Deploying Advanced Metering Infrastructure on the Natural Gas System: Regulatory Challenges and Opportunities

Natural gas combustion and the consequential release of Carbon Dioxide and other greenhouse gases can have very damaging effects on the environment. Recognizing this, a number of analysts have expressed concern that continued use of natural gas will hamper efforts to address climate change, and called for reductions in gas use. This will require major changes in energy consumption patterns, particularly in the residential and commercial sectors, which currently use over one-quarter of all natural gas consumed in the U.S., primarily for heating and cooking.This paper considers whether and how new technologies can be used to promote more efficient natural gas use in the residential and commercial sectors. The focus is on advanced metering infrastructure (AMI), consisting of state-of-the-art meters capable of recording natural gas usage daily or hourly, and transmitting the data to customers in real-time via a wireless network. In addition to this, this paper draws on recent experience with AMI deployment in California, Maryland, and New York to assess how the regulation of local distribution company (LDC) rates affects incentives to invest in AMI.