Week Ending November 15, 2019

Consumers, Gas Industry Addressing Gas Use Restrictions, Moratoriums

This Article Appears as Published in Foster Report No 3274
Consumers, Gas Industry Addressing Gas Use Restrictions, Moratoriums

Some state and local elected officials are starting to see the implications of decisions to restrict natural gas use, as California and New York have seen blowback from consumers and frustration about not having access to gas service, an official with the Consumer Energy Alliance (CEA) said November 12.

The moratoriums for new gas service in New York and Massachusetts, challenges building new pipelines in some regions of the country and building code changes in California cities have made expanding gas use difficult. But the message from CEA and state/local energy users about the moves adding costs and harming businesses is resonating as policymakers become more familiar with the issues, said Brydon Ross, vice president of state affairs at CEA.

A gas industry official agreed with that assessment, even as the stand-off in New York has heated up with Governor Andrew Cuomo threatening to revoke the license of utility National Grid. The impacts of the decisions at the state and municipal levels can harm consumers, drive up costs and lead to higher emissions based on use of other fuels, said David Schryver, incoming president and CEO of the American Public Gas Association (APGA).

“I’m optimistic” that cities and states will rethink some of their positions or deliberate more before making a decision, Schryver said in an interview. “People are becoming more engaged,” he said, pointing to a decision by the Seattle city council to resist an electrification push after hearing from restaurants, labor unions and others opposed to such a move that would limit gas use.

APGA on November 15 is rolling out a marketing campaign for its municipal utility members and its Direct Use Task Group is forming a strategic plan to address anti-fossil fuel sentiments that are straddling legislative and regulatory efforts at the federal, state and local level. The “Did You Know” campaign will arm utility members with material each month on the benefits of natural gas and impacts of mandatory electrification.

APGA also will release a levelized cost of energy study in the next few weeks that will address the costs of electrification, Schryver said. That effort follows up on an American Gas Association (AGA) 2018 study that concluded residential electrification policies – with a goal of using electricity for all energy needs in a home – is a very costly approach for relatively small reductions in emissions. The AGA report was contested by the Natural Resources Defense Council and other who favor electrification policies.

Environmental groups and those opposed to fossil fuels have had more success at the state and local levels than the national level because that has been their focus, Ross said in an interview. State, county, or city leaders may not be familiar with energy issues and some are more apt to sign a pledge or adopt a position to avoid confrontations or being the subject of ridicule on social media, Ross said.

But energy policies should not be based on “sloganeering” and the limited character counts allowed on Twitter, and that is where CEA and other organizations are helping state and local officials understand the implications of some recent moves, he said. Some of the positions being adopted are not realistic and there is “waffling” among officials once they see first-hand the ramifications of restricting gas use.

He referred to a delicatessen owner in New York that spent $500,000 to open a new establishment and obtain permits, only to be told he cannot use natural gas because of the moratorium for new customer connections in the area he selected. The effects on home prices and costs associated with switching appliances where electrification is adopted also has been noted by home builders. “Sometimes it takes bad situations to have people wake up” to the effects of past decisions, Ross said.

The California Public Utilities Commission last week voted to retain more gas-fired power plants in the state than previously planned to ensure reliable electricity supplies while renewable resources and energy storage plans are scaled up in the coming years. Other states are seeing that California has always been aggressive on environmental policies and they do not want to follow that model as implementation is costly and uncertain, Ross said. States are putting more forethought into how they reduce their emission profile and carbon dioxide footprint, knowing that some measures embraced in California will not work for them, he said.

CEA is working with national trade groups in the energy space, such as AGA and others, but also local businesses, chambers of commerce, ratepayer organizations, home builders and labor unions about the gas usage restriction measures. “These people are on the front lines of some of these efforts” and can put a real-world impact to a decision that is not easily captured with regulatory language and legal terms, Ross noted.

The efforts of CEA and others are complimentary to the influence of the national trade groups, he said, adding that the messages of AGA “carry a lot of weight.” Municipal and state officials, however, see consumers paying bills and when they’re harmed by some actions taken it is not esoteric and stays with them, Ross said.

