For Immediate Release
Media Contact:
Robin Tung, Director of Public Relations
Building Decarbonization Coalition
robin@buildingdecarb.org
California moves closer to neighborhood-scale decarbonization pilot programs, but state regulators must expedite process
The first-ever process will enable voluntary pilot programs where it will benefit homeowners with affordable, zero-emission alternatives like neighborhood electrification and thermal energy networks
SACRAMENTO, Calif. (July 15, 2026) — The California Public Utilities Commission (CPUC) issued its final decision last week for neighborhood-scale decarbonization pilots under SB 1221 (Min, 2024). The program authorizes up to 30 pilot projects that replace natural gas service with zero-emission appliances where doing so is more cost-effective for Californians, with consideration for low-income and frontline communities and other priorities. However, an expedited process to approve projects is needed to prevent unnecessary delays.
“Californians are grappling with an affordability crisis and neighborhood-scale decarbonization can deliver near- and long-term relief,” said Beckie Menten, California Director, Building Decarbonization. “We thank the Commissioners for this important step in managing the transition away from the gas system, and we urge them to expedite the process to prioritize Californians’ quality of life, support the workforce with good jobs, and help scale the state’s clean energy future.”
Neighborhood decarbonization can help lower energy bills for Californians by enabling utilities to shift away from expensive investments in aging natural gas pipelines, which cost an average of $3 million per mile and are paid for by gas customers. Decommissioning gas lines where it’s more cost-effective to upgrade blocks of homes and buildings can save households across California an estimated $20 billion over the next decade, and avoid facing energy bills as high as $600 by 2050.
Upgrading to highly efficient electric heat pumps can save California households on average $304 a year on energy bills, and an average of $97 annually when upgrading from a gas water heater to a heat pump water heater. Neighborhood decarbonization can also provide life-saving cooling, improve air quality, promote climate resilience, and model decarbonization at scale while supporting the state’s heat pump and climate targets.
“These pilots have the opportunity to demonstrate what an equitable energy transition looks like—one that puts frontline and low-income communities first,” said Kiki Velez, Equitable Gas Transition Lead, Natural Resources Defense Council. “But this decision creates a lengthy and burdensome application process that will preclude community engagement in pilot development and hinder project success. Streamlining the approval process is necessary to ensure that residents can benefit from this program and receive the critical health and safety repairs that make electrification possible.”
The Decision directs utilities to submit pilot proposals through an application process, at least for the first round of submissions, a time-consuming process often reserved for major policy decisions that can take two or more years to resolve. During this time, prospective project participants can move, existing gas appliances can burn out, and a utility may be compelled to remediate a gas pipeline risk with a business-as-usual replacement. Submission through an Advice Letter (AL) offers a commonsense alternative that can rely on policy direction provided both in statute and in the Final Decision, and can safely speed the process without sacrificing CPUC oversight.
As the Commission moves into the next phase of SB 1221 implementation, the Building Decarbonization Coalition and advocates look forward to working together to ensure these pilots are as effective as possible. That includes moving towards a more streamlined pilot approval process in the future that allows projects to move quickly; encouraging strong partnerships among gas and electric utilities, local governments, and other community partners; ensuring strong customer consent and tenant protections; and encouraging pilot selection in frontline and disadvantaged communities.
Gas utilities will have until April 1, 2027, to submit a first round of applications to propose projects to the CPUC.
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ABOUT THE BUILDING DECARBONIZATION COALITION
The Building Decarbonization Coalition (BDC) aligns critical stakeholders on a path to transform the nation’s buildings through clean energy, using policy, research, market development, and public engagement. The BDC and its members are charting the course to eliminate fossil fuels in buildings to improve people’s health, cut climate and air pollution, prioritize high-road jobs, and ensure that our communities are more resilient to the impacts of climate change. Learn more at www.buildingdecarb.org.
ABOUT NRDC
NRDC (Natural Resources Defense Council) is an international nonprofit environmental organization with more than 3 million members and online activists. Established in 1970, NRDC uses science, policy, law and people power to confront the climate crisis, protect public health, and safeguard nature. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Beijing and Delhi (an office of NRDC India Pvt. Ltd). Learn more at www.nrdc.org.