This blog post represents the third in our series “Affordable Heat: Powered by Policy."
Between the repeal of the Inflation Reduction Act and mounting energy affordability and load growth pressures, state legislatures and utility regulators across the country had their hands full in 2025. Policymakers were faced with a rapidly changing energy landscape marked by rising demand, rising costs for both gas and electric utilities, and deep uncertainty about programs and funding. Even still, we saw meaningful progress towards a cleaner, more affordable built environment in recent years, and states continue to recognize the benefits of advanced electric home technologies despite the bumps in the road.
As we turn the page into the new year, we’re revisiting the story of 2025–the trends that emerged, where there was progress, and where states may have missed opportunities for further consumer savings–and setting our resolutions and predictions for the year ahead.
2025 Building Electrification Legislative Trends2026 Predictions and New Year's Resolutions for State Building Electrification Policy
Bills with no asterisks means the bill has not made it out of one chamber. Bills with one asterisk have passed one house of its legislature, two asterisks means that the bill has passed both chambers, and three means the bill has been signed into law.
1. Gas utility regulatory reforms recognized to offer consumer savings
Over the last few years, states have made monumental progress on overseeing historically under-scrutinized gas system investments. In 2025, we saw fewer bills aimed at strengthening oversight of the gas system, mainly because many of the previous years’ legislative wins to do so are now playing out in public utility commissions. However, there were still several notable legislative efforts on this front.
In particular, we saw New York eliminate their “100-foot-rule” (gas line extension allowance) with the passage of S8417***. The passage of this bill will end the practice of forcing existing gas customers to subsidize system expansions caused by other customers–estimated to save $200M per year. The signing of S8417 marked an eventful year for gas line extension allowances, with states like Maryland, Massachusetts, and Illinois also taking steps toward reforming or eliminating their gas line extension allowance policies via their Public Utility Commissions.
Maryland SB937*** was another notable bill in this category that passed in 2025. HB419 reforms the Strategic Infrastructure Development and Enhancement (STRIDE) program originally created in 2013. STRIDE accelerated pipeline spending with little project-by-project oversight, ballooning the “delivery charge” that gas customers pay on their monthly bills. Previous studies on the STRIDE program projected that if program spending continued unchecked, ratepayers would be expected to pay more than $31.3 billion by 2100 for STRIDE projects alone. SB937 limits gas system spending previously authorized by the STRIDE program by requiring less costly alternatives to pipeline replacement, such as leak detection and non-pipeline alternatives (NPAs). Overall, the bill is a critical step toward managing overspending and stranded asset risk shouldered by Maryland utility customers.
Two expansive packages coming from Illinois and Massachusetts are also building momentum and marking the high watermark for ambition in this space. Illinois HB3525 includes requirements around a clean heat standard, gas infrastructure planning, all-electric-ready new construction, reforming the state’s gas line extensions, and several other major policies. While the bill didn’t make it out of either chamber of the Illinois legislature, it is expected to be introduced for full consideration in future sessions once the state wraps up its Future of Gas proceeding at the Illinois Commerce Commission. Lastly, Massachusetts H3559 included several gas utility reforms. It prevents gas utilities from recovering costs to expand or replace gas infrastructure unless demonstrated all non-pipeline alternatives were considered and found to be non-viable (codifying a regulatory decision made in 2023) and prevents the injection of alternative fuels into the gas distribution system unless it is determined that the fuel is non-greenhouse gas emitting in its lifecycle, does not pose a safety hazard, and has reliable, affordable sources of supply. Notably, the bill also requires customers seeking line or main extension to pay the full cost of the extension and establishes joint tactical thermal transition plans between gas and electric utilities that share territory.
We also saw progress on gas utility reforms at public utility commissions in 2025. In Colorado, the Commission approved the country’s largest and most ambitious Non-Pipeline Alternative yet – the Xcel Energy Mountain Energy Project – projected to save ratepayers approximately $150M. Implicating approximately 33,000 customers, the portfolio includes incentives for heat pumps, gas demand response, and energy efficiency, including new incentives for air to water heat pumps to roll out by mid-summer 2026. The portfolio also includes an interval gas meter pilot to better understand the relationship between gas usage and extreme cold weather changes and a residential electric heating rate pilot that leverages advanced metering infrastructure (AMI) data. This project is the result of the Colorado gas infrastructure plan (GIP) framework, meant to better oversee gas utility capital spending.
