City Council Work Session - Decarbonization Study   3/26/2024

So I'll call the meeting to order.

This is a work session on the decarbonization.

And we have Brian and Natalie are coming through the door.

So good evening, counselors and members of the public.

I'll remember what I said.

I just don't remember when I said it, but at some point earlier this year, I shared that we were going to make a change to the path forward with the decarbonization study.

And the plan was that we were going to slow it down a bit, make sure that we were all on the same page talking about the same things.

Tonight, the plan is that we will have a presentation from our Utilities Director and Director of Sustainability.

We'll also chime in to share some perspective as to where we are, along with our representatives from the consulting firm that we have engaged, Black and Beech.

will also speak to you a little bit tonight.

The plan for tonight really is supposed to clear up any confusion, I guess is probably a fair way to try to say what we're doing in this moment.

We're going to add some public engagement sessions as well before being able to bring back to you the resolution of this effort at some point later in the year.

So good evening, Mayor and Counselors.

I want to introduce the people that are going to be part of the presentation.

I'm Lauren Hildebrand.

I'm the Director of Utilities.

And we have Crystal Ritterwald here, who's the Director with the Office of Sustainability.

Eileen Courier is here with Black and Beech, as well as Hua Fang, who you've seen before, but we're going to give you the presentation tonight in little pieces.

But I'm going to start off.

for Slive Next.

The agenda for tonight's presentation is we're going to go over a little background about Charlottesville gas.

The Office of Sustainability is going to give some input.

I'm going to go over the decarbonization study and timeline, a little bit about a residential survey that we conducted, legal review, environmental stewardship approach.

And then I'm going to turn it over to Blackin Beach, who's going to weigh in on the completion of certain aspects of our study, which is the energy efficiency evaluation.

and the Methane leak assessment as well as emerging technologies and applications.

And then I'll go over the FY25 recommendations.

This is intended to be a presentation for counsel.

No action is required for counsel at this point.

It's entirely for information and for clarifying questions that you may have or additional information that you're interested in.

Next slide.

A little bit about Charlottesville Gas.

It's a city-owned gas system.

It's one of three municipal gas utilities in Virginia.

The other two are the city of Danville and the city of Richmond.

We have had gas operations in this community.

We're established in 1876, so almost 150 years.

Right.

Currently, we serve 21,050 customers, of which 56% are in the city and 44% in the county.

We serve the growth areas of Albar County, where predominantly residential customer base about 89% are residential customers.

And the remainder are commercial and industrial.

If you look at the map on the left, this is our service area.

Basically, to the northwest, we come in from our gate station, which is generally where we get the gas piped in from.

And for union, it's near Glasshouse Winery.

If you wanted some perspective on where our gate station is, it's on Free Union Road.

And two parallel pipes come in from the northwest into the

the central service area.

We do have some services off of these parallel pipes that come in in the remote area of New Orleansville.

We then serve to the north up 29.

The furthest point we serve is what was formerly the GE plant, but what is now called Emerson.

So that's our furthest customer.

To the west, we serve Keswick estates in the hotel out in Keswick.

I'm sorry, to the east, we serve the Keswick, downtown Pantops and out beyond is the Keswick area.

To the south, the furthest point is Mosby Mountain Subdivision, and to the west along 250 is UVA's Northridge Hospital is what we serve, and along the way we serve Farmington, Ednom, Borshead.

There is no intention to grow our service area.

We never have had any intent to grow beyond this.

We're kind of confined to this area.

And it kind of makes financial sense.

But I thought I'd point that out.

Next slide.

And now I'd like to turn it over to the Office of Sustainability.

Hi, good evening everyone and thanks for the opportunity to frame this study in climate and sustainability context.

I and several of the Office of Sustainability team have been engaged with this project since the beginning and I wanted to emphasize at the start of this work session the complexity of the work.

Our team members are here in the room so if there are questions I'm sure we've got additional capacity to answer them.

So not only is it complex, but we are actually discovering it is fairly unique for a small, municipally-owned utility to be taking on this kind of a study.

And I would say different than the transit study.

There are not a lot of peer communities where we can take their experience and their approaches and directly apply them to what we're looking at here.

Next slide, please.

I want to start the conversation with a graphic that presents the global context of the conversation we're having.

The blue line here shows atmospheric, the amount of carbon dioxide in the atmosphere, and the gray line is annual global carbon emissions, so all emissions from all countries all over the world each year.

and you can see that there is naturally occurring carbon dioxide in the atmosphere but as you can see human activity which is measured by carbon emissions

trends upwards around the 19th century and is influencing the atmospheric pollution levels.

So that's just the point of this graphic is that with the industrial age and the increasing human activity based on the use of fossil fuels, you see a spike in the naturally, sorry, the atmospheric pollution levels.

What the graph doesn't show is that in 2023, a high point of

424 parts per million, so off the graph in terms of atmospheric carbon dioxide was reported.

It's the highest point in the past three million years.

And it doesn't show that the increase in the last 60 years is much faster, 100 times faster than at any other time in geologic record.

So the bottom line is human activity is changing our planet in an unprecedented manner.

Next slide, please.

So I'm not going to read all these words, I just want them to be in your packet, but essentially we wanted to share a set of resources from both reputable national and international sources that essentially present the severity, the severe impact of human caused warming, be that

and the

You've seen this slide before.

This graphic shows where community emissions come from as we've shared before.

95% come from activities and sources that are from the community and 5% are directly related to municipal activities.

And you can also see the spread across the different sectors.

So those come fairly evenly from energy use and activities in the residential, in the commercial, and in the transportation sector.

And so today we're focusing on the residential and commercial sector and specifically the use of natural gas, a fossil fuel in our built environment.

Next slide, please.

For a little bit further local climate context, Charlottesville has made commitments related to climate for over a decade.

We recently adopted

Science-based greenhouse gas reductions in 2019, those being a 45% reduction by 2030 and carbon neutrality by 2050.

Elmoral County subsequently adopted the same goals, and another key community player, the University of Virginia, has an established goal to be fossil fuel free by 2050.

and these are all relevant because as the natural gas utility serves UVA and Albemarle County, their goals are relevant to keep in mind with this study as well.

So just over a year ago in early 2023, our first community climate action plan was completed and adopted as an amendment to the comprehensive plan.

I want to remind us the comprehensive plan includes some directions specifically related to the gas utility to do the following.

Research and identify strategies for greenhouse gas emission reductions that are compatible with the city's adopted climate goals.

It also directs to promote energy efficiency programs.

and continue to explore avenues to reduce natural gas consumption, meet carbon neutrality goals and mitigate climate change.

And those components in the comprehensive plan are really where the driver to initiating this decarbonization study.

So the climate plan then builds on these and it contemplates completing the decarbonization study, reviewing the carbon offset program, consideration of the utility to become fully carbon neutral

throughout its service territory and then to review various utility policies and incentives to align with climate commitments.

Next slide, please.

So on this slide, you're seeing gas usage data in a community context and in particular this pie chart is based on the 2021 greenhouse gas emissions inventory data for the City of Charlottesville limits because we

have confidence and have access to the data that that's based on.

So as we break out the emissions, we see that 25% are related to the use of natural gas as a fuel source.

When we consider decarbonization across sectors, I want to remind us that there are some policy drivers that influence the two largest segments of the pie.

So in the emissions from the use of electricity as a fuel source are anticipated to reduce over time

as the electricity supply is mandated to become zero carbon under the Virginia Clean Economy Act of 2020, and this will include significant integration of clean energy generation across the grid.

Emissions in the transportation sector, fueled predominantly by gasoline and diesel, are also projected to be reduced through the Advanced Clean Cars Act, sorry Clean Cars Rule 2 rule.

This rule actually became legally effective a few weeks ago.

and it requires auto manufacturers to ensure that every new light duty car sold in the Commonwealth is a zero emission vehicle by 2035 so that rule and the Virginia Clean Economy Act that will transform the carbon footprint of the grid sets Virginia on a path to lower vehicle emissions so those two areas are sort of

I don't want to say under control, but they are strongly influenced by policy and mandate.

So now we look at the natural gas sector of the pie, the last remaining large wedge.

Virginia does not currently have any legislation aimed at decarbonizing or reducing the use of natural gas.

So there's no mandate.

So as such, we locally have recognized this both as a need and an opportunity to tackle a study about decarbonization of this part of the pie as part of our local climate work.

Next slide please.

So we have a lot of community members and groups who have been following this for several years and they have shared their concerns and feedback on a range of topics and we've gotten that feedback both through the development of the COMP plan, through the development of the climate plan, and now through the work being done with this decarbonization study.

And as you can see over the past two plus years, the range of topics covering health concerns,

and the

There were, we received comments that they wanted the public to have an opportunity to further be part of the process.

I didn't know whether you're from a process or substance.

Trying to address the public consumption

Yes, that's a good clarification question.

Next slide please.

Our local advocacy group, the Community Climate Collaborative, or C3, recently published a blog series this winter related to Charlottesville gas and the decarbonization study.

They focused on three areas.

