NARUC's Asia Gas Partnership from 9,000 Miles Away

This article was originally published in the June 2021 issue of Public Utilities Fortnightly.

By Arielle Swett, David Bloom, and Marisa Lewis

June 2021 -  As an implementer of development assistance under the U.S. Agency for International Development (USAID) for the past two decades, the National Association of Regulatory Utility Commissioners (NARUC) works with its volunteer members from state Public Service Commissions and NARUC's wider network of energy sector professionals to share peer-to-peer best practices in utility regulation with foreign counterparts around the world.

In the spirit of U.S. and international public service, NARUC's unique international programs send U.S. utility regulatory experts to foreign countries to present technical, policy, and economic best practices in niche energy regulatory issues faced by energy regulators throughout Asia, Africa, Eurasia, and Latin America.

NARUC members dedicate their pro bono time and expertise throughout weeks of technical preparation, culminating in long journeys across the world to present at NARUC's workshops in respective partnership countries.

With that said, what happens when a global pandemic brings travel to a halt and temporarily suspends all scheduled in-person peer-to-peer activities? NARUC's international programs and its Commission volunteers have been working to forge a new path and keep these assistance programs running, as the pandemic's implications for international service engagements pose new challenges to a program model with crucial roots in peer-to-peer engagement and face-to-face discussion.

Introducing the Asia Gas Partnership

Sponsored by USAID, the Asia Gas Partnership (AGP) is a joint initiative with NARUC and the U.S. Energy Association (USEA) designed to enhance and strengthen regulatory frameworks to help encourage public-private partnerships involving government and industry representatives among natural gas sectors in U.S. and Indo-Pacific countries.

This effort is part of the U.S. government's Asia EDGE (Enhancing Development and Growth through Energy) initiative, which is a U.S. whole-of-government initiative to grow sustainable and secure energy markets across the Indo-Pacific region and level the playing field for private sector firms in Asia.

NARUC's initial regional engagement under the AGP program was scheduled to commence with a kickoff workshop event hosted by NARUC in Bangkok, Thailand in March 2020. However, with the emergence of COVID-19 and the inability to travel, NARUC and USAID moved to a remote assistance strategy to make sure this valuable partnership could begin.

It required pivoting to host webinars and provide extensive technical peer review reports to help regulatory partners in the Asia Pacific region with taking foundational steps supporting transitions establishing domestic natural gas markets to enhance energy security.

Under Asia EDGE, USAID supports partner countries to mobilize private investment, modernize technologies and practices, and expand market opportunities to accelerate the growth of the region's energy markets in four key areas: regional energy trade and integration, increased deployment of advanced energy systems, utility modernization, and transparent, best value procurement.

In support of USAID's initiatives under Asia EDGE, the objective of the AGP is to share best practices in the development of regulatory frameworks governing safe, reliable, economic, and environmentally responsible natural gas sector development, while facilitating investment and regulatory advancements in the energy industry. As a result, gas demand growth can be stimulated by optimizing gas network infrastructure development and developing domestic gas markets in Asia.

It is currently forecasted that China, the Association of Southeast Asian Nations (ASEAN), and South Asia will account for over ninety-five percent of global LNG demand growth from 2019 to 2035, and that their power and industrial sectors will lead global LNG demand for the next two decades. Given this development, countries throughout the region have prioritized the rapid establishment, implementation, and enhancement of well-formulated downstream natural gas regulatory frameworks to enhance sector competition in their respective countries.

Against this backdrop of rapid energy demand growth, there is increasing competition among coal, natural gas, and renewable energy for power generation and more attention by governments and the private sector in the region to the challenge of reducing greenhouse gas emissions.

In starting its work under the AGP, NARUC explored opportunities for remote region-wide and strategic bilateral country assistance. In order to address the region-wide interest in downstream natural gas regulatory frameworks, the AGP team identified the need for an instructional guide to develop these markets based on best practices in countries with sophisticated downstream natural gas markets, such as the United States. Additionally, NARUC selected Vietnam and Thailand as candidates for bilateral regulatory support given their respective needs for expert review of their governments' foundational natural gas market constructs, policies, and objectives.

The NARUC team then assembled a committee of expert volunteers to ensure NARUC's regional and bilateral assistance on natural gas regulation continues without interruption. The volunteer team of natural gas experts was comprised of Commissioners and Commission Staff from the Illinois Commerce Commission (ICC), the New York Public Service Commission (NYPSC), the Massachusetts Department of Public Utilities (Massachusetts DPU), the Washington Utilities and Transportation Commission (WUTC), the California Public Utilities Commission (CPUC), and others.

While providing remote assistance, the team used new techniques to achieve results. For example, they participated in multiple live webinars, contributed to reports, and reviewed regulatory documents in order to help capture and build on their respective decades of expertise in public utility regulation.

Notably, NARUC Staff and expert volunteers collaborated on the Roadmap for the Development of Downstream Natural Gas Markets, an informative, step-by-step guide and reference for energy regulators and energy sector decision makers in Asian-Pacific countries introducing or expanding liquefied natural gas (LNG) imports and subsequently overseeing domestic regulation of nascent downstream natural gas markets.

The Asia Pacific Regional Gas Roadmap

The Roadmap discusses the key foundational tenets governing the structure of well-functioning, competitive downstream natural gas sectors as exhibited through best practices gleaned from the establishment of liberalized natural gas sector and market reforms in the United States. It also recommends key regulatory steps, provisions, and considerations necessary to establish diversified and competitive downstream gas sectors in countries integrating imported LNG resources.

