California prepares to shift away from natural gas, while keeping power reliable and affordable
California’s energy system is undergoing a period of profound change.
Our state has committed to the goals of 100% clean electricity, a doubling of energy efficiency, widespread transportation electrification, and a carbon-neutral economy by 2045.
Our electricity system has rapidly exceeded the renewable goals, and we are looking at an energy mix that is, at certain times of some days, well over 60% carbon-free.
But in the meantime, we need to achieve significant reductions in the use of fossil fuels in transportation and other sectors.
While you are contemplating making your next car purchase an electric vehicle and replacing your old gas water heater with an efficient heat pump water heater, state policy makers are considering how to manage the long-term transition away from fossil fuels.
As a key part of those considerations, we need to anticipate and plan for significant changes in California’s gas distribution system. In January, the California Public Utilities Commission launched a process to do just that.
The last time the Public Utilities Commission began a long-term planning process for gas system reliability was in 2004, and the effort was largely successful. The commission took actions to enhance reliability and affordability.
But much has changed in the gas industry in California since 2004, as we’ve seen with a series of pipeline and storage safety-related incidents, as well as challenging operational issues and constraints.
On the safety side, we experienced the San Bruno explosion and inferno in 2010 when a PG&E natural gas pipeline ruptured and exploded, killing eight people, injuring 58 other people, and destroying or damaging 108 homes.
To ensure that such a disaster does not happen again, the commission established a new safety process requiring all gas transmission pipeline operators in the state to file plans explaining how they will replace or pressure-test all pipelines that had not been tested or for which reliable records were not available.
Safety issues still exist.
In October 2015, a well blowout at the Aliso Canyon storage facility near Los Angeles caused an environmental disaster resulting in the leak of 97,100 tons of methane. The incident forced several thousand families to be relocated temporarily and led to severe restrictions on Aliso storage.
At the request of Gov. Gavin Newsom and the Legislature, we’re now looking at ways to transition away from the Aliso facility as quickly as possible, once we’ve identified reliable and cost-effective ways to manage the gas system without the large storage capacity at the field.
Moreover, in 2017, SoCalGas experienced a rupture on a major pipeline, Line 235-2, in the desert east of Los Angeles, and other problems on Line 4000. Since both pipelines connect to critical interstate points to receive gas, their outages limited the amount of gas supply on the SoCalGas system.
During unseasonably cold temperatures in the winter of 2018, the utility was forced to order mandatory gas supply cuts for some of its large customers.
These supply constraints led to price spikes for natural gas customers in 2017 and 2018 that resulted in extra costs for electric ratepayers as well.
Given that California’s energy portfolio still includes gas-fired generators, the increased gas prices caused electric ratepayers to pay more than $1 billion in additional costs during 2017 and 2018.
The need to maintain reliability, protect electric customers from increased costs, and the paramount concern for safety means that it is time to take a step back and consider these challenges holistically.
To examine the big picture as part of the state’s future energy needs, challenges and opportunities as we continue to transition from fossil fuels in a thoughtful, strategic way that ensures affordability, reliability and safety.
At the commission’s meeting in San Francisco on Jan. 16, we opened a new rulemaking proceeding with the goal of providing a forum where we can consider the challenge of how to ensure the safety and reliability of California’s natural gas infrastructure.
To do so as we craft a long-term planning strategy to manage our transition away from natural gas-fueled technologies to meet California’s decarbonization goals.
This is no small undertaking.
It is highly complex, with many moving parts and issues to weigh and think through. But it is absolutely essential that we do so, and I look forward to hearing the thoughts and ideas of affected people as we address these challenges.
It’s important to manage this transition so we minimize “stranded” costs borne by ratepayers. Stranded costs refers to utility infrastructure that must still be paid for but that would become obsolete as the transition unfolds.
We must also avoid making gas service unaffordable or uneconomic for those who continue to use gas for essential energy services and ensure that customers who move off gas have access to essential energy services at prices that are affordable.
Most importantly, gas pipelines need to be maintained safely. They must be operated consistent with state and federal standards. Maintaining those standards will require investments of labor and equipment at a time when ideally the amount of gas used will go down.
Ensuring safety at the same time the system transitions towards less reliance on gas will be a high hurdle for the state to clear. But we Californians are up to the challenge.
We plan to conduct this proceeding in three phases:
- Track 1A will examine reliability standards for the gas transmission systems to determine, among other things, whether design changes are necessary to account for a warming climate, and the service capacity of current and future gas system infrastructure.
- Track 1B will examine proposals for mitigating the negative impact that operational issues with gas transmission systems have on wholesale and local gas market prices, and gas system and electric grid reliability.
- And Track 2 will determine the regulatory solutions and planning strategy the commission should implement to ensure that—as the demand for natural gas declines—gas utilities maintain safe and reliable gas systems at just and reasonable rates, and with minimal or no stranded costs.
As we manage this transition, we also need to be cognizant of the impacts on those working in the natural gas industry. A recent report by Gridworks, an energy advocacy organization in Oakland, noted a gas distribution work force in California of more than 10,000 employees.
In the move away from natural gas, these workers are understandably concerned about their livelihoods. We need to be sensitive to their needs as well.
Any undertaking of this magnitude must be collaborative. In addition to working with the public, Public Utilities Commission staff from our energy, safety and legal divisions, as well as other knowledgeable CPUC experts, we are—as always—in close communication and coordination with the California Energy Commission. We are, in fact, establishing a working group with the Energy Commission so that we can explore these issues together.
We face many big decisions as this proceeding moves forward. These decisions will have tremendous economic, social, and environmental impacts.
I’m confident that working inclusively the public, and our partners at the Energy Commission and elsewhere, we can make the right decisions that keep our energy system safe, affordable and reliable.
Liane Randolph is a member of the California Public Utilities Commission, [email protected]. She wrote this commentary for CalMatters.