2024 CPUC Decision on Eliminating Electric Line Extension Subsidies on Mixed-Fuel New Construction Installations
Between 2018 and 2022, residential and non-residential builders in the state of California collected over $2.1B in electric line extension subsidies. The latest CPUC initiative stops Electric providers from providing allowances, refunds, and discounts to mixed-fuel (gas AND electric) projects. Electric providers’ bills and contracts will need to be completed and paid prior to July 1st 2024 in order to claim allowances, refunds, and discount benefits. As far as we are aware, there will be no exception to the ruling or work around. Read below for a additional details of the ruling.
The December 2023 Phase 3B Building Electrification Ruling by the California Public Utilities Commission to eliminate the electric line extension subsidies for new construction building projects that use natural gas and/or propane in addition to electricity, will take effect on July 1, 2024. This new measure is being implemented in an effort to meet California’s “goal of reducing overall greenhouse gas emissions to 40 percent below 1990 levels by 2030 and achieving carbon neutrality by 2045.” These changes are applicable to all residential, commercial, industrial, and mixed-use projects, but do not affect all-electric projects. The decision follows the CPUC’s prior decision D.22-09-026 (in effect July 1st 2023) to eliminate natural gas line extension allowances, 10-year refundable payment option, and fifty percent discount payment option under gas line extension rules. With the elimination of electric line extension subsidies, the state is further “ending indirect incentives” by removing all remaining subsidies associated with the extension of new gas infrastructure.
Mixed-fuel new construction projects in Southern California Edison and other Investor Owned Utilities’ territories will no longer be eligible to receive allowances, refunds, or discounts for the Rule 15 line extensions or Ruile 16 service extensions if the project is planning to install gas as an additional fuel. In order for mixed-fuel projects being served by SCE/SDG&E/PG&E to be grandfathered into allowance eligibility, all Bills and Contracts/ PCALS need to be executed and paid before the CPUC cutoff date of July 1st, 2024 and field completed and energized July 1st 2025. Unpaid projects will require a repricing utilizing actual cost billing.
The California Energy Commission defines a Newly Constructed Building as a building that has never been used or occupied for any purpose. For construction projects with service upgrades to their existing gas service, the elimination of electric line subsidies does not apply as long as there is no additional material or infrastructure being installed other than the gas meter. (See SCE FAQs)
10-year refundable projects currently in construction will not have their executed contracts modified, and will continue collecting their refundable payments.
Extenuating circumstances will be taken into consideration and on a case-by-case basis for projects where both the “customer has executed and paid the contracts by July 1st 2024, and the project extends beyond the 12-month completion date of July 1st 2025.”
For a copy of this latest ruling’s FAQs, or if you have any questions regarding your ongoing or proposed mixed-fuel project, please contact Kip Armstrong, Manager of Murow Development Consultants’ Dry Utilities team, at [email protected]. We can help you navigate the evolving landscape of energization rules and regulations.
