New York State Budget Climate and Environment Housing

Hochul Is Ready to Start Weaning New York Off Gas

The governor and the Senate have aligned on large swathes of the NY HEAT Act. The Assembly might be ready to move on it, too.

Colin Kinniburgh · January 22, 2024

Governor Hochul's proposal could eventually allow the state to shift entire neighborhoods off fossil fuels. | Office of Governor Kathy Hochul

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Over the past year, a once-obscure corner of state law has become the center of attention for New York’s climate movement. Public service law, which governs utilities and the regulators who oversee them, requires those utilities to extend a new gas line to any building in the state that asks for it — and, as long as the building is within 100 feet of an existing main, to spread the cost across all of its customers, rather than charging the owner. A bill called the NY HEAT Act, first introduced in 2022, aims to overhaul this system, which effectively subsidizes the expansion of fossil fuel infrastructure even as the state’s climate law dictates that it be scaled back.

In recent days, the push for reform won a crucial supporter: Governor Kathy Hochul, who included key tenets of the HEAT Act in her budget proposal last week. Hochul’s version, dubbed the Affordable Gas Transition Act, notably scraps the “100-foot rule” that pays for new gas lines. Moreover, it ends utilities’ “obligation to serve” gas to every household — and could eventually allow the state to shift entire neighborhoods off fossil fuels, provided it can ensure reliable service. The current rules, the governor argues, are a “major obstacle” to achieving the targets of the climate law.

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Senate Democrats agree. Last year, they included the full HEAT Act in their counterproposal to Hochul’s budget, and passed it as a standalone bill in June. But it made no such headway in the state Assembly. This year, as the gas transition becomes the central climate fight of budget season, the ball will once again be in the Assembly’s court. And an initial survey of assemblymembers suggests that the bill is poised to move forward, in what could be one of the legislature’s biggest moves on climate since passing the landmark climate law nearly five years ago.

But outside the legislature, critics of the proposal, including the state’s largest labor federation, remain skeptical.

It was a surprise to the HEAT Act’s own sponsors that Hochul included any of it in her budget at all. Just the day before the governor gave her State of the State address, previewing her agenda for the year, Senate sponsor Liz Krueger and her Assembly counterpart Patricia Fahy told New York Focus they weren’t expecting it.

“I’m very pleased that she basically took, word for word, most of the NY HEAT Act and put it in her budget proposal,” Krueger said after the budget came out.

“We’ve met with the governor’s office repeatedly, we just [thought] it wasn’t going to happen, because she felt a little bit burned... that two years ago, we made no progress on HEAT,” Fahy said. Hochul first sought to repeal the 100-foot rule in her 2022–23 budget proposal, but both the Assembly and Senate rejected the idea at the time. The governor did not revive the idea last year, when a gas ban in new construction dominated climate discussions during budget season.

Since winning on new buildings, the environmental movement has massed behind the gas transition bill, with groups ranging from the mainstream New York League of Conservation Voters to scrappier anti-fossil outfits like Sane Energy Project rallying behind it.

It’s not the first time New York’s environmental movement has formed a broad front behind a bill in recent years. The all-electric buildings push enjoyed similar support last year, as did efforts to block an overhaul of the state’s greenhouse gas accounting system and, the year before that, a moratorium on new fossil-fueled cryptomining, said Liz Moran, northeast policy advocate at Earthjustice. All of those campaigns were successful. (Efforts to decarbonize transportation and tackle the state’s mountain of waste have been more polarizing.)

But the gas transition push has the potential to be far more sweeping than many of those earlier bills.

“It’s not just tackling one issue kind of in a silo. It is thinking on a systems level,” said Jessica Azulay, program director of Alliance for a Green Economy. Shifting households off of gas will also impact residential demand for electricity and shape New York’s buildout of renewables over the coming decades. As long as utilities are still required to serve gas to anyone who wants it, it’s impossible to plan a larger-scale transition, Azulay said.

“We need to have enough alternative energy that is readily available and affordable across the state before proposals like the NY HEAT Act are considered.”

—Mario Cilento, New York State AFL-CIO

Some longtime skeptics remain unconvinced that New York is ready for that transition, including the state’s leading voice of organized labor.

“We need to have enough alternative energy that is readily available and affordable across the state before proposals like the NY HEAT Act are considered,” said Mario Cilento, president of the New York State AFL-CIO, when asked about the governor’s gas transition proposal. “As of now, that is not the case.”

Cilento made similar comments to New York Focus last April. The union pushback persists despite a recent addition to the standalone bill requiring certain projects to pay union-level wages. Asked whether they had sought labor input on the HEAT Act since then, climate activists alluded to private conversations but did not provide specifics. A sign-on letter from more than 200 groups last October supporting the HEAT Act and other building electrification measures did not include any unions.

