Proactive Climate Leadership Needed from DC Regulators

Testimony
of
Mark Rodeffer
Sierra Club DC Chapter
DC Council Committee on Business and Economic Development Oversight Hearing
Public Service Commission
Wednesday, March 3, 2021

Thank you, Councilmember McDuffie, for holding this hearing today. I’m Mark Rodeffer and I’m representing the Sierra Club, the nation’s oldest, largest and most influential environmental advocacy organization. We have 3,000 dues-paying members in DC, including many in Ward 5.

I testified at this hearing last year, saying, “DC is not making any progress at reducing greenhouse gas emissions from methane gas leaked and burned in DC.”^[1] Unfortunately, one year later, the statement is still true. The Public Service Commission has made no progress on its mandate to uphold DC’s climate commitments, which call for DC to eliminate fossil fuel combustion and transition from fracked gas to electricity for our energy needs.

The Commission has initiated Formal Case 1167, which allows – but does not require – the utilities to file proposals to meet DC’s climate commitments. We do not see utility-driven proposals as a realistic way to move away from fossil fuels, especially in the case AltaGas, the Canadian fracked gas company that owns our local gas utility. The Sierra Club believes meeting DC's climate commitments will require proactive leadership from the Commission.

DC’s Climate Commitments & the Public Service Commission

DC has committed to a 50 percent reduction in greenhouse gas emissions by 2032 and carbon neutrality by 2050. Mayor Bowser’s Clean Energy DC plan states: “Achieving its 2050 GHG carbon neutral target will require the District to eliminate fossil fuel use.”^[2]

The Commission has gone in the opposite direction. Late last year, the Commission authorized AltaGas to charge DC ratepayers $150 million over the next three years to replace a small fraction of its fossil fuel infrastructure.^[3] This $150 million dollars is only a downpayment on what AltaGas hopes will be a multi-decade, multi-billion dollar plan to gouge DC ratepayers with ever-increasing costs so that AltaGas can lock-in its dirty energy infrastructure while lining the pockets of its investors to the harm of DC families, businesses, churches and others in our community.

DC’s climate commitments require DC to eliminate fossil fuel use – including the fossil fuels sold by AltaGas – by 2050. But AltaGas has outlined plans to upgrade its fossil fuel infrastructure until 2055, five years after DC will reach carbon neutrality. Worse yet, AltaGas plans to charge DC residents for this costly and unneeded infrastructure until 2085, fully 35 years after we end our reliance on the dirty fuel this infrastructure supports. The total cost of the AltaGas fossil fuel subsidy plan is up to $4.5 billion.^[4] With DC’s population at approximately 700,000 residents, that means AltaGas plans to charge each DC resident – not each household, but each person in each household, including children –  an average of $6,500 dollars so that it can profit from expanding its gas pipeline infrastructure that we must stop using in a few decades. This is an irresponsible, imprudent, and unjustified cost to DC ratepayers that must be stopped.

Climate Leadership vs. Business as Usual

The Clean Energy DC Omnibus Act of 2018, which Councilmember McDuffie, you shepherded through this committee, requires the Commission to uphold DC’s climate commitments. This requires proactive leadership from the Commission to ensure that DC’s gas and electric utilities are eliminating fossil fuel energy and moving toward clean energy. The Commission needs to change its historical approach of being reactive to utility proposals, splitting the baby, and giving the utilities some, but not all, of what they seek. The Commission must be a climate leader and guide the utilities to carbon neutrality. We have yet to see such leadership from the Commission.

The False Promise of Manure Gas

The 2018 merger agreement between Washington Gas and AltaGas required the newly combined company to submit a plan to the Commission explaining how it will comply with DC’s commitment of carbon neutrality. AltaGas failed to do so. Instead, AltaGas submitted a plan that called for the continued sale, combustion and leakage of fracked gas past 2050, with a portion of gas from animal manure and highly-flammable hydrogen mixed in. As I explained at my testimony at this hearing a year ago, manure gas and hydrogen are in very limited supply, and their cost is extreme, dwarfing even the AltaGas plan to charge ratepayers $4.5 billion to replace pipes we will stop using in 29 years. Despite the climate misformation included in the AltaGas fossil fuel business plan, the Commission punted, saying it would “not approve or reject” the AltaGas plan that failed to comply with DC’s climate commitments.^[5] The Sierra Club believes the Commission should have upheld its climate mandate.

The Health Threat & AltaGas Disinformation

Like any fossil fuel, methane gas emits pollutants when burned, with the resulting mix of nitrogen dioxide (NO₂) and other pollutants causing serious health ramifications. Homes with electric appliances usually have nitrogen dioxide levels that are half what we see outdoors, but in homes with gas stoves or unvented gas heating systems, the opposite is true: indoor air is more polluted than outdoor air.^[6] Children who grow up in homes with gas burning stoves are 42 percent more likely to develop asthma.^[7]

Low-income and Black children are disproportionately affected. Children in Ward 8 are 10 times more likely to go to the hospital because of an asthma attack than children in wealthier parts of DC.^[8] Gas, along with allergens like mold, pests, and other irritants, are a major cause of these health impacts.

