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Avangrid's NY utilities commit to measures to prevent growth in natural gas


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Avangrid's NY utilities commit to measures to prevent growth in natural gas

Avangrid Inc.'s New York utilities have agreed to limit the growth of natural gas use in their territories, as state regulators continue to challenge gas distributors to evolve their business model.

A joint settlement in the pending rate case for New York State Electric & Gas Corp., or NYSEG, and Rochester Gas & Electric Corp., or RG&E, would see the companies offset growing gas demand with alternatives, stop promoting the fuel, and avoid pipeline construction and expansion where possible. The companies would also conduct several studies that plot out their future and alternative energy projects.

The settlement came three months after the New York Public Service Commission, or PSC, ordered a review aimed at reducing or eliminating the need for investment in gas infrastructure as the state pursues aggressive climate change policies.

"The landmark rate case settlement filed on behalf of NYSEG and RG&E is the most progressive gas case ever filed in New York and affirms the companies' commitment to achieving the state's clean energy goals," Sarah Warren, corporate communications manager at Avangrid said in an email. "Together, these efforts provide a glide path to reduced demand and consumption of natural gas and support the state's clean energy future."

NYSEG and RG&E set a goal of achieving zero net increase in billed gas usage over the three-year rate cycle. This means they will aim to prevent gas use in the second and third rate years from exceeding forecasted consumption levels in the first rate year, while still meeting energy demand in their service territories. To do that, they will offset increases in the second two years with alternatives like heat pumps, district heating and building efficiency upgrades.

The companies made a similar net-zero pledge for customers served by the DeRuyter pipeline. They agreed to identify areas that may need additional energy supply in the service territory and look for ways to reduce demand through non-pipeline solutions. NYSEG and RG&E would issue quarterly reports on the initiatives.

The companies also agreed to end pilot projects aimed at expanding gas use and rebate programs, including for customers switching from fuel oil to natural gas. They would also stop promoting gas on their websites and in marketing materials.

"For many years, New York's utilities have been aggressively marketing and expanding gas use and gas infrastructure, and this is the primary driver of the increase in the use of fracked gas in New York," Jessica Azulay, program director at the Alliance for a Green Economy, said in an email. She called the companies' net-zero sales growth commitment "a game-changing shift in momentum."

The joint settlement also establishes the groundwork for a process to evaluate whether non-pipeline alternatives are suitable in lieu of the construction, expansion or replacement of gas pipelines.

If the PSC approves the order, NYSEG and RG&E would also prepare a report on how their business might evolve, with a focus on the potential to reduce gas consumption and use electric power as an alternative. The report would evaluate grid updates necessary to support further renewable energy deployment and beneficial electrification.

The companies would also retain a consultant to prepare a report on the potential for deploying geothermal district energy systems and heat pump technology in their service territories. Another report mandated by the settlement would require NYSEG and RG&E to evaluate how New York climate policies will impact depreciation of their electric and gas assets.

"The settlement agreement in the NYSEG and RG&E rate case sets an important precedent, and utilities like [National Grid USA] must follow and commit to zero net gas growth if they are going to be in compliance with the [Climate Leadership and Community Protection Act]," Lee Ziesche, community engagement coordinator at the Sane Energy Project, said in an email.