Category Archives: people

Richard Meyer New DOE Rules Impose New Costs on Consumers for Little Benefit

AGA_2995 Furnace Standard Infographic_web_FINAL_Page_1On March 12, the U.S. Department of Energy (DOE) proposed a new rule that would raise minimum efficiency standard for natural gas fired furnaces. The rule, if finalized in its current form, would mandate the manufacture of furnaces that meet a 92 percent or higher specification for energy efficiency.

On the surface, the rule appears to be a positive step toward achieving greater energy efficiency. However, a closer examination reveals many problems that conflict with DOE’s stated goal of improved efficiency and reduced emissions. These counterproductive and unintended consequences include:

  • An economic burden on consumers required to bear the prohibitive costs of the expensive equipment and installation.
  • The undermining of efficiency programs and the financial incentives that enable consumers to purchase high-efficiency furnaces.
  • Wasted energy and higher emissions because customers are induced to switch to cheaper equipment, such as electric furnaces, which have a much higher full-fuel-cycle energy and emissions footprint.

Natural gas utilities have a demonstrated track record of supporting efficiency and reducing energy consumption, a fact validated by years of improvements in household natural gas use. This rule would impose new costs on consumers but add little in terms of energy or emissions benefits. Here we explore in more detail some of the consequences of DOE’s action.

AGA_2995 Furnace Standard Infographic_web_FINAL_Page_2Billions of Dollars in New Costs Imposed on Consumers

DOE’s proposed rule would lead to monthly bill reductions – for some homes and businesses. Under the rule customers would bear between $6 and $12 billion dollars in new costs associated with higher efficiency furnaces (a dollar amount that AGA believes DOE is underestimating). And these costs are distributed unevenly. According to DOE’s proposal, one out of every four households that currently have a furnace would pay more over the life of a new furnace, an inequity that can have a disproportionate effect on many low- and fixed-income households.

Despite the high costs of implementation, the rule would generate only modest energy and emissions savings. According to data in the proposal, the furnace standard would lead to only 1.1 percent in energy reduction relative to no action. In turn, the rule will achieve only 0.2 percent in carbon dioxide emissions reductions compared to a case without amended standards. For billions in upfront consumer costs, DOE’s proposed energy and emissions savings are scant.

By contrast, natural gas efficiency programs today already achieve 60 percent more annual emissions reductions at far lower cost than DOE’s proposed rule would accomplish after three decades of implementation. And these savings will only continue to grow as utilities continue to invest in their efficiency programs.

Furnace Standard Undermines Efficiency Program Gains and Emissions Targets

Why are DOE’s proposed energy reductions this small? Any declines come on top of a decades-long trend of energy efficiency that has already substantially reduced natural gas use in homes and businesses. The typical American household uses 50 percent less gas than it did in 1970, meaning the US uses the same amount of natural gas to serve 30 million additional residences. This is due in large part to natural gas utilities that promote energy efficiency in homes and businesses. Ignoring this track record of successful energy efficient approaches, DOE has proposed a costly mandate that achieves only modest savings.

Natural gas utilities across the country promote energy conservation measures, including efficient natural gas furnaces. Through 112 established programs in 39 states, the vast majority of utility efficiency programs offer homeowners financial incentives to purchase and install a high-efficiency gas furnace. These incentives include cash rebates, low-interest loans, and low or no-cost upgrades for low income customers. This proven, comprehensive, customer-focused, and cost-effective approach could be threatened by the proposed DOE rule.

State utility regulators evaluate efficiency programs based on the ratio of its costs to its benefit, such as energy savings. A higher minimum efficiency standard for furnaces would elevate the baseline from which all energy savings are calculated, thus reducing the savings that qualify as a direct benefit of the program. This, coupled with the higher costs of purchasing and installing a 92 percent efficient furnace, may disqualify many furnace replacement programs should they fail the cost-effectiveness threshold that state regulators require.

As mentioned, the energy savings from natural gas utility programs are already achieving more than the savings DOE is projecting in its proposed rule. In 2013 alone (based on the most recent AGA data), utility efficiency programs reduced gas usage in participating homes by 18 percent—the equivalence of twelve days of residential gas consumption.

