2023 was the year it became obvious – and undeniably so – that the status quo no longer serves us when it comes to heating our homes and businesses. Several trends have come into irreconcilable conflict. In particular, rising gas costs, vulnerabilities in the gas supply chain, and increasing gas infrastructure spending are juxtaposed against new, highly efficient electric appliance options, made ever more accessible by the 2022 federal Inflation Reduction Act as well as continued market growth and innovation. Consumer preferences continue to shift, and, for the second year in a row, electric-powered heat pump sales have surpassed those of gas furnaces.  

This transition has major implications for our utilities – both electric and gas – but the current regulatory model isn’t ready to accommodate these increasingly complex dynamics at the speed and scale necessary. And because the solutions to maintain or improve affordability and reliability through the accelerating transition are still being defined, states may feel like they are building the plane while flying it. Despite these challenges, many see opportunities to build a better, cleaner, more equitable, and more resilient system that leverages the full spectrum of advanced energy technologies. And several states, including Massachusetts, Illinois, Colorado, New York, Nevada, and California, have made real progress in 2023.  

Here’s a roundup of bold progress from the year, and a look ahead at where we can expect more news in 2024. 

Massachusetts: With a new Department of Public Utilities at the helm under Governor Maura Healey, Massachusetts has leapfrogged to the front of the pack with perhaps the most comprehensive and clear-eyed vision for the future of clean heat. In its December 6 Order in Docket 20-80-B, the Department created a first-of-its-kind framework for the gas-to-electric transition for most residential and commercial heating customers. The decision took an energy efficiency and electrification-first approach, with direction to utilities, both gas and electric alike, to change the way they do business. This includes targeted gas infrastructure decommissioning pilots, non-pipeline alternative analyses to justify any new gas system investments, financial incentives and business model reforms, movement towards coordinated gas and electric planning, workforce development and training, and guidance around the future use of hybrid gas/electric systems, renewable natural gas, and hydrogen. The decision also commits to exploring solutions to address energy affordability and equity , giving stakeholders no shortage of new places to engage in the coming year.   

Illinois: On November 16, the Illinois Commerce Commission (ICC) took decisive action to create a ratepayer-first approach to evaluating gas infrastructure and planning for the future of electrification with its final orders in Ameren, Peoples Gas, and Nicor rate cases. Faced with a lack of information in the available filings to understand whether the investments are indeed just, reasonable, and prudent, the ICC restructured the gas utility regulatory regime in a significant way. Specifically, the ICC asked the three main gas utilities in the state to file “Long-Term Gas Infrastructure Plans” to reduce the information asymmetry between parties when evaluating rate increases and to ensure that gas utilities were adequately planning for consumer-driven electrification. The ICC also opened a “Future of Gas” proceeding to examine bigger questions around the timing and technologies of decarbonized heating, the interactions between gas and electric utilities, line extension allowances, stranded assets, ways to improve transition equity, energy efficiency needs, and more.  

Colorado: In the Centennial State, the Public Utilities Commission (PUC) and stakeholders used 2023 to get their hands dirty in the state’s first-ever Gas Infrastructure Plan and the country’s first-ever Clean Heat Plan. This has meant digging into budgets, load forecasts, non-pipeline alternative projects, benefit-cost analyses, resource assumptions, and many other wonky and technical details that shed light on our progress toward a cleaner building sector. And while resolutions in both dockets are still pending, the PUC has already set out on its next adventure – an examination of third-party providers to implement natural gas demand response, neighborhood electrification projects, and the use of virtual power plants. Each docket has been a tremendous learning experience for all involved, but further highlighted a lack of experience dealing with the unique interaction between gas and electric distribution planning and ratemaking, especially when it comes to electric clean heat resources and non-pipeline alternative solutions.  

New York: New York’s 2023 “All-Electric Building Law” made a big splash as the most ambitious and far-reaching state action related to new construction in the nation. In its annual budget, the state declared that fossil fuel equipment would no longer be allowed in new buildings after 2025 for spaces up to seven stories tall, and 2028 for new buildings of any size (with exemptions for certain facilities, many of which do not yet have a decarbonization solution). While hugely significant in its own right, it was notable that the legislature remained silent on the existing building stock, where the statutory line extension allowance (also known as the “100-foot rule”) continues to require new fossil fuel hookups in buildings to replace wood, oil, propane, or electric resistance heating systems with gas furnaces.  

Nevada: In a legislative session full of contentious and high-profile energy issues, a bill to create a new Gas Integrated Resource Planning process, Senate Bill 281 (Senator Rochelle Nguyen), floated through the process – and through Republican Governor Joe Lombardo –  with little controversy. Recognizing the incongruity between how electric utilities and gas utilities were currently planning their investments and infrastructure within the state, stakeholders including Southwest Gas, Chambers of Commerce, labor unions, industry, and environmental and land-use organizations came together in search of transparency, smart planning, and regulatory equivalency to establish a framework for triennial gas utility filings. Because the legislative framework is fairly bare bones, many of the difficult issues and competing visions for the future are likely to surface within the rulemaking process, set to kick off early in January 2024.   

California: California took a different approach this year, notching more wins by: 1) discouraging new fossil fuel-powered buildings by eliminating electric line extension allowances for construction projects that still choose to hook up to natural gas, even if entirely on their own dime (of note: they eliminated gas line extension allowances back in 2022), and 2) passing the Powering Up Californians Act (Senate Bill 410, Senator Josh Becker). This bill encourages proactive grid upgrades to prepare for the deployment of hundreds of millions of interconnected devices and holds utilities accountable to energizing home appliances and electric vehicle chargers in a timely manner. What hasn’t yet passed? Legislation to enable neighborhood-scale decarbonization pilots currently stymied by old doctrines no longer suited to this day and age. This all but guarantees that advocates will soon be back in Sacramento for another try.  

Lastly, we would be remiss not to mention the importance of New Jersey Governor Phil Murphy’s Executive Order 316, which set a target of electrifying 400,000 residential and 20,000 commercial buildings by 2030, Michigan’s landmark clean energy bill package, which included Senate Bill 273 (Senator Sam Singh) to ramp up energy efficiency programs and permit electrification and fuel switching, and the Department of Energy’s steady progress towards making the Inflation Reduction Act’s Home Energy Rebate Programs a reality. And none of this is to discount or overshadow the significant actions taken by decisionmakers at the county and local levels that are sending signals that enable the market for building electrification technologies to scale.   

Big things are happening in the states, and we anticipate even bigger things to happen in 2024. Progress is as much – if not more – in the implementation of big, bold goals. So, United will be closely watching the Public Utilities Commissions in Massachusetts, Illinois, Maryland, Nevada and Colorado, the legislatures in New York, California, and Washington, and the Administrations in New Jersey, Massachusetts, Vermont, and Maryland throughout the next year. We hope you join along.