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The Commonwealth of Massachusetts
—— DEPARTMENT OF PUBLIC UTILITIES
D.P.U. 13-67 December 11, 2014
Petition of Bay State Gas Company, d/b/a Columbia Gas of Massachusetts; The Berkshire Gas
Company; Boston Gas Company and Colonial Gas Company, each d/b/a National Grid;
Fitchburg Gas and Electric Light Company, d/b/a Unitil; NSTAR Gas Company; New England
Gas Company; Massachusetts Electric Company and Nantucket Electric Company, each d/b/a
National Grid; NSTAR Electric Company; and Western Massachusetts Electric Company, for
approval by the Department of Public Utilities of Performance Metrics for 2013 through 2015.
APPEARANCES: Emmett E. Lyne, Esq.
Shaela McNulty Collins, Esq.
Jodi K. Hanover, Esq.
Rich May, P.C.
176 Federal Street, 6th
Floor
Boston, Massachusetts 02110
FOR: BAY STATE GAS COMPANY
D/B/A COLUMBIA GAS OF
MASSACHUSETTS
Petitioner
-and-
FOR: THE BERKSHIRE GAS COMPANY
Petitioner
-and-
FOR: NEW ENGLAND GAS COMPANY
Petitioner
D.P.U. 13-67 Page ii
Patricia Crowe, Esq.
Melissa Liazos, Esq.
National Grid
40 Sylvan Road
Waltham, Massachusetts 02451
FOR: BOSTON GAS COMPANY AND
COLONIAL GAS COMPANY
D/B/A NATIONAL GRID
Petitioner
Kevin F. Penders, Esq.
Donald W. Boecke, Esq.
Keegan Werlin LLP
265 Franklin Street
Boston, Massachusetts 02110
FOR: FITCHBURG GAS AND ELECTRIC
LIGHT COMPANY D/B/A UNITIL
Petitioner
John K. Habib, Esq.
Annette Tran, Esq.
Keegan Werlin LLP
265 Franklin Street
Boston, Massachusetts 02110
FOR: NSTAR GAS COMPANY
Petitioner
-and-
FOR: NSTAR ELECTRIC COMPANY
Petitioner
-and-
FOR: WESTERN MASSACHUSETTS
ELECTRIC COMPANY
Petitioner
D.P.U. 13-67 Page iii
Martha Coakley, Attorney General
Commonwealth of Massachusetts
By: Matthew E. Saunders
Assistant Attorney General
Office of Ratepayer Advocacy
One Ashburton Place
Boston, Massachusetts 02108
Intervenor
Steven I. Venezia, Esq.
Massachusetts Department of Energy Resources
100 Cambridge Street, Suite 1020
Boston, Massachusetts 02114
FOR: MASSACHUSETTS DEPARTMENT OF
ENERGY RESOURCES
Intervenor
Jerrold Oppenheim, Esq.
57 Middle Street
Gloucester, Massachusetts 01930
FOR: LOW-INCOME WEATHERIZATION AND FUEL
ASSISTANCE PROGRAM NETWORK,
MASSACHUSETTS ENERGY DIRECTORS
ASSOCIATION, AND THE LOW-INCOME
ENERGY AFFORDABILITY NETWORK
Intervenor
Shanna Cleveland, Esq.
Conservation Law Foundation
62 Summer Street
Boston, Massachusetts 02110
FOR: CONSERVATION LAW FOUNDATION
Intervenor
Donald Sosland, Esq.
Environment Northeast
8 Summer Street
PO Box 583
Rockport, Maine 04856
FOR: ENVIRONMENT NORTHEAST
Intervenor
D.P.U. 13-67 Page iv
Staci Rubin, Esq.
Alternatives for Community & Environment, Inc.
2181 Washington St., Suite 301
Roxbury, Massachusetts 02119
FOR: GREEN JUSTICE COALITION
Limited Participant
Robert Rio, Esq.
Senior Vice President and Counsel
Associated Industries of Massachusetts
1 Beacon Street, 16th
Floor
Boston, Massachusetts 02108
-and-
Robert R. Ruddock, Esq.
Smith, Segel & Ruddock
50 Congress Street, Suite 500
Boston, Massachusetts 02109
FOR: ASSOCIATED INDUSTRIES OF
MASSACHUSETTS
Limited Participant
Robert R. Ruddock, Esq.
Smith, Segel & Ruddock
50 Congress Street, Suite 500
Boston, Massachusetts 02109
FOR: THE ENERGY CONSORTIUM
Limited Participant
Eric W. Macaux, Esq.
