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Utility CEOs embrace role as natural gas defenders on earnings calls


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Utility CEOs embrace role as natural gas defenders on earnings calls

Executives at U.S. utilities embraced the industry's pledge to more forcefully advocate for natural gas during earnings season, dedicating a significant portion of quarterly conference calls to enumerating the fuel's benefits after a year of mounting challenges.

The industry has lately acknowledged it has done too little to convey the benefits of the nation’s distribution system, allowing anti-gas sentiment to evolve into organized efforts to block pipeline projects and prohibit gas use in new buildings. In contrast, industry captains started 2020 by trying to get investors to focus on their environmental, social and corporate governance records and by making the case for natural gas.

Chesapeake Utilities Corp. President, CEO and Director Jeffry Householder opened a Feb. 27 call by highlighting examples of his company's "environmental stewardship" and its plans to pursue new carbon-neutral opportunities in its mid-Atlantic and Florida territories.

Some of the examples Householder listed are cornerstones of gas utility operations that have knock-on environmental benefits, like transitioning customers from fuel oil to natural gas and replacing leak-prone pipes. Householder nevertheless framed them as ESG initiatives and tackled the topic himself, rather than delegating the ESG overview to a deputy as usual.

"We believe our businesses have a clear role to play in reducing emissions and supporting sustainable communities," the executive said. "We will continue to evolve our energy delivery businesses to better serve our customers and to meet our shareholder expectations."

The tenor was similar on a Feb. 20 call hosted by ONE Gas Inc., which operates gas utilities in Texas, Oklahoma and Kansas. President, CEO and Director Pierce Norton discussed climate change far more than usual, putting methane emissions reductions on par with safety, reliability and growth as a top priority for the next decade.

Utilities tout renewable gas initiatives

The chief of fellow Texas utility operator Atmos Energy Corp. acknowledged the political headwinds natural gas faces, but he argued that the fuel's attributes make it indispensable to meeting energy demand.

"You can compress it, you can decompress it, you can transport it, you can liquefy it, you can store it below ground. There's nothing like it that's reliable and abundant today that's out there," Atmos President, CEO and Director John Kevin Akers said on a Feb. 5 call.

Executives focused in particular on initiatives to expand the use of renewable natural gas, or RNG, a form of the fuel processed from methane waste sources like farms and landfills, which helps to reduce greenhouse gas emissions.

Householder said Chesapeake is in talks with renewable natural gas developers to ensure RNG begins flowing through its pipeline system. Las Vegas-based utility operator Southwest Gas Holdings Inc. said it was mulling investments in RNG projects during its quarterly conference call, while Portland, Ore.-headquartered Northwest Natural Holding Co. stressed its readiness to introduce the fuel to its Oregon service territory.

New Jersey utilities also invoked RNG to quell concern following the release of Gov. Phil Murphy's Energy Master Plan, which calls for carbon-neutral electricity generation and "maximum" building electrification by 2050. Executives stressed the plan commits to maintaining pipeline reliability and safety and it recognizes the value of the gas distribution system as a means of transporting RNG and hydrogen fuel processed from natural gas operations in the future.

New Jersey Resources Corp. President, CEO and Director Stephen Westhoven claimed the governor's policy presents opportunities for his company's solar power unit and home energy services business. South Jersey Industries Inc. President, CEO and Director Michael Renna said he was encouraged that the plan called for carbon neutrality, rather than a total elimination of carbon emissions.

Executives address building gas bans

No local governments in New Jersey are considering gas bans, according to Westhoven, but Public Service Enterprise Group Inc. Chairman, President and CEO Ralph Izzo nevertheless took direct aim at the idea of a quick movement toward building electrification. He said conversion would not benefit the environment until zero-carbon energy dominates electric power supply. He also estimated it could cost upward of $10,000 per customer.

"This would be a significant economic burden on every household and contrary to most customers' personal preferences," Izzo said on a Feb. 26 call. "[Public Service Electric and Gas Co.] customers enjoy the lowest natural gas prices in the region, so a mandated switch to electrification of homes would also diminish the decade-long price benefit shale gas has provided to New Jersey."

Dominion Energy Inc. Chairman, President and CEO Thomas Farrell assured analysts and investors that no gas bans are currently planned in its service territories in Idaho, Ohio, North Carolina, South Carolina, Utah, West Virginia and Wyoming.

"Recently, we have begun to hear of investor concern that, at least in some states, municipal level ordinances could limit overall demand growth for natural gas utility service," he said on Feb. 11. "While that may be true elsewhere, we simply do not see any evidence of slowing customer or investment growth in the states in which we operate gas utilities."

The same day, Dominion announced a net-zero emissions target for 2050, including a goal of cutting methane emissions by 65% by 2030 and 80% by 2040 from 2010 levels. The company forecast that its gas infrastructure would achieve net-zero status 10 years before the rest of the company thanks to its investments in RNG projects.

Also on Feb. 11, Dominion purchased Southern Co.'s stake in the Atlantic Coast Pipeline LLC project. Asked what the sale said about Southern's outlook for gas assets in its Southeast territories, Southern Chairman, President and CEO Thomas Fanning responded with a defense of the fuel.

"I used to say when we bought AGL Resources that natural gas is a bridge to 2050," he said on a Feb. 20 conference call. "I really believe natural gas will go beyond 2050. I think in order to achieve low-to-no or net-zero concepts by 2050, given how plentiful and cheap natural gas is, we're just going to have to find a way to keep it in play, but deal with the carbon atom."