Power Play: How Southwest Gas beat back efforts by environmentalists to start moving Nevada away from natural gas
In early 2021, with the legislative session only a few weeks away, Scott Leedom, the director of public affairs for Southwest Gas, reached out to the city of Mesquite with two requests for Mayor Al Litman.
One was to speak at a virtual employee event extolling the benefits of natural gas, according to emails obtained by the Climate Investigations Center, a fossil fuel watchdog group. The second request was to review a draft letter that a pro-gas coalition of business and labor groups, organized by the company, was planning to send to Gov. Steve Sisolak.
Mesquite was no stranger to Nevada’s largest natural gas utility — in 2018, the state’s Public Utilities Commission authorized the company to expand service to the rural community, leading to the installation of 28 miles of natural gas pipeline serving hundreds of residential homes and businesses. Litman called it a “game-changer for Mesquite” at the time, and in an interview, he said natural gas was important for economic development. Companies wanted natural gas.
“We worked closely with them,” he said of the utility. “They’ve been a great partner to work with. To see it go the opposite direction before it really got underfoot, it’d be a disaster in our city.”
A final version of that letter, obtained through a public records request filed by The Nevada Independent, was finally sent to the Democratic governor on Feb. 21. It was signed by Litman, the mayor of Elko, six chambers of commerce, 17 trade groups and two unions (though one of the unions, IBEW Local 1245, said it was mistakenly included as a signatory).
Over six pages, the letter advocated for continued use of the fossil fuel, and raised concerns about Sisolak’s recently adopted climate strategy, which emphasized the need to plan for a transition away from natural gas to meet the state’s goal of net-zero emissions by 2050.
The letter, and the groundwork that went into crafting it, reflect the gas utility’s full-court press attempt to push back against legislation — and broader policy efforts by the Sisolak administration — aimed at transitioning from natural gas to electric appliances in buildings.
Their efforts, so far, have worked.
In late March, Assemblywoman Lesley Cohen (D-Henderson) introduced legislation (AB380), modeled after Sisolak’s climate strategy, requiring gas utilities to go through a more rigorous planning process before expanding their infrastructure. But the bill, backed by environmental groups, met a groundswell of opposition and skepticism from lawmakers in both parties. It failed to advance past a legislative committee deadline and died weeks after it was introduced.
The utility didn’t get everything it wanted. A bill proposed by Southwest Gas and carried by Senate Majority Leader Nicole Cannizzaro also died by that first committee deadline on April 11. The legislation (SB296) would have allowed the gas utility to replace thousands of miles of pipelines, a program that environmentalists said would cost billions and undermine the state’s efforts to address climate change.
Although Democratic lawmakers overwhelmingly approved a 2050 net-zero emissions goal two years ago, the two pieces of legislation — and the debates around them — show that tensions remain in the party (which controls both the legislative and executive branches) over how to best move forward on facilitating a transition toward decarbonization.
Those tensions were exploited by Southwest Gas, which entered the 2021 Legislature knowing it was in for a fight. Beyond solidifying rural support in Mesquite and Spring Creek, a community outside Elko, Southwest Gas upped campaign contributions, built an influential coalition with affiliated interest groups and doubled its lobbying team.
Natural gas interests also made public shows of charity to minority legislative caucuses during the COVID-19 pandemic, and helped orchestrate a well-coordinated media campaign defining AB380 as banning “natural gas appliances in homes and business” — a characterization that the bill’s drafters dispute.
Similar battles are playing out in statehouses across the country. As local governments have pledged to curb greenhouse gas emissions, utilities like Southwest Gas have lobbied state lawmakers to preempt those efforts. Last year, Arizona Gov. Doug Doucey signed legislation, backed by Southwest Gas, prohibiting local governments from banning gas in new buildings.
Sisolak’s office did not take a position on the legislative efforts, when asked by The Nevada Independent, and officials from his administration testified in neutral on the bill. But on Friday evening, Sisolak issued a press release with statements from Cannizzaro and Assembly Speaker Jason Frierson (D-Las Vegas) affirming the state’s commitment to transitioning away from fossil fuels.
“I appreciate the Nevada Legislature’s effort to kickstart the discussion on the issue and I believe further review by the Public Utilities Commission of Nevada would be appropriate to continue it,” Sisolak said. “This transition away from carbon is already starting, and it is critical that we take a deeper look and determine how we can protect hardworking families and businesses as it continues.”
