DPU Opens Look Into Natural Gas Industry

With an eye on the state's goal of significantly reducing its greenhouse gas emissions over the next 30 years, the Department of Public Utilities opened an investigation Thursday into the future of the natural gas industry in Massachusetts and its role in "ensuring a low-carbon future" for Massachusetts.

Regulators at the DPU issued an order Thursday that requires gas companies operating in Massachusetts to hire an independent consultant who will look into various ways that the companies might be able to help the state meet the Baker administration and Legislature's shared goal of getting to net-zero greenhouse gas emissions by 2050 while still protecting ratepayers and ensuring energy reliability.

Each company will be required by the DPU to use the consultant's analysis to develop a "proposal and plan for helping the Commonwealth achieve its 2050 climate goal," the department said. Those plans must be filed with the DPU by March 1, 2022.

"As the Baker-Polito Administration has committed to an aggressive goal of net zero emissions by 2050, this investigation will analyze the future role of natural gas as part of Massachusetts' energy system," DPU Chairman Matthew Nelson said. "The Commonwealth continues to lead the nation on climate change mitigation, and this Order will help assess how to best achieve deep emissions reductions while ensuring a safe, modern and cost-effective heating distribution system for Massachusetts ratepayers."

In January, Gov. Charlie Baker announced he would accelerate the state's decarbonization efforts. The 12-year-old Global Warming Solutions Act required an 80 percent reduction below 1990 levels by 2050, but the new limit announced by the administration in April essentially puts the state on the path towards net-zero greenhouse gas emissions by 2050.

Under no circumstance, however, should the level of emission be greater than 85 percent below 1990 levels, the policy says. Though it has not yet been codified in law, both branches of the Legislature have registered their support for the net-zero by 2050 goal.

DPU said the consultants' reports and the subsequent gas company plans will build upon two forthcoming administration plans that will "identify consistent and actionable strategies for the energy industry in the Commonwealth's path to reduce emissions." The administration's 2050 Decarbonization Roadmap and the 2030 Clean Energy and Climate Plan are both expected to be released in December. The 2050 Roadmap will inform the setting of a 2030 emissions reduction target by the end of this year.

Thoughout the process, DPU said in its order, it will solicit feedback from the utilities and others as it "develop[s] a regulatory and policy roadmap to guide the evolution of the gas distribution industry."

Thursday's announcement from DPU comes about five months after Attorney General Maura Healey filed an 18-page petition with DPU asking the department to "examine the gas distribution industry, regulatory, and policy changes needed to support the achievement of the Commonwealth's mandated [greenhouse gas] emission limits" and then use that information to "determine what near- and long-term adjustments are necessary to maintain a safe and reliable gas distribution system and protect consumer interests as the Commonwealth transitions from fossil fuels to a clean, increasingly electrified, and decarbonized energy future by 2050."

Healey's argument hinged on the idea that the state needs to reduce the use of fossil fuels in the building sector (for heating homes and offices) in order to meet the 2050 emissions reduction mandates, and that the decline in fossil fuel demand will require gas distribution companies to make significant changes to their planning processes and business models.

"Our office called for this natural gas investigation in June, with support from a chorus of clean energy advocates, because we know how critical it is to transition our state away from fossil fuels. We are grateful to the DPU for taking this necessary next step," Healey said Thursday. "This investigation is nation-leading and it will allow Massachusetts to plan ahead and make the policy and structural changes in the natural gas industry we need to ensure a clean energy future that is safe, reliable and fair for all of our customers."

The attorney general said impending changes also will require DPU to develop new policies and structures to ensure reliability and to protect ratepayers.

Massachusetts deals with some of the highest energy prices in the country and state leaders have been at odds for years over whether the state needs more natural gas pipeline capacity. Baker's administration has expressed a desire to increase natural gas capacity into the New England region, but Healey and some Democratic lawmakers have in recent years argued that additional capacity is not the best solution to meet the state's longer-term energy demand needs.

With the investigation the DPU announced Thursday, Massachusetts follows in the footsteps of California and New York, states that engaged a regulatory proceeding with the aim of proactively managing a transition away from natural gas.

Healey's office said New York's Public Service Commission opened an investigation this March to "ensure more useful and comprehensive planning for natural gas usage and investments in the state" and that California's Public Utility Commission launched a proceeding in January to "examine the challenges relating to the safety and reliability of the state's natural gas infrastructure, while the state focuses on achieving its long-term decarbonization goals."

In 2015, a study produced by Healey's office concluded that additional natural gas pipeline capacity is not the best solution to meet the state's long-term energy demand needs. While new interstate pipeline capacity would have consumer price benefits, the study found it would also carry significant up-front costs with risks for ratepayers of long-term commitments to pay for new infrastructure.

The Baker administration has come under years of criticism for permitting and not joining the opposition to a natural gas compressor station in Weymouth.

Massachusetts lost ground its latest report on reducing greenhouse gas emissions, with Baker administration officials assigning the shift this month to greater transportation fuel use and increasing heating fuel usage in 2018. The Executive Office of Energy and Environmental Affairs this month released its update to the Massachusetts Greenhouse Gas Emissions Inventory, a report that showed emissions in 2018 were 22.2 percent below emissions in 1990, compared to 2017 emissions that were 22.7 percent below 1990 levels.