NGA Issue Brief: Distribution Systems in the Northeast: Continued Strong Demand KEY POINTS Natural gas use remains strong in the Northeast region. There are 12 million households using natural gas in the Northeast, according to U.S. EIA, representing over 50% of all households. Natural gas utilities in the region are leaders in efficiency program investments and in seeking low-carbon supply inputs. Natural gas has consistent benefits over other fuels: cost, supply, and lower emissions. Parts of the region face challenges in securing sufficient pipeline capacity given system constraints and siting difficulties. Natural Gas Provides Multiple Benefits and Remains the Primary Heating Source for the Majority of Homes in the Northeast Natural gas is the preferred choice for homeowners and businesses in the Northeast region. It is the leading home heating fuel in the U.S., fueling 46% of homes (followed by electricity at 41%). In the Northeast, natural gas fuels 54% of homes; some state shares include 73% of New Jersey homes, 58% of New York's, 54% of Rhode Island's, 52% of Massachusetts's, and 51% of Pennsylvania's [data source: U.S. Census Bureau, reflecting 2022 data, released September 2023]. Natural gas is also the leading single fuel for electric power generation throughout the region - about 50% of current electric generating capacity. This issue brief by the Northeast Gas Association (NGA) outlines some recent market developments on natural gas. Natural Gas is the Most Affordable Choice for Consumers The key variables in natural gas price formation generally include production levels, demand growth, the state of the economy, storage levels, weather, and alternate fuel prices. The outlook as of October 2023 is for natural gas commodity prices to be lower in the U.S. after quite volatile prices in the previous two years. 2021 saw higher commodity prices for all fuels, including natural gas, as supply chain and transport issues challenged the global delivery market. The trajectory for energy commodity prices in 2022 was even higher, as a result of inflation and the impact of Russia's war on Ukraine. On October 12, 2023, the U.S. EIA stated that "We expect wholesale natural gas prices to be 14% lower this winter than last winter, driven by higher U.S. natural gas production and robust natural gas inventories, leading to 21% lower retail natural gas prices for households." EIA also noted in October 2023, in its annual "Winter Fuels Outlook", that natural gas would be the lowest cost home heating energy source in the Northeast for the 2023/24 winter (see chart below on right). Environmental Benefits Natural gas has lower emissions than other heating fuels such as oil and propane, and is highly efficient and reliable. Natural gas efficiency program investments are significant in this region; 40% of all U.S. gas efficiency investments emanate from the nine Northeast states. Methane emissions in the region related to natural gas systems have been declining thanks to accelerated replacement of older system components. Another element of focus for the natural gas industry is utilizing new technology innovations to reduce or offset carbon intensity in supply. These include renewable natural gas (RNG), hydrogen, and carbon capture sequestration. Natural gas has been the leading fuel for power generation in recent decades, along with renewables, in the U.S. and the region. Air emissions from power plants have declined substantially in the Northeast in recent years, thanks in great part to the use of natural gas. Finally, natural gas remains a flexible energy source, suitable for heavy-duty transportation. What are the fuels used in home heating in the region? New England Mid-Atlantic Regional Demand Continues; Pipeline Constraints Present Market Challenges in Certain Parts of Region As noted above, natural gas remains the leading home heating fuel source regionally and nationally. In a March 2023 issues brief, U.S. EIA stated: "In 2020, 61% of U.S. households used natural gas for at least one energy end use, according to our 2020 Residential Energy Consumption Survey (RECS). Space heating, water heating, and cooking were the most common end uses; more than half of U.S. households used natural gas for space heating, closely followed by water heating." For the Northeast region, EIA reports that 57% of households use natural gas for space heating, 52% for water heating, and 49% for cooking; in all, 67% of Northeast households use natural gas for some form of end-use consumption. Natural gas utilities in the region continue to receive requests for service and are seeking to provide support where possible. Parts of the Northeast region have moratoria in place on adding new natural gas customers, as demand exceeds available pipeline system supply. Utilities are exploring all options, including a range of options to manage gas demand, such as energy efficiency, demand response programs, and electrification where practicable and supported by state regulations. The natural gas distribution companies continue to work every day to serve customer needs safely, reliably, cost-effectively, and in an environmentally responsible manner. Natural gas is the main heating fuel for over 50% of households in the 9-state Northeast region. For Further Information: NARUC Task Force Report on "Natural Gas Access and Expansion," Nov. 2017 U.S. EIA table of Northeast households by fuel type and average expenditures, Table WF01, released October 2023