A new gas line or cash to electrify? California lets households choose.

When one of the nation’s biggest investor-owned utilities, Pacific Gas and Electric, wanted to replace Merrian Borgeson’s aging gas service line in Berkeley, California, she asked the company not to do it.

Borgeson, who is the California policy director for climate and energy at the nonprofit Natural Resources Defense Council, explained that the repair wasn’t necessary: She was in the process of fully electrifying her home and would be replacing her stove — the only gas appliance left in the house — with an induction version during an upcoming kitchen remodel. At that point, she planned to request that the gas line be shut off.

But PG&E told her it couldn’t wait. That week, the utility dug up her yard and swapped in a new pipe to send gas from the distribution main line to her home.

Borgeson wasn’t charged for the service — at least not directly. The upgrade, which in PG&E’s service area typically costs $20,000 to $30,000, plus interest and operation and maintenance costs, gets paid for by all gas customers over the life of the infrastructure.

A few years later, the new pipe sits unused in the ground.

“Now, I have no gas in my house,” Borgeson said. ​“But the customers all around me are paying for that pipeline for the next 50 years.”

Soon, Californians will have the choice that Borgeson did not.

A new law, the Home Energy Choice Act (Assembly Bill 2313), will require utilities to give households scheduled for a service line replacement the option of getting the new line or taking a financial incentive potentially worth several thousand dollars to get off gas instead. Crucially, the incentive to switch to all-electric equipment such as a heat pump, induction range, and heat-pump water heater, will be less than the cost to replace the line, resulting in savings that will be shared among all gas customers.

The law ​“sends a very clear message that California is no longer going to invest millions of dollars in gas infrastructure without considering the future,” said Borgeson, who advocated for the bill. ​“It’s this huge signal of where the state is headed.”

The Natural Resources Defense Council has calculated that PG&E’s gas customers could save a total of $20 million if the utility gave 1,000 households a $17,500 incentive apiece rather than replacing their service lines. For context, PG&E replaces about 15,000 service lines annually.

If similar programs were instituted across the country, the savings could rival Biden-era investments in home electrification. Utilities spend upward of $7 billion per year on service line replacements, according to clean energy nonprofit RMI. 

The policy will help push the state closer to its goal of a carbon-neutral economy by 2045; however, the version that passed was less ambitious than what was introduced, according to Brandon García, California director at industry association Advanced Energy United. Revisions included programs being capped at 1% of a utility’s customers and the law expiring Jan. 1, 2035, though it could be renewed before then.

“AB 2313 was a very difficult bill to get through the Legislature, so I’m very excited that it will soon give Californians the opportunity to decide what energy is powering their home and provide financial support if they choose to transition away from natural gas,” Assemblymember Marc Berman, who authored the bill, said by email. ​“When homeowners opt to electrify, the utility avoids additional investments in fossil fuel infrastructure that will eventually become a stranded asset, and this saves all ratepayers money long-term.”

Utilities San Diego Gas and Electric and SoCalGas opposed the bill, arguing that it would result in an unfair cost shift: As some customers stop using gas, those remaining could be left bearing outsized costs to maintain the system. While that is an issue writ large for the transition off of fossil fuels, and one the state needs to address, this law ​“is instead about trying to encourage people to leave at the exact time when they are saving money for everyone else by leaving,” said Kiki Velez, equitable gas transition lead at the Natural Resources Defense Council.

With the new legislation, California becomes the third jurisdiction to authorize the pipeline replacement alternative approach — and the first to do so statewide. In 2024, New York utility Con Edison launched its initiative, the Energy Exchange Program, which offers eligible households up to $20,000 to electrify. Other New York utilities are following suit, Velez said. And in July, the Colorado Public Utilities Commission authorized Xcel Energy to create a similar program, which she expects could launch within a few months.

In California, the next step is for the Public Utilities Commission to create a detailed framework for utilities to follow, including incentive levels, with larger amounts for customers in disadvantaged communities. Then utilities will have until Jan. 1, 2028, for their individual proposed programs to be approved.

One yet-to-be-determined detail is how much notice utilities will give residents whose pipes they want to replace. ​“I think the worst case is you don’t hear about [the incentive] until the last minute,” Borgeson said. RMI recommends utilities alert residents one to five years ahead — at the point when it is scheduling the service line replacements.

Other states are looking to emulate California with bills of their own, Velez said, pointing to Illinois, Maryland, Minnesota, Oregon, and Washington. ​“Folks are already reaching out a lot about how they can bring it to their state,” she said.

In California, the bigger electrification incentives for disadvantaged communities will provide a much-needed boost to clean energy equity, García noted. ​“As someone who grew up in those kinds of neighborhoods as a low-income person, I want to make sure that everyone has access to [all-electric] technology.”