Energy Exchange

4 opportunities for gas utilities to accelerate the energy transition today

A troubling story recently emerged about a group of gas utilities whose mission is to fight electrification. While the leaked materials alone don’t explain the full extent of the group’s efforts, it was unsettling to see baseless, fear-driven tactics such as “take advantage of power outage fear,” to make people wary of electrification. Instead of blocking progress to safe, affordable, clean energy, gas utilities concerned with the future should be taking steps today to accelerate the energy transition.

Several analyses make clear that electrification of commercial and residential buildings will play a predominant role in achieving state climate goals. Take New Jersey, for example, where residential and commercial buildings account for the second largest share of the state’s greenhouse gas emissions. According to modeling done by the state, in order to achieve its climate goals of 80% emission reductions by 2050, residential and commercial sector emissions must be reduced by 89%.

To achieve this level of emission reductions, New Jersey has found that “policies requiring net-zero emissions for new construction must be paired with aggressive requirements for electrification of older residential and commercial buildings as soon as practicable.” In other words, the last thing we should be doing is fighting efforts to electrify.

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Posted in Gas to Clean, Methane, Natural Gas, New Jersey, New York / Comments are closed

What our climate goals mean for natural gas, and what states should do about it

The transition to a low-carbon economy will have a big impact on the way we think about natural gas: how we produce, use and transport it. One area where this challenge is particularly acute is the state regulatory frameworks governing gas utilities across the country, and in particular, how those rules line up against the climate goals now being set by a growing number of states.

States that don’t re-envision the way their gas utility systems run will be challenged to meet their climate targets. To help states avoid that fate, EDF has developed a new guide suggesting ways that state regulators can navigate this complex challenge.

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Posted in California, Clean Energy, Colorado, Gas to Clean, Natural Gas, New York / Comments are closed

Federal regulators should reevaluate the incentive model for gas pipelines

The energy industry is in the midst of a massive transformation. Natural gas fired power plants are now the dominant source of electric power in the U.S., and according to numerous studies, natural gas will continue to have a role in our future energy system — even in stringent greenhouse gas reduction scenarios. For the first time ever, renewables supplied more generation than coal in April. New technologies, evolving customer expectations and state laws directing greenhouse gas reductions are driving significant changes in the way we use and consume energy. The pace of this change will be even further accelerated as we turn to electrification as a means of decarbonization.

Regulators must reevaluate their policies and rules to ensure they are keeping up with these major changes. This is particularly true for the current revenue model of gas pipelines, which is built on the idea that “the more you spend, the more you earn.”

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Posted in Clean Energy, Gas to Clean, Natural Gas / Comments are closed

Gas utility planning is behind the times. Rhode Island has a plan to fix it.

When it comes to how utilities plan for future gas needs and use, challenges abound: Pipelines are built before state regulators have an opportunity to assess whether it is prudent for a gas utility to take service from that pipeline; decisions are made behind closed doors with little opportunity for stakeholder input; and planning efforts do not appropriately consider options other than traditional infrastructure such as energy efficiency, gas demand response, or renewable alternatives to natural gas.

Pending before the Rhode Island Public Utilities Commission (RI PUC) is a proposal that would meaningfully resolve many of these issues. The utility in the state and the PUC staff crafted a joint memo proposing a more robust planning framework and rigorous oversight of utility decisions. As EDF recently explained in its comments to the RI PUC, this framework will serve the public interest and can be used as an important model for other states.

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Posted in Clean Energy, Energy Efficiency, Natural Gas / Comments are closed

FERC approves pipeline despite concern over controversial business arrangement

Last week, the Federal Energy Regulatory Commission (FERC) approved the proposed Spire STL Pipeline. Blessings for the controversial 66-mile project come even though St. Louis already enjoys excess capacity from other pipelines, and despite the fact that the only customer of the pipeline, Spire Missouri, does not actually have any growth in customer demand. It is estimated that the project will cost ratepayers $30 million annually over the next twenty years.

The proceeding reveals much about how the agency assesses the legally-required “market need” for new pipelines when both buyer and seller in the contract used to demonstrate that market need are two different arms of the same company. These so-called affiliate transactions are a growing trend as retail gas utilities seek new revenue to offset stagnating demand.

The risk with these types of transactions is that we could end up with expensive new pipelines that aren’t needed. What’s more, these deals are specifically engineered to shift financial responsibility for these costly projects away from private shareholders and onto retail ratepayers (i.e., the public). They can also lock utility customers into decades-long gas contracts at precisely the time when competitive alternatives – from renewables to energy storage – are transforming the market. Spire presents a textbook example of these concerns.

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Posted in Natural Gas, Utility Business Models / Comments are closed

Resilience proceeding gives FERC a chance to advance gas-electric coordination

Last September, the U.S. Department of Energy (DOE) started a conversation on resilience, asking the Federal Energy Regulatory Commission (FERC) to provide new revenues and guaranteed profits to the owners of old, inefficient coal and nuclear power plants to compensate these resources for certain reliability and (undefined) resilience attributes.

FERC swiftly disposed of that proposal in a January 8 order, finding that it was not warranted and would run counter to its pro-market regulatory model. FERC then asked all of the Regional Transmission Operators (RTOs) and Independent System Operators (ISOs) to explain how they are evaluating and addressing resilience within their respective markets.

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Posted in Gas to Clean, Grid Modernization, Natural Gas, Regional Grid / Comments are closed