AGA’s Chris McGill Speaks Out On Challenges, Price Volatility And The Role Of LNG In The Nation’s Energy Future

Chris McGill is the Managing Director Policy Analysis at the American Gas Association (AGA), which represents 202 local energy companies that deliver natural gas throughout the United States.

There are more than 70 million residential, commercial and industrial natural gas customers in the U.S., of which 92% - more than 65 million customers - receive their gas from AGA members.
During his 21 years at the association, he has served as Manager Gas Supply, Director of Gas Supply and Statistics and Director of AGA’s Houston Office - in addition to his current position.
McGill’s work is in the assessment of future supplies of natural gas, domestic production, underground storage, key pipeline transportation issues, winter heating season planning and other related topics. He is an active spokesperson on many natural gas supply topics, representing local gas utility perspectives to the industry, regulators, legislators and the public. He has authored numerous articles, energy analyses and issue briefs on these subjects, as well as having created and managed statistical time-series data focused on key industry benchmarks.
In these especially challenging times, McGill had much to say during an interview with P&GJ.

P&GJ: What issues are proving the most challenging for AGA members today?
McGill: Right now it’s the economy and its impact on our customers. Higher unemployment and reduced household incomes often translate into an increase in late payments by customers and a rise in uncollectibles. Other areas like residential building are also taking a toll. Consider that over half of new homes choose natural gas – but if new homes aren’t being built, gas utilities are not adding new customers which means our residential market base is shrinking. And shrinking markets and lower thermostats result in decreased natural gas throughput. But, there have been a few silver linings. Federal funding for the Low Income Home Energy Assistance Program (LIHEAP) has been at record high levels for the last couple of years and is on track to be fully funded at $5.1 billion for this upcoming fiscal year. Even fully funded, however, the program dollars are insufficient to help all those who would qualify for assistance in paying their utility heating bills.

An increasing number of natural gas utilities have had “decoupled” utility rates put in place in the last few years. These rates break the link between a utility’s earnings and its customers’ natural gas consumption. This approach allows the utility to be on the customer’s side in helping them reduce their energy consumption and bills. Today, 31 natural gas utilities in 18 states serving more than 20 million residential customers (almost one third of U.S. residential customers) have decoupled rates in place. Along with helping the utility help the customer, decoupled rates tend to protect utilities from earnings declines brought about by reduced natural gas throughput.

Also, as consumers recognize the economic and environmental benefits of natural gas, there has been an increase in homeowners converting from oil heat to natural gas heat.

While all businesses have found it more difficult to obtain credit, utilities generally have excellent credit ratings that have helped them better weather today’s financial turmoil.