The Gas Industry is Raising Your Rates to Expand Their Polluting System: The NY HEAT Act Will End That
New legislation will save New Yorkers hundreds of millions in subsidies for methane gas as the state shifts to an electric future
At this very moment, New Yorkers are unknowingly paying hundreds of millions of dollars each year to cover the costs of expanding the methane gas system in a practice known as gas line extension allowances. Not only is this practice deceptive and unfair, but it also forces New Yorkers to invest in an antiquated energy system that we know to be polluting, inefficient, and dangerous.
Luckily, there is a piece of legislation in the works that would phase out this practice, saving New York families millions of dollars each year. Lawmakers should support the NY HEAT Act (Senate Bill S2016) to hold the gas industry accountable and move the state into the all-electric future.
What are gas line extension allowances?
For decades, gas companies have covered the cost of connecting new customers to the gas system with a subsidy, which is often referred to as the “100 foot rule”. The 100 ft rule is a form of cross-subsidy for new residential gas rate payers, who do not pay the cost of a new gas line by up to 100 feet from existing gas mains in order to reach their building. That cost – the new connection – is added to other capital costs that a gas utility can pass off and recover from all of its rate payers. In other words, gas companies have been able to offer new customers “free” construction service that is actually paid for by all New Yorkers.
Under this existing system, New Yorkers can expect to see their gas rates go up over the years. In fact, advocates estimate that extension allowances cost New Yorkers $200 million each year. The 100 foot rule is a meaningful tool and incentive for gas utilities. From 2017 to 2021, utilities shifted just over $1 billion of costs off to existing rate payers for 170, 000 new rate payers. This comes out to about an average of $5,880 for each new ratepayer.
Why should gas line extension allowances be phased out?
Aside from the strain on New Yorker’s pockets, gas line extension allowances should be phased out because they incentivize the expansion of the polluting and outdated gas system. By now, it is common knowledge that we must decrease our reliance on gas if we’re to meet our climate goals in New York. However, there are still tactics– like gas line extension allowances– that enable the gas industry to cling to the last bits of power it has over New York communities.
Burning methane gas to heat homes generates 560 million tons of carbon dioxide each year, amounting to one-tenth of total U.S. emissions. Beyond being a massive contributor to climate change, gas also threatens the health and safety of New York families. New peer-reviewed research suggests that a staggering 18% of New York childhood asthma cases can be linked to having a gas stove in the home. Other new research has shown that gas delivered to stoves contains air toxins known to cause cancer. Then there’s the risk of leaks and explosions– one study estimated that 3.3% to 4.7% of methane escapes the gas supply chain in urban areas.
How has the gas industry gotten away with this?
Historically, lawmakers have allowed the gas industry to provide line allowances under the presumption that access to gas is a public good. This presumption no longer holds true. While we once believed gas to be the cheapest and least polluting power source, there is now clear evidence that electric is a cleaner, more stable energy solution that doesn’t experience volatile price increases. As a result, it is imperative that lawmakers adjust policy to reflect what science shows us.
While burning methane gas in our appliances may seem like the norm, the gas system in New York is not actually that old. A half a century ago, investments in gas networks seemed like a good idea because there were limited alternative options and little was known about the public health and climate impacts around natural gas. Between 1950 – 1960,. natural gas customers in New York State went from 700K to 3.7M in ten years Con Edison of New York and Brooklyn Union mobilized over 3,000 technicians to convert each of their 925,000 customers with their 2 million appliances to the use of natural gas. The rapid transition to natural gas from methane gas and oil demonstrates how established industries can resist technological change that benefits their customers, and also can overcome perceived barriers to adoption when it serves their business interests
Why is the HEAT Act so important?
The NY HEAT Act is a critical piece of legislation for two reasons. It phases out the harmful practice of gas line extension allowances, and also gives the Public Service Commission – which regulates utilities in New York – the power to keep companies in line with New York’s climate laws.
New Yorkers already have one of the country’s most ambitious blueprints to cut pollution in the Climate Leadership and Community Protection Act (CLCPA)– now we just need complementary laws like the NY HEAT Act that empower regulators to do the work necessary to hit emissions goals.
Further, the NY HEAT Act comes with built-in protections for ratepayers. Currently, volatile methane gas prices are making it so hundreds of thousands of New York households are paying over 6% of their income towards their energy bills – this is money that should be going to things like groceries and other basic needs. The NY HEAT Act would ensure that no New Yorker would pay over 6% of their household income, putting money back into family’s pockets.
New York is busy building an electric future for ourselves, with cleaner air in our homes, relief from volatile fossil fuel price swings, and a protected climate. Spending hundreds of millions of New Yorkers’ dollars to expand the polluting gas system is simply out of line with that future.
Meagan joined the Northeast regional office of Earthjustice in September 2017. Her work primarily focuses on climate and energy matters in the northeast region, including representing community and environmental groups in utility rate cases before the NY Public Service Commission. Meagan is an expert in gas and electric utility proceedings and has focused her efforts on cutting the use of gas in buildings in NY and other issues relating to slashing greenhouse gas emissions from the energy sector.
Established in 2008, Earthjustice’s Northeast Office, located in New York City, is at the forefront of issues at the intersection of energy, environmental health, and social justice.