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State laws helping utilities build firewall to halt spread of gas bans


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State laws helping utilities build firewall to halt spread of gas bans

State laws that protect access to utility services are becoming a core part of the natural gas industry's effort to prevent the spread of building gas bans and electrification codes.

Gas utilities have played a key role in developing state bills that prohibit towns, cities and counties from adopting measures that ban or discourage natural gas hookups in new construction. Some of those utilities hope to replicate early success in additional states, while industry peers across the nation are taking note of the strategy.

The sudden rise of gas bans and building electrification requirementsfirst in California and then in Seattle, the Boston area and New York Cityleft the gas industry searching for a response in 2019.

Now, utilities and their allies are working to build a firewall across the nation's interior with state laws that prevent local governments from adopting any measure that blocks consumers' access to utility service based on fuel type. While most of the bills are broadly worded, legislators have called them a preemptive response to the gas ban movement.

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Arizona, Tennessee and Oklahoma have all signed the bills into law. Louisiana is poised to follow suit after bipartisan legislation to protect access to gas utility service sailed through the House and Senate without a single "no" vote. Lawmakers in Minnesota, Missouri, Kentucky and Georgia have also introduced similar bills.

Their backers include utilities that work across several states, including CenterPoint Energy Inc., ONE Gas Inc., Southern Co. and Duke Energy Corp. The legislative push comes as industry leaders have vowed to more actively defend natural gas's role in the U.S. energy mix, following a surge of anti-gas sentiment and pipeline opposition among a number of environmental groups, Democrats and liberal states.

"We're very transparent about who we are and what we do," Scott Doyle, CenterPoint's executive vice president for natural gas distribution, said in a May 17 interview. "We've told local leaders we want to have the system that your community wants, but we also want to be at the table to have a discussion because there's a cost associated with those decisions that you make."

Legislative effort takes shape

CenterPoint was part of the legislative push in Oklahoma and Louisiana, two oil and gas producing states where legislators understand the industry's contribution to its economy, Doyle said. CenterPoint and its industry peers are considering similar legislation in Texas when the state legislature convenes in early 2021, he added.

While no cities in CenterPoint's service territory have proposed gas bans, the company serves part of Austin and other college towns in Central Texas where the policy could garner support, Doyle said. The 25 members of Bloomberg Philanthropies' American Cities Climate Challengewhich include Austin and other cities in or near CenterPoint service territoriescould also gravitate towards gas bans, he added.

One Gas, which distributes gas in Kansas, Oklahoma and Texas, partnered with CenterPoint on the Oklahoma legislation. The company "provided education to legislators on the safety of natural gas plus our shared goal of reducing emissions while maintaining the affordability and reliability Oklahomans enjoy," One Gas spokeswoman Leah Harper said in a statement.

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The Oklahoma gas distributors and utilities elsewhere indicated that they have followed a model supported by the American Gas Association and developed under the chairmanship of former CenterPoint CEO Scott Prochazka: working alongside a diverse group of stakeholders to make the case for natural gas.

In Tennessee, that included associations representing homebuilders, manufacturers and propane companies, as well as the state's chamber of commerce and the restaurant and hospitality industry, according to Eddie Davidson, director of government affairs in Tennessee for Duke-subsidiary Piedmont Natural Gas Co. Inc.

"In this particular case, the message that we deliveredthe various stakeholders deliveredwas the importance of being able to preserve customer choice and being able to preserve the ability for each of the businesses to decide how they want to meet their energy needs," Davidson said.

According to Davidson, the idea that state lawmakers should develop comprehensive utility policy — rather than allowing "piecemeal" decisions at the local level — also resonated in the General Assembly. The legislation ultimately drew broad support from Democrats and Republicans alike.

Attention from the East and West Coasts

The strategy could spread beyond the U.S. Heartland, although many utilities serving the East and West Coasts are still focusing primarily on outreach.

Northwest Natural Holding Co. has held preliminary discussions in Oregon regarding "consumer energy choice legislation" similar to the Tennessee bill, according to Kathryn Williams, the company's vice president of public affairs.

Northwest Natural has already developed substantial inroads with policymakers, regulators and other stakeholders in Oregon in recent years. Recognizing a groundswell of natural gas opposition, the company began a project in 2017 to study the energy system and natural gas's role during peak demand. It has since had hundreds of conversations about the role of gas distribution in Oregon based on its findings.

"We were finding a narrative out there that really just didn't include facts and figures about, 'How do you handle a heating season in the Northwest?'" Northwest Natural CEO David Anderson said during a May 18 interview. "We were having people indicate that it would be fairly simple to electrify that load, and it was really clear to us that people just didn't understand the value of a gas distribution system and the power that it brings in terms of those coldest days."

New England utility Eversource Energy has been engaged in similar outreach since gas bans gathered momentum, including in its Cambridge, Mass., territory, according to Bill Akley, president of gas distribution at Eversource. "We are working with the other companies, the other LDCs in the state, collaboratively on how do we tell the story? How do we provide the right data? How do we engage with all the stakeholders, including environmentalists, around sharing and getting them aligned with a path here?" Akley said in a May 18 interview.

Akley said his company is not certain there is appetite in Massachusetts and Connecticut for legislation to preempt gas bans, but executives are monitoring the progress in other states. He noted that Boston-area gas bans are likely to face court challenges, an opinion shared by the region's city solicitors, who have warned state utility law likely trumps local bylaws and ordinances.

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Executives at Pennsylvania-based UGI Corp. — which has leveraged midstream assets to help alleviate natural gas supply constraints in the Northeast — said they do not currently plan to pursue similar legislation in the Keystone State.

Bob Beard, president and CEO of UGI Utilities Inc., said he has never heard any discussion about banning natural gas hookups in Pennsylvania, the heart of the Appalachian shale gas industry. Policymakers and regulators have encouraged UGI for years to expand gas mains to unconnected towns and small cities, UGI Corp. President and CEO John Walsh added. In his view, the low price of U.S. gas supply will loom large in policy discussions as the nation grapples with the economic fallout of the coronavirus pandemic.

"It doesn't eliminate the need to be environmentally efficient and proactive there, but I think affordability is going to be quite important to both our residential customers and all the small businesses we serve," Walsh said "That balance is really important, because there's no one solution."