Is Charlottesville on track to decarbonize?

What's driving natural gas use and gas leaks in general?

This involved a number of data requests of the gas utility.

They include a number of points that I would say the project team ourselves have identified, similar points.

You'll hear about some of these later in the presentation.

And the feedback in general is being taken into consideration through this project.

We agree with the comment that was made that this study is an excellent opportunity to compile and create more data.

to analyze it meaningfully and to develop actionable solutions and I'll be the first to say there has been a lot of data and there has been a kind of a unique perspective on what this utility is, does, serves, etc.

They had also previously shared recommendations with us back in the fall of 2022 when we were developing the Climate Action Plan with emphasis on equity concerns and some of the other topics which are similar to points presented in the earlier slide.

Next slide, please.

So as I mentioned, our office has been involved in the project in various ways from the development of the request for proposal onward, responding to data that we have in hand, reviewing and commenting on deliverables, doing our own related research, studying and evaluating the strategies that are being explored, participating in the public engagement both to date and planned, and really bringing both that global and local lens to the work.

We've learned a lot and we've asked a lot of questions of the data and of the analysis being done.

We continue to emphasize the community's climate goal as being integral to this process.

It's fair to say that collectively we may not have fully understood what this work encompassed and that the project has raised many questions, some of which are outside of the scope of this initial project and will require subsequent consideration.

This is a serious project and we're taking it seriously.

Decarbonizing the systems in our community and that shape our community is hard and complicated work.

And we will continue to work with our colleagues across the organization and within the community in a serious and thoughtful way.

So we appreciate you taking time today to sit down and think through this with us and to help us do this work.

Next slide.

So we're moving into decarbonization study and timeline residential survey and legal review.

Next slide.

And I'll just echo what Crystal said.

This project, I call it a project, right, because that's how we approach things in utilities, has been very complicated.

It is one of the hardest projects I've ever been involved in.

I don't know why, but it's just been very

Hard work, and I echo what Crystal said.

But a little bit about the decarbonization study.

It's not, I want to emphasize, it's not considered a decommissioning study.

Even it's a decarbonization study.

Even though we took some guidance and input from people that they wanted us, they were interested in a legal review.

of Discontinuing the Natural Gas Distribution Operations and New Connections.

So we did look at that from a legal aspect.

The study is evaluating multiple pathways that can decarbonize the natural gas operations.

We're looking at energy efficiency and electrification.

I will point out those two pathways, their customer-led actions with very little control by the utility because it's decisions that customers have to make in order to implement things that affect their household.

The other three carbon offsets, renewable natural gas and hydrogen,

and Natalie Oschrin.

Right as this RFP was being issued, we decided to survey residential customers on what they thought about the natural gas utility and the city's sustainability goals.

And, and so we have some information on that to provide for you.

We conducted that in November of 2022.

We issued the work to black and beach in December of 2022.

and then we had the kickoff presentation to council in March of 2023.

Since then, we've been working hard to complete certain elements of the study.

And now we are working on getting some community engagement by getting input listening sessions, focus groups set up.

And that's been that started work that started in March of 2024.

We anticipate like a feature will be delivering their final report in the fall of 2024.

No, that's a little different.

Yeah, well, not randomly.

They have, I'll go, it's on the slide, been about three or four.

So we're going to hear a lot of detail about it.

Thank you.

So the decarbonization study has certain elements and basically what we've completed to date, we've completed the kickoff and the project plan.

We've done the review of the regulations, laws and codes associated with the discontinuing service or issuing a new connection ban.

We have finished the energy efficiency evaluation, which

Black and Beach is going to go over this is comparing energy efficiency programs against our peer groups and they will give you more detail on that in the presentation.

They'll also go over the methane emissions assessment, which is using us against the peer groups.

similar utilities.

And we've completed that.

What's in progress still is the system modeling of the various pathways and completing that work, associating with cost.

We are also in progress of stakeholder communication and outreach that is also in progress.

And all of this feeds into the final report.

Next slide.

So I want to thank Council and City Management for allowing us a little extra time to complete this study because we realized pretty quickly that we need more input even though we completed the residential study survey back in November 2022.

We have not talked to the businesses that rely on natural gas and we haven't had any just community listening sessions which we plan to do in the spring and summer of this year.

We plan on doing some virtual and in-person

Back in February during our annual customer satisfaction survey, this was kind of verified.

We asked during this annual survey, we do not familiar you with the Charlottesville Utilities Decharmization Study, and 84% are not familiar with this study at all.

So we knew we needed to take a pause and get some input and listen to people.

Next slide.

So this is where I'm introducing our residential survey.

This was in coordination with UVA Center for Survey Research.

And they have a group of panelists.

It's over a thousand people that they rely on.

It's a diverse group of people that take surveys for them.

And we wanted them to go into an in-depth survey of our Charlotte Civil Community to understand their views towards natural gas and sustainability goals.

And of that thousand or so people that they have,

available, 303 people participated, 49% were in the residents of Almar County, 51% were Charlottesville residents.

The survey results, they will, they do a really good job of analyzing and making sure our questions are objective.

and they also take the results and weight them to align more closely with the demographic composition of the local population.

Just to let you know, the political composition of the people they surveyed aligns pretty well with our community, as you can see in that left table.

We also ask what's best describes the status of their primary home.

46% of the people surveyed actually have gas in their home.

And Pete, I'm just going to give you a few of the questions we asked during this survey.

And if people are interested in looking at the complete survey, it is online on their website at this at this link below.

Next slide.

So some lessons learned from this survey.

We had some conflicting views.

We asked of the gas customers, how important is it to have natural gas available to your home?

And 96% thought it was important.

But we also asked the question, what do they think?

Do they think global climate change is a serious problem?

and 94% think it's serious.

Can I just clarify?

This was asked of the people that took the survey.

It was only asked to those that have gas.

Do you mind really quickly just popping back to the last slide for a quick show?

Sure.

So some people don't choose not to answer all the questions.

I think that's it.

Thanks.

So we also asked questions about whether people are familiar with our existing energy efficiency programs.

And if you look at the attic insulation rebate program, which is a fairly new program, and this was asked of gas and non-gas customers, generally people are not familiar with our attic insulation program.

People also are, interestingly, I thought this was interesting, because we've been doing this program since 2001, that they're also not familiar with our thermostat rebate program.

and we also ask people if they're familiar with our free home weatherization program that we do for income qualified people and you know people were a little more familiar but generally not 49% said they're not familiar.

So this shows that we have a low awareness of our current energy efficiency programs.

We've got some work to do even though we do regularly put this in our utility newsletter.

It's on our website.

We do council updates on this when we give

We try to get the word out of this.

We also do targeted postcards on these topics, but obviously we need to do more work.

Next slide.

We also ask about what people thought about our existing carbon offset program.

And here we defined what it is in detail.

And I will say I'm going to go over a lot about our carbon offset in a later slide.

So I'm just going to run through this pretty quickly and then give you more detail on our program in a later slide.

But they believe the carbon offset program

Generally, 83% show support for our carbon offset program of those that were surveyed.

Next slide.

We also asked questions about electrification.

We asked people how, and this was gas customers only, how likely they would be to convert their gas appliances to electric ones in the next 10 years.

And 54% say it's pretty unlikely they'll convert in the next 10 years.

And then we asked, of these people, what were the barriers associated with converting their appliances to electric?

and it's cost of new appliances, they prefer natural gas appliances.

Now here they could pick more than one.

Reliability of the electric grid is a concern, price of electricity, the cost of upgrading their home to electric.

Next slide.

We also ask respondents based on different fuels, natural gas, electric and propane, how they would rate how efficient they are.

The first question was how efficient.

So how efficient is natural gas and how efficient is electric and how efficient is propane?

So this is, just to clarify, this is perception.

This is not fact.

Yeah, this is what people think.

That's correct.

But they think generally, and this is to gas and non-gas customers, and they generally think that natural gas is more efficient.

They weren't given any definitions.

So this is just how efficient do you think these fuels are.

But we just want to know, you know, without giving them a lot of facts, what do they think?

Because we want it to be objective.

And that's, you know, all during the survey, they would get input to the people that handled the survey for me about now, that's that question is too leading.

It needs to be objective.

Yeah, it's got to be just just get there what they think.

So and then to the right is how reliable it is, the different fuel sources.

Next slide.

This one we asked people how cost effective they think the three fuel sources is.

They think natural gas is more cost effective than electric and propane.

The next one on the right is a little more, you know, I don't know, it's a little more surprising.

How would you rate the impact of the environment of natural gas, electric and propane?

So the blues are friendly to the environment.

The reds are harmful.

And, you know, what was interesting on this side is, you know, they think electric is

more friendly to the environment, but not by much over natural gas, which we thought was kind of interesting.

But I don't know my takeaway with this is that some of the electric utilities may have some work to do to for awareness.

And to continue to do their good work.

Next slide.

So we took a look at the legal review of decommissioning the natural gas operation.

And in the city charter, it addresses all three utilities.

They're all in the same area.

They address water, sewer, and natural gas.

