Greening the Gas System

How utility commission “ratemaking” cases have advanced clean buildings and climate justice in Washington state.

The gas Americans burn in their homes and businesses for heat, cooking, and hot water — misleadingly co-branded as “natural” gas — is one of the top sources of climate-wreaking greenhouse gas emissions and produces health-harming air pollution. Speeding the transition away from fossil fuels toward clean and efficient electric appliances like heat pumps is one of Earthjustice’s top goals.

In Washington state, Earthjustice lawyers have found that utility ratemaking proceedings can be a productive venue for advancing the transition to clean energy. When investor-owned utilities try to slow-walk the shift off dirty fossil fuels, public utility commissions like Washington’s Utility and Transportation Commission (“UTC”), can push utilities to continue to meet state climate goals and act in the public’s interest.

This makes public utility commissioners — regulatory decisionmakers who are far from national politics – some of the most important decisionmakers in how quickly and fairly the United States makes headway on the climate crisis.

Let’s take the case of Puget Sound Energy, the state’s largest utility with hundreds of thousands of both gas and electricity customers in the densely populated west side of Washington state. A decade ago, utilities were rewarded based on how much energy they sold to customers, creating a powerful disincentive to invest in energy efficiency. Earthjustice and our client, NW Energy Coalition, secured a victory allowing PSE to “decouple” profits from power volumes, setting the stage for PSE to boost energy efficiency, make low-income families’ homes more livable, and facilitate an orderly end to coal-fired power plants.

In 2022, PSE filed with the UTC for one of its regular “rate” setting proceedings. Historically, these proceedings took place far from public view, and the UTC would establish gas and electric rates for the utility’s customers based on technical financial information. But Earthjustice, on behalf of its energy conservation and environmental justice clients (NW Energy Coalition, Front and Centered, and Sierra Club), intervened. We focused the UTC’s attention on how PSE was still spending ratepayer money to expand its gas system by adding new customers and growing its gas infrastructure. Not only did this make the job of transitioning to clean electric alternatives more difficult, but it also increased the risk that ratepayers would be stuck with useless assets.

Three people sit at a conference table with papers in front of them.

California Public Utilities Commission President Michael Picker, from left, Washington Utilities and Transportation Commission Chairman David Danner and Oregon Public Utility Commission Chairwoman Lisa Hardie discuss their memorandum of understanding to take action against climate change in Seattle in 2017. (Washington Governor’s Office)

In addition, we focused on the importance of “energy justice”—the principle that since everyone needs light and warmth, we need to be particularly attuned to the inequities in the energy sector and work to make sure the burdens and benefits of the clean energy transition are shared in a fair manner. Together with our partners, we demonstrated to the UTC that PSE’s gas system growth plans were the opposite of energy justice: in other words, that they would create costs and risks that fell hardest on society’s most vulnerable members.

The result? We negotiated a settlement with PSE and other stakeholders that effectively ended the expansion of the gas system and instead encouraged PSE to transition away from gas. The settlement included a first-in-the-nation pilot program focused on electrifying residential gas customers, while also piloting electrification of low-income customers that includes whole home energy efficiency and weatherization upgrades to keep the cost of electrification affordable for these customers.  Now instead of promoting gas appliance upgrades, the company encourages its gas customers to electrify their home energy use.

The settlement also required the company to develop a systemwide strategic electrification strategy, and to better track the affordability of its programs and services for low-income customers. Not long after, PSE and our partners worked together to pass statewide legislation that required PSE to develop utility plans that met state climate targets while continuing to center equity in its business model.

In a separate but related legal proceeding with the UTC, Earthjustice also successfully challenged PSE’s inaugural Clean Energy Implementation Plan under the state’s new clean energy law, known as the Clean Energy Transformation Act (CETA). A ruling by the UTC in 2023 directed PSE to significantly shore up its commitment to equity and clean energy, strengthening the gains made by rate case wins. Our clients in that legal proceeding were NW Energy Coalition and Front and Centered.

A metal box with a fan inside and hoses coming out.

The outdoor unit of a heat pump system. (Dennis Schroeder / NREL)

Fast forward to today, and we’ve intervened in yet another rate case filed by PSE with the same clients we represented in 2022. The landscape has changed considerably. Gas use in PSE’s system has already dropped 7% for residential customers in the last year, due largely to energy efficiency programs and changing preferences in favor of electrification. Gone are the subsidies for new gas customer growth and new gas infrastructure. Instead, PSE is proposing to invest more in electrification and depreciate its gas assets more rapidly in preparation for retiring them.

Is there more to be done? Absolutely. We will continue to push PSE to do more to phase out gas investments, align its gas system planning with state climate goals, and continue to protect its most vulnerable customers from rate hikes and financial risk. And we’ll seek to carry the lessons we’ve learned to other gas utilities in the Pacific Northwest. Together with our partners, we will continue to leverage proceedings like utility commission rate-setting cases to advance a cleaner, more efficient energy system.

Jaimini Parekh is a senior attorney with the Northwest regional office in Seattle with a focus on clean energy.

Jan Hasselman is a senior attorney with Earthjustice's Northwest office in Seattle, WA, which he joined in 1998. Since that time, he has successfully litigated a number of regional and national issues including listings of salmon under the Endangered Species Act, stormwater pollution, coal fired power plants, and coal and crude oil terminals.

A supervising senior attorney in the Northwest regional office, Amanda has litigated regional and national matters that seek to promote a rapid and equitable transition from fossil fuels to clean energy, protect endangered Pacific salmon and orcas (Southern Resident Killer Whales), and institute financial responsibility requirements to ensure the worst polluters clean up hazardous spills quickly and thoroughly.

Earthjustice’s Clean Energy Program uses the power of the law and the strength of partnership to accelerate the transition to 100% clean energy.

Large towers with electrical transmission lines in front of a large mountain at sunset.
Electrical lines in Washington state with Mount Rainier in the background. (Mint Images / Getty Images)