When North Carolina Gov. Roy Cooper, a Democrat, vetoed a bill on Dec. 9 that would have preempted local governments from banning gas hookups, it was the second apparent blow to the industry in the state in as many months.
In November, state regulators greenlighted a Duke Energy efficiency incentive program over strenuous objections from local gas distribution companies, which argued the scheme would lose them customers.
But while clean energy and environmental justice advocates lauded both developments, the setbacks for the industry were largely symbolic.
Even if the GOP-controlled legislature fails to override Cooper’s veto, local governments here will probably still lack the authority to follow the footsteps of New York City, which last week moved to phase out gas appliances in buildings.
At the same, state utility regulators appear leaps and bounds from encouraging, much less requiring, buildings to be all-electric.
The push for electrification
Except perhaps for gas stoves and their popular blue flames, most fuel-burning devices in the home don’t get a second thought. Yet a growing body of evidence shows these appliances create indoor pollution that could cause and exacerbate respiratory diseases such as asthma. Outdoors, they’re a palpable contributor to climate change.
In areas like New York City, where gas use is especially prevalent, onsite fossil fuel combustion is by far the largest source of climate-warming pollution, a whopping 70%, per city sustainability officials. Even in North Carolina, where only about a quarter of homes use gas heat, the fraction is about 8%, according to the Rocky Mountain Institute.
The twin threat of climate and air pollution has prompted a nationwide push for phasing out the use of gas and other fossil fuel appliances in buildings, a solution called “building electrification.”
Advancing technology has buoyed the effort, making electric appliances increasingly as affordable and well-performing as their gas counterparts — with none of the indoor air emissions. Boosters say even the vaunted blue flame has met its match: electric induction cooktops, which use magnets to create heat more quickly and precisely.
Though the electric units will initially run on a grid still partially supplied by gas and coal, climate advocates envision they’ll be powered entirely by carbon-free energy by midcentury, ideally including onsite batteries and rooftop solar panels. Electrify everything, their mantra goes, then make the electric grid 100% clean.
With New York City the latest, and by far the largest, to act, 66 cities in seven states, mostly on the West Coast, have now moved to ban new gas hookups in buildings, according to Healthy Homes California, a coalition working for electrification in that state.
‘Leaving open the possibility’
All the activity has the gas industry on edge. In the past two years, it has doubled down on a century of slick marketing — especially touting its stoves — and launched a counteroffensive in state legislatures. In 2020 and 2021, 20 states passed “preemption” laws, clarifying that local communities couldn’t adopt their own building electrification ordinances.
The preemption strategy spread to the North Carolina legislature, where lawmakers introduced their own bill, House Bill 220, to prevent cities and counties from acting. At the same time, they acknowledged repeatedly that none were attempting bans and they probably lacked the authority for them already.
“We’re trying to get ahead of a trend that’s happening,” Sen. Paul Newton, Republican of Cabarrus County, told his Senate colleagues in committee.
Referring to a legal principle in which local governments must get express authority from the legislature, he explained, “at bottom, what this bill reaffirms is that North Carolina is a Dillon’s Rule state.”
In addition to that interpretation of the state constitution, there’s also a state law that expressly limits localities from adopting their own building codes.
Still, the Dillon’s Rule question is up for some debate, and environmental lawyers believe local governments may have other powers to protect public health and welfare. “It’s gray,” Cassie Gavin, head lobbyist for the North Carolina Sierra Club, said of the legal picture.
Gavin’s group and others opposed House Bill 220, saying that local communities needed every available tool to combat climate change, including banning gas hookups if necessary. “We would like to leave open the possibility that it could someday happen in North Carolina,” she said, “rather than close that option.”
A section shielding the public from information about municipal water and energy infrastructure, added in the legislative’s session final days, only strengthened environmentalists’ opposition. After the measure cleared the Senate and House largely on party lines, 23 environmental and justice groups, including the Sierra Club, American Rivers, and Advance Carolina, urged Cooper to issue a veto.
“We make this request based on Section 1, which would hamper local efforts to address climate change,” the groups wrote, “and Section 2, which would limit public access to information regarding water, sewer, and energy infrastructure far beyond the purported purpose of thwarting bad actors.”
The governor vetoed the measure the next week, saying in a statement, “This legislation undermines North Carolina’s transition to a clean energy economy that is already bringing in thousands of good paying jobs.”
There could be enough votes to sustain the veto in the House, where nearly every Democrat present voted against the bill along with five Republicans. With more than a dozen absences, the measure got just 57 yes votes in the 120-member chamber. Seventy-two would be needed to override Cooper.
