Maryland, Massachusetts, and Rhode Island Cut Ratepayer Efficiency Programs by Over $1 Billion While Commercial Delivery Rates Keep Rising

Maryland cut its EmPOWER annual greenhouse-gas reduction target from 2.5 percent to 1.75 percent in March. Massachusetts reduced Mass Save by one billion dollars in February. Rhode Island trimmed its efficiency budget from one hundred seventeen million dollars to ninety-six million. Three Democratic-led Northeast states dismantled portions of the same program category in the same quarter.

The advertised benefit in Maryland was one hundred fifty dollars in near-term savings per household. The American Council for an Energy-Efficient Economy estimates the cut will cost Maryland ratepayers five hundred ninety-two million dollars in higher electricity bills during the interim period. The Massachusetts reduction, according to state filings cited by Latitude Media, forgoes twelve point one billion dollars in lifetime benefits.

For commercial buildings in these three states, the efficiency lever is contracting while the demand-charge side of the bill is not.

Efficiency Programs Were the Demand-Side Tool States Actually Controlled

Legislators did not trim these programs because they were underperforming. They trimmed them because the line items sit within state regulatory authority, unlike interstate transmission costs, PJM and ISO-NE capacity charges, or FERC-jurisdictional wholesale energy costs. When voters demand near-term bill relief, state-administered efficiency riders are what lawmakers can touch.

Mass Save has historically delivered demand reduction through rebates for efficient HVAC, lighting, building envelope upgrades, and commercial retrofits. EmPOWER in Maryland covered similar ground. These programs functioned as the utility-run arm of demand-side management. Cutting them does not remove the underlying load, it removes the subsidy that was pulling that load down.

Eversource Delivery Rates Rose 13 Percent in January

While the efficiency programs were being cut, Eversource raised delivery rates across its Massachusetts and Connecticut service territories by roughly thirteen percent effective January. National Grid filed rate increases in the same window. The delivery charge is the portion of the bill that funds utility wires, substations, and distribution infrastructure, and it is increasingly where commercial customers see new peak-demand pricing signals.

The result is a structural scissors. Efficiency subsidies shrink. Delivery rates rise. Commercial demand charges, which are set through rate cases and typically move only in one direction, remain.

ACEEE Quantified the Trade

ACEEE’s analysis of the Maryland cut found that every dollar removed from EmPOWER corresponds to higher ratepayer outlays downstream, because the efficiency measures forgone would have reduced gross load and therefore reduced the cost base for capacity procurement, transmission expansion, and generation investment. The five hundred ninety-two million dollar figure represents the difference between the near-term rebate savings advertised and the compounding cost of unmitigated load growth in PJM.

Massachusetts presents a sharper version of the same arithmetic. Cutting one billion dollars from Mass Save saves rebate expenditures in the near term. Forgoing twelve point one billion dollars in lifetime benefits, per state filings, means the twelve-to-one ratio between program cost and avoided load cost now runs in reverse.

The Commercial Segment Carries the Residual

When a state cuts efficiency programs, the residual load has to be served by something. In PJM and ISO-NE, that something is an increasingly gas-dependent capacity stack with rising prices. PJM’s most recent capacity auction cleared at a record sixteen point four billion dollars, forty percent of which is attributable to data-center load growth. ISO-NE recorded a six billion dollar winter in its most recent cold stretch, its highest on record.

Commercial and industrial rate classes absorb the majority of these costs through demand charges and delivery rate increases, because residential customer protections embedded in rate-case settlements typically cap near-term residential exposure. The Maryland RELIEF Act, signed earlier this month, explicitly netted certain data-center grid costs away from general ratepayers and onto specific customer classes. Similar rate-design pressure is active in Massachusetts.

Commercial Buildings Lose a Subsidy but Not a Load

A mid-sized commercial building in Baltimore or Boston that was counting on a Mass Save or EmPOWER rebate for a lighting retrofit, a rooftop-unit replacement, or a building-envelope project still has the same peak-demand profile. The rebate used to offset a portion of the capital cost, improving payback and accelerating the retrofit decision. Without it, the project either slips in the capital plan or gets value-engineered to a lower tier.

What does not slip is the demand charge on the bill every month. Eversource’s demand charges on commercial service classes in Massachusetts have risen alongside the delivery-rate increase, tightening the gap between a building’s metered peak and its billed peak.

New York and Illinois Have Similar Line Items

The political logic that produced the cuts in Maryland, Massachusetts, and Rhode Island applies to other Democratic-led states with large utility-administered efficiency programs. New York’s EmPower NY and the state’s broader Clean Energy Fund carry billions in authorized spending across the next decade. Illinois energy-efficiency riders under the Future Energy Jobs Act and the Climate and Equitable Jobs Act are equally visible line items.

Neither has been cut. Both are potential targets if affordability pressure continues to build, and both would produce the same structural outcome: a smaller efficiency envelope offset by unchanged or rising delivery and demand costs.

The Next-Available Cost-Reduction Tool

Commercial building operators in affected markets now face a narrower set of options for managing electricity cost. Building performance standards like LL97 in New York, BERDO in Boston, and BEPS in Washington continue to require capital deployment for envelope and mechanical upgrades regardless of whether rebates exist. Customer-sited load management, specifically peak-demand reduction, is the category that does not require state subsidy to produce savings, because it monetizes the tariff structure directly.

The Latitude Media analysis frames the cuts as states choosing near-term bill visibility over long-term cost discipline. For commercial customers, the decision has already been made on their behalf. What remains is the question of which residual demand-reduction tools operate without a rebate.

What the ACEEE Number Actually Measures

Five hundred ninety-two million dollars is the gap between what Maryland households will pay in lower near-term efficiency riders and what they will pay in higher total electricity costs over the life of the forgone measures. It is the cost of using the wrong lever. Maryland, Massachusetts, and Rhode Island collectively cut more than one billion dollars from the same category in the same quarter, which puts the aggregate forgone benefit on a multi-billion dollar trajectory before any other state has acted.

The state programs were the utility-administered answer to demand-side management. They have been partially withdrawn. The demand itself has not.

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