The movement to ban Natural Gas and its impact on your transactions

State regulators are establishing policies that could make it tougher for you to sell homes. The California Public Utilities Commission (CPUC) is currently deciding the type of energy and appliances that homeowners can use.

CPUC President Michael Picker has repeatedly called for eliminating the use of natural gas in buildings, even though there are more cost-effective and less disruptive ways to help reach California's climate goals. If adopted, homeowners would have to make the costly switch from gas to electricity. This would mean no gas ranges, no gas fireplaces, no gas water or space heating, no gas barbeques and no outdoor fire pits. For most REALTORS® and home buyers, these natural gas amenities can be key selling points.

According to a California Building Industry Association (CBIA) poll, when purchasing a home, only one out of ten would choose solely electrical appliances and fully two-thirds of voters oppose eliminating the use of natural gas in California. When consumers can't find the amenities they seek in a home, they often choose not to buy. Inventory could remain on the market longer, impacting both your ability to sell and your profitability.

In addition to limiting consumer choice, converting properties from natural gas to electricity is expensive. Should electrifying all end uses become a requirement prior to sale of a property, it would add thousands of dollars in electrical upgrades and appliance replacement costs.

Based on a recent CBIA-sponsored study, the cost of purchasing new electric appliances, plus the cost to upgrade wiring and electrical panels is more than $7,000 per home. And, this does not include any unforeseen expenses, such as asbestos remediation or structural issues discovered when opening walls for rewiring. Undoubtedly, gas-to-electric conversion costs would be passed on from the property seller to the buyer, creating another potential barrier to a sale.

If state regulators mandate electrification, not only will home buyers be unable to find the amenities they seek, but they will also have to pay more for something they don't want. At a time when Governor Newsom continues to denounce California's lack of affordable housing, a costly policy to electrify homes just doesn't make sense. We need energy policies that address climate change, but recognize consumer preference, promote housing affordability and support a healthy real estate market. Regulators should adopt energy policies that include diverse resources, such as solar, wind, hydrogen, natural gas and renewable natural gas.

Much like any wise investor would diversify a financial portfolio, California must diversify its energy portfolio, or risk worsening the housing affordability crisis and the economy. If you are concerned about the consequences of an electric-only mandate or want to learn more please click below.

Words By: Jon Switalski
Executive Director
Spring Street Consulting/Californians for Balanced Energy Solutions