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Palo Alto utility staff outline study to map costs, safety and options for phasing out gas
Summary
City utility staff presented a scope for a gas transition study that will model how 20%–80% reductions in gas use could affect safety, operations and finances, and identify strategies — including pilot block-level retirements and incentives — to manage system abandonment and equity impacts.
Palo Alto utility staff told the Utilities Advisory Commission on Sept. 9 that they are scoping a gas transition study to model the physical, operational and financial effects of widespread building electrification and to develop mitigation strategies.
Jonathan Ebershine, assistant director of public works on climate action, told commissioners the study will model four electrification stages — roughly 20%, 40%, 60% and 80% reductions in gas sales — and run Monte Carlo simulations to examine a range of possible outcomes. “The goal is to make the transition safe, smooth, and equitable,” Ebershine said. The analysis will exclude large medical and industrial buildings that have specialized gas needs.
The nut of the study is practical: staff want to know which mains or blocks could be retired safely and how to reduce the cost of abandonment. Ebershine said some mains may need to be retained to preserve system flows even if adjacent customers disconnect; in other places abandoning an entire block would be cheaper than severing service one home at a time. “It’s certainly cheaper to abandon block by block,” he said, but a single holdout customer can prevent an entire block from being retired.
Commissioners pressed staff on policy implications and timing. Commissioner Mares asked whether regional rules under consideration, such as Bay Area Air Quality Management District NOx proposals, were built into the model; Ebershine replied that the study does not assume specific timelines but instead models outcomes at the 20/40/60/80 percent milestones so it is “indifferent to when we hit these milestones.” Mares argued that the lack of a time dimension can limit business planning: “Then we don’t know when, say, 60% happens. So from a business planning standpoint, in terms of revenue, in terms of cost, and so on, it doesn't really help that much,” Mares said.
Staff said the schedule calls for preliminary results in the coming months and a fuller report to policymakers in early 2026. The scope described planned outputs including maps of lines most likely to be retired, analysis of pipe materials (PVC, steel and larger-diameter mains), estimates of the cost to abandon different system segments, and financial modeling of rate impacts and possible transfers to other utilities or the general fund.
Staff also described the behavioral and programmatic levers the city might use to achieve more block-level abandonments. Commissioners and staff discussed pilot programs that would target segments with near-term capital needs (for example mains already due for replacement) and evaluate incentives, outreach or financing that could increase the share of customers willing to disconnect. A staff speaker noted that opportunities to avoid costly main replacements could be a large source of savings if the city can coordinate conversions in targeted neighborhoods.
Commissioner Gupta and others requested that the study evaluate distributional impacts and mitigation options. Staff said the financial model will examine customer-class level effects and that mitigation measures will be part of the final recommendations. Commissioners raised equity concerns about a possible mid-transition “rate bulge,” when sales fall faster than costs can be reduced, disproportionately affecting multifamily and low-income customers.
Discussion also touched on governance and legal constraints. Staff said the city attorney and CPUC proceedings on gas-system planning are being monitored and will inform legal feasibility questions. Commissioners encouraged staff to seek examples and lessons from other jurisdictions and utilities and to coordinate the gas transition study with parallel SCAP (Climate Action Work Plan) and funding analyses.
The meeting closed with staff saying they will return with preliminary study results and with follow-up work on mitigation ideas and potential pilot areas. Staff asked the commission for feedback on the scope so it can be incorporated into the model runs and the early analysis.
Ending: Staff plans to deliver preliminary results in the next few months and a policy-ready report in early 2026; the study is intended to guide the city’s choices about pilot projects, incentives and funding options to limit rate shocks and meet electrification goals.
