Dave Schryver is the CEO of the American Public Gas Association, which represents about 1,000 municipally and publicly-owned natural gas distribution systems. In this episode, Schryver tells Robert that the gas business is “under attack like never before,” how the gas grid contributes to energy reliability and efficiency, and why his group will “never be embarrassed” to talk about the benefits of the direct use of natural gas.
Robert Bryce 0:04
Hi, and welcome to the power hungry podcast. I’m Robert Bryce. On this podcast we talk about energy, power, innovation and politics. And my guest today is Dave Shriver, he is the President and CEO of the American public gas Association. Dave, welcome to the power hungry podcast. Thank you for having me, Robert. It’s a privilege. So I didn’t warn you. guests on this podcast introduce themselves. So you’ve just arrived somewhere and you don’t know anyone Introduce yourself, if you don’t mind, I’ve given your title, give us something else about yourself if you don’t, and 45 or 60 seconds.
Dave Schryver 0:37
Appreciate that. Just by way of background. As Robert mentioned, I’m the president, CEO of the American public gas Association. We represent communities, cities to own our own natural gas systems. There are about 1000 of those nationwide in 38 states. While I grew up a big 10 guy, I always say that we’re an SEC intensive conference, meaning that a lot of our membership is concentrated in the southeast. And that’s because it’s natural gas come out of the Gulf of Mexico, in the 1960s. For a lot of small and medium sized communities. The only chance he had to get that natural gas into their community was to create your own natural gas system, which is why we have so many members in the southeast in Georgia, Louisiana, Tennessee, the what are known as the SEC states for the Football Conference. We have a lot of small and medium sized members, our largest members, Philadelphia gasworks, they are oldest member as well, and they serve 500,000 customers, but then we have systems that serve less than 50 customers. So there’s a wide gap in size.
Robert Bryce 1:38
You know, I didn’t realize that until I started looking at your website and doing a little research in advance of this our talk today. But they’re, you’re not you’re not cooperatives, right. They’re publicly owned, but they’re similar in structure to cooperatives in that they actually in terms of scale. The publicly owned gas utilities, are there more of them than there are electric co ops are about 900. Electric Co Op. So you they’re more small, I’m gonna say small, although some of them aren’t. So small gas utilities that are publicly owned, then there are electric. Well, I mean, they’re the publicly owned electric utilities like Austin energy and CPS. But anyway, it’s just it’s a it’s a remarkable part of the energy network that I wasn’t that familiar with. So you know, I’ve been in advance of our talk today, Dave, I did some, you know, did some research on the challenges facing public gas. But tell me why. Just in general, what is a PGA do and what are the biggest challenges facing a PGA right now?
Unknown Speaker 2:37
Sure, we do a lot of things. We represent our members in DC, as I said, a lot of small, medium sized communities. In fact, almost half our members have five employees or less so they can’t have their own voice in Washington. So we work with them to make sure they have a voice on it regulatory issues, legislative issues, when Faenza, which regulates pipeline safety when they come out with a rulemaking regarding pipeline safety, it’s important for us to communicate to femmes and regulators that
Robert Bryce 3:06
any fims Oh, sorry, I don’t I’m sorry. It’s a lot of this stuff, but I don’t even know what that acronym means.
Unknown Speaker 3:11
pipeline hazardous and safety materials administration.
Robert Bryce 3:14
Okay. I am mes a or, eh, eh, MSA pH? Okay, got
Unknown Speaker 3:21
it. Yep. And that regulation regarding safety is gonna have a much different impact on upon a system of five or 10 employees, as opposed to say, Washington gas here in dc, dc, which serves, you know, millions of customers. And that’s the difference between us and the investor on utilities. As you said, our members are smaller, and you equate us to real costs. I think that’s good. That’s a good analysis. In fact, we have some rural co ops within our membership. She’s a real co ops that actually own a gas system in addition to the electric system. Another difference is our members are regulated at the local level with a couple exceptions that are regulated by the state PSC. So rates are set at the local level by a locally elected or appointed City Council. In terms of some of the challenges we had, we have ahead of us. One of the big ones is natural gas for the future. You see a push in some areas of the country, primarily California, where they’re trying to move away from natural gas for direct use. Sure. And that’s
Robert Bryce 4:22
that’s the challenge for us. Well, and I want to talk to the about that, because I think in the Philadelphia gasworks is clearly there’s a lot of controversy, a lot of reporting around Philadelphia gasworks, in particular, which I thought was interesting. They formed in 1836. I mean, this is a utility, it’s almost 200 years old. But as I mean, I’ll give you my quick take on what I think is happening in the gas business in terms of distribution, it seems well it for 200 years or so we’ve seen generally a society natural gas networks as being a sign of progress and prosperity and now they’re being attacked on as problematic in terms of climate change. Am I is that Am I missing something there? Because it seems to me a PGA In fact, as Ms is targeted in some of these stories about, oh, well, you’re lobbying against electrification and that somehow that you’re the bad guys. I mean, how do you is that an accurate assessment of where the industry is today?
