More Proactive Leadership Needed from DC Energy Regulators

February 23, 2022

Testimony
of
Mark Rodeffer
Sierra Club DC Chapter
DC Council Committee on Business and Economic Development
DC Public Service Commission Oversight Hearing
February 23, 2022

Councilmember McDuffie, thank you for holding this oversight hearing today. My name is Mark Rodeffer and I am representing the Sierra Club DC Chapter. The Sierra Club is the nation’s oldest, largest, and most influential environmental advocacy group. We have chapters in all 50 states. The DC chapter has about 3,000 dues-paying members.

Proactive Climate Leadership Needed at Public Service Commission

As the Sierra Club has previously testified before this committee, we believe the Public Service Commission must take proactive leadership to ensure it meets its statutory requirement to achieve DC’s climate commitments of eliminating fossil fuel combustion and achieving carbon neutrality by 2050. For the most part, the Commission merely reacts to proposals from the utilities.

One obvious area where improved climate leadership is needed at the Commission is ending the delays and moving forward with projects identified by the Pilot Projects Governance Board. The pilot projects implement recommendations from a proceeding the Commission initiated in 2015 to identify technologies and policies that can modernize our energy delivery system for increased sustainability. The Governance Board has identified scope of work and draft specifications of requests for proposals for a number of innovative projects. Among the pilot projects are a district heat pump project, a renewable energy microgrid, and a virtual power plant using locally distributed energy sources. But the Commission has not issued a single request for proposals (RFP) for potential project developers. The delay is impeding the District’s ability to meet our climate commitments. The Sierra Club urges the Commission to swiftly issue RFPs for the pilot projects identified by the governance board so that developers can begin to implement these projects and District residents can benefit from the projects’ services.

Transitioning Off Fracked Gas

Ensuring DC meets its climate commitment to end all fossil fuel combustion by 2050 is another area where stronger leadership is needed from the Commission. This is particularly challenging with our gas utility, and DC needs the Commission to rise to that challenge.

AltaGas, the Canadian fracked gas company that owns Washington Gas, is seeking to charge DC ratepayers for the costs of its fossil fuel infrastructure until 2085, 35 years after DC has committed to end fossil fuel use. This is akin to taking out a 63-year mortgage on a home that will not be habitable in 28 years. To correct the poor financial planning proposed by AltaGas, the Commission should require that the gas utility fully depreciate all its assets by 2050, the year DC is committed to ending fossil fuel combustion. This means that all debt for the utility’s fossil fuel assets will be fully paid off by 2050, so we ensure DC residents are not burdened with the costs of stranded fossil fuel assets as we transition to clean energy.

Additionally, the Commission should proactively lead the transition of the gas utility so that its business model no longer relies on fossil fuels by 2050. The Commission has opened a proceeding on climate matters (Formal Case 1167), but unfortunately the Commission has structured it so that the Commission reacts to utility proposals rather than directing the utilities to eliminate fossil fuel combustion. AltaGas has made clear it will not make a good faith effort to eliminate fossil fuel combustion, so the Commission must move the utility in that direction.

The Commission may want to look north to Vermont, a state with a slightly smaller population than the District, but with much colder winters. Vermont Gas Systems, the state’s gas utility, is selling, leasing, installing and servicing electric heat pump water heaters.[1] Unlike gas-fired water heaters, heat pump water heaters do not combust fossil fuels and thus avoid the climate and public health threats posed by burning gas inside homes. Because AltaGas is committed to fossil fuel extraction and combustion, it is unlikely to propose a similar program. But the Commission has the power to proactively direct the gas utility to implement such a program.

Public Health Threat From Gas

Gas appliances fill our homes with many of the same pollutants as car exhaust – carbon monoxide, nitrogen dioxide (NO₂), particulate matter, and formaldehyde.[2] Particulate matter and formaldehyde are human carcinogens. Because of this pollution, the air we breathe indoors – where we spend 90% of our time – is often more polluted than outdoor air.[3]

Health impacts stemming from elevated NO₂ exposure include:

  • Aggravated respiratory symptoms and higher susceptibility to lung infections[4]
  • 42% increased risk of developing asthma symptoms[5]
  • IQ and learning deficits in children[6]

Researchers in Australia found that asthma rates in children living with gas stoves are comparable to those of children living with smokers. The researchers attributed 12% of all childhood asthma to pollution from gas stoves.[7] Moving to pollution-free homes with appliances powered by renewable energy will improve indoor air quality and protect public health.

