A handful of Democratic-led states are quietly walking back one of the policy tools their own coalition has long championed: ratepayer-funded energy-efficiency programs. The pitch from lawmakers in Maryland, Massachusetts, and Rhode Island is straightforward — utility bills are too high, energy-efficiency surcharges are visible on those bills, so cut the surcharges and customers will feel relief.
Advocates and a number of consumer groups argue that the move is a misdiagnosis of the problem and a textbook case of trading short-term political relief for long-term ratepayer pain.
The Affordability Problem Is Real
Nobody disputes that electricity is getting expensive. Rate-shock has hit households across New England and the Mid-Atlantic. Wholesale power prices, transmission upgrades, and supply constraints have all driven monthly bills higher.
“The subject of affordability is a serious one across many states across the country. People are hurting, and energy costs are too high,” Forest Bradley-Wright, state and utility director for the American Council for an Energy-Efficient Economy, said. But, he argued, “Energy efficiency did not cause the energy affordability crisis, and the problem can’t be solved by cutting energy efficiency.”
His preferred analogy: “It’s the equivalent of trying to slash your grocery bill by eating out at restaurants more often.” The line item gets smaller, but the total cost goes up.
What Blue States Are Doing
Three Democratic-controlled states have moved or are moving to scale efficiency programs back, according to reporting in the New Hampshire Bulletin.
Maryland lawmakers passed a sprawling affordability package this month that, among other provisions, lowers the state’s emissions-reduction targets through 2035. Smaller targets mean smaller required utility spending on efficiency programs that reduce carbon pollution. Gov. Wes Moore is expected to sign the bill, which proponents say will save residents at least $150 per year.
In Massachusetts, a wide-ranging energy affordability bill would cut $1 billion in spending from the final year of the state’s three-year, $4.5 billion energy-efficiency budget. State utility regulators had already trimmed $500 million from the plan last year, so the new cuts compound a downward trajectory that has accelerated rapidly.
In Rhode Island, Gov. Dan McKee’s proposed budget caps the state’s next three-year energy-efficiency plan at $75 million per year. That is a notable drop from the $95 million approved for 2026 — a roughly 21% cut at a time when energy prices are still climbing.
The Case Against the Cuts
The math behind energy-efficiency programs is, to use the industry’s word, “first-fuel” math. Every kilowatt-hour a customer never uses is a kilowatt-hour the grid does not have to generate, transmit, or buy at the day-ahead market clearing price. Reducing peak demand also lowers the capacity costs utilities pass through to all ratepayers.
Independent analyses across the Northeast have routinely found that efficiency programs deliver $2 to $4 of system benefit for every $1 collected on the bill — meaning they make non-participating customers better off in the long run, not just the homeowner who installs the new heat pump or insulates the attic.
Cut the program, the argument goes, and the line on the bill labeled “energy efficiency” gets smaller. But the line labeled “supply” — the actual cost of electricity — keeps climbing, faster, because demand-side management is no longer holding it in check. Households that benefit most are the ones already using the rebates: low- and moderate-income customers replacing inefficient heating systems, renters in older buildings, and small businesses on tight margins.
A monthly electricity bill, as one explainer put it, “includes multiple components: There’s the costs for the power supply and the wires, poles, and substations needed to carry that energy; the guaranteed profit for utilities; and the fees that pay for programs like energy efficiency.” The fees that fund efficiency are usually a single-digit percentage of the bill. The supply line is the dominant driver — and supply costs are not falling.
Why the New Hampshire Angle Matters
New Hampshire is not in the cut-the-program camp, but it is wrestling with closely related questions. The Granite State Senate recently moved to block a slate of new environmental fees that critics said would have driven up the cost of housing, energy, and consumer goods. At the same time, lawmakers are considering climate-resilience grant programs aimed at lowering home insurance costs, where the underlying logic is similar: spend a little upfront to avoid much larger losses later.
The blue-state pivot away from efficiency programs is in some ways the opposite trade — sacrifice long-term savings for short-term bill reductions — and offers New Hampshire policymakers a useful comparison case. If Maryland, Massachusetts, and Rhode Island ratepayers see bills tick down for a year or two and then accelerate as supply costs rise without efficiency restraint, the political pressure on neighboring states to follow the same path will weaken.
The Underlying Tension
There is a real political problem at the heart of all of this: efficiency programs reward customers who participate. The homeowner who installs the new heat pump or weatherizes the attic captures the savings; every other ratepayer pays the surcharge that funded the rebate. In a high-cost environment, that distributional friction becomes politically combustible.
Defenders argue the answer is to push more of the rebate dollars at low-income households and renters, who otherwise cannot afford the upgrades. Critics counter that the programs have grown bureaucratic and inefficient and that ratepayers are right to resent paying for benefits they do not see.
What the affordability debate has not yet settled is whether the right response is to redesign efficiency programs — making them faster, more equitable, and more transparent — or to scale them back and accept higher long-term supply costs. Maryland, Massachusetts, and Rhode Island are running the second experiment in real time. The results will be informative, even if the politics get messy.
