Illustration by Kirsten Ulve
When local regulators approved funding in April for municipally owned Philadelphia Gas Works to build distribution lines to serve new customers, the decision sparked the kind of news coverage and criticism from certain quarters that has become painfully predictable.
“Philadelphia Gas Commission approves $19 million in fossil fuel infrastructure,” one headline screamed, adding: “Climate activists say PGW’s plan for the infrastructure conflicts with city’s climate goals.”
In an era when such headlines have become all too familiar and the conversation over America’s energy future is largely about binary choices and either/or thinking, it might surprise many people to learn that an average of nearly 22,000 miles of new pipe has been added annually in the past three years, according to the American Gas Association.
The number of miles added in just one year is enough to nearly circle the globe and represents part of a $34 billion investment that natural gas utilities nationwide poured into distribution system modernization in 2023, AGA’s year-end report indicates.
Natural gas companies are adding new pipe to help enhance safety, add reliability and resiliency, reduce emissions, accommodate increasing residential and commercial demand in the nation’s growth hot spots, and bring new supplies of lower-carbon renewable natural gas to customers.
Also spurring construction in part are federal incentives that allow some utilities to accelerate already scheduled pipeline replacement projects at a lower cost to their customers, along with state-level incentives that help utilities recover the cost of projects that fuel job creation and economic development.
Meanwhile, amid the heightened scrutiny facing infrastructure projects, natural gas companies are taking a proactive approach to educating regulators and other stakeholders about how projects benefit their communities and contribute to shared climate goals.
Despite taking a few lumps in the media over local budget decisions, PGW, the nation’s largest municipally owned utility, is moving full speed ahead on an ambitious main-replacement program fueled by a federal funding bonanza that will slash costs for its customers.
PGW hopes to replace more than 60 miles of cast-iron mains and unprotected steel services using up to $125 million from the Pipeline and Hazardous Materials Safety Administration through a grant program created by the 2021 bipartisan Infrastructure Investment and Jobs Act.
PGW has already announced grants of $10 million and $75 million from PHMSA’s Natural Gas Distribution Infrastructure Safety and Modernization program and is “very hopeful” the federal agency will approve an additional $40 million, said Monica Lyv, PGW’s manager of distribution engineering.
The NGDISM grants are for municipally or community-owned gas utilities and target infrastructure improvements in underserved and historically disadvantaged communities, a designation that applies to more than half of PGW’s service territory, according to Lyv.
While PGW replaces about 31 miles of its legacy cast-iron mains in a typical year, the PHMSA funding will accelerate that pace. Work on the grant-funded projects will involve replacing the cast iron with 12-inch or smaller-diameter plastic pipe and was expected to begin in October.
Ultimately, by funding the replacement of more than 60 miles of cast iron mains and the removal of approximately 29,300 bell and spigot joints from the system, the grants will allow PGW to eliminate an estimated 412 metric tons of methane emissions per year, Lyv said.
The grants are also a boon for affordability because they’ll cover nearly all project costs that would otherwise be borne by customers. Replacing cast iron with near-zero-emission plastic will also reduce future operating costs related to responding to emissions and ongoing maintenance, Lyv said.
“I think it’s going to be pretty clear that when we replace our aging infrastructure, we’re lowering emissions and increasing public safety,” she said. “The affordability comes into play with our maintenance and operating costs because we’ll have to spend less on maintaining the system.”
PHMSA has funded about 850 miles of pipeline replacement work with more than $585 million in NGDISM grants over the FY 2022 and 2023 grant cycles, leaving a significant chunk of the $1 billion it received from the IIJA yet to be deployed.
Baltimore Gas & Electric says its Downtown Pipeline Project marks the most significant improvement to its natural gas infrastructure in Baltimore’s downtown area since before World War I. When completed, the project will enhance the safety, reliability and affordability of an energy source that 700,000 BGE customers rely on.
The project’s success will also stand as a testament to some outside-the-box thinking that went into engineering and executing the construction of more than a mile of pipe in a congested area of the city, hemmed in by railroad tracks and Interstate 83 and crisscrossed by major thoroughfares.
“This is the longest length of a pipe of this size that we’ve put in in this area in 100 years,” said David Smith, manager of gas system planning for BGE and a 27-year company veteran. “We haven’t put in something like this in this area of the city in a century, and that’s a challenge just in itself.”
