We’ll Help You Get Off Gas, Says Washington’s Top Gas Supplier

Washington state’s biggest provider of natural gas is telling customers to get off gas. At least, that’s the implicit message in a pilot project launched by Bellevue-based Puget Sound Energy, which seeks to electrify 10,000 Washington households. Next year the utility hopes to electrify even more.

Participating customers get a free, in-person “electrification assessment” detailing how they can ditch furnaces and other gas appliances, connections to local contractors and a $50 gift card. Some also get access to rebates from the utility to top-up government incentives. And, for lower-income customers, Puget Sound Energy will cover the full cost of their home energy makeover — everything from a heat pump and upgraded electrical service to beefed-up insulation.

Why would a gas supplier pay its customers to stop using gas? Washington state and many of its cities are pursuing multiple strategies to reduce natural gas use and consumption is already declining in many parts of the state, so it’s not hard to see the writing on the wall.

Plus, Puget Sound Energy can benefit from the transition: electrification can eliminate operational headaches. And the utility has little to lose, since it sells electricity to over 40 per cent of its gas customers.

David Landers, the utility’s director of system planning, says its Targeted Electrification campaign seeks to relieve pressure on specific areas of its gas system that are already overtaxed, but to do so without adding pipes. “We’ve stopped planning for new capacity additions on the gas delivery system,” he says.

The customer outreach is also an opportunity to learn how Washingtonians are thinking about the energy transition, giving the utility more insight on what’s coming and how fast, and how the utility can best assist customers. As Landers puts it: “We know a transition is on the way. The challenge is forecasting the future.”

Puget Sound Energy has the equivalent of 3,340 full-time employees. Only a few of them work directly to manage and administer the utility’s Targeted Electrification project, along with up to a dozen “electrification coaches” hired by the private-sector contractor conducting home assessments. But it took involvement of more than two dozen utility employees in eight departments — including Landers’ system planning group, the customer energy management team and finance specialists — to craft the program and get it approved by the Washington Utilities and Transportation Commission.

The real jobs impact will be in electrical and heating firms that do the home upgrades. Heat pump installations and other home energy upgrades would create over 12,000 jobs in Washington by 2030 if electrification takes off, according to an April 2024 workforce analysis by the Clean Energy Transition Institute, a Seattle think tank.

It could be a model for the bioregion that combines new regulations, information technology and tweaked business models to lower use of gas, which accelerates the cleanup of buildings that contribute over a quarter of the region’s greenhouse gas emissions and a significant share of local soot and smog. It could also head off future rate increases that are likely to disproportionately hurt lower-income consumers, who have fewer resources to proactively switch to electric heat pumps.

Targeted transition

Puget Sound Energy launched its targeted electrification program last fall with a specific job in Washington’s energy transition: keeping today’s furnaces running during the coldest weeks of the year without big investments in the gas system.

While the utility’s residential customers used seven per cent less gas last year, in certain areas it still struggles to deliver enough gas. During cold snaps it must dispatch staff to manually turn valves, temporarily bypassing lower-priority corners of the network to meet spiking demand from home furnaces. Sometimes it takes even more extreme measures to meet winter demand, says Landers: “We haul compressed natural gas around on trailers and inject it into our system to keep pressure up.”

In the past, Puget Sound Energy avoided or fixed bottlenecks by adding pipes, increasing its system’s capacity to deliver gas. Accelerating electrification, in contrast, provides a pipe-free solution.

To identify areas ripe for electrification, Puget Sound Energy developed mapping software last year that combines metrics of its gas and electric systems and the communities they serve. That multi-layered view reveals where constrained gas supply coincides with spare capacity on the power grid. It can also show where those areas overlap with disadvantaged communities.

The GIS software and targeted electrification respond to specific network pinch-points, but they are part of a broader effort to limit gas growth. For example, Puget Sound Energy used to cover some of the cost of extending its pipes to hook up new gas customers. As of Jan. 1, 2025, customers must pay the full cost of new service.

The state is also making moves to rein in gas use. Landers says state and local building codes are having “significant influence” on customers’ choices for heat and hot water. Updated codes went into effect in March that add substantial costs for builders installing natural gas space and water heating in new homes.

Targeted electrification, meanwhile, has broader benefits for the larger push toward clean energy. Puget Sound Energy says the pilot has already revealed that being prepared for heat waves like the one that scorched the Cascadia region this month is “a big motivator” for electrification. “If you move from a gas furnace to a heat pump, you also get air conditioning in your home,” notes Landers.

Puget Sound Energy has approximately 1.2 million electric customers and about 900,000 natural gas customers, of which 400,000 customers get both. The electrification pilot spans the utility’s gas territory, but offers extra rebates to participating customers that also get power from Puget Sound Energy.

It may be just the start for more holistic energy planning in Washington state, thanks to the latest in a string of state climate-action legislation.

A bill passed earlier this year, pushed by climate and consumer advocates with the utility’s support, requires Puget Sound Energy to co-ordinate planning of its entire gas and electric systems. Regulations implementing Washington House Bill 1589 are likely to mandate planning beyond targeted electrification, according to Laura Feinstein, a fellow at the Seattle-based Sightline Institute and a former Puget Sound Energy engineer.

