October 2021, Vol. 248, No. 10
Features
AGA Chair Anderson Continues Theme of People, Planet and Potential
By Jeff Awalt, Executive Editor
It seemed inevitable that American Gas Association (AGA) Chair David H. Anderson would land in some area of the energy industry after growing up in Fort Worth, Texas, and working part-time at a Permian Basin oilfield supply company while studying engineering at Texas Tech University in Lubbock. Despite shifting his studies to accounting and becoming a CPA, he still found his way into the industry. He started with accounting firms serving oil and gas clients and then joined electricity generator Texas Utilities (now TXU) in Dallas.
Today, Anderson serves as president and CEO of NW Natural, a Portland-based utility that began installing gas lamps on Portland’s streets and delivering manufactured gas to customers more than 160 years ago, before Oregon became a state.
Due to the impact of the pandemic last year, Anderson has had the rare experience of serving two consecutive terms as AGA chair. In addition to serving as chair and as a member of multiple committees and task forces, Anderson also is a past board member of the Northwest Gas Association (NGA) and past co-chair of the AGA Clean Energy Task Force. He also was appointed by Oregon Governor Kate Brown to serve on the state’s Global Warming Commission.
Anderson’s 30 years of industry experience and extensive involvement with both AGA and NGA provide him with a broad industry perspective, while his service on business, educational, charitable and public service boards provides important insights into the communities that NW Holdings and other AGA member companies serve.
P&GJ: How do you think your background in accounting and electric utilities prepared you for the CEO role at NW Natural?
Anderson: I think it gives me the ability to look at how the operations are performing and then what management actions are needed to create the results to better serve our customers. But, in my case, I also benefited from my background studying engineering and learning the operations of companies in different areas of the energy industry. I actually started my career at TXU in the internal audit department as they were building the [Glen Rose] nuclear power plant, making sure controls were in place and trying to find cost efficiencies wherever we could.
At the time I joined the company, TXU was the largest electric utility in the country and, as I went through the financial ranks, I gained experience not only on the electric side, but in the natural gas business as well. In 1996, TXU bought the LDC [local distribution company] business of Enserch Natural gas, which provided gas service to basically the same area that TXU served with electric power. So, I was part of the team that worked on that acquisition, and that’s when I first got real live exposure to a gas distribution company and what it does. By the time I was recruited up to NW Natural in 2004, I was serving as senior vice president and chief accounting officer of TXU, and I was also CFO of the gas subsidiary.
As a result, about half my career has been in the electric industry and the other half has been in the gas industry, which I think provides a good balance, especially with all the talk about climate change and related issues in the world right now.
P&GJ: How long have you been involved in AGA, and what was it that attracted you and kept you so interested and involved over the years?
Anderson: It’s kind of a funny story. When I was a TXU and we were working to integrate Enserch after completion of the sale, one of my tasks was to determine if certain expenses should continue or be eliminated. At TXU, we had been part of EEI – the Edison Electric Institute – for years, but we didn’t know enough about the gas side to decide whether we should continue to be part of AGA. So I went to Washington, D.C., around 1997 and met the AGA team. I came back and told the management team that we needed to stay with AGA, because I was impressed with the team and what they were doing on the Hill. It’s a very well-respected organization. So that was my first interaction with AGA.
Since joining NW Natural in 2004, I’ve been deeply involved at almost all levels. Now I’m on the board, and I’m lucky enough to be the chair. I’ve tried to do all I could to give back to the organization because I think they go above and beyond, and they’re usually ranked as one of the better organizations in D.C. every year. We’ve had great leaders at AGA, whether it’s Dave Parker, who is unfortunately no longer with us, the honorable Dave McCurdy, for quite a few years, and now Karen Harbert, who’s leading the organization as president and CEO. But the touchpoint goes a long way back when my task was to determine if we should be a part of this or not.
P&GJ: What are some of the biggest changes you’ve seen during your years in the industry?
Anderson: One of the biggest changes related to natural gas has been the shale revolution and the ability for folks to get gas out of shale rock, which was always considered unconventional gas. That unleashed a tremendous number of supplies for our country and made us semi-energy-independent, both on an oil and gas basis. That large supply of natural gas, which is a very clean-burning fuel, has really dropped consumer prices at the home dramatically. In fact, if you look at NW Natural, our customers today are paying less for their total bill than they were 15 years ago. A lot of that’s because of not only efficient operation by the management team, but because the cost of natural gas is so much lower than it was back then.
We’ve also seen that the natural gas distribution industry has very large programs in place to replace older pipe. A lot of companies out there, including my own, don’t have any bare steel or cast iron in their system anymore. So, despite being old and established operations, they’re still relatively new systems.
Last but not least – climate change. Over the last five to 10 years, there has been a huge focus on climate change in the role of natural gas and, importantly, the gas distribution companies in this country. I think that’s our newest challenge. There are 180 million Americans being served by the natural gas utility segment. It’s important to understand that their product preference is very high. For instance, in my part of the country, almost nine people out of 10 prefer to have natural gas as a fuel heat. In fact, they’ll actually pay $50,000 more for a house that has natural gas, heating and natural gas products in it than for one that doesn’t.
