California must help neighborhoods ‘decarbonize’

By Jalal Awan, especially for CalMatters

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California is finally staring at an inconvenient fact: We can’t keep pouring money into aging pipelines and pretending we’re on the way for the climate or accessibility accounts.

Only PG&E plans to replace rough 2,000 miles of distribution networks over the next decade, at an estimated cost of $10 billion. In the state, gas companies are projected to spend approx $43 billion to replace pipelines from now until 2045

Replacing one mile of pipe can cost $3 million to $5 million or more. That money goes on your gas bill.

Senate Bill 1221 adopted in 2024 as a partial antidote. It tells the California Public Utilities Commission to approve up to 30 “neighborhood decarbonisation zone” pilot projects where a utility can shut down a local gas pipeline and use the avoided pipeline money to pay for zero-emissions alternatives such as heat pumps, electric water heaters, district heating or efficiency improvements — as long as the clean option is cheaper and the benefits flow to low-income communities first.

This is not meant to be a feel-good climatic side project. It is supposed to be a cost control program with a climate bonus.

The commission recently issued a proposed solution taking the first step by identifying 151 initial decarbonisation priority areas across the state. Faced with more than 9,000 counts, the commission needed a rule to check. It chose to require at least 10 percent of local gas pipelines to be scheduled for tract replacement to qualify. (The commission found that if they set the bar higher, they would exclude places like Los Angeles and Elk Grove that clearly have a need and interest. Set it lower, and almost any tract qualifies.)

On paper, this approach seems prudent and sensible. But two problems arise.

The first is participation bias. The commission’s registration system benefits communities with resources to participate in regulatory processes. The result: a map dominated by coastal, civically organized neighborhoods — leaving busier inland and Central Valley communities on the sidelines.

If wealthier coastal neighborhoods get ratepayer-funded electrification while inland tenants remain on outdated gas systems, California is accelerating the death spiral that SB 1221 was supposed to prevent. As affluent households move away from gas, pipeline costs are spread among fewer, poorer customers.

The second problem is utility incentives. Utilities earn guaranteed returns from pipelines, but face uncertainty with electrification. PG&E moved away from The Cal State Monterey Bay Electrification Project — despite their own analysis showing savings if they converted gas service to electric — because pipelines were the safer financial choice for PG&E, climate goals be damned.

SB 1221 partially fixes this by requiring zero-emissions alternatives only when they are cheaper than gas, ensuring that utilities are fully serviced, while giving the commission the power to close gas segments when two-thirds of property owners agree to electrify.

Whether this achieves the intention of the Fair Decarbonisation Bill depends entirely on how the commission uses its power. The commission’s 2026 update should start with pollution and community vulnerability, not who gets to comment on an obscure document.

CalEnviroScreen is the tool the state uses to identify which neighborhoods are most vulnerable to environmental damage. Its comprehensive data—and serious outreach to interior communities, the Central Valley and more than 100 tribal nations in California—should drive the next map.

At the same time, utilities should be required to follow a transparent cost-effectiveness framework and disclose basic project data so the public can see where the billions are going.

SB 1221 offers a rare combination of climate, affordability and fairness. This promise will only be realized if regulators take the path of least resistance and send neighborhood decarbonisation first to the communities that need it most – and where it saves the most money.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.