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Expanding Utah’s network for natural-gas vehicles


By Judy Fahys  |  The Salt Lake Tribune

First published Aug 04 2013 01:01AM
Updated Feb 14, 2014 11:31PM

Utah leaders were fumbling for solutions last winter as a thick, brown shroud of smog smothered Salt Lake City and spurred angry citizen protests at the Capitol almost weekly.

So, when SB275 was proposed, they enthusiastically embraced its concept. The legislation set up a new, interlocal panel to multiply natural-gas vehicles, and it cleared the way for gas ratepayers to bankroll up to $5 million a year in expansion costs.

"A quantum leap in air quality" is the way House sponsor Rep. Jack Draxler described SB275 Energy Amendments.

This week the Utah Public Service Commission will take up the question of alternative-energy funding in hearings at the state Capitol. But it’s still unclear that Utah’s multimillion-dollar investment in natural-gas vehicles via SB275 will do much to clean up the air. And, more importantly, no one has shown that $5 million or more from gas ratepayers will be getting a good air-quality bang for their bucks.

PSC Administrator Gary Widerberg noted his agency’s mission is to ensure fair customer rates for regulated utilities and fair returns for the monopoly providers, but lawmakers have asked the three-member commission to play a somewhat different role in looking at Utah’s network for natural-gas vehicles.

"We’ve just been asked to gather data and facilitate" a look at alternative-fuel vehicles and their support networks," he said. "We’re not making decisions or setting policy."

As part of SB275, lawmakers declared the goal of building up Utah’s natural-gas fueling infrastructure as being "in the public interest." So, when the PSC produces a report on its findings at the end of next month, the recommendations are expected to focus on how to spend Utah’s investment and not whether it is a cost-effective way to reduce pollution by spending it on promoting natural-gas vehicles, expanding the state’s already robust fueling network and developing more service stations.

David Freidman, a clean-transportation expert at the Union of Concerned Scientists, doubts that natural gas can do much to solve Utah’s air-quality problem.

"It’s a quantum leap," he chuckled, referring to Draxler’s pro-SB275 sales-pitch, "for the company selling natural gas."

State leaders disagree.

Draxler, for instance, called that criticism "ludicrous.

"I just don’t buy it," he said, insisting that air quality benefits of expanding natural-gas vehicle use are "as obvious as they could be."

"There’s always people who are going to see a conspiracy in something that makes economic sense," he said.

Back when lawmakers were talking about SB275, they did not talk about how many vehicles it would take to cut pollution by some specified amount. Instead, they described an if-you-build-it-they-will come vision of the future.

Their actions would put more cars powered by compressed natural gas (CNG) cars on Utah roads, boost demand for Utah natural gas, improve energy security, create jobs and save bundles of money in fuel costs for the owners of big fleets, like buses used by the Utah Transit Authority and schools.

"Let’s have more air quality," declared SB275 sponsor Sen. Stuart Adams, R-Layton, urging his colleagues to vote for the measure in March. "We need to jump start this, and this [bill] is the way to do it."

After just one hearing, SB275 passed the House, 58-14, and the Senate, 28-0.

Behind the scenes, Utah’s natural gas monopoly, Questar Gas, supported the legislation, dubbing it "a clean air bill" on one flier.

"Questar has long held that greater use of NGVs [natural gas vehicles] will have to be a part of any meaningful clean-air solution," says a company fact sheet, which also pointed out the company’s "long history of supporting the state’s initiatives to increase NGV usage" and applauds plans "to fund additional infrastructure," such as fueling and service stations.

In recent years, Questar has spent about $1.5 million annually on building refueling stations, bolstered by ratepayer subsidies of about 3 cents per month. The company owns nearly half of the natural gas fueling stations in the state — 30 of 66.

And, while other states have favored a free-market approach, the Utah-Questar partnership has meant the Beehive State has a more expansive fueling network than any other, including energy-progressive California, on a per-vehicle basis. In fact, Utah is ranked third nationwide in the number of public CNG fueling stations behind California and Oklahoma.

"The only piece that we are missing is the fueling piece," said Questar spokesman Chad Jones in an interview. "If you’ve got more stations, you’ve got more cars."

Adams has insisted that, although the bill directs the PSC to deem the ratepayer subsidy as being "in the public interest, there is no guarantee ratepayers will be picking up the tab." That’s what the bill asks public service commissioners to decide in a months-long review process that culminates in a report to the Legislature by Sept. 30.

And, if the decision is to allow Questar to charge ratepayers up to $5 million to help build an expanded natural-gas network, the costs will be minimal, the Layton Republican said, around 10 cents a month on a typical gas user’s bill.

Governors of 10 states, including Utah Gov. Gary Herbert, have pledged to increase natural-gas vehicles, especially for fleets. Heavy-duty trucks and buses generally last longer than passenger cars and have more time to make up for the higher-up-front costs of new natural gas vehicles, the reasoning goes.

On the other side of the issue, advocates for Utah’s poor and elderly, continue to challenge whether it’s fair to ask ratepayers to help underwrite expensive vehicles and cheap fuel so others can save money on fuel.

At a legislative hearing on SB275, Michele Beck, director of the state’s Committee on Consumer Services, raised a concern that the industry subsidy might not work as intended.

"Perpetuating below-cost NGV service," she said, "is contrary to the development of a long-term, sustainable market."

Freidman, the transportation expert, said "there’s a limited role" for natural gas as a transportation fuel.

The future looks more promising for clean diesel and cleaner, higher-efficiency gasoline vehicles. Most see the brightest future for electric vehicles, which emit no pollution.

Meanwhile, natural-gas vehicles have been slow to gain traction because of their high initial costs (a CNG Honda Civic costs about $8,000 more than a gasoline version) and because of the enormous cost of building a national natural gas network.

"Natural gas doesn’t make as much sense for you or me," Freidman said."You can save more money by buying a hybrid, which will be just as clean or even cleaner [than natural gas] especially when it comes to global warming pollution."

Meanwhile, at least one key question seems unlikely to be addressed: What will $5 million — or potentially more someday — do to clean up Utah’s air?

As the new interlocal panel and the public service commission wrap up their reports to the Legislature over the next two months, it is unclear whether there is an answer to the question anytime soon.

fahys@sltrib.com

Twitter: @judyfutah

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