From Here to the Gas System of 2050
Why Reimagining the Gas System is Essential
Gas utilities face a growing imperative to fundamentally rethink the long-term structure and purpose of the gas distribution system. Once considered a stable, long-term asset, the gas network is increasingly strained by a confluence of economic, environmental, regulatory, and technical pressures.
Utilities are managing vast and aging gas pipeline systems originally built for a different era—one with strong demand growth and limited decarbonization pressure. Today, electrification trends are eroding gas throughput, especially for residential and small commercial customers. As gas volumes decline but infrastructure remains, the cost per customer rises, creating affordability challenges and accelerating the risk of stranded assets. It’s difficult to justify upgrades or replacements of gas mains when commodity throughput is shrinking.
Many jurisdictions have committed to aggressive climate targets, with utilities aiming for net-zero greenhouse gas (GHG) emissions by mid-century or earlier. This shift has intensified scrutiny of methane leaks, full lifecycle emissions, and the long-term sustainability of fossil-based heating systems. While alternatives like renewable natural gas (RNG) and clean hydrogen offer potential, their scalability, economic viability, and compatibility with existing infrastructure remain in question. RNG is constrained by limited feedstock availability, while clean hydrogen faces high production costs and uncertain policy support. As such, neither RNG nor hydrogen is likely to fully sustain current gas demand levels in the coming decades—though targeted deployment of RNG should be pursued where feasible.
Despite falling usage, utilities still face high operational and safety expectations. Leak detection, corrosion monitoring, seismic and geohazard readiness, and rapid emergency response are non-negotiable—adding persistent cost and risk even as volumes decline. This mismatch between system complexity and diminishing demand creates a structural imbalance.
Utilities are caught between diverging pressures:
Regulators and environmental advocates call for faster electrification and system shrinkage.
Customers—especially those unable to electrify—fear being left behind to shoulder rising costs.
Investors and credit agencies are beginning to question the long-term financial sustainability of expansive gas networks.
In this context, the gas system can no longer be treated as a static asset. It must be re-imagined as a dynamic, nimble, and decarbonization-aligned platform—one that evolves alongside customer needs, technological alternatives, and climate policy commitments. For most utilities, this requires a phased, data-driven, and community-sensitive approach to transitioning into a future-proofed gas utility.
First Principles in Rethinking the Gas System
To responsibly evolve the gas system, an electric and gas utility must ground its strategy in core, cross-cutting principles. These principles ensure that system decisions are aligned with long-term outcomes, protect vulnerable customers, and preserve operational integrity.
Safety Is Non-Negotiable
The gas system must remain safe through every stage of the transition. Leak-prone pipes, aging components, and geohazard risks must be addressed regardless of usage levels. Where full electrification is not immediately viable, targeted investment in safety-critical assets remains essential.
Electrification Is the Dominant Decarbonization Pathway
In most sectors—especially residential and light commercial—electrification is the most scalable and cost-effective route to decarbonization. Utilities must treat electrification not as an optional outcome, but as a core system planning input that drives decisions about gas investment, retirement, and incentives.
Decisions Will Look Different in Gas-only, Electric-only, and Combined Territories
Electrification is easy for a utility to promote when an electric utility does not also provide gas to a customer; it’s much more difficult for the utility to justify a strong electrification push when they provide gas but not electric service to a customer. Incentives are more neutral when the utility provides both gas and electric. Transition planning should take place in conjunction with other utilities that share the territory, as possible, but utilities should also focus on what is in their control. Customers who receive both gas and electric service from the same utility may have the best opportunities for conversion (more on this concept below, as “Concept 3”).
Cost-to-Serve Must Drive Resource Allocation
With declining throughput and rising O&M burdens, utilities must adopt a granular understanding of cost-to-serve across their territory. Investment decisions—whether to maintain, retire, or electrify—should be based on a granular bottom-up analysis of projected cost by customer and by neighborhood. Similarly, strategic electrification incentives or mandates should be considered when gas mains require replacement.
The Future Gas System Will Be Smaller, Smarter, and More Targeted
Rather than a ubiquitous energy backbone, the future gas system should be:
Strategically sized to serve high-value, hard-to-electrify uses.
Managed with technology to optimize leak detection, inspection, and performance.
