3 min read February 2023 — Columbia Gas of Pennsylvania is a natural gas distributor, providing gas for residential, commercial and industrial purposes across the state. Invest: spoke with Mark Kempic, president and chief operating officer of Columbia Gas of Pennsylvania, about the current demand for the company’s services and products, how new technologies are shaping the industry and how innovation can help meet the challenges faced in the region.
How would you describe the current demand for your services?
As a public utility, we provide services to residential, commercial and industrial customers. We’ve seen steady growth over the past two years in residential connections. It’s a mature market, so we’re not growing like some of the Sun Belt cities. However, there is some increased demand for gas services for cooking and water heating in residential and commercial applications.
What are the most challenging energy and gas-related issues in the Pittsburgh region?
Recently, we’ve seen an increase in the cost of gas at the wellhead, and we’re fortunate in Western Pennsylvania to have gone through a transition about 13 to 14 years ago that allowed us to increase the production of natural gas in the Commonwealth. Pennsylvania is the second-largest producer of natural gas in the United States. It has brought lots of benefits for customers and businesses in the area. Although there has been a fairly significant rise in prices, Columbia Gas has taken steps to mitigate that price increase, including buying gas in the summer and injecting it into underground storage so that we’re not buying gas at its peak price and customers can enjoy some price protection.
Another transition we’re noticing is the push for decarbonization. Over the past 10 years or so, Pennsylvania has taken the necessary strides to decarbonize the production of electricity using natural gas generation, so much so that natural gas has been the primary way Pennsylvania has reduced its carbon footprint in the last decade. (Generating electricity with natural gas produces about half as much CO2 as coal to produce the same amount of energy.) We are in the early stages of the energy transition. In my opinion, new technologies will emerge on the natural gas side that will play a role in helping Pennsylvania and other states decarbonize and reduce their carbon footprint.
Amid higher prices, what other strategies is the company implementing?
When you analyze the total customer bill and adjust it for inflation, our total bill is still lower than it was 20 years ago, which is amazing. Some new efficiencies that we’ve been implementing in our pipeline replacement programs help us keep costs lower. For instance, using Global Positioning Satellites (GPS) for mapping of our pipelines helps us move forward more efficiently, reduces costs for customers and provides safety benefits. Other technological investments, such as implementing Automated Meter Reading technology, reduces the costs associated with reading meters manually. Internally, we’re taking efforts to keep costs low. And this is keeping our customers’ bills below the inflation rate.
Besides that, we’re a continual advocate of using natural gas wisely. We have a low-income usage reduction program in partnership with third-party insulation companies. They’ll go into a low-income customer’s house, do the necessary prep work to put insulation in the sidewalls and ceiling and even install new high-efficiency furnaces. Through this program, we can lower a customer’s energy consumption and bill. It’s significant to low-income customers. We’ve also recently received approval from the Pennsylvania Public Utility Commission for a three-year pilot program to make energy efficiency programs available for all our residential customers. While gas is plentiful in Pennsylvania, we believe in using our natural resources wisely.
What are some innovations the company is implementing?
We’re exploring the blending of hydrogen with natural gas. We have a training center in Monaca where we inject various mixtures of hydrogen into natural gas to determine its impact on lowering emissions when burning natural gas. Another technology we’re testing is combined heat and power (CHP). These CHP projects play crucial roles in Western Pennsylvania and beyond, enabling customers to access power and heat through combined sources, fueled by natural gas.
We are putting in place measures that will encourage the use of renewable natural gas, requesting updates to our tariff to implement them. A tariff is a document approved by a state’s public utility Commission that details the rates that utilities are authorized to charge, terms and conditions of service, and various service offerings to the public. Renewable natural gas comes from landfills, and farms. Landfill and farms often release methane into the air, so renewable natural gas comes from capturing that methane before it’s released into the atmosphere and putting it into the gas pipelines, which customers can then use to heat their homes. We’re also working with some of our counterparts to try and develop those technologies and that marketplace.
At our customer call center in Smithfield Pennsylvania, we implemented a new interactive voice recognition unit about a year ago and a new customer app for use on smartphones. We’re moving toward a customer-oriented technology that will give customers a better experience when connecting and disconnecting services or seeking payment and energy efficiency plans.
Is there anything on the legislative side that might impact the company or customers?
Nationally, we are looking at both the infrastructure bill and the Inflation Reduction Act to determine how they will benefit our customers, either through the implementation or subsidy of higher-efficiency technologies. Gas heat pumps, which are part of an emerging market, are stipulated there. Installing high-efficiency gas heat pumps can help reach an underserved market since they operate very efficiently at very low ambient temperatures. Furthermore, we’re looking at funding that might be available for our customers; for instance, the weatherization and energy efficiency measures enabled by those acts.
We need to educate the public about the availability of federal funds in a way that’ll be simple for customers to understand how they can benefit from accessing those resources. On the state level, we’re looking at working with the legislature on various things. We look forward to collaborating on this type of legislation that will move Pennsylvania forward.
What are the near-term priorities for Columbia Gas?
For the upcoming years, we’re going to stay close to our mission and stick to our plan. Over the past 13 to 14 years, we’ve been replacing many of our first-generation pipes, and we will continue to do that to provide further benefits to our customers. We have 7,000 miles of pipeline in Pennsylvania and about 12% of that pipe needs to be replaced, as it is nearing the end of its useful life. Our goal is to ensure that we continue to reduce any leakage, which will further reduce our carbon footprint, improve safety and reliability for customers and give them energy options that are affordable and sustainable. By replacing these pipes, we hope to do all of that. In the process of replacing the pipe, we implement a number of safety devices that simply weren’t available when the first-generation pipe was installed decades ago. Things like excess flow valves that shut the gas off automatically if someone digs through a line, and polyethylene pipe that won’t corrode so it will last much longer than the first-generation pipe are really important to provide long-term benefits to customers. The great thing about replacing the system with this new technology is that 50-60 years from now, it will still be keeping customers warm in their homes, cooking their food and heating their water.
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