Unknown Speaker 5:15
100%? Yeah, 100% accurate. What the other side is telling you and telling, you know, policy, policymakers the public is that the only way to address climate change is to get rid of fossil fuel, to move towards an electrified future, and all renewable, electrified future,
Robert Bryce 5:34
electrify everything, which is exactly we’re being pushed by the big environmental groups, a bit of climate activists that the only way forward is eliminate all hydrocarbons and put all energy demand on the electric grid and eliminate the gas grid, and eliminate the surface grid of liquid fuels, etc.
Unknown Speaker 5:53
Exactly. And then and their hope would be an all renewable future. Not right now. We’re about 20%. So I think you can have a legitimate debate whether we get to 50%, nonetheless, 100%, renewable. And the end of the day renewable energies intermittent, as you will know, now to direct use of natural gas, which is what our members do, this is natural gas supplied directly to the home for cooking, heating, hot water heating, for a fireplace, that direct use of natural gas is 92% efficient. So it gets to the home at three times the efficiency and 1/3, the cost of electricity.
Robert Bryce 6:28
And I repeat that again, because I’ve done some of my own calculations. And This to me is one of the key issues here in terms of this electrify everything is the issue of equity and social justice, right about who’s going to pay for this form of energy. So if you don’t mind, run me through those numbers again, please.
Unknown Speaker 6:43
When you take natural gas out of the ground, bring it to your home. So go to the pipeline, the interstate transmission pipeline comes to the distribution system and goes into your home, I believe you live in Austin, I do. So it gets to your home in Austin, it is 92% efficient, meaning you’re only losing 8% of that energy.
Robert Bryce 7:01
By contrast, before it gets delivered, or you’re talking about actually then delivery and in use that conversion of the molecule into heat is delivery
Unknown Speaker 7:08
in in use. Okay, gotcha. So as I said, you know, three times the efficiency 1/3, the cost of electricity. And what the other side is telling you, as you said is you must get rid of all fossil fuels. So I used this analogy, before, you know, we have two boys, 12 and 14. And I can’t help them with their math right now, because it’s way beyond my means. But when they were younger, I could help them with their math homework, I could solve the problem. But I could not solve the problem the way they were taught to solve the problem, I would have to, you know, research the way they’re being taught. And what the other side is telling us is, the only way to solve this problem is our way and we just agree with that. All eggs in one basket approach, we think, you know, there’s a number of ways to solve the problem. And we think the reliability, the resilience, the affordability of natural gas lended in fact Amanda to being part of our energy future
Robert Bryce 8:04
well that that resilience part of it speaks to me because maybe seen some of the things I’ve written but we were blacked out here in Austin during the during the winter storm Yuri and one of the things when we bought our house now 21 some odd years ago was we plumbed in natural gas, it was all electric home when we bought it and during that those 45 hours and we were blacked out man was I ever glad I had natural gas because then we could heat we, we our central furnace wasn’t working because you know, it’s it has an electric fan, but we could heat our kitchen with the burner, we could heat water, we could take a shower, we could cook food, it was you know, it wasn’t pleasant, but it would have been far less pleasant had we not had gas. And that’s one of the things that I think the resilience issue is, is lost here. And as you say, putting all the eggs into the electricity basket. But how do you make that argument effectively? Because I gotta tell you, when I look at the politics of where apga is now and the American gas Association and kind of the gas distribution system in general, you’re being back footed here in a big way. I you know, that’s my assessment, and I’m not trying to, you know, beat up on you. But in what I see in terms of the coverage of these issues, it’s it’s far, far more coverage and attention is being paid to these natural gas bands and and the climate activists and then to the resilience and robustness argument. Is that is that fair?
Unknown Speaker 9:28
I think that’s fair. I mean, everybody talks about the fossil fuel industry. And it just again, our members, a lot of small and medium, medium sized communities, they don’t have a lot of resources. But the other side is pouring millions of dollars into this effort to get rid of fossil fuels to attack fossil fuels. And it’s not just a distribution, it’s a transmission level production level, their messaging and going back to reliability. There’s a quote that appeared in the last left Los Angeles Times for electric electrification advocate who said that concerns about reliability Should not stand in the way of electrification. And I was taken aback by that, because I know when people turn the light switch on when they turn their stove on, when they turn the heat on, they expect it to work. You know, this is the United States, we’re not a third world country, and to just brush off concerns about reliability. And, you know, standing in the way electrification, I just don’t understand that
Robert Bryce 10:24
I haven’t heard that I’d be interested in getting that citation. But that was one of the things that I was interesting to me. And some of the surveys that were done here in Texas after winter storm Yuri was, you know, we had millions of people for over four or 5 million meters. I don’t know how many exact number of people were blacked out, but very few reports of gas in the home that gas being turned off. So that in terms of reliability and resilience during this time of what it was, it was a crisis, very few instances of gas shortages and resonant for residential heating or residential use, but widespread loss of electricity in the broader society, which seemed to me to be an an argument for the for keeping that that gas grid operating. But let me shift and talk about philea Philadelphia gasworks, because I saw that there was a piece in fact, I just before we started recording that Philadelphia gasworks paid American gas Association $42,000 in 2019, and American public gas $56,000 money that came from Philadelphia ratepayers. So it’s through the open Records Act, it seems like the public gas utilities because the open records act in various locations, that the workings of what you’re doing and trying to preserve your markets is seen as somehow nefarious is am I miss reading that?
