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California’s Home Energy Choice Act will require gas utilities to offer eligible households a financial incentive to electrify instead of replacing a gas service line. The state’s Public Utilities Commission must still set the program rules, and utilities’ plans need approval by Jan. 1, 2028.
California has enacted the Home Energy Choice Act, requiring gas utilities to offer households scheduled for a service-line replacement a choice: install a new gas line or receive a financial incentive to electrify their home. The policy could reduce spending on gas infrastructure, but the incentive amounts and program rules have yet to be set by the state’s Public Utilities Commission.
The law, Assembly Bill 2313, applies when a utility plans to replace a gas service line connecting a home to the distribution system. Rather than automatically replacing the pipe, the utility must offer the customer an alternative intended to help pay for electric equipment, such as a heat pump, induction range or heat-pump water heater. The incentive must be lower than the cost of replacing the line, allowing savings to be shared across gas customers.
The Natural Resources Defense Council estimates that PG&E customers could save a total of $20 million if 1,000 households received incentives of $17,500 instead of having their service lines replaced. The report says PG&E replaces about 15,000 service lines annually. Those figures are an advocacy group’s estimate, not a confirmed statewide savings forecast; actual results would depend on program design and participation.
The legislation was revised before passage. Brandon García, California director at Advanced Energy United, said the final version was less ambitious than the original proposal: programs are capped at 1% of a utility’s customers, and the law is scheduled to expire on Jan. 1, 2035, unless renewed. San Diego Gas and Electric and SoCalGas opposed the bill, arguing that customers who remain on gas could face a disproportionate share of system costs as others leave.
A Different Route From Gas Replacement
The law changes what happens when a gas service line needs replacement: eligible households will be offered a choice rather than having a new pipe installed by default. That matters because replacement costs are recovered through utility rates, according to the report, so customers may contribute to infrastructure that a household later stops using.
For participating households, an incentive could help cover the expense of switching appliances, though the law does not guarantee that it will cover the full cost of electrification. For gas customers who stay connected, the policy is intended to avoid some replacement spending. The opposing utilities’ cost-shift concern remains relevant to the broader move away from gas: fewer customers using the system can leave costs to be shared among those who remain.
California has a goal of reaching a carbon-neutral economy by 2045. The law supports that direction by creating a pathway to replace gas use with electric equipment when a line is due for work. Its capped scale and limited term mean it is a targeted program, not a statewide requirement for households to give up gas.
From Berkeley to Statewide Policy
The report describes how Merrian Borgeson, a California policy director at the Natural Resources Defense Council, asked PG&E not to replace her aging gas line because she planned to remove her home’s last gas appliance during a kitchen remodel. PG&E replaced it anyway. Borgeson said the new pipe is now unused, while gas customers will pay for it over time.
Under the previous approach described in the report, a typical PG&E service-line upgrade costs $20,000 to $30,000, in addition to interest and operation and maintenance costs. Borgeson was not billed directly for her replacement; those costs are recovered from gas customers over the infrastructure’s life.
California is the third jurisdiction reported to authorize this kind of alternative and the first to do so statewide. New York utility Con Edison began its Energy Exchange Program in 2024, offering eligible households up to $20,000 to electrify. Colorado’s Public Utilities Commission authorized Xcel Energy to develop a similar program, according to the report.
“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.”
— Merrian Borgeson
Incentive Rules Are Still Pending
The Public Utilities Commission must create the detailed framework, including incentive levels and how larger amounts will be directed to customers in disadvantaged communities. The amount available to an individual household, eligibility rules and the equipment or work the incentive may cover are not yet specified in the source material.
The law also does not settle how far in advance utilities must tell residents that a line replacement is planned. Borgeson warned that customers could otherwise learn about the alternative at the last minute. RMI recommends notice one to five years ahead, according to the report, but that recommendation is not a requirement stated in the law.
The likely savings and effect on remaining gas customers are also not established. The $20 million estimate is based on a particular example involving PG&E, and utility opponents have raised concerns about cost allocation as customers leave the gas system.
Commission Sets the Program Path
The California Public Utilities Commission is next expected to establish the rules utilities must follow, including incentive levels and treatment of customers in disadvantaged communities. Utilities then have until Jan. 1, 2028, for their individual program proposals to be approved.
Those rules should clarify how customers are notified, who qualifies and what electrification costs the incentive can support. The law is set to expire on Jan. 1, 2035, unless lawmakers renew it. Until the commission and utilities complete those steps, households cannot rely on a specific payment amount or a confirmed schedule for receiving an offer.
Key Questions
What choice does California’s new law give households?
When a utility schedules a household’s gas service line for replacement, it must offer the option of taking a financial incentive to electrify instead of receiving a new gas line. The program rules are still being developed.
How much money will a household receive?
The law’s incentive amounts have not yet been set. California’s Public Utilities Commission must establish the framework, including payment levels. The $17,500 figure in the report is an NRDC example used to estimate potential savings, not a confirmed payment for every household.
When will the utility programs be available?
The commission must first set detailed rules. Utilities have until Jan. 1, 2028, for their individual program proposals to be approved; the source does not give a specific date when offers will begin.
Why did some utilities oppose the law?
San Diego Gas and Electric and SoCalGas argued that as customers leave the gas system, those who remain could be left with an outsized share of its costs. The law’s supporters say avoiding a replacement line can save customers money, but the final effects depend on implementation and participation.
Source: rss
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