Corrin Moss is program manager of the Net Zero Grid team at the Massachusetts Clean Energy Center and a Clean Energy Leadership Institute fellow.
Massachusetts must rapidly deploy distributed energy resources to enable an efficient and affordable energy transition, but traditional utility regulation, planning processes and management impede DER integration.
DERs, including assets like solar and storage, and flexible loads like heat pumps and EVs, fundamentally change the way the electric distribution system operates. Unlike traditional grid infrastructure, they are not necessarily planned, owned or operated by utilities, adding complexity and requiring a more flexible system.
Massachusetts’ new grid modernization process provides a path to re-imagine grid planning and utility regulation. The state should evaluate the distribution system operator, or DSO, model to facilitate the state’s decarbonization mandates and create a more flexible, affordable, and democratized energy system.
Massachusetts is modernizing its electric grid and regulatory systems
Massachusetts is embarking on a novel planning process for electric grid modernization to enable a system that can achieve the Commonwealth’s decarbonization mandates and simultaneously better serve customers.
Massachusetts’ 2022 climate law directed the state’s investor-owned utilities to create Electric Sector Modernization Plans, or ESMPs, to proactively upgrade their distribution systems. The ESMPs mark a significant shift in planning and forecasting methodologies. This is the first time that utilities have been required to conduct such comprehensive and proactive long-term planning around distribution.
The regulatory process has produced incremental steps toward planning for flexibility and DER integration. Notably, the Department of Public Utilities ordered utilities to include non-wires alternatives in their planning processes and approved a grid services compensation fund to test novel use cases for DERs. Utilities proposed to use the fund to compensate customer DERs for helping to delay or defer capital investments.
As the process continues, we should be guided by a holistic vision for the future of utility regulation and management. The DSO model provides a long-term vision to achieve the affordable and equitable system that Massachusetts needs.
What is a DSO?
DSO models are emerging globally (including in the UK, Australia, EU, and some US states) as platforms that enable a more flexible, “bottom-up” electric distribution system.
Under the current regulated model applied to investor-owned utilities, the utilities design, own and manage their systems in exchange for a regulated rate of return.
By contrast, the DSO operates an open platform system in service of its users. The DSO earns a regulated rate of return on necessary capital expenses, but is incentivized fairly for operating expenses, performance metrics and efficiency.
Importantly, the DSO administers markets to fulfill (at least some) system needs rather than prioritizing capital investments. These markets procure services, such as capacity and flexibility, from any eligible DER (or aggregation of DERs) connected to the system. The rules governing DER operations and markets are clear and transparent. This model allows DERs to shape the DSO’s planning and enables customers to become active participants in the energy system.
DSO regulation is a long-term vision that can help Massachusetts deliver on its decarbonization and energy affordability goals. Stakeholders spanning the state’s grid ecosystem have identified the need for a democratized energy system, and the idea of the DSO as an enabling mechanism has recently emerged in multiple contexts.
The 2022 legislation that established the ESMP process also created the Grid Modernization Advisory Council, or GMAC, a multi-stakeholder group that provides recommendations to the utilities about their ESMPs.
The GMAC model provides an unprecedented level of transparency and range of stakeholder input on utility planning outside of the regulatory process. The council is beginning to envision grid planning and forecasting processes based on community-identified needs.
For example, in July, the council held its first event with municipal leaders about future grid planning. Participants requested more integration between municipal building-level planning and utility planning, and for municipalities to be treated as key partners in local grid planning. In other words, the GMAC is beginning to consider bottom-up planning.
Stakeholders across the grid ecosystem are also calling for a more customer-driven system. In the 2024 and 2025 Future Grid Event Series hosted by MassCEC and ACT, participants identified a democratized, flexible grid as an important goal for the Commonwealth. Stakeholders specifically recommended that the state consider a DSO model to enable grid edge flexibility and advance energy justice.
Massachusetts utilities are acknowledging the need for a more flexible grid and modernized regulation. National Grid recently filed comments on its Long-Term Cost Recovery Docket (D.P.U. 24-11) that requested an outcomes-based regulatory structure to advance public policy goals, improve affordability and incentivize innovation. The comments also specifically requested that the DPU consider a DSO model to scale DERs.
Momentum is growing in Massachusetts to overhaul utility regulation. The DSO structure will help the state deliver on an affordable, equitable, and efficient energy transition. Massachusetts should look to other jurisdictions, such as the UK, as a model to implement a DSO.
The UKPN DSO is centering decarbonization and democratization, including by utilizing municipal electrification plans in demand forecasting.
It is also seeing big results on affirdability. In 2024, the DSO saved customers more than $150 million in avoided infrastructure upgrade costs alone. The ESMP process allows us to re-imagine what the Massachusetts grid will look like from now until 2050, and the stakes are high.
Lawmakers, policymakers, and the DPU should seize this chance to lead on the future of utility regulation in the United States and ensure an affordable and flexible grid for all Massachusetts customers.