Unknown Speaker 11:46
No, you’re not miss reading that and, you know, a PGA will never be embarrassed for touting the benefits of the great use of natural gas as our job. We believe in those benefits. We believe strongly in those benefits. You know, as I said, the affordability, reliability, resilience, the efficiency, and, but the other side is going after us any way they can, including through following numerous open records requests within our members. And, you know, it’s also important to note that in addition to advocacy, apeejay focuses on pipeline safety issues, providing materials to our members regarding pipeline safety, best practices, cybersecurity best practices. So, you know, we do a number of functions that benefit all public air systems, not just advocacy, but we will never be embarrassed by talking about the benefits of direct use of natural gas. And, you know, I will let you know, hey, PJ is going to, you know, continue to fight for direct use of natural gas, because we believe it’s in the best interest of those who already have it, you know, those who may want to get it in the future. And we support all energy choices. And we don’t think any one should be off the table.
Robert Bryce 12:50
But yet, you yourself said you’ve been admitted or I think agreed with what my point on being backfoot. And you have now 40 communities in California that Well, no, I think it’s 42 or 43. I’m following it on the Sierra Club’s website, City of Seattle has banned natural gas hookups in new in new homes or new residences, new new construction, you have a dozen communities in Massachusetts that are considering a bunch of other communities around the country that have that have considered it. Interestingly enough, just in the last few days here in Texas, the governor signed a bill that would that bans natural gas bans effectively. Right. So you say you’ll never be embarrassed. So apga is is is is is promoting or supporting statewide bans on gas bans? Is that a fair way to put it?
Unknown Speaker 13:34
Yeah, he has a smaller associations, we don’t have the resources to get involved at the state level, we tend to focus the federal level. But as you mentioned that Texas is one of 10 states that have passed legislation signed into law that retains the ability of consumers to choose the choice of energy that’s best works for them. So in other words, a locality can say, no natural gas, no natural gas, or you know, likewise, any, any any fuel. So we I think it’s a push back to those areas and California and other parts of the country you mentioned that are moving to get rid of fuel choices for the customer something we believe customers should be able to choose the appliance in their home that works best for them. If they want an electric stove, they can do that they want natural gas. And studies show that people prefer to cook with natural gas, they should be able to choose that natural gas cooktop.
Robert Bryce 14:26
Well, let me ask you about that. Because that seems to me another area where frankly, your your opponents have are well, directly if they’re kicking your butt on the on the issue of gas appliances in the home, and there have been numerous stories. I’ve saw one in the Atlantic and other places, saying oh, that burning gas in your home is dangerous and that air quality problems and I’ve written a little bit about this. How do you how do you reply to those, those those studies that claim this is a big health problem.
Unknown Speaker 14:56
First of all, it’s not and we have studies that show that combustion of the cooking process, whether it’s electric or gas, is where materials are released into the air. You know, proper venting on a natural gas cooktop resolves any concerns and anytime, you know, people purchase a natural gas of our members have showrooms and do installations, you know, the venting is an important issue. The other side, you know, as I said, they have a lot of money and there’s throwing that money around.
Robert Bryce 15:25
Well, let me let me interrupt you if I can’t, so, yeah, how much money? And who do you say the other side? So who are your biggest critics? And how many millions of dollars? Do you think you’re fighting against here?
Unknown Speaker 15:36
A lot, a lot more than we have? That’s for sure. And I’m sure a lot more than a PGA has, and
Robert Bryce 15:41
I’m sorry, is about what per year, sir? A little over $5 million, 5 million, and you’re under 5 million. Yeah. And a number of employees and we have 10 employees. 10. And so it Who are your biggest critics, your biggest opponents in this fight? Because it is a fight. I mean, it’s unlike anything that I’ve seen in my lifetime, where, frankly, as I said before, that the gas network is being vilified, where for decades, for centuries, it was seen as a sign of progress.
