D.C. could soon hand over money meant for clean energy projects to a monopolistic natural gas company. Loose Lips would find such a proposal a bit comical if it weren’t so depressingly cynical.
Washington Gas is asking the District’s utility regulators for the chance to pull $2 million from the city’s Sustainable Energy Trust Fund. Specifically, the company wants the Public Service Commission, which regulates the utility, to allow it to use the money to study “networked geothermal” energy, “sewage heat recovery,” and “biomethane resources,” arguing that these represent the sort of emissions reduction strategies that the fund is meant to support.
This request, which the commission could advance at its meeting Wednesday, is buried amid bureaucratic jargon but has nonetheless outraged environmentalists and raised eyebrows in the Wilson Building. Funded at roughly $20 million annually, the SETF exists to finance energy efficiency retrofitting or the installation of new renewable energy infrastructure by homeowners and businesses. Experts believe the Washington Gas proposal would not only cut against the spirit behind the fund’s creation, but also the law itself, which specifically describes how the money can be spent. Plus, the D.C. Sustainable Energy Utility and the Department of Energy and the Environment are responsible for managing this fund, not the PSC.
Add in the fact that the SETF was set to be gobbled up by Mayor Muriel Bowser’s proposed budget changes this year (before the Council found money to preserve it) and it’s clear why the fund’s defenders are especially sensitive to any attempts to meddle with it. They are particularly suspicious of Washington Gas’ motives, too, because the SETF also will provide funding for the newly passed “Healthy Homes Act” to finance residential electrification projects for low-income people, which the utility company and its lobbyists fought tooth and nail as it moved through the legislative process.
“This is an attempt to defund low-income home electrification and energy efficiency upgrades,” argues Mark Rodeffer, political chair of the Sierra Club’s D.C. chapter. “They don’t like [the bill] because if your home is more efficient or if it’s fully electrified, you’re not using gas. So they just want to suck up the money and use it on something else, which I think is what this is really about.”
A Washington Gas spokesperson writes in a statement to LL that “we believe that the Sustainable Energy Trust Fund surcharge on gas customers can and should be used to explore gas-related opportunities to meet the District’s climate goals and lower our customers’ energy consumption and monthly bills.
“Washington Gas supports the District’s climate goals and we believe our proposed programs directly support those goals,” the spokesperson adds.
Environmental advocates are not opposed to the idea of pursuing geothermal energy. This sort of technology could allow for the installation of heat pumps underground, which tend to be more efficient than those installed above ground, where temperatures tend to fluctuate more wildly. But nothing is stopping Washington Gas from simply experimenting with these methods on its own, they argue. The company submitted the SETF proposal as part of an August filing meant to outline how the utility is complying with the city’s climate goals in the wake of its merger with a Canadian gas company. Why wouldn’t Washington Gas simply use this as an opportunity to ask for permission to pursue these plans as a demonstration of its good faith efforts to reduce emissions?
“Washington Gas isn’t serious about this,” Rodeffer says. “It’s actually a laudable goal, and they should be doing it. But they shouldn’t be trying to steal money from poor people to study it.”
Tim Oberleiton, senior attorney at the environmental law nonprofit Earthjustice, adds that the company’s desire to use this money to pursue biomethane projects, also known as renewable natural gas, raises serious questions. He called it a “false climate solution” that does little to actually reduce emissions, and notes that the company has, in fact, already studied biomethane in the city and found it wanting. Yet Washington Gas wants to study it again, using the SETF money, and even go a step further. They’re asking for regulatory approval to expedite the installation of infrastructure related to renewable natural gas before this study is even completed. (The company argued in its filing that this is necessary to “provide a clear timeline for interested business partners” as they weigh whether to work with Washington Gas on such projects.)
“It wants to play a waiting game with the proof of whether [biomethane] will actually do anything to meet the emissions goals, but also wants to sneak in this infrastructure now to get as much locked in as possible to support its system,” Oberleiton says. “And we all know the renewable natural gas industry has not changed.”
Broadly, the company’s rhetoric about the SETF in the PSC filing does not exactly inspire confidence in the purity of its ambitions here.
