Sometimes a half-step in the right direction can be a step in the wrong direction. In Santa Nella, a small California community that encompasses a mobile home park, the California utility regulator (the California Public Utilities Commission, or CPUC) recently decided to offer residents a choice to either electrify or receive upgraded gas service, rather than decommissioning the unsafe existing gas infrastructure. But climate change is a ticking clock, and California doesn’t have time for the Commission to put in gas infrastructure with one hand and work to electrify buildings with the other – especially without adequately consulting the community that will pay the price.

In Santa Nella, 270 homes were on the brink of experiencing a major disruption in their utility services. Residents had received natural gas from a local corporation, SNME, Inc., rather than directly from Pacific Gas & Electric, the area’s utility. This practice is fairly common throughout California mobile home parks, but the Santa Nella system presented a number of safety, efficiency, and reliability issues to the residents, and SNME is now closing its doors for good. 

In May 2022, the CPUC opened a ratemaking investigation to determine how to supply the affected community with adequate service going forward – an investigation that highlighted the state’s fraught, fragmented approach to building electrification. The CPUC and stakeholders grappled with a number of questions: when SNME folds, what should become of the gas system and its consumers? Should Santa Nella install a brand new gas system paid for by all PG&E customers? Or do the state’s decarbonization goals mean the community should go electric-only? Answering questions like these is where the rubber meets the road in equitably decarbonizing California buildings.

PG&E offered three options to the CPUC: 1) to upgrade the gas infrastructure only; 2) to upgrade the gas and electrical infrastructure; and 3) to fully electrify the impacted residences and provide only electric service to the area.

Ultimately, the CPUC adopted Commissioner John Reynolds’ recommendation to upgrade the gas and electrical infrastructure and offer customers the option to fully electrify. But this half-in, half-out approach to electrification raises a number of concerns. 

Status Quo vs. California’s Climate Ambition 

Electrification is a critical component of building decarbonization. California has set ambitious goals to make 3 million homes climate-ready by 2030, and 7 million homes climate-ready by 2035; achieving those goals equitably will require a thoughtful, strategic approach, informed by local communities and their needs. Notably, the Commission has previously found that in light of equity considerations, it is necessary to “discourage the expansion of the gas system and reliance on gas appliances.” In fact, the Commission has previously declined to adopt a phased approach to ending natural gas line subsidies because there was agreement that carbon neutrality must be pursued with “unprecedented urgency and commitment,” recognizing that California is already behind on its 2030 goals.

The Santa Nella decision was therefore made against the backdrop of substantial efforts by state regulators to orchestrate a shift away from the use of natural gas in California’s buildings. As the CPUC recognized when it initiated a long-term planning process for the state’s natural gas system, “state and municipal laws concerning greenhouse gas emissions will result in the replacement of gas-fueled technologies and, in turn, reduce the demand for natural gas.” In other words, gas is and should be on its way out to achieve California’s climate goals – but that recognition was absent from the Santa Nella decision.

Also running through the Santa Nella investigation was a fundamental tension: the state needs to reduce its demand for natural gas while also fulfilling a utilities’ legal obligation to serve customers in their service territories. In exchange for operating as a monopoly, investor-owned utilities must provide every customer in their territory with essential services, such as electricity or natural gas. In recent years, the obligation to serve has emerged as a barrier to building electrification in California because of a lack of legal clarity about whether the obligation is satisfied by providing the same underlying end uses – like cooking, water heating, and laundry – or if customers have a continuing and permanent right to receive natural gas service specifically, even if those services can be provided by all-electric appliances. California legislators could avoid such tension in the future by clarifying that in situations like this one, electricity service is an adequate substitute for gas service.

The Risks of a Half-Step Toward Electrification

California’s policy goals are in tension with the Santa Nella decision’s requirement that PG&E update the electrical system throughout the affected community and install new gas infrastructure sufficient to serve the entire area, no matter how many residents ultimately decide to electrify their homes. For the affected residents, the default option of their utility upgrade will be to provide both new gas and electric service. This ‘default’ is due in large part to the CPUC’s recognition of the very short timeline to find a way to provide essential utility service to the community; however, the CPUC has not discussed the option to electrify with the same urgency, as the state’s policy goals would suggest is necessary.

