.January 22, 2020
Testimony
of
Mark Rodeffer
Chair, Sierra Club DC Chapter
before
the DC Council Committee on Business and Economic Development
oversight hearing
on
the DC Public Service Commission
Thank you, Councilmember McDuffie and members of the Committee for holding this hearing today on the important work of the Public Service Commission.
My name is Mark Rodeffer. I chair the Sierra Club DC Chapter. The Sierra Club is the nation’s oldest, largest and most influential environmental advocacy organization. We have 3,000 dues-paying members in DC. Our top priority is fighting climate change.
Public Service Commission & DC climate commitments
The District of Columbia has committed to reduce greenhouse gas emissions 50 percent by 2032 and to net-zero by 2050. The Committee on Business and Economic Development and the full DC Council enshrined those climate commitments into law by mandating that the Public Service Commission uphold the commitments.
In September of last year, the Commission issued a notice of inquiry asking for stakeholder input on how it can carry out its new mandate to uphold DC’s climate commitments. The Sierra Club appreciated the opportunity to provide feedback, and we filed comments calling for the Commission to require that all proposals from regulated utilities reduce greenhouse gas emissions and move DC closer to net-zero emissions on pace with the timing of the District’s climate commitments.
DC’s climate leadership
Thanks to your leadership, Councilmember McDuffie, and the work of this Committee, DC is on track to obtain 100 percent of our electricity from clean sources by 2032. Also thanks to your work, DC is taking important steps to reduce emissions from the transportation sector by electrifying fleet vehicles in DC.
Unfortunately, DC is not making any progress at reducing greenhouse gas emissions from methane gas leaked and burned in DC. Methane from our gas utility is used primarily for heating – space heating, water heating, and also for clothes dryers and cooking. The Department of Energy and Environmental estimates that nearly a fifth of DC’s greenhouse gas emissions come from our gas utility.
Zeroing out DC’s methane emissions
The good news is that DC’s gas utility agreed under the terms of its 2018 merger with the Canadian gas supplier AltaGas to evolve its business model to meet DC’s climate commitment of carbon neutrality by “providing innovative and new services and products instead of relying only on selling natural gas.”
Commitment #79 of the AltaGas-Washington Gas merger states:
By January 1, 2020, AltaGas will file with the Commission a long-term business plan on how it can evolve its business model to support and serve the District’s 2050 climate goals (e.g., providing innovative and new services and products instead of relying only on selling natural gas). After the business plan is filed, AltaGas will hold bi-annual public meetings to report on and discuss its progress on the business plan.
The bad news is that Washington Gas appears to be committed to continuing its gas distribution business, despite committing under the merger agreement to do exactly the opposite.
WGL compliance with DC’s climate commitments
After Washington Gas agreed to change its business model away from selling gas, the utility requested that the Commission allow it to extend a program providing subsidized gas hookups to new buildings and to charge the cost to existing ratepayers. The Commission rejected the request from Washington Gas, citing the Commission’s climate mandate and the gas utility’s merger commitments that “require the company to submit a business plan to support the District’s climate goals.”
The Sierra Club applauds the Commission for upholding its new climate mandate thus far. The Commission will need to remain vigilant in enforcing its climate mandate and the gas utility’s requirement to change its business model so that it no longer relies on selling gas.
The fallacy of “renewable gas”
When the Commission approved the merger in June 2018, the combined company had a year and a half to develop its new business plan, due on January 1, 2020. Despite this ample time frame, Washington Gas has said it cannot submit its business plan until March of this year. Even more worrisome, the utility has indicated the delay is necessary because it needs more time to develop a business plan to keep its gas distribution business in place by mixing what the gas utility calls “renewable gas” with the dirty fracked gas it is already providing.
“Renewable gas,” which is also called biogas, releases greenhouse gas emissions into the atmosphere when burned, commensurate with what was absorbed by the organic material that created the methane. Mixing biogas with fracked gas is not consistent with DC’s 2050 climate s and is thus a violation of merger commitment #79. Under the Commission’s new climate mandate, the Commission must reject any business plan submitted by the utility that continues to rely on selling, burning and leaking gas.
Biogas supply insufficient to replace fracked gas
There is not enough biogas to replace the fracked gas in our pipelines. But replacing fracked gas is not the goal of the gas industry; in fact, it's the opposite of their goal. They want to mix a tiny fraction of biogas with fracked gas so they can continue pumping their dirty fuel through their aging and leaky gas pipeline system while they continue to profit from polluting our planet.