For clean energy advocates, the failure to create a planning framework for transitioning away from natural gas marks a missed opportunity for the state to make good on its goals to lower emissions. But advocates and the utility agree on one thing: The issue is not going away.
“We're going to have to make these changes if we want to meet our goals that the state has already put out there,” Cohen said in an interview after the bill died. “If we're going to get to clean power and zero greenhouse gas emissions, we're going to have to do something.”
Legislation from the state’s climate plan
The legislation that would be introduced as AB380 made its public debut with an op-ed in The Nevada Independent on Feb. 9. Cohen, a soft-spoken Henderson Democrat in her fourth term in the Assembly, published the opinion piece arguing that an orderly transition away from natural gas would save ratepayers money and protect public health.
It outlined broad plans for what would eventually become AB380 — requiring the natural gas utility file plans every three years with the state’s Public Utilities Commission to “prove that their spending plans will keep the gas system affordable and safe in a future where we use more electricity and less gas for our heating and cooking needs.”
Lauded at the time by fellow legislative and other high-ranking Democrats, the proposal was largely taken from the Sisolak administration’s climate strategy, a high-level document outlining pathways to reduce statewide greenhouse gas emissions to net-zero by 2050. The legislation received backing from major environmental groups, including the Nevada Conservation League and Natural Resources Defense Council.
In one of its 17 core policies, the climate report calls for phasing out natural gas hookups in homes and businesses over the next three decades. To do so, the report calls on policymakers to plan for transition by scrutinizing new gas infrastructure, to consider requiring all-electric in new buildings and to give customers more choice to switch from gas to electric appliances.
“While Nevada’s electricity sector transitions from fossil fuels to zero-emissions renewables, the state must also transition from fossil-fuel combustion in homes and commercial buildings in the form of burning gas for cooking, hot water, and space heating,” the report states.
Such a shift would mark a departure from the state’s relationship with Southwest Gas, the investor-owned utility which has served Las Vegas and Southern Nevada since 1954. The state’s laws, environmental advocates argue, currently favor the use of natural gas appliances.
Although only a handful of municipalities (led by Berkeley, California) have taken the full step of instituting a ban on natural gas hookups and requiring electrification in new construction, many others are considering ways to plan for a future with less natural gas.
In the weeks after AB380 was introduced, environmental advocates said that acting now was necessary to avoid continued build-out of fossil fuel infrastructure, keeping the state reliant on natural gas and ratepayers on the hook for the bill.
“Responsible planning is making sure our gas utilities are spending ratepayer money wisely rather than spending customer money on construction projects that raise rates without being good ideas for the future,” said Dylan Sullivan, a senior scientist with the Natural Resources Defense Council.
“Right now, even the most well-intentioned gas utility has a financial incentive to continue with old practices because they get money...by putting pipes in the ground," he added.
The gas utility’s legislative push
At the same time environmental advocates were working on writing AB380, Southwest Gas was circulating its own legislative proposal to create a statutory pipeline replacement program.
The utility’s proposal, similar to legislation that it tried to pass in 2019, would have allowed Southwest Gas to replace about 6,000 miles of vintage steel and plastic pipe, Leedom said in an interview earlier this month.
The company and a federal regulator, Leedom said, had identified the pipe materials as facing safety issues in high heat and acidic soils. Leedom said a program, in statute, was necessary to “proactively remove” older pipelines and replace them with newer infrastructure.
To introduce its legislative proposal, Southwest Gas found one of the most powerful sponsors in the legislative building: the Senate majority leader. One day before Cohen introduced AB380, Cannizzaro introduced SB296, which included the utility’s pipeline replacement program.
In the 2020 election cycle, Southwest Gas contributed $7,000 directly to Cannizzaro and $22,500 to her leadership PAC, while not donating to her Republican opponent, April Becker.
“There's an important conversation about long-term planning for gas resources happening in the Assembly, and I'm looking forward to seeing how that turns out," Cannizzaro said in a statement after the bill was introduced. "We want to be sure that any action we take provides Nevadans with safe, reliable infrastructure and aligns (with) state climate goals."