Meanwhile, installing new natural gas infrastructure on an accelerated timeline will reduce the community’s ability to electrify by 2035 and will increase the likelihood that community members will be left with rising natural gas bills. As more homeowners and businesses disconnect from the state’s natural gas system, the costs of maintaining that system – which largely won’t change –  will increase per person for the decreasing number of customers still reliant on gas. Those costs are likely to fall disproportionately on low-income individuals and renters. And if a new natural gas system is installed in Santa Nella, it will probably become financially “stranded” in the short window of time that remains to meet California’s climate goals.

Not only will new gas infrastructure in Santa Nella have a lifespan beyond California’s 2030 and 2035 goals, it will also contribute to outdoor and in-home air pollution, further harming a community that is already experiencing a higher pollution burden than 84% of Californians. Leaks from natural gas lines and natural gas appliances, even after those appliances are turned off, have been found to increase health risks, particularly in low-income communities already experiencing high pollution burdens.

These potential inequities can be minimized if California commits to a managed transition away from natural gas, a shift which could also generate substantial savings for California ratepayers by avoiding investments in infrastructure that will be abandoned before the end of its service life. 

Whose Choice Is It Anyway? 

The CPUC and PG&E approached the Santa Nella investigation as if every customer in PG&E’s territory must be adequately, reliably and safely connected to the natural gas system – whether or not the customer wants gas service or is adequately informed about its costs and benefits. In other words, all parties seem to have assumed that fulfilling the legal obligation to serve includes providing natural gas to any customer that demands it. However, in the Santa Nella investigation, this leap was made without sufficient discussion or community engagement.

Despite the fact that the investigation involved changing utility service for all the people who live in Santa Nella, only one in-person joint community meeting was convened by the CPUC and PG&E, and it was at this meeting that community members learned for the first time of the impending change. Despite the fact that many in attendance did not have any prior awareness of the issues and therefore had no opportunity to prepare for the meeting or empower local organizing efforts, direct community outreach remained minimal. Two virtual public informational sessions were held, both on February 15th, which required a phone bank call-in to join –  and received almost no community participation. 

In contrast, during the San Joaquin Valley Pilot Program (which was often compared to the situation in Santa Nella), the leveraged community outreach, education and organization, led to one of the highest levels of community engagement seen at the CPUC. It is unclear why, given the similarities between the programs, the CPUC failed to do the same here. Moreover, following the decision, it is similarly unclear if there will be enough community outreach, education, and assistance for community members to learn about the impacts of electrification in their homes and on their bills to make an informed decision about the ‘default’ option of receiving new gas service.

Lessons Learned from the Santa Nella Decision – What Do We Do Next Time?

There are some simple ways the CPUC could do better in the future:

1. Implement an organized neighborhood decommissioning strategy to equitably meet the needs of the community and Califiornia’s climate goals. 

The risks of continuing to deploy natural gas infrastructure in California have been recognized repeatedly by state agencies, the CPUC, and environmental justice groups. Adding a new natural gas system in 2024 in Santa Nella will increase public health risks by contributing to both indoor and outdoor air pollution, and may leave gas consumers stranded with high bills, among other risks. In line with state goals, this new gas system should not be installed without developing a decommissioning strategy that is responsive to community preferences and needs.

2. Position the community, not utilities, as the primary decision-maker.

Before directing the Santa Nella or a similar community to receive new natural gas infrastructure “just in case” that’s what the community wants, California regulators should create more meaningful opportunities for community engagement, including a robust discussion of the benefits and costs of electrification to facilitate an informed decision making process.

Olivia Bonner joined the Climate and Energy Policy Program and Stanford Law School as the Equitable Building Decarbonization Legal Fellow in September 2022. She previously worked as an Associate Legal Officer in the International Environmental Law Unit of the United Nations Environment Programme, where her work centered on environmental rights and justice and environmental rule of law. At CEPP, Olivia’s work focuses on the intersection of healthy homes and communities with a clean, reliable and resilient energy grid, and she is working to ensure that an equitable and just transition in California is realized.

Amanda Zerbe joined Stanford Law School as an Early Career Climate Law Fellow in March 2023, where her work focuses on clean air and equitable decarbonization. She previously worked as a Legal Fellow at the Institute for Policy Integrity at New York University School of Law. She graduated in 2021 from Stanford Law School with a joint M.S. degree from Stanford’s Emmett Interdisciplinary Program in Environment and Resources (E-IPER).

This post was originally shared on the Climate and Energy Policy Program’s Substack.