Furnace Standard Will Cause Higher Emissions and Lower Efficiency for Many Households

What would the effect of the rule be on a typical household? Let’s say a home has a furnace at the end of its usable life, and it fails irreparably. A homeowner will be faced with one of two options:

  • Option 1: Purchase a new gas furnace, at DOE’s stricter efficiency standard, and pay the additional costs of the appliance and installation.
  • Option 2: Switch to less costly equipment such as an electric furnace or heat pump, resulting in increased energy use, higher emissions, and larger monthly energy bills in many areas of the country.

Some consumers that choose Option 1 will see lower overall costs, but not all homeowners or businesses will share in this benefit. Even DOE acknowledges that one in four consumers that replace their furnace will pay more over the life of the equipment because of higher installation costs. The energy savings are just too modest to counterbalance the costs.

In other words, homeowners that today could not justify the purchase of a 92 percent efficient furnace (at least not without gas utility and other incentives) would be forced under DOE’s proposal to make the purchase and eat the costs.

Looking at Option 2, DOE says that 10 percent of consumers will instead switch to an electric furnace or heat pump, which increases emissions and energy use due to the inefficiencies of electricity generation and transmission.  To boot, AGA collected data from contractors that suggests that DOE’s estimate is likely too low – even more customers than DOE expects would be compelled to pull out their furnaces and install an inefficient though less expensive electric appliance. The furnace proposal ostensibly lowers energy use and emissions. This unintended outcome, fully acknowledged by DOE, runs counter to that intent.

Ultimately, DOE’s new standard will impose additional costs on consumers, induce some customers to increase their energy use and grow emissions, and negatively impact efficiency programs that already achieve greater savings than DOE’s proposed rule.

It’s time to re-examine this prescriptive approach and apply a comprehensive vision for furnace efficiency, which recognizes the proven gains from local utility efficiency programs and product choices.

Posted in environment, Natural Gas, people, technology | Leave a comment

Lisa O'Leary AGA Members Recognized in J.D. Power Customer Service Satisfaction Survey

Interaction with a customer service representative on the phone has driven satisfaction up significantly among natural gas utility business customers, according to the 2015 Gas Utility Residential Customer Satisfaction Study, created by J.D. Power and Associates.

Now in its 10th year, the study released in February measured residential customer satisfaction with gas utility companies by looking at six factors: billing and payment; field service; communications; customer service; corporate citizenship; and price.

Each utility company included in the study serves at least 25,000 business customers, or 3.4 million in total and were ranked in four geographic regions: East, Midwest, South and West. This year’s study was based on responses from more than 9,000 online interviews with business customers who spent at least $150 monthly on natural gas.

American Gas Association (AGA) members PSE&G (East), DTE Energy (Midwest), Alagasco (South), and Questar (West) ranked highest in overall satisfaction. Additional AGA members who were ranked among the top three in their respective region included: BG&E, National Fuel Gas Company, MidAmerican Energy, Black Hills Energy, Oklahoma Natural Gas, Atmos Energy, NW Natural, and Southwest Gas.

According to the study, satisfaction improves year over year for a majority of attributes that comprise the customer service factor, including courtesy of the representative; the representative’s concern for customer needs; the timeliness of resolving the problem, question, or request; and the promptness in speaking to a person. Another key finding of the study revealed that customer satisfaction with billing and payment is higher when statements include useful information, such as graphs or pictures.

AGA members deliver clean, efficient and affordable natural gas to more than 68 million residential, commercial and industrial customers in the U.S., and are true partners in the communities they serve, some for as many as 100 years.

To learn more about the 2015 Gas Utility Residential Customer Satisfaction Study, click here.

Posted in people, utility | Leave a comment

Christina Nyquist New Data Shows Natural Gas Customers Saving More Money, More Energy and Reducing Environmental Footprint

Natural gas customers are saving more money, more energy and emitting less carbon than ever before.

That’s the takeaway from the latest data in the freshly updated 2015 American Gas Association Playbook, released today. The go-to guide for natural gas information shows that natural gas customers saved an average of $693 per year from 2012-2013 while reducing their carbon dioxide emissions by half a million metric tons. In addition, emissions from distribution pipelines dropped an additional six percent in 2014 as utilities continued to upgrade and modernize infrastructure to enhance safety.

