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California begins planning for transition away from natural gas

Could your gas stove become a thing of the past?

As cities in California ban natural gas appliances in new homes and the state slashes emissions, gas-powered technology will increasingly become obsolete over the next quarter-century, regulators predict.

And they’ve started to plan for that future.

This month, the California Public Utilities Commission said it will start figuring out how to “manage the state’s transition away from natural gas-fueled technologies” while ensuring safety and keeping rates steady.

Natural gas is the largest source of energy for California, providing more than a quarter of the state’s usage in 2017, according to the Energy Information Administration. It gets piped into homes and businesses for heating and cooking and also fuels power plants, ultimately supplying about 30% of the electricity on the state’s grid. So moving California away from gas would involve a huge change.

The big question is what will happen to vast networks of gas plants and pipelines if demand drops to the point that they are not financially viable. That could leave companies with little-used assets and saddle gas customers who remain with high costs.

The commission’s order said: “Planning for the impending demand reduction must be balanced with the need to ensure that existing transmission of gas is delivered in a safe and reliable manner, long-term statewide electricity procurement requirements are met, and rates are just and reasonable.”

The plan is motivated by a need to reduce greenhouse gas emissions, operational constraints in the gas industry and deadly risks like the 2010 San Bruno pipeline explosion that killed eight people, according to the commission’s order. The process formally gets under way in March and won’t produce a final decision until 2022.

David Wooley, executive director of UC Berkeley’s Center for Environmental Public Policy, said, “The writing has been on the wall as electric technology improves and gas bans sweep the state. For example, Berkeley, San Mateo, Menlo Park, San Jose and Marin County have recently either banned gas appliances in new homes or require the homes to be energy efficient if gas is used.

“It’s timely and very important. It’s likely to provide leadership not only in California but other states that are facing the same sets of issues. These issues have not been carefully thought through yet,” Wooley said. “There are huge consumer implications here because of costs, big investor risk in issues, and there are big planning implications. Everybody in the marketplace needs greater certainty about how this will be treated from a regulatory perspective.”

Part of the reason for urgency is California’s far-reaching climate goal of going carbon neutral by 2045. That includes making the state’s energy supply greener and reducing greenhouse gas emissions from buildings. Some 64% of households in California used natural gas for heating in 2018, according to the Energy Information Administration, and California accounted for 7% of natural gas use in the country in the same year.

Experts say gas, which can be burned day and night, will continue to bridge the gaps in more unpredictable sources like wind or solar. But that will leave operators of natural gas plants with expensive assets that are needed at peak times but used less and less.

Another interesting aspect of the transition is that utilities like Pacific Gas and Electric Co. and Southern California Gas Co. are pushing to scale up renewable gas made from food waste and other natural sources — which could keep gas in the state’s energy mix longer.

The commission is seeking to make sure reduced gas demand doesn’t hurt companies, investors or ratepayers. The risk is that if customers leave the system, those remaining — who are more likely to be lower-income and the last to go electric — could see higher rates.

“There are important equity questions here,” Wooley said.

If customers can’t make up the difference, companies’ assets would be “stranded” — an outcome the commission will look to minimize by making sure cost recovery is equitable, according to Michael Colvin of the Environmental Defense Fund.

Moving away from gas will hit major utility companies like PG&E and SoCalGas that have systems worth billions of dollars. PG&E spokesman Jason King said his company, the major supplier of both gas and electricity in Northern California, “strongly supports California’s climate and clean air goals.”

“PG&E welcomes the opportunity to avoid investments in new gas assets that might later prove underutilized as local governments and the state work together to realize long-term decarbonization objectives,” King said in an email. “Beyond new construction, PG&E believes a multifaceted approach is needed to cost-effectively achieve California’s greenhouse-gas reduction objectives, including both electrification and decarbonizing the gas system with renewable natural gas and hydrogen.”

PG&E depends on natural gas for 15% of its electricity supply. The company is seeking offers to use more biomethane, a renewable gas, this year.

SoCalGas also wants to purchase renewable natural gas with the goal of replacing 5% of its natural gas supply by 2022. The company filed a request with the PUC to allow customers to voluntarily switch to renewable gas for their homes and hopes for approval this year.

The company agrees with the commission that the existing natural gas pipeline system can play a role in reaching environmental goals by delivering renewable natural gas and potentially green hydrogen, spokeswoman Christine Detz said in an email. A SoCalGas-commissioned report predicted renewable gas would continue to be more expensive than natural gas, but the most cost-effective option would be a blend of both.

“We look forward to delivering on our commitment to become the cleanest gas utility in North America and to continued engagement with state policymakers as we all work to reduce greenhouse gas emissions and build a clean energy future that works for all Californians,” Detz wrote.

Companies and regulators are eyeing local gas bans rolling out across California. San Francisco barred gas in new and extensively renovated city-owned buildings. Fifteen other communities passed similar laws, pending approval from the state.

Some homes or businesses are switching on their own. At James & the Giant Cupcake, which opened a third location four months ago in Oakland’s Jack London Square, general manager Caleigh Schrey said the bakery chose to install four electric ovens because it was cheaper than two gas ones. The bakery saved money by not installing a gas hookup and on the cost of the appliances themselves, she said. It has used gas previously.

“The location that we were based from, this store was old, and gas was what came with it,” she said. “When we opened the new store four months ago and got to start over, so to speak, and buy all the equipment new and fresh, we did the electric because they were more cost-effective.”

Not all agree, though: A lawsuit by the California Restaurant Association challenges Berkeley’s ban.

Some energy-conscious consumers embrace going electric, but others don’t want to give up gas appliances. Marin County changed its code this year to allow homeowners to keep gas stoves and fireplaces after meeting resistance. Gas ban advocates and opponents cite conflicting studies amid ongoing debates about whether going electric costs more.



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