Is the gas industry charging you to connect your neighbors to gas?
If you pay a gas bill every month, it’s likely that you’re paying to make your neighbors dependent on methane gas for decades to come.
When a new home is being built, gas utilities usually pay for the new pipes and meters needed to hook it up to the gas system, and then recoup those costs by raising bills on their current customers. These policies are referred to as line extension subsidies (or “allowances”), and they’re in place in just about every state in the country.
With the gas industry bragging that they hook up a new building to gas once every minute in the United States, this adds up to a massive backdoor subsidy for the fossil fuel industry. Shockingly, most state regulators aren’t tracking the practice, but researchers at RMI estimate that it costs the public more than $164 million a year in California and more than $200 million a year in New York. Extrapolated across the country and it’s likely that the American public is unwittingly subsidizing the expansion of fossil fuels to the tune of more than a billion dollars a year.
Luckily, utility regulators around the country are scaling back and eliminating these unfair fees.
- In 2021, the Washington State Utilities and Transportation significantly reduced the amount that gas utilities can recoup from their customers when hooking up new homes to the system.
- In April, the Connecticut Public Utilities Regulatory Authority halted a similar program that increased customers’ monthly bills to finance the expansion of the state’s gas system. The agency cited skyrocketing gas prices that erased any economic benefits and said the plan was incompatible with the state’s climate and energy goals.
- In September, the California Public Utilities Commission eliminated line extension subsidies in the state, calling them “a vestige of the past.”
- Last month, the Oregon Public Utility Commission cut in half the amount that NW Natural, the state’s largest gas utility, could recoup from customers.
- The Colorado Public Utility Commission is currently considering eliminating the subsidy completely.
Making everyone pay the costs of expanding the gas system makes less and less sense as the world embraces the health, safety and economic benefits of running our buildings on increasingly clean electricity. To date, more than 90 cities, counties and states have passed new all-electric building codes, with more coming every day.
Transitioning off of the methane gas system in the coming years is vital for protecting public health, securing stable energy prices and preventing the worst climate scenarios. Making working families pay for the expansion of the system every time they pay an energy bill only makes this long-term transition harder, and increases the risks that lower-income Americans are stuck with higher energy bills.
As people move away from gas, there will be fewer and fewer users left to cover the costs of maintaining a vast, sprawling gas system of more than 3 million miles of pipes nationwide. Even now, the system is getting increasingly expensive to maintain, and the extra costs are being passed on to gas customers through higher rates.
The gas industry is sinking billions of dollars more every year into the system following a series of high profile leaks, like the Aliso Canyon disaster in California, and hundreds of explosions, which have killed 122 people since 2010, according to a report from the U.S. Public Interest Research Group. RMI researchers examined industry records and found that the costs of maintaining the system have tripled since 2011 — to more than $20 billion a year:
Line extension subsidies are one of the clearest examples of the way that the gas industry has warped public policy to ensure we become increasingly dependent on their dangerous, polluting product. It’s past time to eliminate this backdoor subsidy, stop the expansion of the methane gas system and invest in clean electricity instead.