Cascade Gas Has Not Shown It Can Meet Climate Regulations

Oregon is moving forward in reducing climate pollution from our energy systems. Gas utilities need clear plans to show how they will meet regulations without skyrocketing costs for customers.

Cascade, Oregon’s third largest gas utility, serves gas customers in southern and eastern Oregon. In late 2023, the utility filed its long-term resource plan with state utility regulators. This plan will have long-lasting impacts on meeting state climate goals. It will also have a major impact on future customer bills.

Utilities file these plans every two years. The plans look at projections of future energy use from customers. The utility analyzes the best available resources to meet those needs and the activities required to secure those resources. Creating these plans requires vast amounts of economic modeling and analysis.

Editor’s Note: This blog refers to “renewable natural gas,” a term used by utilities for methane gas that comes from sources other than fossil fuels. The term “renewable” is frequently criticized by environmental groups. Although renewable natural gas is not from fossil fuels, it is still methane, which is a powerful greenhouse gas.

CUB, Regulators, and Climate Organizations Share Concerns

A crucial question Cascade needs to address in its plan is how it is going to meet state climate regulations. The Climate Protection Plan requires the utility to reduce emissions by 90% by 2050.

Cascade uses unrealistic assumptions to suggest it can continue to grow its gas systems while slashing its carbon emissions. CUB is challenging Cascade’s assumptions and argues growing its customer base without a reasonable plan will cause unfair, high costs for customers. (Read CUB’s full comments to the Public Utility Commission.)

CUB’s Concerns:

• Cascade has not shown how it can realistically meet climate regulations over the next 20 years
• Cascade makes dangerous assumptions about the availability and affordability of new unapproved and undeveloped fuels
• Cascade is unfairly prioritizing highly expensive new fuels and its profit over the best choices for customers
• Cascade is not minimizing costs in its plan to reduce emissions
• Cascade is not fairly considering clean energy options like converting appliances from gas to high-efficiency electric and energy efficiency measures

Customers could face increasingly higher bills because of unreasonable and unfair planning.
The staff of the Public Utility Commission also raised significant concerns about Cascade’s plan. These criticisms are similar to those made with the plans from NW Natural and Avista over the past year.

Read More:
NW Natural Has Not Shown it Can Meet Climate Regulations (CUB Blog)
Avista Gas Has Not Shown it Can Meet Climate Regulations (CUB Blog)

Cascade Has Not Shown It Can Reasonably Meet Climate Regulations

CUB and Commission Staff were both critical of Cascade’s long-term Climate Protection Program compliance plan. In its resource planning, the gas utility has failed to show a feasible plan for reducing emissions.

Renewable Natural Gas: Cascade unreasonably and unfairly assumes low costs for renewable natural gas. If the gas utility makes long-term investments in renewable natural gas and it is more expensive than they projected, customers will pay the price. CUB has seen similar unrealistic assumptions from the state’s other gas utilities, as well.

Hydrogen: Cascade also assumes a potential new fuel option, hydrogen blending, will be tested, approved and available to Cascade at low cost in just four years. This will be a massive undertaking as this infrastructure does not currently exist in Oregon. The only plan to build a hydrogen blending facility in Oregon was scrapped after significant community pushback in Eugene. It is also unclear how safe this fuel is for customers. Beyond these challenges, a commercial market for renewable hydrogen does not exist yet.

Read more: What’s the Deal with Hydrogen? (CUB Blog)

Cascade’s failure to plan for climate regulation is dangerous for customers. It proposes expensive, experimental fuels that are not available either widely or at all. It does not fairly consider options to move customers to high-efficiency electric appliances. And, most importantly, the plan could be incredibly costly for customers.

Cascade is Not Minimizing Cost to Customers, Underestimating the Cost of Fuels

CUB’s biggest concern is that Cascade’s analysis significantly underestimates the cost of its plan. Additionally, Cascade’s plan relies heavily on renewable natural gas, which is much more expensive than traditional methane.