Unknown Speaker 16:10
There’s a number of opponents out there and you know, we’re looking at NRDC, Sierra Club, E, Environmental Defense Fund, even efficiency groups, I would argue, are more focused on getting rid of fossil fuels and truly increasing efficiency. That’s a battle we’ve had, under the Obama administration, we had to sue do a over a furnace standard that in our view, would have pushed people away from natural gas. I think we anticipate more fights on the efficiency, efficiency front with applying standards that may push people away from natural gas. So that’s something we’ve had to devote a lot of time to. We actually created a campaign three years ago, the natural gas genius campaign, which you know, it’s been under scrutiny, obviously, it must be somewhat effective it because the other side has really gone after it. And the campaign is really focused on educating homeowners or those who want to purchase a home about the benefits of natural gas and how it improves your quality of life. And when I talk about natural gas, I talk about affordability, reliability, resiliency, it’s domestic, it’s efficient. But with this campaign, we’re really focused on how does this appliance improve the quality of your life, whether it’s a cooktop natural gas, fireplace, natural gas, heat, but you live in a cold weather climate. So it’s really focused on educating consumers about the benefits of that appliance purchase and how to improve the quality of their life, how it makes their home a better castle.
Robert Bryce 17:40
makes their home a bit better castle. I like that. So these studies, though, but to go back to the air quality issue, that there there’s been claims and and it seems like a two or three people who have been critical of this are saying, Oh, well, this is an underreported story, that the industry is known about this for years that this was causing asthma, etc. I guess my question would be, well, if this were really a health threat, these gas appliances in the home were really a health threat. Why have they passed been under the radar all these decades? Why haven’t federal authorities then said, Well, this is a danger, we need to resolve this? And yet, now we’re being hit with all these stories saying, oh, no big danger, danger, danger. How do you how do you explain that.
Unknown Speaker 18:26
And that’s an excellent point. If the Consumer Product Safety Commission, EPA, they look at these issues, you know, all the time and they deem this not to be a hazard, they have not moved towards regulation of these appliances. So I think it’s the other side, just throwing anything they can to stick against the wall and create an environment against natural gas. And again, all because we’re fossil fuel, the target on our back has gotten a lot better with increased production. You know, I think, many years ago, natural gas is viewed as a bridge fuel. And I’m President Bush doing a presentation, you know, map of the United States, and there’s dots along the east coast and West Coast. And these are going to be LNG import facilities where we’re going to bring natural gas into the US to meet our future needs. And now we’re an export of natural gas and then we have a plentiful supply. And because of that, I think the target on the back of natural gas has gotten a lot bigger.
Robert Bryce 19:24
So the industry is being targeted because we’re we have such abundant resources that what you’re saying is that big. I become such a big producer.
Unknown Speaker 19:33
I think that’s part of it because natural gas is no longer a bridge fuel. You know, when we were a bridge fuel, you can live with natural gas. It’s
Unknown Speaker 19:41
a bridge fuel,
Robert Bryce 19:42
because because we’re going somewhere else.
Unknown Speaker 19:44
Exactly. It’s a bridge to the all electric all renewable future. But now your supplies are plentiful. As I said. It’s affordable. It’s abundant. And because of that, it stands in the way of the off all electrical renewable future that some people are pushing for
Robert Bryce 20:01
So maybe you know this, but I’ve looked this up now this this data of EIA data and Energy Information Administration, the amount of gas consumed in homes in America has not changed in 50 years, who is 5 trillion cubic feet a year in 2019 70. It’s 5 trillion cubic feet a year now, even though we the size of the US population has increased by about 50%. So just I don’t know, is it that you’re an easier target for the climate activists than trying to, you know, go after transportation? Why now? And why you? I mean, that’s the part that as I look at this, you know, just trying to look at it strategically and saying, Okay, well, if I were in this political fight, which target would I choose? Isn’t that you’re an easier softer target than trying to get people to not use their automobiles? Why do you? Why do you think that is?
Unknown Speaker 20:51
If you look at the overall emissions, you were one of the lower hanging fruit in the tree degeneration, you look at transportation, and much more in terms of greenhouse gas emissions and residential direct use. I do think,
Robert Bryce 21:06
perhaps, your opponents are saying, Oh, well, we have to eliminate gas from the home if we’re going to be serious about climate change that this is the this is the imperative, not those other sectors.
Unknown Speaker 21:15
And that’s what they’re saying, but they’re wrong. Studies have shown a ga did American gas Association did a study a few years ago, what happens if you moved on, you know, mandated electrified future. And you know, you increase consumer costs by about $900 a year in terms of the energy costs, the overall cost of moving towards electrified future, including the build, build out of transmission generation is going to be somewhere in the neighborhood of 600 million to 1.2 trillion,
Robert Bryce 21:46
any agenda day, 62 billion to 1.2 trillion to replace gas, and that gas with electricity,
Unknown Speaker 21:52
correct. And at the end of the day, it’s a minuscule reduction in emissions, I think it was a roughly 2% reduction in emissions, because the renewable renewable energy is going to have to be backed up with natural gas generation. So we argue it’s more efficient, more effective to use natural gas directly and certainly more affordable for the consumer.