Massachusetts Clean Energy Technology Center
55 Summer Street, 9th
Floor
Boston, Massachusetts 02110
FOR: MASSACHUSETTS CLEAN ENERGY
TECHNOLOGY CENTER
Limited Participant
D.P.U. 13-67 Page v
Gregory P. Vasil, Esq.
Greater Boston Real Estate Board
One Center Plaza, Mezzanine Suite
Boston, Massachusetts 02108
-and-
Robert R. Ruddock, Esq.
Smith, Segel & Ruddock
50 Congress Street, Suite 500
Boston, Massachusetts 02109
FOR: GREATER BOSTON REAL ESTATE BOARD
Limited Participant
D.P.U. 13-67 Page 1
I. INTRODUCTION AND PROCEDURAL HISTORY
On November 2, 2012, Bay State Gas Company, d/b/a Columbia Gas of Massachusetts
(“Columbia Gas”); The Berkshire Gas Company (“Berkshire Gas”); Boston Gas Company and
Colonial Gas Company, each d/b/a National Grid (“National Grid (gas)”); Fitchburg Gas and
Electric Light Company, d/b/a Unitil (“Unitil (gas)”); NSTAR Gas Company (“NSTAR Gas”);
New England Gas Company (“NEGC”); Massachusetts Electric Company and Nantucket
Electric Company, each d/b/a National Grid (“National Grid (electric)”); Fitchburg Gas and
Electric Light Company, d/b/a Unitil (“Unitil (electric)”); Western Massachusetts Electric
Company (“WMECo”); NSTAR Electric Company (“NSTAR Electric”) (together, “Program
Administrators”) each filed a three-year energy efficiency plan with the Department of Public
Utilities (“Department”) for 2013 through 2015 (“Three-Year Plans”).1 As part of the
Three-Year Plans, the Program Administrators proposed a statewide performance incentive
mechanism.2 The proposed incentive mechanism, which allows the Program Administrators to
earn incentive payments for meeting or exceeding the goals of their respective energy efficiency
plans, includes the following: (1) a statewide incentive pool; (2) an allocation of the statewide
1 The Department docketed these matters as follows: (1) D.P.U. 12-100 for Columbia Gas;
(2) D.P.U. 12-101 for Berkshire Gas; (3) D.P.U. 12-103 for National Grid (gas);
(4) D.P.U. 12-104 for Unitil (gas); (5) D.P.U. 12-105 for NSTAR Gas; (6) D.P.U. 12-106
for NEGC; (7) D.P.U. 12-108 for Unitil (electric); (8) D.P.U. 12-109 for National Grid
(electric); (9) D.P.U. 12-110 for NSTAR Electric; and (10) D.P.U. 12-111 for WMECo.
2 Blackstone Gas Company, as well as the Towns of Aquinnah, Barnstable, Bourne,
Brewster, Chatham, Chilmark, Dennis, Eastham, Edgartown, Falmouth, Harwich,
Mashpee, Oak Bluffs, Orleans, Provincetown, Sandwich, Tisbury, Truro, Wellfleet, West
Tisbury, and Yarmouth, acting together as the Cape Light Compact, also filed
Three-Year Plans; however, neither of these Program Administrators sought approval of
a performance incentive mechanism. 2013-2015 Three-Year Plans Order, D.P.U. 12-100
through D.P.U. 12-111, at 80 n.64; 144 (January 31, 2013).
D.P.U. 13-67 Page 2
incentive pool to three components (i.e., savings, value, and performance metrics);3 (3) statewide
payout rates for the savings and value components; and (4) incentive thresholds and caps.
2013-2015 Three-Year Plans Order at 88. While the Three-Year Plans filed on
November 2, 2012 included metrics generally as a component of the proposed performance
incentive mechanism, they did not include specific performance metrics.4
On December 4, 2012, the Program Administrators filed seven proposed performance
metrics for program year 2013 in the Three-Year Plan proceedings (“Performance Metrics
Filing”). The proposed performance metrics include: (1) two metrics associated with residential
programs; (2) two metrics associated with low-income programs; and (3) three metrics
associated with commercial and industrial (“C&I”) programs.5 Given the late filing of the
3 The incentive payments that a Program Administrator can receive through the savings
and value components are based on total benefits and net benefits, respectively, achieved
through the implementation of a Program Administrator’s energy efficiency programs.
