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Gas utilities have a structural problem in an electrifying economy. Customers can stop using gas one building at a time, while most of the physical network remains in service until enough neighboring customers have left for a section of pipe to be shut down.
That distinction matters more as heat pumps and electric appliances spread. Falling gas demand does not immediately eliminate inspections, pressure equipment, emergency response or replacement spending. If customers disappear randomly across a service territory, a shrinking customer base can end up supporting much of the old infrastructure.
I argued in 2023 that regulators would eventually have to treat this as a geographic problem rather than simply forecasting declining gas demand. The newer development is that this is beginning to show up in actual utility-planning processes.
I recently revisited the larger strategy in Gas Utilities Need A Future Beyond The Gas Network, including what three more years of evidence have taught us about retiring gas infrastructure without trapping the remaining customers or giving incumbent utilities ownership of whatever comes next.
California is now putting some of that logic into regulation. Its SB 1221 process requires gas utilities to identify planned maintenance and replacement work and allows targeted neighbourhood projects where zero-emission alternatives can cost less than continuing to repair or operate the gas system. The state has designated 151 initial priority neighbourhood zones and created a programme that can approve up to 30 pilots without unanimous property-owner participation. The first utility applications are due in April 2027.
The important feature is not the number of zones. It is what goes into the comparison. A utility considering an aging section of gas main can now be asked whether replacing the pipe is still the best use of money. In some locations, helping customers switch heating systems and retiring the gas asset may be cheaper than another cycle of pipeline investment.
California’s own research also shows why this will not be a simple least-cost mapping exercise. Communities may put different weights on affordability, disruption and local priorities, while switching from gas to electricity can raise household bills under some tariff structures. Rooftop solar and other measures can change those economics.
That makes customer outcomes part of gas-network retirement rather than an afterthought. A project that looks efficient on the utility asset register can fail if the households behind the valve are left with higher costs or difficult building upgrades.
Massachusetts is testing the same physical problem from the other end. National Grid has proposed converting roughly 118 residential customers in Winthrop and Leominster from gas appliances to electric equipment, including air-source heat pumps, so that sections of leak-prone gas pipe can be retired.
The proposal illustrates why geographic coordination becomes unavoidable near the end of a branch. Ninety-nine households can electrify, but a gas main may still have to remain in service for the hundredth customer. The infrastructure saving appears only when enough of the connected system can actually be closed.
This is a different policy question from whether governments should encourage individual heat-pump purchases. Individual electrification reduces emissions and household gas demand. Coordinated electrification can eventually remove a piece of gas infrastructure and the spending associated with maintaining or replacing it.
The emerging regulatory work also forces electric-grid planning into the same conversation. Retiring gas from a neighbourhood shifts heating load toward electricity, so distribution upgrades, building electrical work, storage and demand management need to be evaluated before the gas pipe disappears.
None of this establishes a universal replacement for gas networks. Some buildings will use individual heat pumps, some dense districts may justify shared thermal systems, and difficult commercial loads may take longer to convert. The replacement depends on local buildings, electricity capacity, heat resources and economics.
It also does not mean incumbent gas utilities should automatically own the new infrastructure. Their workers, underground-construction experience, customer systems and capital can be useful during the transition, but those capabilities still have to compete against other ways of providing heat.
What has changed since 2023 is that managed gas-network decline is starting to acquire procedures, maps and regulatory tests. California is linking potential retirement to planned gas-system spending. Massachusetts is testing whether converting all the customers on specific pipe segments can avoid replacing those assets.
Those are early programmes, and neither has demonstrated metropolitan-scale gas retirement. They do show that the question has moved beyond forecasts of falling gas demand. Regulators are beginning to ask which pipes should still be receiving capital at all. That is the planning question that determines whether electrification merely reduces gas sales or eventually allows the infrastructure costs to fall with them.
The full TFIE Strategy Briefing goes further into the evidence from Europe, Australia and the United States, the possible post-gas roles for utilities, and the decision framework for separating network retirement, heating technology and ownership.
