Washington — State regulators were served a strong dose of skepticism Sunday about municipal bans on natural gas hookups in new buildings from parties concerned about the consumer costs and the wisdom of setting key energy policies outside the state utility regulation construct.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Depending on how widespread it becomes, the wave of bans, as well as other incentives for building electrification, could have broad implications for the residential fuel mix and the future of gas distribution infrastructure and demand.
"My experience has been that the city councils aren't necessarily the source of balanced information, just and reasonable cost estimates, all the things that are part of the utility regulatory framework that makes determinations on the capital infrastructure investments," said Timothy Simon, a former California Public Utility Commission member.
Simon, who currently represents several local distribution companies, was among panelists urging caution about the bans during a staff gas subcommittee meeting at the National Association of Regulatory Utility Commissioners winter policy summit.
While residential energy use makes up only 7% of California's carbon dioxide emissions, "it's gaining the ire and the attack of city councils across my great state," he said. The "real culprit" in his view is transportation, which makes up 41% of CO2 emissions and is concentrated around big rig diesel trucks. Those trucks "generally don't run through Bel Air and Beverly Hills, he said. "They generally are running by black and brown communities that are in industrial sections near ports of entry and other areas."
Beginning with a ban in Berkeley, California, municipal gas bans have spread through California and appeared in the Boston area and Washington state.
Bill Malcolm, senior legislative representative from AARP, said that while his group does not favor one type of fuel over another, it has raised questions in several states about rate impacts for low and moderate income residents.
"I just checked the numbers and natural gas is now at $1.85/MMBtu, and just to put that in perspective, in 2012 it was actually $12/MMBtu," he said. "So where is the new power for the new load going to come from?" he said.
In Connecticut, for instance, AARP filed comments questioning whether incentives to install electric heat pumps over gas furnaces would benefit ratepayers and whether it would drive up peak power demand, he noted.
What role state regulators will play in the debate is "the multi-billion question that will most likely be settled by the courts," said Andreas Thanos, a Massachusetts regulator who chairs the NARUC gas staff subcommittee, when reached by email.
While PUCs grant the franchise allowing an LDC to go into a town or city, municipalities are using their bylaws to implement the bans. "So the PUCs will most likely not weigh in on the issue until the courts decide," he said.
Dianne Solomon, a New Jersey Board of Public Utilities commissioner, said she also sees a movement by states to empower their departments of environmental protection to "get into this space, take it out of the hands of the utility regulators and suggest that all projects going forward would have to have some environmental impact."
Several state regulators suggested green groups have had the more effective messaging thus far.
"I have heard a lot from the environmental advocates, Sierra Club and what have you, saying why we should have the natural gas bans," said Greer Gillis, a member of the Public Service Commission of the District of Columbia, adding it was important to get the views aired in the room out into the mainstream.
Judith Schwartz, a former utility commissioner from Palo Alto, where a municipal "reach code" encouraging all electric construction was adopted, contended "while the intentions are good, the reality of what [gas bans] are doing is minimal." During the winter "you have natural gas and imports making up the shortfall of every single hour of the day," she said.
Still, speaking from the audience, David Kolata with the Citizens Utility Board of Illinois, said he believed the issue was more complicated than the dialogue Sunday suggested.
"It's pretty clear that in every blue state, we're going to need to deliver a plan" that keeps the increase in temperatures due to climate change under 2 degrees Celsius, he said, with the modeling showing the need to decarbonize electricity, heating and transportation.
"Given that, how do we think about this from a consumer advocate point of view, where money spent on natural gas right now and natural gas infrastructure could very well be stranded?" he said.