Additionally, Nevada gas utilities filed their first gas integrated resource plans (IRPs), created in 2023 by Senate Bill 281. The California Public Utilities Commission designated its initial “priority neighborhood decarbonization zones,” per Senate Bill 1221 (2024), for a tranche of 30 voluntary electrification pilot projects. Maryland also opened its formal Future of Gas proceeding, and has been tackling near-term policy recommendations from the proceeding’s initiating petition from the Office of the People’s Counsel (OPC), including a proposal to eliminate gas line extension allowances in the state. In Massachusetts, the local gas distribution companies filed their first-ever Climate Compliance Plans (CCPs) intended to assess progress toward meeting the state’s 2050 climate goals and assess alternatives to pipeline investment that can help meet required emissions reductions. These filings included an NPA framework, and an initial roadmap to achieve integrated energy planning. The New York State Energy Plan also indicated its intent to refine the New York long-term gas planning process and advance integrated gas and electric planning. Connecticut’s Public Utilities Regulatory Authority indicated its intent to develop a comprehensive framework for performance-based regulation (PBR) for gas companies in its 2025 Yankee Gas rate case decision.
Lastly, the Washington Utilities and Transportation Commission (UTC) finalized first-in-the-nation rules for their Integrated System Plans (ISPs), a statutory requirement that came from a 2024 bill. The rules will require large combination gas and electric utilities to combine gas and electric plan filings into one plan that models costs and timelines for decarbonizing the state’s energy system.
As gas infrastructure spending and gas supply rates continue to rise dramatically in 2026, additional states can look to this suite of bills and regulatory proceedings for ways to bring down consumer costs.
2. Geothermal heat and thermal energy networks received broad support
Geothermal (or, ground-source) heating and thermal energy networks (TENs) had an unprecedented year in 2025. Both standalone geothermal systems, as well as networked geothermal, saw support from both sides of the aisle. Notably, H.R. 1 maintained tax credits for commercial geothermal systems, even as it repealed other clean energy provisions. In Maine, LD1619*** creates a commission to study pathways for thermal energy network programs. In addition, Washington HB1514*** establishes a regulatory process for TENs, including bringing “thermal energy companies” under the regulatory oversight of the Utilities and Transportation Commission.
Funding for TENs was particularly popular at state legislatures. In Connecticut, SB4*** establishes a TEN grant and loan program, and in Illinois, SB25*** creates a TEN revolving loan program through the state’s climate bank, the Illinois Finance Authority. The bill also allows the Illinois Commerce Commission to approve TEN pilots and create a standard rate structure for those pilots. In addition, SB25 establishes a geothermal renewable energy credit program, which carves out $10M from the state’s renewable portfolio standard budget for eligible geothermal heating systems.
It's no surprise that states continue to be interested in geothermal technologies, especially given their high efficiencies, ability to reduce electric grid strain while operating with ease in extreme cold, and the utility bill savings potential for their users. TENs are already being piloted or operating in states like Massachusetts, New York, Texas, Colorado, Michigan, Illinois, and more. It’s clear the momentum on TENs and standalone geothermal is only getting started.
3. Many states expanded investments in energy efficiency programs, while some repealed existing programs
With rising demand on the electric grid and, in turn, higher consumer bills, energy efficiency was largely recognized as a cost-effective way to curb demand and lower bills. In Texas, HB5323*** was signed to create an Energy Waste Advisory Committee to make recommendations for energy efficiency and demand response programs. Likewise, the Virginia legislature passed HB1935** to establish a task force aimed at improving coordination between available services on weatherization resources and other upgrades for low-income utility customers; however, the bill was later vetoed. In Delaware, HB50*** was signed, which directs additional funding toward energy efficiency, renewable energy, and financing programs. Beyond its geothermal and TENs provisions, Illinois SB25*** also included reforms to investor-owned utility energy efficiency programs. The bill sets a minimum 2% annual savings goal for the state’s investor-owned electric utilities, and includes several provisions aimed at delivering more energy savings for income-qualified customers. The bill also allows gas utilities to voluntarily propose new energy efficiency goals that include greater focus on comprehensive building retrofits and health and safety measures.
