'Beneficial electrification' doesn’t benefit consumers or environment

A natural gas pipeline.
A natural gas pipeline.
Zivica Kerkez/Shutterstock
A natural gas pipeline.

'Beneficial electrification' doesn’t benefit consumers or environment

Making heat from dirty electricity instead of gas benefits no one.
April 19, 2019

In January, Consolidated Edison, citing lack of pipeline capacity needed for natural gas, announced a moratorium on new natural gas hookups in Westchester County. This shortage has arisen because the Cuomo administration has refused to site new natural gas pipelines that would bring shale natural gas from Pennsylvania. If left unaddressed, it will prevent Westchester from developing new housing or office space to meet the growing New York City region’s considerable demand.

To address Con Ed’s moratorium, the New York Public Service Commission issued an order in February authorizing Con Ed to spend $220 million to reduce demand for natural gas with energy efficiency and “beneficial electrification” solutions. According to Public Service Commission Chairman John Rhodes, these “non-traditional solutions” to an artificial natural gas shortage will benefit Con Ed customers and protect the environment. Following its February order, in March the PSC announced that the New York Power Authority and the New York State Energy Research and Development Authority would be chipping in another $85 million to promote energy efficiency programs for Con Ed’s customers.

But what Rhodes considers “beneficial” is anything but: The new solutions will mean not only higher costs for Con Ed customers, but also more pollution – the very outcome New York claims to be combatting. If the state is serious about reducing greenhouse gas emissions, it should approve the Constitution and Northern Access pipelines, which it has opposed, to provide natural gas to meet Westchester’s needs. Until then, Con Ed should focus exclusively on the least expensive stopgap measures to reduce natural gas demand, such as subsidizing heating efficiency upgrades for consumers.

Here’s why “beneficial electrification” will cost consumers more and result in more pollution: Although Westchester customers pay a lot for natural gas, they pay much more for electricity and electrification uses natural gas less efficiently. For example, in January of this year, Con Ed’s residential customers in Westchester County paid $20 per million British thermal units, known as Btus, for natural gas.

To compare the costs of using gas versus the costs of using electricity, it’s important to account for the inefficiency of generating plants that produce electricity. By comparison, modern residential gas furnaces are highly energy efficient. The best ones convert over 90% of the natural gas they consume into usable energy, with the rest of the energy going up the chimney. Suppose a typical residential customer uses 10 million Btus of natural gas in January for space and water heat at a cost of $200. Then, based on that 90% furnace efficiency, 9 million Btus will provide actual heat and hot water. Hence, the customer will pay the equivalent of just over $22 per million Btus for usable energy.

Now, instead, suppose this customer is required to use electricity for heat and hot water as part of Con Ed’s “beneficial electrification” efforts. Electric heat and hot water are virtually 100% efficient; no energy is lost up the chimney. In January, Con Ed’s Westchester customers paid around 18 cents per kilowatt-hour for their electricity (Con Ed charged them about 12.5 cents per kilowatt-hour to deliver electricity to their homes and electric suppliers were typically charging around 5 to 7 cents for the actual electricity supplies.) One kilowatt-hour of electricity is equivalent to 3,412 Btus. That works out to about $53 per million Btus. Thus, to get that same 9 million Btus to produce useful heat and hot water, the customer will pay around $470 instead of $200. The customer is now paying almost two and one-half times the cost of using natural gas, even at New York’s inflated, supply-constrained prices, for the same amount of heat and hot water in the month of January.

As for improving the environment by switching to electricity, it depends on how the electricity is generated. According to the New York Independent System Operator, which operates the state’s high-voltage transmission system to ensure reliable electric supplies, in 2018 two-thirds of the electricity supplied to Westchester County residents was generated by natural gas and oil-fired plants. Another 23% was supplied by nuclear – mainly from the Indian Point Generating Center, which is located 40 miles north of Manhattan.

Thanks to a deal brokered by Gov. Andrew Cuomo, the first unit of the two-unit Indian Point plant must shut down next year and the second will be shuttered in 2021. The emissions-free electricity formerly supplied by Indian Point Two will be replaced by new natural gas-fired generating plants. Hence, about 90% of the electricity needed for “beneficial electrification” designed to replace the growing demand for natural gas will be produced by … natural gas and oil-fired plants.

Except, rather than losing 10% of the heating value of natural gas when burned directly in a furnace or water heater, “beneficial electrification” will result in losing at least 50% of the heating value. The reason is that gas-fired generating plants typically lose about 50% of the energy they consume as waste heat. Another 5% or so is lost when electricity is transmitted over high-voltage power lines. Even the most efficient natural gas-fired generators lose about 40% of their energy as waste heat. Consequently, air pollution and carbon emissions will increase because more natural gas and oil will need to be burned to generate the additional electricity needed for “beneficial electrification.”

Thus, Public Service Commission Chairman Rhodes’ “non-traditional” solutions to an artificial natural gas shortage will force new Con Ed customers to pay far more for the energy they need for their homes and businesses, while also increasing total natural gas consumption and air pollution.

Higher costs, more pollution. Beneficial? Not for Con Ed’s customers, New York’s beleaguered taxpayers, nor the environment.

Jonathan Lesser
is the president of Continental Economics, an economic consulting firm, and a Manhattan Institute adjunct fellow.
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