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California’s Home Energy Choice Act requires gas utilities to offer households scheduled for service-line replacement a financial incentive to electrify instead. The Public Utilities Commission must set program details, and utilities’ proposals must be approved by Jan. 1, 2028; the law is capped at 1% of each utility’s customers and expires in 2035 unless renewed.
California has enacted the Home Energy Choice Act, AB 2313, requiring gas utilities to offer households whose service lines are scheduled for replacement a choice: install a new gas line or take a financial incentive to electrify. The statewide policy is intended to avoid some gas infrastructure spending and give households support to switch appliances, though its rules and incentive amounts have yet to be set.
The alternative applies when a utility plans to replace a gas service line running from a distribution main to a home. Instead of automatically receiving a replacement line, a household will be able to consider an incentive to move to electric equipment, such as a heat pump, induction range or heat-pump water heater. The law requires the incentive to be less than the cost of replacing the line, with savings shared among gas customers.
The Natural Resources Defense Council estimates that, in PG&E territory, replacing a service line typically costs $20,000 to $30,000, before associated interest and ongoing operation and maintenance costs. The group calculated that PG&E gas customers could save a total of $20 million if 1,000 households received incentives of $17,500 instead of having their lines replaced. PG&E replaces about 15,000 service lines a year, according to the report; that annual figure does not mean all those customers would qualify for or take the alternative.
The law’s reach is limited: programs are capped at 1% of a utility’s customers and the legislation expires on Jan. 1, 2035, unless renewed. California’s Public Utilities Commission must develop a framework, including incentive levels and larger amounts for customers in disadvantaged communities. Utilities then have until Jan. 1, 2028 to obtain approval for their proposed programs.
Avoiding Unneeded Gas Line Costs
The policy could change what happens when a gas line needs replacement: rather than treating a new pipe as the default, a utility must offer an alternative that supports electrification. That matters to customers because the cost of gas infrastructure is recovered across the customer base over time, according to the report. A line may remain in the ground and be paid for by ratepayers even if a household later stops using gas.
It also offers participating households financial help with the expense of switching appliances. The law does not require every household to electrify, and it does not remove the broader challenge of maintaining a gas network as customers leave it. San Diego Gas and Electric and SoCalGas opposed the bill, arguing that customers who remain on gas could face a disproportionate share of system costs. The policy therefore addresses a specific decision point—service-line replacement—rather than resolving the wider question of how gas-system costs should be allocated over time.
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From One Berkeley Home to State Policy
The law grew in part from an experience described by Merrian Borgeson, California policy director for climate and energy at the Natural Resources Defense Council. When PG&E replaced the aging line to her Berkeley home, she said she had asked the utility not to do so because she planned to replace her remaining gas appliance during a kitchen remodel and later have the line shut off. The work went ahead, and Borgeson said the new pipe is now unused while gas customers continue to pay for it.
California is the third jurisdiction to authorize this kind of alternative, according to the report, and the first to do so statewide. Con Edison began its Energy Exchange Program in New York in 2024, offering eligible households up to $20,000 to electrify. Colorado’s Public Utilities Commission authorized Xcel Energy to create a similar program in July, though the report said its launch was expected in the following months. The California measure was less ambitious than its original version, according to Brandon García of Advanced Energy United, after revisions added the customer cap and 2035 sunset.
“It’s this huge signal of where the state is headed.”
— Merrian Borgeson
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Incentive Rules Still Pending
The state has not yet set the incentive amounts, eligibility details or customer notification period. Those decisions are part of the Public Utilities Commission’s framework and utility proposals. The timing of notice matters: households need enough time to weigh an offer and plan appliance changes before a replacement is scheduled. Borgeson warned that learning about an incentive only at the last minute would be the worst-case scenario; the Rocky Mountain Institute recommends notice one to five years ahead, according to the report.
It is also not yet clear how many eligible households will choose electrification, how much the approved programs will spend, or how the policy will affect gas bills over time. Utilities’ cost-shift concerns extend beyond this program to the broader transition away from fossil fuels. The law’s limited cap means its initial reach will be restricted, and its expiration date leaves the program’s longer-term future dependent on possible renewal.
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State Commission Sets Program Terms
The immediate next step is for the California Public Utilities Commission to establish the framework utilities must follow, including incentive levels and provisions for larger payments in disadvantaged communities. Utilities will then prepare individual proposals for review and approval by Jan. 1, 2028. Until those rules and plans are approved, households cannot know the exact offer available to them or how far in advance they will be contacted.
Advocates say other states are considering similar measures. Velez told Canary Media that people in Illinois, Maryland, Minnesota, Oregon and Washington have been exploring legislation. Whether those efforts advance, and whether California renews its program before the 2035 sunset, remain open questions.
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Key Questions
What choice will California households get?
When a utility schedules a household’s gas service line for replacement, the law requires it to offer the option of a financial incentive to electrify instead of installing a new line. Households are not required to take the offer.
How much will the incentive be?
The amount has not been set. The Public Utilities Commission will establish program rules, including incentive levels. The law specifies that the incentive must be less than the cost of replacing the line.
When will the programs be available?
The commission must first create a framework, after which utilities will submit plans for approval. Those utility proposals must be approved by Jan. 1, 2028; the specific start dates will depend on the approved plans.
Will every California gas customer be eligible?
No. The policy applies to households whose gas service lines are scheduled for replacement, and programs are capped at 1% of each utility’s customers. Final eligibility details remain pending.
Why did some utilities oppose the law?
San Diego Gas and Electric and SoCalGas argued that customers who leave the gas system could shift costs onto those who remain. The law focuses on offering an alternative at the time of line replacement; it does not settle the wider debate over gas-system costs.
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