Pro-Electrification Studies Undercut Economic Case for Transition
Activists have called building electrification a “lynchpin” to solving climate change, resulting in sympathetic lawmakers introducing legislation to push Americans to electrify their houses—ostensibly to save money on their utility bills. But research from electrification supporters across the country undercuts this position, showing that electrification mandates would likely raise utility bills for many Americans while threatening grid reliability.
Electricity Only Raises Utility Bills
A recent University of California Berkeley found that for each customer transitioning to an electric-only house, utilities could expect to lose $152, costs that would be passed on to remaining customers.
According to the study:
“A 15 percent reduction in natural gas residential customers by 2030; 40 percent by 2040; and 90 percent reduction by 2050 would result in annual bill increases of $30, $120, and $1,600 per remaining residential customer, respectively.”
The impacts of these cost increases would be felt most in areas with already-high energy prices, such as California, and for low-income residents, many of whom are minorities.
The disproportionate impacts finding isn’t new. EID first discussed the study when it was released as a working paper in July, noting that the study’s own data show electrification would disproportionately impact low- and middle-income residents and minority communities.
One study by the pro-electrification group RMI, cited a report “Pathways to a Carbon Neutral NYC” that found continued investment in natural gas infrastructure was needed even during the electrification transition because of the cost of transitioning to electrified or high-efficiency gas heating systems and since pipeline infrastructure would still be used:
“Continued maintenance and state-of-good repair investment in the gas system is required to provide safe, reliable service and reduce emissions. Due to regulatory requirements, gas utilities must provide safe, reliable service to customers and are responsible for pipeline infrastructure in their service territories.”
Ironically, this study concludes that investments in existing pipeline infrastructure would remain the cheaper or most cost-efficient option, despite a gross overvaluation that replacement fuels like hydrogen and bio gas are seven to nine times more expensive than natural gas.
However, with a smaller ratepayer base, these costs would be shared among fewer customers, who would see higher rate increases.
Electrification Puts Reliability At Risk
Electrification would have negative impacts beyond just higher bills—it could also threaten grid reliability. Speaking at a webinar on electricity markets, outgoing Federal Energy Regulatory Commission Commissioner Neil Chatterjee warned that natural gas bans and clean energy standards mandating renewable generation could threaten reliability:
“It’s crucial that we don’t put ourselves in a position where we are accidentally driving out competitive resources that are needed to maintain reliability. But I fear that’s the direction we are heading.”
In his remarks, Chatterjee credited the “natural abundant affordable supply of natural gas that we are blessed to have in our country” with helping to keep American electricity bills at historic lows.
These remarks follow his April comments that FERC “is not really in the driver’s seat on electrification,” and how it will impact the wholesale markets it does oversee. FERC is only in the initial stages of understanding what its exact role will be in the planning and operations of a future power system with a radically different peak electricity demand. During their forum, FERC commissioners held equity, affordability, and reliability were the first items to ensure in an any conceivable transition.
As it stands, American natural gas has provided energy security in addition to affordability. When winter storms caused sustained blackouts in Texas earlier this year, some 4.6 million households using natural gas did not lose their heat source, according to Congressional testimony from Railroad Commission of Texas Chair Christi Craddick, who said data showed 99.95 percent of Texans did not lose residential natural gas service during the storm.
The increased reliance on a single source of energy and growing interconnectedness of the grid opens homes to disruptions. According to Rob Chapman, senior vice president of energy delivery and customer solutions at the Electric Power Research Institute:
“I would suggest right now we have very good efforts underway, in terms of managing cybersecurity, but of course the bad actors always seem to be one step ahead of where we are going as an industry. That risk only increases, from a resiliency and reliability perspective, as we drive more of our consumers to use electricity as an end use fuel of choice.”
Electricity and natural gas each have roles to play in how future Americans will heat their homes and run their appliances. As this research and recent FERC discussions demonstrate, the conversations to decide which option is best for a region need to incorporate many factors to ensure U.S. households have access to reliable, affordable energy.