Gas & Mixed Fuel Subsidies Ending; PG&E Begins Direct Cost Billing

PG&E Provides Transition Details to the Development Community

In the wake of a California Public Utility Commission (CPUC) decision to end subsidies for new natural gas connections along with any related electric services, PG&E leaders responded to the homebuilding industry's request for a comprehensive presentation on how the utility will implement the new policy.

The ban on subsidies is playing out in two parts. The first went into effect on July 1, 2023, when all applications for new natural service were no longer eligible for allowances, refunds or discounts. The second starts on July 1, 2024, when the electric service component is no longer eligible for subsidies if the project also includes gas.

The moves are part of the state's effort to reduce greenhouse gas emissions through the promotion of all-electric homes and businesses.

To facilitate the policy shift, PG&E will invoice developers who submit gas and mixed-fuel service applications for estimated direct connection costs rather than the current pricing format, which incorporates the now-banned discounts, refunds and allowances.

Developers who submitted applications for gas service on or after July 1, 2023, have already moved to the new direct cost billing system. Effective July 1, 2024, mixed-fuel projects will be billed under the same direct cost system. All-electric projects will continue to use the current pricing format that incorporates allowances, refunds and discounts.

Starting in May 2024, PG&E will begin sending developers final or true-up invoices for completed projects that reflect actual costs. If the developer has overpaid, PG&E will send a refund. If the developer has underpaid, PG&E will bill the developer for the amount owed. PG&E estimates that as of mid-2025, developers will receive their true-up statements roughly six months after the project has been completed.

Click HERE to view a presentation that includes links to the CPUC decisions, the billing change schedule and more details about PG&E's transition to direct cost billing. For questions or comments, contact BIA's Lisa Vorderbrueggen at lvorderbrueggen@biabayarea.org.