Proceeding Opens on Plans to Reduce Natural Gas Emissions

On Mar 7, 2023

Yesterday, The New Jersey Board of Public Utilities (NJBPU) voted to initiate a proceeding to formally engage with stakeholders concerning development of natural gas utility plans to reduce emissions from the natural gas sector to levels that are consistent with achieving the state’s 50% reduction in greenhouse gas emissions below 2006 levels by 2030.

The agency took action as outlined in Gov. Phil Murphy’s Executive Order 317, which was signed on Feb. 15.

Within 18 months from the date of the Executive Order, the NJBPU is also required to develop recommendations for how the natural gas industry can best meet these goals. The recommendations will consider the cost and support for jobs, including union jobs, necessary to deliver on these goals.

“This is perhaps the seminal climate issue of today,” said NJBPU President Joseph L. Fiordaliso. “As we fight the ravages of climate changes, which are brought about mainly by fossil fuels, we must do all we can to significantly reduce greenhouse gases and create a cleaner climate.” The president added, “I am anticipating a robust stakeholder process which will feature input from the gas utilities and other key stakeholders so that we might arrive at the best recommendations to enable the state to meet its clean energy goals.”

As part of the proceeding, the governor’s Executive Order required the NJBPU to consider the following:

• Competitive market mechanisms to drive the lowest cost methods for reducing total greenhouse gas emissions associated with the natural gas sector, including but not limited to adoption of a “clean heat” standard that would allow natural gas public utilities to select from a suite of measures to meet emission reduction standards, which may include accelerated energy efficiency and peak demand reduction targets, enhanced building electrification targets, leak minimization, or other similar measures;
• The need to ensure reliable operation and long-term financial viability of natural gas public utilities and the business model needed to keep the gas system intact while accounting for a shrinking customer base, including ensuring that gas distribution company growth assumptions and peak usage calculations factor into state decarbonization policies and minimize investment in new infrastructure so as to reduce risk of stranded asset costs;
• Alternative programs and investments that could provide natural gas utilities with new revenue streams and promote good-paying jobs, including union jobs, such as the potential to convert existing pipeline infrastructure to provide decarbonized heating and cooling to New Jersey’s residents and businesses;
• Elimination of subsidies that encourage unnecessary investment in natural gas infrastructure that is likely to result in stranded costs being passed on to customers;
• Long-term impacts on residential and industrial customers who fail to or are unable to switch away from natural gas, with particular attention to the needs of and barriers faced by low-income customers, and ways to reduce barriers to transition, including rate design, incentive structuring, and pilot programs to accelerate infrastructure conversion;
• Electric grid readiness to handle electrification of building heating and cooling, as well as transportation, including recommendations for shifting investment funding from natural gas to electric system infrastructure upgrades.

As an initial step in this proceeding, NJBPU will soon conduct a stakeholder process, including scheduling stakeholder meetings.

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