Why You’re Still Paying for Someone Else’s Gas Line

New York law requires utilities to build out gas infrastructure at customers’ expense. The Senate wants to close the spigot.

Colin Kinniburgh   ·   April 18, 2023
Gas bills could skyrocket over the coming decades as a shrinking pool of customers is left footing the bill for the entire system. | Illustration: Maia Hibbett for New York Focus

NEW YORKERS’ ENERGY bills hit record highs in recent months — and more hikes are on the way. Four of the state’s 10 major utilities are currently petitioning regulators to charge customers for billions of dollars’ worth of infrastructure upgrades. Con Edison, the largest of the lot, has struck a tentative deal to raise bills more than 12 percent over the next three years.

What’s costing utilities so much? Among other things, maintaining and even expanding a gas system that the state’s own expert panel says is at odds with New York’s climate law. The state’s climate plan recommends phasing out natural gas almost everywhere it is used today, “as quickly as possible.” But utilities are largely still doing the opposite — in part because of a little-known state law that requires them to. 

The Senate has taken notice. It is seeking to include a bill in the overdue state budget that would begin to pare the gas system back, pressing utilities to electrify faster and rein in costs to customers. “It’s common sense not to continue to invest money in expanding the gas system,” Senator Liz Krueger, who sponsors the bill, told New York Focus.

Dubbed the NY HEAT Act, the bill faces long odds in budget talks: Neither the Assembly nor Governor Kathy Hochul — who had previously supported aspects of the legislation — have gotten behind the push. But whether it makes it into the budget or not, it’s likely to remain on the agenda as New York charts a path towards cleaning up its most polluting sector.

The HEAT Act has exposed a deepening rift between utilities. ConEd — whose main business is electricity — backs a key provision, while gas-only National Fuel remains staunchly opposed. The state’s largest union federation also opposes the bill, New York Focus learned, reflecting long-running tensions between climate groups and a large section of organized labor.

NEW YORK’S LONGSTANDING public service law, which governs utilities, requires them to supply gas to any customer who requests it. It also dictates that the utility hook up new gas customers at no charge to them, provided their building is within 100 feet of an existing main. That cost gets spread among all of the utility’s customers — and, little by little, it adds up. Filings reviewed by the clean energy group RMI show that the so-called “100-foot rule” cost New Yorkers roughly $200 million a year from 2017 to 2021.

ConEd alone has estimated that it will spend about $75 million annually on new customer connections over the next few years, out of roughly $500 million the utility plans to spend on its gas system. Altogether, ConEd gas customers would see their bills rise 20 percent by 2025 if the current deal is adopted. 

That may just be the tip of the iceberg. A recent report by the Building Decarbonization Coalition, a pro-electrification industry group, found that gas bills could skyrocket over the coming decades as more households go all-electric and a shrinking pool of customers is left footing the bill for the system. 

Even if just two percent of households per year get off of gas, the average monthly bill for those who stay hooked up could reach well into the thousands of dollars by 2050, the group found. That could especially hurt low- and moderate-income households who are least able to pay the upfront costs of making the switch — and saddled with the cost of the infrastructure. Previous studies have projected similar trends

The NY HEAT Act would end the 100-foot rule and give utilities hard targets for reducing gas use. It would also write into law New York’s stated goal of capping energy bills at six percent of household income.

The bill has become a top cause for climate activists — but elements of it have also been endorsed by players they often rally against. ConEd in late March signaled its support for repealing the 100-foot rule and reducing gas use in line with the state’s emissions targets, two of the bill’s core provisions. Hochul also sought to repeal the 100-foot rule in her budget proposal last year, though the legislature didn’t take her up on it, and she didn’t revive the proposal this year. 

New York isn’t the only state reconsidering subsidized gas line extensions. California regulators eliminated them last fall, and Colorado took a similar step a few months later — though it stopped short of closing the spigot altogether.

Krueger, the Senate finance committee chair, said she didn’t know why Hochul backed down on the 100-foot rule repeal, but cited utility lobbyists’ influence as a potential factor. National Grid, the state’s largest gas utility, and other fossil fuel interests including the American Petroleum Institute have lobbied on versions of the bill in the last year, filings show. So has the influential Real Estate Board of New York.

New York Focus contacted REBNY and eight of the state’s large utilities through their parent companies. None answered specific questions about the NY HEAT Act.

The only utility that has openly voiced its opposition to the NY HEAT Act is National Fuel, which issued a memo in March opposing the bill’s inclusion in the state budget.

“A core premise of the bill, that use of the natural gas distribution system must be curtailed or discontinued in order to meet the emission reduction goals of the [climate law], is patently inaccurate,” the memo read. The gas-only utility has consistently lobbied against full electrification, including from its perch on the state’s Climate Action Council.

Hochul’s office did not answer questions about the NY HEAT Act or why it dropped its proposal to repeal the 100-foot rule. Instead, it provided its refrain about seeking a budget that makes “New York more affordable, more livable and safer.”

The Assembly did not include the NY HEAT Act in its wish list for the final budget. Assembly energy committee chair Didi Barrett said the omission reflected the chamber’s longstanding position that the budget should only address revenue and spending, not policy issues. 

“I have no problem with it,” she said, of repealing the 100-foot rule. “I just don’t see it as an appropriate part of the budget process.” 

The Assembly’s budget proposal does include related policy items, though, including its version of a ban on fossil fuels in new construction.