2013-2015 Three-Year Plans Order at 81 n.66. The performance metrics component is
intended to provide an incentive for Program Administrators to undertake specific efforts
that are expected to provide benefits beyond those captured in the calculation of total
benefits or net benefits. Id.
4 The proposed performance metrics were not included in the Three-Year Plan because at
the time of filing the Program Administrators were still discussing the metrics with the
Energy Efficiency Advisory Council (“Council”). D.P.U. 12-100 through D.P.U. 12-111,
Exh. 1, at 253.
5 The Program Administrators did not include proposed performance metrics for program
years 2014 and 2015 as part of the Performance Metrics Filing. D.P.U. 12-110 through
D.P.U. 12-111, Letter from Program Administrators to Department regarding 2013
Performance Metrics (December 4, 2012). Instead, the Program Administrators stated
that they would file proposed 2014 and 2015 performance metrics prior to the start of the
applicable program years. Id. Subsequently, the Program Administrators proposed to
eliminate metrics as a component of the performance incentive mechanism and,
therefore, the Program Administrators did not propose performance metrics for 2014 and
2015. Energy Efficiency Updates, D.P.U. 14-05, Program Administrator Filing at 2
(February 28, 2014).
D.P.U. 13-67 Page 3
metrics and the 90-day review period for the Three-Year Plans prescribed in G.L. c. 25,
§ 21(d)(2), on December 10, 2012, the Department deferred consideration of the performance
metrics. D.P.U. 12-100 through D.P.U. 12-111, Tr. 2, at 374. On January 31, 2013, the
Department issued an Order approving the Three-Year Plans, including the proposed statewide
performance incentive mechanism, without specific performance metrics.6 2013-2015 Three-
Year Plans Order at 163-164.
On February 12, 2013, the Council passed a resolution supporting the proposed
performance metrics7 (Council Resolution Concerning 2013 Performance Metrics at 1). On
March 21, 2013, the Department opened the instant docket to investigate the proposed
performance metrics for 2013 (Hearing Officer Memorandum at 1 (March 20, 2013)).8 On
April 2, 2013, the Department held a technical conference to discuss the proposed metrics with
stakeholders.
II. DESCRIPTION OF PROPOSED PERFORMANCE METRICS
A. Residential Metrics
The Program Administrators propose two residential metrics for program year 2013, each
intended to provide an incentive to achieve deeper levels of savings in the Residential Whole
6 As part of the approval of the statewide incentive pool, the Department found that, in the
event that the Department does not approve the proposed performance metrics, the
amount of the incentive pool allocated to performance metrics will be reallocated to the
savings and value components. 2013-2015 Three-Year Plans Order at 92 n.76.
7 In her role as a member of the Council, the Attorney General opposed the resolution
(Council Resolution Concerning 2013 Performance Metrics at 1).
8 Because this proceeding is a subsequent phase of the Three-Year Plan proceedings, all
parties to D.P.U. 12-110 through D.P.U. 12-111 are also parties to this proceeding
(Hearing Officer Memorandum at 1 n.1 (March 20, 2013)).
D.P.U. 13-67 Page 4
House/Home Energy Services (“HES”) program. The first metric, Residential HES: Deeper
Savings (“Major Measures”), is intended to provide an incentive to the Program Administrators
to increase the percentage of HES program participants that install major measures (i.e., air
sealing and envelope insulation) (Performance Metrics Filing at 1). Achievement of the Major
Measures metric is based on a comparison of the close rate9 a Program Administrator achieves in
the HES program in 2013 to the close rate it achieved during 2012 (Performance Metrics Filing
at 1).
The second metric, Residential HES: Early Boiler Replacement (“Early Boiler
Replacement”), is intended to provide an incentive to the Program Administrators to increase the
number of HES program participants that install an early boiler replacement10
(Performance
Metrics Filing at 2). Achievement of the Early Boiler Replacement metric is based on a
comparison of the number of early boiler replacements installed in 2013 to the number installed
in 2012.
B. Low-Income Metrics
The Program Administrators propose two low-income metrics for program year 2013:
(1) Low-Income Strategic Targeting, and (2) Low-Income Multifamily Building Inventory. The
first metric, the Low-Income Strategic Targeting metric, is intended to provide an incentive to
the Program Administrators to develop and implement marketing plans to increase program
participation in gateway cities and hard-to-reach communities (Performance Metrics Filing at 4).
9 The close rate is the ratio of the number of HES program participants that install major
measures after an audit to the number of eligible audits (Performance Metrics Filing at 1).