As the oldest natural gas utility in the nation, BGE has a lot of legacy cast-iron mains, many of them low- or utilization-pressure pipelines, especially in the area targeted for the Downtown Pipeline Project. As part of its ongoing replacement program, the utility has been transitioning to higher-pressure mains.
The conundrum for Smith’s team was that the only two trunk lines—one 20-inch and one 24-inch—that could bring higherpressure natural gas into the area were also part of the old cast-iron system. The challenge became how to offload the capacity of those mains to new, higher-pressure pipelines.
Digging up the two pipelines and replacing them in kind would be expensive and highly disruptive to businesses, residents and commuters. Smith’s team opted instead to run a single 6,000-foot, 30-inch wrapped steel main on the edge of the system to replace the capacity of the two mains.
“We were really concerned that to replace those other pipes we were going to essentially have to dig them up, lift them out of the ground and put a new pipe in their place,” Smith said. “You can imagine what that looks like in a heavily urbanized area of the city that’s busy traffic-wise. It was going to be very costly, and it was going to be challenging for customers, businesses, commuters and others.”
As part of the project, which is expected to be completed by mid-2025, BGE will retire about 3,000 feet of low-pressure cast-iron infrastructure, add 1,000 feet of medium-pressure plastic pipe and install service regulators at customer premises to protect from overpressurization, Smith said.
The project provides obvious safety benefits, shrinks BGE’s carbon footprint by eliminating cast iron from its distribution system, and contributes to affordability by reducing the amount of natural gas lost to emissions and by enhancing reliability, which lessens costly outages related to pipe failure.
Modernizing and decarbonizing its distribution system also aligns with Maryland’s goal of reaching net-zero greenhouse gas emissions by 2045, BGE said, and allows natural gas to play a role in keeping the transition to net zero affordable by reducing the need for expensive new electric grid infrastructure.
While access to natural gas has long been a key factor in siteselection decisions, natural gas utilities serving the Buckeye State are utilizing new incentives to add infrastructure expressly for the purpose of attracting economic development projects that boost the state’s economy and create new jobs for Ohioans.
Ohio’s Infrastructure Development Rider allows natural gas companies to recover costs associated with extending gas service for economic development projects. The original IDR, authorized by legislation in 2015, was limited in scope but has since been expanded to make it more useful.
A new enhancement to the IDR signed into law by Gov. Mike DeWine in January allows utilities to recover the cost of infrastructure projects needed to make sites “shovel-ready” for companies considering locations for a new manufacturing plant, distribution facility or corporate headquarters.
Enbridge Ohio has used the IDR eight times over the past nine years to move forward on pipeline construction projects that would fuel economic development but didn’t make sense financially under normal circumstances, said Paul Briggs, the utility’s state director of government affairs and economic development.
Earlier versions of the IDR allowed utilities to seek regulatory approval to collect up to $1.50 per customer per month for such projects. A deferral mechanism that lets utilities exceed that cap was added later, and the IDR in its current form also lets utilities earn a return on their capital investment.
“It’s been a great thing for Ohio,” Briggs said. “Of course, we have to be very cognizant about keeping our customers’ bills down, so we’re very careful when we look at these projects that we’re being good stewards of our customers’ dollars and that these are making a difference to create jobs.”
Enbridge Ohio won approval from regulators earlier this year to cover the $2.2 million capital cost of extending a 6,521-foot 6-inch line to a new First Solar distribution center that will serve three Ohio locations that make solar panels. The project will create 50 to 80 jobs, with the potential for more.
“It was cost-ineffective because it was a couple million dollars to get gas to a site that doesn’t use a whole lot of natural gas, but it brought economic development to an area that needed job growth,” said Wendy Kraft, gas development services consultant for Enbridge Ohio. “That’s really the beauty of this.”
The company’s ninth IDR-related project in the works now leverages the new “shovel-ready” provision of the law allowing recovery of costs incurred even before a specific economic development prospect is identified for a site—as long as JobsOhio or a local economic development agency has signed off on it.
Chesapeake Utilities Corporation, with customers in nine states stretching from the Great Lakes to the Gulf of Mexico, is making a $46 million infrastructure investment in growth and sustainability in the Florida markets it now serves, following its November 2023 acquisition of Florida City Gas.