Robert Bryce 22:13
If I can interrupt because that’s one of the other things in terms of the resilience. And I wrote about this back in February during the blizzard, that the and I guess it goes back to that old saw in the in the energy business. And maybe you’ve heard this, it’s easier to move molecules and electrons. And that the surge of gas consumption in the winter is something like in terms of just total energy use. In on the coldest days there, there’s four times as much energy delivered in the form of gas, then there is electricity delivered during the hottest days of the summer. So you’ve got it, it seems to me in terms of the resilience argument, that’s a pretty strong one. Right? And in terms of, especially the heating load, because that is a difficult one to put all on the electric network. Is that one that has been effective? Or Well, I mean, what do you think you use? You said reliability, affordability, etc? I mean, how do you how do you counter the these these forces that are really trying to put you out of business?
Unknown Speaker 23:08
and resilience is critical. I mean, you talked about storm Erie, and what you what you experienced in Texas, and what other portions of the country experienced, you know, while the price of natural gas, you know, went up significantly, and that’s something we’re looking at, to to see, you know, are there safeguards that can be done, or things that can be done to prevent this from happening in the future with some of these historic price increases? You know, the system, the infrastructure was resilient, people got the energy to their homes, now, it was more expensive, but at least they got the energy, it wasn’t a life and death situation, you can eat your home, you could cook your food. So we think, you know, the resiliency is something that’s very important. But you know, the other side, as I said, which is that, you know, kind of pushes that to the side, because they think, you know, electrification is the way to go, and we need to get there sooner than later.
Robert Bryce 23:56
Is this is this part of the culture war? And I don’t use that term lightly. But it, it seems to me, we’re in the midst of a very large kind of cultural battle over over climate issues over who’s going to contribute over what choices individuals are going to be able to make in terms of what they drive, what fuels they use, where they you know, the types of homes they live in it? How do you see is it? I don’t really like that term culture war. How do you see it?
Unknown Speaker 24:22
And I agree, I mean, I think our industry or natural gas industry is under attack like we’ve never seen before. And it’s by those who want to, as I said, force their solution to the problem. Tell us the only the only solution to addressing this is what we’re pushing for. Is our approach on Asia one basket, this is the way it must be done. And you know, I don’t care what anybody else saying this the way we need to do it. And and obviously we disagree with that position. And going back to what you said earlier about residential use. You’re right. You know, we’ve increased the numbers significantly of in terms of Hong Kong is going to natural gas, the demand has not increased because such gains have been made in terms of efficiency appliances is so much more efficient. So while the number of customers are growing, the throughput is not because of gains in efficiency. And another point to make is while the number of customers are growing, the emissions were producing is stayed constant. So we’re not increasing emissions at all, again, because of improvements in efficiency
Robert Bryce 25:28
is interesting, you see that those numbers have five TCF a year in residential consumption, even though homes have gotten bigger in terms of square footage. And we’ve seen and we’ve added 50%, roughly more people since 1970, and memory serves. But nevertheless, that that drumbeat continues. Let me let me switch What are green molecules? That was one of the things that I saw in one of the articles that I read on it prior to our discussion today about the and Southern California Gas, talked about this, they didn’t use the term green molecules, but they were talking about a word we want to preserve our pipeline network, because we might be able to use it for hydrogen delivery. So my question what a green molecules,
Unknown Speaker 26:08
green green molecules is, it could be any number of things. What I think of green molecules, I think of renewable natural gas. So you’re taking that emissions emissions from a landfill from an agricultural area and would have gone up in the air anyway, to
Robert Bryce 26:24
recap methane produced from trash or or correct or animal poop?
Unknown Speaker 26:28
Correct. So you’re capturing those emissions and you’re utilizing them. And what’s interesting to note is, you know, some of those environmental groups are against for good, knowable, natural gas. And and it seems to me that if you’re really serious about addressing climate change, why not capture these emissions, as opposed to let him go up into the air? But yeah, and some of our members have done that is to Easton, Maryland, which is one of our members. They have they have a landfill site where they’re capturing the emissions utilizing the emissions, and other utilities are doing that as well.
Robert Bryce 27:00
So and how big is that market of renewable natural gas is, what did give me an idea of you know, how big it is, or how much production there is, in terms of overall RNG?
Unknown Speaker 27:10
Not a lot. But I think people are moving that way, especially, you know, and states more focused on climate change like California, I think people are making more investments in RNG RNG for vehicles, you know, natural gas vehicles do not in the middle are compared to a gasoline powered vehicle or diesel vehicle. So it’s a relatively small market, but it is growing.
Robert Bryce 27:33
So what about hydrogen? How much of the pipeline network could be used? Or what? What are the Have you looked at the top end in terms of hydrogen blends that you can add into natural gas and for delivery into industrial or residential use?
Unknown Speaker 27:46
I know. So Cal in California has looked at that. They’re not one of our members. They’re an investor owned utility. So they’re a member of the American gas Association. So from our side, I don’t know if a lot of works people are looking at it. But some of the larger systems are looking at what can be done with hydrogen. But um, I don’t think any any significant movement has been made in that area over the past couple of years.
