the voice and choice of public gas national gas policy and the stimulus impact john erickson...
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the voice and choice of public gasthe voice and choice of public gas
National Gas Policy and the Stimulus Impact
John EricksonAmerican Public Gas Association
August 25, 2009
the voice and choice of public gas
American Public Gas Association
• ~1000 community-owned gas systems 37 states >5M Customers ~21,000 Employees ~120,000 Miles of Main
• Systems size (Meters): 12 to ~500,000• Largest cities: Philadelphia, San
Antonio, Indianapolis, Memphis, Long Beach, Richmond, Colorado Springs, Mesa
• Freedom, OK (12 meters)• Annual Conference, Indianapolis, IN
(August)
the voice and choice of public gas
U.S. Municipal Gas Systems
the voice and choice of public gas
Public Gas Systems # of Employees
No data 1-5 6-10 11-20 21-50 51-100 >1000
50
100
150
200
250
300
350
400
450
500
110
475
178
10578
21 19
the voice and choice of public gas
Public Gas Systems # of Customers
No data 1-1K 1K-10K 10K-100K >100K0
50
100
150
200
250
300
350
400
450
500
83
474
361
59
9
the voice and choice of public gas
Priority #1The Safe and ReliableDelivery of AffordableNatural Gas at Just &
Reasonable Rates
the voice and choice of public gas
National Gas Policy• Climate Change• Supply• Market Transparency• Overhaul of the Financial Markets• Section 5 Reform• Stimulus Package
the voice and choice of public gas
Climate Change• Focus of both Congress and the
Administration• Significant Impact on Natural Gas LDC’s• House Passed Legislation on June 26th by
a 219-212 vote• Significant impact on natural gas
Fuel switchingIncreased demandCap on emissionsPoint of regulation
the voice and choice of public gas
HFC, PFC, SF62%
N20 (Soil Mgmt, Combustion)7%
Methane (Landfill, Mining, Ag, Gas)8%
CO2 from Process and Non-Energy Use
4%
CO2 from Residential Combustion
5%
CO2 from Commercial Combustion
3%
CO2 from Industrial Combustion
12%
CO2 from Transportation26%
Oil1%
Gas4%Coal
28%
CO2 from Electricity Generation
33%
U.S. GHG Emissions – 2005
the voice and choice of public gas
What is Cap and Trade?
the voice and choice of public gas
Climate Change Legislation• Waxman-Markey American Clean Energy Security Act (H.R. 2454) • The bill includes:
Carbon Reduction Program (83% by 2050)Renewable Electricity mandate Carbon LabelingEnergy Efficiency mandate for gas &
electric mandate removed
the voice and choice of public gas
Waxman/Markey Bill• Emissions Cap begins is 2012 • Gas LDCs come under cap in 2016• Gas LDCs with 475, 000 MCF (25,000
Co2 equivalent) • Industrial users over 475,000 MCF
responsible to track their own emissions
the voice and choice of public gas
Waxman/Markey Bill• Gas prices will likely increase due
to fuel switching• Gas LDCs will get 9% of “free
allowances” • Sale of those must be used to
protect consumers from gas price increases
• Buy remaining allowances if you don’t meet your yearly targets – auction or open market
• Recent CBO report estimates cost to consumers about $175 per year
the voice and choice of public gas
What can Gas LDCs expect under a climate program?
• Tracking your emissionsEPA registry rule www.apga.org/calculator
• Yearly compliance with EPA - permits• Potentially buying & selling allowances on
the market or buying from a government auction
• Find ways to reduce emissions to meet the cap (efficiency, load reduction, etc.)
• Stress on U.S. natural gas supply and price from fuel switching
the voice and choice of public gas
Access to U.S. Supply
APGA has long maintained the additional supply is a
fundamental component to long-term affordable natural
gas
the voice and choice of public gas
Supply Estimates Up
*35% increase from last report
the voice and choice of public gas
Supply Examples
the voice and choice of public gas
Access to U.S. Supply• Moratoria removed last year on OCS on East and West Coast• A recent Senate Energy bill contains language that opens Eastern Gulf of Mexico for E&P • Dept. of Interior finalizing rules on E&P on federal lands
the voice and choice of public gas
Market Transparency• Restore public confidence in the pricing
of natural gas• Transparency must assure consumers
that market prices are a result of fundamental supply and demand forces and not the result of manipulation or other abusive market conduct
• APGA supported legislation became law as part of 2008 Farm Bill
• CFTC and Congress continue to focus on oversight and transparency
the voice and choice of public gas
Overhaul of Financial Markets• Language added to the
Waxman/Markey Bill that addresses regulation of the over-the-counter (OTC) market.
• House and Senate moving to address derivatives reform legislation
• Move towards mandatory clearing will impact the natural gas industry on multiple levels
the voice and choice of public gas
Natural Gas Act Section 5 – FERC Refund Authority
APGA is pushing Congress to change the law to give the agency that oversees interstate pipeline rates, Federal Energy Regulatory Commission (FERC), refund authority to protect consumers.
the voice and choice of public gas
• Certain pipelines are proven to be over-charging consumers
• This authority would allow FERC to grant refunds to consumers when it is proven a pipeline is charging more than just and reasonable rates
Natural Gas Act Section 5 – FERC Refund Authority
the voice and choice of public gas
Natural Gas and the Stimulus Package
• The American Reinvestment and Recovery Act of 2009 (Stimulus Bill) signed into law February on 17, 2009
• The legislation allocates $787 billion to help stimulate the US economy
• Dollars available reduce over time
the voice and choice of public gas
Stimulus Dollars to Energy• 6.4% of the package designated to
energy• $32.5 billion in programs allocated to
State Energy Agencies.• $11.0 billion in programs directly funded
by the Department of Energy• Some provisions are specifically
designated to investment in electric generation, transmission and distribution
the voice and choice of public gas
An Example of State Program Funding• $5 billion for Weatherization Programs• $4.3 billion for Low Income Energy Efficiency• $3.2 billion for Energy Efficiency and
Conservation Grants• $3.1 billion for State Energy Program Grants• $2.4 billion for Housing and Urban
Development energy programs• $1.0 billion for Appliance Rebates and
Efficient Fleets
the voice and choice of public gas
Opportunities for Potential Stimulus Bill Funding
• State energy efficiency programs• Weatherization• State energy conservation block grants• Housing and Urban Development energy efficiency
projects• Tax credits and rebates for appliances and
weatherization• Natural Gas Vehicles• Reimbursement for relocation expenses• Develop new natural gas service conversion offers
from competing fuels (i.e. propane and fuel oil) that leverage funding from the Stimulus Bill
the voice and choice of public gas
Definition of Reportable Incident• Proposed by PHMSA Comments due 8/31• Any event where gas ignites would be
reportable, regardless of property loss• Events where house fires involve the meter
would be reportable if the house cost more than $50,000
• Volumetric criteria (3 MMCF)• Encourage utilities to file comments by 8/31
the voice and choice of public gas
WWW.APGA.ORG
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