Flexible and transitional, capable of evolving alongside policy and market signals.
Transition Planning Must Be Proactive, Not Reactive
Waiting for usage to decline or infrastructure to fail will result in higher costs, greater inequity, and regulatory backlash. Utilities must proactively chart a path to:
Target early electrification zones.
Plan for systematic retirements.
Redesign tariffs, incentives, and engagement models to match the future state.
Customer-Centric Communication and Support
The transition away from gas is not just a technical or financial challenge—it is perhaps the most profound communications challenge a utility will ever face. It threatens the utility’s identity as a universal provider of essential services and will involve visible disruptions and real costs. To succeed, utilities must:
Lead with transparency about the drivers of change and long-term vision.
Build trust through ongoing engagement—not just outreach—and recognize that different communities will need different messages, messengers, and modes of support.
Empower customers with tailored tools, incentives, and education to make confident energy decisions.
Electric Grid Investment as a Strategic Enabler of Customer Choice
The electric grid must be more than a passive receiver of new load—it must become an active platform enabling decarbonized energy services. Utilities should:
Use grid planning to identify strategic electrification zones where investment yields the greatest societal value.
Coordinate distributed energy resources (DERs), storage, and demand flexibility as integral parts of system design—not afterthoughts.
Shift from static capacity planning to scenario-driven forecasting that integrates building electrification, EV adoption, and climate impacts.
Partner with regulators to create investment frameworks that reward resilience, emissions reduction, and customer-centric performance.
These principles should guide every aspect of gas system strategy—from infrastructure investment and customer programs to regulatory engagement and long-term financial planning. They form the foundation for an integrated, equitable, and climate-aligned energy future.
Three Specific Concepts:
Zonal Electrification
Addressing Leak-Prone Pipes
Encouraging Gas+Electric Utility Integration
Concept 1: How to Prioritize Electrification
A successful electrification strategy must be based on a data-rich, customer-sensitive, and system-integrated approach. Electrification is not a one-size-fits-all solution—different customers and neighborhoods face different barriers and opportunities. Utilities should prioritize electrification through the following layered methodology:
Customer-Level Usage Analysis
Determine which end uses rely on gas (e.g., space heating, water heating, cooking) using a combination of smart meter data, seasonal consumption patterns, and customer surveys. Identify homes and businesses that already use electric systems for some functions and may be "electrification-ready.” Meter data and demographic data may also reveal a propensity for electrification.
Cost-to-Serve Modeling
Calculate the actual cost to maintain gas service for each customer, feeder, or geographic area. Include pipe maintenance, replacement risk, emergency response, and throughput trends. Prioritize electrification in areas with high cost to serve and greater propensity for electrification.
Electrification Readiness Index
Develop a scoring system that ranks neighborhoods or feeders based on:
Local housing stock (e.g., age, electric panel size)
Grid capacity and upgrade needs
Customer income and eligibility for incentives
Contractor and workforce availability
Zone-Based Electrification Planning
Cluster customers into priority zones for electrification, based on usage profiles and readiness index. Coordinate with city planning, affordable housing developers, and clean energy programs to align resources.
Stackable Incentive Structures
Design customer incentives based on the avoided cost of gas service, existing electrification incentives, and household income. Consider bundling whole-home solutions (e.g., heat pumps + electric water heaters + panel upgrades) with on-bill repayment or third-party financing.
Dynamic Targeting and Program Adjustment
Use real-time data to adjust program offers, shift outreach focus, and measure progress. Regularly revisit prioritization models to reflect changing customer behavior, policy, and grid conditions.
Concept 2: Addressing Leak-Prone Pipe Strategically
As utilities reduce reliance on the gas system, leak-prone pipes remain a safety and cost challenge. However, blanket replacement is rarely the most efficient solution—especially in areas where electrification is viable. A smarter, phased approach includes:
1. Map and Segment the System
Break the gas network into three functional categories:
Keep and Maintain – Areas requiring long-term gas service (e.g., industrial zones, gas-only customers).
Transition Zones – Areas that could electrify within 10–20 years but aren't yet ready.
Electrify and Exit – Areas where maintaining gas service is costly and electrification is practical.
2. Only Replace What’s Necessary
In Keep and Maintain zones: Replace leak-prone pipes to uphold safety.
