Deploying Advanced Metering Infrastructure on the Natural Gas System: Regulatory Challenges and Opportunities
Recent increases in domestic natural gas use have been widely heralded as a vital step in the fight against climate change. Proponents often characterize natural gas as a “clean” fossil fuel, emphasizing that its combustion produces fewer greenhouse gas emissions than coal and oil, per unit of energy produced. These savings at the point of combustion may, however, be offset by emissions during natural gas production and transportation. Recognizing this, a number of analysts have expressed concern that continued use of natural gas will hamper efforts to address climate change, and called for reductions in gas use. This paper explores opportunities to promote more efficient natural gas use in the residential and commercial sectors, through deployment of advanced metering infrastructure (AMI), consisting of state-of-the-art gas meters connected to a wireless network that supports two-way communication. Such systems enable hourly or daily natural gas usage figures to be collected and transmitted to customers in real-time, thereby encouraging greater conservation and leading a reduction in greenhouse gas emissions. Additional emissions reductions may also occur due to improved management of the natural gas pipeline system. Despite these benefits, to date, AMI has not been widely deployed on the natural gas distribution system in the U.S. The reasons for this are poorly understood; previous research has focused exclusively on market barriers to deploying AMI and failed to consider other possible explanations for the slow rate of deployment. This is intended to fill that gap. The paper draws on recent experience with deployment in California, Maryland, and New York to assess how regulation affects incentives to invest in AMI.
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