Advisory board forms financing working group to study distribution costs, rate impacts and alternative funding

The advisory board created a financing-the-transition focus-area working group to analyze how Massachusetts will pay for the distribution-system investments needed to support electrification and decarbonization.

Former DPU chair Paul (presenter) and staff outlined the challenge: recent Electric Sector Modernization Plans (ESMPs) approved by the Department of Public Utilities include billions of dollars in distribution investments over the coming decade. Under the DPU’s cost-of-service model, many distribution investments are recovered through customer delivery rates; staff warned that rising distribution investment could increase the delivery portion of customer bills unless alternative financing or rate design measures are used.

The working group will follow phased work: baseline current investments and cost recovery mechanisms, review other states’ approaches and public‑private financing options, assess cost impacts and distributional equity, and recommend policy or programmatic approaches. Staff emphasized coordination with the DPU’s ESMP proceedings and an interagency rates working group examining rate design.

Members raised questions about whether the work would be confined to utility plans and DPU decisions; staff said the FOG will not be confined and will consider financing mechanisms beyond bills (for example, tax policy and other state or federal funding mechanisms) while coordinating with DPU and other proceedings.

The advisory board voted to adopt the FOG’s high-level approach and Article 3 of its bylaws. Staff said the FOG will issue analyses and recommendations and coordinate with the broader policy and regulatory landscape to seek equitable financing strategies as electrification accelerates.