Feinstein says she hopes regulators use the law’s full potential and push the utility to begin electrifying entire neighbourhoods, enabling it to shut off some gas pipes and thus trimming operating and maintenance costs.

Puget Sound Energy’s support for HB1589 marks a huge change of posture and remains rare for gas providers. As Feinstein puts it: Puget Sound Energy is no longer “speaking the same language” as other gas providers in the bioregion that stretches from Alaska to California. “They think PSE has joined a cult or something,” she says.

Most gas firms just about everywhere continue to present today’s gas systems as a climate-action asset, insisting that they can simply shift to lower-carbon fuels to cut emissions. They want to use their existing pipes to deliver so-called renewable natural gas produced from agricultural wastes and hydrogen generated from renewable electricity.

Washington's other gas firms — Avista Utilities, Cascade Natural Gas and NW Natural — lobbied against HB1589, notes Feinstein. She says the bill applied to Puget Sound Energy exclusively, but other firms saw it setting a precedent that would ultimately expand to the whole industry.

Resistance by Washington gas interests didn’t end with HB1589’s passage: state ballot initiatives for November's election backed by businesses that favour natural gas would largely render the bill moot.

BC’s contrasting approach

Across the border in British Columbia, residential gas use is still rising according to data from Statistics Canada, and primary supplier FortisBC is doubling down on its gas system.

According to energy expert Dan Woynillowicz, the problem is a lack of clarity from the B.C. government. Woynillowicz, who runs Victoria-based climate policy consultancy Polaris Strategy + Insight, says uncertainty around the future of the gas system has allowed it to go on growing. That is delaying greenhouse gas reductions and setting up B.C. for a financial reckoning in the years ahead, he says.

“We need to stop digging a bigger hole in terms of total size of the gas system and the sunk costs that have to be recovered by ratepayers, given the uncertain future of the system,” says Woynillowicz. “For the next government in B.C., reconciling this needs to be on the top of the list of the energy minister’s mandate letter.”

B.C.’s primary gas provider FortisBC, a subsidiary of multinational energy firm Fortis Inc., continues to emphasize low-carbon gasses as its climate solution despite serious doubts about their availability, cost and carbon footprint (which The Tyee recently covered in a three-part series). In March the British Columbia Utilities Commission rejected the utility’s plan for ramping up renewable natural gas.

Even in the Okanagan and the Kootenays, where FortisBC provides electricity as well as natural gas, the utility has sought to expand its gas network.

Most recently FortisBC had proposed a 30-kilometre high-pressure pipe to meet rising gas demand in the Okanagan. Without the new pipe, said FortisBC, it would be unable to keep customer furnaces fuelled in the event of a severe one-in-20-year freeze, as early as next winter.

In December 2023 the BCUC rejected the proposed $327-million Okanagan pipe, stating that FortisBC had not considered how growing adoption of heat pumps would impact gas demand. “The forecast peak demand growth… is highly unlikely to occur,” concluded the BCUC.

FortisBC spokesperson Nicole Brown says the utility will file a workaround plan, which the regulator required by the end of this month. Brown says targeted electrification of existing gas consumers “could be one of the approaches” proposed.

Brown says FortisBC recognizes the possible long-term costs to ratepayers from gas system expansion. But she says electrification deserves the same scrutiny: “We have to look at the cost of tripling our electric grid in the Okanagan and what the financial impacts to our customers would be, what the environmental impacts would be, the land acquisition impacts.”

Woynillowicz says this case exemplifies the inadequacy of B.C. government action. In its 2021 CleanBC policy update the province committed to creating greenhouse gas standards for the natural gas system, but it never delivered. “Here we are halfway through 2024, and there hasn’t been any public discussion about what is going on,” says Woynillowicz.

The government has also failed to drive the type of integrated planning that’s getting underway south of the border — something it recognized the need for in an energy strategy document released last month. “There needs to be that coordination between the two systems to be planning proactively enough, because it takes time to upgrade the systems to handle more demand,” says Woynillowicz.

The situation is dysfunctional and complex across the bulk of the province where Fortis BC sells gas but BC Hydro supplies the power. As Woynillowicz puts it: “We have BC Hydro and FortisBC planning in silos and making plans that conflict with each other.”

These problems are not unique to B.C. In fact, no province has issued policy on what the energy transition means for the future of gas, according to a recent report by the Canadian Climate Institute.

Their modelling, which matches most other analysis on the energy transition, found that meeting provincial and national climate action targets will “require a significant increase in the use of electricity for building heat, and a declining use of gas, starting right away.”

The analysis concludes that further expansion of gas systems is “risky for ratepayers” and “inconsistent with cost-effectively reaching net zero.” As a result, they warn, “gas utilities’ incentives do not necessarily align with what is most affordable for ratepayers over the long term.”

[Editor’s note: This article runs in a new section of The Tyee called ‘What Works: The Business of a Healthy Bioregion,’ where you’ll find profiles of people creating the low-carbon, sustainable economy we need from Alaska to California. Find out more about this project and its funders.]