By Robert Bradley Jr. — January 27, 2022
Q. It’s been a year since your last MasterResource article. I know you recently retired from Spire, Inc., a St. Louis-based gas utility holding company you joined in 1994. What happened?
A. I was planning to retire for medical reasons anyway, but Spire beat me to it and that accelerated my retirement.
Q. But here you are still in the natural gas fight.
A. I am very much still involved. I and a few other ex-gas utility ex-pats are starting a consulting group. Our objective is to become a technical resource for consumers and other entities that value and want to protect end-use alternatives to electricity. We want to be a technical alternative to NRDC (and its “useful idiots”). For now, we are going with the decidedly dull but to-the-point name of Gas End-Use Advocacy Group.
Q. All good … What is on your agenda?
A. We have been weighing-in as best we can on pro-electrification dockets. Collectively, we have filed comments in several ongoing Federal energy and environmental dockets. These include those discussed at the start of this series. Specifically:
EERE-2018-BT-STD-0018: 2021-08-27 Energy Conservation Program for Appliance Standards: Energy Conservation Standards for Residential Furnaces and Commercial Water Heaters; Notification of proposed interpretive rule; request for comment
The purpose of this docket is to reinstate EERE’s prohibition of non-condensing appliances, which had become an obstacle to EERE’s “beneficial electrification,” because you can’t ban gas non-condensing appliances means you can’t ban gas. Our comments can be downloaded here. IER also filed comments; they can be downloaded here. ACEEE’s press release praising EERE’s reinstatement are here: DOE Opens Path to Cut Energy Waste from Gas Furnaces, Water Heaters, Boilers.
On Wednesday, December 29, 2021, EERE officially rescinded its process rule modifications under Trump in the Federal Register. This starts the clock under the Administrative Procedures Act for appeal. Click here for the Federal Register notice.
- EERE-2021-BT-STD-0003: Energy Conservation Program for Appliance Standards: Procedures, Interpretations, and Policies for Consideration in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment
The purpose of this docket is to rescind some modest improvements to EERE’s “Process Rule” that, as a result, render it as mere guidance (rather than an enforceable rule) and make it easier to impose increasingly stringent minimum appliance efficiency standards at the expense of consumer choice and economic efficiency. Our comments can be downloaded here. On December 13th, 2021, DOE issued its Final Rule in the Federal Register.
Q. This is so much to counter, but it is in your blood….
A. Although I’m no longer personally involved in the commercial boiler lawsuit, legal counsel for Spire and AHRI argued on behalf of the petitioners (including APGA) in September. This proceeding can be viewed on YouTube. It provides a valuable review (primarily given by Spire’s outside counsel Barton Day) of the modelling manipulations DOE routinely uses to claim the benefits needed to justify more stringent minimum efficiency standards.
The commercial boiler hearing picks up at the 1:32 hour mark of the video with Barton leading off. Barton picks up again with rebuttals at 2:46. A Final Rule on commercial boilers may be sent back to DOE for (what may end up being) relatively minor tweaking (a.k.a., “remand”).
Q. Is there an update on this?
A. Yes. On January 18th, 2022, the Court rendered its verdict and the appellants (APGA, et. al.) won. This is a big deal because it should cause DOE to proceed with extreme caution if and/or when it tries to eliminate other non-condensing appliances, like residential furnaces and water heaters for example. The caveat here is the court is allowing DOE to come back as shown by the following excerpt:
Because we are not persuaded it was reasonable for the Secretary to conclude the Final Rule was supported by clear and convincing evidence, we remand the rule to the DOE to address several points raised by the petitioners within a limited time.
Q. What can be done to challenge these other two Final Rules at this point?
A. Once a Final Rule comes out in the Federal Register, it starts the clock for potential appeals. However, knowing what I know now, I recommend holding off with any more appeals or petitions until DOE/EERE publishes a Final Rule that bans something which would illegally deprive consumers of significant choices protected under EPCA (like what was filed for commercial boilers). These appeals can and do take years to resolve. There is considerable risk that gas utilities may not resist.
Q. What free market groups are you currently working with?
A. Aside from still collaborating with Master Resource (obviously), we’re beginning to work with the Competitive Enterprise Institute’s (CEI) “Cooler Heads” collaborative. We hope it will lead to better free market recognition of the direct use of gaseous fuels as the leading (yet complementary) alternative to electricity from and for consumer perspectives.
