City of Palo Alto staff presented the scope of a study intended to estimate how high levels of electrification — driven by local, state and regional policy — could affect the city’s gas utility physically, financially and for safety, and asked the Climate Action and Sustainability Committee for feedback on assumptions and modeling approaches.

The study, presented by Jonathan Abenschein, assistant director for climate action, will model a range of electrification scenarios and examine the costs of decommissioning parts of the gas network, how remaining fixed costs might be allocated among fewer customers, and where parts of the system could be safely retired. "This study does not is not, a statement of what our goals are or what we think the future is necessarily going to bring. It's a study of several different scenarios," Abenschein told the committee.

Why it matters: Palo Alto’s gas utility serves homes and businesses that use gas for space and water heating; replacing those uses with electric alternatives would reduce gas sales and change the utility’s revenue base. Staff told the committee they need data to identify safety and operational risks, estimate decommissioning costs, and craft transition strategies that are equitable and keep the system safe.

Key elements of the scoping

- Scenarios and modeling: Staff said the study will model incremental scenarios representing roughly 20%, 40% and 80% declines in gas sales, primarily driven by residential and commercial electrification of space and water heating, which staff said represent 70%–90% of local gas use. The study will exclude — for the purposes of initial scenarios — medical and industrial uses because staff said those uses are more difficult to model; those loads are expected to remain on the system longer.

- Disconnection likelihoods: The study will simulate not only how usage declines but also the likelihood that a customer who has electrified appliances will disconnect gas service altogether. Abenschein said the team will vary that likelihood (low, medium, high) and run multiple simulations to show probable outcomes.

- Physical versus financial impacts: Staff emphasized a distinction between physical retirement of infrastructure (e.g., digging up and abandoning service lines for safety) and financial impacts (the spread of remaining fixed costs across fewer customers). Abenschein noted that leaving abandoned lines in place raises safety risks from accidental digs, so costs to excavate and permanently retire lines are a central part of the analysis.

- Block‑level versus service‑by‑service retirements: The study will evaluate "bookend" strategies such as coordinated, block‑level retirements (more efficient excavation) versus disorderly, service‑by‑service retirements (potentially much higher per‑customer abandonment costs). Staff said the model will examine a range of orderly and disorderly patterns and their effects on rates and system costs.

Committee questions and public comment

Committee members pressed for clarity about how multifamily buildings will be modeled, whether the study will produce repeatable tools the city can own, whether the model can show how reductions map to greenhouse‑gas outcomes, and whether staff will analyze pilot programs to encourage coordinated retirements. Abenschein replied the study will create a gas financial model and physical simulations intended to be repeatable for future scenarios.

Public commenters urged the city to scrutinize assumptions about industrial and medical customers and to consider established technologies. Steven Rosenblum, who identified himself as affiliated with a statewide coalition, told the committee that "there are plenty of ways of replacing natural gas as a heat source using either electric heaters or heat pumps." Tom Caput, a former Palo Alto utilities employee, urged the city to consider allocating the cost of eventual decommissioning earlier in rates so customers receive a price signal now.

Next steps and timeline

Staff said they expect to move quickly: preliminary results by the fall, presentation to the Utilities Advisory Commission and the committee this year, and a final report that could inform 2026–27 policy work and, potentially, be published for other cities. Abenschein said staff will follow up with the Utilities Advisory Commission and incorporate working‑group feedback about behavioral and pilot program options to be evaluated after the core study is finished.

Ending

Committee members broadly endorsed the approach and asked staff to include comparisons of orderly and disorderly retirement patterns, multifamily vs. single‑family dynamics, and example pilot options for coordinated block retirements in the final analysis. Staff confirmed they will bring back the draft results and that the study is intended to inform later policy choices rather than prescribe them.