Malloy Promotes Conversion To Natural Gas, Denies Choosing ‘Winner’
CROMWELL — Gov. Dannel P. Malloy unveiled a new Comprehensive Energy Strategy Friday that, among other things, promotes a major conversion to natural gas.
Malloy told a group of business and utilities executives in Cromwell that he wants to make it affordable for their businesses and, further, to convert 250,000 homeowners and 75 percent of businesses to natural gas in the next seven years.
“Think about it.,“ Malloy said. “If I tell you that you can save money by converting to natural gas but it will cost $7,000 or $8,000 to connect and get your new furnace and appliances, you might decide to pass.”
However, “if I tell you there are minimal out-of-pocket expenses and that you can finance all this over time for a monthly cost that is less than your current bill, you are likely to make the move. That’s what our strategy recommends.”
The average heating bill for a natural gas customer is about $1,600, while families with home heating oil are paying about $3,400 a year, he said.
Those in attendance offered cautious approval of the 200-page document which many were seeing for the first time, while others like Eugene Guilford, who represents 600 heating oil and propane retailers, were more critical.
“Connecticut should avoid a ‘One-Fuel Fits All’ energy strategy,“ Guilford, president of the Independent Connecticut Petroleum Association, warned.
“Both ISO-New England and the Federal Energy Regulatory Commission have warned this year about New England’s over-reliance on natural gas and Connecticut should heed these warnings,” he added.
As for the economics of converting to natural gas, there’s no way to predict that natural gas will be cheaper than heating oil into the future, Guilford said.
“No one four years ago believed that the economics of natural gas would be where they are today. Hence, no one today can tell you where the economics of natural gas will be four years from now,“ he said.
Department of Energy and Environmental Protection Commissioner Daniel C. Esty said natural gas is currently one-third the price of home heating oil.
“It’s cleaner, cheaper, and more reliable,” he said.
Asked if the state was picking a “winner” by promoting the conversion to natural gas, Esty said they weren’t forcing anyone to convert.
Currently, 50 percent of Connecticut homes are on home heating oil, while about 35 percent of commercial businesses and 53 percent of industrial customers use natural gas.
Malloy admitted in his remarks that they debated requiring the conversion to natural gas, which is currently being used by about 31 percent of households, but decided against it.
He said many consumers in the state of Connecticut haven’t had the option to convert to natural gas, like residents of other states.
“I think there’s a great option here for the oil suppliers. There’s a lot of work to be done in conversion. There’s a lot of work to be done on the maintenance side,” Malloy said. “But in the absence of competition our consumers were left with only one option—the most expensive option. And we know that’s not been good for us as a state.”
He said he doesn’t know how many low value manufacturing companies the state would have held onto if it had offered this conversion option to companies years ago, but he knows he wants to hang onto the more than 170 precision manufacturing companies that are largely operating at the moment on heating oil.
But Guilford argues that like electric utilities, there’s no choice for consumers when it comes to natural gas companies.
“With natural gas and electric utilities, consumers are stuck with one company and have no choice between energy providers. With heating oil, the consumer may choose between dozens of companies who all compete for the right to serve the consumer,“ he said.
Malloy argues the conversion to natural gas is more than just economic. It’s about the environment.
He said there will be “significant air quality and public health benefits.”
At the same time he acknowledged the controversy over obtaining natural gas through a process called hydraulic fracking.
“There have been cases where this has impacted water supplies or when drilling and transmission have led to the release of methane, a very potent green house gas,” Malloy said. “First, let me be clear – we will not be ‘fracking’ in Connecticut – we simply don’t have natural gas deposits in our state.”
He said the natural gas deposits seem to stop in the Hudson River Valley in New York. He also said they will aim for a “zero leak standard” for methane on pipelines that bring the gas to Connecticut.
Mark LeBel, an energy fellow at the Connecticut Fund for the Environment, said that while natural gas is better in some respects than other fossil fuels, it is not sufficient by itself to reach Connecticut’s environmental goals.
“Investment in energy efficiency and renewables shield consumers from unexpected changes in fuel markets and we shouldn’t underinvest just because natural gas prices are appealing at the moment,“ he said.
Without commenting directly on the 200-page document, Sen. John Fonfara, co-chairman of the legislature’s Energy and Technology Committee, applauded Malloy’s ability to show leadership when it comes to energy issues.
“The plan will go through it’s normal process and everyone will have a chance to weigh in on it, but it’s framework is exactly what Connecticut needs in taking an affirmative stance on how to get out of being one of the highest cost energy states in the continental U.S.,” Fonfara said.
The strategy has been posted on the state’s website here and will be open for public comment through the end of the year.
Editor’s note: This corrects Esty’s statements regarding the price of natural gas and the number of commercial businesses using natural gas.