April 2016, Vol. 243, No. 4
Q&A
Q&A: Wearing Many Hats No Problem for Ralph LaRossa
Ralph A. LaRossa is a busy man these days. His company, Public Service Electric & Gas Co. (PSE&G), is embarking on an extensive multi-year upgrading of its North Jersey and environs territory (see related article). His peers at the American Gas Association thought enough of his experience and abilities to name him their 2016 chairman.
It’s a job that demands effort and dedication, especially with natural gas looming ever larger as America’s fuel for the present and the future. If over 30 years of experience means anything, they can depend on LaRossa, who was named president and chief operating officer of New Jersey’s oldest and largest regulated gas and electric utility in 2006.
He must love working with utilities. On Jan. 1, 2014, LaRossa became chairman of the Board of PSEG Long Island, a subsidiary of PSE&G, which manages the electric transmission and distribution systems on Long Island and in the Rockaway and serves 1.1 million customers.
P&GJ: Ralph, how would you describe the state of the natural gas industry today, and in particular the gas distribution sector?
LaRossa: Natural gas is seeing remarkable growth. In particular, there is a movement happening at the state level to upgrade our natural gas infrastructure and extend natural gas service to more consumers. In 2014, natural gas utilities invested $9.7 billion in our nation’s distribution infrastructure, a 94% increase compared to the previous decade. This is part of the estimated $22 billion per year natural gas utilities spend on safety-related activities.
In a similar vein, we have seen an acceleration of infrastructure programs to replace pipelines that are no longer fit for service, and now such programs exist in 39 states and the District of Columbia. Throughout the natural gas industry, we are using technology to continue to make our operations safer and more efficient. This is reflected in the increased prevalence of natural gas replacement and expansion programs in the U.S.
P&GJ: What is the industry doing this year in terms of improving public and worker safety?
LaRossa: The safety of customers and communities is the top priority for America’s natural gas utilities. Our focus every day is ensuring that we keep the gas flowing safely and reliably to the more than 177 million Americans that our local distribution companies (LDCs) serve. The American Gas Association (AGA) and its member companies are committed to promoting a positive safety culture among their employees throughout the natural gas distribution industry. All employees, as well as contractors and suppliers providing services to AGA members, are expected to place the highest priority on employee, customer, public and pipeline safety.
Furthermore, AGA members are advancing the safety of the industry through a number of voluntary actions, including the AGA Peer Review Program, launched in 2015. This voluntary peer-to-peer safety and operational practices review program allows participants to receive reviews from their peers, share leading practices and identify opportunities to better serve customers and their communities.
Last month, AGA’s Board of Directors approved an update to its “Commitment to Enhancing Safety.” This outlines the industry’s commitment to proactively collaborate with key stakeholders and members of the public to continue to improve the industry’s longstanding record of providing natural gas service safely and effectively. Excavation damages also remain a huge concern. As an industry we have worked hard to promote the use of 811 and other programs to help avoid these types of preventable incidents.
P&GJ: Is the aging workforce still a big concern for utilities and what are some of the ways industry is dealing with this?
LaRossa: This is an opportunity – both for our companies and for millions of young people who can make a life for themselves with a utility job. I like to speak to young audiences on the bright future of the industry. A diverse and motivated workforce is the key to continued success in the energy sector and that is something we need to talk more about to help younger generations become more engaged. We have an abundance of natural gas, and our infrastructure is built to be safe and reliable for generations. That stability is not only helping to meet our national energy goals, but providing good, stable jobs across the country.
P&GJ: What are your leading priorities as chairman?
LaRossa: I firmly believe our future depends on having an engaged workforce in which everyone feels valued and respected for their experiences, values and perspectives. As AGA’s 2016 Chairman, I am pleased to have the opportunity to tell this story. As a clean energy source, natural gas will provide another generation with the same opportunities I have had in my career, spanning over 30 years at PSE&G. From welding pipes, to managing crews in the field and working in the office, this industry has good, well-paying jobs. A dynamic, diverse and inclusive workforce is out there waiting to connect with this industry and a career they can be proud of. Natural gas works. It is good for our nation, good for our communities and good for our workforce. I look forward to carrying that message in 2016.
P&GJ: Is the low-price environment and the move away from coal inducing more customers to switch to natural gas?
LaRossa: The affordable price of natural gas brought on by our domestic abundance has led to an increase in the number of homes and businesses seeking access to this energy source and the benefits it provides. As a result, more Americans are using natural gas today than ever before and the numbers continue to increase. Over the past four years, low domestic natural gas prices led to savings of almost $69 billion for residential natural gas customers. Households that use natural gas for heating, cooking and clothes drying spend on average $840 less per year than homes using electricity for those appliances. Millions of Americans are seeing these benefits every day which is why it is becoming the choice of more consumers.
P&GJ: How is the increased focus on pipeline integrity mandates affecting utilities? Are they having a difficult time complying?
LaRossa: The U.S. Senate is considering passage of the Securing America’s Energy: Protecting our Infrastructure, Pipelines and Enhancing Safety Act (SAFE PIPES Act.) This legislation will help ensure the safety of America’s pipeline network by reauthorizing the Pipeline Hazardous Materials Safety Administration (PHMSA) through 2019. The safety of our nation’s 2.5 million miles of natural gas pipelines is a collaborative effort between industry, federal and local regulators. The SAFE PIPES Act acknowledges the incredible progress made through the programs set forth in the 2006 and 2011 pipeline safety legislation and gives regulators the authority they need to continue to enhance the safety of our nation’s natural gas pipelines. Safety is a core value for natural gas utilities and I applaud the efforts of the industry to continue improving upon the delivery of natural gas to homes and businesses across the nation.