Dangerous Methane Leaks

The Beyond Gas DC coalition today released a survey finding hundreds of methane gas leaks across DC, some approaching the explosive level.[8] The volunteer neighborhood researchers who conducted the leak survey went to all eight wards and found significant leaks in each. Similarly, a gas leak study commissioned by the Department of Energy and Environment (DOEE) found 3,346 locations with methane gas leaks in DC’s residential neighborhoods.[9] When methane is leaked directly into the atmosphere, it has a climate impact 84 to 87 times greater than carbon.[10] In addition to the climate damage of these leaks, there is an additional health and safety risk. The Beyond Gas volunteer researchers found 13 gas leaks at or above 50,000 parts per million, or 5% of air volume, which is the level at which methane can explode.

Mandating the Commission End Fossil Fuel Sales & Combustion

AltaGas argues that to address methane leaks, DC residents should spend almost $5 billion to maintain the utility’s fossil fuel distribution system. Instead of the wasteful spending proposed by our Calgary-based fracked gas utility, DC can save money, improve public health, and reduce greenhouse gas emissions by investing in clean energy technology, such as highly efficient heat pumps powered by clean energy.

The Sierra Club calls on the DC Council to pass legislation directing the Commission to open a regulatory proceeding to determine how DC’s gas utility will achieve carbon neutrality with a new business model that ends the sale of fossil fuels and instead relies on renewable, efficient, and non-combustible energy.

Solar

Since its inception in 2016, the Solar For All Program has been a core component of furthering the District’s goals to both combat the climate crisis and promote environmental justice. Solar for All provides critical relief for the disproportionate energy cost burden borne by low-income households.

Solar energy in DC has been plagued by problems that are, at best, a negligent failure by Pepco to comply with its legal responsibilities, and at worst, self-interested obstructionism driven by conflict of interest. These problems have been repeatedly raised by many in the solar community. Two concerns warrant serious attention: ongoing interconnection delays and failure to distribute accrued bill credits to Solar For All’s low-income beneficiaries.

Unjustified interconnection delays lead directly to higher utility costs and lost revenue as well as uncertainty for solar developers and their capital sources, depriving the District’s solar providers of the resources they need. A 2020 report produced for the Office of the People’s Council cited the slow Pepco interconnection process as one of the key barriers to achieving requirements for electricity from renewable sources under DC’s Renewable Portfolio Standard.[11]

Additionally, Pepco has failed to distribute accrued credits to Solar for All participants. This undermines the program’s core tenet of affordability, wastes resources, and jeopardizes the standing in the community of both the program and solar energy in general. Exelon, Pepco’s parent company, is a multibillion dollar corporation whose CEO is paid $15 million a year. For Exelon to fail to provide low-income residents the money they are owed for their accrued solar credits is unconscionable. The Public Service Commission must put a stop to it.

Transportation Electrification

The Commission, in coordination with the DC Department of Transportation (DDOT) and other relevant agencies, should facilitate an electric vehicle transition, which will mean taking into account an increasing number of on-street charging stations. We were pleased that the Commission approved in part Pepco’s Application for a Transportation Electrification Program. The Sierra Club envisions a future in the District with fully electrified WMATA buses, fleet vehicles, and personal automobiles, and adequate charging stations for those vehicles. The Commission has a key leadership role to play in effecting this vision.

Pepco Energy Efficiency Filing

The Sierra Club is deeply concerned about the high cost of Pepco‘s proposed energy efficiency program in Formal Case 1160. It appears that Pepco wants to spend two to three times as much for each kilowatt hour (kWh) of avoided energy consumption compared to utility efficiency programs elsewhere in the nation. This is unacceptable, and we join the Office of the People’s Counsel in urging the Commission to reject the proposal as it was submitted. To be clear, we strongly support energy efficiency efforts, but they must be implemented at reasonable cost.

