Unlikely Hero in New York’s Historic Energy Transition Offers Lessons for Today, Says Professor

When University of Virginia School of Law professor Alison Gocke delved into how New York rapidly transitioned its energy infrastructure in the mid-20th century, she was surprised by a state commission’s powerful reach. The New York Public Service Commission encouraged the replacement of coal with natural gas to combat the city’s air pollution, and also influenced the approval of interstate gas pipelines to ensure the conversion’s success.

In the Yale Law Journal article “Public Utility’s Potential,” Gocke argues that New York’s example highlights the pivotal role state public utility commissions can play in today’s clean-energy transition.

Gocke directs the Program in Law, Communities and the Environment (PLACE) and teaches courses on climate change, energy regulation and public utility regulation at the Law School. She recently shared insights from her new paper.

What inspired your interest in this topic?

This particular article was inspired by some of my prior work on the history of the Federal Energy Regulatory Commission’s approval of interstate natural gas pipeline under the Natural Gas Act. FERC’s authority to approve interstate natural gas pipelines is and always has been politically contentious. There have always been political interests that want access to natural gas, and those who oppose it, although the groups involved and the reasons for their support/opposition have changed over time. Under the Natural Gas Act — specifically, Section 7 — it falls to FERC to reconcile these competing interests under its power to determine whether a pipeline is required by the “public convenience and necessity.”

I was surprised to find in my research that one of the most vocal supporters of interstate natural gas pipelines in the period right after World War II was the New York Public Service Commission, the state’s public utility commission. The New York PSC was intervening constantly in FERC’s Section 7 proceedings requesting that the federal regulator approve the construction of a pipeline that would bring natural gas into New York City. And it was making these arguments on the ground that natural gas was a “cleaner-burning fuel” than other options at the time, which the New York PSC argued the city needed to address a serious air pollution problem.

I was intrigued by these arguments made by the New York PSC. For one thing, there is a kind of conventional wisdom that energy regulators like FERC and state public utility commissions aren’t concerned with environmental problems like air pollution. There’s a sense that those issues are supposed to fall to other agencies. But here I was, finding in these records that the New York PSC was intervening in FERC’s proceedings precisely because it was concerned about air pollution. Also, I was curious about what was going on in New York at this time that led the New York PSC to be playing such a remarkable and active role in the federal proceedings.

How did you pursue that idea? What did you find?

This led me to look into the historical archive of the New York PSC’s regulatory proceedings in the 1940s and 1950s. There I found a truly surprising story: At this time, New York City suffered from a serious air pollution problem. Most of this pollution came from coal, which New York relied on as its primary fuel source. Before World War II, the city relied heavily on what was called “manufactured gas,” which was essentially gasified coal, to heat its buildings, run a variety of appliances and to supply fuel for cooking. Not surprisingly, burning coal created a significant amount of soot pollution. So the New York PSC, led by the chairman, Milo Maltbie, took it upon itself to oversee a full-scale transition of the city’s energy infrastructure during this time. The PSC decided that the city should transition to natural gas to reduce air pollution from coal-burning, and then coerced and cajoled the city’s utilities to get them to transition their facilities over to natural gas. This included utility employees going house by house in New York City to transition people’s appliances so that they could use natural gas rather than coal. The city underwent this transition in an approximately 10-year period, and it did so entirely through the New York PSC’s regulatory apparatus. There was no significant legislative involvement.

This was a fascinating story for me, not just because it showed that public utility commissions have historically been concerned about environmental issues, and so the conventional wisdom is wrong on that point, but also that public utility commissions and public utility regulation can be effective tools for overseeing an energy transition. One of the biggest challenges our energy systems currently face is how to manage a transition of our energy systems from one that relies on fossil fuels to one that is dominated by renewable and zero-emission resources. This is necessary both to mitigate climate change and to make our energy infrastructure more resilient to the effects of climate change. I don’t think anyone conceived of public utility regulation as a legal model that is particularly effective at managing significant transitions; but that is what I found in the records of the New York PSC. This paper examines how the New York PSC was able to implement this transition historically, and what lessons that might hold for today.  

How can state public utility commissions play a role in facilitating the clean-energy transition?

State public utility commissions have a significant role to play in facilitating a clean-energy transition. Given the nature of public utility regulation, they are involved in effectively every important decision a utility makes, ranging from what kind of resource the utility is going to rely on to supply energy to consumers to how much a utility is permitted to charge consumers for that resource. This is true even as we have developed an increasingly integrated and federalized system of energy regulation; state public utility commissions still have exclusive authority over many parts of our energy regulation.