After its publication, the team collaborated to organize a Webinar Presenting the Roadmap for the Development of Downstream Natural Gas Markets as a means of officially introducing the document to regional partners. During this webinar, the NARUC team also responded to technical and regulatory questions submitted by participants, which pertained to the Roadmap and downstream natural gas markets. Former U.S. Ambassador to Thailand Michael George DeSombre provided opening remarks and emphasized the role that programs like the AGP play in strengthening U.S.-Thailand commercial relationships and energy interdependence.

NARUC Peer Review: Vietnam and Thailand

In collaboration with regulatory partners — Vietnam's Ministry of Industry and Trade (MOIT) and Thailand's Office of the Energy Regulatory Commission (OERC) — NARUC Staff and volunteers conducted peer reviews of foundational natural gas policy and regulatory documents.

The team reviewed and provided constructive comments to, and suggestions for, Vietnam's Gas Master Plan and Thailand's (gas pipeline) Third Party Access (TPA) Regime and Transmission Service Operator (TSO) framework. The review team collaborated to provide insight from the U.S. experience in natural gas infrastructure regulation, reflective of best practices in encouraging efficient and competitive wholesale and retail natural gas markets.

Improving these countries' foundational regulatory documents in line with international best practices will support regulatory and market environments conducive to healthy competition, subsequently encouraging investment and sustainable growth in Vietnam and Thailand's energy sectors.

Participating gas experts faced the challenge of providing insight and feedback on these documents without face-to-face engagement with Vietnamese and Thai regulators regarding specific challenges they face in natural gas regulation and their needs and questions moving forward.

To address this, NARUC staff shared information on each country's natural gas sector with the experts, who also conducted their own background research in preparation for the peer review.

Through strong teamwork, as well as clear and consistent communication with respective regulatory partners in the Asia Pacific, this review successfully provided expert technical assistance through these targeted policy assessments.

Feedback from the Review Team

After the document preparation and webinars, the volunteer group noted several highlights from the experience: professional self-growth and exposure, the fulfilling nature of sharing the U.S. natural gas experience to help Asian countries avoid regulatory pitfalls, and the significant benefits of in-person international workshops vs. remote engagement.

For ICC Commissioner Ethan Kimbrel, Chair of the NARUC Gas Committee, the remote AGP engagement provided an opportunity for him to participate in information-sharing with foreign regulators through NARUC's international programs for the first time, allowing him to gain an understanding of the benefits of these exchanges and how fulfilling this work can be as a U.S. Commissioner.

"It was a great opportunity to do some international work — I don't know if I would have been able to participate if not for us having to do this remotely due to the COVID-19 situation, so I welcomed it, and I was glad that I had the opportunity to contribute what I've learned as a regulator at the Commission in Illinois."

Commissioner Kimbrel also alluded to the self-growth aspect of this work, sharing, "For me, you get tunnel vision as far as what you're doing at your own Commission. Working in these regional activities through NARUC committees broadens your horizons; participating in something like this is fascinating. It was an opportunity as a regulator to learn about what is going on in energy regulation elsewhere outside of the U.S. and share what I've learned at the ICC."

Additionally, Commissioner Diane Burman of the NYPSC (and Chair of the NARUC-Department of Energy Natural Gas Partnership Initiative; co-vice Chair of NARUC's Select Committee on Regulatory and Industry Diversity; vice Chair of the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration Gas Pipeline Advisory Committee, and immediate past Chair of NARUC's Gas Committee) stated she has grown both personally and professionally as a regulator by engaging in NARUC International educational exchanges to help share what she has learned as a Commissioner in the U.S.

In terms of her experience conducting remote regulatory reviews for the first time, Commissioner Burman stated, "When I participate in NARUC International Programs' activities, the time spent from leaving my home state and traveling to my destination provides me with an opportunity to connect with volunteers and NARUC Staff while we're traveling and ensure we're all in sync with what we're doing for the program and the partners, so we can provide the best programming possible."

"When we had our first remote webinar for the AGP, I realized I had not had that important hands on connection of actually working together with my team members behind the scenes.

Despite the long travel period, in-person engagement allows you to connect substantively along the journey and come together as a team before presenting. In this context, we prepared for presentations remotely, which is a different experience."

Along similar lines, WUTC Commissioner Jay Balasbas, Chair of the Subcommittee on Pipeline Safety and co-vice Chair of NARUC Critical Infrastructure, shared, "For the Roadmap piece, as part of a remote work environment, it was challenging to work without the ability to get more country-specific context face-to-face with some of the international regulators and other countries with regard to what exactly they need help with and what they are looking for beyond what's on paper.

It would be more efficient if we were all able to sit down in a room with everybody together and say, 'Let's hash this out. This is the situation, and these are our challenges. Here's our feedback, and here's our response.'"

The ultimate takeaway shared by the NARUC team was articulated by Andreas Thanos, Chair of the NARUC Staff Committee on Gas, and a gas policy specialist at the Massachusetts DPU.

Andreas' statement reflects the heart and core of NARUC's philosophy behind international energy sector development programs and informational exchanges between regulators:

"In terms of natural gas and LNG knowledge, it's a fantastic opportunity to be able to share this information, our experiences, and the good things we've learned as regulators in order to help provide insight about what works and what doesn't in terms of gas sector regulation and development."

Through this collaboration, Commissioners and Staff working on the AGP have dedicated their time and effort to share their insights about natural gas regulation with their peers throughout the Asia Pacific by knowledge-sharing on niche natural gas issues.

In addition, despite working through an unforeseen circumstance, their efforts have encouraged capacity-building teamwork among international energy regulators to help improve energy infrastructure, regulation, and reliability on a global scale.

These values reflect the core of NARUC's International programs and the invaluable commitment that NARUC's expert volunteers demonstrate to public service and to the development of safe, reliable, economic, and environmentally-friendly energy sectors worldwide.

This article is made possible by the generous support of the American people through USAID. The contents are the responsibility of NARUC and do not necessarily reflect the views of USAID or the United States Government.