Instead of continuing to build pipeline systems and replace aging pipes with expensive new ones that raise rates for customers, Maryland’s gas utilities should first look at non-pipes alternatives (NPAs) such as identifying and sealing leaky pipe joints, said Joyce Lombardi, energy policy manager at the Maryland Energy Administration.

“There’s a robot that can do this,” Lombardi told the Maryland Public Service Commission on July 31, during the continuation of its July 25 public hearing on the future of natural gas in the state. “It just zips underground. It goes into a working pipe, seals the joints; no one up top knows about it. [It] lasts for 50 years. It is one-third of the cost of traditional pipe replacement [and is] being used in New York and Rhode Island.”

The PSC heard two presentations with strongly opposing views at the July 31 hearing: one from the MEA and one from the commission’s own staff attorneys.

Lombardi focused on practical actions, which she said the PSC has the legal authority to take in the short term, such as requiring gas utilities to consider NPAs, while staff laid out complex and at times seemingly contradictory arguments on the fine points of existing legislation and whether any action on the future of gas is currently needed.

“The General Assembly should be given the opportunity to ratify or modify the commission’s decisions after the commission has had the opportunity to create a thorough review of the factual record,” said Staff Counsel Lloyd Spivak.

The hearings were triggered by a petition from the Office of People’s Counsel, filed in February 2023, asking the PSC to open a docket on the future of natural gas, and natural gas infrastructure and utilities, in the state. At the July 25 hearing, People’s Counsel David Lapp argued that Maryland’s ambitious climate targets and push for electrification of heating and cooling would decrease gas demand and the need for ongoing pipeline buildout and replacements. (See Maryland PSC Opens Debate on Future of Gas.)

Under the Climate Solutions Now Act (CSNA) of 2022, Maryland is committed to cutting its greenhouse gas emissions 60% by 2031, and Gov. Wes Moore (D) has pledged the state will have a 100% clean electric system by 2035.

The result, Lapp said on July 25, is that “there’s a massive disconnect between the technology, climate policy and what’s actually going on with the state’s gas utilities,” which have been spending hundreds of millions of dollars per year on pipeline replacement projects while increasing customer bills — in some cases, threefold.

Lapp stressed at the earlier hearing that OPC’s goal was not shutting down the state’s natural gas utilities, but rather to have the commission consider a “wide spectrum” of pathways for these companies to plan for substantially downsized demand and capital spending.

A panel of four PSC staff attorneys initially seemed to support the OPC petition, saying that a proceeding on the future of natural gas would be “necessary in order to achieve the goals laid out in the CSNA,” according to Harrison Scherr, who led off the presentation.

But Scherr and the other attorneys then qualified that support with a series of legal and technical considerations, finally recommending the commission take no immediate action beyond possibly launching a work group or several feasibility studies.

The PSC has “broad authority to regulate the gas utilities … [but] changes in commission policy should proceed with a rule making,” Scherr said. “It should be a very thorough path that we move forward. [Any] actions and policy decisions regarding the transition away from gas should be consistent with guidance from the General Assembly.”

Similarly, Scherr first said that the CSNA tasks the commission with determining how the law’s GHG reduction goals should be achieved, but then backtracked, saying, “It is the responsibility of the General Assembly to set the course by choosing a GHG reduction pathway and enacting enabling legislation.”

Spivak noted that natural gas — used as fuel, for electricity and from its own production facilities — accounts for about 19.5% of Maryland’s greenhouse gas emissions and contested the OPC’s figures on the increasing adoption of heat pumps across the state.

He discounted a 3.8% increase in electric heating customers from 2013 to 2022 — versus a .3% increase in natural gas customers — by speculating that “customers are switching from propane or oil to electric and are not necessarily switching from gas to electric.”

He argued for a balance of climate and public safety considerations in any review of Maryland’s natural gas policies, calling for feasibility studies to look at options like renewable natural gas or geothermal energy or whether the state has the workforce or enough heat pumps to support widespread electrification. A “human feasibility study” may also be needed to look at “the willingness of citizens to switch,” he said.

National Trends

The primary impetus for the OPC’s petition was a 2013 law called the Strategic Infrastructure Development and Enhancement (STRIDE) Act (S.B. 8/H.B. 89), which has allowed the gas utilities to recover the costs of certain pipeline replacements before they are completed, resulting in significant increases in gas utility bills.

But the OPC petition is also part of a larger national trend as other states look to curb emissions from natural gas and face pushback from the industry. As detailed in the petition’s appendices, the California Public Utilities Commission in 2022 passed a first-in-the-nation rule eliminating subsidies for natural gas hookups — still allowed in Maryland. It also passed a general order requiring gas utilities to get PUC approval for any projects costing more than $75 million and potentially causing significant environmental impacts.

Colorado, Massachusetts, Minnesota, New Jersey, New York, Rhode Island and the District of Columbia also have proceedings underway looking at how to balance their emission reduction goals with the public safety imperatives of existing natural gas systems. In 2021, for example, Minnesota passed the Natural Gas Innovation Act (NGIA), requiring the state’s natural gas utilities to develop plans for how they will use “innovative resources” to decarbonize their operations.

In 2022, the Minnesota Public Utilities Commission issued an order setting standards for energy efficiency and electrification investments that will comply with the NGIA.

While the PSC has yet to rule on the OPC’s petition, Chair Frederick H. Hoover did acknowledge the July public hearings as de facto proceedings on the future of natural gas. Other drivers for the PSC could be the executive order Gov. Moore signed in June, calling for the state to establish a zero-emission heating equipment standard and a new clean heat standard to be added to the state’s renewable portfolio standard.

Moore also signed a new law (H.B. 397) in May, requiring gas utilities to develop geothermal pilot projects to provide power to specific neighborhoods, also aimed at cutting back the need for natural gas pipelines. The utilities’ plans will go to the PSC for approval.

As these policies and programs come into effect, Lombardi stressed that requiring gas utilities to demonstrate that they are giving serious consideration to non-pipes alternatives should be a first step for the commission.

“This would be for all capital infrastructure spending, including capacity and line extensions to the extent possible,” she said. “Again, this is a floor, not a ceiling.”

In addition to pipe repairs, like joint resealing, Lombardi said definitions of NPAs should include both demand response and targeted electrification, a strategy for selectively swapping out natural gas for electric heating, or other electric appliances in locations that could most benefit from electrification.

“You can electrify just a few houses or an apartment building or an entire neighborhood maybe that has a high energy burden, or maybe a neighborhood that already has a lot of leaks,” she said.

That idea won support from Commissioner Bonnie Suchman, who said targeted electrification could be an effective, incremental approach to reducing both emissions and gas networks.

“The idea of targeted electrification is a much easier pill to swallow than sort of all-or-nothing,” she said. “And it gets us focused on what makes the most sense for an individual as opposed to just full-on electrification.”