This leaves the broad environmental movement at odds with unions on a major piece of legislation — a familiar but uncomfortable position for green groups as they champion a “just transition” for energy workers.

Segments of organized labor have aligned themselves directly with fossil fuel and other business interests opposing the bill.

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Daniel Ortega, who runs outreach for the operating engineers’ local ELEC 825, now leads New Yorkers for Affordable Energy, a coalition whose steering committee also includes the gas utility National Fuel and two pipeline companies. The group has rebuked Hochul’s push to repeal the 100-foot rule, arguing that it threatens energy affordability and “good paying union jobs at a time when our state can ill afford such losses.”

Hochul’s office did not directly respond to these concerns when asked. Her draft legislation emphasizes “neighborhood-scale transitions” toward clean heating and cooling, including through the use of thermal energy networks — one approach that unions and climate hawks have bonded over. New York is currently piloting such networks, which link multiple buildings to a shared heating and cooling loop, in all seven of the state’s major utility territories.

Utilities have yet to weigh in publicly on Hochul’s version of the HEAT Act. National Grid, National Fuel, and Avangrid told New York Focus they were still reviewing the legislation. Con Edison and Central Hudson did not provide comment, but ConEd — which has in recent years positioned itself as the most pro-electrification of the state’s utilities — has already voiced support for ending the 100-foot rule.

National Grid has meanwhile parted ways with New Yorkers for Affordable Energy, New York Focus has learned, after serving on its steering committee last year. Asked why, spokesperson Karen Young said National Grid supports expanding use of renewable energy while advancing “the right mix of heating solutions that are in the best interest of our customers.”

Despite pushback from some corners, momentum appears to be on the climate movement’s side, including in the Assembly. The recently amended HEAT Act has 74 sponsors in that chamber, including two-thirds of Assembly leadership, outpacing last year’s All-Electric Buildings Act.

Even some non-sponsors are receptive to the governor’s proposal, at least in its broad strokes.

Monica Wallace, a Buffalo-area Assemblymember who chairs the chamber’s Majority Steering committee, told New York Focus she supports eliminating the 100-foot rule. “At the same time, we can’t compromise reliability and affordability,” she said, noting that in upstate and western New York especially, “we have to be very mindful of [the fact that] if the electricity goes out, people could die.”

In past years’ budget talks, some climate initiatives have faced resistance in the Assembly on the grounds that the budget should leave out “policy” issues that don’t affect revenue and spending. But Wallace and other assemblymembers reached by New York Focus argued that the gas transition bill was fair game.

“We’re talking about subsidies,” said Deputy Majority Leader Michaelle Solages, a sponsor of the HEAT Act. “The 100-foot rule is a subsidy. And so that really intertwines with the conversation with the budget.”

Solages stressed that the bill was as much about New Yorkers’ pocketbooks as about the climate.

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“We want to make sure that we are making the transition affordable for marginalized communities, Black and brown communities, who bear the brunt of not only the cost of the climate crisis, but also, as we transition, these individuals are paying more and more” for energy, she said.

Climate groups are disappointed that Hochul’s proposal doesn’t include the HEAT Act’s cornerstone affordability provision, which would codify the state’s existing goal of ensuring that utility bills not exceed six percent of household incomes. The Public Service Commission set this target in 2016, but has so far failed to meet it. (The Public Utility Law Project, a consumer protection group, estimates that only about half of households eligible for energy affordability programs are enrolled, and says even many of those households are paying more than six percent.) Advocates say enshrining the target in law would force regulators to take it more seriously.

New Yorkers for Affordable Energy, for its part, commended Hochul for “wisely choosing to buck extremists and leave out any mention of their 6% wealth redistribution scheme” in her budget.

Advocates hope to build on their current momentum to wrangle the affordability provision into a final budget deal. Azulay is heartened that Hochul has taken other steps in this direction. Last year, the governor wrote the six percent cap into a $200 million home retrofit program, and this year she announced an initiative that would put some of the proceeds from community solar arrays toward low-income customers’ utility bills.

Hochul’s proposal leaves out another pillar of the HEAT Act, too: There is no timeline for shrinking the gas system to meet the state’s emissions reductions targets. Instead, it would leave the Public Service Commission to set the pace.

Krueger, the bill’s Senate sponsor, says the key is to remove the obligation to serve gas; doing so will free regulators to move ahead in implementing the climate law on their own. (The climate law already requires all state agencies to comply, but HEAT Act backers say public service law has hamstrung those efforts.)

Still, climate advocates say they’ll push the legislature to stick with the HEAT Act’s more hands-on approach.

“We’re five years out from passing the [climate law],” Azulay said. “It’s time to make big moves.”