The updated Playbook highlights several key national trends, including:

Natural gas customers are saving more money, more energy and emitting less carbon than ever before.

Average yearly savings for households using natural gas appliances increased $40 between 2012 and 2013. From 2012-2013, households using natural gas appliances saved an average of $693 per year compared to households using other energy choices. Utilities helped customers save 136 trillion Btu of energy and offset 7.1 million metric tons of carbon dioxide emissions in 2012, an increase of 11 trillion and 0.6 million from 2011 respectively.Nat Gas Means Savings for Consumers

Safety remains a core value for natural gas utilities.

Pipeline incidents have declined approximately 40 percent over the past three decades as natural gas utilities continue to work to enhance safety. Natural gas utilities spend $19 billion annually and take a number of voluntary actions to help enhance the safety of natural gas distribution and transmission systems.

Safest Energy Delivery System in the Nation

Emissions from natural gas distribution systems continue to decline.

Emissions from natural gas systems dropped another 6 percent from 2014. In total, emissions from natural gas distribution systems have dropped 22 percent since 1990, even as the industry has added more than 600,000 miles of pipeline to serve over 17 million more customers.Cleaner Air and Reduced Emissions

Natural gas utilities continue to increase investments in energy efficiency programs.

Utilities invested $1.1 billion in energy efficiency programs in 2012 and 2013, an increase of $100 million from 2011.

Residential Nat Ga Use - Efficiency Success Story

More states are pursuing strategies to expand and enhance natural gas infrastructure.

Eight additional states are pursuing natural gas growth through innovative expansion proposals, growing the number from 17 states in 2014 to a total of 25 today. Meanwhile, 38 states have adopted specific rate mechanisms that foster accelerated replacement of pipelines no longer fit for service, supporting enhanced safety, reliability and performance of natural gas delivery systems.

Expanding the Reach - 25 StatesCheck out the complete AGA Playbook for more facts and information, and visit http://www.aga.org/ to learn even more about all that goes into delivering affordable, reliable, efficient and safe energy solutions.

Posted in energy, environment, Natural Gas, people | Leave a comment

Jake Rubin Understanding Your Natural Gas Bill

More than 177 million Americans use natural gas to cook a hot meal, heat their water or warm their houses. Many parts of the country have felt the chill of winter and that means folks are using more natural gas. The American Gas Association has developed a video to explain what goes into your natural gas bill.

Your bill is essentially comprised of three parts:

  1. Gas you used: Often, the largest part of your bill is based on the amount of natural gas you use each month. The United States has an abundance of clean natural gas and that has led to stable and affordable prices. Utilities do not make a profit on the gas they deliver to your home or business.
  2.  Delivery cost: The public utility commission, a group of elected or appointed officials, sets the rate that your utility can charge each month. Included in this cost is maintenance, upgrades of the pipes that deliver natural gas to your home or businesses and everything else that is needed to help ensure safe and reliable delivery of natural gas.
  3.  Local, state and federal taxes.

During the 2013-14 Winter Heating Season, the natural gas delivery system in the United States achieved historic levels of performance. More natural gas was delivered through more pipelines to more customers than ever before, and customer bills remained affordable. Residential customer bills increased only 10 percent on average from the prior winter – an increase mostly due to higher consumption.

AGA expects relatively warmer temperatures this winter based on information from the climate Prediction Center, which may lead to a reduction in demand. Natural gas prices are likely to be slightly higher, resulting in an increase in customer bills of about seven percent this winter.

Promise Delivered is an AGA study of the planning, preparation and performance of the natural gas system during the 2013-14 Winter Heating Season. Utilities work all year to prepare for the possibility of extreme temperatures and employ a portfolio approach to help ensure they can meet the needs of their customers at affordable prices on the coldest days of the year. Before last year’s extraordinary winter concluded, they were already preparing for this winter cycle.

Posted in appliances, education, energy, Natural Gas, people, utility, weather, winter heating | Leave a comment