AGA and others are also advocating on the value of natural gas and addressing state and local concerns, noted Jake Rubin, spokesman for AGA. Earlier this year, AGA hired Susan Forrester as vice president of advocacy and outreach, and she has worked on building and maintaining strong partnerships at the local, state, and national levels.

AGA “is coordinating regularly with organizations that deliver the benefits of natural gas to customers, from the manufacturers of natural gas appliances, to the businesses that use natural gas to fuel their success to the unions that represent workers that build and maintain our nation’s 2.6 million miles of natural gas pipelines,” Rubin said.

In October, AGA officials said opposition to pipeline infrastructure and moratoriums on new customers is being monitored, with the goal of having politicians reconsider some of their positions on the fuel.

Natural gas is desired by consumers, helps the environment when backing out coal-fired power generation or being used to supplement renewable resources and more infrastructure is needed to bring it to customers, Matthew Agen, assistant general counsel at AGA, said during a media briefing on the group’s winter gas outlook. While AGA’s concern is obvious, “we think it’s important for customers to speak out” and make their views known to politicians, Agen said.

In California, cities such as Mountain View, Palo Alto and Menlo Park have followed the lead of Berkeley and adopted ordinances that have an “all-electric” requirement for new buildings, essentially banning natural gas use in new developments, with some limited exceptions. The Palo Alto city council this month approved the move and actually went beyond the suggestions of city staff that would have given builders a “mixed-fuel” design option that allowed for natural gas use if a builder exceeded state energy efficiency goals. The council declined that option and went with a decision to ban natural gas use in new buildings starting in 2020.

That decision affects the municipal utility in Palo Alto, which is a combination gas and electric utility, Schryver noted. Because APGA members are utilities owned by the cities where they serve customers, they abide by the rules adopted by city councils or utility boards. The positions of municipal utility members when gas use restrictions are up for debate are up to the individual utilities, he said.

Banning gas use in new buildings adds costs to consumers and there are better ways to address greenhouse gas emissions, he asserted. Putting all the eggs in one basket for electricity is short-sighted and jeopardizes the affordability and reliability of a region’s energy infrastructure, Schryver said.

“Our members are part of the city and community in 37 states,” he said. Like Ross with CEA, Schryver said “the battlefield has shifted” from the federal level the state and local level. More education is always helpful, particularly when city council members or state lawmakers are new on the job, both of them said.

There are varying degrees of familiarity with gas use and energy matters at the state and local level, Ross said. In many states, the elected leaders are part-time positions and there can be high turnovers, particularly with term limits in some jurisdictions. Energy use is not intuitive like tax issues or other items that everyone pays attention to, but people are starting to pay more attention to it, Ross noted.

That dynamic is both “a challenge and an opportunity,” he said. CEA and other groups try to ensure decisionmakers understand the implications of their policies and not be rushed into a position that harms their constituents. Too often lately, “they’re regulating by 140 characters or less,” Ross said, referring to Twitter posts that have policymakers taking positions that might seem popular but can turn out costly in the long run.

CEA is fuel agnostic and has members all across the U.S., representing different sectors of the economy. It has members that include utilities and oil and natural gas companies, along with renewable energy project developers, academia, and retirees. The group advocates for transmission development to improve access to renewable resources and bring power from solar and wind energy projects to more consumers, Ross noted. “We’re trying to work on energy solutions” where people are willing to listen and hear all points of view, he said.

Some activist organizations thrive on creating conflicts, he said, deeming it unfortunate that the energy sector has become more subject to partisan politics than in the past.

Schryver is due to become president and CEO of APGA on Jan. 1, 2020, taking over for Bert Kalisch, who is leaving the trade group after more than 15 years in that role. In his last column for the APGA magazine, Kalisch referred to the moratoriums and restrictions on gas use in different parts of the country. “All politics is local. When energy prices rise, and if reliability becomes an issue (which is more than likely), decisionmakers will be forced to sprint back to the affordable/reliable model. In the meantime, we must keep up the good fight and pray that long-term damage is not done to our economy and current energy grid/infrastructure,” Kalisch wrote.

By Tom Tiernan ttiernan@fosterreport.com

Want to try it out? Sign up for a free trial!
Subscribe Here