Why Natural Gas Line Extension Policies Matter for Energy Reliability and Affordability

NWGA members have consistently supported thoughtful decarbonization that protects affordability and reliability and have already begun introducing Renewable Natural Gas and hydrogen into their systems. In today’s shifting energy landscape, regulators in the Pacific Northwest face increasing pressure to use utility policies as a tool for decarbonization, even at the expense of reliability of affordability. Some jurisdictions in the region have already begun to eliminate natural gas utility line extension allowances (LEAs), and many more on the West Coast are considering it.

Another piece of this policy trend is forced electrification in new construction, requiring expensive electric heat pumps (heat pumps will be discussed in future NWGA blogs) and banning gas stoves. While framed as a step toward decarbonization, removing LEAs could erode both the affordability and reliability of the regional energy system—particularly for low-income households and new homebuyers.

At the heart of the debate is a long-standing regulatory mechanism known as the regulatory compact, an arrangement in which utility companies agree to provide safe, reliable, and universal service in return for fair rates and the ability to earn a reasonable return on investment. Natural gas LEAs, which help offset the upfront costs of connecting new customers to the gas grid, are an essential tool within this framework. Contrary to claims made by some stakeholders, LEAs are not subsidies. They are carefully calculated tariffed rates, reviewed and approved by regulators, that help ensure both new and existing customers share fairly in the costs and benefits of a growing energy system.

Eliminating these allowances would have real consequences. Without LEAs, the cost of new gas service connections would rise sharply. This would disproportionately harm lower-income consumers, affordable housing developers, and first-time homebuyers—many of whom already struggle with high housing and energy costs. Moreover, the loss of LEAs result in new customers paying more than their fair share of costs, undermining a core principle of good rate design.

Natural gas remains a cornerstone of the Pacific Northwest’s energy reliability and affordability. A newly constructed gas-powered home in the state saves the average household over $600 annually compared to its all-electric equivalent. Even when comparing to cold-climate heat pump homes, gas homes still provide nearly $300 in yearly savings. These advantages stem not only from lower fuel costs, but also from the efficiency of modern gas appliances, which have become more environmentally responsible over time.

In contrast, electric-only homes often rely on lower-efficiency heating systems to minimize upfront costs, reducing potential long-term energy savings. Removing LEAs would make natural gas unaffordable for many new customers, leaving them with fewer—and often more expensive—energy choices. This could further deepen economic disparities, particularly in communities where access to clean, affordable energy is already limited.

LEAs support the expansion of gas infrastructure that is compatible with emerging decarbonization technologies like renewable natural gas (RNG) and hybrid heating systems. These solutions can reduce emissions at lower costs and with fewer disruptions than full electrification mandates. Ironically, removing LEAs may slow decarbonization progress by making it harder to invest in transitional infrastructure and by driving households toward inefficient electric systems that underperform in cold weather.

Some argue that gas line extension policies create the risk of stranded assets—gas infrastructure built today that could become obsolete before it’s paid off. But the evidence tells a different story. Gas customers in the Northwest are growing, not shrinking.

Perhaps most importantly, eliminating LEAs ignores the proven benefits of scale in utility systems. Adding new customers spreads fixed costs across a broader base, reducing per-customer expenses and helping to reduce rate pressure. LEAs are carefully designed to prevent cross-subsidization: if the cost of connecting a new customer exceeds expected revenues, that customer must contribute the difference. This approach ensures fairness for all ratepayers and encourages rational system growth.

Interest groups suggest that ending LEAs would reveal the “true cost” of gas service. Yet that reasoning misses the point of public utility regulation, which is not to deliver the cheapest possible service to the newest customer, but to ensure safe, reliable, and universal service across the region. Energy policy should reflect both fiscal prudence and social responsibility. That means preserving tools—like LEAs—that allow utilities to meet their obligations while supporting equity and efficiency.

As our energy system evolves to meet climate objectives, natural gas will continue to play a vital role. Rather than dismantling longstanding mechanisms like LEAs, policymakers should see them as an opportunity to support innovation, reduce emissions, and protect consumer choice.