When one of the nation’s largest investor-owned utilities, Pacific Gas and Electric, wanted to replace Merrian Borgeson’s aging gas service line at her home in Berkeley, California, she politely asked the company not to do it.
Borgeson, who serves as the California policy director for climate and energy at the nonprofit Natural Resources Defense Council, knew that the costly repair work was entirely unnecessary for her household. At the time, she was already in the process of fully electrifying her residence. Her immediate plans involved replacing her stove—the final gas appliance remaining in her home—with a modern induction version during an upcoming kitchen remodel. Once that transition was complete, she intended to formally request that the utility shut off her gas supply permanently.
However, Pacific Gas and Electric informed her that the utility’s maintenance schedule could not wait for her renovation timeline. Within that very week, utility crews arrived at her property, dug up her front yard, and swapped in a brand-new pipe designed to deliver natural gas from the distribution main line straight to her house.
Borgeson was not billed directly for the disruptive service. Instead, the upgrade—which typically ranges between $20,000 and $30,000 in PG&E’s service territory alone, not including long-term interest, operations, and ongoing maintenance costs—was absorbed into the broader utility rate base, meaning it is ultimately paid for by all gas customers over the projected multi-decade lifespan of the infrastructure.
A few years later, that newly installed pipe sits completely idle and unused underground.
Reflecting on the experience, Borgeson noted the financial irony built into the legacy utility system. Now, she has no gas running into her house at all, yet the neighbors and other ratepayers all around her are stuck paying off the cost of that unused pipeline for the next fifty years.
Soon, however, homeowners across California will finally have the meaningful choice that Borgeson was denied.
A newly enacted piece of legislation known as the Home Energy Choice Act, formally designated as Assembly Bill 2313, will fundamentally alter how utilities handle aging infrastructure. The law will soon require utility companies to provide households scheduled for routine service line replacements with a vital alternative option: they can either proceed with the traditional installation of a new gas line or choose to accept a substantial financial incentive—potentially worth several thousand dollars—to disconnect from the gas system entirely and pivot toward clean home electrification.
Crucially, the mechanics of the law are designed to benefit the entire customer base. The financial incentive provided to homeowners to switch to all-electric alternatives, such as advanced heat pumps, induction ranges, and heat-pump water heaters, will be deliberately set lower than the actual cost of replacing the physical gas line. This economic gap ensures that the program creates net savings, which will then be shared among all remaining gas customers rather than compounding the debt of aging fossil fuel networks.
Advocates argue that the legislation marks a historic turning point for the state’s energy landscape. Borgeson, who actively advocated for the passage of the bill, emphasized that it sends a very clear and undeniable message that California is no longer willing to invest millions of dollars blindly into legacy gas infrastructure without thoughtfully considering the future. She described the policy as a massive signal regarding the ultimate direction in which the state is heading.
To illustrate the potential savings, the Natural Resources Defense Council conducted economic modeling and calculated that PG&E’s gas customers alone could save a combined total of $20 million if the utility simply redirected funds by giving 1,000 households an incentive of $17,500 apiece rather than funding the physical replacement of their service lines. For broader context regarding the scale of the infrastructure work, PG&E routinely replaces approximately 15,000 service lines every single year.
If similar regulatory programs were successfully instituted on a national scale, the resulting financial savings could easily rival major federal investments in residential energy upgrades, such as the landmark Biden-era home electrification rebates. According to estimates from clean energy nonprofit RMI, utility providers across the United States spend upwards of $7 billion every single year exclusively on service line replacements.
The new policy will serve as a crucial stepping stone, pushing California closer to its ambitious statutory goal of achieving a fully carbon-neutral economy by the year 2045. Even so, the final version of the bill that successfully cleared the state legislature was notably less expansive and ambitious than the original proposal, according to Brandon García, the California director at industry association Advanced Energy United. Among the compromises required to secure legislative approval were strict regulatory caps limiting the programs to 1% of a utility’s total customer base, alongside a statutory sunset clause that causes the law to expire on January 1, 2035, though lawmakers retain the option to renew it before that deadline arrives.
Securing the votes for the legislation proved to be an uphill battle in the state capital, underscoring the deep political and economic tensions surrounding the transition away from fossil fuels. Assemblymember Marc Berman, who authored the bill, expressed enthusiasm for its passage in an email statement, noting that AB 2313 was a very difficult measure to shepherd through the Legislature. He expressed excitement that the law will soon empower Californians to decide what kind of energy powers their homes while offering tangible financial support to help them transition away from natural gas. Berman added that when homeowners willingly opt to electrify, utilities successfully avoid making additional capital investments in fossil fuel infrastructure that would otherwise eventually become stranded assets, protecting all ratepayers from long-term financial burdens.
Not everyone welcomed the new statutory framework, however. Investor-owned utilities including San Diego Gas and Electric and SoCalGas strongly opposed the bill during the legislative process. Their primary argument centered on the fear of an unfair cost shift: as more individual customers gradually abandon gas service, the remaining ratepayers could potentially be left bearing disproportionately high costs to maintain and operate the sprawling pipeline system.
While utility transition experts acknowledge that shrinking customer bases pose a complex structural challenge for the broader phase-out of fossil fuels—and one that state regulators must actively address—proponents of the law argue that the critique misses the immediate economic reality of the new policy. Kiki Velez, the equitable gas transition lead at the Natural Resources Defense Council, explained that the legislation is specifically designed to encourage people to leave the gas system precisely at the moment when their departure actually saves money for everyone else, rather than penalizing the remaining base.
With the enactment of this legislation, California officially becomes the third jurisdiction in the United Nations to authorize a pipeline replacement alternative approach, and the very first to implement the strategy on a statewide level. The policy builds on emerging models established elsewhere in the country. In 2024, New York utility Con Edison launched its own pioneering initiative known as the Energy Exchange Program, which offers eligible households up to $20,000 to transition their homes to full electrification. Velez noted that other New York utilities are currently following suit. Furthermore, in July, the Colorado Public Utilities Commission officially authorized Xcel Energy to establish a similar framework, which is anticipated to launch within a matter of months.
The immediate next step for California is for the state’s Public Utilities Commission to draft a comprehensive, detailed regulatory framework that utilities must follow. This process will involve establishing precise incentive tiers, with provisions ensuring larger financial amounts are directed toward customers residing in historically disadvantaged communities. Once the regulatory guidelines are finalized, individual utilities will have until January 1, 2028, to submit their proposed program designs for formal approval.
One critical detail that remains to be ironed out by regulators is the exact amount of advance notice utilities will be required to give residents before scheduling repairs on pipes running to their properties. Borgeson pointed out that the worst-case scenario would involve homeowners remaining completely unaware of the electrification incentive option until the very last minute when utility crews are already arriving to dig up their lawns. To prevent this, RMI recommends that utilities give residents between one and five years of advance warning, aligning notifications with the long-term scheduling of routine service line replacements.
As California moves forward with implementation, policymakers and clean energy advocates in other states are closely watching the rollout and looking to emulate the model. Velez indicated that lawmakers and advocates in states including Illinois, Maryland, Minnesota, Oregon, and Washington have already expressed intense interest. She noted that people are frequently reaching out to ask how they can successfully introduce similar legislation within their own states.
For California, the inclusion of enhanced electrification incentives tailored for disadvantaged communities will provide a much-needed boost to clean energy equity, García noted. Having grown up in those kinds of neighborhoods as a low-income resident, he emphasized his personal commitment to ensuring that every single household gains equitable access to modern, all-electric technology rather than leaving vulnerable populations behind in the transition.