STL Pipeline Issue
Q. Let’s talk about Spire, where you worked. They also have a very important issue regarding the STL Pipeline, which since entering service in 2019 had been delivering natural gas to nearly 650,000 homes in eastern Missouri. As an interstate line from Illinois, it is federal regulated by the FERC.
A. Yes. As just another Spire customer (albeit with some insider perspective as a former employee), I didn’t pay the crippling costs paid by gas consumers elsewhere due to the February 13–17, 2021, North American Winter Storm Uri. I mainly attribute this to the STL Pipeline and the low-cost gas supplies it engendered.
Q. Yet there are some that want to close STL down. What’s that about?
A. I think this situation represents a new tactic to suppress consumer preferences for using natural gas. But again, it is mainstream environmentalists promoting electrification as a “no holds barred” means of preventing catastrophic AGW. And again, contrary to their propaganda, this will inflate both taxes (that subsidize “clean” energy) and energy bills. They (apparently) believe that increasing gas bills will make it easier for consumers to accept electrification. In this case, the Environmental Defense Fund (EDF) is implementing part of their business model to entrench themselves into utility operations and force EDF’s environmental objectives. I have experienced it before.
For more information, on January 18th, 2021, S&P Global published an update to this situation: Spire STL, environmental advocates argue over new FERC permitting review’s scope .
Q. Tell us about your previous experiences working with environmentalists.
A. Before Spire, I worked for a Texas-based gas utility in a similar capacity. In several instances during my time in Texas, I was an expert witness for the EDF to intervene against what was then the largest electric utility in Texas, the “Texas Utilities Electric Company” (a.k.a., TU, since deceased).
Q. You worked for the other side?
A. No. However, occasionally, I collaborated with some environmentalists like EDF. I have my regrets about that. At that time, I was in technical marketing for an Austin-based gas utility company. The environmentalists were not necessarily opposed to the direct use of natural gas, especially with coal-dominated electricity generation being the leading alternative. I was able to demonstrate that gas appliances generated fewer emissions than their electric counterparts.
That was 30 years ago in a different era. It was right after the 1992 Energy Policy Act was enacted and, with it, the start of Integrated Resource Planning (IRP). Unfortunately, IRP was, at best, segregated resource planning and, at least arguably, degenerated into “institutionalized revenue plundering.” But I digress.
Also recall that it was the Natural Resource Defense Council’s (NRDC) official energy policy back then that all electric generation should be powered by natural gas-fired combined-cycle turbines (typically in the range of 50 to 60% site efficiency) versus natural gas direct use (typically in the range of 85 to 90% site efficiency).
Regardless, it was not NRDC’s platform back then that all energy should be electric. Anyway, in TU’s case, it was their predominant use of coal that EDF objected to. Now, EDF is part of the plan to “transition” natural gas end-use markets to supposedly “clean” electricity.
However, the local electric utility in Spire’s service territory, Ameren, is 69% coal per their latest IRP. Consequently, switching from natural gas to electric appliances will generally increase overall emissions, carbon or otherwise. Ameren appears more than willing to go along with this plan because they think they can securitize their existing coal plants, and simultaneously rate-base new renewable plants and the expanded transmission and distribution (and storage) infrastructure to serve all this new load from forced electrification.
It’s like having your cake and eating it thrice. For more information on the STL Pipeline debacle, I submitted comments to FERC. They can be downloaded here: Comments of Mark E Krebs under FERC Docket CP17-40
Q. The Pandemic and takeover of the Democrat Party by the Progressives has set back energy policy by at least a decade. Do you see reasons for optimism?
A. Do you mean Democratic Socialists? Because I do. Regardless, yes and no. Yes, because the physics are strongly against an all renewables all the time energy monoculture. Thus, so are the economics. And yes, because some other (better-known) energy pundits are weighing in on our side. These include, for just two examples, Michael Shellenberger and Robert Bryce.
Conversely, no, because most consumers are increasingly besieged with so many everyday problems that they just can’t focus on the relatively esoteric and distant issues of losing their energy choices. That is, of course, until it hits them smack in the face in the form of increasing fuel bills and lack of viable alternatives when their gas appliances eventually wear out.
