Energy Efficiency Fund

July 28, 2021


Massachusetts Public Benefit Funds

Massachusetts's 1997 electric utility restructuring legislation created two separate public benefit funds to promote renewable energy and energy efficiency for all customer classes. Both funds were significantly revised by legislation enacted in July 2008 (The Green Communities Act, S.B. 2768). The 2008 Green Communities Act directs the electric and gas program administrators to “first acquire all available energy efficiency that is cost effective or less than the cost of supply."

Funding and Administration

The energy efficiency fund is authorized to support energy efficiency programs, including demand-side management (DSM) programs and low-income energy programs. It is funded by several sources: a non-bypassable surcharge of $0.0025 per kilowatt-hour (2.5 mills/kWh), imposed on customers of all investor-owned electric utilities in Massachusetts; amounts generated under the Forward Capacity Market program administered by ISO-New England; cap-and-trade pollution control programs, including the Regional Greenhouse Gas Initiative (RGGI) and the NOx Allowance Trading Program; and other sources approved by the Massachusetts Department of Energy Resources (DOER), the Energy Efficiency Advisory Council, and the Department of Public Utilities (DPU). The energy efficiency surcharge does not have an expiration date. The non-bypassable surcharge is subject to a reconciling factor to ensure that energy efficiency program costs are fully recovered.

Efficiency programs are administered by electric utilities and municipal aggregators, with approval by a state-appointed Energy Efficiency Advisory Council consisting of a broad group of stakeholders and the DPU. DOER is responsible for program oversight and evaluation. The Energy Efficiency Advisory Council's website includes minutes from meetings, information about upcoming meetings, as well as mid-term amendments to the energy efficiency plans.

Electric and gas energy efficiency program funds are required to be allocated to customer classes, including the low-income residential subclass, in proportion to their contributions to those funds; provided, that at least 10% of the amount expended for electric energy efficiency programs and at least 20% of the amount expended for gas energy efficiency programs must be spent on comprehensive low-income residential DSM and education programs. The low-income residential DSM and education programs are being implemented through the state’s low-income weatherization and fuel assistance program network. 


The Energy Efficiency Advisory Council and the DPU are also authorized to approve and fund natural gas energy efficiency programs, including DSM programs and low-income energy programs, proposed by natural gas distribution companies. Energy efficiency activities eligible for funding through these programs include combined heat and power (CHP). Gas efficiency programs are administered by gas distribution companies. 

In January 2016, the DPU approved the 2016-2018 Three-Year Energy Efficiency Plans for electric and gas utilities in the state. The joint statewide 2016-2018 plan can be found here. Results and updates are provided on the Energy Efficiency Advisory Council's website.

Program Overview

Implementing Sector: State
Category: Regulatory Policy
State: Massachusetts
Incentive Type: Public Benefits Fund
Web Site:
Start Date:
Eligible Renewable/Other Technologies:
  • Geothermal Heat Pumps
  • Combined Heat & Power
  • Yes; specific technologies not identified
  • Geothermal Direct-Use
Types: Energy efficiency, low-income energy assistance
Total Fund: Three year plans for 2016-2018 expected to be approximately $2.5 billion
Charge: $0.0025 per kilowatt-hour (2.5 mills/kWh); +
Proceeds from Forward Capacity Market +
Proceeds from Regional Greenhouse Gas Initiative, and possibly other sources


Name: 1. ch. 25 § 19 (subsequently amended)
Date Enacted: 11/25/1997
Effective Date: 3/1/1998
Name: M.G.L. ch. 25A § 11G
Name: DPU Order Approving 2016-2018 Electric & Gas Efficiency Plans
Date Enacted: 01/28/2016
Effective Date: 01/28/2016


Name: Steven Venezia
Organization: Massachusetts Department of Energy Resources
Address: 100 Cambridge St., Suite 1020
Boston MA 02114

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.