As Connecticut regulators consider reforms to a utility-run program that incentivizes homeowners to convert to natural gas heating, the state Office of Consumer Counsel is calling for an end to the program.
In testimony submitted this month to the state Public Utility Regulatory Authority, the consumer advocate said the predicted benefits from the ratepayer-subsidized program “have simply failed to materialize, and ratepayers are now funding investments that are likely to become stranded assets in light of the state’s climate and clean energy goals.”
The program, established under legislation passed in 2013, is approved through 2023. The consumer advocate said the program should end at that 10-year mark, “if not sooner.”
Regulators opened a proceeding to review the program more than a year ago after concluding that the average cost to connect new gas services has increased dramatically. In addition, the number of homeowners choosing to convert has dropped off, as the cost differential between natural gas and heating oil has narrowed.
The gas distribution companies use outreach, marketing materials, and incentives to persuade homeowners to switch. But the regulatory authority found that between 2014 and 2019, the average costs per new service and new customer doubled for Connecticut Natural Gas and Southern Connecticut Natural Gas, and tripled for Eversource.
Numerous environmental advocates are calling on regulators to halt the program, which was established when gas was considerably cheaper than oil and less was known about its methane-related climate impacts. Environmental groups argue that the expansion of a distribution network for fossil fuels is now at odds with Connecticut’s climate and clean energy goals.
“Given the fact that the state is not on target to meet our statutory greenhouse gas reduction obligations, and the changed state policy priorities since 2013 to focus on the beneficial electrification of the building sector rather than natural gas as a climate solution, our position would be to end the program at the soonest opportunity,” said Charles Rothenberger, climate and energy attorney for Save the Sound.
The consumer counsel’s recommendations largely echo the conclusions of the regulatory authority’s own Office of Education, Outreach and Enforcement in a report submitted in December. That report summed up the findings of a working group of stakeholders who met numerous times to discuss the plan.
The office advised that “the promotion of natural gas is no longer justified as a tool to meet greenhouse gas reduction targets.” The largest impact natural gas could provide toward emissions reductions in the state has already been realized through conversions in the electricity generation sector, the largest user of natural gas, the report said.
“There may be benefits to allowing gas conversions,” the outreach office concluded, “but those benefits are not substantial enough to promote gas conversion at the level previously implemented under the plan.”
They recommended shifting away from the focus on converting customers to gas, to a “balance” between making gas an affordable choice while also protecting ratepayers.
“In this sense, the program should ‘downsize’ immediately,” and end in 2023, the report advised.
At the annual environmental summit hosted on Jan. 25 by the Connecticut League of Conservation Voters, Samantha Dynowski, state director for Sierra Club Connecticut, called on lawmakers to direct the regulatory authority to explore how the state can make an “orderly” transition away from the use of natural gas to electrification. The next legislative session opens Feb. 9.
“We can not be expanding the use of gas right now — we need to be moving toward renewables,” Dynowski said during the virtual summit. The expansion plan “really holds us back from doing that, and it’s costing ratepayers millions of dollars.”
Rothenberger said a number of other states are already exploring plans to transition away from gas, including Massachusetts, California, Oregon and Washington.
In a separate proceeding investigating how Eversource has marketed the gas expansion program, the regulatory authority recently assessed a civil penalty of $1,797,000 against the company for failure to include the necessary disclosures in their advertisements. State law requires them to disclose who is paying for the advertisements — ratepayers, shareholders, or both.
The authority ordered the company to direct $1.75 million of the penalty to Operation Fuel to provide financial assistance to households having trouble paying their utility bills. The remainder is to go to the state treasury.