With new technologies and lower-cost renewables playing a larger role in the United States' energy mix, what are the challenges facing the natural gas industry as it works to modernize and expand its infrastructure and workforce? During today's OnPoint, Ralph LaRossa, chairman of the board at the American Gas Association and president and chief operating officer of PSE&G, discusses the safety and climate challenges facing his industry.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Ralph LaRossa, chairman of the board at the American Gas Association. Ralph is also president and COO of PSE&G in New Jersey. Ralph, thank you for joining me.
Ralph LaRossa: Thanks for having me, Monica.
Monica Trauzzi: Ralph, the conversation on natural gas has shifted pretty dramatically over the last few years with some heated debates now occurring over infrastructure. What do you believe are the biggest challenges facing your members on infrastructure?
Ralph LaRossa: I think it's the continuous need for us to prove the safety and reliability of the system. And I think we've done a really good job of that. It's not really spoken about a lot or talked to in many areas because with media the way it is today and so many different channels any incident that takes place is publicized very quickly and repeated.
But the major incidents in our industry are down over 40 percent over the last 10 years alone, and so we have done a really good job of replacing our facilities. We install replacement mains whenever we can in certain areas, and we've also extended our facilities as well. So we were actually operating a much safer system than we have in the past, and we just need to continue to tell that message.
Monica Trauzzi: So there are safety concerns. There are also climate concerns. Do you think that there should be a climate test whenever you're talking about building new infrastructure?
Ralph LaRossa: Well, I think that that's a conversation that some folks bring to the table, but we do need some source of energy. I know there's been a real challenge for the coal industry that's gone on and really we're not in competition with the renewables industry. If you look at it, we really complement each other and we're expanding both industries right now. So we don't see it necessarily as a need for a test, but we do need to see a reliability test and a resiliency test, and I think that's where the FERC and local agencies come into play.
Monica Trauzzi: It's a dynamic time for energy policy overall in the U.S. Certainly the rise of renewables has changed the conversation and fueled new questions among policymakers and consumers as well. Why is natural gas a better choice for fueling homes and businesses?
Ralph LaRossa: Well, it's a real simple equation. It's a direct-use conversation. When you look at natural gas and if you're in your home and were to convert electricity and the fuel source in an electric home, we're just a much cheaper and much more efficient fuel source for the heaters in your home, the water heaters in your home, and your ovens and your cooking. So it's very clear when you look at that.
In fact, I think if you look at the average home that was all natural gas and all electric, we'd be about $840 cheaper for that home in any given year.
Monica Trauzzi: But are you confident that you'll always stay less expensive?
Ralph LaRossa: Well, I think right now that's a function of the natural gas prices and our ability to source it at about $4 of MMBtu versus where we were in the past. So we're confident that we'll always have an advantage at some point with that difference that we have may shrink to some degree, but that when you step back and look at the advantages that we bring with that direct-use efficiency, it's going to be hard to beat us in the long term.
Monica Trauzzi: How many homes are heated with natural gas in the U.S., and what are your industry's projections for where that number will grow to or stay at?
Ralph LaRossa: Yeah. I think you really have to look at that. I don't know the number exactly on the USA basis, but I look at each of the different regions that are accessed to natural gas. I can talk specifically for our company in New Jersey. And we're at about 86 percent heating of homes in Jersey in our service territory, and we've grown about a percent a year, a little bit at a time, as folks continue to change over their oil furnaces.
But there's opportunities that are out there for us to continue to expand the system. The classic example for me is out on Long Island where we operate the electric system and National Grid has the gas system, but they still haven't been infiltrated the eastern shore of Long Island because we really haven't had the opportunity to build the pipelines out there.
So we're still burning oil to heat the homes to there, much higher costs and much different impact on the environment.
Monica Trauzzi: When you took over as chair earlier this year, you made workforce development a key mission. Where's the industry lacking on this?
Ralph LaRossa: So I think really we need to tell the story to the youth really that are out there and kids that are graduating today. There are good jobs in the gas industry. If you step back and look at your opportunities as you went to the workforce, someone that joins our company as an example, right out of high school, we'll train them to work in our gas distribution locations or actually go into homes and work on appliances. And they have an opportunity to make six figures within a couple years. And we'll provide all that training. And folks still to this day really think the only track for folks to take is the college side.
So I tell the story everywhere I go about when I sat down with my dad coming out of college and I said, "Well, I had couple offers. One in the steel industry, one in the natural gas industry." My dad worked in the garment industry, and we saw that industry leave the United States, and we sat back and said, "Well, geez, where's the right place to go?"
And looked at natural gas and what supplies looked like and I said, "That'll probably be OK for my career." Well, now we're sitting here with 100 years' worth of supply in natural gas and a continued growth plan. And we need to get that story out to the kids as they make their decisions about our industry.
Monica Trauzzi: So what are your plans for expanding the workforce?
Ralph LaRossa: So we're attacking out of multiple fronts. We're working with local schools and local colleges to continue to educate them about the opportunities. We're working with community colleges to build in some programs across the industry where we'll actually train people on utility degrees and they'll get a two-year degree and then join the local company on that front.
And we're also trying to really expand the conversation with the diverse work areas that we can. We still have not done as good a job as we can to look like the customers that we provide our service to, and I think that the more that we get the message out to diverse constituents, the better it's going to be to raise a good workforce in that area.
Monica Trauzzi: Very interesting conversation. Thank you for coming on the show. I appreciate it.
Ralph LaRossa: Thanks, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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