These bills, and many more that were introduced in 2025, indicate states’ continued enthusiasm for energy conservation. Oklahoma, however, was one state that reversed its previous investments HB2037*** repeals the state’s energy conservation law, including a section of the law that allowed political subdivisions from entering into contracts to implement energy efficiency measures.
Several other states, including those in the northeast, also began (but did not finish) complex negotiations on the right funding, incentives, and structures for their energy efficiency programs. Even through those negotiations, energy efficiency remains an important strategy for states looking to invest in long-term consumer bill savings and support low-income energy customers.
4. Despite constrained state budgets, expanding electrification programs and funding were popular
As a result of federal funding cuts, many states in 2025 experienced budget shortfalls and constrained opportunities for state-funded energy programs. Even with these roadblocks, electrification programs were still attractive to policymakers in 2025. In Connecticut, HB5004*** contains provisions allowing the Department of Administrative Services (DAS) to provide grants for schools to install heat pumps. The bill also requires DAS to develop a plan to retrofit fossil fuel heating and cooling at state buildings. In addition, Oregon HB2567*** allows the State Department of Energy to provide an additional $1,000 under the Rental Home Heat Pump Program for heat pumps installed in rural communities. A final bill of note is Minnesota SF2***, a large energy omnibus that appropriates funds for pre-weatherization, weatherization, a heat pump rebate program, and more.
Beyond legislative action, the New England Heat Pump Accelerator was launched to boost heat pump adoption sales in five states, including Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island. With the help of $450M from the U.S. EPA, the initiative will work with heat pump manufacturers, distributors, and contractors to achieve a goal of 65% of residential heating, cooling, and water heating sales coming from heat pumps by 2030. The approach is the first of its kind, and other regions looking to spur heat pump adoption can learn from this innovative administrative action.
5. “State navigator programs” were introduced as a solution for the confusing incentive landscape
Even for states that have robust electrification and weatherization incentives, customers can have challenges accessing and understanding all of the funding opportunities available and how to stack them. Most states have separate programs, and separate entities, running energy efficiency programs, weatherization and income-eligible utility bill assistance, electrification incentives, and other clean energy programs. Some programs are offered by state or federal agencies, some by utilities, and some by localities or community action agencies. Navigating the available funding, at all of these different levels, is confusing and time-consuming for even the most energy-literate consumers. State navigator programs are intended to solve this issue. They house digital tools to help point residents to the right set of solutions based on their needs and eligibility.
Several state navigator programs were passed or introduced in 2025. Maine passed LD1967***, requiring state agencies to coordinate and design a home energy navigator and coaching pilot program. Washington also appropriated $3.5 million for its Building Energy Upgrade Navigator in its budget, SB5167***. Oregon and Illinois introduced state navigator programs with HB3081* and HB3650*, respectively, although these bills were held in 2025. Beyond legislative action, Colorado and New Jersey also created state navigator programs through administrative action.
6. Building codes and energy benchmarking faced challenges despite proven cost-savings
As energy and housing costs rise across the nation, states are looking for solutions that can lower costs. Strong building energy codes have been shown to reduce customer energy bills, and despite arguments made by their opponents, to not impact housing attainability. New code provisions can also reduce load coming onto the grid from new developments and promote distributed energy resource (DER) integration–to the benefit of all ratepayers in both the short and long-term.
Unfortunately, 2025 was a mixed year for building codes legislation. California passed AB130***, which pauses all building code updates until 2031. Several states passed more neutral building codes provisions, such as Texas with SB783***, which requires analysis be conducted to measure the impact of adopting a new edition of the International Energy Conservation Code (IECC) on housing affordability and cost effectiveness of new builds.
