Category Archives: technology

Christina Nyquist Meeting the Needs of the Modern Natural Gas Customer

2015 EEI/AGA Customer Service Conference Explores the Opportunities and Challenges of the Digital Age

Did you know that the average American home has 26 appliances? Since Robert Bunsen invented the first natural gas burner in 1885, we’ve come to rely on a diverse array of household tools to provide essential daily needs like heating, cooling, cooking and bathing. Our dependence on these appliances makes seamless energy delivery critical, and energy utilities are dedicated to meeting the needs of their customers.

For decades, the Edison Electric Institute (EEI)/American Gas Association (AGA) Customer Service Conference has been the leading energy utility customer service conference in the world, bringing together energy and natural gas utility professionals to discuss ways to better serve customers and enhance energy delivery. At this year’s conference in Washington, D.C., the core tradition of reliably and safely delivering energy while providing excellent service remained the theme, as attendees discussed how to leverage and manage technology to further enhance the modern customer experience.

AGA Senior Vice President and COO Lori Traweek speaks on panel discussing “Perspectives on Utility Customer Service in the Future.” L-R: Charles Dickerson, Pepco; Tanya Hudson, Washington Gas; Rick Tempchin, EEI; The Honorable Branko Terzic, FinMetrix LP.

AGA Senior Vice President and COO Lori Traweek speaks on panel discussing “Perspectives on Utility Customer Service in the Future.” L-R: Charles Dickerson, Pepco; Tanya Hudson, Washington Gas; Rick Tempchin, EEI; The Honorable Branko Terzic, FinMetrix LP.

Today’s technology landscape has changed the way we use energy, as well as customers’ expectations for interacting with their local utilities. Attendees heard from panels and participated in workshops on leading customer service practices and emerging trends, challenges and opportunities, with remarks from industry leaders including AGA Chairman and President and CEO of WGL Holdings, Inc. Terry McCallister and AGA COO and Senior Vice President Lori Traweek. Discussions explored how to use online and digital platforms to provide greater flexibility, better communication with customers, response during emergencies and facilitate bill paying. More and more, energy utilities are offering mobile and online platforms for bill payment and outage communications and alerts. Utilities are also leveraging social media channels and online chat platforms to build relationships, talk with customers, increase engagement and spread important messages. And innovations in technology throughout the energy delivery chain have made the process safer, more reliable and more efficient than ever.

Yet along with these tremendous opportunities to provide solutions for customers, the digital world has created new challenges – particularly on the security front. As more functions and data move online, working to ensure that utility systems are secure from cyber threats grows increasingly critical. Defense expert and author of the book America the Vulnerable Joel Brenner delivered the keynote address, detailing the ever-changing threats posed by cyber hackers and attackers. Throughout the conference, panelists and breakout sessions examined today’s threats to energy delivery and customer privacy, and leading practices to combat those threats. Safety has always been the core value for natural gas utilities, and AGA and its member companies continue to work to enhance both the physical and cyber security of their delivery systems.

Joel Brenner, author of American the Vulnerable, discusses “Utility Customer Service in a Vulnerable World” at EEI/AGA CSC 2015.

Joel Brenner, author of American the Vulnerable, discusses “Utility Customer Service in a Vulnerable World” at EEI/AGA CSC 2015.

For nearly 200 years, natural gas utilities have delivered energy to homes and businesses. Though technology has changed, their commitment to safe, reliable energy delivery and exemplary customer service has stayed strong. In April 2016, the EEI/AGA Customer Service Conference will join CS Week – the largest utility-focused customer service conference in the world. Transitioning to CS Week provides all of the benefits of the EEI/AGA Customer Service Conference on a larger scale, and AGA looks forward to continuing to elevate the natural gas customer experience.

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Richard Meyer Natural Gas Market Indicators: April 15, 2015

A new study from Washington State University shows that methane emissions from U.S. natural gas distribution systems are 70 percent below current Environmental Protection Agency (EPA) estimates of those emissions. Based on data collected from pipeline leaks, meter and regulator stations, and city gates within 13 utility systems across the country, the study’s authors found that emissions from local distribution companies (LDCs) have decreased over the past 20 years due to upgrades, changes in pipeline materials, and better leak detection and survey methods.

As we often report here in the “Market Indicators” blog articles, industry experience and performance exists on a spectrum – one that is often improving in terms of practices and technologies, as well as the regulatory precepts that oversee these activities. This study demonstrates improvements to gas utility system safety and environmental performance, but it is also part of a larger industry trend of better overall performance.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Christina Nyquist New Report Shows Growing Natural Gas Resources: Four Things You Need to Know

On Wednesday, April 8, AGA announced the findings of a new report detailing the nation’s supply of domestic natural gas. Compiled by the Potential Gas Committee, the year-end 2014 report Potential Supply of Natural Gas in the United States, shows that future U.S. gas supplies are at their highest level ever and continue to grow. This means the nation’s domestic abundance of natural gas can continue to support customer savings, economic growth, energy security and increased efficiency and environmental solutions.

AGA_3110-Potential-Gas-Committee-Map-V-3-WEB

Here are four things you need to know about the latest natural gas numbers.

Record Supply

  •  According to the Potential Gas Committee, U.S. technically recoverable natural gas resources are estimated to be 2,515 trillion cubic feet (Tcf) as of year-end 2014 – a five percent increase since the year-end 2012 report.
  • The U.S. Energy Information Administration (EIA) estimates that domestic dry proved natural gas reserves have doubled since 1993, and are now estimated at 338 Tcf. Proved reserves are volumes of natural gas known to exist that have been proven by exploration and development operations.
  • When combined with EIA proved reserves estimates, the U.S. future supply of natural gas now exceeds 2,850 Tcfthe highest combined future supply of natural gas ever.

Savings for Consumers

  •  Households that use natural gas for heating, water heating, cooking and clothes drying save an average of $693 per year compared to homes using electricity for those applications.
  • Strong supply fundamentals and robust delivery infrastructure suggest that natural gas prices will remain competitive and stable at a level well below the peak market prices of the preceding decade.
  • Low domestic natural gas prices have led to savings of almost $30 billion for residential natural gas customers over the past five years.
  • In 2013, the average commercial customer saved more than $2,000 on their annual bill due to low natural gas prices compared to 2008.

Direct Use of Natural Gas is the Efficient Choice

  •  Natural gas is 92 percent efficient when used directly in homes and businesses.
  • Customers can unlock greater savings by working with their local utility to make efficient energy choices.
  • In 2013, local utility efficiency programs helped customers reduce their annual natural gas usage by an average 18 percent and save $137 in annual energy costs, while offsetting 7.9 million metric tons of carbon dioxide emissions.

Expanding Access, Enhancing Safety

  •  To ensure that more Americans can safely enjoy the benefits of domestic natural gas, local utilities are working with governors, legislators and state regulators around the country to upgrade, enhance and expand the nation’s more than 2.4 million miles of natural gas infrastructure.
  • By investing in our energy future and advancing smart policy to enhance safety and expand infrastructure, customers can look forward to continued market stability, reliable service and affordable prices.

For more information, visit www.aga.org/PGCReport.

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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.

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