Although the “polls” indicate growing public dissatisfaction with the Biden Administration, maybe, “average” consumers need to feel a little more pain as a prerequisite for getting organized and starting to fight back regarding “clean” energy. But by then, severe damage to consumer choice will have likely been done. The electrification infrastructure will have been set in concrete (sometimes literally) and consumers will be made to pay, one way or another.
Q. Anything else positive?
A. A few things. First, there is one which on its face isn’t positive, but it affords a potential opportunity to expose EERE’s endemic dishonesty. Basically, EERE violated long-standing notice & comment procedures by ignoring our filed comments in EERE-2021-BT-STD-0003. While this may provide a legal “cause of action” for challenging a Final Rule, we lack at present legal funding to hold EERE accountable for its breach of administrative procedure.
And while it is likely that EERE is counting on a lack of appetite (and/or funding) for challenging them and some of us would relish the opportunity of proving them wrong, it takes deep pockets to do so, whereas DOE has the deepest pockets of all–the backing of the Department of Justice (unwittingly financed by American taxpayers), along with most of the electric utility industry, most environmentalists, and even some of the appliance manufacturers who stand to profit from electrification.
But again, and more importantly, the second thing is the polls: “Elections have consequences” and people are feeling them and regretting voting for Biden. Starting in 2022, it appears at least possible that the deep green decarbonization machine can and will be effectively challenged. I plan on sticking around for that.
Q. Is there any more reason to have optimism? This is a dark time.
A. One can only hope, even expect, that DOE will think twice about banning non-condensing equipment going forward. This comes from aforementioned National Academy of Science “peer review” project titled Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards (Summary, p. 3):
- DOE should pay greater attention to the justification for the standards, as required by executive orders and the EPCA requirement that standards be economically justified. DOE should attempt to find significant failures of private markets or irrational behavior by consumers in the no-standards case and should consider such a finding as being necessary to conclude that standards are economically justified.
- DOE should place greater emphasis on providing an argument for the plausibility and magnitude of any market failure related to the energy efficiency gap in its analyses. For some commercial goods in particular, there should be a presumption that the market actors behave rationally, unless DOE can provide evidence or argument to the contrary.
- DOE should give greater attention to a broader set of potential market failures on the supply side, including not just how standards might reduce the number of competing firms, but also how they might impact price discrimination, technological diffusion, and collusion.
For additional information, Susan Dudley, director of the George Washington University Regulatory Studies Center, was a member of the review panel and just published an article about the NAS report in Forbes.
Last and not least but personal, I don’t think God plans on handing over America to a bunch of atheist socialists. However, we must do our part too. “Faith is dead without good works.”
Q. So mainly free-market groups to carry the earthly workload? Not even some appliance makers and some natural gas interests?
A. Most appliance makers are against rescinding EERE-2018-BT-STD-0018 and EERE-2021-BT-STD-0003 as shown by their filed comments. How far they are willing to go, however, is still unclear (to me at least). While some manufacturers strongly support rescinding these dockets, those are predominately electric appliance manufacturers and/or are “rent seeking” against consumer best interests through higher profits associated with much more expensive and maintenance intensive high efficiency appliances.
Regarding “natural gas interests,” I hope they will be encouraged enough by the court win and the NAS report to keep up the pressure on EERE to obey the rules and not game the system. But hope is not a plan and that remains to be seen.
Q. What is the state of the natural gas industry today compared to, say, five or ten years ago?
A. The “natural gas industry” is doing fine selling gas for the growing consumption of electric utilities, which ironically (from an affordable carbon mitigation perspective) decreases overall energy resource efficiency). In comparison, the natural gas utility industry, dependent upon end-use customer direct consumption, can’t seem to get a break, and sales are typically stagnant at best.
Recognize, there are only a few gas-only utilities left of any size. The rest are “combo” (gas and electric) utilities where the electric side dominates; or else they are predominately small gas utilities. In fact, many of these probably qualify as small businesses, especially for APGA’s membership. In AGA’s case, the combination utilities largely control it. In short, true to social Darwinism, “the big dog eats first.”
Q. Any fight left in the gas utilities?
A. Some, but maybe not enough. Most remaining gas utilities are trying to play the “if you can’t beat them, join them” game. For some, that means hoping that renewable natural gas (RNG) will save the day. Others, engage in wishful thinking that a gas utility form of securitization will bail them out. I strongly discount both as they are ineffective for protecting consumer choice for alternatives to electricity.
