An Uncertain Future For Our Gas System

On August 27th, 2020, the California Public Utilities Commission (CPUC) approved Agenda Item 27, a Biomethane Standard Interconnection Tariff (R. 13-02-008). In layman’s terms, this rulemaking created a standard process for interconnecting renewable natural gas producers with any investor-owned utility pipelines. For many citizens, this groundbreaking ruling represents a huge step towards decarbonizing our power infrastructure, since it creates an efficient process for lessening our reliance on fossil fuels in our power system.

Furthermore, there is one more significant issue. As more and more users begin to leave the gas system, fewer consumers, oftentimes low-income communities, are left to continue paying for the maintenance of the entirety of the infrastructure, which are costs that would otherwise have been supported by the customers that have switched. Similar issues arise with the Power Charge Indifference Adjustment (PCIA) exit fee which is paid by electricity users that want to buy their power from Community Choice Aggregates instead of their traditional utilities; this charge was used to supplement the transmission costs for utilities. While similar to the gas system change, the PCIA charge is triggered by users simply switching providers, rather than moving off the transmission infrastructure entirely. Thus as Gridworks, a consulting organization focusing on transforming our energy system for the future, puts it, we have two paths forward:

However, there is also different side to this debate.  Since much of the natural gas system, especially the transmission pipeline portion, is prone to leakage, it is one of the largest contributors to atmospheric pollution. Thus, some view this ruling as allowing the natural gas industry to entrench itself in an effort to stay relevant and provide different kinds of gas, contrary to calls for widespread electrification of buildings, cars, and homes. For instance, the city of Berkeley recently became the first in the nation to prohibit natural gas pipeline hookups to new buildings. Consequently, the system of pipeline infrastructure is slowly falling into disarray with an uncertain plan for its future, as communities are likely to continue to leave the system.

  1. A smart, managed path that maximizes benefits and minimizes costs for everyone
  2. An uncontrolled path is reactive and costly

The upshot of Gridworks’ analysis of these two paths is that California needs to put a plan in place to address this soon so as to avoid the inevitable scramble of supporting an inefficient and outdated gas system. Yet, this is easier said than done. In effect, this will require creation of a formal state-wide effort ensuring a sound and sensible transition off the system, while adjusting gas customer rates in a way that incentivizes the exploration of alternative external funding sources to recover gas transition costs. Unfortunately, the 2019 report by Gridworks, a leader in the energy consulting field, offers no further guidance than big picture considerations, and a grim reminder that this transformation will be one of the most challenging tasks facing us in the 2020 decade.

Wesley Clark

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