The fund is seeded by fees on D.C. residents’ gas and electric bills and then redirected into programs like the D.C. SEU, which provides rebates for the purchases of electric appliances and other efficient technologies, and the D.C. Green Bank, which finances new green energy infrastructure projects. Yet Washington Gas still argued in its filing that “since October 2021, Washington Gas customers have paid approximately $38.8 million into the SETF without receiving any direct benefits associated with the funds being collected.” The company claims that this study of alternative energy sources, however, could (eventually) cut costs for its ratepayers, which makes it a much better use of the fund.
“Prior to September 2021 DCSEU administered gas appliance programs, but since October 2021, Washington Gas customers in the District have paid more than $38 million into the SETF, and DCSEU has offered no energy savings programs or lower carbon-focused programs to gas customers during that time,” the company added in its statement to LL.
Rodeffer calls that argument “absurd,” as gas customers are undoubtedly benefiting from these clean energy programs, since they’re also electric customers and have seen benefits to changes with the city’s grid—they just happen to be using less natural gas as a result of these programs, and that’s bad for business. “They want to keep low- and moderate-income residents stuck on their system to maximize their profits,” he argues.
“This is clearly a way for [Washington Gas] to siphon money away from funding for programs that have been up and running in D.C. for a while,” Oberleiton says.
It remains to be seen, however, whether Washington Gas can really pull off this move. The company is asking the three-member PSC to rule that this use of the SETF funding is “in the public interest,” which could tee up the SEU’s approval. But LL’s sources inside and outside the Wilson Building are skeptical that the law would allow the fund to be used in this way. The D.C. code is extremely specific about where this money can flow—consider that energy efficiency projects in Ward 7 totaling $2 million needed special legislative language to win funding through the SETF. (Spokespeople for DOEE and the PSC did not respond to LL’s requests for comment.)
The Council could always change the law to allow this use, should Washington Gas ask it to do so, but lawmakers probably aren’t itching to do so after fighting so hard to pass the Healthy Homes bill and restore SETF funding in the previous budget cycle. (Bowser pulled money away from the fund to pay for the city’s own electric bills; Ward 6 Councilmember Charles Allen, the transportation and environment committee chair, convinced his colleagues to increase fees on electric and gas bills to avoid emptying out the fund entirely.) Although the utility has historically wielded quite a bit of influence on such matters, the Council has recently taken a more skeptical view of its proposals—10 of the 13 lawmakers wrote a letter to the PSC in February urging it to reject a new phase of Washington Gas’ $672 million “Project Pipes” proposal for replacing its gas infrastructure in the city.
That was a highly unusual step for the Council, which has traditionally not gotten involved in such esoteric matters, and it appears to have had some effect. The PSC has now twice slapped down the utility’s plans for this work, arguing it would unnecessarily lock in new infrastructure for a type of energy the city should be phasing out, and directed Washington Gas to file a slimmed-down version of the plan that would allow for only the replacement of the most unsafe pipes currently in use. The company did so on Sept. 27, scaling back the project to about $215 million in spending (and, perhaps in recognition of the bad press associated with “Project Pipes,” rebranded the whole effort as “District SAFE”).
Though this debate over the pipeline replacement project is technically distinct from the drama over the SETF, Oberleiton stresses that the issues can’t be considered in a vacuum. “What you can read from Washington Gas’ approach right now is desperation,” he says, as the utility isn’t accustomed to such critical questions from its regulators on a project as lucrative as “District SAFE.”
“If Washington Gas can convince the commission that there is room in D.C.’s climate future for something like [renewable natural gas] because it results in emissions reductions, then the commission can be incentivized to approve funding to keep these pipes in the ground and keep them maintained,” Oberleiton says. “And that is the real money maker for them.”
The commission remains a wild card here. Washington Gas is asking the PSC to set a schedule Wednesday for the consideration of its SETF requests, but Oberleiton’s firm and other environmentalists have filed their own motions opposing any consideration of the matter.
The PSC’s recent skepticism of the company’s plans gives some advocates hope that it won’t simply give into Washington Gas’ wishes. But the commission’s historically cozy relationship with utilities in the District for many years now has given them plenty of reason for pessimism, too.
“There’s definitely good reason to be cynical here,” Rodeffer says. “But if you had asked the day before they rejected Project Pipes if that was going to happen, I would’ve said no.”