Palo Alto staff: majority of gas mains unlikely to be abandoned until widespread electrification

Palo Alto staff told the Utilities Advisory Commission that under current assumptions neighborhoods would need very high levels of voluntary electrification before the city could abandon a large share of its natural‑gas mains.

The study, presented Oct. 24 by Jonathan Abenshine, assistant director of public works for climate action, modeled equipment and customer connections and ran simulations of 20, 40, 60 and 80 percent reductions in gas sales. The work estimates that, under a random‑adoption scenario, reductions on the order of 60 percent are required before even 10 percent of mains could be abandoned.

The report matters because the city is already pursuing policies to encourage electrification and the commission has repeatedly asked staff to quantify financial and operational impacts. Abenshine said the preliminary results validate commissioners' concerns that costs and timing will require deliberate planning and funds to avoid abrupt rate impacts for remaining gas customers.

Staff described the study steps: estimating how many gas appliances are in Palo Alto homes and businesses; simulating customer disconnections and the resulting ability to abandon distribution mains; and estimating which utility costs decline as sales fall. Abenshine said the team has completed a system model and Monte Carlo simulations and plans further data cleaning and more targeted analysis of cluster (nonrandom) electrification patterns.

Abenshine noted the study currently assumes industrial and large commercial gas use will not electrify in the short term, a simplifying assumption staff intends to refine. He also said the share of costs tied to declining sales versus fixed or customer‑based costs is material: the preliminary analysis shows roughly 60 percent of gas utility costs fall as sales decline, while the remainder is tied to customer counts or mains that would only fall if mains are abandoned.

Commissioners pressed staff on timing, clustering and equity. Commissioner Phillips asked whether any local businesses use natural gas as a chemical feedstock rather than for energy; staff said they do not yet have a reliable inventory and therefore held commercial and industrial sectors constant in the scenarios. Several commissioners urged staff to analyze whether electrification will cluster by neighborhood and by income, which would change how and when mains could be taken out of service.

The commission discussed possible policy responses, including options raised in the meeting for spreading costs (for example, a sale or consolidation with a larger gas provider) but staff said the current study is not a proposal to sell the gas system and that such options would each carry trade‑offs and legal/financial complexity.

Abenshine said next steps include refining equipment estimates, running clustered‑adoption scenarios, integrating results into the broader Sustainability and Climate Action Plan (SCAP) funding discussions and developing mitigation strategies to address rate impacts as sales decline.

Looking ahead, the commission and staff agreed further work is needed on sequencing with electric capacity planning and how to finance mitigation measures as voluntary electrification grows.