Biogas will never be available in the quantities necessary to replace our current supply of fracked gas. An analysis commissioned by the DC Department of Energy and Environment found that even under the rosiest scenarios claimed by the American Gas Foundation, a group funded by the gas industry, biogas could supply only 32 percent of the region’s gas consumption. The analysis found that only 36 landfills and seven farms in the entire country produce gas that can be transported through pipelines. None are located in DC, Maryland or Virginia.
Even if biogas could supply 32 percent of our gas needs, that’s 68 percent short of DC’s commitment of carbon neutrality. Biogas is not a serious approach to reducing greenhouse gas emissions. It’s an excuse for the gas industry to keep its dirty infrastructure in place and continue profiting from the same old business model: fracking gas, leaking methane, polluting the air we breathe and heating up our planet.
Powerful methane leaks will continue with biogas
When methane is burned – both fracked gas and biogas – it produces carbon dioxide, the most common greenhouse gas. When methane is released into the atmosphere before being burned, its climate impact is 84 to 87 times greater than that of carbon.
Along the methane gas supply chain – from when the gas is fracked, processed, transported, and distributed into buildings – there are leaks, which are known as fugitive methane. And the methane gas that is leaking is more than 80 times worse for the climate than the carbon emitted when we burn this gas in our buildings.
A 2018 study published in the journal Science found that fugitive methane emissions from the oil and gas supply chain are 60 percent higher than the official estimates from the Environmental Protection Agency. That study didn’t look at fugitive emissions from gas distribution utilities. It only looked at the supply chain before gas utilities pipe their dirty fuel into our homes, meaning the study not consider fugitive methane emissions from gas distribution utilities like Washington Gas.
But a 2019 study did look at utility gas leaks in major urban centers such as DC and found that fugitive emissions from methane distribution utilities such as Washington Gas are more than double the EPA’s estimates. The study, conducted by scientists from the University of Michigan, Harvard University and the National Oceanic and Atmospheric Administration, examined “six old and leak‐prone major cities along the East Coast,” including DC, and found that “current urban inventory estimates of natural gas emissions are substantially low, either due to underestimates of leakage, lack of inclusion of end‐use emissions, or some combination thereof.”
Biogas does not eliminate any of these problems. Like fracked gas, biogas must be extracted, processed, transported and then distributed to buildings in DC. And like fracked gas, biogas will leak at every stage of that process. Even if biogas could meet 100 percent of our current methane gas needs, it would still leak this powerful greenhouse gas into the atmosphere and continue contributing to climate change. If DC relies on biogas for our energy needs, we will never meet our climate commitments.
“Renewable Gas” is inconsistent with DC’s climate commitments
The Public Service Commission is required to uphold DC’s public climate commitments. The bedrock of DC’s climate commitments is the Clean Energy DC plan, which states that fuel switching from gas to electricity “is required to reduce the greenhouse gas intensity (or carbon intensity) of a building’s energy.” The Clean Energy DC plan further states that using gas instead of electricity is “contrary to the long-term carbon reduction goals of the District.”
If the Commission is to faithfully uphold its climate mandate, the Commission must make decisions consistent with the Clean Energy DC plan, which calls for DC to rely on electricity from renewable sources, not continued reliance on gas.
Geothermal network pilot
The Sierra Club requests that the Commission exercise its new climate mandate by requiring the District’s gas utility to undertake a geothermal network pilot study. Such a pilot would require Washington Gas to build a geothermal network that can heat homes by leveraging the naturally-occurring heat in the ground via heat pumps and delivering hot water to homes in pipes. Boston's gas utility recently applied for authorization to undertake such a study.
Geothermal systems are very efficient, with coefficients of performance between 300 and 600 percent. That means that one unit of electricity used to drive the heat pump can extract three to six units of energy from the ground. With the heat pumps powered by electricity from renewable sources, geothermal networks can provide a path toward a zero-emissions business model for the utility.
The gas utility’s business is to provide a service for customers to heat homes and other buildings. Geothermal networks provide the same service, but without the combustion of fossil fuels and the resulting greenhouse gases. As Boston’s gas utility, Eversource, indicated in its application for the pilot study, gas distribution systems and geothermal networks share other characteristics, and both involve:
• Capital intensive projects with large upfront costs for infrastructure;
• Buried and underground infrastructure, including trenching and installing pipes in the ground;
• Long lived assets with a lifespan of 30 years or more;
• Regulated service with siting and right of way issues; and
• Monitoring system conditions, such as pumping and maintaining proper pressure and temperature in pipes.
