The Unseen Competition in the Energy Transition

State and federal regulators have long treated the electric and gas utility sectors as distinct industries providing largely separate and non-competing energy services. However, greenhouse gas mitigation policies paired with improvements in electric cooking and heating technologies are increasingly putting the two sectors in direct competition. Rather than attempting to reactively manage ratepayer-funded competition between electric and gas utilities, both safe, just utility regulation and rapid, effective decarbonization require a more deliberate and proactive response. State Public Utility Commissions should begin to formally plan around a single, unified energy sector. Doing so can provide the basis for a coordinated, least-cost transition to zero-carbon utility services while minimizing stranded gas assets, transitional inequity, unsafe operating conditions, and ratepayer risk. In addition to integration and coordination of planning processes, Commissions should consider whether the emergence of a single energy utility sector calls for the consolidation of separate gas and electric utilities that serve the same territory, evaluate the feasibility of such mergers, and generate policy frameworks to ensure barriers to such consolidation, where appropriate, do not impede the energy transition. Managing a safe and affordable decrease in gas systems’ size will require thoughtful and sustained planning, whether it occurs in a context of competing gas and electric utilities or via integration of these services into a combined gas-electric utility. To achieve this, joint energy-sector planning and regulation should become the norm rather than the exception.