Massachusetts regulators directed the state's six investor-owned gas utilities to lower the revenue they earn from repairing natural gas distribution infrastructure, ordering the companies to implement advanced leak-repair technology and explore non-pipeline alternatives before replacing gas infrastructure.
In April 30 orders, the Massachusetts Department of Public Utilities (DPU) approved the utilities' 2026 Gas System Enhancement plans (GSEPs) but reduced revenue caps, which set an upper limit on pipeline construction spending, from the existing 2.5% to 2.0%. The DPU said the change would help balance program operations and maintain affordable rates for customers. The department also continued to disallow carrying charges on deferred GSEP costs.
Last year, the DPU ordered utilities to lower revenue caps to 2.5% from 3% under the state's 2024 Climate Act. The department said it intends to reduce the cap further to 1.5% for 2027 GSEPs. The GSEP began in 2014 as a mechanism for utilities to finance system upgrades.
In their 2026 plans, National Grid PLC, Unitil Corp., The Berkshire Gas Co., Liberty Utilities Co., Eversource Energy and NSTAR Gas Co. all sought revenue increases above a 2.0% revenue cap. Berkshire Gas Co. is a subsidiary of Iberdrola SA., while NSTAR is owned by Eversource.
The DPU found the utilities still rely heavily on high-cost replacement strategies and did not demonstrate a sustained shift toward lower-cost strategies such as targeted repair, retirement or non-pipeline alternatives (NPAs).
"Continued spending at or near cap levels would place upward pressure on customer bills, and the department finds that additional measures to reduce the cap are necessary to ensure that the GSEP program operates in a balanced manner to maintain affordable rates for customers consistent with statutory requirements," the department said.
The DPU will allow spending above the 2.0% cap, up to 3.0%, for NPAs, which it said would encourage gas companies to consider solutions that avoid additional investment in fossil fuel infrastructure.
Non-pipeline alternative expansions
Although the utilities' 2026 GSEPs included a revised interim framework to evaluate NPA opportunities, the DPU said the companies did not identify viable NPAs or related longer-term planning. The DPU said the framework was ineffective in identifying NPAs, and that companies must consider realistic NPA opportunities in the near, medium and long term.
Utilities' 2027 GSEPs, due in October, must include documentation demonstrating evaluation of NPAs for GSEP projects expected between 2028 and 2031, the DPU said. While acknowledging NPAs are not always an option, the department said utilities must demonstrate that they have fully evaluated all NPAs.
The DPU denied requests to change the definition of NPAs and to allow cost recovery through GSEP for NPAs that do not result in abandonment of leak-prone pipe due to affordability concerns.
Implementing the risk prioritization guidelines
The DPU adopted the "risk-based prioritization principles" developed by a GSEP Risk Assessment Working Group over the last year to guide the 2026 and future GSEP filings. The guidelines outline how utilities must evaluate high-risk pipe in their system and to transparently consider alternatives to replacement.
Gas utilities are required to use the Distribution Integrity Management Program risk analysis for generating GSEP project priority lists.
The guidelines also establish a filing requirement. Companies must show how their investments contribute to measurable reductions in system risk over time, including the quantity of cuts in leak-prone pipe and emissions, along with annual leak data and metrics such as risk score reduction per mile and per $1 million invested.