And it's really intended to protect the customer because it requires if you want to sell or transfer the service,

It remains unsaid about just stopping it.

But if you want to sell or transfer the service to someone else, you have to have a super majority vote to have a public referendum to put it out to the voters to decide if you want to sell or transfer the service.

but more recently at the state level in 2022, there was a, it originated as an energy choice bill and it passed the House and then it was not going to pass the Senate.

It was an energy choice bill.

And so a Democrat from Enrico County saw that it wasn't going to pass the Senate and he wanted to put some amendments to it.

and, you know, you got to remember Enrico Counties where the city of Richmond's natural gas utility is located because they serve in Enrico County.

And so they conference in close, they put it in conference to issue some amendments.

It was bipartisan, it was Democrats involved as well as Republicans.

And what came out was a natural gas customer protection bill.

And basically this bill says that if a municipality wants to sell their natural gas utility, they have to try to negotiate for two years with another utility, an investor owned utility to operate for them and maintain it.

Now you've got to keep in mind that Charlottesville sits per the SEC mapping

The State Corporation Commission has a map of where the service areas are for investor-owned utilities like Washington Gas and Columbia Gas and Virginia Power and Light.

And we sit in Columbia Gas's service area.

Even though you're allowed to have a municipal gas utility, we are in Columbia Gas's service area as defined by the State Corporation Commission.

and you could tell that because there's little pockets of natural gas service by Columbia Gas in Scottsville and Crozet and Orange, Stanton also, I think in Waynesboro.

So they said in this bill you have two years to try to negotiate.

So obviously Columbia Gas kind of has a monopoly on the service area here.

But in the third year, if you can't reach terms with

Another utility to take it over, you will auction it off to the highest bidder.

So that tells me that if Columbia is going to be the only bidder, it kind of puts Charlottesville at a disadvantage, could potentially be the only bidder, would be likely.

And they could possibly get it for a minimal price if we chose to go down that route.

So it's not ideal situation.

If we want to just stop doing it.

So we're in a Dillon rule state, and there's nothing that provides us the authority to do that.

Of course, I'm an engineer trying to do the legal review, right?

But there's really no laws that would, you know, at Dillon Rural State, you have to be given that permission to do it.

And there really is nothing that says you can do that.

So except for

I still don't understand that because do we have some state mandate to keep a our own utility going?

I mean, these are intended to protect the customer.

No, I appreciate that.

Um, my question though is a question is, um, Jay, maybe you can help me here.

Um, was there a federal estate license or something granted when our first

It states that no municipal corporation in the city that provides natural gas shall discontinue such service to any residential, commercial, or industrial customer.

Unless there's a three-year notice provision, and for a following two years to have a sale, or three, if that sale is not consummated to have an auction, it has to sell to the real estate.

The city is not under any obligation to continue if it wishes to go in a different path but also point out section 28 on the sale of public utilities.

You have the slide up there that does require a referendum but in terms of the city

So, Mr. Mayor, to your point, the answer is yes.

You just can't say we're going to stop.

If you're going to discontinue, let's just put aside for a moment the sale of the public utility, which would require approval by the voters.

But under the statute, if you just say we want to stop, then the provisions that Miss Hildebrand has made reference to, we're going to kick in.

and that is there has to be an opportunity to sell the system or to put it up for auction.

If there were if there were no bids

that's that's unknown under state law.

But if there were if there were no bids, I think I'd want to do a little bit more research on that.

The law doesn't clearly state and I would want to do some more research.

And I haven't had an opportunity to to look at the research that outside council has provided as to whether this the city would be obligated to maintain if there was no bid, I would say practically.

And again, I'll defer to Ms.

Hildebrand

entity purchased us, purchased the municipal gas system.

Well, theoretically, but again, that's highly unlikely because they would see this as an opportunity to acquire additional customers, perhaps at a bargain rate, perhaps not.

We don't know that.

But because they're in the business of providing

of Selling Gas.

Of course.

I'll just say, since we happen to be discussing it, to my knowledge, there hasn't really been much, if any, discussion about just decommissioning the utility.

And I'm really only interested in the conversation about new connections and disincentivizing those or transitioning the business model of the utility on a longer term time horizon.

I really have no interest in exploring decommissioning the utility, which I think it's clear would

play out like a lot of water utilities that got privatized where rates are jacked up and the service gets worse and we don't even make an impact on natural gas usage.

I think they would practically

I mean, I think at the moment they're interchangeable.

If they're customers that are using natural gas and want to continue using it, then we would have to decommission to say we're just shutting down your service.

No, well, yeah, sale is different.

Okay.

Sale is different.

Yeah, that's right.

So moving to the Natural Gas New Connection Band, the current city code states that we will provide 150 feet of gas line service line for a qualifying appliance

and it must be approved

and the

Basically the revenues that we would see.

And so what we do when we get a new request in, we look at what their qualifying appliances are, what their load will be, what we call load.

And we translate that to revenue.

And if the payback we see is four and a half years, then we install the service line.

But we get a lot of requests for generators or fireplaces, more generators lately and that want to use natural gas.

And that is not a qualifying appliance that would never meet that four and a half year payback.

And if somebody requests a generator, then they pay the full cost of running the install of that line.

And that's how we apply the city code.

So it's, you know, some people have said it's kind of a subsidy, but, you know, we are looking to make sure we're getting its mixed financial sense for us to run a new request for new installation without them paying.

in some cases it does, in some cases it does not.

It just depends on their load of the gas appliances that they're installing.

But to go on to looking at, if you want to look at a new connection ban, we're in a Dillon rule state where the powers have to be expressly granted to localities by the state.

The state code is unsaid on this, so

In other words, they don't expressly say you can issue a new connection ban.

So it might be difficult.

There is no city in Virginia that's implemented a new connection ban to date.

New connection bans have been challenged in other states.

For example, Berkeley County was challenged by the local restaurant group.

And it got heard before the Circuit Court of Appeals, and it was ruled unlawful.

and Berkeley, of course, can appeal, but they would have to appeal to the Supreme Court at this point.

In recent months, New York has issued bans and they are being challenged by the propane and plumbing associations, which is interesting to me for some reason.

And of course, that's still got to play out in the Circuit Court of Appeals.

If you want to issue a new connection ban, it requires a changing of city code.

But we have seen a natural decline in requests for new connections, pretty dramatic over the last five years.

Both.

I'm giving you more detail here.

Kind of want to segue into this.

So we've been, this is data from 2018 and it is a 62% decline from 2018 to 2023.

Last year we saw 147 requests for

and I

put this where we kind of stopped marketing natural gas back in 2018.

Before then, we would target people that had natural gas on their streets, and they may have oil that fuels their household.

There's a lot.

There's not so much in the city limits, but in our county, they've got certain subdivisions that have predominantly oil fueled households.

And so we were targeting some of those where they can convert, those are easy conversions from oil to natural gas and they can save a lot of money, frankly.

Also, they also get a little bit of an extra benefit in that it's reduced emissions from converting to oil and to natural gas.

But we stopped marketing our natural gas back in 2018.

And you can see the dramatic decline that's automatically happening.

Just last year, we only had 147 new requests.

Of those new requests, 133 were in the county, 14 were in the city.

of the 14 six requests in the city.

Six work for commercial customers.

One was for an existing residential customer that wanted to provide new service for a pool heater and then seven for new homes.

None of them were heating loads.

One, they were for tankless water heaters, fireplaces, ranges or generators.

So that kind of gives you over time.

Is there data somewhere that shows this in context of new construction in general?

theoretically, like maybe, you know, seven, there were seven new homes, but there were only seven new homes.

Yeah, I mean, we're the new homes are predominantly in the county, you know, with new subdivisions, because there's a lot more infill here.

And typically with infill in the city, you know, you may see some

also want to go over what we're doing as far as environmental stewardship approach within the gas utility.

Next slide.

We've got current programs and you've seen this slide before during rate setting when we set our rates.

But we have tried to instigate carbon emissions reduction initiatives, carbon capture program and carbon offsets.

Next slide.

A little more detail on our carbon emission reduction initiatives.

We offer a programmable thermostat rebate of $100.

To date, since 2001, people have taken advantage of about 2,300 rebates that have been redeemed with a utility investment of about $206,000.

We also have a rebate for tankless hot water years because they're more efficient than regular gas hot water heaters.

We offer a $200 rebate.

So far since 2015, we've given 122 rebates for an investment of $24,000.

And in recent years, we've developed an attic insulation rebate.

And we give $300 if people are installing additional insulation in their homes.

And to date, we've given 48 rebates for a utility investment of about $30,000.

And we also have our Shotsful Gas Energy Efficiency Program, which is for income qualified gas customers.

They can own their homes or rent their homes.

and it's in partnership with LEAP.

LEAP does all the work with the assessments and really the work that's involved with the household and then Charlottesville Utilities actually markets this program and so far to date we've had 179 participants.

We can tell

based on their gas consumption during winter months.

On the average, our participants for that household, we've seen a 20% reduction in their gas consumption and we've invested $221,000.

Next slide.

