On August 29, 2024, the Massachusetts Department of Public Utilities ("DPU") issued a highly anticipated order approving the Electric Sector Modernization Plans ("ESMPs") filed by the three Massachusetts electric distribution companies ("EDCs"), Eversource, National Grid, and Unitil. The ESMPs will provide a strategic roadmap for the EDCs' plans to make significant investments in their electric distribution systems to support state clean energy goals.
The EDCs filed their ESMPs with the DPU in January after a robust deliberative process with a new stakeholder advisor body, the Grid Modernization Advisory Council ("GMAC"), as required by Section 53 of An Act Driving Clean Energy and Offshore Wind, enacted in 2022 (the "Act"). In this order, the DPU approved the EDCs' plans, directed certain modifications and next steps, and set criteria for required biannual reports and future proceedings.
Scope and Key Approvals
The DPU reviewed the ESMPs at the long-term, strategic planning level, generally finding that the EDCs had complied with the requirements of the Act, with some modifications. The DPU expects the ESMPs to operate as each EDCs' roadmap for grid modernization investments in accordance with the Act. The DPU specifically found that the EDCs' ESMP forecast and demand assessments were reviewable, appropriate, and reliable; the EDCs' Integrated Energy Planning proposals for optimizing gas, electric, and decarbonization investments were reasonable and consistent with the overall ESMP objectives; the proposed equity frameworks complied with statutory requirements for stakeholder engagement and equity; and the EDCs had properly considered alternatives to proposed investments, alternative financing opportunities, and the net benefits of their proposed ESMP investments to customers. The DPU addressed these subtopics in detail, ultimately approving the EDCs' plans, subject to various modifications.
In their ESMPs, the EDCs drew a distinction between "core" investments (described as base spending capital investment activities funded through base distribution rates to maintain the safety and reliability of the electric distribution system in the normal course of business) and their proposed ESMP investments (described as accelerated, incremental investments that supplement and go beyond existing programs and core investments). The DPU found this distinction reasonable and appropriate, declining to require the EDCs to categorize certain investment types as either core or ESMP uniformly and allowing for a measure of flexibility in the utilities' ESMP investment planning. The DPU limited its review of the ESMPs to new, discrete, and incremental investments proposed by the EDCs but found that proposed ESMP investments must be informed by the EDCs' existing, planned, and proposed non-ESMP investments, including investments previously approved by the DPU.
Long-Term System Planning Program and Provisional Program Extension
As noted by the DPU in another docket (D.P.U. 20-75-C), the Act effectively codified a long-term system planning program ("LTSPP") requirement for enabling distributed energy resource ("DER") deployment. In recognition of this requirement, the GMAC recommended that the EDCs include in their ESMPs a proactive LTSPP process for the interconnection of DERs. However, the EDCs did not make detailed proposals for LTSPPs in their ESMPs; instead, they proposed working with interested stakeholders to develop LTSPP proposals in accordance with analyses, proposals, and comments submitted in D.P.U. 20-75.
The DPU found the EDCs' approach reasonable but emphasized the need to develop LTSPP proposals in a timely manner. To facilitate this, the DPU directed the EDCs to coordinate an LTSPP stakeholder group no later than October 1, 2024, organize bi-monthly stakeholder meetings over six months, and submit an interim status report by February 3, 2025, and a final report with consensus proposals and a detailed summary of disagreements by April 4, 2025. This process could become central to the continued deployment of DERs in Massachusetts.
The DPU also found reasonable the EDCs' proposal to extend the so-called Provisional Program as a bridge to an LTSPP. The Provisional Program, created in D.P.U. 20-75-B is an interim framework for planning and funding essential upgrades to the distribution system, which allows the EDCs to file capital investment project ("CIP") proposals with the DPU to limit the interconnection costs allocated to any particular DER. Extension of the Provisional Program will allow DER projects currently in the interconnection queue to proceed before establishing an LTSPP. The DPU also identified new eligibility criteria for CIP proposals and provided a Provisional Program Extension Filing Checklist as an Appendix to the order.
Deferral of Cost Recovery Framework and Other Issues
The DPU emphasized that this order did not pre-approve or preauthorize any of the EDCs' proposed ESMP investments or related costs. The DPU declined to make the ESMPs each EDC's central distribution system planning document and limited its review to whether the EDCs had complied with the minimum statutory requirements. The DPU also refrained from issuing detailed findings regarding several important aspects of the EDCs' plans, including the exact parameters of the cost recovery mechanisms, applicable performance metrics, and the processes for evaluating alternatives and addressing changed circumstances during the five-year ESMP terms. These and other longer-term issues were deferred to a later phase of the proceedings.
Biannual Reporting Requirements and Next Steps
The order established the first five-year ESMP term from July 1, 2025, through June 30, 2030, rejecting the EDCs' recommendation to begin ESMP biannual reporting in 2026. The DPU declined to require each EDC to establish a dedicated data-sharing platform for stakeholders to access their data on an ongoing basis. The DPU also directed the EDCs to include specific information in their required biannual reports, the first of which is due on September 30, 2025. The utilities were ordered to include supplemental information about proposed ESMP and non-ESMP investments, forecasts and demand assessments, progress on Integrated Energy Planning processes, updates related to planned grid studies and compensation frameworks, and other issues related to energy storage systems, transmission upgrades, alternative funding proposals, and stakeholder engagement and equity. The DPU intends to finalize the form and content of the biannual reports in a subsequent phase of the proceedings.
The DPU's approval of these ESMPs is a significant step towards preparing the electric grid to meet Massachusetts's ambitious clean energy targets. The Foley Hoag Energy & Climate team will continue monitoring and reporting on these dockets as the ESMP process continues.
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