Paying More for Less: The Rising Cost of Home Gas

Andy Stone (0:07)

Welcome to the Energy Policy Now podcast from The Kleinman Center for Energy Policy at the University of Pennsylvania. I'm Andy Stone. Over the past two decades, the average per household consumption of natural gas, used primarily for heating and home cooking, has declined across the United States.

This trend has been broadly driven by improving energy efficiency and more recently by the growing use of electricity for needs previously met by gas. Yet over the same period and despite lower home gas use, gas bills have continued to rise outright, leaving some consumers effectively paying more for less.

As today's guest will discuss, this trend reflects a major change in the composition of home gas bills. For much of the history of gas service, consumer bills were dominated by the cost of the gas commodity itself. Yet over the past couple of decades, this has flipped in significant portions of the country, with delivery costs, including investment in and maintenance of the system, now accounting for two-thirds or more of residential gas bills. Yet this heavier weighting of infrastructure and related costs comes at a time when the role of gas in the home is being reconsidered, driven by growing electrification and state climate policies. And it raises a fundamental question. As average gas consumption falls, to what extent is growing investment in gas distribution networks, the pipes that deliver gas to homes, aligned with this changing reality? And what role should policymakers and utility regulators take in balancing this competition between gas and electric systems to provide the same essential home services at a reasonable cost to consumers?

Today's guest is well positioned to provide insight into these questions. James Van Nostrand is a senior fellow with the Kleinman Center and policy director with the Future of Heat Initiative, a nonpartisan organization focused on challenges in utility regulation. Between 2023 and 2025, Jamie served as chairman of the Massachusetts Department of Public Utilities, the agency responsible for regulating that state's energy utilities. Jamie, welcome back to the podcast.

James Van Nostrand (2:23)

Thanks, Andy. It's great to be here.

Andy Stone (2:25)

You're on, it's now been about four years ago, in a very different time and place in your career, before you had been chairman of the Massachusetts DPU. At the time, you were a professor of law at the University of West Virginia, and we talked about a book you just written about the coal industries hold on West Virginia politics. But interesting, so a lot has happened over these last few years.

Up to Massachusetts, now you're back in the Pennsylvania area, Philadelphia area. Tell us about that journey.

James Van Nostrand (2:55)

Yeah, thanks, Andy. Yeah, I wrote the book called The Coal Trap, How West Virginia was Left Behind and the Clean Energy Revolution. It was based on my experience living in West Virginia for 12 years and seeing the hold that the coal industry had on West Virginia.

A lot of them from a climate and environmental perspective as well, because I had got my LLM and environmental law from PACE before I went to WVU. So I went to the state pretty much armed to address the climate issues associated with coal and ended up, the book was a lot more political in terms of the influence that the coal industry has in West Virginia. But it was therapeutic for me to write that book. Then out of the blue, I got the call from the folks in Massachusetts. I had been on the list, so to speak, being considered for commissioner jobs, because I was a clean energy guy, and some states are looking for somebody like that. I got a call from the Healy administration saying, would you like to talk about being chair of the Massachusetts Department of Public Utilities? My father was chair of the Iowa Commission growing up. It was always something I wanted to do was serve on a commission. This is a great opportunity to go to one of the bluest states in the country in terms of where Massachusetts is on climate change and clean energy. A nice welcome change from the environment in West Virginia, where they debate about whether climate change is actually happening.

It was a lot of fun. It was a lot of work, but Massachusetts had just really, really smart people in the state government working on energy and climate issues. It was just a real joy to be part of that team working for Governor Healy.

Andy Stone (4:36)

You chaired the Massachusetts DPU again from 2023 to 2025

You now serve as Policy Director at the Future of Heat Initiative. What are the most important issues you confronted at the Mass DPU, and how did that experience lead to what you're doing now, again, with Future of Heat?