part of this rate case to dedicate some funds and a team toward increasing that engagement and get more people signed onto the discount program.”
As part of is new rate case, National Grid has also proposed spending more money on outreach to help spread the word about the existing discount rate and other debt forgiveness programs.
“The goals are to raise awareness, increase enrollment and provide greater direct personalized customer support,” Barde said. He added that the company would also work with community-based organizations “to ensure that we’re reaching customers in the language and the framing and in terms that resonate with them.”
Other notable things in the rate case include substantial plans to invest in building out the local distribution grid to help support the state’s electrification goals, and to harden existing infrastructure against the more extreme weather climate change is likely to bring.
Massachusetts has made building electrification — swapping fossil fuel-powered appliances for electric ones — a cornerstone of its climate policy. But because electricity is often more expensive than natural gas in the state, the prospects of higher costs can be a disincentive for people to make the change.
To help counteract this, the company is also proposing a different innovative rate design to encourage customers to install electric heat pumps and buy electric vehicles. Currently, while some of your monthly electric bill consists of fixed charges, most of what you pay is determined by how much electricity you consume.
For customers who opt into this new rate structure, more of their bill would be “fixed” charges, meaning their monthly costs wouldn’t spike as dramatically if they increase their electricity usage. The company estimates that customers with fully electric homes who adopt this new rate could save as much as 11% on their monthly bills.
National Grid filed its rate case with the Department of Public Utilities on Friday. The company is proposing an annual bill increase of 2-3% per year for the average ratepayer over the next five years, which would help pay for the new rate structures, infrastructure upgrades and other proposals.
Rate cases take a long time and the state is unlikely to issue a final decision about the company's proposals before next fall.