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A program designed to expand Connecticut’s natural gas distribution network is coming under scrutiny due to soaring costs and declining demand.
The program, which is subsidized by ratepayers, offers incentives for homeowners to switch from oil to gas heat. It was established under legislation passed in 2013 when gas was cheaper and less was known about its climate impacts. Regulatory officials are now exploring ways to modify the program while environmental advocates call for it to be eliminated altogether.
The idea of natural gas as a cleaner alternative “has been thoroughly debunked as we’ve learned just how damaging methane is to the climate,” said Shannon Laun, a Connecticut staff attorney for the Conservation Law Foundation. “It’s now clear that we should not be converting people from oil to gas; we should be converting people to electric heat pumps, which are far more efficient.”
Less interest, higher costs
As approved by the state Public Utility Regulatory Authority, known as PURA, the plan originally called for the conversion of roughly 280,000 customers over a 10-year period. The three natural gas distribution companies serving Connecticut use outreach, marketing materials and incentives to persuade new customers to sign on.
Late last year, PURA opened a proceeding to review the expansion plan after determining that the average cost to connect new gas services has increased dramatically.
In its decision announcing the proceeding, regulators said that between 2014 and 2019, average costs per new service and new customer tripled for Eversource, and doubled for Connecticut Natural Gas and Southern Connecticut Natural Gas, both owned by Avangrid.
At the same time, the number of new customers and services added annually has declined, as the price disparity between oil and gas has narrowed. Fewer than 10,000 new customers were added in 2019, compared to more than 13,000 in 2016. The program had resulted in roughly 82,000 gas conversions overall as of the end of 2019.
“The companies have consistently fallen far short of the customer conversion targets,” Laun said. “And the cost of adding customers has gone up.”
Brenda Watson, executive director of Operation Fuel, which provides energy and utility assistance to low-income households, said she believes the program has added to the burden on these households, both due to rising costs and because of the health impacts of fossil fuel systems on indoor air quality.
When the program was first conceived, “I saw the conversion to gas as a good thing. Oil prices were nearing $4 a gallon and we were receiving up to 150 applications a day for fuel assistance,” Watson said. “But now I have a different take on the issue. It’s not good for the population we serve.”
Dispute over program’s future
Operation Fuel and the Conservation Law Foundation are both involved in a working group established by regulators to discuss, along with the gas companies, various aspects of the program and possible modifications. One point of dispute is whether the expansion program automatically ends in 2023 if it is not reauthorized.
One of the questions PURA has posed to the companies is whether they agree that the plan was never intended to extend beyond 2023. Eversource replied that the legislation authorizing the program requires a 10-year plan, but “does not specify an end date for natural gas infrastructure expansion.”
Eversource spokesman Mitch Gross said the company “fully supports” decarbonizing the natural gas system, but that it will take time.
“It is essential that the transition to a decarbonized energy future be done in tandem with ensuring that customers continue to have access to safe, reliable and affordable energy,” he said.
Southern Connecticut Gas argued that continuing the program, with modifications, beyond 2023 “will not only help with the carbon emissions of the state, but will continue to provide benefits to current ratepayers and prospective customers.”
Avangrid spokesperson Susan Millerick said continuing to convert higher-emitting fuels to gas “will provide meaningful greenhouse gas reductions.” She noted that the company is also “harnessing the power of innovation and technological developments — such as hydrogen, renewable natural gas and the electrification of heating and cooling systems — to further reduce emissions and build a cleaner, greener future.”
Environmental advocates argue that an extension of the natural gas expansion plan would be bad policy, and are calling for a swift wind-down.
“The gas expansion program should be ended as soon as possible, and under no circumstances should the program be extended beyond its original term,” said the Connecticut Green Building Council’s board of directors in comments submitted to PURA. “The program is outdated, contrary to Connecticut’s climate commitments, costly for ratepayers, and only serves to lock the state into burning more fossil fuels in the coming years.”
The building council called on regulators to open a docket to explore ways to retire the gas system “in a just and equitable manner.”
PURA’s Office of Education, Outreach and Enforcement is to submit a report summarizing the working group’s findings by December 10.
Meanwhile, in a separate proceeding, PURA is investigating the marketing tactics used by Eversource to promote the conversion program. Attorney General William Tong and the Office of Consumer Counsel requested the investigation in August after a Hartford Courant columnist wrote about misleading marketing materials he received at his home in South Windsor.
The mailers said his street was scheduled to be permanently paved, and he had a limited time to sign up to connect to the gas line. After that, the mailer said, it would be several years before the pavement could be opened up again.
It turned out his road was not scheduled for paving.
Tong called the “high-pressure” marketing tactics “nothing short of alarming.” Eversource has said the materials were mistakenly sent to about 70 wrong addresses, and that there was no deceptive intent.