Robert Bryce 28:09
When you mentioned So Cal gas, I thought that was interesting in doing it, again, just a little research on on on the gas distribution business there. They have over 5 million customers, I think they’re the biggest gas utility in America. So they’re 10 times the size of of Philadelphia gasworks, which has 500,000 meters. So but are the interests of those publicly or the investor owned gas utilities different from from the publicly owned ones are your interest fairly aligned?
Unknown Speaker 28:38
I think are in terms of direct use of natural gas, working to preserve customer choice. Our interests are very closely aligned. You know, some differences between us and them are size, as you said. You know, our members nationwide serve under 6 million customers. And as you mentioned, so Carol serves close to five. So we tend to be smaller, also
Robert Bryce 29:01
total. So the total of meters served by publicly owned utilities publicly on gas utilities, 6 million in Southern California Gas by itself has 5 million. So yeah. So that is interesting that the the scale will let me ask you this, because I’ve thought about the electric cooperatives in in this regard about the diffusion of political and economic power. Right. That was one of the legacy issues of the New Deal, which I think is still clear today. Right? These are those electric co ops are I see him as living remnants of the New Deal that they created in 1935 1936. The the enabling legislation, but the public gas utilities aren’t necessarily of that same lineage right there. They come from a different part. What was the enabling federal legislation or was there that allowed this the creation of these entities but I know Philadelphia gasworks is different. You talked about South and southeastern us being a particular hotbed for your, for your, for your clients or your members. What was the difference? In terms of the the, the the the the the Genesis or the creation of some of some of these publicly owned entities
Unknown Speaker 30:07
were very similar to public power utilities. I know you had joy ditto on your show, a while back, she was co CEO of a PPA. In fact, within our universe, we have about 300 combo systems, meaning the utilities as well as the electric and the gas system. So we’re very, very similar public power entities. And it wasn’t an enabling federal statute that I’m aware of it was more at the state level, where these communities wanted to get natural gas into their system. I knew their community and the only way they could do that was to create their own system, which is why I said you have a lot of small to medium sized communities and as I said, we also have some rural co ops throughout the US as well that own the gas system.
Robert Bryce 30:50
Sure. Well, so CPS energy is the biggest of the combos I think the biggest electric and gas utility is here in Santa nearby here in San Antonio. They’re facing some serious challenges and I’m not asking you to specifically comment on those but they’re you know, I guess one of the arguments against gas would be well look at you know, the prices are volatile. Look what happened to CPS energy and how many of your other members got hit by big gas bills or trying to deal with those the after effects of winter storm Yuri, I know CPS energy sued some of their gas suppliers. Are there other member companies in another other member entities within apga that are in similar situation to CPS,
Unknown Speaker 31:30
there were a lot of primary that middle portion of the US. I was in Kansas a few weeks ago speaking to the Kansas missile utility Association in Wichita, and their members were hit particularly hard up. I use Winfield Kansas as an example. They typically spend $1.5 million a year on natural gas. And in February alone, they spent $10 million.
Robert Bryce 31:51
So these prices repeat that again, Winfield, Kansas, Winfield, Kansas,
Unknown Speaker 31:55
about 12,000 customers, they spent $1.5 million a year typically on natural gas. And in February alone, they spent 10 million.
Robert Bryce 32:03
So how are they going to deal with this? Because this is one of the other things that I think is quite interesting. And we’re still in the Texas legislature is working on enabling legislation and this this issue of securitization, is that in play for the gas utilities in Kansas and elsewhere, that some legislation at the state level and how would that work?
Unknown Speaker 32:20
Sure. And so I you know, when you have these exorbitant price increases, and you know, the price went from $3 to $300, in Oklahoma, and also the price hit just under 12 $100. So, you know, these costs, you know, directly impact consumers. So what you seen is some states, Kansas passed $100 million dollar, low interest loan program, Missouri was $50 million, Illinois with $15 million. And they’ve created these programs very quickly. To help the public s public power systems mitigate the price increases upon their consumers so that they can spread these utility increases over a period of 510 years. So the consumers aren’t hit too adversely. My concern, when we’re talking about internally at a PGA is, you know, nothing prevents this from happening again next winter, at some point in the future, need to have a cold winter and shut down production and increase demand.
Robert Bryce 33:17
So what we can see this again, next next winner, I mean, exactly, there may be a one in 100 year event, but it doesn’t mean it won’t happen again next year. Exactly. How do you how do you do that? I mean, the some of the criticisms of CPS energy, in fact, San Antonio, express news is run some some story saying well, they didn’t properly hedge they weren’t they didn’t have enough capacity. But is that poor planning on the gas utility side? Or is there something that they can do that would protect them from these potentially devastating? bills?
