When one of the nation’s largest investor-owned utilities, Pacific Gas and Electric (PG&E), wanted to replace Merrian Borgeson’s aging gas service line at her home 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 (NRDC), explained to the utility that the repair was entirely unnecessary. She was already in the process of fully electrifying her home and was preparing to replace her stove—the very last gas appliance left in the house—with a modern induction version during an upcoming kitchen remodel. Once that work was complete, she planned to formally request that the gas line be permanently shut off.
However, PG&E informed her that its operational schedule could not accommodate a delay. That same week, utility crews dug up her front yard and swapped in a brand-new pipe designed to send gas from the distribution main line directly to her home.
Borgeson was not billed for the service directly out of pocket. Instead, the infrastructure upgrade—which typically costs between $20,000 and $30,000 in PG&E’s service territory alone, not including long-term interest and ongoing operation and maintenance costs—was quietly added to the ledger to be paid for by all gas customers over the expected multi-decade lifespan of the infrastructure.
A few years later, that brand-new pipe sits completely unused, buried quietly in the ground.
“Now, I have no gas in my house,” Borgeson said, reflecting on the paradox of the utility’s infrastructure mandates. “But the customers all around me are paying for that pipeline for the next 50 years.”
Soon, however, utility customers across California will have a choice that Borgeson was denied. A landmark piece of legislation, the Home Energy Choice Act, officially designated as Assembly Bill 2313, is poised to reshape how utilities manage aging infrastructure and transition away from fossil fuels. The new law will require investor-owned utilities to give households scheduled for a standard service line replacement a meaningful alternative: they can either proceed with the traditional pipe replacement or accept a financial incentive, potentially worth several thousand dollars, to disconnect from the gas system entirely.
Crucially, the financial incentive offered to homeowners to switch to all-electric equipment—such as high-efficiency heat pumps, induction ranges, and heat-pump water heaters—will be lower than the actual cost of replacing the gas line. This dynamic ensures that every time a household chooses electrification over a new pipe, the resulting savings are shared among all remaining gas customers, putting downward pressure on utility bills while reducing greenhouse gas emissions.
The enactment of the law sends a definitive signal about the state’s energy future. According to Borgeson, who actively advocated for the legislation, the policy sends a very clear message that California is no longer going to invest millions of dollars in gas infrastructure without seriously considering what the future holds. It represents a massive signal of where the state is headed as it seeks to modernize its energy grid and meet its climate mandates.
The Natural Resources Defense Council has run extensive calculations demonstrating the economic potential of this shift. According to the organization’s research, PG&E’s gas customers could save a cumulative 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 service lines. To put that figure into perspective, PG&E replaces approximately 15,000 service lines on an annual basis, illustrating the massive scale of potential savings.
If similar programs were instituted by utilities across the country, the resulting financial and environmental savings could rival federal investments in home electrification seen during the Biden administration. According to clean energy nonprofit RMI, traditional utilities across the United States spend upward of $7 billion every single year exclusively on service line replacements.
The new policy will help push California closer to its overarching statutory goal of achieving a fully carbon-neutral economy by 2045. However, the version of the legislation that ultimately crossed the finish line and was signed into law was noticeably less ambitious than the initial proposal introduced in the legislature, according to Brandon García, California director at the industry association Advanced Energy United. Among the revisions and compromises required to pass the bill were caps limiting the programs to 1% of a utility’s total customer base, alongside a sunset clause causing the law to expire on January 1, 2035, though lawmakers retain the option to renew it before that date approaches.
Despite the compromises, the legislation is viewed as a major victory by its proponents. Assemblymember Marc Berman, who authored the bill, expressed enthusiasm for its passage in an email statement, noting the heavy lift required to secure its approval in the statehouse.
“AB 2313 was a very difficult bill to get through the Legislature, so I’m very excited that it will soon give Californians the opportunity to decide what energy is powering their home and provide financial support if they choose to transition away from natural gas,” Berman said. “When homeowners opt to electrify, the utility avoids additional investments in fossil fuel infrastructure that will eventually become a stranded asset, and this saves all ratepayers money long-term.”
Not all utility stakeholders viewed the legislation favorably. Major utilities, including San Diego Gas and Electric and SoCalGas, opposed the bill during its legislative journey, arguing that it could precipitate an unfair cost shift. Their core argument centered on the concern that as more customers abandon the gas network, those remaining on the system would be left bearing increasingly outsized financial burdens to maintain the physical infrastructure.
While the broader question of how to manage the economic contraction of the gas grid is a recognized challenge for the transition away from fossil fuels—and one that state regulators must ultimately address—proponents argue that AB 2313 takes the opposite approach of what critics claim. Kiki Velez, equitable gas transition lead at the Natural Resources Defense Council, explained that the law is specifically designed to encourage people to leave the gas system at the exact moment when their departure actually saves money for everyone else remaining on the network.
With the enactment of this legislation, California becomes the third jurisdiction in the United States to authorize a pipeline replacement alternative approach, and the very first to implement it on a statewide level. The movement began taking shape in 2024, when New York utility Con Edison launched its own pioneering initiative known as the Energy Exchange Program. That program offers eligible residential households up to $20,000 in incentives to electrify their homes rather than repairing gas infrastructure. Other utilities across New York are now following suit, according to Velez. Furthermore, in July, the Colorado Public Utilities Commission officially authorized Xcel Energy to create a comparable program, which is expected to launch within a matter of months.
The immediate next step for California is for the state’s Public Utilities Commission to establish a detailed, formal framework for utilities to follow. This framework will need to outline precise incentive levels, including provisions for larger financial awards directed at customers residing in disadvantaged communities. Once the regulatory guidelines are established, utilities will have until January 1, 2028, to secure formal approval for their individual proposed programs.
One crucial operational detail that remains to be determined is the exact amount of advance notice utilities will be required to provide to residents whose pipes are scheduled for replacement. Borgeson pointed out that receiving notification at the eleventh hour would severely undermine the effectiveness of the program. RMI recommends that utilities alert residents one to five years in advance, specifically at the point when maintenance schedules designate the service lines for replacement.
As California moves forward with implementation, other states are closely watching and looking to emulate the model with legislation of their own. Velez noted that lawmakers and advocates in states such as Illinois, Maryland, Minnesota, Oregon, and Washington have already expressed keen interest. People are frequently reaching out to inquire how they can introduce similar regulatory frameworks in their home states, signaling a growing national appetite for rethinking utility investments.
In California, the integration of larger electrification incentives tailored for disadvantaged communities will provide a much-needed boost to clean energy equity, García emphasized. Drawing on his own background, he noted the personal significance of ensuring that lower-income neighborhoods are not left behind in the green energy transition. As someone who grew up in those kinds of neighborhoods as a low-income person, he stressed the importance of ensuring that all residents have equitable access to modern, all-electric technology.