SoCalGas wants a lifeline to stay in business — suing California is not the answer.
- Aug 27, 2020 9:54 pm GMT
By Michael Colvin
Earlier this month, the largest gas utility in the country filed a lawsuit against the state of California for its efforts to reduce greenhouse gas emissions. Southern California Gas Company claims in its suit that the California Energy Commission has not properly considered what role natural gas can play in a clean energy future.
It is a pretty bold move from SoCalGas — the company that supplies a fossil fuel that inherently runs counter the long-term benefit of the environment, and was responsible for the massive 2015 Aliso Canyon gas leak that for months on end sent nearly a hundred thousand tons of potent methane gas into the atmosphere.
This is a spurious argument aimed at advancing the false notion that gas utilities should continue to provide customers with gas, whether they want it or not.
Why is this happening?
Every four years, California reassess its energy strategy to “maximize the benefits obtained from natural gas as an energy resource.” EDF supported the bill creating this effort, and continues to advocate for new ways for gas utilities to further reduce carbon emissions. Now that California has a new goal to make its energy system carbon neutral — the assessment of natural gas will look a lot different.
From the 1990s-2000s natural gas was a cleaner alternative to the state’s coal-fired power generation. Natural gas is often termed as a “bridge fuel” because it was meant to help ease the transition from dirty power to clean power. We are almost at the other end of that bridge. Ironically, it was events like the massive leak at the Aliso Canyon underground storage facility that acted as a wake-up call to the state that natural gas-fired generation is not a viable long-term solution and motivated our accelerated pace.
At the same time, multiple scientific studies reveal the methane leak rate of natural gas production is so high, it is no longer responsible for it to be considered a primary way to generate electricity. California is phasing out natural gas power plants, as we have demonstrated that we can cost-effectively decarbonize our electric grid.
California intends to use this clean electric grid to further decarbonize other parts of the economy, including our homes and buildings. Gas has been used for services like residential space heating, water heating and cooking. But enough technology now exists that the state can offer new programs to cost-effectively switch to electric counterparts, leaving zero fossil fuel-based energy in the home.
As a result, fewer customers will be connected to the gas system — which means fewer customers will be left to pay for the same amount of infrastructure. Meanwhile, over the last decade, the state increased spending on the gas system to repair dangerous gas leaks, resulting in a higher price tag for gas customers. These rapidly increasing infrastructure costs are further motivating customers to electrify and to leave the natural gas system. The projected costs are so high that the analysis by the California Energy Commission (the same analysis subject in the lawsuit) indicates that it may be prudent to only have electricity power homes. The California Energy Commission is actively considering making the state’s building code for all new buildings to be all-electric and not allow new gas hook-ups. Pacific Gas and Electric Company, the other main gas provider in California, preliminarily supports this concept. PG&E states that they want to “avoid investments in new gas assets that might later prove underutilized” — aligning their investments with the state’s long term decarbonization policy vision.
Combine this potential statewide move with the over two dozen jurisdictions in California that have already moved to ban gas in some form and that adds up to a very nervous gas company in Southern California.
SoCalGas has taken issue with the Energy Commission’s analysis — arguing their pipelines can be part of the clean energy transition, particularly if used to transport cleaner energy options like biomethane or eventually hydrogen. Last year, SoCalGas introduced an aggressive voluntary target to have 20% of its supply come from one of these cleaner fuels by the end of the decade.
A December 2019 analysis sponsored by the American Gas Foundation indicates there simply is not enough high integrity, environmentally responsible biomethane available to meet the gas demand on this timeframe. More generally, the biogases are also more expensive and may be unaffordable if introduced into the pipeline too quickly.
SoCalGas wants to stay in business, but these fuels need more time to develop and to decrease in price. SoCalGas is worried that if customers leave the system, they will not come back. And an all-electric code for new buildings is a key step on the pathway to decarbonizing existing buildings.
So that brings us back to the lawsuit. SoCalGas’ action is misguided. Suing a state agency to keep things as they are is not a way to create customer choice. It is inevitable that tomorrow’s natural gas system will look a lot different than the system we have today. Rather than suing the state, SoCalGas should come to the table prepared to offer clean alternatives for customers. The company has already made the public commitments — now it needs to honor them. This may require changes to their business model in order to better align shareholder interests with state policy. EDF will stand ready to help them do so.
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