Meanwhile, Washington state passed HB1543***, a bill that expands compliance pathways for the state’s Clean Building Performance Standard (BPS) and prevents penalties from noncompliance with the BPS from being passed along from building owners to tenants. Washington, DC passed B25-0801***, which postpones its BPS compliance cycle by a year and changes its frequency from every 3 to every 6 years. Colorado, on the other hand, passed HB1269*** to update its building energy use benchmarking and BPS requirements. The bill also creates a building decarbonization enterprise to provide financing and technical assistance for building owners to decarbonize.
7. Virtual power plants (VPPs) expanded load flexibility potential for buildings
With rising demand on the electric grid, states are recognizing the importance of expanded distributed generation, demand response (DR), and load flexibility programs, including VPPs, which aggregate distributed generation and load flexibility. Offering incentives to consumers to adopt VPP and DR-eligible technologies, and enrolling them in VPP and DR programs, means more customer savings in the near- and long-term, and smaller grid buildouts in the future.
VPPs were all the rage in 2025. Though many early programs have focused on distributed solar storage as the key technology, United is optimistic that over time, more electrification technologies (like heat pump water heaters and electric vehicles) can meaningfully contribute to programs.
While a lot of the action around VPPs occurred in regulatory venues, such as in Maryland, Illinois, Colorado, and more, several states also advanced legislation to create VPP programs. In Virginia, HB2346*** passed to require each electric utility to file a petition to the State Corporation Commission for approval of a VPP pilot program. Illinois passed a scheduled dispatch VPP program in its large energy omnibus bill, SB25***. The California legislature also advanced AB740**, a bill requiring the Energy Commission to adopt a VPP deployment plan in the next update to the integrated energy policy report; however, the bill was vetoed by Governor Newsom.
1. Load Flexibility, VPPs, and Buildings as Grid Assets
Outlook: In 2026, states will continue searching for solutions to get more capacity on the grid as fast and as affordably as possible. The action on VPPs and load flexibility will not slow down anytime soon.
Prediction: Legislatures recognize VPPs and demand flexibility as key resources for this era in electricity policy. Some recognize the potential to also deploy distributed, electrification technologies and auto-enroll them in key flexibility programs. In that way, rather than being regarded as additional load, electric buildings are used proactively as grid assets. With flexible advanced home technologies, such as heat pumps for heating and cooling and water heating, smart thermostats and smart panels, battery storage, solar, homes and businesses can flatten electric system peaks and inject electrons onto the grid in response to system needs. Enabling these technologies will have numerous benefits for households and the grid – now and into the future.
2. Geothermal technologies
Outlook: Geothermal/ground source heat pump technologies saw several bipartisan legislative wins in 2025. While residential Inflation Reduction Act (IRA) tax credits for ground source heat pumps did not make it to 2026, commercial ground source systems are still eligible for tax credits.
Prediction: State legislatures help make up for the loss in residential ground source heat pump tax credits by charging ahead with creative programs and state and utility incentives to expand geothermal deployment – in a bipartisan way.
3. Affordability
Outlook: Energy affordability will still be top of mind for legislators and their constituents in 2026. While much of the attention has been on electric bill costs, natural gas bills are also rising rapidly. As the need for electric system upgrades grows, gas utilities are spending at unprecedented rates to replace and expand infrastructure. Meanwhile, customers are increasingly opting for electric heating technologies over gas – meaning investments on the gas side may go unused in the future. On top of rising delivery charges, gas supply rates are also expected to double this winter. State policymakers will need to not only find ways to manage costs on the electric system, but also respond to increasingly expensive winter heating bills for gas customers.
Predictions:
Advanced Energy United’s resolution: 1) to continue expanding markets for the efficient, smart, and advanced energy technologies that are transforming our homes and businesses, and 2) to encourage smart, efficient energy infrastructure planning and investment that does not spend a cent more than necessary to serve Americans with reliable, resilient energy.
As the policy problems of 2025 remain salient for 2026, the new year brings an opportunity for states to turn resolutions into durable, cost-effective solutions. Advanced Energy United looks forward to engaging on these policies in 2026, and to building on the momentum of years passed.