We also have a carbon capture program with our energy saving tree giveaway.

And we just had our tree giveaway this past weekend.

So we have a lot of happy people in the city that just got free trees.

They're getting ready to plant them.

But this is results for the last two years.

This is our third annual tree giveaway.

We've given in the last two years, 450 trees.

Recently, this past weekend, we gave 250 trees away.

And these are numbers that are projected for 20 years from the Arbor Day Foundation.

We coordinate with them.

And they project that without these 450 trees that are planted, that we will avoid a little over 1.3 million get million pounds sequestered or avoided carbon.

Now, we

kind of coordinate with them because they've got a cool website that when people want a free tree they can go on this website and they can position the tree on their parcel and based on the position they can tell where it will be the most energy efficient for their household.

So for protection from providing shade or protection from winds

and so they can position it.

We also take it as an opportunity that they can protect the utilities.

So we promote safe utility digging practices by calling 8-1-1 during this process because we want people not to hit utilities with their shovels.

And so it kind of serves twofold.

But I will say

People that work this event, their staff, say these are the happiest people getting these trees.

We opened up the website about a couple weeks earlier to select the trees.

We coordinate with parks to pick

The Parks Arborist picked the variety of the species that works well here in Virginia.

And then people can get online and pick their tree and where they want to place it.

And within 48 hours most of the trees are gone.

So there is a high demand for this kind of service.

So they get delivered to the yard and they come last Friday afternoon.

Yeah, they plan.

Yep, wherever they want it.

So next slide.

So we do a lot locally, but we wanted to do more.

And I know we have gotten some criticism about, well, why don't we do more locally?

But we figured at the time we're doing a lot locally with our carbon, you know, our energy efficiency programs, our energy saving tree program that's been developed.

And we but we felt like we could do more.

And so we presented the idea during the rate report process in June 2021 that we were interested in buying carbon offsets from our supplier because we wanted to look at doing more.

And what carbon offsets are, they're a reduction of our greenhouse gas emissions by investing in the projects elsewhere.

So they can be anywhere in the world, they can be in the United States.

But it's investing in projects elsewhere.

So council approved that we should move forward with this.

We have a five year contract that we executed in November of 2021.

And what we offset, we buy enough offsets to offset the equivalent of 25% of our gas systems emissions at this point.

There's a lot of information out there about good offsets and bad offsets.

I think based on our research, our offsets are good offsets because they meet all this criteria and that's been verified.

So what you have to do to have a good offset is to meet these four criteria of real, additional, verifiable, and permanent.

and, you know, based on our research, these are good offsets.

Some of the projects that our monies have been invested in is sustainable forest management in Tennessee and the installation of solar energy power plants in India.

And I will, I've got one more thing.

Yeah, so I don't even mean as a criticism.

I'm curious if it's been explored or considered feasible whether there could be local offsets.

Well, I think that there's a lot of interest in seeing how we could.

It's a little bit like water quality, whether you buy credits or whether you do the improvement locally.

We would have to have a really rigorous process to set up a project that meets those criteria.

But I think it's part of what needs to be explored over time.

In the meanwhile, this is assured

Reduction in Global Emissions related to the gas utility.

So in 2021, it presented a much more tangible, reliable, defensible option than a project locally that was available to implement in 2021.

Yeah, I think we've also got the challenge of is there something available locally, right?

So we would have to flush that out.

Next slide.

Hi there, everyone.

Good evening.

Thank you for having Black and Beach here today.

I'm going to spend some time talking about two tasks related with the decarbonization study that impact the outcome of that study, as far as the recommendations that we will make.

And that includes the existing energy efficiency programs and benchmarking those programs against its peers, as well as a methane leak assessment of the actual makeup of the pipeline of the City of Charlottesville system.

So what you are seeing here is you are seeing a list of 21 non-investor owned utilities.

As I speak about these peers throughout the presentation, I'm probably going to use the phrase municipal utilities purely as a shorthand only because non-investor owned is

Quite a long phrase, and I'm trying to shorten things up for us here.

But we selected 21 similarly sized municipal gas utilities in the mid and south Atlantic.

You will see a green asterisk next to some of the utility names.

That indicates that those utilities offer both gas and electric service, which will be important as we move forward with this conversation.

You're also seeing that we define the peer group sizes by miles of distribution manes and number of services.

The way to think about this is almost like a tree.

So if you think about the branches are the distribution manes and the services are the leaves.

So that's kind of the analogy I would make here to have this make sense.

What you're seeing is that from the miles of distribution mains, the city of Charlottesville is a little bit on the smaller end, but it's very dense.

And so there are quite a bit of number of services, so quite a bit of dense per branch as it relates to its peers.

So you'll see a few representatives here.

You'll see a few different municipal utilities from Tennessee, Florida, Virginia, North Carolina, South Carolina, Georgia, et cetera.

And the purpose of this peer group is really to compare the energy efficiency programs that these peers are participating in and hosting in their utilities as well as this is the same peer group that will be used for the methane assessment.

Next slide please.

All right.

And so if we take a look at this slide, this is the same peer group.

But what this is actually showing is a comparison of all of the different rebates that are offered by this peer group utilities.

Anything in dark blue, the dark blue circle there with the check in it shows that it is a gas only incentive or rebate.

Anything with a light blue indicates that it is a gas and electric rebate.

And anything with just a green circle indicates that it is an electric incentive only.

You will see that there's quite a few blanks.

So as an example, I think it says the greater Dickinson, this third one down, does not offer any rebates.

So that's intentional that it is left blank.

and so what you will also see here is that there's many different incentives that are offered.

We're going to describe as it relates to in the next slide here what the gas specific incentives look like.

Next slide please.

Okay, so this slide here, we are looking at the gas only utilities.

So earlier I had mentioned that anything with an asterisk next to it indicates that they offer both gas and electric service.

This is just taking the segment of utilities that are only gas providing utilities.

And so what you are seeing here is a list of all of the gas rebates that you offer that they offer.

The key takeaways here when we're looking at this is there's quite a bit of focus on increasing natural gas usage via conversion from other fuels.

And so one or several places where this is a little bit more obvious is as it relates to water heating, lake

of Popka, I think is how we say it.

They actually offer more money, more rebate dollars for customers that are switching from a different fuel.

So electric to gas or propane to gas.

What is unique here is that the city of Charlottesville is one of the only utilities that actually offers energy efficiency rebates that actually reduce the consumption of gas.

So if we look at the intent of a programmable thermostat, for example, the intent of a program programmable thermostat is to reduce your energy usage.

as is building envelope incentives.

So you'll see that, you know, Clinton, Newberry, they offer building envelope incentive.

One question.

So does that mean that Clinton, Newberry, natural gas will give you $100 if you get rid of it?

No, that means they will give you $100 towards building envelope adjustments.

So that could be things like duct work.

A positive number, it means the money that the end user is receiving.

And so there are rebates for new gas appliances and those are beneficial.

So if you're in a situation where an end user is converting from an old natural gas appliance, those are inherently

Next slide please.

So we wanted to pull out a comparison specifically between the three municipal utilities here locally.

So Charlottesville, Danville, and Richmond.

Richmond publicly is not promoting any energy efficiency programs associated with its natural gas utility.

You will see that Danville offers a wide range of gas and electric rebates.

They are dual fuel utilities, so they have incentive to

switch their customers from either gas to electric that's staying in their business that's keeping the money in their business there's incentive to do so that is not a practice that Charlottesville has being only a gas utility

A couple other things to point out as it relates to this is that Charlottesville's program on Income Qualified Assistance Program is a leader among these three utilities, despite the City of Richmond being a much larger city in utility.

And so you will see that the City of Charlottesville Gas Energy Efficiency Program offers free home energy efficiency improvements in partnership with LEAP and also offers a local gas assistance program.

Danville includes heating and cooling assistance funded by the city and donations from partnerships from local United Way.

And Richmond does have a program.

It's just a little bit of a smaller scope with heating assistance up to $500 in partnership with local agencies.

Next slide, please.

A few important things to keep in mind as we talk about energy efficiency in relation to decarbonization.

On the left, you'll see there's three major takeaways here.

And so the first is that there are no or unknown decarbonization targets among many of the peers that we evaluated in this assessment.

So there's no public announcement of decarbonization initiatives that we were able to find differentiating the city of Charlottesville gas, as you all know.

We've identified that Charlottesville is the only gas utility in the peer group pursuing a gas utility decarbonization initiative And further the city of Charlottesville gas is the only one that we were able to identify that actually published as the energy program metrics and results It's incredibly difficult to measure the impact of these programs and the city of Charlottesville was the only municipal utility in the peer group that did so

In the natural gas utilities, the emphasis still remains on natural gas usage.

So as I implied earlier, there are many rebates that offer fuel switching from other fuels to natural gas and those are often higher than if it's a natural gas to natural gas switch.

And very few utilities, only two other than the City of Charlottesville, actually offer energy savings tips to reduce gas usage.