10 Early boiler replacement is defined as replacement of an existing, functional forced hot
water or steam boiler that is at least 30 years old and is fueled by natural gas, oil, or
propane (Performance Metric Filing at 2).
D.P.U. 13-67 Page 5
A Program Administrator will meet the threshold, design, and exemplary performance levels,
respectively, of this metric by: (1) developing a marketing strategy plan; (2) implementing the
plan; and (3) increasing program participation in communities targeted in the market strategy
plan (Performance Metric Filing at 4).
The second metric, the Low-Income Multifamily Building Inventory metric, is intended
to provide an incentive to the Program Administrators to develop multifamily building
inventories designed to identify energy retrofit potential and screen potential projects
(Performance Metrics Filing at 5). A Program Administrator will meet the threshold, design, and
exemplary performance levels, respectively, of this metric by: (1) supporting the development of
the inventories;11
(2) conducting an inventory in its service territory; and (3) submitting a status
report showing its inventory results (Performance Metrics Filing at 5).
C. Commercial & Industrial Metrics
The Program Administrators propose three C&I performance metrics for 2013, each
intended to provide an incentive to achieve deeper savings levels in the C&I Small Business
Direct Install (“Direct Install”), C&I Large Retrofit (“Large Retrofit”), and C&I New
Construction (“New Construction”) programs (Performance Metrics Filing at 7-11). The Direct
Install metric is intended to provide an incentive to the Program Administrators to increase the
average depth of savings12
in small business facilities that participate in the Direct Install
program, where average depth of savings is defined as program-wide savings in a year divided
11
The Program Administrators state that the development of these inventories is a four-year
effort that began in 2010 (Performance Metrics Filing at 5).
12 Depth of savings is the percentage reduction of a participant’s usage as compared to a
usage baseline determined by a simulation model (Performance Metrics Filing 9).
D.P.U. 13-67 Page 6
by the sum of program participants’ historic consumption (Performance Metrics Filing at 11). A
Program Administrator’s annual performance for this metric will be determined by comparing
the average depth of savings it achieves in the Direct Install program in the applicable program
year to the average depth of savings it achieved in the prior program year (Performance Metrics
Filing at 10-11). In order to calculate average depth of savings achieved in a program year, each
Program Administrator will need to determine: (1) the annual program savings achieved for the
year; and (2) the historic (i.e., pre-participation) total building annual energy usage for each
program participant, where such usage will be calculated based on twelve or 24 months of billing
data for electric and gas participants, respectively (Performance Metrics Filing at 10-11).
The Large Retrofit metric is intended to provide an incentive to the Program
Administrators to increase the number of projects in the Large Retrofit program that meet or
exceed a predetermined depth of savings target, where depth of savings is defined as the
percentage reduction in a participant’s annual gas and/or electric usage (Performance Metrics
Filing at 7).13
A Program Administrator’s annual performance for this metric will be determined
by comparing the number of qualified projects completed in the applicable program year to the
number completed projects in the prior program year (Performance Metrics Filing at 7-8). In
13
For electric Program Administrators, for customers that also use gas, the depth of savings
targets are 15 and five percent of total annual electric and gas usage, respectively. For
electric customers that do not use gas, the depth of savings targets are: (1) 15 and
five percent of total annual electric and other fuel usage, respectively; or (2) 20 percent of
total annual electric usage alone (Performance Metrics Filing at 7).
For gas Program Administrators, for customers that also use electricity, the depth of
savings targets are 15 and five percent of total annual gas and electric usage, respectively.
For gas customers that are not also served by an electric Program Administrator (i.e.,
municipal utility customers), the depth of savings target is 20 percent of total gas usage
(Performance Metrics Filing at 7-8).
D.P.U. 13-67 Page 7
order to identify qualified projects for each year, each Program Administrator will need to
determine: (1) annual electric and gas savings achieved for the year for each participant; and
(2) historic annual electric and gas usage for each program participant, where such usage will be
calculated based on twelve or 24 months of billing data for electric or gas participants,
respectively (Performance Metrics Filing at 7-8).
