Update on the Massachusetts Clean Heat Standard

Dear Friends,

Last August, I wrote to you about MASSDEP formulating a Clean Heat Standard and how it may affect you. I have some updates on the CHS I want to share with you.

This past November, MassDEP released draft framework of the CHS. In December we participated in stakeholder meetings with MassDEP where they presented their thoughts on the draft framework. Much of what is in the draft framework is what I mention in my first letter to you, but of course there were surprises in the draft. So, what are the highlights?

• The obligated parties in this standard are ALL heating oil, propane, natural gas AND ELECTRICITY
• There are TWO standards within the Clean Heat Standard: an Emissions Reduction Standard AND a Full Electrification Standard.
• The Emissions Reduction Standard is essentially what we expected. We (energy suppliers) must lower our emissions output year after year. We do this by either blending biodiesel into our fuel (as we already do), sell less fuel (AKA fire customers), or pay a large fine (which MassDEP conveniently calls purchasing credits).
• The Full Electrification Standard is the problematic (costly) one. I mentioned in my first letter to you that the goal of MassDEP was to convert every home in the Commonwealth to electric heat. I took some heat (no pun intended) from some of our customers who claimed I was fearmongering this subject. Well, my proof lies in this draft framework. EVERY oil, propane, natural gas and electric supplier IS REQUIRED to convert an escalating percentage of their customer base to electric heat pump OR PAY an astronomical fine (which again they call purchasing credits).
• So how much is the Full Electrification Standard Fine? I cut and paste below the exact example given to us in the MASSDEP draft framework. The draft framework sets the fine (purchasing credit value) of each full home electrification at $6,000 in 2026, increasing $1000 each year to $10,000 in 2030, and will remain at $10,000 per household annually after that. The low-income household carveout is DOUBLE THAT AMOUNT! (25% of full electrification projects completed or credits purchased each year are REQUIRED to come from low-income households.)

Using the example MASSDEP has provided, in 2030 this example company would have to pay an $1,880,000 fine just on the full electrification standard side of the CHS. This DOES NOT include the emissions reduction standard fine. This means a $188 increase in heating costs per customer in 2030 for just ½ of the Clean Heat Standard obligations.

• 112 full electrification house obligation = 112 x $10,000 = $1,120,000
• 38 Low-income house obligation = 38 x $20,000 = $760,000
• $1,120,000 + $760,000 = $1,880,000 fine.
• $1,880,000 divided by 10,000 customers = $188 per customer “tax”.

These numbers are if an energy supplier doesn’t capitulate to MassDEP demands. I can tell you I am not going to voluntarily fire any one of our customers, nor can I force you to spend $20,000 or so on a heat pump conversion. Nor can MassDEP force anyone to convert, even though that is exactly what they are attempting to do! They are just going to “tax” you until YOU DO capitulate. Of course, as I have previously mentioned, nowhere in the CHS program is this called a tax, even though the entire program really is a carbon tax.

• Back to the Emissions Reduction Standard. How much will that cost you? Well again referring to the MassDEP example THEY PROVIDED, we can calculate as follows…
  • 12,500 MT (the compliance obligation for a 10,000-customer company in 2030) x $190 (the emission reduction standard price cap / ACP per MT) = $2,375,00 fine in 2030 from the emission reduction standard.
  • $2,375,000 fine divided by 10,000 customers = $237.50 per customer “tax”.

THIS MEANS WE CAN EXPECT IN 2030, that each customer will have to pay $425.50 MORE TO HEAT THEIR HOME. JUST for that year!

We should be able to mitigate some of the Emissions Reduction Standard fine by blending biodiesel. But there is no way to guarantee that. I CAN essentially guarantee you one thing, if the CHS does come to fruition as is stated in the draft framework, the cost of biodiesel will go up (all renewables actually), so whatever savings we might be able to pass on will most likely be moot.

• Regardless of how you heat your home… YOUR COSTS ARE GOING UP UNDER THE CHS! Not only is your oil bill(s) going to go up, but your electricity bills are also going up as well. As a matter of fact, the draft regulation stipulates that in 2040 the entire CHS obligation falls on the electric companies. You might have a heat pump now… BUT YOU WILL STILL PAY MORE!

Clean Heat Standard Q&A

Q: Why is MassDEP implementing a CHS?

A: This regulation is a result of a Massachusetts law passed in August 2008 called the Global Warming Solutions Act. Regulations such as this is what happens when politicians pass laws that require specific outcomes, yet they have no idea how to implement anything to achieve said outcomes.

Q: How much is my price per gallon of oil going to go up?

A: MassDEP hasn’t given us all the metrics yet and I doubt we will see them before a final regulation is produced. Based on what I can extrapolate from the draft framework, I estimate in 2030 the price per gallon “tax” on heating oil will be around 75 cents per gallon.

Q: Where can I look up information on the CHS?

A: MASSDEP keeps a webpage on all things CHS. You can see every document I can at this link here! I ENCOURAGE EVERYONE to visit this page and read all the information provided, especially the draft regulation itself.

Q: What can I do to help stop a CHS from becoming a reality?

A: The only person(s) that can put a stop to MASSDEP implementing this is the Commonwealth of Massachusetts Legislature. They are the only ones with the power to undo or modify laws which have already been passed. Last summer, I started a CHS campaign asking all our customers to contact their state representatives on this matter. Many of you have and I thank you! If you have yet to contact your representative, we have an easy-to-use form to do this located on our website. In addition, feel free to contact MassDEP directly to voice your displeasure.

In Conclusion

We started PayLessForOil.com so our customers would pay less for their fuel.  When something comes along that will make our customers pay significantly more, I feel it important to share whatever I can.  There are only a handful of oil, propane, natural gas and electricity suppliers in Massachusetts. We can’t fight this alone. There are, however, almost 7 million residents in Massachusetts. YOU have the power to fight this; we don’t.  All we can do is educate. Please remember, the proposed CHS regulation WILL INCREASE COSTS on oil, propane, natural gas, and electricity! Everyone in Massachusetts will be affected. Please get involved.