TO HAVE ANY CHANCE to avoid a climatic catastrophe, the latest climate science is definitive that we must actively dismantle much of our existing fossil fuel infrastructure. In the face of this dire warning, Massachusetts is poised to spend about $40 billion to get its gas distribution system back online. How is it possible?
In 2014At a time of growing concern about the threat of explosions caused by gas leaks and the need to reduce fugitive gases, the Legislature enacted the Gas System Improvement Plan (GSEP) to encourage the six Commonwealth investor-owned gas companies to replace their aging pipelines more quickly in return for faster recovery of the costs paid by taxpayers.
Since then, GSEP’s original focus has slowly changed. Gas companies are now using the plan as an accelerated investment vehicle to prepare their gas delivery systems for biomethane and hydrogen. With the cooperation of the Department of Utilities, their regulator, they are revitalizing over 90% of their assets and tying them up at a nearly 10% rate of return through the end of the century.
The new goal of GSEP is unabashedly recognized in research supported by the gas industry. The Associated Industries of Massachusetts recently funded a UMass-Lowell study supporting the development of hydrogen in the Commonwealth, including pipeline and combustion to heat buildings – a false solution for our climate, safety and public health. The report suggests that “the GSEP schedule could be accelerated” to accelerate the introduction of hydrogen since 4,000 miles of pipeline await replacement of the GSEP with a hydrogen-compatible plastic pipe.
In contrast, GSEP has been a stealth player in the The future of gas investigation, a DPU examining how gas companies can reconfigure their operations to help the Commonwealth achieve net zero emissions. Reports from consultants and proposals from gas companies were filed in March. None describes or assesses the role of GSEP in the energy future, although GSEP could not be more fundamental to preferred gas company energy pathways such as “efficient gas equipment” and “hybrid” electrification. or “weak”. Indeed, these pathways would be worthless if the GSEP were to disappear, as they require upgraded plastic pipelines ready to deliver fractured natural gas mixed with biomethane, synthetic natural gas or hydrogen.
Is there hope for a full audit of the GSEP program? Not according to the DPU. End of March, DPU rejected Attorney General Maura Healey’s call to convene a task force to closely examine the GSEP and also excluded interested parties from future discovery, including the Attorney General’s office and community stakeholders. . Everything indicates that the DPU is speeding up procedures for gas companies regulatory requestspresumably to lock in decisions before the next change of administration.
Be careful because these requests would allow gas companies to obtain biomethane and hydrogen, even if they cost more than natural gas, and to impose new tariffs on taxpayers to finance the “decarbonization” activities of each business. These proposals assume that alternative gases are fossil-free, emission-free, compatible with existing infrastructure, and pose no health or safety hazard. A wishful thinking at best. Strong scientific evidence clearly shows that these gases are not affordable, clean, safe or healthy when delivered to homes and businesses.
The opportunity costs of GSEP should not be buried by Future of Gas Investigation and ignored by DPU. What do these costs look like?
Despite requests from stakeholders, the survey did not provide a full cost for the GSEP, although these costs are clearly incorporated into the consultants’ modelling. However, an appendix to the report shows GSEP’s annual investment forecast until the end of the program in 2039.
Let’s do the math. Assuming the DPU-approved rate of return on pipeline assets (currently averaging 9.65%) and the 60-year asset life for the plastic pipes claimed by the gas companies, the annual forecasts of the survey indicate total GSEP costs of $40 billion (in constant 2019 dollars). Yes, that’s $40 billion with a B. That staggering cost translates to about $23,500 per gas customer, enough to install a cold climate heat pump or solar panels and weatherproof the building envelope of the customer’s residence or business.
The Senate has just voted its omnibus amendment on the climate S.2819, happily including provisions mandating a GSEP Stakeholder Working Group and a decision-making process for DPU review of gas company “Net Zero Activation Plans”. The spotlight now turns to the House where lawmakers have a crucial opportunity to guide the transition of our gas system, aligning it with our climate mandates and reigning in a runaway GSEP agenda.
Lawmakers are expected to take three crucial steps during this session.
First, accurately measure Commonwealth greenhouse gas emissions. Our methane measurements are woefully out of date, which is only a fraction actual gas leaks, and we do not use a life-cycle approach to measuring greenhouse gases. Accurate metrics will reveal whether gas company business proposals are in fact aligned with our 2050 goals. reduction of emissions from the Massachusetts Department of Environmental Protection.
Second, ban the use of alternative gases, such as hydrogen and biomethane, for heating homes and businesses. The DPU should not be allowed to greenlight gas companies’ ill-conceived plans for these gases because they fail to meet reasonable safety, health, emissions and cost standards.
Third, encourage utility companies to invest in networked geothermal heat pumps. We need to transfer the substantial financial benefits of the GSEP (including asset depreciation beyond 2050 and cost recovery on an annual basis) from the replacement of gas lines to the installation of renewable, non-emitting thermal infrastructure such as as the GeoGrid water pipes that can heat and cool our buildings.
By correcting the calculation of gas company investments, these three pieces of legislation will lead to a smart and strategic deceleration of investment in fossil fuel infrastructure while opening the door for gas companies to evolve their business models towards non-emitting renewable thermal energy.
Following these three patches, significant work remains to be done. The glaring disconnect between the original purpose of the GSEP and its rampant reality must be resolved. To ensure that significant investments of taxpayers’ money actually move us toward our climate goals, the Legislature should replace the GSEP with a bespoke “Gas System Transition Program” focused on promoting safety, reducing emissions and using resources wisely during the energy transition.
Dorie Seavey is a climate economist and author.