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Ending Subsidies for Gas Infrastructure

On Sept. 15th, 2022, The California Public Utilities Commission (CPUC) voted to eliminate all ratepayer subsidies for extending natural gas line infrastructure. The move makes California the first state to entirely eliminate gas infrastructure subsidies. The unanimous decision further confirms the state’s commitment to decarbonization via electrification. The existing subsidies will be eliminated on July 1st, 2023.

For years gas companies have benefitted from subsidies that reduce their cost to install or extend new gas lines. The subsides, a legacy policy, date back decades when natural gas was perceived as a cheap and clean alternative to electricity. The state now realizes that these gas line improvements will soon become “stranded assets” as we transition to an all-electric future.

The decision to end the subsidies was billed as a “common sense decision.” Eliminating subsidies creates a new incentive for developers, encouraging them to concentrate on constructing all-electric buildings and homes.

CPUC is Considering a Proposal to Phase Out Rebates for Natural Gas Appliances

The CPUC is currently reviewing a staff proposal that promotes phasing out energy efficiency (EE) rebates for natural gas appliances.

AB 3232 (Pavley,2016) required an assessment to determine effective means to reduce Greenhouse Gas (GHG) emissions in the state. AB 3232 set a goal of reducing GHG emissions from buildings to 40 percent below 1990 levels by 2030. Meeting these goals will require transitioning away from fossil fuels, specifically natural gas, and encouraging all-electric buildings.

The proposal suggests phasing out ratepayer EE incentives for gas appliances over ten years. The CPUC recognizes there is a cost-effective, clean alternative to natural gas appliances (heat pumps). From a business perspective, EE incentives for natural gas appliances invest ratepayer funds into something that will become a “stranded asset” as we transition to an all-electric future. The proposal suggests EE incentives focus on non-gas energy savings measures such as insulation and building envelope improvements. We agree with this approach.

The proposal further confirms the state’s desire to transition to carbon-free electricity sourced from renewables.

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