So if you just go on these municipal utility websites, very few actually offer tips of how to reduce your usage.

and the third key takeaway is that dual fuel utilities really have an advantage in efficiency solutions and that is because encouraging electrification and switching from natural gas to electric use still supports their business model as they offer both electric and gas service.

Next slide please.

So as a result of our energy efficiency evaluation, we've made four high level recommendations that the City of Charlottesville should consider and continue to do.

The first is to adjust high efficiency appliance rebate programs to encourage high efficiency natural gas appliance technologies.

And so really the key takeaway here is to remove any incentives for

electric to gas switching.

So encouraging customers that if they're already on natural gas, I'm sorry, already on electric, that not offer rebate to switch to natural gas.

The second would be to offer more tailored incentives to target customer segments and expand eligibility of these existing programs.

And so really that means to expand custom rebate options to residential and customer segments.

If we look at some of the most successful

Michael Payne,

Successful is through expanding partnerships with local organizations.

So whether that be an expanding a partnership with LEAP or another local organization that can enable the municipal utility to do so.

The third is to utilize lessons learned from large utilities and marketing and stakeholder engagement.

This gets to my earlier comment that there's very little data on the success of municipal energy efficiency programs, but there's a lot more data on the success of investor-owned utilities.

They do a lot of marketing and customer engagement in these programs, and we do encourage that the city evaluate ways to expand its marketing efforts.

and advertising periods to engage customers and provide custom insights to understand how energy efficiency can help them reduce their natural gas usage.

The fourth is to consider expanding building envelope incentives and evaluate oil to propane gas incentives.

In addition to the

recommendations around efficiency.

So as it relates to electrification, what we focused on was encouraging that the existing natural gas customers reduce their natural gas usage.

Given that the City of Charlottesville is not a dual fuel utility,

There's little work that the City of Charlottesville can do to encourage their customers to switch to, to encourage electrification.

Yeah, and if I might interject, I think one of the takeaways is it may not be the job of Charlottesville gas to promote electrification, but it certainly is the job of the climate program of some of the community partners of the electricity provider to promote that.

So these are recommendations to the gas utility.

And I may be

jumping ahead in the conversation, so if so, just tell me so we can move on.

But I'm curious, you had mentioned Danville was a dual fuel utility.

I'm curious what, if anything, would it take for our natural gas utility to kind of diversify its business model and look at electrification, community solar, things like that.

Well, Dan Villa, they, they provide electricity to customers as well as so it's an easy thing for them to do because they're natural gas and electric.

Here it might be a little difficult because Dominion kind of provides electricity.

We have a little pockets and now more candy.

The Dominion for our service area provides all the electricity.

How do we

Yeah, I mean I guess when I say diversify the business model and perhaps there just isn't a clear role for the utility to be slotted into it, but like is there any useful function as a municipal utility in

Granted that we're not, like, Danville, still getting directly involved in incentivizing electrification around appliances, community solar programs.

I mean, I don't know, maybe there's not a rule for it to slide into that, but in my mind, like, thinking 20, 30 years down the road as the natural gas base, like, reduces, I just wonder if there's any opportunity there.

Well, I think those are the questions we're hoping this work session kind of brings out so that they may not be resolved in the study.

But if there's interest in some kind of evolution of the business, that's information for the gas utility to take going forward, right?

Because counsel could also say, do not look at doing anything other than what you are doing today.

And that would be a very specific direction.

And so again,

As I said, there's a lot of questions this project has raised and some of the things you all are bringing up are those questions that we will have to figure out what is the next consideration of the future of gas, the future of Charlottesville gas, the future of fossil fuels in this community.

Well, I'm not going to talk about anything as exciting as breaking the monopoly of dominion, but we are going to transition to talk about methane.

So next slide, please.

So before we describe what's on the slide here, I want to take a second to bring up why we're actually doing a methane assessment.

And so the purpose of this part of the scope was to evaluate methane released into the atmosphere from leaks.

and Michael Payne

of Carbon Dioxide.

So what that means is that for every one ton of methane, there are 82.5 tons of carbon dioxide.

So we want to talk about methane basically.

So if we go back to my earlier analogies of distribution mains and services, we're going to talk about mains, which is the branches of the trees.

and what you're seeing here on this graphic is on the bottom you are seeing this is represented in miles and so you'll see zero to 1,000 miles and that is the miles of mains and so what you're seeing here is that anything in orange is plastic which this is the industry best practices of for distribution mains this is has the least corrosion effects

and the least leakage is associated with it.

Anything in blue is cathodically protected steel.

Moving forward I'm just going to refer to that as steel because again it's a mouthful.

All other materials is represented in yellow that might be iron and some other different materials.

What you will see here is that the city of Charlottesville is towards the top of the distribution between plastic and cathodically protected steel.

So as I said, plastic is a really good thing.

That is the industry standard.

Next slide, please.

Now if we look at the same makeup of distribution services, so now we're talking about the leaves on the tree.

Here we are looking at about 99% of these Charlottesville services is plastic, with about a little bit left here of the cathodically protected steel.

You will also see that still representing that anything, any utility here with an asterisk is an electric and gas utility.

This is the same group of utilities that you previously saw.

And so really this is to set the stage for the materials that make up the distribution mains and distribution services of the City of Charlottesville gas utility.

Next slide please.

This slide is doing a comparison between the Virginia municipal utilities to the same group, Charlottesville, City of Danville, and Richmond.

What you will see is that the City of Richmond has a far larger utility.

So significantly more distribution mains, significantly more distribution services, and about average in between the services per mile of mains between the City of Charlottesville and Richmond.

The key takeaway here is that Richmond has six times the mileage of distribution mains and five times the mileage of services as Charlottesville.

But if you look at the main leaks, the main leaks that we observed are 10 times that of the city of Charlottesville and service line leaks are four times that of the city of Charlottesville.

And you're able to see the representation of the services and mains on the left and right hand graphic there that you're seeing on your screen.

Can I ask a question about this?

Sure.

So you've given us the comparison between Charlottesville and Richmond for amount of leaks, but how many, what's the actual number of leaks?

Are we super leaky or are we not that leaky?

So next slide please.

and here we go.

So we took a look at the leaks per 1000 services which is the graphic on the left and this is from the last five years.

So the city of Charlottesville is the blue line and the peer group is the orange line and so what you are seeing is that the city of Charlottesville is below average as it relates to the leaks per 1000 services.

On the right, you're seeing leaks related to excavation damages per 1,000 tickets.

And so again, the City of Charlottesville is outperforming its peer group in the number of leaks.

This is really a testament to the procedures in place by the City of Charlottesville.

We have about... Those on the last slide.

Yeah, let's see if we go back a lot and you remember.

Look at some total system emission leaks if we go to the next slide

So the second part of this methane assessment is looking at the estimated methane emissions based on pipeline inventory.

Given that emission methane is not measured and leaks leaking are not measured as they happen, this is a proxy from the federal government of how you actually measure the leaks expected on the system.

So using this available information,

We estimated the total system emissions for all of the peer group utilities.

And so what you see is that City of Charlottesville is about 1600 metric tons of CO2E.

and you'll see the metric tons are on the x-axis on the bottom.

The average of the peer group is about 2,300 and so City of Charlottesville is quite far below the peer group and again this is when you are looking at the based on the pipeline inventory that we discussed earlier.

Can I ask a question about the scale?

This is metric tons of CO2.

Yep, converted from methane.

And this is a, just to add detail, this is from PHMSA, which is the NEPA's recommendation for how you apply this.

And so we use EPA and PHMSA recommendations for calculating all of this information.

Now if we look at methane emissions by services, so on the bottom what you will see is metric tons of CO2 emissions per thousand services of customers.

And so you will also see that the city of Charlottesville is performed very well here.

So 7.6 metric tons of CO2 compared to the average, which is almost twice that of 14.2.

And we actually expect this number to decrease with the replacement of the remaining mile of cast iron on the system, which is planned for 2025.

And that is something that the City of Charlotte's municipal utility is currently underway.

As stated earlier, this has really contributed to the materials of the pipeline, the responsiveness of the utility, and the processes and places for educating and responding to any leaks that occur on the system.

Next slide please.

So while compared to its peer group, the City of Charlottesville is performing very well in its methane assessment, there are recommendations that can be made for the city to continue doing as well as new things for the city to consider.

And so the first is that we encourage the city to complete leak surveys

of the residential gas system every three years, which they're already doing, which is more frequent than the required PHMSA five-year intervals.

So this is the regulation encouraged by PHMSA that is every five years.

The city is already doing this as a schedule more aggressive than that.

The second is to install excess flow valves on service lines, which shut down when a service line is severed during excavation damage.

Again, the city is already doing this.

It is showing that it is working.

And so we encourage them to continue this practice.

The third is to develop and implement preventative preemptive pipeline and equipment maintenance or repair.

Again, the city is always doing this.

We encourage them to expand and continue doing this.

The last two are continue investing in the public awareness program to prevent third-party excavation damage leaks, which is especially important in plastic systems.

So while plastics prevent corrosion of the pipeline, they are more prone to excavation damage leaks.