For environmental advocates, the utility’s pipeline replacement proposal underscored the need to more closely watch how Southwest Gas spent ratepayer money on infrastructure. Where the utility saw a program to enhance safety, environmental groups saw a bill that allowed a utility to double-down on fossil fuel infrastructure with little oversight.
They said the utility should have the ability to fix leaky and unsafe pipes, but that it should be done on a case-by-case basis, considering the cost to customers. In December, Arizona’s elected utilities commission rejected a similar Southwest Gas proposal over concerns related to cost.
“It's hard to imagine that bill being a top priority in a legislative session that is focused on the economic hardship of the past year,” Sullivan said in March. “This isn't the right time for a $3.7 billion giveaway to Southwest Gas because customers can't afford to pick up the bill."
Leedom rejected arguments that the investment in new infrastructure was unnecessary.
“It’s not to harden the infrastructure,” he said. “It’s to address the safety concern, and it’s to enhance the safety and reliability to the benefit of our entire customer base.”
Both bills were the culmination of lobbying — the gas utility on one side and environmental groups on the other — that had been going on for months, and their fate foreshadows the tensions the state faces in implementing some elements of its climate strategy.
Framing a planning process as a ban
As state officials have looked at ways to meet Nevada’s 2050 climate goal, Southwest Gas has taken an active approach in working to influence the state’s policy efforts.
Before the Sisolak administration released the climate report in December, an inter-agency team working to draft the strategy held a listening session on “green buildings.” When the topic of natural gas came up, it became clear that the utility had no intention of sitting on the sidelines.
Leedom cast policies that move away from gas in buildings as “premature and problematic.” Two of the utility’s staunch defenders, AARP Nevada and the Latin Chamber of Commerce, also spoke out against such proposals, citing the outsized impact it could have on jobs, low-income ratepayers and seniors on fixed incomes.
The utility has argued that its infrastructure could be part of the solution, touting its efforts to move toward low-carbon fuels, including “renewable natural gas,” and other alternatives that could offset its carbon footprint. Southwest Gas takes issue with the climate strategy — and AB380’s — approach, which is to move toward electrifying appliances in homes and businesses.
He said the company has hired a third-party to “outline what that pathway to netzero looks like for us.”
To push back, Southwest Gas borrowed a playbook that utilities have used in other states: building a coalition of business interests casting the fossil fuel as affordable and “clean,” despite the fact that a state fact-sheet notes that gas appliances can pollute indoor air quality.
Where AB380 looked to institute a planning framework, the utility reframed it as a ban.
Danny Thompson — the former head of the Nevada AFL-CIO and a lobbyist hired by Southwest Gas this session — published an op-ed in The Nevada Independent in mid-February, writing that AB380 would kill jobs, raise costs and put more strain on the electric grid.
A few days later, Latin Chamber of Commerce President Peter Guzman (whose organization lists Southwest Gas as a major sponsor) published an op-ed in the Las Vegas Sun indirectly calling Cohen’s proposal a risky action that “will make our economy and the burden to businesses and families even worse.”
“Forcing abuelo and abuela to make a choice between medicine and groceries or heating their home affordably in the winter is unacceptable,” he wrote.
Behind the scenes, Southwest Gas was engaged in a lobbying campaign aimed at driving opinion against Cohen’s bill and solidifying its business footing in the state.
Lobbyist registration records show the utility went from three registered lobbyists in 2017 and five in 2019 to 10 in the 2021 session. Four of those are with the firm of Greenberg Traurig, including former state Senate Democratic Caucus leader Alisa Nave-Worth. Two are longtime labor lobbyists — Thompson and Gail Tuzzolo.
Cohen, the bill’s sponsor, said the “sizable push in lobbying” became more noticeable as the session went on, even while she and advocates for the bill were actively working with the opposition to try to address any concerns with the concepts in the bill.
Even before the legislative session, Southwest Gas and other allies in the natural gas and petroleum industry were working to make inroads with lawmakers.
Last year, lobbyists representing the Western States Petroleum Association (WSPA) — a nonprofit trade association representing the petroleum industry in six western states — donated thousands of dollars worth of gift cards to both the Nevada Black Legislative Caucus and Nevada Hispanic Legislative Caucus to be distributed for help with COVID-19 relief efforts undertaken by lawmakers.
Southwest Gas, along with the WSPA, were invited to give presentations to both caucuses early in the legislative session.
