Oregon Report on Gas Utilities Highlights Risks to Customers
Posted on February 14, 2023 by Bob Jenks
Tags, Energy, General Interest
Customers of gas utilities are at risk as gas utilities attempt to reduce their climate impact according to a new report released by state utility regulators.
Oregon has adopted climate regulations that require Oregon’s three gas utilities to reduce their greenhouse gas (GHG) emissions by 50% by 2035 and 90% by 2050. The Oregon Public Utility Commission found that the cost and risks of decarbonization could be substantial. But regulators have tools to help manage that risk.
Investigating the Future of Natural Gas (Methane)
Natural gas is methane, a potent greenhouse gas. Regulators found that gas utilities will need to take significant action to reduce emissions in the near term. This will likely increase the cost of gas for customers as gas utilities spend more to meet climate regulation.
This investigation process began in June 2021. The Public Utility Commission asked gas utilities to provide a plan for how they will comply with the emissions reduction targets. Community and customer stakeholders were given the opportunity to review the compliance plans and provide comments. The final report was released in February 2023.
The Final Report: Reducing Customer Risk
Utilities Will Try to Pass Costs of Reducing Emissions to Customers
The final report from regulators recognizes that gas utilities’ compliance with climate regulation will place costs on customers. The greatest burden will likely fall on customers with a high energy burden. All stakeholders were concerned about the impact on low-income and other at-risk customers.
Going Electric Means Fewer Gas Customers, Higher Bills for Those Remaining
Beyond bill pressure from increasing utility costs, there is a risk of customers leaving the gas system by switching their space heat, hot water, and cooking to electricity.
The report recognizes that this could accelerate cost pressures by having a smaller customer base paying for a larger share of the system. These increasing bills could, in turn, cause more customers to leave the system. According to the report, this also “calls into question annual expansion of the gas system, as each new customer not only brings increased [Climate Protection Plan] compliance obligations but also more gas infrastructure for future ratepayers to cover.”
Reducing Risk Through Energy Efficiency
One tool that could help customers is the US Inflation Reduction Act subsidies for low-to-moderate income households for heat pumps for space and water heating. The report suggests that a program should be implemented to target the gas companies’ most energy-burdened customers allowing them to get off the gas system before prices increase.
The report highlights the need to look at the impact of electrification on customers of both gas and electric utilities. State regulators have hired two consultants to help explore this issue.
A Step in the Right Direction
Last April, regulators released a draft report from this investigation to much criticism from stakeholders. CUB was critical of that report for summarizing utilities’ proposed compliance scenarios but offering few conclusions. This new report is a big improvement. It details many of the risks to customers from the gas utilities’ attempts to comply and provides suggestions and tools that can help mitigate the risks.
The final report can be found on the Public Utility Commission website.
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04/06/23 | 0 Comments | Oregon Report on Gas Utilities Highlights Risks to Customers