Full Title: Under Pressure: Gas Utility Regulation for a Time of Transition
Author(s): Megan Anderson, Mark LeBel, Max Dupuy
Publisher(s): Regulatory Assistance Project (RAP)
Publication Date: May 7, 2021
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The way we use fossil gas as a fuel for heating buildings and other end uses is rapidly changing. Efficiency gains and improved electric end-use technologies are constraining demand for gas. At the same time, the urgency to address climate change is increasing, with the new U.S. national target to cut greenhouse gas emissions by more than half by 2030 adding to existing state-level decarbonization policies. Increased awareness of the health and safety risks of fossil gas is also accelerating the transition to other sources of energy. These shifts are happening as gas utility distribution systems in many places are aging — meaning that utilities may be seeking approval for major investments while the size of their customer base is poised to shrink. Regulators and utilities that do not get ahead of these trends may face the need to impose unsustainable rate increases on customers, likely imposing high costs on those who can least afford it.
These changes mean that the current paradigm for gas utility regulation is coming under pressure, and regulators need a range of practical options to consider as they confront the changing circumstances. This paper offers recommendations that can serve as building blocks to facilitate the gas transition in an efficient and equitable way.