In Transition zones: Use temporary or low-cost repairs with a plan to phase out service over time.
In Electrify and Exit zones: Avoid major replacements. Instead, focus on supporting customer transitions to electric alternatives.
3. Use Smarter Leak Detection
Employ advanced technologies to reduce inspection and emergency response costs:
Mobile and aerial leak sensors
Smart monitoring systems
Predictive software to identify high-risk segments before failure
4. Link Maintenance with Electrification Offers
When addressing leaks in transition zones, reframe the choice for customers:
“We can fix this line, or pay you to switch to electric and retire the gas connection entirely.”
This approach transforms maintenance into a launchpad for electrification.
Bottom Line: Utilities don’t have to choose between overspending and compromised safety. The optimal strategy is to:
Fix what must be fixed
Defer where prudent
Exit where electrification aligns with customer needs and system goals
This targeted, data-driven approach will save money, reduce emissions, and reshape the gas system into a smaller, smarter, safer platform.
Concept 3: Encouraging Utility Integration
An underexplored, or perhaps wholly unexplored, strategy for a more seamless transition is the regulatory encouragement—or facilitation—of utility integration where electric and gas utilities serve overlapping territories. The rationale is simple: the electrification transition is more holistic, economically viable, and strategically aligned when a single entity serves both gas and electric customers.
Why Integration Matters
Utilities that serve customers with both gas and electric services can plan with a system-wide mindset. They understand that declining gas revenues can be balanced by increasing electric revenues—enabling investments in electrification that are economically rational and strategically aligned.
In contrast, gas-only utilities—or hybrid utilities with customers they serve only with gas—face a clear disincentive. Electrification represents only downside: reduced gas load, revenue losses, and stranded assets.
Even electric-only utilities may hesitate to aggressively electrify another utility’s gas customers, especially if it causes conflict they might prefer to avoid.
The Need for Holistic Planning and Incentives
Neighborhoods not served by the same gas and electric utility are at a structural disadvantage. Without a unified view or aligned incentive structures, planning and execution will be fragmented.
Electric utilities may see strategic value in acquiring local gas utilities, particularly where future load growth offsets the cost of acquisition. Even if the endgame is to phase out gas, the upside of new electric load could make this worthwhile.
However, many such mergers will not be economically viable in the short term. Therefore, state regulators should assess whether combinations of gas and electric utilities are in the long-term public interest and consider mechanisms to support or incentivize such integration where it serves ratepayers.
These are early ideas from Realize 2050, but they warrant further study. A truly aligned and future-ready energy system may require not just coordination between utilities—but structural realignment.
Conclusion
The future of gas utilities lies not in maintaining the status quo, but in orchestrating a deliberate, equitable, and sophisticated transition to a climate-aligned energy system. This transformation will not be easy. It will test the operational flexibility, customer trust, and institutional resilience. But it is achievable—with intention, innovation, and a broader systems perspective.
The three specific concepts outlined in this strategy—prioritizing electrification, addressing leak-prone infrastructure strategically, and encouraging utility integration—are not isolated ideas, but interdependent levers that reinforce each other.
Prioritizing Electrification ensures that investments are targeted where they deliver the greatest benefit—economically, operationally, and socially. It enables utilities to reduce long-term costs, decarbonize at scale, and empower customers through cleaner and more efficient technologies.
Addressing Leak-Prone Pipes Strategically allows utilities to manage safety, cost, and emissions simultaneously. Rather than reacting to failures, utilities can pivot toward proactive retirement and reinvestment, aligning near-term maintenance with long-term decarbonization.
Encouraging Utility Integration has the potential to resolve misaligned incentives that have long stymied coordinated planning. By enabling shared ownership across gas and electric services, utilities can take a whole-systems view—balancing losses in one domain with gains in another, and unlocking win-win outcomes for customers, regulators, and shareholders.
Imagine a future in which innovation is not siloed, but driven by integrated business models that recognize the interconnectedness of infrastructure, affordability, and climate.
Getting there will require more than new technologies—it will require rethinking regulatory frameworks, forging new partnerships, and investing in long-term vision. It will require utilities to embrace a new identity: not just as providers of a commodity, but as stewards of a shared energy future.
