California has ambitious goals to significantly reduce carbon emissions across the energy, transportation, agriculture, and building sectors. In addition, there are specific goals to decarbonize the natural gas system particularly on residential and commercial buildings. The paper will discuss how building electrification will result in reduced gas demand and reduced gas revenues, which puts upward pressure on gas rates. To manage gas rates, the need to retire gas facilities to reduce costs will be discussed. Development of criteria to identify portions of the system that are potential retirement candidates will be reviewed. The criteria will include efforts to approximate costs to maintain and operate hydraulically independent gas distribution systems, develop a tool to help identify areas for electrification, conduct electrification programs, compare the impact of partial versus full electrification in a geographic area, and incorporate local gas bans for new buildings. A significant portion of the paper will focus on the complexity and time required to perform hydraulic analysis on retiring portions of the gas system as demand drops.

Introduction and Background

California has a long history of environmental leadership from stricter automobile emission standards to early movement away from coal for power generation, and now some of the most aggressive carbon emission reduction and carbon neutrality goals in the U.S. and the world. Governor Brown’s 2018 Executive Order states that California will achieve carbon neutrality by 2045 and maintain net negative carbon emissions thereafter. The Order impacts all areas of carbon emissions including power generation, transportation, industrial, agriculture, and buildings. Residential and commercial buildings are responsible for roughly 25% of California’s greenhouse gas (GHG) emissions when accounting for fossil fuels consumed onsite and electricity demand.1 Multiple studies favor electrification of buildings due to technical feasibility and lower expected overall costs to mitigate greenhouse gas emissions when compared to other strategies. Therefore, this paper will focus on building electrification; including the challenges to electrify buildings, upward pressure on gas rates driving the need to retire gas facilities to manage costs, and a review of the complexity of hydraulic analysis and the methods needed to analyze retiring portions of the gas system under reduced demand.

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