In the New York example that I discuss in this piece, I found that state public utility commissions could be doing much more to support this transition. They could be advocating for their state’s interest in decreasing air pollution in proceedings that occur at the federal and regional level, like the New York PSC did for interstate natural gas pipelines. They could be pushing utilities to secure access to different resources. They could be calculating rates that help utilities manage stranded assets and ensure that consumers don’t immediately take on the full costs of the transition. They could be thinking about how to manage reliability issues as different resources come online and drop off the grid. There is a lot more potential for state public utility commissions to take an active role in facilitating transitions, more so than I think even most scholars and practitioners in the energy field are aware of. I was amazed, as I circulated this paper to colleagues and lawyers in the field, how many people were shocked to hear about this story and understand the possibilities inherent within public utility regulation.

What are some of the underlying political dynamics hindering such commissions’ involvement?

Every state public utility commission is different. But we should remember that each of them, although they are highly technical regulatory agencies, are also often political bodies. Depending on the state, commissioners are either elected directly by the people or appointed by the governor, often with input from other political bodies like the state legislature.

When utility commissioners are elected, they will often directly state their politics: For instance, in Alabama, some of the current commissioners have campaigned on platforms that question the science behind climate change and the need to engage in an energy transition at all. When commissioners are appointed, they can get caught up in the broader political landscape in the state: For example, if a state has a governor who supports the clean-energy transition but a legislature that is opposed to it or more wary of it, commissioners tend to be less interested in using their existing regulatory authorities to address climate change. We’ve seen this in places like Pennsylvania, where the public utility commission has been reluctant to embrace arguments that it ought to consider the effects of climate change on the utilities it regulates even when those effects are increasingly apparent.

How could it be beneficial to eliminate the traditional separation of energy and environmental law?

Energy and environmental law have always been intimately connected, as I argue in this piece. But I think some people in the energy field — practitioners, regulators — and in academia can think about these two areas as separate. Climate change makes that segmentation virtually impossible. Energy production and provisioning is one of the biggest sources of greenhouse gases; the extreme weather events of climate change also put increasing strain on our energy infrastructure. There’s no way to engage in energy regulation today without thinking about climate change, and, similarly, there’s no way to engage in environmental law today without thinking about energy regulation. I argue in this piece that the segmentation between these two fields is not essential to either of them or their doctrinal underpinnings, and so we need to move past that artificial block if we want to take seriously the challenges that we face in ensuring safe, adequate and reliable energy for everyone today.

What are some potential legal challenges to using energy law as a tool to address climate change?

There’s the smaller challenge, which I rebut in this piece, of energy regulators claiming that climate change falls outside of the things they are supposed to consider in energy regulation. That’s that false energy/environmental law divide I discuss. As I show, I don’t think this divide exists doctrinally, and so the reluctance of some public utility commissions to recognize their ability to address climate change under existing law is likely due to other factors like the political valence of climate change in their state.

I think more seriously, the legal challenges of using energy law to address climate change rest in both the immensity of the challenge and the complexity of our current system. In the paper, I describe a successful energy transition that New York City underwent in the 1940s and 1950s. I think we can learn a lot from that transition. But the kind of energy transition we are talking about today would be one on a scope and scale that we have never really seen before. I think using energy law to address that is going to require a concerted effort on the part of everyone involved, and probably some new legal authorities, particularly on the transmission front, to ensure that this happens on the rapid timescale needed to address climate change.

Related to that point, when I use the phrase “energy law,” that makes it sound like there is a single, coherent regulatory framework here. But energy law as a governance matter is incredibly fragmented and overlapping: there are 50 different state public utility commissions, plus FERC, plus a variety of nongovernmental, regional bodies that control our energy systems, some of them with exclusive jurisdiction over their own discrete part of our energy grids. Coordinating all of these entities and getting them all on the same page is a challenge in and of itself. It’s doubly difficult because of the various interests at stake, with some entities more invested in the energy transition and some deeply opposed to it. It’s an immense coordination and policy challenge, one that I don’t think anyone should take lightly.

My hope, with this piece, is that we start to see the legal potential that already exists within energy law to facilitate that transition. And, with the potential of the law recognized, we start to surface some of the real challenges to the transition, which are not fundamentally doctrinal in nature, but rather political or policy-oriented.