River Crossing Strategy Group

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Contact: Timothy White | Published On: Wednesday, August 2, 2023
Natural gas' future is up in the air, but New Jersey isn't banning gas stoves

With all 120 New Jersey legislators on the ballot this fall, a plan by Gov. Phil Murphy to ban gas stoves would be a heck of an issue for Republicans to use against his fellow Democrats. And one of Republicans' loudest voices trying to reclaim seats has advocated making it one.

The governor does want hundreds of thousands of homes to dump gas by the end of the decade and to explore the future of the natural gas industry, but there is no gas stove ban in New Jersey or any mandate that anyone buy an electric appliance instead of a gas one.

That didn’t stop howling from Republicans and a few South Jersey Democrats about a move by the state’s utility regulators last week to encourage building “decarbonization,” which generally means retrofitting homes and businesses to switch from natural gas to electric heat. Republicans nationally have made similar claims that President Joe Biden is taking away gas stoves.

The Senate Minority Leader, Anthony Bucco, said Murphy's electrification plans show he's willing to move forward "no matter how unpopular they are, regardless of the cost, and without legislative oversight," and his office said the plans "will lead to bans" of stoves and other gas appliances. Bill Spadea, the conservative radio host who is supporting Republican candidates while mulling a run for governor, said that "This is a perfect issue for ALL gop challengers to run on in November."

While the long-term future of natural gas in New Jersey is up in the air, there is nothing the Board of Public Utilities has done that makes any New Jersey resident do anything to rid their own homes of gas appliances.

In a report on South Jersey Democrats’ concerns, the NJ Globe stated there was “a plan to ban gas stoves.” But it is much more nuanced and many critics are careful to attack what the state may do rather than claim Murphy's administration has done something it's not. Even harsh critics of Murphy’s energy plans acknowledge this.

“No, they’re not busting down your door to steal your gas range… today," wrote conservative commentator Matt Rooney.

If there is a new mandate, it is in a narrower sense: The BPU is mandating electric utilities — and encouraging gas utilities — to start offering customers incentives to voluntarily replace gas stoves and heaters with electric ones.

And there is going to be money behind it — some $350 million over the next three years.

That is money that utilities collect from their customers and then spend to encourage energy efficiency, thanks to a 2018 law signed by Murphy. In the past, utilities have spent the money on incentives so customers buy more efficient appliances, switch to LED lightbulbs or audit their homes’ energy use.

Over the next three years, utilities are expected to collect and spend about $4.3 billion more, and the BPU is looking to use some of that money to decarbonize buildings. The board wants about 8 percent of that money to go toward helping customers move away from gas heaters and stoves.

Nationally, the state push is part of a broader set of energy goals, many of them coming from the federal Inflation Reduction Act and the Biden administration. Their goal is to nudge people to switch to electric appliances, which are generally considered more efficient and can be powered by wind, solar, nuclear and other energy sources that don’t contribute to climate change like coal and gas. (About half of New Jersey's electricity is generated by burning natural gas.) Some of the federal money, though, is for tax credits, which don’t help customers with upfront costs.

To Eric DeGesero, who represents the Fuel Merchants Association of New Jersey and New Jersey Propane Gas Association, the BPU’s decarbonization push is a “non-mandate mandate,” because while it may force energy companies to do something, it doesn’t force homeowners or customers to do anything.

Reimagining the future of natural gas in NJ

None of this is to say that natural gas isn’t facing scrutiny.

In fact, the future of natural gas is about to go on trial in the state. This week, state regulators started holding the first meetings in a closely watched proceeding on the “future of the natural gas utility.”

Murphy ordered the BPU to begin that proceeding in a February speech where he adopted what, on paper, is perhaps the most ambitious set of climate change and clean energy goals of any state.

Among the things he did was set a target of electrifying 400,000 residential buildings and 20,000 commercial buildings by 2030.

The emphasis in the speech and in conversations with administration officials at the time was on the voluntary aspects of it.

Shortly after the announcement, Public Service Enterprise Group — which owns PSE&G, the largest gas and power utility in the state — said it welcomed Murphy’s move and plan to electrify hundreds of thousands of homes.

“We’ll take them all,” PSEG CEO Ralph LaRossa said at the time.

In the months since, PSEG has pushed the BPU to encourage more spending on decarbonization.

PSE&G is in a unique position, though. If the company lost 400,000 gas customers, PSE&G would still have nearly 1.5 million residential gas customers — and, as electricity use rose, it could spend more on new substations and transmission lines.

The company already offers rebates to customers looking to switch from gas furnaces or gas water heaters to electric heat pumps and water heaters, but it doesn’t offer incentives to customers with a gas stoves who want to switch to electric, a company spokesperson said in an email.

The utilities that only sell gas have a decidedly less enthusiastic view of the way the BPU is approaching building decarbonization.

New Jersey Natural Gas, which has 570,000 customers in the state, argued in a recent letter that the BPU is “myopically focused on electrification.” The company suggests regulators aren’t exploring hydrogen, which the Biden administration is also encouraging. And, the company seems to suggest the BPU isn’t fully considering risks of demand for electricity growing too fast.

NJ still relatively friendly to natural gas

It’s lost on no one in the industry that last winter, the regional grid operator told New Jersey residents to turn off their Christmas lights and turn down their thermostats on Christmas Eve and Christmas Day because extreme cold weather was straining the power supplies.

Critics of the BPU’s electrification push point to that as a sign of things to come.

The Murphy administration says it is considering reliability as it steps up its electrification plans.

Officials in the administration also blame the fuss over the BPU’s action on the fossil fuel industry's deception.

Catherine Klinger, the head of Murphy’s office of Climate Action and the Green Economy, said she wonders what opponents of the incentives are afraid of.

“You’re just opening up more choice to New Jersey consumers, which is something we should be interested in doing,” she said.

New Jersey is, if anything, friendlier to natural gas than other politically similar places that are banning gas in new construction, like New York City and dozens of cities in California. Not a single city in New Jersey has such a gas ban. A statewide building code change would likely require legislative action, in the Murphy administration’s view.

Other changes may only happen after Murphy is out of office. The three-year building decarbonization program the BPU approved isn’t in effect yet. Utilities still need to come to the board with more specific plans to spend money, including exactly what kinds of incentives they plan to offer people to switch from gas to electric. Those three-year plans won’t start until next year and will run through 2027.

After 2027, though, there is another three-year cycle might have even more aggressive policies, the BPU has indicated. But Murphy’s second term ends in early 2026.