Unknown Speaker 33:46
And terms of poor planning? No, not at all. Because what we saw was, you know, production being shut down because of cold weather. So you had a reduction in production, you had an increase in demand because of extreme cold weather. So every utility hedges CPS had just very well as but when you had this extreme cold weather, you had this increase in demand, you have to go out into the market and purchase the gas for your customers. You can’t tell them, I’m sorry, you’re not getting the gas, you’re going out your market, you’re purchasing the gas, it’s an essential commodity, you know, so you’re getting out getting out to your customers, and you got to purchase it, whatever the market has. So we’re looking at what can be done to, you know, prevent us from in the future. There’s the low hanging fruit, you know, look at winterizing the production facilities that were impacted. So you don’t have those shutdowns. That’s one thing. It was a pretty important issue for us because 95% of our members are captured the one pipeline, meaning they don’t have different suppliers to choose from. So when your Capital One pipeline, you have limited storage options. events like this hit you even harder.
Robert Bryce 34:50
So let me ask you about that securitization, because you mentioned Winfield, Kansas, if they’re upside down $10 million, and the whole state only allocated 100 million. Well, that’s a lot of potential. borrowing capacity for one fairly small entity? What happens to that liability? That is it stay on the Winfield Kansas balance sheet then so they’ve they borrow that money and pay that loan back over time. How does that? Because there’s been some questions about the securitization issue here in Texas about as well about about where does the liability end up.
Unknown Speaker 35:22
Some of our members have reserves on hand already, and they’ll use those reserves to help mitigate the impacts upon consumers. So they utilize those reserves, and then go to other areas of assistance, you know, whether it’s that state Assistance Fund, in the case of Kansas, so they’ve utilized their reserves and had to burn on their reserves. And, you know, they’re certainly an issue of concern. You know, my concern is, as you said, this can happen again, next winter, at some point in their future. And if it happens, again, I know how these lovely small, medium sized communities, you know, how do they get through that it’s gonna, it’s going to be very challenging. So, you know, from our perspective, we’ve been talking to our membership, we’re going to develop some proposals that we think you know, Congress should adopt to help prevent this from happening in the future. And we’ve been, we’ve worked with ATP at a PPA on that as well, that is an investigation at first about the price increases. But yeah, so we’ll see what comes out of that. But certainly, we’d like to protect consumers from these type of increases in the future.
Robert Bryce 36:22
So you would that legislation includes some kind of anti price gouging or some limits on pricing? Or how would that what would that look like?
Unknown Speaker 36:30
What we’re not sure yet, you know, you know, everybody supports a free market, we believe strongly in free markets. So we’re looking at safeguards, you know, that we can support. And we’re still working on those, we actually had a call with our membership Tuesday to further discuss this, and continue to try and develop some proposals. But certainly, as I said, the one of the easiest things to do is winterize, the production areas that were impacted. So you can keep those production areas going during extreme cold weather. And by keeping the supply robust, that’s going to help the price help depress the price increases,
Robert Bryce 37:06
as you’re talking about, something just pops in my head here about Do you ever marvel at the complexity of the system that you’re participating in? I mean, with so many different players, and one of the things that I think was clear in the in after the winter storm Yuri was that nobody talks about it, or really, you know, there wasn’t a headline, but the gas, Nat gas grid and the electric grid have merged. They’re totally interdependent, right, that they, you know, the some of the gas producers didn’t have enough electricity to provide the gas. And then if they didn’t provide the gas, then they couldn’t produce the electricity. So there was there is a very mutual dependence system, but there’s no coordination between them are not not going to say no coordination. But it’s clear that there’s not enough coordination and joy did. Oh, and I talked a little bit about that. But how do you resolve that, given the complexity of the you know, the staggering number of market participants, and that is, they’re going to have to be some kind of federal intervention here that’s going to take on that job of reliability and resilience as it comes to the when it comes to the, the clear integration of the electric and gas grids, it’s already happened?
Unknown Speaker 38:14
Yeah, certainly, you know, as dealer electrics move more and more towards gas for generation. You see, more and more depend interdependency between the two. And gaslights coordination, I anticipate will be something that gets looked at coming out of this event, whether it’s the North American energy Standards Board, and it looks at it, or other groups, but anticipate gas electric coordination will be something that gets looked at, you know, for our standpoint, you know, systems work pretty well, for our members at the gas day, the nomination schedule. Will, you know, we’ll be interested to see what’s proposed going forward. But you know, our members on the gas side, you know, they buy from capacity at the pipeline, because they have to get that gas. So the customers on the electric side, I’m not sure how many invest in firm capacity at the pipeline from the pipeline. But that’ll be something I anticipate gas electric coordination that will get looked at coming out of store mirror.
Robert Bryce 39:10
But that’s going to require action from Congress, or is that something that North American energy Standards Board can manage? Or what’s going to happen? Or firk? Who’s Who has the authority here? Because that’s a part. You’ve got all these overlying or overlapping regulatory entities, right? Between firk and the artios and est p UCs and the local mutiny utilities and so on? How does it even get done?
