SB5668– Modifying the regulation of gas companies to reduce greenhouse gas emissions.
Prime Sponsor – Senator Lovelett (D; 40th District; Anacortes.) (Co-Sponsor Liias -D)
Current status – Referred to the Committee on Environment, Energy and Technology. Still in committee at cutoff.
Next step would be – Dead bill.
HB1766 is a companion bill in the House.

Summary –
The bill would require each non-municipal gas utility to develop a clean heat transition plan for meeting the state’s greenhouse gas limits with respect to the emissions from fossil natural gas combustion; limiting the expansion of the gas system for residential and commercial space and water heating; advancing the use of high-efficiency electric equipment and production and the distribution of clean gas fuels; and ensuring the safe and equitable transition of the system. Plans would have to ensure that the transition achieves benefits for low-income households, overburdened communities, and vulnerable populations; and ensure the equitable distribution of the energy and nonenergy benefits of the utility’s programs and infrastructure to those communities and populations, including the reduction of energy burdens and improvement of indoor and outdoor air quality.

Plans would have to identify specific actions to achieve the company’s share of the State’s greenhouse gas reduction targets; and include an evaluation of the costs and benefits of alternative transition actions, including those for vulnerable populations and overburdened communities, and incorporating the social cost of emissions. They would have to consider recommendations from the latest state energy strategy; identify changes to depreciation schedules or rate design consistent with specific actions in the plan; and prioritize the remaining use of fossil natural gas by residential and commercial customers in consultation with electric utilities. They would have to assess overall current conditions within the company’s service territory, including the state of the economy, public health, and environmental conditions; the energy and nonenergy benefits and burdens associated with the utility’s infrastructure and programs, including those caused by utility actions outside its service area; and the relative impact of alternative emissions reduction strategies on indoor air pollution and the health of customers. Plans would have to support an equitable transition for overburdened communities and low-income customers through no-cost grant programs for low- income residents and low-cost or specially targeted incentive programs for moderate income or fixed income seniors. Companies would have to consult with any electric utility with customers in their service area in developing plans, and those would be subject to review, modification, and approval by the Utilities and Transportation Commission.

Plans would have to be based on a comprehensive evaluation and comparison of multiple emissions reduction strategies to identify the combination that complied with the requirements at lowest reasonable cost.They would be required to consider:
(a) Measures to increase the efficiency of energy use in residential, industrial, and commercial buildings through thermal load reduction strategies such as envelope efficiency improvements, hot water conservation, or process load reductions;
(b) Development of geothermal and industrial waste heat, and other heat sources that don’t involve substantial emissions of greenhouse gases;
(c) Development of district heating systems using waste heat; and
(d) Reduction of the carbon content of delivered gas by incorporating renewable natural gas or renewable hydrogen.
They might also consider expanding voluntary renewable natural gas programs, using dual heating systems to limit the use of fossil gas to periods of peak energy demand during a transition period, converting existing customers to high-efficiency electric equipment; targeted programs to permanently decommission areas of the company’s distribution systems; using offset credits to the extent the cap and invest program allows; and implementing projects to reduce nonhazardous leaks from pipelines.

The bill would exempt gas companies from the requirement that utilities provide new service on request, and prohibit companies from extending service to new customers unless they determined that was compatible with their plan; it would prohibit them from expanding their service area unless the UTC determined that was consistent with their plan and would not result in a net increase in emissions over the expected useful life of the gas plant to be installed in the expanded area. It would require them to charge the full cost of a line extension. (They can currently provide a rebate of up to $4,300 to subsidize an extension to a new customer.) After December 31, 2024, it would prohibit them from including any conservation measure that requires the installation of new gas-fired equipment in their conservation acquisition targets or offering financial incentives to acquire any, unless the commission found the measures were consistent with the company’s plan and didn’t result in a net increase in emissions over the expected useful life of the equipment.

It would expand the renewable natural gas program to allow a utility to propose delivering renewable hydrogen and hydrogen produced by hydrolysis using any energy source as well, provided that it demonstrated that would reduce its greenhouse gas intensity per therm, including life-cycle emissions, and would not reduce the safety or reliability of its service. The bill would require the UTC to establish safety standards for the use of hydrogen before approving a program that includes it, and would allow the retail customer charge for a program to exceed 5% of the charge for natural gas if the Commission determined that was necessary under an approved transition plan.

Once major projects in an approved plan began operating, the bill would allow the utilities to account for and defer all operating and maintenance costs, depreciation, taxes, and cost of capital incurred in connection with them, as well as costs for contracts to purchase renewable natural gas or renewable hydrogen, until the UTC considered their application to recover them through rates.