Delays in Power Purchase Agreement Implementation

One area in which the Commission has demonstrated proactive climate leadership was requiring in April 2019 that Pepco procure 5% of electricity in its Standard Offer Service (SOS) via long-term Power Purchase Agreements (PPAs) from a newly constructed renewable energy facility. The Sierra Club applauds the Commission for this initiative, but we are disappointed with the long delays finalizing contract negotiations between the winning bidder and Pepco. The winner of the bid was announced in early 2021 and month after month Pepco states in filings before the Commission that it is still in contract negotiations. By comparison, the New York State Energy Research and Development Authority (NYSERDA) announced this month that it has finalized contracts for new offshore wind farms in less than a year. New York’s contract negotiations are far more complex than those in DC, yet they are proceeding at a much faster pace. We are concerned that with delayed contract negotiations, the PPA will not be constructed and operating by 2024, as the Commission has ordered. The Sierra Club calls on the Commission to exercise its oversight authority and move this project forward.

Commission Nomination

The Sierra Club supports nominees to the Commission who recognize that the climate crisis is no longer something that will happen in the future. It is here. It is happening now. Climate change harms the most vulnerable members of society first and worst, but all of us are vulnerable to climate disruption, including extreme heat, flooding, new disease-carrying pests, and other threats.

In recent years, the Mayor has nominated individuals with distinguished careers in other fields but little or no experience with energy issues or utility regulation. Now is not the time for on-the-job learning or for maintaining the status quo. DC needs commissioners who understand that we must transform our energy system to end the use of fossil fuels as quickly as possible, while improving the affordability of energy for all DC residents. This urgently-needed transition will not only reduce greenhouse gas emissions, but also improve local air quality indoors and outdoors.

Now that former Chairman Willie Phillips is serving on the Federal Energy Regulatory Commission, the Mayor must nominate a new commissioner. Emergency legislation passed by the DC Council last year requires that the next nominee have “experience in electric grid modernization and renewable energy integration or technology,” and the one after that have “experience in consumer protection.”

The experience the new law requires of commissioners is necessary but not sufficient. The Sierra Club calls on the Mayor to nominate and the Council to confirm a new commissioner with the vision and knowledge to transform the energy sector in an equitable and just manner to meet the climate crisis.

Resilient Infrastructure

The Commission must consider climate resiliency in every decision it makes, because climate change is already creating challenges for the District. A recent forum hosted by the DC Commission on Climate Change and Resiliency included a keynote presentation by Kasha Patel, deputy weather editor at the Washington Post, laying out the local trajectory of climate change over the past several decades.[12] Modernizing the grid to include extensive distributed energy resources (DER) is an essential step. Microgrids are a key tool for energy innovation, resilience for critical infrastructure and more, and lower cost energy. Microgrids should use clean energy, not fossil fuels.

Waste Heat

In niche situations that are cost-effective, the Sierra Club supports the use of heat from sewers and other sources that would otherwise be wasted. However, we strongly oppose the creation of a new heating and cooling utility company for this purpose, an idea that has been floated by DC Water and others. The District already has two infrastructure-intensive utilities that provide heating and cooling, and ratepayers are already being asked to invest additional billions of dollars in this existing infrastructure. A utility using waste heat would only be cost-effective if buildings across the city were required to use it – locking them into a higher-carbon, more expensive solution than existing electricity-based technologies.

The best path forward for decarbonization and energy justice is to 1) reduce energy consumption through energy efficiency measures; 2) use the District’s increasingly clean electricity supply to electrify residential and commercial buildings using highly efficient heat pumps; and 3) wind down the use of gas for heating and cooling. Where there are cost-effective applications for waste heat, pipes or rights-of-way no longer needed for gas distribution could potentially be repurposed for district heating systems. Companies that develop district heating projects are already active in the DC area, and several universities are using their services without the need for a new utility company.

Conclusion

Thank you again, Councilmember McDuffie, for allowing the Sierra Club to testify today. DC is making progress on reducing greenhouse gas emissions, but we will not meet our commitments of carbon neutrality and eliminating fossil fuel combustion by 2050 without additional action. To ensure DC meets its climate commitments, we need stronger and more proactive leadership from the Public Service Commission.