And what that actually means is that is when folks are going out there like digging,

not realizing that there's potentially a pipeline.

I'm glad to hear that we're already doing the recommendations.

And the third is to continue to emphasize the existing training and operator qualification program to really enhance the responsiveness and processes that are already in place by the city.

The city is doing a good job.

Encourage them to continue these programs and to expand upon them.

Next slide, please.

All right.

So I think in the next few slides, we're going to talk a little bit about the alternative decomposition technologies that can use the existing natural gas transportation and distribution system that the city has already in place, but provide a low carbon footprint compared to the kind of traditional natural gas that's been serviced here.

Next slide, please.

So we have seen this before.

I think we mentioned this in the previous briefings.

We talk about the lower carbon alternatives to traditional natural gas, including renewable natural gas and hydrogen.

So this time we're going to be talking a little bit about where we were trying to set up scenarios for modeling the future and how each of those alternatives can be incorporated into the

City of Charlottesville's decarbonization plan.

I think we want to really kind of provide you with a little bit of background in terms of the information we have learned since last time we have talked about this as well as how that's going to be relevant in the city to incorporate in the decarbonization footprint.

Next slide please.

So renewable natural gas that we talk about is that it has the same chemical composition and characteristics as the traditional natural gas but were produced from organic waste that really exists in the environment right now.

So that includes landfill and animal waste from farms and wastewater treatment facilities as well as other food waste or other organic matter.

And I think depending on what source of the waste you use to produce the renewable natural gas, the carbon intensity of that source of natural gas is different, and the cost of producing that gas is also different.

However, if you look into the carbon intensity of those renewable natural gas, so for example, some of them will actually provide what they call the carbon negative.

A source of supply, a source of fuel, that including if you are using animal manure to produce that and I think that really allows you to have a carbon negative supply of to natural gas, alternative to traditional natural gas.

And I think then the cost of production also varies depending on the source of production from what sources you are using to produce renewable natural gas.

And it also depends on the technology being used there.

So right now, renewable natural gas is not a new technology.

It's being used commercialized in commercial terms.

But I think the limitation is that right now it doesn't have a very wide

Dr. Wang,

is much higher.

Renewable natural gas, the cost range we actually identified based on a public study is that in real $20, $23 terms is $8.4 per MMBTU to about $23 per MMBTU depending on what the source of the production looks like.

I think as a comparison what you are seeing is that

We're not talking about the actual retail rate to your bill, but this is just the cost of the commodity.

So as a comparison, compared to the A to $23 per MMBTU basis, if you're looking at producing natural gas just as a commodity before you pay for transportation and distribution charges, it's about like $2 to $3 per MMBTU.

That's the normal kind of range of cost we are seeing here.

Essentially the limited availability of resource as well as the higher cost in comparison has restrict the use of renewable natural gas.

I think right now the city of Charlotte does not have a renewable natural gas supply source into their supply portfolio.

but they are under kind of discussions with the potential wastewater treatment facility to be able to really kind of get their first renewable gas project going.

So to incorporate the renewable gas into the city's decarbonization plan

I think one way is to really identify locally sourced renewable gas projects such as the wastewater treatment facility.

And I think then that has to be evaluated on the basis of cost benefit on a project to project basis.

You just really need to understand what will be the cost of that supply and what will be the infrastructure improvement needed in order to incorporate the supply to the system.

And I think then

What you will want to make sure is that it has the cost-benefit barrier so that you actually are incorporating projects that can benefit the rate payers and the customers too.

There are credits or incentives provided for renewable natural gas project development.

So the Inflation Reduction Act actually provides 30% capital cost credit on capital investment on qualified renewable natural gas projects and they also have

50% tax credit on operating costs of the renewable gas facilities.

So I think those were the considerations we want to put into the system, assuming some of those will be kind of realized and be properly incorporated into the system modeling part of the analysis.

The other way of incorporating renewable natural gas is actually really just do not

kind of expand beyond the locally, physically available renewable natural gas projects and basically asking the gas marketers or the gas suppliers to provide to source renewable natural gas from other locations and transfer the credit to the city.

Those really allows the city to be able to have access to a larger renewable natural gas supply

But I think again, as similar to carbon credits, it actually has maybe has some measure that it needs to be verified and I think then the credits needs to be real.

Next slide, please.

So hydrogen, we know, I think you may have like known from different sources that hydrogen has come in different colors.

And I think what we want to really focus on here is what we call the clean hydrogen.

So clean hydrogen really we're referring to the hydrogen that has very, either zero or very low carbon intensity.

And if you look into the colors, you actually see green hydrogen, which is basically hydrogen produced from electrolysis process using 100% green energy or renewable energy.

and I think that you see yellow hydrogen which is using a mixture of renewable energy and grid which may not entirely renewable based electricity.

I think that you also have pink hydrogen which is actually produced

through nuclear energy.

And those were zero carbon.

I think green and pink are actually zero carbon hydrogen sources, but I think yellow, you have a little bit of carbon intensity from the non-100% electricity use.

I think that the other source of hydrogen, what we're going to talk about a little bit, and I think that's relevant to the city of Charlotte, so it's blue hydrogen, which is produced through the steam methane reforming process, is actually taking nitro gas and really heat it to really high temperatures and put that into, and then bring

Part of that nitrogas separate them into hydrogen.

During the process carbon will be emitted so it's not a carbon free process.

In order to make it blue hydrogen you basically have installed some carbon capture technology to really capture the carbon released.

during the SMR process.

So depending on the technology you use or the equipment you use and the efficiency of that process, blue hydrogen is low carbon fuel, but it's not 100% zero carbon fuel.

So I think the implications that what we are seeing is that all of these are not new technology.

Technology-wise, all of those are kind of mature technology is the commercial implication of those, however, is not widespread because of the high cost of those two processes.

I think right now what we are seeing is that from a cost range perspective, green hydrogen, what we are seeing based on current technology is equivalent of $30 to $48 per MBTU.

I think then blue hydrogen is slightly cheaper and I think depending on the price of nitrogas that were used in the SMR process is $20 to about $37.

I think the

Equally, what they are saying is that they want to produce up to $3 per kilogram of tax credit to those hydrodens produced meeting the green or the blue criteria based on a certain level of carbon intensity.

With that tax credit, the cost will be lower comparably.

But I think it's just as a comparison, if you're looking into the goal that DOE has set, that they want to have a dollar per kilogram of clean hydrogen in the next decade.

So the goal is a dollar per kilogram hydrogen.

I think either through the tax credit or through private investment and technology breakthroughs, if we bring the cost of hydrogen down to be a dollar per kilogram,

That's actually going to be equivalent to about $7 per MMBT on MMBT BTU basis.

I think the heat content transformation means that $1 per kilogram equals to about $7.30 per MMBTU.

It's still higher, but I think then what we want to really kind of bring about and compare that is that it does have a very low carbon footprint.

So it's either zero or very low carbon intensity compared to conventional nitro gas.

that the way for the city of Charlottesville to incorporate hydrogen into its supply portfolio and the compensation plan is that we think it's not going to be very feasible for the city to identify and really procure locally sourced hydrogen

production.

So we have not seen any kind of projects being proposed in the city service territory.

And I think then it's probably not going to be visible that you can see a local supplier of green hydrogen project.

I think then the best way to incorporate that will be really procure that from a supplier that really get the hydrogen from like a scaled up production facility.

I think one such potential supply source is one of the hydrogen hubs that's really already been approved by the DOE in December.

that was in the, that covers the Marcellus shale gas production in the West Virginia, Ohio and Pennsylvania area that really are half-stakeholders including the nitro gas producers and nitro gas transporters as well as some equipment or supply chain vendors in the hub.

So they are planning to have large-scale

of both blue hydrogen and green hydrogen to be produced.

I think then right now the city of Charlottesville already procure natural gas from the suppliers at the Appalachian hub.

So if hydrogen will become available, I think there is a way for the potential suppliers to procure that on the city's behalf and be able to transport and use for the city to use hydrogen in their service lines.

What we want to also kind of understand is keeping really an eye on monitoring the progress of the hydrogen incentives that was provided in the hydrogen hubs as well as in the implementation

inflation reduction act, the 45v clause that provide private investors in clean hydrogen production facilities with a tax credit.

I think then what we are seeing is that for the city to incorporate hydrogen as a variable supply source, it may not be a near-term thing.

Just because the infrastructure is not there, there is no kind of variable production facilities inside that actually has verifiable or even kind of visible paths of seeing when they will start producing hydrogen in some time.

But the hope is that with the policy and the general society to really move toward a hydrogen economy, the cost will come down.

I think the city should be in a good place to incorporate that into the economy.

into his supply portfolio, just because I think like based on what we have learned from the status of the city's pipeline system and service line system, so essentially the pipeline system is like if you are built within the recent periods and also the material of the pipe were cathodically protected still

all plastic pipes that were very actually good for potential hydrogen transportation.

So because it's less leaky and I think that will allow you be able to safely operate the system even with a certain percentage of hydrogen mixed in or maybe converting like some like have a larger percentage of the network transporting a bigger mix of hydrogen and conventional natural gas.

