Heat pumps installed at a home in Massachusetts.Erin Clark/Globe Staff
Early this year, the state’s nation-leading energy efficiency program adopted a broader strategy to encourage more low-income households and tenants to tap into its benefits for heat pumps, insulation, and other measures that would save them money while helping the environment.
The intent was to make up for years of not reaching those populations — a failure highlighted this week in a new report by the state auditor’s office, which found that low-income residents are paying more for Mass Save through surcharges on their energy bills but not getting much in return.
Yet the response from those customers has so far proved so popular that Mass Save is quickly reaching its budgeted amounts for the cycle and now has to temper ambitions. It is also colliding with another reality: the state is under pressure to keep already high energy bills in check, especially after the budget-busting charges of last winter. And the first thing they targeted for cost-savings was the surcharges on energy bills that underwrite the efficiency measures that Mass Save wants more people to take.
The Mass Save program is designed not just to help homeowners and renters lower their utility bills through energy efficiency, but also to be a critical component of the state’s efforts to achieve its legally mandated targets to tackle climate change by reducing greenhouse gas emissions.
Mass Save operates on three-year cycles, and a $5 billion budget proposed in January would have been the largest in the history of Mass Save.
Trouble started almost immediately.
In February, in response to an outcry from Massachusetts consumers and lawmakers over high energy bills — only Californians and Hawaiians pay more for electricity in the United States — the state Department of Public Utilities slashed $500 million from Mass Save’s budget to lower those bills.
In April, the program announced how those cuts would be met, with some of the biggest reductions targeting heat pump incentives and the program aimed at helping renters.
Then this summer, another change. In a memo dated August 4 and shared recently with the Globe, Mass Save scaled back its services for low-income residents, adding new hurdles to adopt electric heat pumps and deferring some window replacement projects, while also warning of delays.
The problem, the Mass Save administrators explained, was that the program had been a victim of its own success. “Unprecedented levels of customer demand” had put the program on track to blow the budget for single family low-income residents just months into the start of its latest three-year cycle.
What it means: rather than actively trying to help connect low-income residents with services to help lower their energy bills,, Mass Save will instead prioritize other groups, such as small businesses and small multifamily building owners.
A spokesman for the Mass Save program said the “broad commitment to serve income-eligible households remains a core priority” of the plan, and that Mass Save is still on track to provide more than $1 billion in incentives and other aid for income-eligible residents during this three-year period — double what that group of customers received during the 2022-2024 cycle.
This challenge represents the tricky needle that Mass Save, and the state, must thread: offer a program that helps all residents lower their energy bills and cut their household greenhouse gas emissions without sending their energy bills sky-high with exorbitant surcharges to ratepayers.
With the rollback of federal incentives by the Trump administration to get off fossil fuels and switch to electricity for heating homes, state offerings are even more critical. But at a time when ratepayers in Massachusetts are already asked to pay so much, any additional surcharge on a bill to fund Mass Save comes with a political risk.
In the memo to its energy efficiency vendors, Mass Save administrators warned the Department of Public Utilities had “strongly emphasized” the importance of staying on budget — meaning it is unlikely the department would approve a rate increase.
State Senator Michael Barrett, a Lexington Democrat who worked on multiple climate change initiatives, said the DPU’s emphasis on keeping budgets and surcharges in check makes sense. “Who wants to over-burden consumers again? And keep a bullseye on the program?”
But clean energy advocates say that short-term worries about the budget overlook the long-term problem.
“The efficiency programs are delivering $3.40 in benefits for every dollar we invest,” said Amy Boyd Rabin, vice president of policy at the Environmental League of Massachusetts. “We must find funding sources beyond gas and electric ratepayers for these programs to really serve everyone.”
Barrett added that while “people are angry about their bills, and they should be ... it’s important to spare energy efficiency from becoming collateral damage.”
Those working in communities with large low-income populations say it’s no surprise there is a lot of demand for Mass Save’s offerings because, they say, low-income residents have long been overlooked by the program.
“It has a spotty track record in terms of equity, to say the least,” said John Walkey, director of climate justice and waterfront initiatives at GreenRoots in Chelsea.
That track record was highlighted in the state auditor’s report, which analyzed Mass Save data from 2019-2023. Residents in poorer communities contributed 24 percent more, per capita, than the average for the rest of the state($77.76 annually versus $62.96).
Massachusetts energy officials noted the auditor’s report does not include the most current Mass Save plans that target disparities. But given the recent changes outlined in the memo from Mass Save, some question whether the state has really changed its outreach.
“This is just a continued frustration and outrage,” said Alex Pratt, director of strategic planning and housing development in Malden. “Low income communities are subsidizing this program for wealthier people and wealthier communities. That’s just totally backwards.”