New California Gas Utility Regulation Targets Leak Reduction

In August 2019, the California Public Utilities Commission adopted a new gas utility regulation that provides an innovative approach to monitoring methane emissions and encouraging gas leak control.  Considering that California residents alone have been paying an estimated $18 million a year for gas that is never delivered because of leakage, the new rules are a welcomed improvement.

Nuts and Bolts of the New California Gas Utility Regulation

The most innovative element of the new California law is that it incentivizes gas companies to address the thousands of non-catastrophic natural gas leaks that waste gas and harm the environment. 

The state’s new law aims to achieve this goal by implementing performance-based regulation tactics.  Specifically, the law prevents gas companies from passing the cost of wasted gas from leakage onto customers when the leakage exceeds the state’s methane reduction targets.  This is the first time any state has implemented this type of practice.

Impact on Emergency Preparedness

This new and innovative approach to gas utility regulation is helpful to utilities in all sectors from an emergency preparedness perspective.  Once other states follow suit, as is expected, the reduction in methane leaks should help stem or at least slow the pace of climate change.  This should, in theory, keep a lid on the predicted increasing ferociousness of weather patterns – at least in the short term – which will help minimize outages.

Additionally, reducing wasted gas should help stabilize reliability of supply, especially in terms of fueling natural gas plants.  This too is very important, because increased reliability, coupled with a deceleration of volatile weather associated with global warming, means that outages will be minimized and recovery performance will be bolstered. 

I think it is only a matter of time before other states will follow the leader and implement similar gas utility regulation approaches.  The only question is when will this happen?  Hopefully, sooner rather than later.