Unknown Speaker 39:32
I think, you know, neighs, we could make a recommendation to firk. So I think it’d be done more on the regulatory side as opposed to legislation from Congress. Now, the safeguards I’m talking about, you know, what those may be that that may require an amendment to the natural gas Policy Act through Congress. And, you know, if the industry can agree on something, some type of safeguards that Congress can move, you know, hopefully they can move that quickly. And
Robert Bryce 40:00
It may be necessary to the natural gas Policy Act. But it seems to me clear after you’re a to that you’ve got a clear demarcation between the big interstate pipelines is some of whom made fortunes hundreds of millions, if not billions of dollars during the crisis versus the local distribution utilities, whichever holy, they were the ones that were paying. I mean, CPS sued, who was an energy transfer. I mean, these are the big money at stake and big litigation and stake but there’s, again, they’re the competing interests here are are many and it’s, in some cases, the Giants against the Lilliputians here, am I am I not? Does that. Am I missing something?
Unknown Speaker 40:43
No, you’re absolutely right. Our members are price takers, not price makers, our members are more mainstream than Wall Street. So you know, they’re they’re relatively small systems up doesn’t mean they’re not sophisticated in what they do. They do a great job in hedging, they do a great job in providing service to their customers reliable, resilient service. But, you know, we’re, as I said, as I said earlier, you know, smaller players, I think, I think we hit a lot heavier than our weight. But in terms of the overall natural gas market structure, you know, our members, you know, are they said, price takers, not price makers.
Robert Bryce 41:19
So, just a few, a few more things. So, what’s the hardest part of your job, Dave? I mean, you’ve got all these, you’ve got a lot of members, and though they’re gonna take some cultivation, and and and work, What’s the hardest part of being the president and CEO of the American public gas Association?
Unknown Speaker 41:33
That’s, that’s a good question. You know, I, I enjoy what I’m doing, I enjoy the people I work with. So, you know, while it’s challenging, I never view it as hard. For me, the more frustrating component, my job right now, is just dealing with, you know, this anti fossil fuel approach, you know, these attacks on natural gas, we’re seeing because, as I said, you know, we believe strongly in the benefits of natural gas, and to take those away from consumers, you know, we think is the wrong approach. You know, apjs greatest, our members are by far our greatest strength, they come to DC, they talked to they’re not in our seat, obviously, because of COVID. But they talk regularly with their congressional members. They’re great to work with, you know, they, we say, you know, we get, we get to wear the white hats, we go up to the Hill, we’re not for profit members are focused on their community. As I said, Main Street, not Wall Street, and it’s really a focus on being able to provide service to your community, something our members are very proud of.
Robert Bryce 42:37
Last couple things, Dave? Again, my guest is Dave Shriver, he’s the president and CEO of the American public gas Association. You can learn more about email@example.com. What are you reading?
Unknown Speaker 42:48
The question I, you know, I’ve, over the years, I’ve turned more towards history. I just finished Stalin drive by Anthony de Boer. And within a PGA, we’re going to have a reading list. And one of our staffers suggested the peacemakers code, which is a fiction book I just started. But the reason we’re reading it is because it addresses problem solving, making strong arguments to get to the right answer. So that I said I just started something I look forward to finishing.
Robert Bryce 43:18
And last question, then Dave, what gives you hope, a lot of things.
Unknown Speaker 43:26
When I anytime I meet with our members, I’m excited about the optimism, enthusiasm they have for serving their communities. It’s something you know, they are very proud of, that gives me hope, the benefits of our product, seeing people you know, enjoying natural gas, you go to a nice restaurant in Austin, I’m pretty sure that cooking with natural gas. You know, if you go to a home in Minnesota, I’m pretty sure they’re heating it with natural gas. It’d be a tough winter to get the wind Duluth on electric heat really expensive whenever they get through with electric heat. So, you know, I think we have a great story to tell, I’m excited about our future. I think the future for natural gas is strong. You know, I wish in some of these areas that are banning natural gas, you could just kind of wall those areas off, let that experiment play out and see where they are 1015 years from now, I don’t think they’ll be in a good place. I think your energy costs will be a lot higher. And you’re particularly hitting those on low fixed income seniors with a lot much higher energy bills and in my view, a you know, a lower quality of life because if they want to cook with natural gas, they can’t if they want to heat their water with natural gas or heat your home with natural gas, they can’t. So you know, it would be interesting to see as time goes forward, but I am optimistic about our future very optimistic about our future. And I’m hopeful that you know, my grandchildren, you know, just a ways away will be cooked with natural gas for their children.
Robert Bryce 44:58
Well, let’s stop it there. Then. That’s great. I appreciate your time. My guest again has been Dave Shriver, he’s the president and CEO of the American public gas Association. You can read more about their work in the history of natural gas, which I thought was interesting goes back now more than 200 years back to the days of, of what was called city gas of making natural gas or making methane from from heating coal. But it’s an interesting history apga.org. And you can find more about them there. Dave, thanks for being on the power hungry podcast. And maybe we’ll do this again. To all you out there in podcast land. Thanks for tuning in. If you’re inclined to give me 345 612 stars, as many as you can on those podcast rating things, and until then, I will see you then on the next episode of the power hungry podcast. Thanks again, Dave. Thank you, Robert.