Finally, the New Construction metric is intended to provide an incentive to the Program
Administrators to increase the percentage of qualifying projects in a program year. For this
metric, qualifying projects include: (1) new construction projects that meet or exceed a
predetermined depth of savings target;14
and (2) core performance projects15
(Performance
Metrics Filing at 9). For 2013, a Program Administrator’s performance for this metric will be
determined by comparing the percentage of qualifying projects in 2013 to the percentage of
qualifying projects in 2012 (Performance Metrics Filing at 9).16
In order to identify qualifying
projects for each year, each Program Administrator will need to determine: (1) annual electric
14
For electric Program Administrators, the depth of savings target is: (1) for projects that
also use gas, 20 percent savings for electric and gas usage; and (2) for projects that do not
use gas, (a) 20 percent savings for electric and other fuel usage, or (b) 25 percent electric
savings alone (Performance Metrics Filing at 8). For gas Program Administrators, the
depth of savings target is: (1) for projects that are also served by an electric Program
Administrator, 20 percent savings for gas and electric usage; and (2) for projects that are
not also served by an electric Program Administrator (e.g., municipal utility customers),
25 percent gas savings alone (Performance Metrics Filing at 8-9).
15 Core performance projects include at least three enhanced performance strategies as
defined in the Core Performance Guide published by the New Buildings Institute
(Performance Metrics Filing at 9).
16 A Program Administrator will meet the design level for this metric in 2013 if it achieves
a ten percent increase in number of qualifying projects as compared to 2012
(Performance Metrics Filing at 9).
D.P.U. 13-67 Page 8
and gas savings achieved for the year for each participant; and (2) the number of core
performance projects (Performance Metrics Filing at 9).
III. ANALYSIS AND FINDINGS
Prior to the passage of the Green Communities Act, energy efficiency programs were
significantly smaller in size and scope than they are today. See, e.g., Massachusetts Electric
Company and Nantucket Electric Company, each d/b/a National Grid, D.P.U. 08-129 (2009);
Fitchburg Gas and Electric Light Company, d/b/a Unitil, D.P.U. 08-128 (2009); NSTAR Electric
Company, D.P.U. 08-117 (2009). Electric Program Administrators developed one-year energy
efficiency plans that were funded primarily through a systems benefits charge.17
See, e.g.,
Western Massachusetts Electric Company, D.P.U. 06-69 (2007). Gas Program Administrators
developed smaller five-year energy efficiency plans that were funded through an energy
efficiency surcharge. See, e.g., NSTAR Gas Company, D.T.E. 04-37-A (2008).
The Green Communities Act significantly changed the manner in which Program
Administrators design and implement energy efficiency programs. See D.P.U. 08-117, at 39
(2009). The Green Communities Act requires gas and electric Program Administrators to
develop three-year plans that provide for the acquisition of all cost-effective energy efficiency.
G.L. c. 25, § 21; see also D.P.U. 08-117, at 39. Each Program Administrator recovers the costs
associated with the implementation of all cost-effective energy efficiency through a fully
reconciling funding mechanism. G.L. c. 25, § 21. In order to capture all cost-effective energy
17
Program Administrators also use revenues from the Forward Capacity Market (“FCM”)
to fund energy efficiency programs. Western Massachusetts Electric Company,
D.P.U. 07-85, at 18-20 (2008); Fitchburg Gas and Electric Light Company, d/b/a Unitil,
D.P.U. 07-57, at 15-16 (2007); Massachusetts Electric Company and Nantucket Electric
Company, each d/b/a National Grid, D.P.U. 07-48, at 12-13 (2007); NSTAR Electric
Company, D.P.U. 07-55, at 11-12 (2007).
D.P.U. 13-67 Page 9
efficiency, Program Administrators’ plans now include significantly more programs, broader
initiatives, and correspondingly larger budgets than before. See, e.g., Bay State Gas Company,
D.P.U. 09-125, Three-Year Plan Filing (October 30, 2009); cf., Bay State Gas Company,
D.T.E. 04-39, Five-Year Energy Efficiency Plan Filing (March 30, 2004).
Pre-Green Communities Act, Program Administrators included performance metrics in
their energy efficiency plans. See, e.g., Fitchburg Gas and Electric Light Company, d/b/a Unitil,
D.P.U. 08-128 (2009); Massachusetts Electric Company and Nantucket Electric Company, each
d/b/a National Grid, D.P.U. 08-129 (2009). For the first three-year plan term under the Green
Communities Act, the Program Administrators proposed to continue to have performance
metrics as part of the performance incentive mechanism. Gas Three-Year Plans Order,
D.P.U. 09-121 through D.P.U. 09-128, at 107 (2010) (“Gas Three-Year Plans Order”); Electric
Three-Year Plans Order, D.P.U. 09-116 through D.P.U. 09-120, at 117 (2010) (“Electric
Three-Year Plans Order”). The Department did not, however, approve the metrics as proposed
because their design violated certain aspects of the Department’s Energy Efficiency Guidelines
(“Guidelines”).18
Gas Three-Year Plans Order at 114; Electric Three-Year Plans Order at 122.
Subsequently, the Department approved revised performance metrics for program years 2010
18
The Department first issued energy efficiency guidelines in 1999, following the passage
of An Act Relative to Restructuring the Electric Utility Industry in the Commonwealth,
Regulating the Provision of Electricity and Other Services, and Promoting Enhanced
Consumer Protections Therein, St. 1997, c. 164. The Department subsequently revised
the energy efficiency guidelines in 2009, following passage of the Green Communities
Act. Investigation by the Department of Public Utilities on its own Motion into Updating
its Energy Efficiency Guidelines Consistent with An Act Relative to Green Communities,
D.P.U. 08-50-B at 44-57 (2009). The Guidelines set forth the design requirements for the
performance incentive mechanism. Guidelines § 3.6.2.
D.P.U. 13-67 Page 10
through 2012.19
Order on New and Revised Performance Incentive Metrics, D.P.U. 09-116
through D.P.U. 09-118-B, D.P.U. 09-120-B through 09-127-B (2010) (“Performance Metrics
Order”). As the Program Administrators implement their energy efficiency plans for the second
three-year term under the Green Communities Act (i.e., 2013 to 2015), the Department now
considers whether performance metrics remain a necessary component of the performance
incentive mechanism.
The Department has long held that performance metrics should induce Program
Administrators to undertake activities they would not otherwise undertake. Performance Metrics
Order at 14, citing Gas Three-Year Plans Order at 109-110; Electric Three-Year Plans Order
at 120. Prior to the Green Communities Act, there was no obligation to pursue all cost-effective
energy efficiency resources and, therefore, the Department approved performance metrics that
were designed to provide incentives for Program Administrators to undertake specific activities
that they would not likely undertake absent the metrics.20
See, e.g., D.P.U. 08-129;
D.P.U. 08-128; D.P.U. 08-117. These pre-Green Communities Act performance metrics
19
The Department, however, did not approve certain proposed baselines for the revised
metrics and cautioned the Program Administrators that they bear the risk that the
Department may reject requested incentive payments if performance under the metrics
cannot be verified easily and objectively. Performance Metrics Order at 12-13, 15-16.
Ultimately, the Department rejected performance incentive payments for qualitative
metrics where the Program Administrators failed to sufficiently verify performance after
the fact. See, e.g., The Berkshire Gas Company, D.P.U. 11-67, at 19-23 (2013); NSTAR
Electric Company, D.P.U. 11-63, at 18-20 (2013).
20 Program Administrators also received payments through the savings and value
components of the performance incentive mechanism based on total benefits and net
benefits, respectively, achieved through the implementation of energy efficiency
programs. Gas Three-Year Plans Order at 103-104; Electric Three-Year Plans Order
at 113-114. The savings and value components remain a part of the performance
incentive mechanism approved by the Department in 2013-2015 Three-Year Plans Order
at 89-95.
D.P.U. 13-67 Page 11
provided the Program Administrators with important guidance regarding where they should
focus their limited energy efficiency budgets.
Since the passage of the Green Communities Act, the Program Administrators receive
extensive input and guidance from interested stakeholders in the design of their energy efficiency
programs. The Program Administrators, in conjunction with the Council and other stakeholders,
have developed a comprehensive infrastructure to promote statewide energy efficiency program
integration and continuous improvement in program delivery. 2013-2015 Three-Year Plans
Order at 78-79; D.P.U. 12-100 through D.P.U. 12-111, Tr. 3, at 634-635. Over the current
three-year term and beyond, the Program Administrators will employ resources such as the
Residential Management Committee, the C&I Management Committee,21
the Evaluation
Management Committee,22
and the Low-Income Best Practices Working Group23
to address
program implementation barriers and foster communication with the Council and other
stakeholders. 2013-2015 Three-Year Plans Order at 78; D.P.U. 12-100 through D.P.U. 12-111,
Tr. 1 at 97; Tr. 2 at 303; Tr. 4, at 805. The Program Administrators work directly and
continuously with the Council and other interested stakeholders to design, implement, and
21
The Residential Management Committee and the C&I Management Committee are
tasked with coordinating energy efficiency implementation activities, developing
statewide marketing and media campaigns, and reviewing best practices in other
jurisdictions (D.P.U. 12-100 through D.P.U. 12-111, Exh. 1, at 78).
22 The Evaluation Management Committee was formed in April 2012 to provide a forum to
discuss evaluation issues (e.g., development of statewide evaluation strategies, providing
research area planning and direction) (D.P.U. 12-100 through D.P.U. 12-111, Exh. 1,
at 35; Tr. 1, at 97).
23 The Low-Income Best Practices Working Group was formed to coordinate best practices
across all Program Administrators, as well as to review new measures and innovations.
D.P.U. 12-100 through D.P.U. 12-111, Exh. 1, at 180-187.
D.P.U. 13-67 Page 12
evaluate energy efficiency programs in order to acquire all available cost-effective energy
efficiency resources, as required by the Green Communities Act. 2013-2015 Three-Year Plans
Order at 78; D.P.U. 12-100 through D.P.U. 12-111, Tr. 1 at 97; Tr. 2 at 303; Tr. 4, at 805.
As described in Section II, above, the proposed residential and C&I performance metrics
are designed to encourage deeper savings. The proposed low-income metrics are designed to
develop strategies to improve the delivery of energy efficiency programs to specific
communities. The Department recognizes the importance of the activities targeted by the
proposed metrics. See Gas Three-Year Plans Order at 107; Electric Three-Year Plans Order
at 118. Contrary to Department precedent, however, the proposed performance metrics simply
provide incentive payments to the Program Administrators to undertake activities that they are
now obligated by the Green Communities Act to undertake.24
See Performance Metrics Order
at 14, citing Gas Three-Year Plans Order at 109-110; Electric Three-Year Plans Order at 120.
These types of activities are necessary for the acquisition of all cost-effective energy efficiency
resources, as described in the Program Administrators’ Three-Year Plans. See D.P.U. 12-100
through D.P.U. 12-111, Exh. 1, at 12, 23, 27, 33, 57, 59, 62, 66, 88, 114, 115, 120, 125-131,
135-141, 146, 151, 160-164, 168-170, 173, 174-187, 202, 205, 208-215, 220, 228, 235.
24
The Department rejected the proposed 2011 and 2012 Cost Efficiency metrics, which
would have allowed the Program Administrators to receive incentives for maximizing the
efficiency of funding and achieving plan benefits. The Department found that the metrics
were not appropriate because they did not require the Program Administrators to
undertake actions that they otherwise would not have taken to acquire all cost-effective
energy efficiency. 2011 and 2012 Mid-Term Modification Order, D.P.U. 10-140 through
D.P.U. 10-150, D.P.U. 11-106 through D.P.U. 11-116, at 33-34, 39-40
(November 26, 2014).
D.P.U. 13-67 Page 13
Negotiating, satisfying, and documenting performance metrics is costly and time
consuming.25
See D.P.U. 14-05, Program Administrator Joint Reply Comments at 2
(May 23, 2014). The Department finds that such an investment of time and resources solely for
the purpose of verifying metric performance is out of proportion with the potential benefit of
metrics. Further, verifying performance of these metrics would divert Program Administrator
and stakeholders focus from the successful implementation of the three-year plans and is
inconsistent with the Department’s obligation to fulfill its oversight responsibilities in an
administratively efficient and effective manner. See Investigation by the Department of Public
Utilities on its own Motion into Updating its Energy Efficiency Guidelines, D.P.U. 11-120-A,
Phase II at 2 (January 31, 2013).
While the Program Administrators contend that performance metrics were useful during
the first three-year term under the Green Communities Act to help direct energy efficiency
efforts during the transition to three-year plans designed to achieve all-cost-effective energy
efficiency, the Program Administrators now no longer propose to include performance metrics as
a component of the performance incentive mechanism starting in 2014. D.P.U. 14-05, Program
Administrator Filing at 2 (February 28, 2014); Program Administrator Joint Reply Comments
at 2 (May 23, 2014). The Program Administrators explained that performance metrics hinder
their ability to improve performance and achieve savings goals because incentives are earned
only by satisfying the strict requirements of the metrics, notwithstanding the possibility that a
better result could be achieved through alternative approaches. D.P.U. 14-05, Program
25
For example, the proposed C&I metrics require the Program Administrators to collect,
analyze, and submit a significant amount of information that is not currently reported to
verify performance, such as calculating historic usage for each gas and electric
participant (Performance Metrics Filing at 7-11).
D.P.U. 13-67 Page 14
Administrator Joint Reply Comments at 2 (May 23, 2014). The Low-Income Weatherization
and Fuel Assistance Program Network, the Massachusetts Energy Directors Association, and the
Low-Income Energy Affordability Network (together, “LEAN”), who advocate on behalf of
low-income customers, support the Program Administrators’ proposal to eliminate metrics.
