Audio & Visual
The Pivotal Role of Gas Utilities in the Energy Transition
How utilities can prepare to align their business with ambitious policy objectives
Panelists:
- Despina Niehaus, Director, Strategy & Sustainability, SoCalGas
- Jim Steffes, SVP, Regulatory, Washington Gas
- Fred Gomos, Senior Director, Environmental Policy & Sustainability, NiSource
- Melissa Orsen, President, South Jersey Industries Utilities
- Margaret Oloriz, Senior Manager, Energy & Utilities, West Monroe (Moderator)
Overview
As states across the country set ambitious carbon neutrality targets, natural gas utilities are integrating decarbonization into their planning processes. Historically, natural gas has reduced greenhouse gas (GHG) emissions by displacing more carbon-intensive energy sources like coal and oil. Today, natural gas utilities are furthering emission reductions through innovative technologies, programs, and infrastructure improvements in power generation, industrial processes, and commercial and residential use. Energy efficiency, infrastructure modernization, and the integration of lower carbon fuels such as renewable natural gas (RNG) and hydrogen, are crucial for aligning the natural gas utility industry to state policy objectives.
Natural Gas Pathways to a Lower-Carbon Future
The country’s natural gas infrastructure provides safe, reliable, resilient, and affordable energy to millions. Natural gas can serve as a foundation for the energy transition, especially as extreme weather events become more frequent and the flexibility of the natural gas system to support the electric grid is of heightened importance.
We believe very strongly that natural gas is here to stay, and we are part of the solution.
Melissa Orsen
South Jersey Industries
Energy adaptability is increasingly important as industrial sectors like automotive and semiconductor manufacturing experience notable load growth, driving economic development and highlighting the need for dependable energy sources. Energy efficiency will remain a cornerstone, benefiting customers by stabilizing costs while also mitigating some of the expected load growth.
Energy efficiency, along with fuel switching, will reduce natural gas consumption and under the traditional regulatory construct also lower revenues for utilities. Decoupling mechanisms that separate throughput from revenue are an important part of managing costs for customers and utilities as the role of the natural gas system evolves. RNG can bridge the gap to a lower-carbon future, especially as customers continue to demand natural gas.
It is very important to balance the policy objectives with what we are actually seeing when we are planning our system. And to date, we are not seeing any material attrition in customer count.
Despina Neihaus
SoCalGas
There is strong potential for lower-carbon fuels that enable the continued use of established systems while advancing toward cleaner energy sources. Investments in technologies such as carbon capture and management infrastructure can further enhance the potential of natural gas to contribute to a sustainable energy future. By leveraging these innovations, natural gas utilities can play a pivotal role in achieving long-term sustainability goals.
Regulatory Considerations: Balancing Safety, Reliability, Resiliency, and Affordability
Decarbonization requires maintaining safety, reliability, and resiliency of the natural gas system while ensuring affordability for ratepayers at every stage of the process.
We are almost, subject to rounding, about 100% reliable for our customers. And that reliability, that confidence to know that if they need hot water, that flame is going to come on and give them hot water. That is huge.
Jim Steffes
Washington Gas
As climate change leads to more severe weather, the point was made that the largely underground and very reliable natural gas system is easy to take for granted. Incorporating weather-normalized data into bill impact analyses can offer clearer insights for customers. Additionally, natural gas procurement practices should aim to minimize volatility by utilizing natural gas storage facilities, liquefied natural gas plants, and market mechanisms. Engaging with policymakers, regulators, and customers is essential for supporting the energy transition and educating them on the long-term value of the natural gas system.
Coordinated, cross-sector approach and integrated energy planning can optimize the use of natural gas infrastructure. This isn't about choosing between natural gas or electricity — it’s about leveraging the strengths of both to achieve a cleaner energy system. Viewing the energy transition as an either/or decision is shortsighted and misses opportunities to achieve environmental benefits through innovative natural gas technologies.
The most affordable way to get to net-zero and hit these targets is really an economy wide coordinated approach with all of the above solutions.
Fred Gomos
NiSource
By fostering collaboration and open communication, the industry can adapt to changing demands while meeting policy goals. This strategy not only supports a sustainable energy future but also can meet increasing customer expectations for energy delivery. Maintaining safe, reliable, resilient, and affordable energy is in everyone's best interest, and natural gas utilities must lead the way.
Conclusion
An energy transition of this scale is unprecedented, with no silver bullet solution. Natural gas remains a critical part of the energy mix, bridging the gap between today’s needs and tomorrow’s goals. A coordinated approach that brings together the natural gas and electricity sectors, along with regulators, state and national policymakers, is essential to meeting climate policy objectives. Through innovation and collaboration, natural gas utilities can continue to play a pivotal role in achieving decarbonization.