Check your answers below to see how much you know about this climate solution.
1. Many customers in the West will use gas infrastructure far less by 2050.
Many customers in the West will use gas infrastructure far less by 2050, when states like Colorado, Nevada and New Mexico have goals to reach zero or near-zero levels of carbon emissions. Yet even with these goals, the investment model of large gas utilities relies on continued growth. To avoid saddling ratepayers with expensive and potentially unnecessary investments in fossil fuel assets, it is critical to require gas utilities to plan proactively, especially given many states’ goals for 100% decarbonization by 2050.
For example, the Colorado Public Utilities Commission (PUC) recently adopted regulations requiring utilities to analyze non-pipeline alternatives, or NPAs, like electrification and efficiency to potentially avoid or postpone large, planned gas infrastructure projects.
2. A ratepayer today is likely to be paying for new gas investments through:
Ratepayers currently pay for gas investments for decades. For example, the assumed average lifespan for Xcel’s current gas investments is 57 years. An Xcel ratepayer today will be paying for new gas investments through 2080 – 30 years after Colorado has pledged to eliminate its greenhouse gas emissions, and all buildings must be decarbonized.
This means Coloradans will still be paying for the gas system infrastructure long after they have stopped using the system. And if we manage the transition poorly, those who are last left on the system – which are more likely to be renters, seniors on fixed incomes, and low-income members of the community – will bear the full costs of the system.
A solution is to require gas utilities to depreciate all new gas investments using an assumed lifespan of 30 years. This ensures that ratepayers pay off gas investments by mid-century, when communities will have largely transitioned off gas. It also allows us to evaluate these gas investments more realistically — are they still worth their cost, even if they need to be paid off more quickly? This would be in line with states’ greenhouse gas emissions reduction goals.
3. Which of these is NOT a potential solution for high gas bills?
d. Building new gas pipelines
While there are several solutions to our reliance on gas, like installing clean electric heat pumps, improving the energy efficiency of homes, and ending gas subsidies, the math on building new gas infrastructure simply doesn’t work.
For example, Xcel invested $394 million in new pipeline capacity designed to support even more gas customers and load from 2019-2022, according to its most recent rate case filing. These investments required $49 million in additional revenue from existing customers this year, if they were to be paid off within 30 years. Yet the 46,488 new customers added in that same time provided only $25 million in annual revenue – a shortfall of nearly 50%.
Fortunately, improving the efficiency of homes and electrifying space and water heating – especially in new homes – can save customers money, improve indoor air quality, lead to more comfortable homes, and help address climate change.