P&GJ: What is the outlook for LDCs, then, as the industry responds to climate change while consumers have a strong preference for gas?
Anderson: I think what is really exciting is that you’re going to see more decarbonized product going through the system in the form of renewable natural gas [RNG], which can be harnessed and cleaned up off wastewater facilities, landfills and dairies. That’s happening today. There are well over 130 projects in the United States that are producing renewable natural gas to pipeline-quality specs.
You’re also going to start hearing a lot more about hydrogen, which is interesting because we’re almost coming full circle back to where we started as a company (with manufactured gas). It can be blended in the current systems of natural gas utilities to certain levels. You can also use waste CO2 from power plants and industrial processes and combine it with hydrogen. So, the natural gas and the gas distribution infrastructure specifically can be part of a decarbonized world by changing over time what goes through our pipes.
P&GJ: On the topic of clean energy, how did you come to serve on the Oregon Global Warming Commission, and how might that experience be affecting your perspective on our industry?
Anderson: Yes, I was honored to be selected, along with other citizens, by Governor Kate Brown to serve on the Global Warming Commission. This commission provides reports to the legislature and the governor on ways to ensure Oregon is as climate conscious from a global warming perspective as possible. I applaud her for putting utilities on the commission. It’s not just about natural gas; it’s also about how the electric system will perform in a lower carbon future, and what do we do with transportation? It also tries to address environmental justice to make sure that as we go through an energy transition, the most vulnerable are not left behind in that journey.
PG&J: That reliability has certainly been tested with some of the weather extremes we’ve seen, and the industry always seems able to respond.
Anderson: I think gas utilities and the natural gas pipeline industry are always talking about reliability, because it’s core to what we do. A new word that’s very much being used after a lot of the winter events we’ve seen this year is resiliency. That includes the sad events that took place in my home state of Texas back in February with the very cold temperatures that affected a lot of the electricity sector. And by the way, the gas distribution sector actually did quite well. On February 15th, as a country, we had our second-largest throughput day for distribution companies in our history. If you combine February 14th and 15th, that two-day period was the largest send-out in gas utility history.
P&GJ: Do you have any key themes or issues that you’re specifically hoping to address this year as AGA chair, and how is that affected by your two-year term?
Anderson: Interestingly enough, my predecessor, Diane Leopold, from Dominion Energy and our next chair, Kim Green, of Southern Company and I all got together when Diane was becoming chair and decided it would be good to have a consistent theme for at least a period of three years. The theme we agreed on has three pedestals: Protect the people, Preserve the planet, and Picture the potential.
“Protect the people” basically means that, as an industry, we need to do all we can to leverage technology and involve best practices to keep the workforce and the communities we serve safe. That’s something we all seek to do, day in and day out, but it’s important to recognize that that needs to continue. “Preserve the planet” refers to reducing emissions, finding new efficiencies and securing natural gas’ rightful place as part of the clean energy future. Finally, “picture the potential” means really reimagining the industry for the future – innovating, cultivating the workforce and continuing to exceed customer expectations.
P&GJ: One of the responses to the falloff in energy demand during the pandemic was that many anti-fossil fuel advocates became emboldened by the idea of switching to renewables and never bringing those fuels back. As an LDC in Oregon, are you feeling more pressure now to diversify your fuel sources?
Anderson: I think there is a theme out there to electrify everything and then clean up the grid. I think many people don’t really understand the energy content of natural gas and how difficult it is to replace it. It’s one thing to have it as a bumper sticker. It’s another thing to make that electricity theme a reality. I also think that with the results in Texas and other parts of the country, it shows by putting all your eggs in one basket is maybe not the right thing to do for the population. I do believe there’s a way that as a country we can decarbonize our use. Natural gas is part of that. Renewable fuels are part of that.
When I started at TXU in the mid-80s, that’s when the first wind turbines were coming into place in West Texas as well as some of the first solar. We were trying to figure out what to do with that as an electric company. Well, one of the things we did not say at the time is, “Hey, let’s cut the wires and start over.” Instead, we said, let’s just kind of change how the kilowatts are produced to go over those wires. I think it’s time for people to stop saying, “Hey, let’s cut the pipes and start over.” If you’re really serious about decarbonization, it really has to be an all-of-the-above strategy.
P&GJ: Are you concerned about the difficulty getting approval for gas pipeline construction or projects being completed, particularly in terms of your ability as an LDC to secure enough supply to serve your customer base?
Anderson: I am worried about that, along with being able to construct large electricity transmission lines. I mean, this is not just a pipeline issue. Doing large infrastructure projects in this country a little bit differently in each region is very difficult to do. I’m a big fan of additional infrastructure in this country. Not only does it create GDP when you produce it, it continues to create GDP over a long period of time. So, it’s the gift that keeps on giving. I think the country desperately needs that, and I think we need to remove some of the barriers to permitting activities and processes, so it doesn’t take so long to build pipelines and transmission lines.
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