ACEEE report looks at how decarbonization will impact gas bills

A new report from the American Council for an Energy-Efficient Economy (ACEEE) examines the impact of decarbonization on household gas bills.

The report examined the impacts based on two building decarbonization pathways: the electrification of currently gas-powered end uses; and the replacement of fossil gas with lower-carbon alternatives such as biogas from sources like landfills and animal manure.

“Electrification is likely the most cost-effective decarbonization strategy for most buildings. Businesses and households that remain on the gas system could see a significant increase in their bills going forward,” Steven Nadel, executive director of ACEEE and author of the report, said. “Utilities and their regulators should start planning now to avoid costly gas pipeline replacements and assist households that are overburdened by energy costs with the transition off planet-warming fuels.”

The report found that if a quarter of gas customers fully electrify, costs for remaining gas customers could increase by 21 percent. If three-fourths of customers move fully off gas, remaining gas customers could see cost increases of 129 percent.

Also, it said that forgoing electrification of current gas end uses and instead relying on biogas for building decarbonization would raise the average household’s gas utility bills by about $3,500 a year. In addition, gas customers in regions with gas pipes slated for replacement could see additional cost increases unrelated to biogas. Specifically, in areas with minimal pipeline replacement, costs could increase by 15 percent. In areas with older pipes, many of which are scheduled for replacement, pipeline replacement could raise costs more than 100 percent per gas customer.

The report also looked at a middle-ground scenario with half of gas customers fully electrified, half transitioned from fossil gas to biogas, and a moderate level of pipeline replacement. In this scenario, an average gas customer’s cost would increase by about 172 percent, or $2,283 per year.

The report added that more research is needed to explore policy frameworks for minimizing future costs, such as accelerating depreciation of already sunk costs and decommissioning portions of the gas distribution system where full electrification is less expensive than pipe replacement.

It also said that planning for strategic decarbonization will require a serious focus on equity. Middle- and upper-income households that can afford to electrify will be financially incentivized to do so as gas prices rise, but households with the least ability to afford the expense of biogas or the rising cost of remaining on the gas system will need assistance to transition off the gas system.