California’s regulators have the chance to fund a groundbreaking new electrification project, one that would help 250,000 homes in Southern California transition away from fossil fuels. If they do, they’ll be showing the world that California is still a climate leader. If they don’t, the results could be disastrous for customer utility bills and our climate commitments.
On paper, the state appears to be taking the climate crisis head on. In the approved 2022 CARB Scoping Plan, state regulators committed to 80 percent decarbonization of the buildings sector by 2035. While this commitment lags behind President Biden’s 2035 net zero carbon pledge, it at least indicates that the state will take steps in the right direction, weaning itself off an expensive reliance on natural gas. To halt the expansion of the gas system, the California Public Utilities Commission (CPUC) has successively eliminated subsidies for new gas hookups. To reduce emissions from existing buildings, CARB has committed to banning the sale of natural gas space and water heating appliances by 2030. These commitments are admirable and important to decarbonization, as building emissions constitute 25 percent of greenhouse gas emissions statewide and are major contributors to respiratory diseases and asthma.
Yet in practice, the state seems poised to actively hinder electrification efforts and favor the fossil fueled status quo. In October, the CPUC took a giant step backwards, proposing to reject a first-of-its-kind electrification program by one of the state’s largest utilities, SoCalEdison. The program would have funded the installation of over 250,000 electric heat pumps and heat pump water heaters and thousands of electric panel upgrades in Southern California, providing customers with much-needed financial assistance in getting off of gas.
Electrification funding is desperately needed.
Electric appliances can offer enormous cost savings (and are 3 to 4 times more efficient than gas appliances) in the long run. But those cost savings come only after installation, and can be prohibitively expensive for homeowners without capital or without access to the right contractors. For the majority of low-income Californians who rent, electrification programs like SoCalEdison’s would make electrification cheaper for landlords, and thereby translate to cleaner air and lower bills for renters.
In rejecting the SoCalEdison’s proposal, the CPUC cited short-term concerns about the program’s total cost – minuscule compared to alternative gas distribution spending – without considering electrification’s potential to reduce electric rates long-term by spreading electric system costs over more load. (With suggested modifications from NRDC and the Sierra Club, the program would have resulted in over $7 annual bill savings for decades, in exchange for only $1 monthly rate hikes from 2024 to 2027). In a vacuum, this decision is discouraging, With context, it looks even worse. While the Commission categorically rejects spending on electrification efforts, it continues to approve billions of dollars in gas infrastructure upgrades, all while the gas utilities themselves admit that gas demand will decrease by 25 percent, at least, over the next 25 years.
And yes, the federal Inflation Reduction Act (“IRA”) promises tax credits for electric appliances. But SoCalEdison estimates that even after IRA and state funding is exhausted, there will still exist a 1.3 to 1.4 million “heat pump gap” in its service area alone. We won’t be able to hit our climate goals with federal funding alone.
As a result, California, once a climate leader, is beginning to fall behind other states in decarbonization efforts. Just recently, Massachusetts boldly went much further than California, releasing a plan called “Beyond Gas,” rejecting gas utilities’ vision for a fossil fuel future and instead requiring that utilities work to electrify and decommission the gas system.
The proposed decision to reject SoCalEdison’s electrification program is set to be voted on on January 11th. There is still time for the state to reverse course and begin to end its toxic relationship with gas.