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Sticker Shock: What Phasing Out of Natural Gas Means for Washington Homeowners
Despite the supposed focus on legislating laws to help the state recover from the COVID-19 pandemic, the Washington Legislator and Governor Inslee are attempting to phase out natural gas in new construction homes by 2030 and by 2050 in existing buildings. These new laws would force builders to install heat pumps instead of gas furnaces and electric stovetops instead of gas ranges, among other appliances.
While the building industry generally agrees with adopting sustainability and energy efficiency best practices, concerns exist in relation to unfunded mandates that drive-up home prices and negatively affect housing affordability. Instead, state and local government should consider pushing for innovations for the natural gas system like renewable natural gas and renewable hydrogen, which already exist in Europe and are underway here in Washington.
Conversion (from natural gas to electric) is expensive.
There will be a significant and eventual upfront cost to converting appliances from gas to electric. While it’s arguably easier to mandate in new construction homes, eventually all homeowners will have to make the switch. In a recent study released by Home Innovation Research Labs (HIRL), mixed climate states (such as Washington) could experience costs of conversion to be $14,495 for new construction homes and $28,491 for retrofitting an existing home (not including switching out the cooktop, upgrading electrical, and/or adding an electric vehicle charger circuit).
Aside from the upfront costs, recurring costs associated with electric energy can be much higher than natural gas. This will likely worsen as utility customers make the switch, inching up prices to those that cannot afford the costs of conversion at the onset of a phase-out (examples could include those that are eligible for the property tax exemption program: senior citizens and individuals with disabilities, as well as first-time homebuyers).
However, one piece of good news exists for homeowners: As with other government mandates of the past, it’s expected that utility companies will offer incentives to homeowners to make the switch. Whether the incentive is paid for by the utility company or government, homeowners are still paying for the transition even though it is not technically paid by the homeowner at the time of service.
The average life expectancy of most gas equipment tends to be longer than its electronic counterparts: gas furnace (20 years) versus heat pump (15 years); tankless gas water heater (20 years) versus heat pump water heater (12 years); conventional gas and electric storage-type water heaters have about the same life expectancy (10-13 years). This generally means that these items will have to be replaced more frequently, thus driving up costs associated with household appliances. Not surprisingly this is another factor affecting the affordability of homeownership, making it further out of reach for those wanting to purchase a home.
Economic sustainability matters.
Contrary to a widely held belief, the building industry supports sustainability and energy efficiency endeavors so long as such measures don’t impact housing affordability. We’ve already explored the upfront and recurrent costs of phasing out natural gas but before the state is able to phase out any energy source, our elected leaders need to assess if our current power grid can sustain existing and upcoming demand. Gas works when the power is out and shifting consumers and businesses away from natural gas and onto electricity puts severe pressure on the electric grid at a time when we’re retiring more generating capacity than ever.
Further, dissolving an entire sector will likely only result in higher unemployment unless retraining efforts for those in the natural gas sector can be implemented. This will likely require investment from utility companies and the government alike.
Customers need choices.
According to a recent survey conducted by Escalent, 83 percent of prospective homebuyers in the Portland-Vancouver Metropolitan area – across all home values – would choose a natural gas home. The study also showed that 8 in 10 prospective homebuyers prefer natural gas for heating and cooking. As expressed by a survey participant, “We prefer cooking with natural gas. It is also much cheaper to heat our home with natural gas instead of electricity.”
As state and local governments adopt sustainability and energy efficiency best practices, we implore them not to not take the expensive route, but instead push for renewable natural gas, focus on reliability, and offer customer choices.