I think so that will be the plan is going to be you blend a certain level of hydrogen into the system and I think right now the safe limit for the plastic pipe and the carbon protected steel pipe are about 15% and I think then that right now the some of the

You kind of started to talk about it where hydrogen can be blended directly with the natural gas that's already existing, so that gets sent to people who burn it in their systems and then it gets used.

Do people need all new stuff?

100% yes.

I think right now the safe limit data study is being done on unused equipment and appliances.

So if like for the city of Charlottesville customers, most of residential and commercial customers, they use nitrogen, they use nitro gas in like cooking and water heating.

All of those appliances are generally safe.

if the hydrogen percentage is somewhere between 15% or lower.

If you have a higher mixture of hydrogen into the system, you probably need to have some modifications with high efficiency plans.

So this is what we're thinking is going to be a portfolio of tools that you have to incorporate.

I think then 100% hydrogen is a little bit restricted because from the system operation perspective, the gas system can operate with 100% hydrogen.

but the end use part is like the end use need to update their equipment so that the equipment can run as mostly as possible the furnaces is for example right now a lot of the the furnaces vendors are trying to incorporate certain levels of hydrogen capability into the new designs

for the next couple of years to at least get that amount of decarbonization.

However, we don't really have a good source for that over the next couple of years.

I think you're actually right in the kind of the scenarios that could play out.

And I think then the other likely scenario is also going to be that once there is established hydrogen economy framework, so you have a lot of hydrogen that's being cheaply produced.

And then you have a transportation system that actually moves hydrogen around.

I think the other concern is, I know it's in flux, but my understanding is the closest hub to us is open to using gray hydrogen as their

source.

And so if we're doing blue or gray hydrogen, you factor in the transportation since there's not going to be a local source.

Even if you fix the problem, then it's 20 to 50 times more expensive and not competitive on the market at all currently.

Even if you fix that, to me it seems like there's an open question of if it is

particularly gray but potentially even blue hydrogen and you factor in that whole supply chain and transportation.

Is it even providing an emissions advantage over natural gas if it's not green hydrogen?

That's one of the questions it raises for me.

But I don't know.

I mean everything's worth considering but to me it just

Electrification, rather than Hydrogen, but except for major industrial uses, but that's just kind of Yeah, I think that's going to be some kind of debate going on is that it's depending upon because I mean from just from a cost perspective that it is one like you're really right if that's like one key consideration I think then the other consideration is the reliability benefit

of having a diversified energy supply portfolio, including electricity and certain level of either the hydrogen or low carbon fuels.

I think most of the people start to realize that if you have that worst source of energy, so this is really very obvious in some of the events in the electricity industry.

I think we have had a lot of

and Natalie Oschrin.

Dr. Wang

to test the natural gas infrastructure is that natural gas infrastructure most of them are buried underground so it will have less kind of consequence if there is a natural disaster on the ground like a weather event and all certain things and it will not have

The same level if you actually get power lines down, I think then you can't really distribute in power.

But I think this is a total, really is a comprehensive consideration.

You have to really compare all of those aspects.

One thing to add to your earlier comment is for it to be a DOE funded or federally funded hydrogen hub, it does have to meet the clean hydrogen threshold, which is considerably lower in emissions than natural gas.

And so for it to be coming from one of the hydrogen hubs, it would need to be to meet that clean hydrogen threshold.

And so the color is

Colors kind of marketing jargon, if I'm being honest.

It's really the emissions content that matters.

And that is required to be below a very explicit threshold.

The only reason the color matters is because it's a way for people to differentiate how hydrogen was created.

Ultimately, the only thing that matters is what the emissions content is of that hydrogen.

Good question.

So this is just the fuel, the fuel content.

So this doesn't include the delivery

Yeah, even green hydrogen, if you're shaping it from a long distance, it's going to have the same kind of impact on that.

Yeah, so part of the advantage of YDOE awarded the hydrogen hub to the Apolytine hub

is very close

transportation, I think then the heavy processing of the carbon intensity or the carbon footprint of that natural gas supplied into the SMR process is lower.

Can I ask one question about the notion of the

The changeover for end users.

Yeah, well, I think the one thing that we have identified is the wafts.

It's kind of like the wafts that really kind of control the flow of the, I think there's sort of the lining of the wafts, could tend to be affected differently by hydrogen, all the

like a mixture of hydrogen or natural gas but I think from a safe burning perspective we know that the Hawaii gas they actually do not have any gas production so their gas comes from a synthetic process that create not a hundred percent methane in the supply is actually a mixture of hydrogen and and methane so they have been

really offering their system, I think the customers has been using the mixture in their normal appliances for their basic purposes with up to about 12 to 15% of hydrogen in the past decades or so.

So it is safe to say you have a lower percentage of mixture in the stream.

It doesn't have a negative impact on the efficiency of the appliance either.

But I think the situation is going to be in the long term if the general trend is trying to use hydrogen as a lower carbon replacement for natural gas.

Just thinking in terms of like a cubic, I wouldn't say meter or cubic,

Five percent difference.

Five percent less.

OK.

Next slide, please.

So the next option we want to really propose and really I think the recommendation is to keep a very close eye on is the

Geothermal District Heating Systems.

I think the Geothermal District Systems, I think the advantage is that it actually uses existing pipeline network that the gas utilities currently have.

And I think then it's from a perspective of this low-tech essentially, it's really trying to use the underground

The system is actually the technology has been in place for a long time and I think then in Europe there are about 250 geothermal district heating systems in place

But in the U.S., it's not being widely used.

Part of the reason is that I think it requires a very, like, very, very dense kind of population so that makes the system more efficient.

I think you do not need to build miles and miles of pipeline network in order to make the system work.

I think in the U.S.

as a decarbonization kind of potential tool, I think the DOE has started to implement some of the geothermal systems across the country.

Currently there are 11 pilot programs in place across the country.

I think one of them we actually reviewed some of them.

Those were really smaller scale demonstration systems like with 10 or 20 houses.

Just to really demonstrate what happens if you actually implement that system, whether the customers or the houses will experience energy savings and I think then what will be the capital requirement of that.

So I think in the next few years it will be closely watched how much of the knowledge and experience we gained from those demonstration pilot programs

So this is literally just a vague recollection I have of geothermal and UVA being in the same headline.

I think that might be something that they are considering because we actually are seeing a lot of universities consider this option just because, I mean, there were, it's on university campus, it's a collection, it's a really dense collection of buildings.

Well, and it's also really advantageous because academic institutions have campuses where they own and operate.

They're the owner and the bill payer, and so this is a true district level system.

Is that the same building that's at Fontaine, Brian?

It is an option, and it has been, for decades, been used.

It's typically used in really cold climates because heat pumps are less effective, air source heat pumps, and so underground the temperature typically stays the same.

With all that said, we're looking at some short term recommendations for next year that you'll hear more about as we work through our utility rate report and finalize some of the detail.

But some of the proposed actions we're looking at are to establish a new fee structure to incentivize new gas connections.

And this would be based on actual cost of the service.

And the revenues that we would generate from that would be to use to fund the expansion of new utility energy efficiency programs.

We are looking at a new weatherization program that is focused on attic insulation.

And we're trying to look at a program that would make it easier for people to participate, just from a process standpoint.

So stay tuned for more detail on that.

We're just trying to work out some of that process on that.

We're also going to evaluate existing rebates by increasing some or removing some.

They were not Bradford pairs.

So with all that said, we've still got a lot of work to do.

That's a reminder that we're still working on this finalizing this report.

But we want to remind people that we are going to schedule the community listening sessions in the spring and the summer.

And if people are interested in knowing about that, they could sign up by scanning the QR code.

and they'll be added to a list that will be notified of their dates when we set them.

Small, just practical ones.

So kind of how were the business focus groups done and did it seem like those were successful?

And is there kind of already a game plan for the broader community sessions?

So we held one business focus group that was a pretty diverse group, you know, overall it was small, but it contained restaurants, you know, industry, you know, various groups, and they had

They have some opinions that they gave us and we're going to incorporate that into the final report.

You know, we're contemplating whether we should hold, because it was a small group, whether we should hold another one.

We're still thinking about that other than, you know, we're pleased that it was so diverse.

So we're in discussions on that.

We anticipate the community listening sessions.

We're still trying to plan those.

It's going to be different than the presentation we did or the interaction we did for the business focus group because it was small.

Whereas the community, it might be a bigger group.

They'll probably be held at Carver Rack or here, and then there'll be some available in person.

We have a facilitator that is helping us with that.

What's the goal of those sessions?

Yeah, we've done the residential, we've done, but we want to hear from as many people as we can connect with.

Because obviously, even though we've done that residential survey in the business focus group, there's still a lot of people that don't know about the stick organization study.

Will it impact, I mean, is this sort of the final report we're looking at here?

No, this is not the final report.

There's still more work that we're working through to figure out the detail on how we can decarbonize the natural gas utility.

We're looking at probably short term, mid term, and long term.