The company received regulatory approval in July for three new pipelines that will transport RNG from third-party landfill waste-to-energy production facilities in Indian River, Brevard and Miami-Dade counties to customers in those markets. The projects should come online by mid-2025.
In addition to helping FCG reduce the carbon intensity of the gas flowing through its distribution system, the increase in supply provided by the new infrastructure will help meet growing demand for natural gas in booming south Florida, strengthen system reliability and provide additional flexibility.
Overall, the projects will add 27 miles of transmission pipeline to FCG’s system and add 13,100 dekatherms of additional gas supply per day throughout the three counties. Here’s a breakdown of the three projects and their impact:
Indian River will include 14 miles of new transmission infrastructure, a district regulator station, a tie-in with FCG’s distribution system and a tie-in with existing facilities owned by Peninsula Pipeline Co., the Chesapeake Utilities subsidiary constructing all three projects. Capital spend: $18 million.
Miami-Dade will include 8 miles of new transmission infrastructure and a new district regulator station tied in with FCG’s distribution system. Capital spend: $22 million.
Brevard will include 5 miles of new transmission infrastructure. Capital spend: $6 million.
This new infrastructure will enable FCG to provide locally sourced RNG in the three counties for the first time, said Lucia Dempsey, head of investor relations for Chesapeake Utilities.
“As part of our vision to be a leader in delivering energy that contributes to a sustainable future, we’re using our construction and energy-delivery expertise to bring the RNG produced by third-party waste-to-energy production facilities to market,” Dempsey said. “This infrastructure will enhance the reliability and sustainability of gas delivery in these highgrowth counties, and we remain poised to execute on future opportunities to provide pathways to bring RNG to our markets.”
While the South Florida pipeline projects will transport RNG from facilities the company does not own, Chesapeake Utilities does have one company-owned and -operated RNG facility at Full Circle Dairy in northwest Florida. The company announced earlier this summer that the facility is now operational, with initial RNG production shipping from the facility and being injected into the company’s system in Yulee, Florida.
With infrastructure projects facing opposition as never before, natural gas utilities have responded by taking extra care to educate customers, regulators, the communities they serve and other stakeholders about the benefits these projects deliver, including the role natural gas is playing in helping achieve our nation’s energy and environmental goals.
Anticipating pushback on its Downtown Pipeline Project, BGE emphasized its alignment with Maryland’s climate goals and commissioned a study showing that a net-zero transition strategy that left natural gas out of the mix would be less reliable, less resilient and cost billions more than a hybrid approach.
In announcing its $75 million PHMSA grant in May, PGW highlighted the environmental benefits of replacing its mains and listed seven initiatives it is participating in as it “ambitiously challenges the norms of energy production and delivery in Philadelphia as an influential force in the city’s clean-energy future.”
Critics of Ohio’s IDR assailed the latest changes to the law as an “unvetted giveaway” that put the priorities of “fossil fuel-reliant utility companies” ahead of the state’s efforts to address climate change. But Enbridge Ohio’s Briggs points out the IDR is helping propel the transition to a net-zero future.
First Solar’s project is one of eight job-creation opportunities Enbridge Ohio has advanced using the IDR. Though not part of the IDR, another renewable energy project just up the street from First Solar’s location in Luckey, Ohio—NSG Group, an Enbridge Ohio customer—has been using natural gas to manufacture glass for solar panels since 2020.
Chesapeake Utilities welcomed the opportunity to educate regulators from across the United States and local officials when the National Association of Regulatory Utility Commissioners held its Summer Policy Summit in West Palm Beach, Florida, in July.
The officials toured a city gate to learn how natural gas enters the local distribution system; visited The Breakers to see how the famed resort uses natural gas to run its boilers, pool-heating systems and backup generators; then visited a high-end restaurant to savor the culinary benefits of cooking with gas.
It was an opportunity to showcase the myriad roles natural gas plays in fueling the American economy and the importance of maintaining a safe, reliable and efficient delivery system—and combat the perception that investing in infrastructure is backpedaling on climate commitments.
“That’s a really tough perception to break, but natural gas is so embedded in our everyday lives that I think it makes most sense to replace our aging infrastructure to increase our safety and reduce emissions,” said PGW’s Lyv. “I hope that perception can shift to showcase that we’re doing our very best to improve the safety of our residents, not just providing safe natural gas to our customers but for the community as well.”