Gas corporations: gas distribution service line replacements: alternatives.

Eligible gas customer definition narrowed: now requires the customer to be residential AND the property owner of the location receiving gas service. Removed the 'planned or forecasted for replacement during the next five years' language, leaving only lines that will be replaced or are prioritized by the commission.

Grace period for existing programs: a gas corporation with a substantially similar program approved by the commission on or before January 1, 2028 is not required to update its program until January 1, 2031.

New provision requiring a mechanism to ensure customers transitioning to electrical service bear an equitable share of unrecovered gas infrastructure costs attributable to their departure, so remaining gas customers are held indifferent. This is a stranded-cost recovery requirement for departing customers.

New program design element: participating customers must provide an acknowledgment waiving their obligation to be served by the gas corporation, in addition to closing their gas account and requesting meter removal as a condition of participation.

Sunset provision added: the entire section is repealed on January 1, 2035.

Annual review requirement: the commission must annually review the program to determine whether adjustments should be made to increase participation. After January 1, 2028, the commission may also determine whether programs should continue and whether incentive amounts or other details should change.

Legislative reporting requirement: on or before January 1, 2029, and annually thereafter, the commission must report to the Legislature on program progress including number of participants, implementation costs, and impacts to nonparticipating gas customers.

Incentive level changed from 'no greater than equivalent to 85 percent' of average lifetime cost to simply 'equivalent to 85 percent,' removing the cap language and making it a fixed percentage. Also added requirement that incentive be based on avoided cost excluding any cost associated with the gas distribution main line.

Anti-double-dipping provision: a gas corporation shall not receive ratepayer funds for program costs that are covered by incentives under federal, state, or local laws.

Commission's role expanded from simply requiring gas corporations to offer the program to first soliciting proposals for the program and then requiring it. The bill title was updated to reflect both addition and repeal of Section 785.3.

Legislative finding (3) now includes 'safe' alongside 'feasible and cost-effective.' Finding (5) changed from 'at least 55 years' to 'often exceeds 50 years' for the capital cost recovery period. The intent statement removed the cap language about incentives being 'no greater than the average avoided cost.'

Assembly Member Irwin added as co-author. Various formatting and line-numbering changes throughout.

The definition of 'eligible gas customer' was narrowed. The old version included customers whose lines had characteristics identified by the commission as prioritized for replacement (such as age or material). That broader category was removed, leaving only customers whose lines are planned or forecasted for replacement within the next five years.

A new requirement was added stating that the standard incentive level for eligible gas customers must be less than the avoided cost of the gas distribution service line replacement (excluding main line costs). This caps incentives below full cost recovery.

The incentive structure was reorganized. The equitable share mechanism (ensuring departing customers bear a fair share of unrecovered gas infrastructure costs) and the capital spending benefit mechanism were moved from being sub-parts of the incentive level definition to standalone numbered requirements, giving them equal standing with the incentive levels themselves.

A new enrollment cap was added: program enrollment shall not exceed 1 percent of each gas corporation's customers within its service territory, including customers enrolled in zonal decarbonization pilot projects under Section 663. This limits the total number of participants per utility.

The standard incentive level is now explicitly required to be less than the avoided cost of the gas distribution service line replacement, rather than simply 'based on' that cost. This caps the standard incentive below full cost recovery.

The mechanism to ensure gas customers benefit from reduced capital spending on service lines was moved from being a component of the incentive level definition to a separate standalone program requirement, giving it independent standing rather than being subordinate to the incentive calculation.

A new enhanced incentive tier was added specifically for eligible gas customers located in a disadvantaged community, creating a two-tier incentive structure where disadvantaged community customers receive a higher incentive than the standard level.

New subsection (d) allows a gas corporation, subject to commission approval, to propose limiting the program to specific gas distribution service line replacement programs or specific geographic areas based on criteria including avoided average cost of replacements and readiness to electrify. This gives utilities significant flexibility to narrow where and how the program operates.

Assembly Member Muratsuchi was added as a coauthor of the bill.

The definition of 'eligible gas customer' was revised to remove the phrase 'that will be replaced or' before 'planned or forecasted for replacement during the next five years,' and removed redundant language. The definition now more clearly specifies it is the property owner who qualifies, rather than a residential gas customer broadly.

The emergency replacement exemption was changed from an automatic statutory exemption to one that requires the commission to make the determination. The digest now states 'the bill would require the commission to exempt' rather than simply stating the bill exempts emergency replacements.

Subsection (c)(4)(L) was amended to explicitly name 'Tenant protections' alongside the existing requirement that tenants receive adequate notification and engagement, elevating tenant protections as a distinct program design element.

The definition of 'eligible gas customer' was expanded to include customers whose service line is planned or forecasted for replacement during the next five years, not just lines that will be replaced or are prioritized by the commission.

Specific incentive thresholds were removed. The old bill set a standard incentive at 85 percent of the average lifetime cost of an avoided service line replacement and an enhanced incentive at 100 percent for disadvantaged community customers. The new version requires only that the commission establish 'an incentive level' and 'an enhanced incentive level' without specifying percentages.

The requirement for a cost-recovery period of no more than 10 years for program implementation costs was removed entirely.

A new provision states that the section does not modify a gas corporation's safety and compliance requirements under state or federal law, creating an explicit safety carve-out.

A new requirement adds that any tenants living in the eligible gas customer's property must receive adequate notification and engagement regarding the program.

The requirement for service line decommissioning following implementation of a replacement alternative was removed from the program design elements.

The definition of 'gas distribution service line replacement alternatives' was simplified from a detailed list of specific measures (appliance replacement, wiring, panel upgrades, circuit sharing, energy efficiency) to the broader phrase 'measures to provide residential gas customers with energy service that does not require gas use.'

A new timeframe requirement was added for gas corporations to notify eligible customers of their eligibility and reach agreements on participation, with the timeframe needing to provide adequate time for outreach while ensuring safety and compliance timelines are met.

The definition of 'eligible gas customer' was restructured to clarify that the property owner (not just any residential customer) must be the one receiving gas service, and the language around commission-prioritized lines was expanded to include lines with characteristics identified by the commission as prioritized for replacement.

The standard incentive level was changed from 'no greater than the average lifetime cost of an avoided gas distribution service line replacement' to 'equivalent to 85 percent of the average lifetime cost,' setting a specific target rather than just a cap.

A new enhanced incentive equivalent to the total (100 percent) average lifetime cost of the avoided replacement is required for eligible gas customers located in a disadvantaged community, creating a tiered incentive structure.

The definition of 'eligible gas customer' was expanded to include lines that 'will be replaced,' not just those planned, forecasted, or prioritized for replacement, broadening the pool of covered customers.

An exemption for emergency replacement of a gas distribution service line was added, meaning the program's requirements do not apply when a line must be replaced due to an emergency as defined in Section 21060.3 of the Public Resources Code.

A new requirement mandates a mechanism to ensure gas customers benefit from the reduction in capital spending on gas distribution service lines that would otherwise have occurred without the program, effectively requiring cost savings to flow back to ratepayers.

New requirements for service line decommissioning following implementation of a replacement alternative were added, addressing what happens to the old gas line after a customer switches away from gas.

The program implementation process was restructured into a more detailed list. Notice requirements now explicitly include programs offered by community choice aggregators and renewable energy networks. A new sub-item requires communication of measures to prevent unnecessary electrical service or panel upsizing.

A new definition of 'emergency' was added, incorporating the meaning from Section 21060.3 of the Public Resources Code.