Dive Brief:
- California state legislators passed a bill last week that allows natural gas utilities to pilot neighborhood-scale decarbonization of buildings instead of replacing old gas pipelines — as long as the decarbonization projects are less expensive.
- SB 1221, which has yet to be signed into law by Gov. Gavin Newsom, authorizes up to 30 of these pilot projects across the state. At least two-thirds of affected property owners would need to consent to a pilot project for it to move ahead.
- Supporters of the bill say such projects offer climate benefits and cost savings. A rural county advocacy group opposed the bill, saying local governments should be allowed to block such projects. Pool, hot tub and spa industry groups raised concerns about electrification’s impacts on pools, home fire pits and spas.
Dive Insight:
Building decarbonization advocates are increasingly pushing for neighborhood-scale decarbonization, which focuses on getting entire street segments, developments or neighborhoods off fossil fuels at once. They argue it is more effective than relying on individual consumers to electrify appliances one by one. Plus, advocates say, the managed approach addresses equity concerns about those who can’t afford to electrify getting stuck with the bill for gas infrastructure as ratepayers who can afford to do so get off the system.
Two primary forms of neighborhood-scale decarbonization exist: Electrification of all the buildings in an area or the installation of a thermal energy network, which allows for the transfer of heat in and out of buildings. The nation’s first networked geothermal system owned by a utility went live in June in Framingham, Massachusetts.
California is already home to gas pipeline decommissioning projects led by Pacific Gas & Electric. The utility has electrified 105 customers, resulting in the decommissioning of 22 miles of transmission pipe, according to a May whitepaper published by National Grid and nonprofit RMI.
But even if California gas utilities are amenable to decommissioning gas lines, their legal “obligation to serve” customers has raised concerns that a single dissenting customer could derail an entire neighborhood-scale decarbonization project.
SB 1221 addresses this question by stating that the California Public Utilities Commission can relieve a gas company of its obligation to provide service in a pilot project area if the new energy service is “reasonably available to support the energy end uses” of affected customers.
If signed into law, the bill would also require utilities to annually submit maps to the commission showing where they plan to replace gas pipelines. The legislation also stipulates that the decarbonization projects should prioritize benefits to disadvantaged and low-income communities, and include tenant protections.
All this work will come at a cost for California, according to an analysis of the bill. The Public Utilities Commission anticipates needing seven new positions, which will cost $1.6 million each year, along with tens of thousands of dollars for public outreach, training and equipment.
Newsom has until Sept. 30 to act on the bill.
