A tiered rate system being developed by the state’s utility regulator is raising concerns that the program will shift costs and ultimately hit middle class ratepayers.
The Department of Public Utilities (DPU) released its Annual Report for 2025 this week, highlighting its ongoing probe into the state’s energy burden and focus on affordability for residential ratepayers. As part of that process, the department held an all-day technical conference to come up with a tiered rate model for Massachusetts.
“On January 28, 2025, the Department convened a virtual all-day technical conference to discuss the following issues: (1) how to determine a target energy burden level; (2) how to translate the target energy burden level into tiered discount rates and define the tiers; and (3) how to address recovery of the revenue shortfall from discount rates,” the report said. “Using data … and with stakeholder input, the Department developed a tiered discount rate model to calculate discount rates based on a target energy burden, with various assumptions.”
But one critic says the only thing a tiered system would do is continue to increase energy costs for ratepayers, especially if the state’s NetZero by 2050 climate mandate is not rolled back to a goals-based system, as was in place during former Gov. Deval Patrick’s administration.
With energy prices soaring, that’s an approach suggested by state Sen. and Minority Leader Ryan Fattman.
“I’m doubtful there will be any meaningful cost savings for ratepayers if they don’t address the policies that are bringing higher costs, said Paul Craney, Executive Director of the Massachusetts Fiscal Alliance. “It’ll probably just shuffle costs around and ultimately the middle class will see their bills increase.”
As part of its investigation into high energy costs, DPU says it will evaluate “whether certain charges should be eliminated, consolidated, or redesigned as a fixed charge,” and review whether to establish maximum limits on net metering charges paid by electric customers “without compromising the continued development of solar in the state.”
The report also indicates that along with capital investments, transition costs and grid modernization, Massachusetts ratepayers have “electric vehicle program costs” tacked onto their monthly bills.
“Other costs and mechanisms that the Rates Division reviews on an annual basis include: the annual reconciliation of basic/default service, transmission, transition costs and revenues, grid modernization investments, interconnection cost allocations, electric vehicle program costs, pension and PBOP costs, and net metering costs,” the report said.
As Gov. Maura Healey, the DPU and state lawmakers continue to hang on to Massachusetts climate policies and the 2050 NetZero mandate, an independent study released in November by the Fiscal Alliance Foundation found that state’s climate and energy programs are to blame for the sharp rise in electric bills in Massachusetts. A separate, 2026 study estimated that New England ratepayers would save between $400-$700 billion by replacing planned offshore wind and solar projects in the region with natural gas and nuclear power. And a 2024 study by the coalition found that sticking with current solar and wind energy projects will cost New England ratepayers an estimated $815 billion.
DPU Chair Jeremy McDiarmid, appointed by Healey in August, touted the department’s 2025 accomplishments while blaming a “reversal in federal policy priorities” for “unprecedented affordability challenges.”
“2025 was a very productive year that saw the DPU advance many critical policy priorities, welcome new leadership, and continue to implement the many policies the Legislature has entrusted to the Department in recent years,” McDiarmid wrote in a cover letter attached to the DPU’s annual report. “At the same time, unprecedented affordability challenges and reversals in federal policy priorities have required the DPU to adapt.”
McDiaramid was appointed by Healey following the departure of former DPU Chair James Van Nostrand, who was found to have used his state-issued email to network for jobs with organizations tied to climate policy while regulating Massachusetts energy rates.
The Herald has requested more information from the DPU on its planned tiered discount rate model.