AltaGas denies the science demonstrating the health threat from gas. AltaGas executives have made false and misleading public health claims. Asked about the fact that fossil fuel stoves emit harmful pollutants that are not emitted by electric or induction stoves, Melissa Adams, an assistant vice president and chief social responsibility officer with AltaGas, misled the public at a meeting on July 29, 2020. She said that the health threat from stoves depends not on whether the stoves are gas-fired or use electricity, but instead on the aroma of the food being cooked. Ms. Adams said: "Things that smell really good tend to actually produce the most emissions. And it doesn't really matter if it’s electric or gas." She then started talking about the threat of gas from carpets.^[9] Her statements are factually inaccurate and contradict public health research. The Commission did not hold AltaGas accountable for its dishonesty.

Commission Nomination

Next week, this Committee will consider the Mayor’s nominee to fill the vacant seat on the Commission. The Sierra Club very much appreciates that this Committee scheduled the hearing with ample time for stakeholders to prepare. We are eager to learn about the nominee’s views on how the Commission will ensure that DC meets its climate commitments, how our gas utility will have to evolve its business model so that it no longer sells fossil fuels, how the Commission can eliminate the significant delays in connecting solar power installations to the grid, and how our energy system can be transformed to rely on distributed energy resources instead of a 20^th century fossil-fuel based system.

Grid Modernization

The Commission’s PowerPath grid modernization process is now beginning its seventh year. Though DC at least has a grid modernization dialogue among stakeholders, the District is not a leader among states that are advancing grid modernization. The Commission seems to prefer following the initiative of the utilities it regulates rather than leading on grid modernization. The utilities are owned by investors who do not have the same priorities as DC ratepayers, and are generally adverse to the changes required.

Integrated resource planning (IRP) that includes the multitude of existing clean energy and other new technologies is essential, but it is only practiced in isolated instances. Grid-wide management of distributed resources to enable DC to power its own load with clean energy and efficient demand management would result in the smart grid we need to benefit ratepayers, provide small business opportunity, improve grid resilience and create a reliable energy system in the coming century. Efforts by DC energy advocates to advance this vision – increasingly a reality in other jurisdictions – are met by fragmentation of formal cases before the Commission and lengthy processes, seemingly without end. Discussions continue on foundational issues such as how to employ the benefit cost analysis to different types of energy generation and management strategies.

If Council oversight cannot persuade proactive leadership from the Commission, we believe a legislative solution will be necessary. The PowerPath strategy for Pepco’s annual IRP announcement is a request for proposals from third-party energy service contractors that is constrained to a small territory and then vetted by Pepco. This should be expanded to cover the entire service area. If the Commission cannot require full implementation of such planning, the Council should consider a legislative solution.

Performance Based Regulation

Performance Based Regulation (PBR) is an innovative approach to aligning utilities’ performance with DC’s climate commitments, the growth of local renewable energy businesses, and ratepayer protection. It was discussed in the Commission’s PowerPath proceedings and was introduced as an objective in the recent Pepco rate case. Introducing a change in the rate design within a rate case was ill-advised and parties to the case agreed that a rate case was the wrong place to seek a collaborative strategy for redesigning the rate structure. The result was that the rate case did not build a robust record on the feasibility of PBR for the District. Best practices for PBR are being demonstrated in states across the country, and Hawaii has legislated it. In DC, the Commission has no docket expressly exploring PBR. The Sierra Club recommends that this Committee schedule a roundtable to understand why PBR is essential for harnessing marketplace power to meet clean energy DC goals.

Transportation Electrification

The Commission has previously explored expanding electric vehicle (EV) charging through a number of areas through case Formal Case 1130. The Sierra Club believes the Commission identified the correct areas for Pepco to involve itself in transportation electrification, specifically in designing time-of-use electricity rates for EV owners to incentivize charging at night when power prices are lower, and to a limited extent helping to directly build out the infrastructure to support EV charging (known as “make ready” infrastructure). The Commission displayed appropriate caution in its restrictions on what Pepco could be involved in, specifically restricting Pepco from owning electric vehicle chargers, and instead only allowing the utility to set rates to sell power to the competitive EV charging network market.

The Sierra Club urges the Commission to proactively engage in advancing electric vehicle adoption in the District. While EVs are a small fraction of total vehicles in the District, even conservative estimates forecast a dramatic expansion in EV sales in the near future. This will have far-reaching consequences on the power grid, making grid modernization initiatives even more pressing, given that the alternative will most likely be costly distribution capacity upgrades.

Conclusion

Thank you, Councilmember McDuffie, for the opportunity to testify today. DC has climate commitments that are appropriately robust given our unique vulnerability to climate change. DC is a low-lying city that sits along two tidal rivers, making sea level rise from climate change a serious threat, especially in Wards 2, 5, 6, 7 and 8, all of which border the Potomac River or the Anacostia River. Extreme heat waves, which are increasingly common because of climate change, are a life-and-death threat to DC’s residents, especially seniors, low-income residents and those without air conditioning.^[10]

The District must take bold action to match our bold climate commitments. The Sierra Club urges the DC Council to provide the oversight necessary to ensure that the Public Service Commission provides proactive climate leadership to meet our climate commitments.