DC’s climate commitments and the gas utility’s merger commitment to end all greenhouse emissions over the next three decades will require a substantial change in the business of Washington Gas. As previously explained in the Sierra Club’s testimony, biogas will fail to meet DC’s and the merged gas utility’s climate commitments. Geothermal networks may be a way for the utility to continue providing its current service while meeting DC’s climate commitments. The Sierra Club believes the issue is worthy of investigation though a demonstration project, and if successful, a more comprehensive offering.
Commission needs resources to carry out climate mandate
Meeting the Commission’s new mandate to uphold DC’s climate commitments will not be easy. For the Commission to effectively lead the utilities’ transition to net-zero emissions, and for the Commission to determine whether utility proposals are credibly moving to net-zero emissions, the Commission will need added expertise on climate and clean energy issues. The Sierra Club asks this Committee and the full DC Council to provide the Commission the necessary funding to hire additional staff to assess the environmental and climate impact of matters before the Commission. The climate and clean energy issues facing DC are are sufficiently important and complex for the Commission to hire its own in-house experts on these environmental and climate issues.
On-bill financing for energy efficiency upgrades
Missouri’s Public Service Commission last month instructed its electric utility to administer a one-year pilot program to provide energy efficiency upgrades to renters and people with low incomes, two groups that typically do not have easy access to home improvements that reduce energy use.
The program, called “Pay As You Save," requires the utility to pay for the efficiency upgrades with ratepayers incrementally paying back the cost on their monthly bills. The program is available to ratepayers regardless of income or credit history.
“Pay As You Save" programs are administered by about 15 utilities across the country, mostly small rural electric cooperatives. The Missouri pilot is in Kansas City. We believe a “Pay As You Save" program is worth exploring in the District, either through a pilot program mandated by the Public Service Commission or the DC Council funding a feasibility study on the issue. The details of such a program would need to be carefully considered to ensure minimal ratepayer impact and maximum impact on energy efficiency and greenhouse gas reductions.
Grid modernization
The Sierra Club participated in the Commission’s MEDSIS (Modernizing the Energy Delivery System for Increased Sustainability) proceedings as part of a coalition of public interest organizations seeking to advance community engagement with the electric utility in shaping modernization of the grid to achieve three primary goals: (1) reducing greenhouse gas emissions, (2) promoting business development in distributed energy resources, and (3) reducing costs to ratepayers.
Though the Sierra Club appreciated the opportunity to provide input, we are concerned that MEDSIS has ultimately done little to advance grid modernization goals. Despite lofty principles proclaimed for MEDSIS, indications from the MEDSIS draft order prepared by Commission staff show little change from business as usual, with Pepco still financially incentivized to build large and costly projects to chase peak demand.
The Sierra Club seeks a concerted effort to shift Pepco's incentives from capital investments like new substations toward performance based ratemaking. But we see in the current Pepco rate case a continuation of the cost-of-service model without any reference to the MEDSIS principles. The Sierra Club is monitoring the Pepco rate case. If we see no progress in meeting the MEDSIS goals of real grid modernization, we believe that a legislative remedy will be required.
Conclusion
The Commission will need to work with stakeholders to create a regulatory framework for winding down gas assets in a rapid and responsible manner and moving toward rapid electrification.
Under the Commission’s climate mandate, it must reject any proposal to extend the life DC’s gas infrastructure. Similarly, the Commission must reject any business plan from Washington Gas that continues DC’s reliance on any form of gas. The Commission must require a serious plan from the gas utility to wind down its gas distribution business and instead invest in truly clean energy. If the utility submits a biogas business plan, or any other business plan not consistent with DC’s climate commitments, the Commission should reject the plan and assess a daily financial penalty on Washington Gas until it files a serious business plan. The Sierra Club and 18 organizations and businesses made these points in a letter to the Commission in December.
If Washington Gas continually fails to come up with a realistic business plan, the Commission should exercise its power to reverse the AltaGas-Washington Gas merger and require AltaGas to divest Washington Gas so that the utility can be operated in a manner consistent with DC’s climate commitments.
The Sierra Club asks the Public Service Commission to recognize the severity of the climate crisis by rising to the challenge of shutting off the gas pipeline in DC.