A utility report on the future of natural gas in Oregon is drawing the ire of a customer watchdog group.
Members of the Citizens Utility Board, which represents thousands of Oregon customers, said the report depicting future rate scenarios fails to meet Oregon’s climate goals or take customers fully into account.
At issue is the state’s climate goal of reducing greenhouse gas emissions by 90% over the next three decades. At least 26% of that reduction will have to come from the natural gas utilities. Those reductions could lead to higher rates for Oregonians across the state who rely on natural gas for heating, cooling and other uses as gas companies switch to renewable fuel.
The Department of Environmental Quality has set utility emission targets, and in response, the Public Utility Commission produced its Natural Gas Fact Finding Draft Report in April, which analyzes how those targets will affect the natural gas industry and customers.
The public commission, a governor-appointed group of three that regulates private utility rates to protect customers from unfair pricing, will use the report to determine what regulatory tools it can use to make sure prices don’t skyrocket and that the companies are investing customer money wisely.
The report will be discussed in two public meetings on Tuesday, July 12.
Big emission producer
Natural gas is 80% methane, which traps about 30 times as much heat as carbon dioxide, according to the Environmental Protection Agency. One-third of global warming today is due to human-caused emissions of methane, according to the agency, and nearly 40% of Oregon’s carbon dioxide emissions each year come from the burning of natural gas, according to the U.S. Energy Information Administration.
For its report, the Public Utility Commission asked for input from the state’s three largest, private natural gas utilities: NW Natural, Avista Utilities and Cascade Natural Gas. While the three companies have committed to meeting the emissions targets, they are also challenging the authority of the state Department of Environmental Quality to regulate greenhouse gasses under its plan, the Climate Protection Program.
The commission also asked for input from the public and the Citizens Utilities Board, which was established in 1984 by Oregon voters to represent private utility customers in the state. The board is made up of 15 members – three from each of Oregon’s five congressional districts.
‘We didn’t really get either’
When the 58-page report was released, Bob Jenks, executive director of the Citizens Utility Board, was surprised. He said it lacked the bulk of submitted public comment and considered adding more natural gas customers and expanding infrastructure for natural gas rather than reducing use.
“We expected identification of the risks and a road map for how we address those risks,” he said. The board wants more analysis of the risks of allowing the natural gas utilities to expand and missing the state’s climate targets. It also wants a plan from the commission on ensuring that customers aren’t stuck with natural gas appliances and infrastructure that they can’t use in the future, and with rates that they can’t afford while the utilities transition.
“I guess we didn’t really get either,” Jenks said.
The report largely summarized proposals by the three gas utilities for what they’d have to do to comply with DEQ’s goals under various scenarios. Each came up with projections on how rates would affect customers, how they’d use more renewable natural gas and how fast they could transition to meet emission goals. Renewable natural gas is methane gas that is recycled and used as energy as opposed to natural gas obtained from drilling.
“It didn’t say whether PUC staff saw them as credible proposals,” Jenks said of the utilities’ analysis. “What facts did they actually find?”
The commission recommended that natural gas utilities work urgently to reduce emissions while also suggesting that further planning and investigation was needed.
“We wasted a year on this,” he said. “Doing another investigation only makes sense if the commission is committed to solving this and protecting customers.”
Jenks expected the report to propose concrete suggestions, such as forbidding the utilities to offer subsidies to new home and building owners to get connected to natural gas. These subsidies hide the real costs of expanding the system, Jenks said.
“The subsidies are set by the commission. They could eliminate them or phase them out,” he said. The owner of a new home or building would have to pay full-price to be connected, and might consider alternatives to natural gas.
“We shouldn’t be subsidizing something that harms us,” Jenks said.
He said the report did not go far enough to propose the level of decarbonization needed to meet the state’s climate goals, and that much of the feedback from stakeholders who were not affiliated with the natural gas companies was left out of the report.
“This was one of the most wide open dockets as far as the number of people who participated,” he said. “This had all kinds of representation from groups concerned about the climate, who were low income. You don’t see a whole lot of that in these types of discussions reflected very much and they deserve some recognition that the PUC did something with those comments.”
Kandi Young, spokesperson for the Public Utility Commission, wrote in an email that “the PUC is carefully reviewing CUB’s comments on the draft report, particularly those that seek a more accurate and comprehensive discussion of stakeholder comments.”
Young said the report was intended to inform and “set the stage for the commission to decide when and how to consider the many issues that inform the future of natural gas in Oregon.”
The commission does not dictate emissions from providers, but it is responsible for protecting consumers and making sure their money is spent efficiently.
Jenks felt the commission needed to provide more information on the impact of the utilities losing customers. Those who can afford to electrify will, he said, and the people who cannot switch their home or building to electric systems will be stuck with natural gas at higher rates.
The modeling also shows real risks to gas customers. The modeling points to significant rate increases which could drive some customers – those who can afford it –to electrify their homes, leaving behind the set of customers who cannot afford to electrify.
Of renewable natural gas, both the commission and Jenks said it’s too uncertain to bank on. The infrastructure needed to make large-scale renewable natural gas scalable for the state is expensive and still developing.
“If they can pull it off, fine, but if pulling it off is so much more expensive than electric, then the best thing to do is to stop,” Jenks said. “We’re in a hole. Stop digging. It doesn’t mean you can’t dig later on. But until we know it makes sense, you don’t keep making things worse, if you don’t think you can solve the problem.”
Calling for more public input
The board is trying to get utilities customers and members of the public to attend two public meetings with the Public Utilities Commission and ask that they make major revisions to the report and pause any expansion of natural gas infrastructure in the state.
The final report will be published August 12 and a discussion of next steps will happen at the end of August, according to the commission.
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