When one of the nation’s largest 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 serves as the California policy director for climate and energy at the nonprofit Natural Resources Defense Council, explained that the repair was entirely unnecessary. She was already in the process of fully electrifying her home and planned to replace her stove—the final gas appliance remaining in the house—with a modern induction version during an impending kitchen remodel. Once that work was complete, she intended to officially request that the gas utility shut off her service line permanently.
However, Pacific Gas and Electric informed her that it could not wait. That very week, utility crews dug up her front yard and swapped in a brand-new pipe designed to send natural gas from the distribution main line straight to her home. Borgeson was not charged directly for the service. Instead, the costly upgrade—which in the utility’s service area typically runs anywhere from $20,000 to $30,000, not including interest, operational expenses, and ongoing maintenance costs—was absorbed by the broader pool of gas customers over the long operational life of the infrastructure. A few years later, that new pipe sits completely unused and dormant underground.
Reflecting on the encounter, Borgeson noted the financial irony of the situation. Now, she has no gas running into her house whatsoever, yet the neighbors and customers all around her are stuck paying off the cost of that unused pipeline for the next fifty years. Soon, however, everyday Californians will finally have a practical choice that Borgeson was denied under the previous regulatory framework.
A newly enacted piece of legislation known as the Home Energy Choice Act, officially designated as Assembly Bill 2313, will soon require utilities to provide households scheduled for a standard service line replacement with a meaningful alternative. Instead of automatically installing a new pipe, utilities must offer homeowners the option of taking the new line or accepting a financial incentive potentially worth several thousand dollars to transition away from natural gas altogether. Crucially, the monetary incentive offered to switch to all-electric equipment—such as high-efficiency heat pumps, induction ranges, and heat-pump water heaters—will be calculated to cost less than the total expense of replacing the gas line. This economic design ensures that the transition results in tangible savings that will be shared among all remaining gas customers rather than burdening them with stranded assets.
The landmark law sends a very clear message that California is no longer going to invest millions of dollars into aging fossil fuel infrastructure without critically considering the future, according to Borgeson, who actively advocated for the passage of the bill. She describes the legislation as a massive signal of the direction the state is heading in its energy policy.
The Natural Resources Defense Council has crunched the numbers and calculated that Pacific Gas and Electric’s gas customers could save a collective total of $20 million if the utility simply provided 1,000 households with a $17,500 incentive apiece rather than moving forward with replacing their aging service lines. For context and scale, Pacific Gas and Electric typically replaces approximately 15,000 service lines on an annual basis across its sprawling service territory.
If similar alternative incentive programs were to be instituted across the country, the resulting financial savings could easily rival major federal investments in home electrification seen during the Biden administration. According to estimates from the clean energy nonprofit RMI, gas utilities across the United States spend upward of $7 billion every single year exclusively on service line replacements.
The ambitious policy will help push the state closer to its overarching statutory goal of achieving a fully carbon-neutral economy by the year 2045. However, the final version of the legislation that ultimately passed the state legislature was notably less ambitious than the original proposal introduced by lawmakers, according to Brandon García, the California director at the industry association Advanced Energy United. Revisions and compromises required to secure enough votes included capping the new alternative programs at 1% of a utility’s total customer base and adding a sunset provision that causes the law to expire on January 1, 2035, though the program could potentially be renewed by lawmakers before that deadline arrives.
Assemblymember Marc Berman, who authored the bill, acknowledged the intense political battles required to pass the measure. In an email statement, he expressed his excitement that the legislation will soon give everyday Californians the opportunity to decide what specific energy source powers their home while providing vital financial support if they choose to transition away from natural gas. When homeowners voluntarily opt to electrify their properties, Berman noted, the utility successfully avoids making additional capital investments in fossil fuel infrastructure that would eventually become a costly stranded asset, ultimately saving all ratepayers money over the long term.
Not all utility stakeholders welcomed the legislation. Major gas providers including San Diego Gas and Electric and SoCalGas actively opposed the bill during the legislative process, arguing that such programs would result in an unfair cost shift. Their core argument maintained that as individual customers progressively stop using gas, the remaining customers would be left bearing outsized financial burdens to maintain the physical distribution system.
While that structural issue is a genuine concern writ large for the broader societal transition away from fossil fuels—and one that state regulators will eventually need to address comprehensively—advocates argue that this specific law targets a different phase of the problem. Kiki Velez, the equitable gas transition lead at the Natural Resources Defense Council, explained that the law is instead about trying to encourage people to leave the gas system at the exact historical moment when their departure actually saves money for everyone else rather than adding to the system’s long-term liabilities.
With the enactment of this legislation, California officially becomes the third jurisdiction in the nation to authorize a pipeline replacement alternative approach, and the very first to do so on a statewide level. Earlier, in 2024, New York utility Con Edison launched its own proactive initiative known as the Energy Exchange Program, which offers eligible residential households up to $20,000 in financial assistance to fully electrify their homes. Velez noted that other utilities across New York are now following suit with similar frameworks. Furthermore, in July, the Colorado Public Utilities Commission officially authorized Xcel Energy to create a comparable program, which Velez expects will launch within a matter of months.
In California, the next critical phase in the implementation process requires the Public Utilities Commission to establish a detailed regulatory framework for utilities to follow. This framework will outline specific incentive levels, ensuring that larger financial amounts are directed toward customers residing in disadvantaged communities. Following the creation of this framework, utilities will have until January 1, 2028, to have their individual proposed programs officially reviewed and approved by state regulators.
One important operational detail that remains to be determined is exactly how much advance notice utilities will be required to give residents whose gas pipes are scheduled for replacement. Borgeson warned that the worst-case scenario would be a situation where a homeowner does not hear about the available electrification incentive until the very last minute, when utility crews are already arriving to dig up the yard. To prevent this, RMI recommends that utilities proactively alert residents anywhere from one to five years ahead of time, aligning the notification with the initial scheduling phase of the service line replacements.
As California moves forward, other states are already looking to emulate the Golden State by drafting and introducing similar legislative measures of their own, according to Velez. She pointed to states such as Illinois, Maryland, Minnesota, Oregon, and Washington as active areas of interest. People are already reaching out frequently to inquire about how they can successfully bring this innovative framework to their own home states, she added.
Within California, the incorporation of larger electrification incentives specifically tailored for disadvantaged communities will provide a much-needed and equitable boost to clean energy access, García noted. Having grown up in those exact kinds of neighborhoods as a low-income resident himself, García emphasized his personal commitment to ensuring that every single community has equitable access to modern, clean all-electric technology rather than being left behind in the transition.