How a utility company fought to keep two Colorado towns hooked on fossil fuels

Once a sleepy coal mining town, Crested Butte, Colo., has transformed itself into a year-round tourism magnet.

In the winter, the community of about 1,500 people tucked into the Rocky Mountains is a picturesque snow globe known as "the last great Colorado ski town." In the spring and summer, it advertises itself as the wildflower capital of Colorado, drawing visitors to admire fields of bluebonnets and columbines.

Now, Mayor Ian Billick fears that's all under threat — from climate change.

A biologist, Billick leads the Rocky Mountain Biological Laboratory, an alpine field research station located nearby. Snowpack has already declined across the region. The lab's research indicates that arid conditions and rising temperatures endanger iconic flower species.

That worry led Billick to run for office with climate at the center of his platform. After a decisive victory in 2021, he led a push to cut the town's largest source of climate-warming pollution: buildings. To address the problem, he proposed banning natural gas in new homes and businesses — one strategy experts say could reduce emissions and help the U.S. meet its climate goals.

"Based upon what I see as a field scientist, it made it clear that even if there was a lot of grief that came along with that decision, it was something that we absolutely needed to do," Billick said.

Most homes in Colorado are heated by natural gas, a fossil fuel made up primarily of the potent planet-warming gas methane. Billick's proposal required all-electric heating and cooking in new construction, to take advantage of low-carbon electricity generated from sources like wind and solar power. The same rationale has led places from New York State to Berkeley, Calif. to enact similar gas bans. Berkeley's ban has been blocked in court.

But the push put Billick on a collision course with Atmos Energy, the town's natural gas provider and the largest gas-only utility in the country.

In public hearings and private meetings, the Dallas-based company argued the city's plan would restrict consumer choice and further increase the community's high cost of living.

The utility further claimed that the newest generation of heat pumps — an efficient source of electric heating and cooling — couldn't handle the harsh mountain climate's cold temperatures and high elevation. Researchers and installers say that's not true.

Utility pressure on local governments

Across the country, local gas companies and their powerful trade association have fought similar all-electric building standards — and won. Those efforts have alarmed environmental advocates and utility watchdogs, who worry utilities are using customer dollars to block one of the best strategies to limit climate pollution from buildings, which are responsible for about 13% of U.S. greenhouse gas emissions.

Gas utilities see natural gas bans as a threat to their business, said David Pomerantz, the executive director of the Energy and Policy Institute, a climate advocacy and utility watchdog group.

"They are scared about building electrification, and they are lobbying aggressively," he said.

Colorado is now among a handful of states trying to limit that lobbying. Earlier this year, the state passed a new law banning utilities from charging customers for lobbying activities. Maine and Connecticut passed similar legislation, and other states are considering following suit. But it's unclear if that will stop gas companies from fighting local climate policies.

In Crested Butte, town councilors unanimously approved the natural gas ban in August 2022, making it the first such ban in Colorado. But similar policies have hit roadblocks in other communities.

One example is just 30 miles down the highway in Gunnison, a neighboring community with a population of about 6,500. Many of the city's residents commute to work in Crested Butte at service jobs connected to its nearby ski resort.

Shortly before Crested Butte approved its gas ban, Gunnison proposed a more modest plan to encourage a gradual transition away from fossil fuels. Rather than banning gas hookups in new construction, the city floated a building code update with an option to require wiring and plugs so future residents could easily switch from gas to electric appliances.

Atmos Energy quickly launched a multipronged campaign to defeat the policy.

CPR News and NPR reviewed communications between Atmos and local officials, which were obtained through a public records request by the Energy and Policy Institute, and first reported by High Country News.

In September 2022, the company sent an email to local residents warning the plan would make housing less affordable, restrict energy choices and even increase climate-warming emissions. The email told residents that natural gas could help the community meet a "low-carbon future" and encouraged them to attend an upcoming town meeting and voice their opinions on the proposed rule.

Local leaders later found problems with the utility's claims. In a follow-up email to local government officials, John Cattles, a Gunnison County sustainability official, noted Atmos had overestimated the local cost of electricity by roughly 50%. He further found the company seemed to base its price estimates on traditional electric resistance heaters, which are far less energy-efficient than the electric heat pumps currently being installed.

