Webinar Recap: Future of Gas 101 Series

Once touted as a “bridge fuel” by the fossil fuel industry and its proponents, the reality is that natural gas infrastructure locks the U.S. into future emissions when cleaner alternatives exist. The future of natural gas is one of the foremost concerns for climate and clean energy actors, and states play a crucial role in shaping and regulating which energy sources they utilize.

‘Future of gas’ (FOG) policies and proceedings seek to plan and implement the regulatory framework needed to halt the expansion of gas infrastructure, decarbonize our buildings, invest in efficiency, and more — all while protecting ratepayers and securing long-term energy affordability.

We invited a panel of experts for a three-part webinar series on future of gas policy and the opportunities it presents for state climate actors:

In the first webinar of our FOG 101 series, we invited experts to dive into the basics of FOG policies and proceedings, including what legislative and regulatory mechanisms exist, which stakeholders are involved, and what the outcomes of these processes could look like. Our expert lineup included:

• Kristin George Bagdanov, Senior Policy Research Manager at Building Decarbonization Coalition
• Juan-Pablo Velez, Executive Director at Switchbox

Future of Gas Basics: The What and the Why

Kristin George Bagdanov, Building Decarbonization Coalition

Learn more by watching the webinar at 05:30

• There has been a growing consensus about what the future of gas should be and how we should get there, with 15 FOG proceedings opened in states across the country since 2019.
• Capital expenditure (CapEx) has accelerated while customers and gas consumption have stagnated, leading to higher gas bills for remaining customers and higher stranded asset risk for utilities. Leading reasons for this acceleration are overinvestment in the current system and subsidies for new infrastructure.
• A managed gas transition is a comprehensive strategy involving regulatory oversight and stakeholder collaboration to phase out pipeline-delivered methane gas while ensuring safety, reliability, and affordability.
• FOG proceedings are commonly initiated through a Public Utilities Commission (PUC) order, a legislative directive, a petition from an Attorney General, or an Executive Order.
• FOG proceedings can result in reforms for gas line extension allowances (LEAs), depreciation studies exploring risk of stranded assets, reporting requirements for utilities, transition-related frameworks and plans, and new gas system data, as well as follow-on proceedings.

Explore related resources from BDC, including quarterly momentum reports, future of gas reports, and other research.

Future of Gas Policies and Strategy

Juan-Pablo Velez, Switchbox

Learn more by watching the webinar at 27:35

• There are three main types of FOG policies, which aim to: (1) stop the growth of the gas system; (2) avoid replacements of existing infrastructure; and (3) facilitate an equitably managed shut-down of the rest of the system.
• The buildout and replacement of gas system infrastructure is subsidized for utilities, with costs borne by ratepayers on their gas bills.
• To stop the growth of the gas systems, policies may eliminate line extension allowances (LEAs) or require all-electric new construction, such as through New York’s enacted legislation.
• To avoid replacements of existing gas infrastructure, policies may promote non-pipeline alternatives (NPAs) when gas lines need replacing, such as through zonal electrification, relining the pipe to fix leaks, or repairing only the segments of pipe that are leaking. Policies may also amend the Obligation to Serve (OTS) to protect the right to heat, rather than the right to have gas service.
• To shut down the rest of the gas system, we either undergo planned neighborhood-scale electrification, such as through thermal energy networks (TENs) or “scattershot” electrification, where individual households choose to electrify their homes.

In the second webinar of our FOG 101 series, we invited advocates and experts to dive into case studies from Minnesota and Illinois, and share lessons learned from their states’ ongoing FOG policies and proceedings. Our expert lineup included:

• • Natalie Cook, Coalition Manager at Clean Heat Minnesota
  • Madeline Semanisin, Policy Director, Illinois, Climate & Energy at NRDC

FOG in Minnesota: Advocacy and Early Outcomes

Natalie Cook, Clean Heat Minnesota

Learn more by watching the webinar at 5:02

• Emissions from gas are increasing in Minnesota, with about two-thirds of households connected to the gas system. Additionally, the state’s utilities are a mix of investor-owned utilities (IOUs), municipal utilities, and cooperatives, and the PUC is composed of five Governor-appointed commissioners.
• In 2021, the Natural Gas Innovation Act mandated that the PUC open two dockets: one for FOG, and another for utilities to pilot innovative resources to contribute to meeting the state’s GHG reduction goals. Separately, a Gas Integrated Resource Plans framework was created to develop long-term planning for gas utilities.
• Clean Heat Minnesota was established as a coalition of 40 groups working to decarbonize buildings, with representatives from city and county governments, community and faith-based groups, state and regional policy groups, and others.
• Clean Heat MN commissioned a study to model how to feasibly and equitably decarbonize buildings, the findings of which were used as technical citations for engagement with the PUC and key communications pieces for coalition members.
• Currently, the FOG Docket is considering line extension allowances (LEAs); during the public comment period, 17 of Clean Heat MN’s member organizations filed comments, over 30 community members filed individual comments, and 33 parties, including state and local governments and organizations, filed a joint letter supporting ending LEAs.

FOG in Illinois: Regulatory and Legislative Movement

Madeline Semanisin, Illinois Climate & Energy at NRDC

Learn more by watching the webinar at 25:35

• Twenty percent of Illinois’ emissions come from gas use in buildings, and the state’s gas utilities have some of the highest fixed charges in the Midwest.
• The Illinois Clean Jobs Coalition is composed of over 200 climate and environmental justice groups, healthcare professionals, labor unions, businesses, and others; one of the Coalition’s main three pillars focuses on advancing an equitable transition away from the gas system.
• The FOG process was initiated from 2023 gas rate cases, when all four IOUs filed record rate increases and advocates requested a space to discuss high-level policy decisions. The PUC responded by ordering the initiation of a FOG process, which consisted of two phases:
  • Phase 1: Neutral fact-finding, where all interested entities submitted comments on all topics relevant to FOG and decarbonizing the state’s gas distribution system.
  • Phase 2: Identification of decarbonization pathways and pilots, including legislative and regulatory solutions.
• NRDC advocated for electrification, energy efficiency, low income protections, and gas expansion limitations as part of the Pathways Working Group. They also submitted a low income home decarbonization pilot and NPA pilots as part of the Pilots Working Group.

The Coalition separately introduced the Clean and Healthy Buildings Act, which includes a 100 percent clean heat standard, a clean heat pathways study, gas system audits, biennial gas infrastructure plans, gas energy efficiency standards and programs, and equitable electrification and efficiency funding.

In the third and final event of our FOG 101 series, we invited a panel of advocates and experts for a discussion and Q&A on state-level FOG policy. Our expert lineup included:

• David Lapp, People’s Counsel for the State of Maryland
• Michael Walsh, Founding Partner at Groundwork Data
• Kristin George Bagdanov, Senior Policy Research Manager at Building Decarbonization Coalition
• Natalie Cook, Coalition Manager at Clean Heat Minnesota
• Juan-Pablo Velez, Executive Director at Switchbox

Q&A

05:25 — Speaker Introductions and Setting the Stage

28:45 — Q: How do we pay off gas infrastructure in a way that protects ratepayers? Which stakeholders are involved with paying those costs within a managed transition?

43:15 — Q: How are states approaching ratepayers are not burdened with paying for stranded assets?

50:35 — Q: How are states looking at non-pipeline alternatives (NPAs), and related cost recovery mechanisms?