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By Tom Schuster, Clean Energy Program Director
This is the first in a regular series of updates on our Chapter’s work to transition from our dirty energy past and present to our clean energy future. As noted in our last Sylvanian edition, I transitioned into the new Clean Energy Program Director position in February, right at the end of the “Before Times”. It has been a bumpy road for all the reasons you might expect, but a very busy one as well and I’m very happy to be officially part of the Chapter family. Here are a few of the issues that have kept us busy in the last few months.
No more business as usual for gas utilities
Sierra Club’s newest national energy campaign seeks to electrify buildings and end their dependence on fossil fuels (overwhelmingly fracked gas) for space heating, water heating, and cooking. Philadelphia has quickly become a regional centerpiece in that fight, as it houses the largest municipal gas utility in the country, Philadelphia Gas Works (PGW).
In late February, just as the pandemic was taking hold, upending the economy and threatening millions of households with severe economic hardship, PGW petitioned for a rate increase of over 11%. Monthly fixed charges, which are regressive and discourage efficiency because they can’t be avoided, make up the bulk of that increase. The utility cited declining sales and the need to accelerate gas line replacement as justification.
There was a time when Sierra Club would have supported gas line replacement to reduce methane leakage and associated climate impacts, but we are past that point. The climate crisis now demands that we move away from fracked gas entirely, and only replace gas lines that are a threat to safety. So Sierra Club (represented by Earthjustice) has intervened in this rate case, seeking to block the rate hike. We are arguing that spending money to replace an entire system of gas lines is an imprudent use of ratepayer funds, because they will be made obsolete before the end of their useful lives as we decarbonize our economy. In support of this argument, we are citing the resolution passed by the City of Philadelphia (the ultimate owners of PGW) last year committing to 100% clean, renewable energy by 2050.
These are novel legal arguments in this type of case, and we recently passed our first major legal test. PGW had petitioned the Administrative Law Judges (ALJs) to dismiss our arguments related to climate and environmental impacts, stranded assets, and electrification, claiming they were out of scope of the proceeding, and outside the jurisdiction of the Public Utility Commission (PUC). The ALJs denied nearly all of PGW’s arguments, with the exception that they ruled our electrification arguments out of scope for this case, but not out of jurisdiction of the PUC.
This has several key implications. First, in a precedent-setting decision for Pennsylvania, the ALJs confirmed that the PUC has jurisdiction to consider climate change as part of rate cases, which opens up a lot of future possibilities. Second, the ALJs allowed us to continue with our core argument that the use of ratepayer funds for gas infrastructure replacement is an imprudent use of funds if the infrastructure will become a stranded asset due to state and local climate policies. Third, the ALJs’ ruling that electrification is out of scope for the current rate case, but not out of jurisdiction for the PUC, means that we can advocate for electrification in other PUC cases, such as those related to energy efficiency brought by PGW or other utilities in Pennsylvania.
The case is far from over and we are unlikely to be able to fully block the rate increase. But we think we can compel PGW to stop blindly investing in a system that is known to be ruining our climate, and instead begin the overdue process of planning for how they will decarbonize.
Two Critical Climate Regulations Move Forward: Methane and RGGI
Meanwhile, we are inching closer to the first ever state-level limits on methane from oil and gas operations, and carbon dioxide from power plants.
In late July, the comment period closed on a rule that has the potential to reduce methane emissions from existing oil and gas wells and infrastructure by about 50%. We coordinated with a broad coalition to turn out hundreds of testifiers to a series of virtual public hearings in late June. Thanks to many of you, we overwhelmed their system. All comments received were in favor of adopting the regulations, and many urged the DEP to strengthen them in their final form.
We’re asking for two critical improvements to the rule. First, the exemption for low-producing wells must be removed, as these wells emit disproportionately high amounts of fugitive methane relative to their commercial production. Second, we want all wells to be subject to regular inspections, but the draft rule allows for those that initially pass to be inspected with reduced frequency. If Attorney General Shapiro’s grand jury report taught us anything, it is that DEP should not be allowing any level of industry self-policing. The proposed final rule is expected to be released in mid to late Fall, and finalized in early 2021.
While the work on the methane rule is beginning to wind down, work on the rule capping carbon dioxide pollution from power plants and linking to the Regional Greenhouse Gas Initiative (RGGI) is ramping up. The RGGI rule faces much stiffer opposition from Republicans and some coal-field Democrats in the legislature.
In April, the DEP presented modeling results that showed that 1) coal as a power source was going to nearly disappear by 2030 even without a policy change, and 2) the RGGI rule greatly accelerated that phase-out. At that time, the DEP proposed a strict initial carbon cap for the program, which is lower than current emissions. We had advocated for that, but until then were concerned DEP might try to allow for increased emissions between now and the start of the program assuming new gas plants would come online. In all, the RGGI caps themselves are projected to prevent about 180 million tons of carbon pollution between 2022 and 2030, and the savings increase to 223 million tons if carbon allowance proceeds (starting at $320 million/year) are invested in efficiency and clean energy projects.
This is great news for the climate, but unfortunately has sharpened opposition from the coal and gas industries and the trade unions that work in those industries. The unions have turned out in force to lobby lawmakers to pass HB 2025, which would prevent the Wolf Administration not only from finalizing the RGGI rule, but enacting ANY regulation on greenhouse gas emissions under the Air Pollution Control Act. While Governor Wolf would certainly veto the bill if it reaches his desk, the Democrats in the legislature are feeling intense pressure from unions like the Boilermakers and International Brotherhood of Electrical Workers to vote for the bill. When a floor vote was announced in the House, the AFL-CIO, which had previously been on the sidelines, began lobbying in favor of the bill and we were concerned that they would convert enough Democrats to win a veto-proof majority.
Fortunately, Sierra Club supporters stepped up in a big way and delivered about 2000 calls and emails to their legislators in less than 24 hours before the floor vote. As a result, we were able to hold enough NO votes to sustain a veto if it comes to that. Hopefully it won’t be necessary, as our coalition seems to have inoculated against a vote on HB 2025 in the Senate, at least for now. We expect ongoing attempts at legislative interference until the program actually starts or the climate deniers lose their majority.
Meanwhile, the rulemaking is continuing, with only minor delays that are largely due to the COVID-19 shutdowns of the spring. The draft rule is scheduled to be voted on by the Environmental Quality Board on September 15th. If approved, that action will cause the draft regulation to be published in the PA Bulletin, which will open up a public comment period with multiple (likely virtual) public hearings. We will need to make our voices heard in a big way during this comment period to ensure this rule is finalized in 2021.
We hope you’re up for a fight!
This blog was included as part of the 2020 Fall Sylvanian newsletter. Please click here to check out more articles from this edition!