Kurtis Paradisa, a manager for public affairs for Atmos Energy, said an energy calculator created by GTI Energy, an industry-funded think tank, supported the company's estimates.

"We believe that a balanced energy approach that includes natural gas and preserves energy choice, rather than supporting specific fuels or technologies, will achieve goals of reducing emissions while maintaining energy reliability," Paradisa said in an email response to questions from CPR News.

Ken Fogle, an Atmos Energy executive, traveled to Gunnison to reiterate those claims in a public meeting in October 2022. The city council ended up following through on the company's recommendations and declined to adopt the pro-electrification portions of the proposed building code.

Diego Plata, the mayor of Gunnison, said the decision made sense given the limited capacity of the rural electrical grid that powers the city. At the same time, he thought Atmos' mass email to persuade customers went too far.

"It seemed like advocacy work, and for just somebody that's providing natural gas, I think that falls outside of what the company should be doing," Plata said.

The "built-in advantage" of utilities

Atmos Energy's efforts to limit climate-friendly building codes went beyond the local battles in Gunnison and Crested Butte. In Colorado, the company founded a "grassroots" group called Coloradans for Energy Access to help trade unions and smaller companies oppose similar building standards. It also unsuccessfully lobbied against state-level green building codes approved last year.

In other state legislatures, the industry has put its political muscle behind stopping those battles from breaking out in the first place. At least 24 states have passed laws that prevent towns, cities and counties from restricting gas use in buildings, according to an analysis by S&P Global published in June. A 2021 NPR investigation found that the American Gas Association, the industry's top trade group, has been actively involved in passing those state-level policies.

David Pomerantz with the Energy and Policy Institute said those activities deserve extra scrutiny because utilities operate as state-sanctioned monopolies. That means households have no choice but to pay the companies, even if they disagree with them. It also means Atmos and other utilities have a guaranteed source of income: customers' energy bills.

"Utilities have this built-in structural advantage most companies don't have. It allows them to supercharge their lobbying efforts with what's essentially public money, and that can make them into incredibly powerful political entities," Pomerantz said.

Federal rules already bar utilities from recovering the cost of political influence from customers. In practice, Pomerantz said companies can skirt those rules by recasting political work as "public education" or "working with stakeholders." Utilities can also pay trade associations to conduct lobbying on their behalf.

One example could be Atmos' recent work in Gunnison and Crested Butte. When contacted about those activities, Paradisa, one of the company's executives, reiterated that lobbying expenses "are not included in the rates we charge to customers" but didn't clarify how the company financed its recent work in both communities.

Pomerantz thinks it's clear customers covered the cost. That's because the company's 2022 Colorado lobbying report only lists a single state-level contract lobbyist, suggesting the company doesn't classify the work in Crested Butte and Gunnison as "lobbying." Atmos Energy officials did not respond to emails asking if the company classified its work in Crested Butte and Gunnison as lobbying.

Colorado State Senate President Steve Fenberg, a Democrat representing Boulder, sponsored the new state law meant to close those loopholes by clarifying exactly what constitutes prohibited "lobbying."

"We define lobbying relatively broadly to say if you are trying to influence the outcome of a regulation or a law, an ordinance, whether it's grassroots or direct, that's considered lobbying," Fenberg said.

While utilities can still engage in those activities, the law requires the company to cover the costs with profits bound for executives or shareholders, not direct charges on energy bills. It also includes provisions to require detailed annual lobbying disclosures to ensure compliance.

Billick, the mayor of Crested Butte, appreciates the new state rules but doubts they will stop utilities from opposing policies that could hurt their bottom line. He expects those fights will continue to play out at the local level. If communities want to pass all-electric standards, he expects they will have to do it over the objections of local utilities.

In his case, Billick said critical support came from installers who disputed Atmos' claim that heat pumps wouldn't work in cold weather and high altitudes. Multiple local builders told officials they'd already installed the machines without sticking residents with steep energy prices.

"Showing us what they had done, showing us that they were able to keep the costs down? It was very compelling," Billick said.

The results of Crested Butte's gas ban can already be seen at a construction site for a new workforce housing development. It lacks pipes and fittings to connect the 68 new housing units to the company's gas network, for gas furnaces and stoves.

Instead, future residents will stay warm using electric heat pumps and cook on electric induction ranges.

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