And at least some utility executives probably just want to cash out and move to Boca Raton or the likes thereof. Unfortunately, some parts of the gas industry are also funding their own destruction. For example, the ACEEE just published a report titled Deep Retrofits Can Halve Homes’ Energy Use and Emissions. In it, they are recommending electric heat pumps for space and water heating. Now, look at who is funding ACEEE.
There is some fight here and there. One example is from Robert Bryce’s interview of Dave Schryver: CEO of the American Public Gas Association from last June. But again, for every one of those there a dozen (if not hundreds) of articles advocating for an end to fossil fuels. And you’re probably paying for it. After all, that’s often how taxpayer provided money is; doled out by EERE and now, DOE’s new Office of Clean Energy Demonstrations.
If gas utilities do somehow manage to hang on and overcome their complacency, electric rates may increase to a point where the direct use of natural gas becomes even more of a bargain than it has been historically.
On the other hand, part of the overall “transition” plan seems to be to reserve natural gas resources to fuel combustion turbines for more economically backing up renewables. Eliminating the competition from direct consumption of natural gas would clearly serve that purpose. Recognize, the direct use of fossil fuels (like natural gas) remain the only competitive alternatives to electricity.
In a free market economy (or what’s left of it), knowledgeable consumers should be able to freely choose alternatives to electricity if they desire to do so. However, consumers may not be free to choose for long at this rate. Conversely, it may be that more politicians realize that cost matters and start serving the best interests of their voting constituents and/or get voted out of office for not serving them. Too bad it doesn’t work that way for EERE’s “career professionals.”
I suppose that, given the odds, you can’t really blame gas utilities all that much for their chronic complacency. At least some of that complacency is inbred through decades of the “regulatory compact.” And if you’re a combination utility, you’re going to get the business one way or the other. And electrification is more profitable for a regulated utility.
State & Local Energy Efficiency Codes
Q. Are there any other evolving “energy efficiency” issues that are looking to be troublesome for the direct use of gaseous fuels.?
A. Unfortunately, yes, there is: Building “energy efficiency” codes. While building construction codes have been around since Hammurabi’s Code (nearly 2,000 years ago) they been (relatively recently) getting deeper and deeper into building efficiency codes; especially now with EERE (and the same “usual suspects”) pushing “clean” energy agendas and underwriting the expenses. Consequently, it is getting increasingly difficult to build with gaseous fuels.
Selling building construction codes has become “big business.” The International Code Council (ICC) and the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) are the biggest. Basically, ICC and ASHRAE are in the publishing business. Much of which is in the form of “model” codes. They sell these codes to code enforcement authorities. Assuming these officials adopt a given code, it become mandatory. So then, builders must buy these code books in order to “build to code.” In the case of “energy efficiency” codes, they are making it increasingly difficult to build with gas. The EPA has been getting with the Biden program too. Specifically, the EPA is eliminating gas products from their EnergyStar program.
The Federal government is also financing state and local building codes that promote electrification. For example, on January 21, 2022, the White House issued the following press release: FACT SHEET: Biden-Harris Administration Launches Coalition of States and Local Governments to Strengthen Building Performance Standards. Thus, building energy codes are no longer about energy. They are now about emissions efficiency (meaning carbon, as discussed in Part I) as shown by the following excerpt:
New federal actions today, in tandem with close state and local coordination, will accelerate progress towards reducing buildings emissions at all levels of government, including states, territories, Tribal nations, and local jurisdictions. Federal investments and technical assistance builds capacity, expertise, and infrastructure to advance climate action and environmental justice aligned with local or state-levels needs and opportunities.
And once more, American taxpayers are financing it. With this preliminary background, I’d prefer to come back to it some other time. Okay?
Q. Okay. This has been a very explicit update, but you’re right; we need to end it for now. Any closing comments?
A. Please follow the hyperlinks to read the filed comments (and attachments thereof). They contain a lot more information and insight on these subjects.
Mark Krebs, a mechanical engineer and energy policy analyst, has been involved with energy efficiency design and program evaluation for more than thirty years. He has served as an expert witness in dozens of State energy efficiency proceedings, has been an advisor to DOE and has submitted scores of Federal energy-efficiency filings. Mark’s first article was in the Public Utilities Fortnightly and was titled “It’s a War Out There: A Gas Man Questions Electric Efficiency” (December 1996).
For more about Mark, see his MasterResource archive.