Opening talks indicate a daunting path forward for potential gas phaseout

In a quiet room of Richmond’s Main Library, neither a Venn diagram nor a whiteboard were enough to get nearly a dozen members of the city’s utilities commission and its Department of Public Utilities on the same page. 

“Are we working towards the same goal?” asked Commissioner Andrew Grigsby toward the end of a 90-minute meeting devoted to what Chair Kevin Cianfarini acknowledged was a “difficult and uncomfortable” subject to tackle: how a city that provides natural gas to much of the region and relies on that business to prop up its budget could phase out the utility that supplies that service.

“I don’t even know what you would do,” said Dan Rifenburgh, director of Richmond Gas Works, at one point while contemplating that possibility. “Run nitrogen lines?” 

While civil, Thursday’s conversation by a subcommittee of the Public Utilities and Services Commission exposed many of the tensions that underlie a 2021 climate resolution passed by Richmond’s City Council declaring that “the continued operation of the City’s gas utility is an obstacle to the City’s goal of Net-Zero emissions.” Among other pledges, Council committed to working with the city administration to craft “an equitable plan to phase out reliance on gas.” 

That won’t be easy. Richmond has been operating its gas utility since 1851 and currently provides service to about 121,000 residential, commercial and industrial customers in not only the city but Henrico, Chesterfield and Hanover counties. Richmond’s charter calls for DPU to run a gas utility, and state law prohibits it from discontinuing all service without three years’ notice and attempts to negotiate its sale. 

“As it’s currently structured, I’m obligated to maintain it,” DPU Director Scott Morris told the subcommittee. Furthermore, he indicated, even if the city chose to wind down its gas service to its own residents, DPU would still be obligated to provide gas to customers outside of the city boundaries. 

Despite Council’s pledge and commitments in other city plans to significantly reduce Richmond’s greenhouse gas emissions by 2050, DPU has shown little interest in shuttering one of its own services. Rifenburgh on Thursday said the proposal was like “pulling the rug out from under ourselves.” 

“We’re not going to do that,” he said. 

Still, he acknowledged, “if it comes top-down, we’ll do it. If the mayor says ‘This is what you have to do,’ then I’ll do it.” 

The department’s outlook caused some evident frustration among members of the commission, which has been charged with “providing advice on how the City may facilitate a transition of the gas utility in accordance” with the 2021 resolution and the master plan. Grigsby in particular repeatedly emphasized the need for DPU to “partner” with the commission in that work. 

“What you’re hinting at, what you really want, which I think is a fair and reasonable request, is to want DPU to be an active, kind of bought-in partner,” said Commissioner Kajsa Foskey at one point. “It sounds like that can’t or won’t be the case.” 

A difficult path forward

Willingness isn’t the only hurdle the commission will have to clear in providing recommendations to City Council, a task likely to take more than a year. 

It will also have to grapple with a long list of considerations, ranging from potential retraining and reassignment of Gas Works employees to replacement of the millions of dollars in payments the utility makes to the general fund annually, the potential impacts that curtailing future gas hookups could have on the city’s attractiveness to business and the fate of the extensive utility assets that taxpayers have funded over the years. 

One possibility floated Thursday was for the city to hire a consultant to analyze the challenges that exist and the options Richmond might have for dealing with them. 

Charlottesville, which along with Richmond and Danville is one of just three local governments in Virginia to operate a gas utility, has taken that path. In 2023, the city hired consultancy Black & Veatch to produce a report on “opportunities to decarbonize the existing gas system and assess the associated cost, impact on customer gas rates, and emissions impacts.” That study, released this January, offered an array of potential strategies, including the use of green hydrogen or renewable natural gas and the use of carbon credits. All came with hefty price tags that could see monthly gas bills more than triple by 2050. 

“I think it'll probably take a mixture of everything realistically, and also considering how do you match climate goals along with affordability concerns,” said Foskey. “That's ultimately still a unique problem.”

It’s an especially pressing one in Richmond, where about one in five residents live on incomes below the federal poverty line. Officials have repeatedly asked the state for financial help with required fixes to the city’s combined sewer overflow system to keep residents’ wastewater utility bills from rising to unsustainable levels. 

At the same time, addressing climate change remains a priority for many Richmonders, who see its signs in more frequent and intense flooding and soaring summer temperatures that fuel heat islands in concrete-heavy neighborhoods. 

“There's a history here of state and city policy, in resolutions, in the ordinances and in the master plan, that this is where we want to go,” said Grigsby. “We’ve said we want to phase out fossil fuels, and this is one of them.”

How to do that is likely to provoke a range of opinions.

“Most of the general public probably doesn't know about the resolution” to transition away from the gas utility, said Commissioner Joe Lerch. “I think it's really important to find out what do the customers in the general public think?” 

If Richmond were to move forward with winding down its gas utility, that public input would become mandatory. The city’s charter currently mandates that DPU “shall be responsible” for a gas utility and requires that a majority of voters approve any sale or lease of the utility in a referendum. 

“Shall means that you have to. That’s not a may. May means you can if you want to,” said Assistant City Attorney Sophie Koziol. Phasing out the gas utility “would trigger, first of all, a charter change, but also there are quite a few different references throughout the charter and city code and state code, for that matter, that would need to be amended.” 

State law also lays out extensive requirements for how a municipal gas utility can discontinue its services. Besides providing “at least three years’ notice” of its intent, the utility is required to spend two years attempting to negotiate the sale of its facilities and rights “such that service to its customers remains uninterrupted.” 

“All of these things will have significant ramifications within the city,” said Koziol. 

The state law was passed by the General Assembly in 2022, months after Richmond’s City Council passed the non-binding resolution. The legislation initially would have forbid local governments from banning natural gas but was later modified to impose extensive notice and sale requirements. While Richmond took no official position on the law, emails obtained by The Virginia Mercury at the time showed lobbyists for the city were receptive to it (“We like the bill but want some amendments,” wrote one) but wanted to ensure it didn’t block Richmond’s ability to potentially convert its system to a “natural gas service authority” in the future.   

With so many constraints, Grigsby urged the commission to begin working on the problem now.

“No one's saying it happens tomorrow. No one's saying the city cuts people off and sells off” the system, he said. “I'm saying, are we setting ourselves a pathway whereby we're working towards rather than away from the city's clearly stated goals?”  

Contact Reporter Sarah Vogelsong at svogelsong@richmonder.org