It’s Time to Rethink Utilities’ Energy Efficiency Programs

The policy brief examines the misalignment between legacy gas utility energy efficiency programs and current state climate goals in the United States. It highlights how traditional cost-effectiveness tests often prioritize short-term gas appliance rebates over high-impact weatherization and electrification. Using examples from states like New York and Massachusetts, the document proposes six strategic reforms to redirect ratepayer funding toward long-term decarbonization and building efficiency.

• In 2023, regulated utilities in New Jersey, Minnesota, Washington, Maryland, Colorado, and Illinois spent approximately $127 million on residential gas appliance incentives, such as boilers and furnaces, for about 12 million customers.
• Traditional regulatory frameworks often prioritize short-term savings over long-term emissions reductions because cost-effectiveness tests may favor a cheap measure with a short lifespan over a more expensive one with greater lifetime savings.
• Weatherization can be significantly more impactful than appliance rebates; for example, Xcel Energy's Minnesota weatherization program saved about $1,080 per household in 2023, while its gas appliance rebate program saved only $213, despite the latter receiving 51 percent of the residential efficiency budget.
• Market saturation of high-efficiency appliances can make continued utility incentives redundant. In Maine, a 2023 study found that ENERGY STAR gas water heaters were already the majority of sales without incentives.
• New York has implemented a strategic framework that prohibits using ratepayer funds for residential gas-fired appliances, directing 63 percent of proposed 2026–2030 spending toward heat pumps and building envelope upgrades.
• Massachusetts' Mass Save program ceased providing gas appliance incentives in 2024 to align with GHG reduction targets, though it maintains exceptions for income-eligible households.

APA

RMI (2025). It’s Time to Rethink Utilities’ Energy Efficiency Programs. https://rmi.org/resources/its-time-to-rethink-gas-energy-efficiency-programs/

Chicago

RMI. It’s Time to Rethink Utilities’ Energy Efficiency Programs. 2025. https://rmi.org/resources/its-time-to-rethink-gas-energy-efficiency-programs/.

Wikipedia

{{cite report |author=RMI |title=It’s Time to Rethink Utilities’ Energy Efficiency Programs |date=3 September 2025 |url=https://rmi.org/resources/its-time-to-rethink-gas-energy-efficiency-programs/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025its, author = {{RMI}}, title = {{It’s Time to Rethink Utilities’ Energy Efficiency Programs}}, institution = {RMI}, year = {2025}, month = sep, url = {https://rmi.org/resources/its-time-to-rethink-gas-energy-efficiency-programs/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }