New York could rewrite its relationship to fossil gas with this bill

New York’s future is fossil-gas-free, and it’s time for state policies to fully reflect that.

That’s the upshot of testimony last week from climate advocates, who called on Governor Kathy Hochul (D) and the state legislature to pass the NY Home Energy Affordable Transition Act in this year’s budget.

Known as the NY HEAT Act, the legislation seeks to speed the transition away from the fossil gas system that currently helps heat around 60 percent of households in New York state. New York’s landmark 2019 Climate Leadership and Community Protection Act mandates that it cut greenhouse gas emissions by 40 percent by 2030 — a goal achievable only with the rapid phaseout of fossil fuel infrastructure. In large part due to the fossil gas that ignites their stoves and fuels their furnaces and boilers, buildings are New York state’s largest source of emissions as well as a major source of local air pollution.

Meeting state climate goals will necessitate the ​“downsizing of the gas system, and most customers getting off of the gas system and switching to electric appliances for heating, like heat pumps,” according to Jessica Azulay, executive director of Alliance for a Green Economy. ​“But it’s very difficult right now for the utilities to plan for that transition, or to help make that transition occur, because we have a public service law that actually requires them to continue to expand the system.”

New York’s push to phase out — or at least phase down — fossil gas use in buildings comes as other states, including California, Colorado and Massachusetts, explore options for doing the same. It also comes as federal incentives to electrify buildings kick in. The 2022 Inflation Reduction Act provides tax credits for induction stoves, heat pumps and other climate-focused upgrades, as well as $8.8 billion worth of home electrification and efficiency rebates targeted at low- and moderate-income homeowners.

Advocates say that legislation like the NY HEAT Act is critical to accelerating this shift to all-electric buildings because it closes the gap between utility incentives and state climate laws.

Though Governor Hochul hasn’t embraced the entirety of the HEAT Act, she has included major portions of the bill’s text in her proposed budget. For one, utilities would no longer have an ​“obligation to serve” gas to households, but rather an energy-neutral obligation to provide electric service, heating, cooling, cooking and hot-water services.

The proposed budget would also do away with the so-called ​“100-foot rule,” a portion of state public-service law that requires utilities to provide a ratepayer-subsidized gas hookup to any customer who wants one, as long as they’re within 100 feet of an existing gas pipeline.

Climate think tank RMI estimates that between 2017 and 2021, the 100-foot rule helped add nearly 170,000 new customers to New York’s gas system. That’s an expansion in direct contradiction to what state analysis has found is necessary to meet the Climate Leadership and Community Protection Act’s emissions-reduction goals, which include a 33 percent reduction in fossil gas use by 2030 and a 57 percent cut by 2035. Last year’s state budget also included a first-in-the-nation ban on gas hookups for new buildings starting in 2026. (Canary Media is an independent affiliate of RMI.)

The HEAT Act would not prevent customers who want a new gas hookup from getting one. But it would require them to pay for gas connections themselves, instead of having the utility’s entire customer base picking up the tab. That would put climate-friendly alternatives, like electrification, on a more level playing field for customers looking to switch heating and cooking fuel sources or connect a new building.

“We hope that will mean that when people are considering what fuel they’re going to use, they will make different choices,” Azulay said. ​“The actual cost of a gas hookup will be something they have to consider and weigh against the cost of the heat pump. Whereas now, even though that gas hookup has a cost, they don’t really have to consider that, because they don’t pay for it” out of pocket.

The move could also lead to significant savings for New Yorkers: RMI estimates that the 100-foot rule cost ratepayers a total of over $1 billion between 2017 and 2021.

The governor’s proposal would also allow the state Public Service Commission to begin exploring so-called ​“non-pipeline alternatives,” like the thermal energy networks being piloted across the state, that could replace gas networks at a neighborhood scale.

But Hochul’s plan leaves out provisions of the act that advocates say are needed to protect New York’s most vulnerable residents from shouldering an unfair burden as the state transitions away from fossil fuels.

As more buildings move to electric heating and cooking, the pool of gas customers across which utilities can spread costs will shrink, causing energy rates to rise for remaining ratepayers. Experts fear that without a ​“managed” phaseout of fossil gas infrastructure, those who can’t afford to ditch fossil fuels and buy heat pumps or electric stoves will be stuck in this ​“cost spiral,” leading them to foot the bill for increasingly obsolete gas assets.

The full NY HEAT Act aims to address this in two ways: by implementing the state’s goal of capping energy bills at 6 percent of income and by requiring the Public Service Commission to furnish a timeline for downsizing fossil gas infrastructure. Advocates are urging legislators to make sure these provisions are in the final budget.

“The affordability provisions and the timelines for implementation are really important elements that the governor’s proposal left out. We still have a ways to go when it comes to negotiating the budget,” said Liz Moran, New York policy advocate at Earthjustice, emphasizing that these provisions ​“actually add some teeth” to the act.

“This isn’t to say that ending the 100-foot rule and the obligation to serve aren’t really important components to that — they are — but the affordability piece, and the timelines especially, are what’s going to both protect consumers and make sure [the Public Service Commission] is really doing what they’re supposed to be doing and keeps us on track for the climate law.”

This isn’t the first time the NY HEAT Act has been up for consideration — the Senate passed it as a stand-alone bill last year, and Hochul has also included it in previous budget proposals. But the assembly has been a stumbling block. This year, however, the bill has widespread support in the chamber. The deadline for budget approval is April 1.

“The Senate is clearly supportive because they passed it last year, and they also included it in their budget proposal last year,” Azulay said. ​“We have a majority of assemblymembers now co-sponsoring the bill. So we think we have a good chance.”