The bill updates the methods used to determine the cost-effectiveness of demand-side management (DSM) programs of public utilities selling natural gas at retail, including requiring that the calculation of future benefits reflects the avoided costs to ratepayers resulting from reduced consumption of natural gas. The bill specifies that the calculation must be based on reliable estimates and published scientific data and must include methane emissions.
In deciding what programs are cost-effective, state regulators must incorporate into their evaluations “the costs of greenhouse gas emissions, including the social cost of carbon dioxide and methane leaked or emitted into the atmosphere,” the law says. It also says regulators must use a discount rate of 2.5% or less. The lower the discount rate, the greater the future benefits of not producing greenhouse gas emissions.
Another provision of the law tells state regulators to get the best available information about leaks of methane upstream of buildings, beginning with its extraction and processing, then delivery through an elaborate network of pipelines.
The social cost of methane emissions was set most recently at $1,756 per short ton by the U.S. Interagency Working Group on Social Cost of Greenhouse Gases, compared to $68 for carbon dioxide. Both metrics estimate the economic damages of releasing emissions into the atmosphere.