What is the future of natural gas in Maryland? Debate unfurls at Baltimore hearing

BALTIMORE — Joelle Novey and her colleagues attended a rally Thursday urging regulators to curtail natural gas spending in Maryland in costumes based off of the 1960s television show “The Flintstones.”

Their message? Using natural gas appliances in homes and businesses is a thing of the past.

“As far as we’re concerned, it is high time to leave burning fuel indoors in our past. A page right out of history — as in the Stone Age,” said Novey, director of the local chapter of Interfaith Power & Light, a religious group dedicated to fighting climate change.

Novey, alongside a group of environmental and consumer advocates, gathered Thursday in downtown Baltimore to attend the Maryland Public Service Commission’s first public hearing regarding the future of natural gas.

They are pushing for the commission to open a formal proceeding on the matter and use its regulatory power to constrain utility spending on gas infrastructure, as state officials push for a deeply electrified future — full of electric heat pumps and water heaters instead of their gas-fired equivalents.

In February 2023, Maryland’s ratepayer advocate, People’s Counsel David Lapp, asked the commission, which regulates utilities in the state, to take short-term and long-term steps to slow the costly installation of new natural gas pipelines.

Lapp, who represents Maryland renters and homeowners paying for gas and electricity, has expressed concern that gas companies continue to pour hundreds of millions of ratepayer dollars each year into new gas lines and replacements, despite state projections that many customers will turn away from natural gas in the years ahead, partly because of government regulation.

Because gas infrastructure costs are recouped over decades, a shrinking base of ratepayers could be left with today’s bill, pushing rates higher and higher, Lapp argues. And it’s the less wealthy ratepayers, who won’t be able to afford switching out their gas furnaces for electric heat pumps, who will bear the brunt of those increased rates, he says.

The trend already is beginning to play out, Lapp said during Thursday’s hearing. For instance, between 2014 and 2022, BGE increased its gas capital spending from $272 per customer to $690 — a 154% bump. And since 2010, the utility’s delivery rates have tripled, an increase that is three times the pace of inflation.

“That is what’s profitable for their inventors,” Lapp said Thursday. “So you won’t hear about a gas industry strategy that involves decreasing — at least substantially — the infrastructure investments.”

A study commissioned by the PSC indicated that residential and commercial demand for natural gas in Maryland, excluding industrial use, could decline 31% to 32% by 2031. The study also predicted that demand for electricity could rise 0.6% to 2.1% per year through 2031, but that increase is less dramatic than prior periods, such as the 1980s, when demand jumped almost 5% per year, suggesting that grid upgrades would be manageable.

Meanwhile, Maryland officials such as Gov. Wes Moore, are pushing to fuel the grid with increasingly clean energy, such as wind and solar.

But at Thursday’s hearing, gas companies such as Baltimore Gas & Electric and Washington Gas Light argued that demand remains for new natural gas hookups, necessitating continued spending on the infrastructure to ensure it is safe and reliable.

BGE sees 1% growth annually in the number of gas customers, said John Frain, the utility’s director of regulatory accounting.

During Thursday’s hearing, BGE officials acknowledged that the consumption of gas in Maryland homes is likely to decline in the future, but they argued that continued investment in the system is needed nevertheless.

“That doesn’t necessarily mean that there would be a proportionate reduction in gas infrastructure,” said Lauren Urbanek, BGE’s senior manager of decarbonization strategy. “That’s really dependent on the geographic nature of where customers choose to electrify.”

In other words, even if Marylanders leave the gas system, if those remaining on the system are spread throughout the state, it may be necessary to keep the entire system up and running, Frain said.

BGE is supportive of opening a proceeding but stands by its current level of investment, officials said. The utility also argued that the commission should await specific action from the Maryland General Assembly before constraining gas spending.

The General Assembly already has passed a requirement that the state cut its fossil fuel emissions 60% from 2006 levels by 2031, and become net-zero by 2045, balancing its annual output of carbon emissions with the amount removed by vegetation and technological sources.

Soon, all new buildings constructed in Maryland will have to use electric heat pumps and water heaters, rather than gas-burning equivalents. In an executive order last month, Moore ordered his environment agency to issue the formal regulation.

Thursday’s hearing ran later than expected, and will hbe continued another day. But afterward, the commission, now led by Moore’s appointees, will decide what steps to take, and what a formal proceeding to decide the future of gas could look like.

In Lapp’s eyes, there are short-term actions the commission can take right away.

For example, the PSC could require homeowners who want new gas lines running to their home to foot the bill, rather than allowing utilities to pass that cost on to all of their ratepayers. And when the utility plans to replace an outdated gas line running to someone’s home, they could provide ample notice, allowing the homeowner to consider electrifying, and notifying the utility that replacing the line may prove unnecessary — and therefore wasteful.

“They’re just doing it automatically. So if that customer decides in the next five years they’re going to fully electrify — or in 10 years — most of those costs still haven’t been recovered,” Lapp said in an interview.

A 2013 Maryland law called STRIDE encourages utilities to replace aging gas lines by allowing them to put a monthly surcharge on ratepayer bills to fund the upgrades, Lapp argues.

Climate and ratepayer advocates pushed to reform that law this past year. The bill they backed, which stalled in committee, would have required utilities to prioritize cheaper fixes to outdated gas lines, rather than full replacement.

“STRIDE is not a statute about safety. It’s a financial recovery mechanism,” Lapp said Thursday. “There are alternatives to promote safety, other than replacement.”

But even without legislative change, the commission could deny an individual utility’s STRIDE plan because the existing law required gas upgrades under the law to be “reasonable and prudent,” and, Lapp argues, the current investments are excessive.

During Thursday’s hearing, Christopher Klein, an employee of Miller Pipeline, which builds and repairs pipelines including for natural gas, spoke about the importance of continuing to fund pipe repairs.

“I’ve personally worked on mains that were installed in the 1800s and are still in operation today,” Kline said. “These systems need constant maintenance to ensure they’re safe and reliable. I’ve seen cast iron pipes so deteriorated that the bottom section has completely fallen out.”

The 26 other commenters from the public, including ratepayers and representatives of environmental groups, spoke in support of Lapp’s petition, including Emily Scarr, director of the Maryland Public Interest Research Group.

“When you find yourself in a hole, stop digging,” Scarr told the commission Thursday. “We’re asking you to put the shovel down, and exercise your authority.”

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