Regulatory commissions in a dozen states are considering an innovative conservation plan under which natural gas utilities would insulate the homes of their customers and add the cost to their monthly bills.
The end result, they say, would be cheaper than present bills because of the massive savings in natural gas and other scarec energy supplies.
If approved nationwide, the program would put local gas distributing utilities in the business of installing home insulation and furnace efficiency devices, which would result in an estimated annual savings in home heating costs of between $1 billion and $3 billion and would save more natural gas than Alaska's North slope is expected to produce through the 1980s.
Federal Energy Administration official William G. Rosenberg, who developed the plan during the past few months, said that if the conservation measures he is advocating are followed in all 34 million homes using gas heat, the nation could benefit as follows:
An annual savings of 1.2 trillion cubic feet of natural gas, which is about 12 per cent of the current interstate pipeline sales volume, and is equal to production from 39 nuclear power plants or 215 million barrels a year of imported oil.
Creation of an $8 billion investment program over seven years, generating 70,000 jobs a year.
A reduction in cutbacks of natural gas supplies to industry equal to new hookups for 6 million residential users.
Under the Rosenberg plan, which is not a formal policy of the FEA, local utilities such as Washington Gas Light Co. would install and pay for three conservation measures in gas-heated homes - ceiling insulation that meets the strictest federal standards, automatic thermostats that reduce temperatures by 5 to 7 degrees at night, and furnace effiociency modifications.
In a interview, Rosenberg said his proposed measures would cost about $400 for each under-insulated home and $175 for fully insulated houses. The cost of renovation would be less than the cost of extra gas purchases or suppliemental fuels, over a seven-year period, said Rosenberg, who is assistant administrator for energy resource development.
The $8 billion investment needed to launch the nationwide project would be treated by state regulatory agencies the same as long-term investments designed to produce new gas supplies. That would produce a cost for the new gas - "created" by conservation - that would be added to consumer rates.
After conducting surveys of current consumer costs for three utilities in New Jersey, Michigan and California, Rosenberg estimates that the cost of new gas "created" by conservation would be about $1.50 per thousand cubic feet compared with imported gas from Algeria at $2.80 per thousand cubic feet. The current price for gas flowing across state lines is $1.44 per thousand cubic feet.
Moreover, depite the added costs of insulation and new furnace devices, average monthly consumer bills would be decreased, according to the FEA assessments because less gas would be used.
Rosenberg said an analysis at Public Service Electric and Gas Co. in New Jersey projected a reduction in gas consumption of more than 33 per gas consumption of more than 33 per cent with the conservation program: only 44 per cent of the housing units in Newark have adequate insulation today, for example.
The annual gas heating bill for a fully insulated New jersey gas constomer today is $236, a cost projected to rise to $359 by 1985. The owner of an uninsulated home in the New Jersey area now pays $384 a year for gas and the bill would increase to $583 in 1985 without new conservation measures.
Rosenberg said that under his plan, the 1983 bills would average $283 a year for underinsulated homes, generally occupied by relatively poor people, that would represent a 51 per cent reduction in annual gas heating costs.
The reduction would be 21 per cent.
A great benefit of the proposal, Rosenberg said, is the aid to poor people in upgrading their home heating efficiency. He contended that it also is fair to homeowners who already have adequate insulation, because they will receive other devices to improve efficiency, their rates will be lower when all customers have cheaper gas and they are a "minority of the population."
Another reason to support the plan, Rosenberg argued, is that it can be done without federal subsidy.
'If investments to produce conservation gas are treated like other investments to produce or purchase gas supply, and utilities are allowed to earn competitive return on conservation investments, then the program can be financed privately," he stated.
In response to the Rosenberg plan, the Pennsylvania Public Utility Commission has directed its technical and legal staffs to draw up a formal plan that could be implemented as early as this summer. Commissions and gas utilities in New York, Massachusetts, California, Michigan and Illinois are either drawing up proposals to implement the Rosenberg plan or have scheduled hearings in the near future.
However, Sen. Edward W. Brooks (R-Mass.), who has specialized in housing legislation, said it would be a mistake to launch such a program aimed only at natural gas heating. Consumers of fuel oil and electric heat also should be brought under any such plan, Brooke said in a recent letter to Rosenberg. Unless a comparable proposal is made for other energy sources, Brooke said he would introduce legislation to prevent implementation of a federal policy to aid consumers of gas.