latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/in-bid-to-cut-gas-use-pipe-investment-ny-regulator-to-overhaul-energy-policy-57696460 content esgSubNav
In This List

In bid to cut gas use, pipe investment, NY regulator to overhaul energy policy


The Big Picture: 2024 Energy Transition Industry Outlook

Case Study

An Oil and Gas Company's Roadmap for Strategic Insights in a Quickly Evolving Regulatory Landscape


Essential IR Insights Newsletter Fall - 2023


Cleantech Edge: Private energy transition capital stages subdued summer rebound

In bid to cut gas use, pipe investment, NY regulator to overhaul energy policy

New York regulators teed up a sweeping overhaul of natural gas supply planning that would push gas utilities to reduce their reliance on fossil fuels, build fewer pipelines and invest in emissions-free alternatives.

The New York State Public Service Commissions on March 19 announced a review of current gas supply planning protocols as the state pursues ambitious goals to mitigate climate change. The proposal orders gas utilities to take steps that could "reduce or eliminate the need for gas infrastructure and investments" in New York.

The order follows a bitter dispute between National Grid USA and New York over the state's refusal to permit new pipeline capacity and the utility's subsequent decision to stop hooking up new downstate customers. More recently, New York passed the Climate Leadership and Community Protection Act, or CLCPA, establishing a legally mandated goal of reaching net-zero greenhouse gas emissions by 2050 and generating 100% of electric power from emissions-free sources by 2040.

"Recent events have shown that we need smarter, more comprehensive and more transparent planning by utilities for gas infrastructure and clean energy alternatives," PSC Chair John Rhodes said in a statement. "It is essential for protecting New Yorkers and ensuring they have the infrastructure they need and minimizing what they don't; it's critical to ensuring reliability, keeping costs down, and advancing state policies."

SNL Image

The proceeding calls on utilities to incorporate nonpipeline solutions into their planning in order to avoid building new gas infrastructure and reduce gas demand across their systems. That means utilities would have to include proposals for energy efficiency, electrification and demand response programs in their planning, and evaluate how those solutions could help cut the need for infrastructure investments.

The PSC ordered New York state gas utilities to report within 150 days on their current use of these alternatives, their plans to use them in the future and how those plans would reduce the need for gas infrastructure.

Meanwhile, staff at the New York Department of Public Service will develop a proposal within 150 days to "modernize" gas system planning requirements, with a focus on assuring plans align with the CLCPA.

"Recent developments have challenged conventional approaches to gas system planning," the PSC said in a March 19 filing. "The current approach to gas system planning poses risks of incomplete alignment with CLCPA, sub-optimal consideration of alternatives and timeframe, increased risk and cost to consumers, and unsatisfactory provision of service and solutions for those same consumers."

PSC ordered utilities to file a report within 90 days analyzing supply and demand in the parts of their service territory vulnerable to supply constraints. Within 120 days, they must submit a supply-and-demand analysis for their entire service territory.

The commission required gas utilities to submit proposals within 120 days for establishing standards that would spell out how much they can rely on peaking services and how they manage moratoria on new gas hookups. Utilities can file proposals separately or jointly with one another.

Both National Grid and Consolidated Edison Co. of New York Inc. are relying on one type of peaking service, truck deliveries of compressed natural gas, to get through the winter. But the PSC warned over-reliance on peaking solutions is risky because service contracts can expire, leaving utilities at risk of shortages, and market rates can be expensive.

The two companies also addressed supply shortages by refusing to hook up new customers in parts of New York City and Westchester County. The proceeding will establish criteria for declaring and lifting future moratoria, as well as communicating with impacted communities and prioritizing service applications during a moratorium, the PSC said. Among other things, it would define the data utilities must present to justify a moratorium and establish how to deal with businesses that applied for service prior to implementation.

In addition to ConEdison and National Grid's downstate subsidiaries Brooklyn Union Gas Co. and KeySpan Gas East Corp., the order applies to Orange and Rockland Utilities Inc. and Central Hudson Gas & Electric Corp., as well as upstate National Grid subsidiary Niagara Mohawk Power Corp., New York State Electric & Gas Corp., Rochester Gas and Electric Corp., National Fuel Gas Distribution Corp., St. Lawrence Gas Company Inc. and Corning Natural Gas Corp.