New York regulators have proposed long-term natural gas planning procedures that could begin to address how utilities balance infrastructure needs with the state’s greenhouse gas reduction goals.

The New York State Department of Public Service (DPS) on Friday released a proposal to require that the state’s 11 local distribution companies (LDCs) file integrated resource plans every three years to supplement annual winter readiness reviews (20-00652/20-G-0131).

The IRPs would be a continuously updated model that considers load, peak demand and costs and investment opportunities for traditional natural gas solutions and for alternatives. Central to the proposal are requirements that the LDCs include “no-infrastructure” options and nonpipeline alternatives to address market demands and system needs.

According to the proposal, no-infrastructure options would include a mix of utility-sponsored demand reduction measures and contingency solutions, such as compressed natural gas or peaking services. In addition, utilities would need to improve infrastructure alternatives, such as energy efficiency, demand response and electrification.

“A comprehensive gas planning process is essential for protecting New Yorkers and ensuring they have the natural gas infrastructure they need and minimizing what they don’t,” said John B. Rhodes, chair of the state Public Service Commission, which will rule on the proposal. “It’s critical to ensuring reliability, keeping costs down and advancing State clean energy policies while combating climate change.”

A coalition of clean energy advocates criticized the proposal, saying in a press statement that it does not provide clear metrics for gas reductions or address the needs of environmental justice communities, as required by New York’s Climate Leadership and Community Protection Act (CLCPA).

Some gas utilities in the state have placed a hold on new service connections, citing supply constraints. Those constraints, however, are not going to get any easier under CLCPA targets, and they are leading to customer hardships, according to DPS. (See Study: No Silver Bullet for Fossil-Climate Legal Tension.)

In a March 2020 order initiating a proceeding on gas planning procedures, DPS said that gas planning has not “kept pace with recent developments and demands on energy systems.” The gas planning proposal, released as part of that DPS proceeding, seeks to address multiple, conflicting priorities.

DPS said that utilities need to maintain reliability while adopting improved planning practices to meet current customer needs and minimize infrastructure investments to avoid stranded costs under the goals of the CLCPA.

Michaela Ciovacco, an organizer with New Yorkers for Clean Power, applauded a requirement in the proposal for modeling gas infrastructure investment costs based on fully depreciating them by 2050. Ciovacco said the next step would be to specify when gas infrastructure should be eliminated altogether.

“Without bolder signals that New York is phasing out gas, energy efficiency and clean heating solutions like heat pumps will not be scalable to reach our state’s energy and environmental goals,” Ciovacco said.

New Service Moratoria

DPS on Friday also released a proposal on how utilities impose moratoria on new service connections. The proposal would require LDCs to attempt to offset gas demand through energy efficiency and demand response.

“Moratoria impose significant hardship on customers, and for that reason are a last resort, to be avoided and mitigated to the maximum extent practical,” staff wrote in the proposal, which would ensure consumers have notice of the need for such measures and when they would be implemented.

National Grid’s Brooklyn Union Gas found itself at odds with Gov. Andrew Cuomo in 2019 when the company issued a moratorium on new gas hook-ups that it attributed to supply concerns. The company resumed hook-ups under a settlement with the PSC. (See Online Protesters Reject NY Gas Supply Plans.)

Filing Requirements

The gas IRP process would include stakeholder engagement through technical conferences, comment periods and public meetings.

Each utility’s plan would include a demand forecast with a 20-year horizon, with peak day, peak hour and annual load projections. A supply forecast covering the same 20-year horizon would identify the supply portfolio for everything from pipeline contracts to contingency solutions such as compressed natural gas and demand-side resources such as electrification.

Proposals for new gas pipelines would be allowed within the long-term planning process, but DPS said they should be screened against non-pipeline alternatives. New pipelines that address immediate threats to reliability would be exempt from that screening process.

The proposal calls for “novel approaches” to building the supply portfolio, for example, peak pricing or payments for electric options that reduce gas demand. DPS said utilities should look for market examples of “imaginative solutions to demand-supply gaps,” and identify available renewable natural gas from landfills, wastewater treatment and anaerobic digestion.

DPS acknowledged that while utilities have expressed interest in renewable gas alternatives, “more work needs to be done to specify the environmental, and perhaps other, standards that should be applied to nontraditional methane to qualify a source as ‘renewable gas.’”

As part of its proposal, DPS invited interested parties to propose renewable gas standards in the gas planning proceeding for future commission consideration.

DPS also proposed establishing a best practices working group to calculate the “avoided cost of gas” for comparison with energy efficiency and other purposes. The working group would be open to interested parties but would also include state gas utilities, DPS staff and NYSERDA.

A stakeholder forum is scheduled for 1 p.m. March 25 to discuss the two proposals.

Initial comments on the proposals are due on May 3, with reply comments due June 4.