Cutting These Subsidies Could Save States Millions of Dollars

The document examines the practice of gas line extension allowances, where the cost of connecting new buildings to the natural gas system is funded through the bills of existing customers. It argues that this model is failing as customers shift toward electric alternatives, creating a financial risk of stranded investments. Eight US states have already taken action to reduce or phase out these subsidies, which RMI estimates could save up to $750 million in annual utility costs across those states. Evidence from California and Colorado suggests that removing these subsidies encourages developers to choose all-electric options over gas.

• Gas line extension allowances are subsidies for new gas utility connections funded by existing customers through their utility bills, typically as part of the delivery charge.
• The traditional model of line extension is failing because revenue from new customers often does not cover the cost of their connection, especially as more users switch to electric alternatives or efficiency upgrades.
• Phasing out or reducing these allowances in eight US states could result in total annual utility cost savings of $750 million.
• Eight states have taken action to address these allowances: California, Washington, Colorado, Oregon, Minnesota, Maryland, Massachusetts, and New York.
• Removing gas subsidies is influencing developers to build all-electric buildings; in 2023, PG&E reported that 72% of residential and 91% of non-residential new line extension requests were for electric service only.
• In Minnesota, RMI estimates that eliminating line extension allowances could reduce annual capital spending by approximately $34 million.

APA

RMI (2025). Cutting These Subsidies Could Save States Millions of Dollars. https://rmi.org/resources/cutting-gas-system-subsidies-could-save-states-millions-of-dollars/

Chicago

RMI. Cutting These Subsidies Could Save States Millions of Dollars. 2025. https://rmi.org/resources/cutting-gas-system-subsidies-could-save-states-millions-of-dollars/.

Wikipedia

{{cite report |author=RMI |title=Cutting These Subsidies Could Save States Millions of Dollars |date=27 August 2025 |url=https://rmi.org/resources/cutting-gas-system-subsidies-could-save-states-millions-of-dollars/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025cutting, author = {{RMI}}, title = {{Cutting These Subsidies Could Save States Millions of Dollars}}, institution = {RMI}, year = {2025}, month = aug, url = {https://rmi.org/resources/cutting-gas-system-subsidies-could-save-states-millions-of-dollars/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }