The Commonwealth of...

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


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


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


Intervenor

Steven I. Venezia, Esq.

Massachusetts Department of Energy Resources

100 Cambridge Street, Suite 1020


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


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


-and-

Robert R. Ruddock, Esq.

Smith, Segel & Ruddock

50 Congress Street, Suite 500


FOR: ASSOCIATED INDUSTRIES OF

MASSACHUSETTS

Limited Participant





FOR: THE ENERGY CONSORTIUM

Limited Participant

Eric W. Macaux, Esq.

Massachusetts Clean Energy Technology Center

55 Summer Street, 9th

Floor


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


-and-





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.

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