What we think is going to happen is, you know, we'll know a lot about the short term because the applications are in place and we'll know a little bit about the midterm.

Okay.

Yes, there will be.

The one thing I will say is I will commend you and your utility, the amount of plastic that you have and the kind of programs that you're running and the

The frequency, the infrequency of methane leaks I think is really admirable compared to many other systems.

So I want to congratulate you all for that.

I know that this is a new paradigm, a new way of thinking in terms of

how we're going to heat and cool our houses and all of these things.

I hope we'll just continue to push the envelope about what are possible options.

I still feel like with hydrogen, when I hear that, it makes me think of nuclear fusion, you know, that's going to be the

The next thing that's going to, well, I mean, every 10 years they're saying the nuclear fusion will be here and it will solve all the world's problems.

That's sort of how I feel about hydrogen, but maybe that's changing.

But I think one thing that you hit on in your last slide is the cost.

And I think somehow my gas bill is not very much.

And most of my appliance, I shouldn't admit this, but most of them are natural gas.

My gas bill is

What the real cost of that is in terms of emissions and the other aspects that are produced by greenhouse gases.

I don't know how we come up with like a real gas rate that's not sort of really subsidized is what it is right now because it doesn't reflect the external factors of climate change.

But anyway, I do think that costs

So what, you know, we just had two hours of pretty technical stuff.

And what I'm going to have to do to start tomorrow, maybe even tonight, if I go out, is to explain it to the common person or, you know,

someone who may may not be as enlightened as my other colleagues here.

So I'm going to tell you what I heard.

So what what I heard is that Charlottesville were since we're in this business of natural gas, which we know now, you know, does emit carbon.

It's not what we want is that among up here,

We're doing great.

We don't have as many leaks.

We are pretty efficient, so I think it was $3.39, but because we're kind of dense, we are up high as far as I forgot the term service.

and so again we don't have a lot of leaks and so if we want to kind of take it to the next level it's like you know like okay and we're doing a lot of things like the tree distribution that kind of help address that if we want to say to get more

Efficient in what we do, we can't go above 12, 14, 15 percent of the hydrogen.

And even if we do do hydrogen, we have to kind of look at the source of it.

And that has a big factor and we may have to wait a few years to kind of when everything catches up.

in where it's produced, they can accommodate more hydrogen, but the user end appliances and things that we use may not be able to.

So we're getting information, still getting input from businesses and the community.

The final report is going to be probably in the fall sometime.

We talked a little bit about, like, we're not publicizing it anymore.

I mean, gas hookups.

Jay is going to look at, you know, some of the language that you talked about as far as the legal aspect of it.

And so, if someone asked me, like, well, why is Charlottesville doing this?

What is the next steps?

What is

What's the best way to tell them what should I tell them?

And maybe others may have a succinct way to what you're telling the public.

No, no, I'm not going to say that.

So I think what you should tell them is we're doing hard work and we're probably ahead of a lot of people in this country looking at this from municipalities of our size.

Yeah, I would add, and we're not going to wait until we have the full equation figured out to do anything.

The utility is going to bring some immediate recommendations that are in response to things that have been heard from the community, right?

Those recommendations reflect some of the things you saw in that input slide early on.

So I think part of it is there are things that we can and should

initiate.

There's a lot of things that we can and should track.

There's some possibilities on the horizon, and then there's some unknown.

So this is just the first step of lots of steps that are going to be associated with decarbonizing this Charlottesville gas utility.

But we shouldn't wait till 2049 to start the process.

Yeah, and I'll just say, I guess my biggest takeaway is actually from just some of the very first slides on the global emissions and the IPCC reports.

My takeaway is this is all in the context of who are in a climate emergency.

We've blown past every previous target.

Global warming is accelerating at a pace that is far worse than anticipated.

We don't know all the impacts of that except that they're going to be very bad, and it requires system change at every level.

So for us locally, this is important because it touches 60% of our local emission sector, residential and commercial.

And arguably, this is the most important municipal action we can take when we look at the changes already underway for vehicles and the electric grid.

So that's my big takeaway of why we're doing this and why it's important and I also definitely got from the presentation which was very informative that it's very clear we have a very well-run utility that's been extremely well run for a number of years that has also been ahead of the curve on a lot of things but because of that global situation we're just in the weird position of

One of the most important local climate actions we can take is reducing demand and usage of natural gas.

So I guess my takeaway from the proposed actions is I definitely think establishing the fee structure to disincentivize gas connections is very positive and necessary.

I also think that the weatherization programs are obviously positive and are part of that reducing demand equation.

I guess the only thoughts at the moment I have is I am curious kind of more

The opportunity for local offsets is something that kind of excites me.

I don't know if it's the direction to go, but it's of interest to me.

And then maybe there's something I'm just missing, but just as a lay person.

If we're talking about stuff like hydrogen and geothermal, to me it seems it's not even that level of dreaming to be thinking about

reducing that demand in usage electrification is probably the most important component in the survey we saw that cost was a huge reason people aren't doing it and so is there anything we can do to reduce costs and make it more financially feasible is probably the biggest things not just local but state federal government can do and I know there's already a lot that they're already doing but anyway I just maybe I'm missing something but again it seems like to me that there are opportunities maybe more mid long term of

What could the utility do as a partner with LEAP to promote and incentivize electrification or community solar?

And I know that's not a short-term thing, and maybe the utility is not an avenue to do that kind of work by any means, but it just still, to me, seems, in my mind, like the direction it seems like we need to go to reach the climate goals.

I like to, I like how you summarized all of that very nicely.

Thank you.

But there's two things that I would like to see in addition to what's been mentioned already.

One is I would like to kind of, I don't know if it's all that gray or it might be pretty black and white about what the legal status is of us being able to fully decommission and if that's going to be a long-term process that's going to involve some legislative

Action to add that to our potential agenda.

And then something I've mentioned before is a city newsletter and having those rebates

Because in the absence of being able to actively kind of turn things off, we have to go with getting people to make that choice on their own.

And so how do we market that?

How do we get the word out?

How do we tell people about the rebates beyond what you already do?

One of the things that I would like to see the city do is have a newsletter that goes out to anyone who's signed up for it.

Hopefully everyone in the city this is not your concern, but I'm just giving you some background here and It would include things like that so that it's not up specifically to the utility to send a postcard, but it's something in email that can go out Weekly bi-weekly To everyone in the community without having to postage or

or, you know, it gets lost in people's stack of, you know, other mail.

Yeah, and I will add also one of the initiatives that we've been thinking about and talking with partners about

is establishing a resource hub for residents and businesses to be connected with and be helped with accessing various incentives, whether they be local utility provided, state provided, federal provided, but with a lot of the IRA incentives, we know that people are going to need help getting

Access to them and so that could be another place where it's like a clearinghouse with a Navigator or a coach or a human that helps people figure out like I didn't audit whether it's an easy self audit or whether it's an audit by another audit partner These are my opportunities now.

How do I get to those things and so?

And just to let you know, we do a utility e-newsletter.

It's people that have signed up for the automatic billing and the paperless.

And we have 10,000 subscribers.

And I think it's about a 65% open rate.

And we regularly put out these rebates.

That's great.

And we do it once.

This initially came up when we were learning about people who were signed up for paperless tax payments.

And there were three different systems you had to sign up for if you wanted it for all three.

And so I started thinking about how do we get all of that information in one place for people.

So that same kind of thing is like, the tax people are doing that, you're doing that.

Someone else, some other department is doing that when we could do it as a cohesive.

People who are not wealthy is a great idea, but I've found just looking at neighborhood listservs and so on, a lot of folks are asking questions like, you know, how do I get solar panels?

Where can I, you know, where can I get, you know, when I talk, for example, I mentioned about geothermal, some folks in the Greenbrier listserv were asking, you know, is that a possibility even?

and all of the different things that we have, the technologies that are out there, it would be great if somebody could come up with a buyer's guide.

Here's what you need to know.

To know whether this is even something worth talking about for you and your home.

What square footage would this kind of thing serve?

There are various things like that.

Because one of the fears that I know when I've done my own decision making in this respect is I don't know whether I'm about to get taken.

If it's a new technology and there's no sort of ground rule out there, you ought to be paying X number of dollars per square foot of your house.

Something like that.

I'm just wondering if there is any way that the city can suggest, just by getting together the Chamber of Commerce or whatever other actions there might be, if we're going to get serious about decarbonizing and more accurately, climate change,

D. Greenhouse gasification of the city.

It's going to have to involve people who have money, not just doing it with poor people.

And we're not doing a very good job at this point.

I'm not sure industry is doing a very good job at this point.

And when I mentioned only half facetiously, I wanted to look at

and Geothermal, next time my furnace needs to be replaced.

If everybody out there had some way of saying, hey, that's an option for me because I've got so many square feet in my backyard, we could run the pipes around or something like that.

I just think it would be great if we could, if we're really going to tackle the portion of our greenhouse gas emissions that is purely personal, purely private.

It's going to have to involve that kind of effort as well.

I love the proposed actions you've got here.

Any other questions or comments?

Thank you.