A new task force of state regulators intends to examine issues around the inability of some communities to have natural gas service, and one of the co-chairs of the task force, John Coleman of the Pennsylvania Public Utility Commission (PUC), believes his state has some good examples that provide lessons for his colleagues.
The task force was announced on April 17, and in an April 20 interview, Coleman provided some insights on his goals and lessons learned from his experience at the PUC and on the Gas Committee of the National Association of Regulatory Utility Commissioners (NARUC). Coleman is co-chair of the task force with Brandon Presley, chairman of the Mississippi Public Service Commission.
The task force is charged with developing best practices and recommendations regarding natural gas service for underserved or unserved areas of the country, such as rural communities where the cost of extending gas distribution infrastructure can be prohibitive. The group, which will have about 15 members, will analyze the potential demand for gas service infrastructure and identify alternative or unconventional approaches to reaching those unserved or underserved areas, NARUC said in a statement.
In Pennsylvania, Coleman related how the low cost of gas and access to the Marcellus Shale has helped companies utilize natural gas in new ways, such as a Proctor & Gamble plant that almost closed until it added natural gas for a production facility and has continued operating.
“I think Pennsylvania is uniquely positioned” to help other states use their natural resources or ratemaking mechanisms to expand gas use and save consumers money compared with costs in communities that have to rely on bottled propane, heating oil or other more expensive fuels, Coleman said. On-bill financing, where utility customers can help pay for service expansions through their monthly bill payments is one tool regulators in other states can consider, he said.
“There are success stories,” but sometimes it takes negotiations to reach a solution, Coleman said, recounting how a new gas line to be added to replace a coal-fired power plant in the middle of a city faced residential opposition. “I thought it would be a no-brainer” that residents would support gas service compared with trucks hauling coal to the plant and the emissions impact.
However, the distribution line to serve the plant was planned to go through a residential neighborhood, and that neighborhood did not want a new pipeline to be added, so the local distribution company rerouted the distribution line to reach the plant from a different path.
The task force will focus on distribution systems and end-use customers in states and not interstate pipeline facilities, but some of the discussions could touch on larger pipeline issues. “We’ve seen opposition” on a smaller scale than what interstate pipelines have encountered at the national level, Coleman said.
In one instance, a municipality tried to have a gas company pay for community improvement projects in exchange for permission to extend a gas line, he said, declining to identify the municipality. The municipality viewed a gas service expansion as a source of money for public works projects. “The citizens were able to convince the town council to not do that,” and the project is being developed, he said.
The lack of gas service in some areas can be associated with difficult topography or geographic constraints, but it may also be attributed to philosophical differences with fossil fuels or economic issues that make gas service too expensive, Coleman added. He does not expect the task force to address upstream production issues. It will focus on understanding any barriers to enhanced access to natural gas, how to overcome those barriers and best practices for regulators.
In Mississippi in late 2016, the PSC approved Atmos Energy’s plan to extend gas service to the White Oak community in Tunica County following Presley’s push to bring natural gas service to unserved areas of the state. That project, with the potential to serve 215 customers, was made possible through cooperation from the Tunica County Board of Supervisors, the PSC said. The Board of Supervisors agreed to invest almost $200,000 in the $485,000 project, which provided a good lesson on state and local cooperation, Presley said in a 12/13/16 statement.
Upon being named co-chair of the NARUC task force, Presley said he has advocated for natural gas service expansion in Mississippi. “I have seen first-hand how expanding natural gas service can lower the cost of living for Mississippians. It is an honor to help lead this effort to look at ways to grow America’s energy infrastructure and make our nation more energy independent,” he said in an April 17 statement through the PSC.
Coleman and Presley thanked NARUC President Robert Powelson for tapping them to lead the task force. Powelson and the NARUC executive committee established the task force, with North Dakota Commissioner Julie Fedorchak serving as vice-chair.
During its winter meetings in Washington, NARUC passed a resolution to ensure state regulatory members continue to educate themselves on issues around the appropriateness of expedited review of interstate natural gas pipeline projects, NARUC said in an April 17 statement. Previous resolutions noted the need to explore alternative rate recovery mechanisms to accelerate the modernization, replacement and expansion of gas pipeline systems.
During the eight-month term of the task force, the group’s main focus will be to prepare an analytical report that will: study current access, expansion and service extension policies for underserved and unserved areas; examine the need for access and expansion including case studies and review of the barriers and obstacles to such access; recommend potential mechanisms to address the benefits and opportunities for access and expansion; and compile a national best practices collection on natural gas access and expansion to underserved and unserved areas.
In December, the task force is expected to provide a report or presentation to the NARUC board, Coleman said in the interview.
He said NARUC is agnostic about fuel sources and does not view the task force as showing favoritism for natural gas service compared with other fuels, renewable resources or energy efficiency efforts. Consumers have seen cost reductions thanks to the plentiful gas resource base in some states and the task force hopes to bring that value to more consumers, he said.
Coleman mentioned that the PUC a few years ago issued a certificate for a new gas company to serve parts of northeast Pennsylvania in Susquehanna County. Leatherstocking Gas Co. LLC started out as a partnership between Corning Natural Gas Corp. and Mirabito Holdings Inc. to take gas service for a few industrial customers and expand it to hospitals, schools and other parts of the communities through a new distribution network. “They have a great story to tell” about expanding the abundant gas resource base in the region for the benefit of local consumers, Coleman said.
Whether such success stories can be replicated in other areas will be the focus of the task force. Other members of state commissions that have been invited to serve on the task force are: Ken Anderson of Texas, Stephen Bloom of Oregon, Julie Brown of Florida, Robert Hayden of Massachusetts, Kim O’Guinn of Arkansas, Norman Saari of Michigan, Dianne Solomon of New Jersey, Nick Wagner of Iowa, and Dallas Winslow of Delaware. There are three vacant positions to be filled at the discretion of Powelson.
Stan Wise of Georgia, chairman of the NARUC gas committee, and Diane Burman of New York, co-vice chair of the gas committee, will serve as liaisons to the task force, NARUC said.
By Tom Tiernan TTiernan@fosterreport.com
This article appears as published in The Foster Report No. 3145, issued April 21, 2017
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