Heads of both of those caucuses — Assembly members Edgar Flores (D-Las Vegas) and Daniele Monroe Moreno (D-North Las Vegas) — strenuously denied that the assistance had any effect on the eventual fate of AB380 or other natural gas legislation.
Donations made by the trade group benefited a grocery delivery service for COVID-19 positive individuals arranged by the Hispanic Legislative Caucus, and those made to the Black caucus helped purchase personal protective equipment and food at a senior living facility.
“Western States Petroleum helped us, local grocery stores helped us, churches helped us, nonprofits helped us,” Monroe Moreno said. “So if they want to draw a line, there’s going to be a whole bunch of lines drawn. There was a lot of need that was going on, and they were one of the companies that stepped up.”
In March, Southwest Gas and allies set up an advocacy Facebook page called the Coalition for Cleaner Affordable Energy calling for lawmakers and the public to oppose AB380. Though the group hasn’t run any ads, the page includes video testimonials from homebuilders, business groups (including the Latin Chamber) and union representatives (including Thompson).
Cohen said that the utility’s messaging was inaccurate, but nonetheless struck a chord with members of the public, lawmakers and interest groups concerned about potentially losing natural gas access or stoves in their own homes.
“For all those people who call and say ‘What's going on?’ and I can respond to it, I can't respond to everyone who's been to a website and gets incorrect information, and have the conversation to put them at ease,” she said. “So it definitely is difficult to respond to that when there is fear that is fueled by incorrect information.”
One hearing, many revisions
The final version of what was to become AB380 underwent several changes before it was ever heard in a legislative committee on April 6.
An initial version of the bill obtained by The Nevada Independent had three main components. It repealed a section of state law authorizing the expansion of natural gas infrastructure if it related to economic development, required the utility to submit an infrastructure plan to regulators that weighed decarbonization and set a state policy to gradually reduce greenhouse gas emissions from “combustible fuels” to 95 percent of 2016 levels by 2050.
After feedback from Southwest Gas and other groups, a conceptual, final amendment removed all references to the gradual emission reduction targets and many of the specific requirements for plans required to be filed with the PUC. Still, the legislation required the utility to undergo a comprehensive planning process meant to prepare for a future where more appliances got their energy from the electrical grid, not gas pipelines.
The final version of the legislation also sought to address equity concerns. It would have required regulators to investigate “strategies to limit the impact of a transition from the use of gas in buildings on low income households and historically underserved communities, including, without limitation, such persons who rent or lease their residence.”
“We did a lot of work with the stakeholders, the gas utility, labor, and there were lots of meetings,” Cohen said. “We substantially amended the bill, taking their concerns in mind, things that we didn't necessarily think said or would do what they said they were concerned with, but we still took it out and made modifications. They still were against it.”
Even as amended, Leedom said “the bill was not a neutral natural gas study or planning bill.” He argued that the legislation pre-supposed that electrification was the best approach forward.
During a more than two-hour hearing before the Assembly Growth and Infrastructure Committee earlier this month, lawmakers raised concerns about the amended version of AB380, echoing many of the arguments made by the natural gas utility and the coalition opposing the bill.
The coalition had repeatedly argued that the effects of AB380 would disproportionately affect communities of colors, seniors and low-income households.
At the hearing, Southwest Gas CEO John Hester said the utility is “fully supportive of taking efforts in energy efficiency and reducing greenhouse gas emissions, but we are also very concerned about the needs of our customers here in Nevada.”
Environmentalists and AB380 supporters argue that the pro-gas messaging ignores the health impacts of natural gas, the climate strategy and distorts the bill’s language, which specifically sought to ensure that there was an equitable transition for low-income households.
“It is absurd that they are weaponizing equity amidst a climate crisis,” Elspeth DiMarzio, an organizer with the Sierra Club, said in an interview last week. “Responsible energy planning was about making sure there was a plan to protect low-income communities down the road.”
Cinthia Moore, an organizer for pro-clean energy group EcoMadres, said the rhetoric at the hearing largely ignored the public health consequences of burning natural gas, noting that Latinos are more likely to suffer asthma attacks than white counterparts.
She said she understood the concerns legislators expressed, “but it’s important to have conversations with our communities about how we are moving away from the usage of natural gas and more toward electric — and it’s going to require a lot of work.”
