Energy Plan Makes Bet On Natural Gas

Oct 8, 2012

The Malloy administration’s new energy overhaul is winning both plaudits and protests. The centerpiece of the policy is a huge investment in natural gas infrastructure, and as WNPR’s Harriet Jones reports, it has implications for many businesses in the state.

Governor Dannel Malloy says his new energy policy reframes an old debate.

“It used to be that you could only be pro-business or pro-environment. Let me say clearly that I reject that as a false choice.”

He says the extension of natural gas infrastructure, at the cost of more than $2 billion, will give businesses and residents the choice of a cleaner, more reliable and lower cost power source.

“This is not a mandate for the consumption of natural gas. All this plan does, all this plan does is put Connecticut on equal ground with other states that have already made these investments, creating jobs for residents in the process. Our challenge is to give our businesses and our residents a choice.”

$850 million of the new distribution system would be paid for by gas customers themselves through their utility bills, while the state would kick in a portion of the remainder through new bonding. It’s paired with a renewed commitment to energy efficiency and conservation which the administration says goes way beyond weatherization.

“I was very encouraged, I thought it was excellent that the Governor’s looking at the right options for customers to save money.”

That’s James Torgerson, the CEO of UIL Holdings, which, in addition to United Illuminating, owns three gas companies in the state. The state’s new emphasis will be good for his business, and he concurs with the governor that it will create new jobs – the administration estimates at least seven thousand construction workers could be employed as new gas mains are laid and business and homes convert to a new system.

“The other challenge is to get enough contractors and people to actually do the work, because the utilities don’t have enough people right now to do the work, so we’ve got to do some training.”

But not everyone’s convinced.

“When the governor’s talking about taking away one third of our customers, and giving them to the gas company, what he’s taking about is eliminating one industry’s jobs and giving them to another industry.”

Gene Guilford of the Independent Connecticut Petroleum Association represents hundreds of home heating oil dealers in the state, who between them employ 13,000 people.

“No one can tell you what the price of energy is going to be four, ten or fifty years from now, and Connecticut will make a serious error if it decides to put all its eggs in the natural gas basket.”

He points out that for seventeen of the last twenty years, heating oil has been cheaper than natural gas in Connecticut. Guilford is also disturbed by the prospect of what he believes will be a less competitive energy landscape under this new plan.

“There are 600 plus companies that compete to serve 650,000 customers today, so as a result if you don’t like the service that you get from one company, you’re free to switch to another one.”

Natural gas, meanwhile, will be supplied by the major utilities, leaving customers unable to make such a switch. Guilford is calling on the governor to consider breaking up that system, and allowing his member companies to become gas distributors under the plan. Commissioner of the Department of Energy and Environmental Protection, Dan Esty says he’s not concerned that the state will become too reliant on natural gas.

“Frankly we know that there will remain half the state heating with something other than natural gas. There will still be a lot of people on fuel oil, some on propane, some on electric heat, so there’s no risk of that. This actually improves our portfolio of energy options and increases flexibility and creates a more robust energy infrastructure in the state.”

The dropping price of natural gas is due in large part to the discovery of large deposits of shale gas in states such as Pennsylvania. It’s extracted by the controversial and environmentally damaging process of hydraulic fracturing, or fracking. Environmental groups including the Connecticut Fund for the Environment have already expressed concern about switching the state’s energy reliance to another fossil fuel. The administration’s plan is now open for public comment before it becomes the basis for new legislation.