Still, even if the measure dies, doubt remains about local governments’ authority to enact their own gas bans — leaving them to either risk lawsuits or request permission for the ordinances from state legislators. And though dozens have passed their own aggressive climate goals, none have yet proposed building electrification as a strategy to meet them.
Preventing ‘destructive competition’
In some ways, the state Utilities Commission is a friendlier forum than the legislature for building electrification. Six of its seven members were appointed by Cooper, with a seventh awaiting confirmation by the General Assembly. Its chair, attorney Charlotte Mitchell, once counted renewable energy groups among her clients.
The panel sided against gas companies last month when it allowed Duke Energy to expand a popular energy efficiency program to the larger of its two electric utilities in North Carolina. As a result, new home builders in Duke Energy Carolinas territory, covering mostly the central part of the state, will get at least a $650 incentive for using more efficient appliances and adhering to a green building standard more stringent than the state’s meager energy conservation code. Builders will earn up to 75 cents for every kilowatt-hour of electricity conserved after that.
But advocates cautioned against drawing any lessons about electrification from the order.
For one thing, the incentives long predated the current “electrify everything” movement and weren’t designed to influence homeowners’ fuel choice.
Indeed, the panel approved the rebates after concluding they wouldn’t cause new homeowners to shun gas appliances, since it is the policy of the state to prevent “destructive competition” between utilities.
“The evidence presented by the parties does not show that the [program],” commissioners wrote in their order, “is likely to result in fuel switching from natural gas to electricity, or that it will promote unfair or destructive competition,” the order concluded.
Plus, Duke made the per-kilowatt-hour rebates less generous for all-electric homes to help win approval of the program, a fact mourned by Amy Musser, a green building advocate in Asheville.
“The idea that it’s being done to make the gas industry happy, and it isn’t even making the gas industry happy,” she said, “it just doesn’t make a ton of sense to me.”
Still, Musser and clean energy advocates embraced the commission’s decision overall, which also leaves the program in Duke Energy Progress territory, as revised back in 2017, intact. The four-year deliberation over the program made its approval all the sweeter.
“This one was quite a saga,” said Daniel Brookshire, regulatory and policy manager with the North Carolina Sustainable Energy Association. “We’re glad it finally passed, especially with such a housing crunch right now. To have this program in place in the territory with more customers, I know several of our building performance members are happy it’s finally coming.”
Even though three commissioners dissented, most observers believe the gas companies are likely to lose if they choose to appeal. According to a December order, the companies have until Jan. 7 to do so.
Little way forward on electrification
But the order offers little way forward on electrification. For one, the majority opinion suggests regulators are either unaware or unpersuaded by the arguments against gas appliances.
Arguing the incentives wouldn’t and didn’t influence fuel choice, they write:
“It is generally accepted, and often touted by [gas] customers, that natural gas is faster and more efficient than electricity for water heating and cooking. In addition, there are many who could be persuaded to choose natural gas based on the view that it is more economical and environmentally friendly to directly burn natural gas for heating and cooking as opposed to using it to generate electricity that is then used for heating and cooking.”
Electrification advocates say the first assertion simply isn’t true with induction cooking and heat pumps now widely available. The second may be “currently true,” Musser said, adding, “however, if what we’re trying to do is green our grid, hopefully that won’t be true for very long.”
The frequent reference in the order to the statute limiting ill-defined “destructive competition” is another issue. Since the aim of phasing out gas appliances is to “destroy” their use in buildings, the law would almost certainly need amending if utility regulators wanted to go along.
There’s also the reality that under current circumstances, the Duke corporation has little financial incentive to support electrification. In 2016, the company bought Piedmont Natural Gas, the largest gas distribution company in the state with some 1 million customers. The vast bulk of Piedmont’s territory is also in Duke electric territory. No doubt, Duke shareholders would prefer the company sign up two accounts per new home than just one.
There again, utility commission precedent and the law must be altered if Duke’s gas division is to eventually dwindle into nothing, as regulators’ November order made clear.
As a condition of allowing the Duke corporation to buy Piedmont, commissioners ruled that the Duke electric utilities and Piedmont, “shall continue to compete against all energy providers, including each other, to serve those retail customer energy needs that can be legally and profitably served by both electricity and natural gas.”
Finally, with the passage of a new climate law whose success depends on utility regulators’ implementation of it, many advocates are more focused on greening the North Carolina grid before tackling electrification.
“Electrification is certainly an important priority,” said Peter Ledford, the Sustainable Energy Association’s general counsel. “That said, we’re a small nonprofit, and if you look at everything coming down the pike … I don’t know that it’s going to be the highest priority.”