Lawyer: Cost of Natural Gas Conversion May Outweigh Benefits
As soon as Gov. Dannel P. Malloy unveiled his draft energy plan for the state in October, heating oil dealers were up in arms over its assumption that expansion of natural gas would save consumers money. One energy expert says the energy plan actually says the opposite.
“The departments analysis clearly indicates that a large portion of the proposed expansion would cost more than it would save,” N. Jonathan Peress, vice president and director of the Clean Energy and Climate Change Program for the Conservation Law Foundation, said Friday.
“If you deploy the energy efficiency supported by the draft strategy then the cost of natural gas expansion further outweigh the benefits,” Peress added.
Kelly Porter, a rate specialist inside the Department of Energy and Environmental Protection, said that’s true for some “off-main” customers. Those who are more than 150 feet from an existing natural gas line.
But she said there are 217,000 on or near a natural gas main and for those customers, based on the current price of natural gas, it may be more cost-beneficial to switch to natural gas. There are still an estimated 90,000 customers who are far enough off natural gas lines where energy efficiency measures may produce larger cost savings, she said.
“I’m sure in some cases half of Connecticut residents and businesses are better off staying on fuel oil,” Porter said.
The report estimates that about 50 percent of the state’s homes are in locations that are cost-prohibitive for conversion and their energy usage also makes conversion cost prohibitive.
But that doesn’t seem to be the message being sent by Malloy, who went so far as to admit that his administration debated forcing consumers to switch to natural gas, but ultimately decided against it.
The cost of converting customers who already live near natural gas lines has been estimated at $815 million. The cost would be picked up by the customers and the utilities.
But converting “off main” customers is much more expensive, Malloy said.
“This would require approximately 900 miles of new mains and cost somewhere around $1.4 billion,” Malloy said in October when he unveiled the plan.
“This is not a radical expansion of natural gas in the state,” Andrew Doba, Malloy’s spokesman, reiterated Monday. “The expansion will put Connecticut on par with neighboring states and lower costs for consumers and businesses.”
The guiding principle of the plan is to give consumers choice, “not mandate conversion to any one specific fuel,” he added.
But others, including Peress, a lawyer who lives in New Hampshire, believe the better choice may be biofuel.
An analysis conducted by New York City this past summer shows that converting to biodiesel costs less and has more beneficial environmental impacts, Peress said.
“Biodiesel is very close to the benefits of natural gas and costs less,” he added, noting the comment would likely upset some people.
Many fuel oil dealers in Connecticut already offer biodiesel or biofuel. The Independent Connecticut Petroleum Association lists them by county on their website.
Biodiesel is made from agricultural co-products and byproducts such as soybean oil, other natural oils, and greases. Fuel oil dealers in Connecticut are striving to implement a 20 percent blend of biofuel by 2020.
Gene Guilford, president and CEO of the Independent Connecticut Petroleum Association, said at the moment customers have to specifically ask their oil company for a biofuel blend, if they want it. But that won’t be the case in the future.
In 2010, the ICPA was able to get legislation passed that called for the virtual elimination of sulfur from heating oil and, at the same time, introduced a renewable fuel mandate to it. But Guilford said the legislation tied the mandate to what other surrounding states like Massachusetts, Rhode Island, and New York were doing. He’s hoping for stronger legislation this year that gets Connecticut to 20 percent biofuel before the end of the decade.
The public hearings for the draft energy proposal are over, but public comment on the proposal is open until Dec. 14.