- Heat pumps can offer significant winter heating savings for 82% of MA homes if outdated electric rates are reformed.
- Current MA electric rates hinder climate goals and discourage heat pump adoption; “2.0 rates” are urgently needed.
Many Massachusetts residents faced exorbitant heating costs last winter, with some households paying as much as $400 per month for natural gas heating. Arriving at a critical juncture, a new report from Switchbox reveals that 82% of Massachusetts households could save money on heating this season by switching to high-efficiency heat pumps if the Department of Public Utilities reforms outdated electric rate structures.
Commissioned by Environmental Defense Fund and other leading environmental groups, the new report highlights that utility rate reform is the key to widespread, affordable heat pump adoption in Massachusetts — with statewide median savings of $114 per month through the heating season. Report findings underscore that heat pumps are not just a climate solution, but also a smart financial move for homeowners, especially when supported by favorable rate structures.
The challenge: rates that accurately reflect clean choices
Massachusetts has set ambitious climate targets, including aiming to have 65% of residential-scale heating systems be heat pumps by 2030 and 90% by 2040. Yet, many residents have found themselves facing higher heating bills after switching to cold-climate air-source heat pumps — a counterintuitive outcome rooted in outdated electric rate designs.
Under current electric delivery rates, Massachusetts households that switch to heat pumps often pay disproportionately for grid infrastructure — subsidizing customers who remain on fossil fuels. As a result, more than half of homes retrofitting with heat pumps today see their winter energy bills go up.
Recognizing this problem, the MA Department of Public Utilities has required the state’s three major electric utilities to implement seasonal discounts for heat pump users, known as “1.0” rates. But as the Switchbox report analysis confirms, those reforms only go part way.
A better path: “2.0” rates that deliver real savings
Proposed “2.0” heat pump rates, championed by the MA Department of Energy Resources, go further. They offer deeper seasonal discounts on delivery charges, aligning winter electric heating costs more closely with natural gas. The impact? According to the report:
- 82% of households in Massachusetts would save on their winter heating bills with 2.0 rates, up from just 45% under today’s default rates.
- Low-income households would see meaningful relief: 70% would spend less than 6% of income on winter energy bills, a 26% percentage point improvement compared with the status quo.
- For the 42% of homes in the Commonwealth currently heated by expensive delivered fuels or electric resistance, heat pumps become a clear economic win—with median winter savings ranging from $1,071 (oil) to $1,755 (electric resistance).
Implications for climate and affordability
Switching to heat pumps already improves air quality, indoor comfort and public health. But aligning utility rates with policy goals can also make heat pumps the most affordable choice for most Massachusetts residents — including those in single-family homes and low-income households, where affordability is critical.
As the Commonwealth continues its nation-leading clean energy transition, policymakers and regulators need to adopt heat pump electric rates that match the moment. The 2.0 rate proposal — both a climate and equity solution — need to be adopted immediately, offering an essential step toward energy affordability in Massachusetts.