How HB 1589 affects homebuilders and Washington families
April 2, 2024
BIAW has received a lot of questions about how HB 1589 affects homebuilders and Washington families.
The Washington State Legislature passed HB 1589 regarding natural gas service during the 2024 legislative session. The governor signed it on March 2. The legislation gives Puget Sound Energy (PSE) sweeping authority to electrify its natural gas system. While legislators removed the outright ban from the final bill, HB 1589 still mandates a forced transition to end the use of natural gas.
How HB 1589 affects homebuilders and families
- The legislature removed the immediate ban on new residential natural gas hookups from the bill.
- The legislature also removed changes to the “obligation to serve” natural gas statute from the bill. PSE must continue to provide natural gas service to new and existing customers in their service area for the time being.
- However, the bill* requires PSE to develop a plan to “achieve all cost-effective electrification of end uses currently served by natural gas” including “geographically targeted electrification.” In practice, this will likely result in PSE subsidizing some consumers to switch from natural gas at significant cost to all other ratepayers. If PSE converts all natural gas customers to electric in a targeted area, they will likely be able to decommission service to that area with approval from the Utilities and Transportation Commission (UTC).
How HB 1589 incentivizes PSE to electrify its system at the expense of ratepayers
- Allows for accelerated depreciation of natural gas assets by 2050 – meaning they will factor in a quicker expiration of value and useful life of their pipelines for maintenance,
rates, and expansion. This allows PSE to charge consumers more over a shorter period to pay for electrification. - Combines natural gas and electricity rates. Currently, electric and natural gas rates are calculated separately so gas customers pay for gas and gas-related infrastructure
maintenance only and electricity customers pay for electricity and electricity-related infrastructure maintenance. Now customers that receive one or the other may be required
to pay for the delivery and infrastructure maintenance for both. This will push current natural gas AND electricity customer rates higher. - Gives PSE the ability to obtain pre-approval for energy projects and incorporate those costs BEFORE the project is approved by the UTC. Even if the project is ultimately disapproved PSE can incorporate all those costs into utility rates.
Frequently Asked Questions
If I currently receive natural gas service, do I need to convert to electric?
No, not right away. Existing consumers will continue to receive natural gas service until PSE ultimately stops serving natural gas per the targeted electrification plan required in this bill.*
If I am building a home in PSE’s natural gas service territory, may I hook up to natural gas?
Yes. If PSE provides natural gas in a particular area, they will be required to provide service to new customers in that area, until they implement the targeted electrification plan required in this bill.* However, builders should consider protecting themselves in the event PSE terminates a customer’s natural gas service after the home is built with natural gas appliances.
When will I need to convert to electric?
The bill does not specify when PSE must implement its targeted electrification plan–only that it does need to do it.