LEAN states that metrics are no longer appropriate because, unlike at the time of the first
three-year term, there is now a fully developed energy efficiency infrastructure to provide
ongoing guidance for implementing energy efficiency programs. D.P.U. 14-05, LEAN Reply
Comments at 1-2 (May 22, 2014). 26
In light of the fact that the Program Administrators are already obligated to undertake
activities such as those targeted by the proposed metrics to satisfy the mandates of the Green
Communities Act, and given the development of the infrastructure through which stakeholders
can participate in program design and implementation, the Department concludes that
performance metrics are no longer a necessary component of the Program Administrators’
performance incentive mechanisms. Accordingly, the Department does not approve the
proposed performance metrics.
The elimination of performance metrics does not reduce the total performance incentive a
Program Administrators can earn. In 2013-2015 Three-Year Plans Order at 81-82, the
Department approved a statewide incentive pool that is allocated to the various components of
the performance incentive mechanism (i.e., savings, value, and performance metrics). As we
26
The Department of Energy Resources (“DOER”) and Environment Northeast (“ENE”) do
not seek to eliminate performance metrics. D.P.U. 14-05, DOER Comments at 7-8, ENE
Comments at 2-3 (March 28, 2014). DOER and ENE contend that while some past
performance metrics have been “weaker and less effective,” they support the use of
performance metrics focused on achieving deeper savings and supported by adequate
data. D.P.U. 14-05, DOER Comments at 7, ENE Comments at 2 (March 28, 2014).
D.P.U. 13-67 Page 15
said there, in the event that the Department did not approve performance metrics, the portion of
the statewide incentive pool allocated to performance metrics would be reallocated to the savings
and value components of the performance incentive mechanism. 2013-2015 Three-Year Plans
Order at 83 n.70.
IV. CONCLUSION
For the reasons discussed herein, the Department does not approve the Program
Administrators’ proposed performance metrics. The portion of the performance incentive
mechanism allocated to performance metrics shall be redistributed in the manner described by
the Department in 2013-2015 Three-Year Plans Order at 83 n.70.
V. ORDER
Accordingly, after due notice and consideration, it is:
ORDERED: That the energy efficiency performance metrics filed by Bay State Gas
Company, d/b/a Columbia Gas of Massachusetts; The Berkshire Gas Company; Boston Gas
Company and Colonial Gas Company, each d/b/a National Grid; Fitchburg Gas and Electric
Company, d/b/a Unitil (gas); NSTAR Gas Company; New England Gas Company; Fitchburg
Gas and Electric Light Company, d/b/a Unitil (electric); Massachusetts Electric Company and
Nantucket Electric Company, each d/b/a National Grid; NSTAR Electric Company; and Western
Massachusetts Electric Company are DENIED, and it is
D.P.U. 13-67 Page 16
FURTHER ORDERED: That Bay State Gas Company, d/b/a Columbia Gas of
Massachusetts; The Berkshire Gas Company; Boston Gas Company and Colonial Gas Company,
each d/b/a National Grid; Fitchburg Gas and Electric Company, d/b/a Unitil (gas); NSTAR Gas
Company; New England Gas Company; Fitchburg Gas and Electric Light Company, d/b/a Unitil
(electric); Massachusetts Electric Company and Nantucket Electric Company, each d/b/a
National Grid; NSTAR Electric Company; and Western Massachusetts Electric Company shall
comply with all other directives contained in this Order.
By Order of the Department,
/s/
Ann G. Berwick, Chair
/s/
Jolette A. Westbrook, Commissioner
/s/
Kate McKeever, Commissioner
D.P.U. 13-67 Page 17
An appeal as to matters of law from any final decision, order or ruling of the Commission may
be taken to the Supreme Judicial Court by an aggrieved party in interest by the filing of a written
petition praying that the Order of the Commission be modified or set aside in whole or in part.
Such petition for appeal shall be filed with the Secretary of the Commission within twenty days
after the date of service of the decision, order or ruling of the Commission, or within such further
time as the Commission may allow upon request filed prior to the expiration of the twenty days
after the date of service of said decision, order or ruling. Within ten days after such petition has
been filed, the appealing party shall enter the appeal in the Supreme Judicial Court sitting in
Suffolk County by filing a copy thereof with the Clerk of said Court. G.L. c. 25, § 5.