P&GJ: What progress are utilities making in replacing pipelines? Have low interest rates helped utilities borrow the money needed for this work?
LaRossa: The safety initiatives of local distribution companies are rooted in our integrity management programs which involve constant monitoring, assessment of risk and proactive steps to address those risks. A cornerstone of our mission is to upgrade and replace pipes that are no longer fit for service, which are being replaced with ones made from more modern materials. While all natural gas utilities upgrade and modernize their infrastructure using risk-based integrity management programs, 39 states and the District of Columbia now have specific rate mechanisms that foster accelerated replacement of pipelines. Natural gas utilities are consistently working to install modern plastic pipes and pipes with cathodic protection, both connecting new customers and upgrading existing pipeline infrastructure. In fact, since 1990, we have added nearly 600,000 miles of distribution mains and service lines to serve over 17 million new customers, an increase of 32%.
P&GJ: Where are the best prospects for natural gas growth over the next few years from a customer base and geographically?
LaRossa: Because of its value to customers and our economy, more people want natural gas. Every American should have access to the benefits of natural gas, and that means getting gas to unserved areas and adding capacity to underserved areas. At PSE&G, our customers benefit greatly from several transmission lines in the area bringing plentiful and affordable gas from shale plays in Pennsylvania. We are seeing states recognize the intrinsic economic benefits of natural gas and looking to expand their infrastructure as a way of increasing opportunity, giving more citizens and businesses access to this domestic fuel source. Thirty-seven states have adopted or are considering innovative pipeline expansion proposals to get gas to communities that don’t yet have it – a number that continues to increase.
P&GJ: What effects has the mild winter had on the utility business?
LaRossa: The direct use of natural gas continues to be the most affordable energy option for home heating and offers lower greenhouse gas emissions than other home energy sources. Abundant supplies, reasonable temperatures and a moderate increase in total U.S. demand have resulted in lower residential natural gas bills. Recently, PSE&G was approved by the New Jersey Board of Public Utilities for a $905 million plan to replace up to 510 miles of gas mains and 38,000 service lines over a three-year period. Since 2009, residential gas heating bills are down 47% in PSE&G’s territory because of the lower commodity cost. Now is the time to accelerate this work.
In addition, with continuing warmer than normal conditions, the U.S. Energy Information Agency now expects 2015-16 winter bills to be 17% lower than last year. Nationwide, energy bills may be the lowest in the past decade on average – this would allow natural gas to continue to be the lowest-cost energy option for energy consumers. America’s natural gas utilities are using this opportunity to continue to improve our nation’s natural gas infrastructure, and they are working with local regulators to develop innovative models for making these capital investments possible.
P&GJ: Do you foresee a potential shortage of gas as 1) electric generators move from coal to gas, 2) LNG exports begin and 3) new pipeline projects are delayed?
LaRossa: We now have over 2,000 Tcf of potential gas resources in this country and are producing natural gas at historic levels. That is enough natural gas to meet America’s diverse energy needs for over 100 years. I have confidence in America’s natural gas resource base and its ability to satisfy existing demand and new markets for natural gas at competitive prices for many years to come. With the abundance of supply, along with the projections of demand, we do not believe that U.S. exports of natural gas will have a material impact on core LDC customers for the foreseeable future.
P&GJ: Reports suggest the oil and gas industry is in its worst “bust” in 45 years, with no quick end in sight. Do you expect to see a rollover effect into the LDC sector as perhaps transmission companies delay pipeline projects?
LaRossa: There is no doubt we have substantial natural gas resources to meet our country’s energy needs. But as cost and environmental desires move more businesses and electric-generating plants to use natural gas, we need to be realistic about the infrastructure needs that go along with that. During times of extreme cold in areas of the country without sufficient infrastructure, there can be competing demands for pipeline capacity.
Natural gas utilities reserve space to ensure the needs of their customers are met, but during times of high demand, power generators may face challenges in meeting their needs. Infrastructure investment to meet the needs of the increasing use of natural gas for power generation will help ease this pressure, but without that, we will continue to see these types of strains on the system.
P&GJ: What are the greatest challenges facing the nation’s LDCs today, and do they differ from the past few years?
LaRossa: The natural gas industry is in a time of significant transition. As our industry works on the next generation of energy services for homes and businesses, we are also working together to train and recruit a new generation of energy workers. LDCs can’t look the way utility companies did 50 years ago. We have a different customer base and we need to reflect the communities we’re serving. At PSE&G, we remain vigilant and continue to focus on hiring individuals with diverse backgrounds and experience to best support the company and serve customers more effectively.
P&GJ: Finally, how did you get into the business?
LaRossa: Growing up in Rutherford, NJ, I commuted to the Stevens Institute of Technology in Hoboken. On the last day of recruitment, I interviewed with PSE&G and knew it was a good fit. I was hired as an associate engineer in the gas department in 1985. After about eight years, I was asked to be a project manager for the company’s first mobile dispatch work management system for distribution crews, a short-term assignment that exposed me to both information technology and the electric side of the business.
I had the good fortune of being exposed to so many different parts of the business and the extensive opportunities that exist, which was a big part of the reason I ended up staying with PSE&G for as long as I have. I continue to be inspired by the people in this industry and I look forward to bringing the benefits of this foundation fuel to every corner of our nation and every part of our communities.
By Jeff Share, Editor
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