“I don’t see it as a ban,” she said of AB380.
Environmental groups also stress the cost of inaction. If there is no planning process in place, the natural gas utility could be permitted to continue expanding, leaving ratepayers on the hook for the costs of more fossil fuel infrastructure, even as the economy moves toward decarbonization.
This is an argument that won buy-in from the state’ Consumer Advocate, Ernest Figueroa, who works within the attorney general’s office and represents ratepayers before utility regulators.
“If the policy of the state, as outlined in the governor’s climate initiative, is to eventually transition away from the use of natural gas by 2050, then it is imperative, for economic reasons, that natural gas resource planning be implemented so that natural gas utility customers are not left with billions of dollars in stranded assets when that time comes,” he said during the hearing.
The bill was heard just four days before the deadline for first committee passage, and was at one point scheduled for a committee vote, but it was later removed from the agenda.
In an interview, Monroe Moreno said she “didn’t have the votes to make it out of committee.”
SB296, backed by the gas utility, experienced a similar fate. Cannizzaro’s bill did not even get a committee hearing, a rare occurrence for legislation proposed by leadership.
“Just like so many things in this building, sometimes you can't exactly get to the right policy place,” she said in an interview on Wednesday. “There were just a lot of concerns that we couldn't quite...I don't know. So that one didn't make it.”
Cannizzaro was more direct in the press release Sisolak released on Friday evening.
“We are committed to taking action that supports the state’s Climate Strategy and puts us on track to meet our greenhouse gas reduction goals,” she said. “While we simply didn’t have the time for some of these tough, complex discussions this Legislative Session, it’s critical that we look at what the future will bring and prepare ourselves so that no Nevadan is left behind."
Frierson, as the Democratic leader of the Assembly, echoed the sentiment.
“As we know, the pandemic has presented unprecedented challenges to our legislative process, making it a difficult environment for robust discussion and debate,” Frierson said in a statement released through Sisolak’s office. “And while some bills related to acting on climate change did not move forward this session, we no less remain committed to addressing the climate crisis and will continue to push Nevada to be a leader in the clean energy economy.
Setting the stage
Litman, the mayor of Mesquite, said he was glad to see AB380 die in committee.
He believes that “natural gas is still the future for our community” and argued that cars are far more polluting. But he also said he recognizes that the issue is not going away anytime soon.
The state, he argued, is simply not ready for the transition contemplated in AB380.
“But it will be back,” he said. “I guarantee you that.”
Leedom said he expected the legislation to come back, too.
“This isn’t the last time we’ll see electrification policies in the state,” Leedom said in an interview last week. “But again, we stand ready with the state and with other stakeholders to outline what an alternative path to a decarbonized future looks like.”
The Sisolak administration did not take a formal position on AB380, and a spokesperson for the governor said his office did not send a formal response to the pro-gas coalition letter. It was not until Friday evening that Sisolak released a public statement on the legislation.
Still, the administration has continued to stress the long-term need to transition buildings from natural gas. At the hearing for AB380, two state officials noted that AB380 was consistent with the climate strategy and appeared to rebut some of the gas utility’s claims.
The Nevada Climate Initiative also put out a fact-sheet in March, emphasizing the fact that methane gas contributes to global climate change and can cause indoor health problems.
At the hearing, David Bobzien, who directs the Governor’s Office of Energy, said the state is willing to work with the company on alternatives, but he also noted that while there is some potential in low-carbon fuel alternatives like green hydrogen, there are some major limitations.
In past interviews, he has noted the need for a long-term transition toward electric appliances.
For years, environmental groups have focused on pushing the state’s largest electric utility, NV Energy, to move toward a more renewable portfolio. They are continuing to do so, but they also plan to engage more on natural gas issues, including outside of the Legislature.
DiMarzio said environmental groups can also do more to educate the public on natural gas.
“We need to be really clear that natural gas is a fossil fuel,” DiMarzio said. “It is methane. It is bad for the environment. And it is bad for indoor air quality and health. There's a lot of education that needs to be done because natural gas is not natural at all."
Update: This story was updated on April 19, 2021 to include more information. The coalition letter referenced in this story, obtained through a public records request, includes IBEW Local 1245 as a signatory. A representative from IBEW Local 1245 clarified that the union was listed on the coalition letter in error.