306 

 Mr. DeFazio. Paul Hathaway. 



STATEMENT OF PAUL L. HATHAWAY 



Mr. Hathaway. Thank you, Mr. Chairman. I appreciate the op- 

 portunity to testify. I am Paul Hathaway, senior vice president of 

 Northwest Natural Gas Company. I've been 31 years in the natural 

 gas distribution business. I've been an officer of two combination 

 utilities, as well as my present company, San Diego Gas and Elec- 

 tric and Consolidated Edison of New York. I am a registered engi- 

 neer. 



In the interest of time, also, I will skip through pieces of my 

 written testimony and hit some highlights. The responses to your 

 specific questions to me are predicated on the premise that it's 

 more efficient to use natural gas directly for heating in homes and 

 business and industries than it is to use it indirectly to generate 

 electricity to do that job. 



Your first question asks what's the potential for cost-effective 

 electricity savings in the northwest region fi*om fuel switching to 

 natural gas. For many years, our region has been dominated by low 

 cost hydro power because of the low cost and electric energy is used 

 far more extensively in the northwest for heating and water heat- 

 ing than in other parts of the country. 



And because electricity has dominated the industry seen here for 

 so long, the market saturation of natural gas in the region is quite 

 low, something on the order of 35 percent, which means that there 

 is a large amount of electric space and water heating in the region. 



Much of that electric space and water heating is located in homes 

 and businesses that are near or already being served by natural 

 gas. The potential for shifting these existing electric customers to 

 natural gas represents a very large electric generating savings by 

 reducing demand on the electric system of the region. 



We've done a dozen or more studies in recent years that have 

 looked at the magnitude. The conclusion that we have reached as 

 we've looked at the issue ourselves in the gas industry is that 

 somewhere between a thousand and 1,600 megawatts, average 

 megawatts of electric generating capacity could be shifted — could 

 be saved by shifting residential space and water heating customers 

 from electricity to natural gas. There have been some studies that 

 have shown that the peak capacity savings could be as high as 

 6,000 megawatts. 



Fuel switching is a resource that's readily available. As an exam- 

 ple, on our own system. Northwest Natural Gas, we've got about 

 100,000 customers who use natural gas for space heating, but who 

 use electricity for water heating. 



Converting those water heating customers to natural gas could 

 be accomplished relatively inexpensively and rapidly. The 100,000 

 water heaters, we figure, represents about an average demand of 

 perhaps .56 kilowatts each, a total of 140 megawatts at peak use. 

 If those customers were completely reimbursed for conversion to 

 natural gas, the total cost to do that job would be something on the 

 order of $50 million. Fifty million dollars to serve a 140-megawatt 

 peak is a pretty reasonable cost for power purchase, about $350 per 

 kilowatt of an installed generating capacity. It's about a half to a 



