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Little Connecticut Unveils Big Natural Gas Appetite

Connecticut should build 900 miles of natural gas mains and use financial and regulatory changes to make gas available to as many as 300,000 homes and businesses, according to a draft 2012 Comprehensive Energy Strategy unveiled Friday by Gov. Dannel Malloy.

"As things now stand, Connecticut is not well positioned to take advantage of the emerging natural gas opportunity," said the 184-page draft, which was prepared by the Connecticut Department of Energy and Environmental Protection (DEEP). "Only 31% of Connecticut homes heat with gas today, compared with 47% in Massachusetts and 48% in Rhode Island. The percentage of commercial and industrial entities with access to gas is only slightly higher."

"The most dramatic element of this strategy is the opportunity presented to us by the increased supply of low cost domestic natural gas," Malloy said in a speech Friday at the Connecticut Business & Industry Association's 2012 Business Energy Conference in Cromwell, CT. "Let me be clear. This is not a mandate for the consumption of natural gas. All this plan does is put Connecticut on equal ground with other states that have already made these investments, creating jobs for residents in the process."

The draft proposes to make natural gas available to as many as 300,000 additional Connecticut homes and businesses over the next seven years, beginning with roughly 217,000 customers already connected to gas mains but not heating with gas.

Recommendations include offering financing options for homeowners and businesses to eliminate upfront costs of converting appliances to natural gas; alternative financing for low-income homeowners; regulatory changes to enable potential customers who are near gas mains to have connections financed by the state's three gas companies, which would be repaid by new customer revenues; and that roughly 900 miles of gas mains be built, focusing on providing factories, hospitals, schools and other facilities with significant energy consumption with access to gas mains.

Funding for the recommendations would come through $3 billion of private capital, $1.4 billion to be paid by some combination of new gas customers, all gas ratepayers and bond funding, and $815 million to be financed by gas companies, according to the draft.

The draft energy strategy also calls for the state to adopt an expanded commitment to "all cost-effective" energy efficiency and improvements in its electricity, industry and transportation sector strategies. The plan would also reexamine the state's renewable portfolio standard, which currently calls for 20% renewable power by 2020, with an eye toward both raising the standard and increasing the mix of renewable options.

But even if all of the energy strategy's recommendations are adopted, "significant additional measures and breakthrough technologies will be required to achieve the goal of an 80% emissions reduction by 2050 as spelled out in the state's 2008 Global Warming Solutions Act," according to the draft.

"Connecticut needs an energy policy that is balanced, responsible and market-driven, not one focused only on natural gas," said the Independent Connecticut Petroleum Association (ICPA), which represents 600 heating oil and propane retailers in the state.

The strategy's focus on natural gas appears to be based in large part on current low gas prices, according to ICPA, which said there is no guarantee those prices will remain low. "No one four years ago believed that the economics of natural gas would be where they are today. Hence, no one today can tell you where the economics of natural gas will be four years from now. Connecticut needs to avoid the potential pitfalls of over-reliance on one fuel," ICPA said.

DEEP is accepting public comment on the strategy at a series of technical meetings and public hearings in November and through the electronic filing system on the DEEP website.

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