Moratoriums and Efficiency Programs: The State of Natural Gas in New York
by Christina Nagy-McKenna, Enerdynamics Facilitator
One of the newest productions in New York is not playing on Broadway but rather in the statehouse as the complicated transition to clean energy unfolds in the Empire State. Since the beginning of the year, regulators from the state’s environmental agency denied a permit for the construction of additional natural gas pipeline capacity, despite data that points to a critical capacity shortfall.
Utility regulators approved a new program to help solve the capacity issue by reducing demand. Concerned about potential shortfalls on peak demand days, two of the state’s gas distribution utilities have declared moratoriums on the addition of new customer loads in selected areas. The issue is not an easy one to tackle as it asks a critical question: “How do you balance the need to move away from fossil fuels for the betterment of the environment with the need for service to the end-use customer?”
In March 2019, Consolidated Edison of New York (Con Edison) announced a moratorium on new natural gas services in most of Westchester County, N.Y. In April, the company warned that without additional capacity, the ban could be extended to its service territory in New York City. In May, National Grid followed suit for its service areas in New York City and Long Island. The underlying concern for both companies is a shortage of natural gas on peak demand days.
The recent denial by the New York Department of Environmental Conservation (DEC) to issue an environmental permit for the FERC-certified Northeast Supply Enhancement (NESE) project was the tipping point for National Grid. The project is an expansion of the Transco pipeline and is designed to bring 400 MMcf/day to the New York, New Jersey, and Pennsylvania markets. It is expected to become operational in 2020-21 and can potentially help meet the needs of customers in New York City and Long Island where approximately 8,000 new customers are being added each year by National Grid. Transco resubmitted its permit application two days after the DEC denied it, thus the issue continues to develop.
How to balance the varied needs of the environment is part of the issue. Under Governor Andrew Cuomo, New York is aggressively pursuing clean energy solutions with the goal of 50 percent renewable sources for electricity by 2030. It has not approved a new natural gas pipeline since 2013, and it banned high-volume hydraulic fracking in 2015.
While customers in New York are encouraged to switch from heating oil to cleaner-burning natural gas to improve air quality and decrease greenhouse gas emissions, the DEC raised concerns about the impact of the NESE project on water quality. This potentially leaves some customers stuck with fuel oil if they cannot get access to natural gas. Similar water quality concerns were raised by the DEC when it denied permits for the proposed Constitution Pipeline and Northern Access Pipeline projects in 2016 and 2017.
The New York State Public Service Commission is encouraging utilities to turn to gas efficiency programs, demand response programs, and alternative technologies to mitigate the supply issue. Con Edison received state approval for a $233 million efficiency program in February that targets reduction of gas usage through increased efficiency and selective electricity solutions with the use of heat pumps. For example, as part of its Smart Solutions program, the utility offers Westchester customers a $5,000 rebate for a ground-sourced heat pump and up to $6,500 in rebates for home insulation and smart technology upgrades. Rebates are higher for multi-family units.
Commercial and industrial customers are targeted with programs including steam trap repair and replacement, and demand-controlled ventilation. The Smart Usage Rewards Program is a demand response program offering customers incentives up to $4,500 per winter season for every 100 therms/day that they pledge to reduce. Customers receive an alert 21 hours before the day they must curtail their usage. Depending on the geographic constraints of the utility’s service territory, customers can earn either $9.00/therm or $5.00/therm and an additional performance payment of $1/therm.
Con Edison Demand Response Payment Options by Zones:
||Hours of notification before event
||Monthly reservation payments rate
||Performance payment rate during DR events
|Gas Demand Response Pilot
Zone A: $9/therm/ event/month
Zone B: $5/therm event/month
source: ConEd.com website
Even with the authorization of the new gas efficiency program, Con Edison remains concerned about its ability to serve new customers and has not ruled out expanding its moratorium.
It is unknown at this time when the DEC will decide to accept the resubmitted environmental permit application or how it will rule on other new pipeline projects like Kinder Morgan’s Tennessee Gas Pipeline, which recently agreed to build additional pipeline capacity of 110MMcf/day to Westchester County and ease the supply issue there for Con Edison. The success of the new demand response programs will be easier to evaluate after a full winter heating season as will the impacts of the gas efficiency programs. Until then, the state will grapple with weighing customer needs for expanded service and the negative impacts of burning fuel oil instead of natural gas, while not compromising water resources that may be negatively impacted by additional gas pipeline construction.
Footnotes and bibliography:
Cocklin, James. Con Ed Warns of Natural Gas Service Moratoriums in New York City. 16 April 2019. <www.naturalgasintel.com/articles/118058-con-ed-warns-of natural-gas-service-moratoriums-in-new-york-city>.
Gheorghiu, Iulia. "National Grid Says No to NYC Gas Customers Until State Approves Pipeline." 22 May 2019. Utility Dive.
Stockton, Chris. "Williams Receives FERC Certificate Authorizing Northeast Supply Enhancement Project." 3 May 2019. Williams Pipeline Co. <https://northeastsupplyenhancement.com/press/williams-receives-ferc-certificate-authorizing-northeast-supply-enhancement-project/>.
U.S. Energy Information Administration. Natural Gas Weekly Update. 1 May 2019.
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