“We often say we’re not going to do policy, and then a number of things end up in there,” said Assemblymember Patricia Fahy, NY HEAT Act’s sponsor in that chamber. “That’s depending on what day of the week it is.”

Fahy said the resistance she’s encountered from colleagues goes deeper than process.

“There’s a lot of pushback in general on this legislation that we’re moving too far, too fast,” she said. “I think we do need to move faster, quite frankly.”

Among the opponents is a major voice of organized labor: the AFL-CIO, which told New York Focus it opposes the current version of the bill.

Krueger said pushback from labor is hard to avoid when unionized oil and gas jobs are at stake, but that the transition toward renewable energy isn’t zero-sum.

“There will probably be fewer people working gas lines 20 years from now — that’s just inevitable,” she said. “It doesn’t mean there won’t even be more jobs in ABCD forms of energy that we’re producing and using at a far greater quantity than whatever we use today.”

Mario Cilento, president of the New York State AFL-CIO, argued those other forms of energy aren’t ready for primetime.

“Phasing out natural gas before alternative energy sources are available will displace workers from good union jobs, imperil reliability, and increase costs for consumers,” he said.

Dennis Elsenbeck, a former National Grid executive who served on the Climate Action Council, echoed those concerns.

“You can’t transition from something unless you know what you’re transitioning to,” Elsenbeck said, noting that New York’s electric grid isn’t yet ready for full electrification. “When we just say, ‘I’m going to shut down the natural gas system,’ but we don't know what the impact will be cost-wise on the electric distribution system, we’ll create unintended consequences.”

THE HEAT ACT WOULDN’T just slow the gas system’s expansion — it would effectively force utilities to shrink it. The bill would require the Department of Public Service to set targets for reducing emissions from the gas system specifically, in line with the state’s economy-wide emissions reduction mandates.

And beyond new hookups, it would attack another major spending area for gas utilities: replacing “leak-prone” pipes. ConEd alone plans to spend more than $400 million doing so every year through 2025, according to its proposed settlement. The consulting firm Synapse Energy Economics found that the total cost of pipe replacements across New York’s six largest gas utilities could exceed $3 billion a year by 2040 if current trends continue. 

Proponents of the bill maintain that avoiding that expense could save customers a lot of money in the long term, and that alternatives already exist. 

Under the HEAT Act, utilities would have to take a hard look at whether a gas line is really needed, or whether the area might be better supplied by emissions-free technologies. Those could include “thermal energy networks,” which link multiple buildings to a shared heating and cooling loop, similar to New York City’s steam system.

The concept has broad political support, including from building trades unions often wary of electrification mandates, but can be tricky to implement. New York utilities are about to find out just how tricky: They’re currently sketching out a series of pilot projects, as required by a state law passed last year. 

“We are steadfast in our commitment to combat climate change and are working with the governor and the legislature to quickly develop clean energy alternatives, including thermal energy networks,” Cilento said. 

Jessica Azulay, program director of Alliance for a Green Economy, says the HEAT Act would remove a major obstacle to exploring those alternatives to fossil fuels. Most, if not all, utilities are already pursuing them, she said — but their “obligation to serve” gas gets in the way. 

If a utility wants to decommission a gas line, “it’s this very time-consuming, uncertain process right now where they kind of have to go house by house by house by house and convince everybody that they should get on a heat pump instead,” Azulay said. “You can’t really plan around that.”

She framed the HEAT Act as giving utilities more options rather than boxing them in. But it could mean that holdout customers might be pushed to go all-electric before they’re ready, if the state deems a neighborhood-wide switch necessary to meet its climate targets. (Households could probably still go it alone with propane or oil if they really wanted.) It also bans almost all expansion of the gas system to new neighborhoods after 2025, with a hard stop in 2027. 

Will it all amount to any relief on New Yorkers’ energy bills in the short term? That’s less clear. Ryan Cassidy, director of sustainability and construction at the affordable housing provider RiseBoro, says stubbornly high electric rates remain an important obstacle to ditching gas. The nonprofit has multiple all-electric buildings in development, and has completed inside-out retrofits on nine Bushwick buildings. But Cassidy says it remains prohibitively expensive to operate some multifamily buildings without gas, especially for water heating.

That deeper imbalance is something the HEAT Act would also prod the state to examine: It would require the Public Service Commission to reevaluate how it sets rates, by opening a planning docket and issuing a report.

Azulay acknowledges that process isn’t going to make energy bills affordable overnight. But she said that reorienting regulators’ priorities could in turn force utilities to think more creatively about ways to bring overall energy costs down while greening the grid — for example, through community solar projects — and steering clear of the so-called “death spiral” that gas utilities could face if the transition isn’t adequately planned.

Recent reports suggest that National Grid has its own doubts about the future viability of its gas system. The Wall Street Journal revealed in early April that the company is considering selling off some of its pipelines, fearing that it may not be able to recoup further spending on them as New York weans itself off natural gas.

Elsenbeck said the risk of customers getting caught paying for those “stranded assets” was real. “What you don’t want to be is the last person on a natural gas system that everybody’s focused on shutting down,” he said.

Colin Kinniburgh is a reporter at New York Focus, covering the state’s climate and environmental politics. Over a decade in media, he has worked in print, television, audio, and online news, and participated in fellowship programs at CUNY’s Graduate School of Journalism and… more
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