Significant new uncertainties and options for the gas industry are creating new challenges for regulators who are responsible for ensuring that utility investments are in the public interest.
Many of the unknowns relate to the potential for customers to switch from gas to electricity for heating and other uses and the potential for utilities to replace fossil methane with alternative gases. Gas customers could face higher costs if their numbers decline in favor of electrification or if investments in alternative gases far exceed current resource costs.
Yet current typical tools and processes for regulating gas distribution utilities do not give regulators complete information on which to make decisions about long-term utility investments in this context.
Commissions across the country are recognizing the need to review and update their planning approaches. This paper surveys current efforts to modernize gas utility planning and draws lessons for those considering similar work. At the heart of the paper are five principles for redesigning planning to restore confidence that utility investments will be in the public interest:
- Build equity into planning so decisions are made with equitable service and distribution of costs and benefits in mind.
- Consider an expanded range of investment and resource options.
- Establish integrated gas planning by combining integrated resource planning practices with gas distribution system planning.
- Use combined energy planning to take the broadest possible view of emissions reduction opportunities.
- Foster collaboration with state agencies that have expertise in emissions reduction.