Fuel switching policies to move more end-users to natural gas should be a part of each state’s energy strategy, particularly in rural areas, according to a panel of experts speaking Wednesday at a National Regulatory Research Institute (NRRI) teleseminar.
There was agreement that shale-driven abundant U.S. gas supplies make the question more relevant at this time than ever before. The panelists — a state regulator, utility senior executive, rural study center director and NRRI’s principal researcher — said more gas switching, including for vehicle transportation, was in the national interest.
With the recent stimulus from the development of the Marcellus Shale in Pennsylvania, Center for Rural Pennsylvania Director Barry Denk outlined studies and legislation that seek to make the switch for consumers smoother.
“And the nice thing in Pennsylvania is that all of the players have come to the table” to spur initiatives to take advantage of new-found gas supplies, said Denk. In the past four years there have been nearly 8,000 new gas wells drilled in the Marcellus Shale, 5,681 of them were unconventional.
NRRI principal researcher Ken Costello said low gas prices have heightened the interest in a topic that used to be confined to dry utility economic analyses.
“There are large potential public benefits for a lot of customers switching from oil or propane to natural gas,” Costello said. “Studies have confirmed that consumers can realize a quick payback in two to three years by converting to gas. In New England, for example, residential customers can save from up to $1,500-2,000 a year.”
Costello highlighted eight states that have been active in gas line extension policy development: Connecticut, Delaware, Maine, Minnesota, Nebraska, New York, North Carolina and Pennsylvania.
Panelists also noted the looming questions in each state as to what the role of government should be in promoting energy conversions, as well as the role of local utilities. Since public hearings and meetings last year, Pennsylvania lawmakers have responded with Senate Resolution 29, said Denk, “to study extension and expansion of natural gas infrastructure,” along with two bills (SB 738 and 739) that increase access to gas and encourage alternative energy investments for schools, hospitals and other institutions.
Connecticut’s John Betkoski, vice chairman of the Public Utilities Regulatory Authority, said there is a “real balancing act” in approaching the issue of gas conversions in his state, where only about one-fifth of the consumers use natural gas.
As part of a comprehensive state strategy that merges energy and environmental policy-making, Connecticut is moving toward conversions, while looking at macroeconomic and environmental issues. “Our state is calling upon the U.S. Environmental Protection Agency to look at standards for methane release at oil and gas wells,” said Betkoski. The state conversion plans equate to a $5 billion investment by local gas utilities.
Who pays for retail utility rates is the subject of continuing debate throughout Connecticut and elsewhere, he said.
AGL Resources Senior Vice President Bryan Batson, who runs three southern utilities, including Atlanta Gas Light, said there is a need to “get fairly pragmatic” concerning the line extension/conversion issues. “It [natural gas] is an American energy source; it is affordable, and it is a very abundant energy source…
“Then, I think it comes back to each individual state understanding what is best for its utilities and its consumers. There is no cookie-cutter approach that is perfect for every state, and each [regulatory] commission is unique. But in the end the customers are paying the bill, and I never want my customers paying more than they can afford. I think with the supply we have now, it is much, much more affordable.”
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