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AGA takes steps to counter gas bans, state opposition to pipelines

The American Gas Association is attempting to capture momentum in the fight against what it sees as a fundamental threat to the U.S. natural gas utility industry from new fronts in the anti-gas movement.

AGA President and CEO Karen Harbert and 2020 Chair Scott Prochazka discussed their group's efforts in an interview following a presentation to financial analysts at the CFA Society New York in Manhattan on Jan. 22. The utility industry leaders outlined plans for dealing with a wave of building gas bans and pipeline opposition in liberal states, and they discussed the industry's work to drive down greenhouse gas emissions while the nation debates far-reaching federal climate plans.

The resistance to natural gas is an expression of the growing concern among significant portions of the general public about global warming and the contribution of fossil fuels to it. Many oil and gas companies have made public commitments to reduce the impact of their industry.

AGA fights building gas bans

The movement to prohibit gas infrastructure in new buildings and renovations caught many in the utility industry by surprise in 2019. By the end of the year, the AGA had articulated a plan to build alliances among local stakeholders who are opposed to gas ban measures cropping up in California, the Boston area and Washington state.

AGA is in the "mobilization phase," Prochazka said. In addition to his position at AGA, Prochazka is president and CEO of CenterPoint Energy Inc., which has utilities in eight states and a wider footprint in other energy businesses.

The focus of the AGA campaign against gas bans is getting national groups on board and determining how to marshal boots on the ground through regional chapters when bans crop up.

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The AGA will seek out allies from ski lodges in Colorado to general contractors in Boston as it seeks to push back on building gas bans, AGA President and CEO Karen Harbert said.
Source: American Gas Association

"When you start the conversation with so many of these groups, and they begin to understand that their livelihood depends on your success — in other words, their success — they're absolutely willing to come to the table and help mobilize folks on the ground," Harbert said.

The group's leaders said there are community-level voices with equity at stake who believe strongly in energy choice. They said AGA's job is to empower them with information to wage the battle, like analysis of the measures' potential impacts on local energy costs.

"That's where we will be successful: If the voice of the customer is the loudest voice and the one that says, 'This is not acceptable to us,'" Prochazka said.

Gas utilities have found common cause with real estate developers, restaurants, unions and appliance and fireplace manufacturers, but the AGA believes it has just scratched the surface.

For example, ordinances that prohibit gas hookups in substantial building renovations, as well as an electric heating retrofit requirement under consideration in Bellingham, Wash., will cause at least some home and property owners to reconsider renovations, Harbert said. That makes general contractors potential members of the emerging AGA alliance, she said.

Groups that represent Americans on fixed incomes, including people over 50 in the AARP, are also natural allies because they worry changes to energy policy will raise ratepayer costs, Harbert said.

Group challenges state pipeline authority

The AGA leaders were critical of the $36 million settlement that New York regulators struck with National Grid USA over the utility's downstate gas moratorium, a response to the state's refusal to permit new pipeline capacity into the supply-constrained New York City area.

Harbert called New York Gov. Andrew Cuomo's threat to strip National Grid of its franchise "pretty extreme." She said the strategy forced the utility to adopt less economic pipeline alternatives — including trucking compressed natural gas into its service territory — and to curtail gas supply to industrial customers, opening the door to reliance on diesel generators.

"If we're trying to solve an environmental problem, we've just made it worse," Harbert said. "If we're trying to solve an economic problem, we've just made it worse. There was absolutely no problem that that decision solved that came out for the benefit of the consumer or the economy or the environment."

Harbert said New York has demonstrated why Congress and the federal government should place limits on authority granted to states under the Clean Water Act to deny critical permits to pipeline developers. "If [Cuomo's strategy] is replicated in other places, then everything completely grinds to a halt for very narrow ideological reasons," she said.

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AGA Chair and CenterPoint Energy CEO Scott Prochazka told the New York City investment community that the organization would mount a robust and proactive campaign to enumerate the benefits of gas amid growing headwinds.
Source: S&P Global Market Intelligence

Prochazka said he has not seen the same situation play out elsewhere, but he warned that does not mean other governors will not use Cuomo's playbook.

"What has always troubled me about policy decision that are of this nature is often times the decision which is a populist-type decision doesn't have implications until long after the elected official is off doing something else," he said.

Industry cannot ignore Green New Deal

At the national level, plans like the Green New Deal and the Climate Leadership and Environmental Action for our Nation's Future Act, or CLEAN Future Act, would largely phase out fossil fuels, including natural gas. Some Democratic presidential primary contenders have vowed to ban hydraulic fracturing, a production technique that is a cornerstone of the U.S. shale oil and gas boom.

For the moment, prominent fossil fuel ban backers like U.S. Rep. Alexandria Ocasio-Cortez, D-N.Y., are talking about a national climate plan in broad terms, and the lack of detail can make it sound obvious, clear and appropriate, Prochazka said. He said he believes that reality will set in when policymakers try to implement these plans. Yet the industry still needs to remain engaged and ready to mobilize allies and present realistic policy proposals, he said.

"To ignore it and say, 'This is silly, this is fanciful, this is going to go away on its own' we can't do that," Prochazka said. "We can't afford to take that stance."

AGA noted in a recently released climate change position statement that planet-warming methane emissions from the nation's gas distribution system have declined 73% since 1990, even as utilities have added more than 760,000 miles of main, which the group said shows that pipeline replacement and integrity management are working. Energy efficiency programs and coal-to-gas switching in power generation have also helped to drive down carbon emissions, the group said.

The position statement, which Prochazka discussed publicly for the first time at the CFA Society, held 10 commitments and eight principles for AGA's roughly 200 members. These included steps that gas utilities have taken even without an overarching federal climate plan, Harbert said.

"We are not being forced to do this," she said. "We are going to continue to reduce the emissions footprint of our customers in this country based on the commitments and investments this industry is going to make. We can talk about the Green New Deal and what it will and will not do, and in the noise, nothing is happening."