Dive Brief:

• Pacific Gas & Electric (PG&E) supports efforts to promote all-electric new construction, when feasible and cost-effective, as part of a 2022 update to California's energy code, the utility said in a letter filed with the California Energy Commission (CEC) Wednesday.

• PG&E "welcomes the opportunity to avoid investments in new gas assets that might later prove underutilized as local governments and the state work together to realize long-term decarbonization objectives," Robert Kenney, PG&E vice president of state and regulatory affairs, said in the letter.

• Several cities in California have been passing building codes that would reduce their reliance on natural gas as part of the state's broader climate goals. Regulators are now faced with the task of stitching those policies into a comprehensive strategy to manage the state's natural gas system.

Dive Insight:

PG&E's letter is "a really critical milestone for climate leadership among utilities," since it is the first combined gas and electric investor-owned utility to publicly support all-electric new construction, Stephanie Greene, principal at Rocky Mountain Institute, told Utility Dive.

California's building energy efficiency standards are updated by the CEC every three years and last year, the agency opened a docket to begin considering the 2022 update. PG&E's letter of support was filed proactively, and could set a precedent for other utilities in the state, Greene said. 

The 2022 update to the energy code could also set a precedent for other parts of the country. "Other states can sometimes look to California's Title 24 to figure out what to include in their own building codes," Greene said.

PG&E in its letter advocated for "a multi-faceted approach" that includes electrification, renewable natural gas and hydrogen to cost-effectively reduce state greenhouse gas emissions. The utility has been continuously forecasting load in its service territory and upgrading its distribution grid as required.

"PG&E fully expects to meet the needs that all-electric buildings will require," the letter states. 

California has been building all-electric homes for decades, Michael Colvin, director of regulatory and legislative affairs of the California energy program at the Environmental Defense Fund, told Utility Dive. The question now is whether the practice is ready to be embedded into the state's energy code.

Although the CEC docket is in early stages, he noted that the agency has been involved in conversations around all-electric new construction policies for a while — in its 2019 Integrated Energy Policy report, the CEC notes that some stakeholders have advocated for a transition towards all-electric buildings. 

If the 2022 update were to include such a measure, it would be the first energy code in the nation for all-electric new construction, Greene said. And supporting it is a smart move for PG&E, she added, "so that they don't risk putting new assets in the ground that could have 30 to 80 year asset lives, from an investment standpoint."

"I think of it almost like a water balloon — if you squeeze down on their natural gas service, there will be an expansion for them on their electric service," Colvin said. 

Greene thinks that renewable natural gas has a role to play in the decarbonization effort, but not in buildings.

"It should be used for hardest-to-electrify sectors, which are some industrial processes and aviation, because it is so supply limited and because it's expensive," she explained. 

San Diego Gas & Electric supports the CEC's efforts to implement the most cost-effective strategies to reduce emissions in new construction, utility spokesperson Sara Prince said in an emailed statement.

"We believe the path to achieving aggressive GHG reduction goals for buildings will require a multi-faceted approach that takes into consideration affordability, resiliency as well as customer choice."