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N at u r a l G a s Fuel Oil versus Natural Gas Fuel oil leaders are fighting expansion plans of natural gas companies B y S t e p h e n B e nn e t t F uel oil trade groups in Connecticut and New York have been busy trying to convince regulators that expansion plans by natural gas companies should not be approved. They have scored some successes, leaders of trade groups in both states said. Connecticut's Public Utilities Regulatory Authority (PURA) issued a draft ruling in November approving a broad expansion of natural gas service throughout the state, but the result is that natural gas is going to cost more, said Christian Herb, president of the Connecticut Energy Marketers Association (CEMA), which represents fuel oil dealers and is based in Cromwell, Conn. "Basically what [regulators have] approved is a 50 percent rate increase on commercial and industrial businesses," Herb said in an interview with Fuel Oil News. For homeowners, depending on how far their residences are from a gas main, the rate increase could be anywhere from 10 to 30 percent, Herb estimated. "So I can tell you, without a doubt, that what this means for Connecticut is higher natural gas prices in the future." The final ruling had not been issued as of this writing. Herb said it was unlikely to differ substantially from the draft. "I expect that the draft decision will hold up," he said. Expansion of the natural gas distribution network in Connecticut is a goal of the "Comprehensive Energy Strategy" devised by the state's Department of Energy and Exporting Natural Gas Could Drive Up Price Should the U.S. export liquefied natural gas? Not even the natural gas industry is united on that question. As some suppliers seek to export, critics within the industry argue that exporting will drive up the price of natural gas here in the U.S. A case in point is a decision in November by the U.S. Department of Energy to approve an application by Freeport LNG Expansion, Houston, Texas, and related entities to export 1.4 billion cubic feet per day (Bcf/d) of liquefied natural gas by vessel from a terminal on Quintana Island, Texas, to "non-free trade agreement nations." A previous application by the same parties that was conditionally granted also allowed export of 1.4 Bcf/d of liquefied gas, which would bring the entities' combined export authorization 2.8 Bcf/d, the DOE noted in its latest order granting approval to Freeport LNG. Among those criticizing the DOE decision were America's Energy Advantage (AEA), a trade association representing manufacturers with worldwide 18 operations, such as Alcoa, Inc., and U.S. publiclyowned natural gas distribution companies. "Unchecked LNG exports will threaten America's manufacturing renaissance, double or even triple prices for consumers, and negatively impact investment and job creation," Jennifer Diggins, chair of AEA, said in a statement. "Foreign and domestic companies are investing in new U.S. manufacturing because of America's energy advantage," Diggins said. "With sound LNG policy, we import jobs. We renew our call for a full DOE review of the cumulative market impacts of its decisions to date before any additional approvals are granted." Diggins noted that Charles Rivers Associates, a consulting firm in Boston, Mass., warned that unchecked exports of U.S. natural gas "could lead to a tripling of natural gas prices from current levels by 2030." The firm concluded that such an increase would have "disastrous trickle down DECEMBER 2013 | FUEL OIL NEWS | www.fueloilnews.com Environmental Protection. The strategy was approved earlier this year. Expansion plans filed last summer by Connecticut's three investor-owned gas companies – Southern Connecticut Gas, Connecticut Natural Gas and Yankee Gas – seek to convert 280,000 customers to natural gas over a ten-year period. The plans target customers who currently have gas available on their street, but have not yet connected (on-main customers) as well as those potential customers interested in gas service, but not close enough to existing gas facilities to connect (off-main customers). The draft ruling notes that rate impacts to current customers should be kept to a minimum, while the companies work to expand the current gas system infrastructure to serve new customers. The gas companies will continue to be required to demonstrate that expansion activity reflects prudent and efficient management on their part, regulators said. In effect, according to Herb, "What the utilities asked for was to be able to shift all of the costs to their customers. "They wanted their rate payers to pay for the expansion, and they wanted to set it up in a way that people who were converting could do it virtually for free." The natural gas companies effects for the consumers, the manufacturing sector, employment and overall GDP [gross domestic product]." The American Public Gas Association (APGA), a member of AEA, argued similarly to the U.S. House Committee on Oversight and Government Reform during a hearing last March on the DOE's plan for exporting LNG. APGA, Washington, D.C., is a national association of municipally and publicly‐owned local distribution systems. There are about 1,000 public gas systems serving more than five million customers, APGA said. These systems are not‐for‐profit retail distribution entities that are owned by their customers. "The future of natural gas in the United States is bright, but only if it remains affordable," APGA President and CEO Bert Kalisch testified. "Exporting our natural gas resources is in opposition to this critical factor." Kalisch said, "Proponents of export are currently seeking unchecked authority to sell [LNG] abroad in order to enrich export investors and producers, while causing job losses and reduced wages for all other sectors of the U.S. economy."