There are two options the company has for getting this fuel: buying it on the market and building facilities to produce it. Generally, CUB believes purchasing renewable natural gas on the market is the better option at this time. However, buying on the market is still incredibly expensive and not widely available. CUB expects renewable natural gas to cost about eight times as much as fossil gas if not more.

It is not clear to CUB to what extent Cascade plans on building facilities to produce renewable methane for Oregon emissions compliance. These investments would add risk and potentially long-term costs for customers.

CUB raised a similar issue in NW Natural’s and Avista’s resource planning in the last year. Regulators at the Public Utility Commission ultimately agreed with CUB’s concerns in the NW Natural case. The Commission rejected NW Natural’s long-term plan finding that the utility did not adequately assess cost and risk to customers. They also found that NW Natural did not provide an accurate analysis of the cost of renewable natural gas or other non-fossil gas options.

Cascade’s analysis follows similar pitfalls and unrealistic assumptions. CUB is pushing the utility to justify its price models. Without a reasonable plan, customers could end up paying disastrously high gas bills in the future.

Cascade Must Expand Alternatives to Expensive Renewable Natural Gas

Cascade greatly overestimates the potential of renewable natural gas and hydrogen blending. The utility’s focus on these resources ignores less risky and potentially lower-cost options at the risk of customers.

Electrification, replacing gas appliances with high-efficiency electric appliances, is an option gas utilities must consider. Cascade referenced this as a resource option but has not selected it as a pathway for reducing emissions. CUB raised similar concerns with NW Natural’s plan and state regulators agreed.

Cascade is also planning to use the emissions offset program allowed by the Climate Protection Program but will not be using the maximum allowable amount. The program allows gas utilities to offset emissions by funding community projects. CUB is concerned that Cascade will only use a fraction of the total amount of Community Climate Investments allowed. We worry it will instead use more renewable natural gas, costing customers more.

Community Climate Investments are expected to be significantly less expensive than investments in risky and untested fuel sources. The credits are currently priced at $0.65 per therm (gas unit), compared to Cascade’s projected $1.30 per therm of renewable natural gas. Cascade projects renewable natural gas will cost $2.50 per therm in a few years, making the comparison even more stark.

CUB is encouraging the utility to maximize these credits for meeting climate regulation and benefitting communities. One example of a Community Climate Investment project would be installing highly efficient electric heat pumps (home heating/cooling) in low-income households. These projects are meant to save customers money while reducing emissions.

Cascade’s Analysis Works Against Customers’ Interests

The process of creating these resource plans is long, complicated, and full of intensive analysis. Many analysis methods, however, are not specifically laid out by regulators. This allows for important planning flexibility. But it also allows flexibility in analysis methods that can benefit utilities, not customers. In its proposal, Cascade presented a biased analysis that supports its corporate interests.

CUB is concerned that Cascade laid out many different resource scenarios but biased the selection of options. The utility’s plan favors options that keep customers tied to the gas system and support its current investment strategy and profits. As a result, Cascade came up with an analysis that likely does not present the best pathway for customers.

Through selective projections, the utility has been able to downplay the risk to customers. Cascade’s analysis is not just risky, it’s dangerous. This could have massive impacts on customers, who will have to pay even higher costs when the utility is wrong.

CUB Continues to Push Back

Cascade, CUB, other advocates, and Public Utility Commission analysts have several more months to weigh in on Cascade’s plan. The Commission will decide in early 2024 based on all the analyses presented.

This decision is important because anything approved can more easily be put into customers’ bills down the line. It’s worth noting that approval is not a guarantee that customers will pay for investments. Cascade will still have to come back to regulators and argue why customers should have to cover costs down the line. When that happens, CUB will continue to advocate for customers’ best interests.

CUB is hopeful that regulators will uphold customers’ best interests. The Commission recently sided with CUB’s analysis of NW Natural’s resource plan which followed similar pitfalls to Cascade’s. We will continue to push for strong consumer protections and affordable approaches to addressing climate change.

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