Even before the Malloy administration’s release Friday morning of the state’s first Comprehensive Energy Strategy, concerns emerged among the environmental community and other organizations about a cornerstone of the plan — widespread conversion of homes and businesses to natural gas.
Chief among them is that natural gas’s historic low prices will not last and that consumers could at some point face the same problem with gas that they now face with oil.
“The thing of greatest concern — what appeared to us to be an extraordinarily mistaken impression — [is] that the current cheap natural gas prices, relative to what they were four years ago, are going to be that way for a very, very long time,” said Gene Guilford, president and CEO of the Independent Connecticut Petroleum Association.
The group represents 576 fuel oil dealers and gasoline distributors who are likely to feel the brunt of business losses if people turn from oil to gas heat.
“I’ve been around energy issues for about 30 years,” Guilford said. “Probably the only thing that can be said in the energy business is that nothing lasts for very long.
“Oil has been less expensive than natural gas for 18 of the last 20 years. What’s going to happen over the next 20? If someone purports to know, ask him for the lottery numbers, too.”
Environmental groups, on one hand, had overall praise for many of the concepts in the five components of the new strategy: natural gas, energy efficiency, electricity supply and renewable energy, industrial needs and transportation.
But on natural gas they echoed concerns on even more fronts. They worry consumers will wind up locked into a considerable investment in natural gas equipment even if natural gas is no longer an optimal fuel. They say the focus on natural gas could push off the goal of more renewable energy.
And they note that the new policy depends on the availability of domestic shale gas, something obtained through the extraction process called hydraulic fracturing, or fracking. Not only is fracking likely to have negative environmental impacts, they point out, but so does the natural gas itself with potential methane leakage.
In the end, they say, natural gas is still a non-renewable fossil fuel.
“The details of the plan will matter greatly,” Daniel Sosland, president and CEO of Environment Northeast, said in a statement that also praised Gov. Dannel Malloy’s commitment to energy efficiency and clean energy strategies. “The state needs to fully understand the implications of increased reliance on natural gas and how capital for additional energy project financing will be raised, and we look forward to seeing those details.”
Charles Rothenberger, an environmental attorney who, until recently, was with the Connecticut Fund for the Environment, raised similar concerns about the gas component.
“Five years ago, was anybody predicting natural gas prices are as low as they are?” he asked rhetorically. “It’s very difficult to predict where natural gas prices will be in five years, never mind 30 years.”
Natural gas expansion, he said, should be a “fill-in resource,” not a long-term substitute for oil and coal, and a bridge to renewable energy coupled with energy efficiency. The questions are: “What does that bridge look like and how long is that bridge?” Rothenberger asked.
Department of Energy and Environmental Protection Commissioner Dan Esty said his department examined about a dozen energy forecasts, and while natural gas prices will rise somewhat, all showed it to be more cost-effective than oil for at least the next decade.
“It’s not the final solution to our energy future,” he said of natural gas “But it’s a big bridge to our energy future.”
The key in the natural gas conversion plan, he said, is the financing mechanism that will eliminate a consumer’s upfront costs. “You’re going to save money from day one,” he said, explaining that monthly payments should be less than energy savings. “So it really has dramatically shifted the limitations that people felt.”
Converting homes, businesses to natural gas
The plan was developed by DEEP as required by legislation passed in 2011. It faces months of scrutiny and some legislative and regulatory approvals.
It was unveiled to a standing-room-only sea of dark suits at a Connecticut Business & Industry Association energy forum, by Malloy, who said: “This is not a mandate for the consumption of natural gas.”
But the bulk of his speech and responses after it indicated otherwise. “The most dramatic element of this strategy is the opportunity presented to us by the increased supply of low-cost domestic natural gas,” he said. “For businesses, especially manufacturers, the cost savings from switching to natural gas may be a key to competitiveness and profitability.”
The highly detailed natural gas section in the plan shows it clearly to be a priority. It calls for converting as many as 300,000 homes and businesses to natural gas, about 227,000 of them already along gas mains.
The average residential cost for the conversion is put at $7,500, and while the plan spells out new financing models and restates existing ones, the cost would still be borne by home and business owners. Some are skeptical that homeowners and businesses in the current economic downturn would be inclined to take on the financial burden.
For residents a little farther from gas mains, costs would be picked up by the state’s three gas companies and passed onto ratepayers, a red flag for Rep. Vickie Nardello, D-Prospect, and co-chairwoman of the Energy and Technology Committee.
“I’m always concerned with ratepayer impact,” she said. “We have to balance energy needs and desire for clean energy with any possible ratepayer impacts.
“There are elements in the framework that I think we can agree to, but the important thing is the details of how all of this will be implemented.”
The plan also calls for an estimated 900 miles of new gas mains for so-called “anchor loads” such as factories, hospitals and schools that are not near existing gas infrastructure. There is concern that the already-jammed gas transmission system would not be able to handle the increased load, and expanding it would incur costs above the more than the $5 billion the plan estimates conversion would run.
Overall praise
Even with the concerns, the plan gets high praise among some simply for existing.
“We’re very encouraged by what the focus of the plan appears to be — building a cheaper, cleaner, more reliable energy future for Connecticut,” said Eric Brown of CBIA and a member of the Connecticut Energy Advisory Board. “Just the fact that the state is going to have a strategic plan that focuses on those key priorities is going to be in and of itself a great thing for the state.”
John Olsen, president of the Connecticut AFL-CIO, also a member of the energy advisory board and on the board of the Clean Energy Finance and Investment Authority, noted that the plan is filled with creative ideas.
“I’ve got to believe there’s no plan anyplace that someone can’t find something they don’t like, including me,” he said. “I think we can find the right balance.”
He said the plan would go “a long way to achieving” job creation and retention for the people he represents. “The challenge for us is to understand energy is going to change and move, and we have to not be afraid of the future and turn around and be poised to take advantage of it,” he said.
Emphasis on efficiency
Other parts of the strategy include building out infrastructures and support systems for electric, natural gas, hydrogen fuel cell and biofuel vehicles, and it calls for better methods for getting energy savings to small businesses. But a lot of the points — development of microgrids, clean energy financing programs and better grid resilience for storms — are already in place.
What all parties agree to is that one of the plan’s most important points is its emphasis on energy efficiency. “The cheapest energy resource is the one that is never used,” the governor said – a concept the environmental community universally embraces.
“The way to address an energy crisis is to not use energy and the way to do that is efficiency,” said Martin Mador, legislative and political chairman for the Connecticut chapter of the Sierra Club. “We’re not going to get people to stop driving, we’re not going to get them to keep thermostats at 60 in winter. The way to do it is to weatherize homes, and that also creates jobs.”
But there are concerns about how well the state has been able to manage energy efficiency efforts so far. Its touted Lead By Example program, which uses bond money to finance energy efficiency is likely to miss its goal — reducing energy use in state buildings by 10 percent by Jan. 1 — by more than half. And the doubling of energy efficiency funding Malloy announced in April has yet to be approved by the Public Utilities Regulatory Authority.
“We’ve had a lot of false starts because we’re always changing the game,” said Rep. Lonnie Reed, D-Branford, co-vice chairwoman of the energy committee. “I think we really have to sort of straighten out what is working and what isn’t.”
To that end, Esty said he plans to overhaul all existing energy efficiency programs.
“What’s often been missing in the energy efficiency field has been measurability and evaluation, and that is extremely important,” said Nardello, who doesn’t think current programs do that adequately. “Could we have made progress quicker,” she asked. “Changing people’s behaviors in terms of efficiency is very difficult.”