New York Governor Kathy Hochul recently signed a bill to repeal the “100-foot rule” that has been in effect for over 40 years regarding natural gas installations. According to the new regulation, for future residential developments applying for the installation of natural gas service lines, the costs for the first 100 feet of construction and installation will no longer be shared by all users, but will be the responsibility of the applicant. The state government stated that the purpose of this law is to reduce the burden on existing users’ bills and adjust outdated subsidy mechanisms.
The rule, implemented in 1981, originally required natural gas utility companies to pay for the initial 100 feet of pipeline construction in new residences, with these costs eventually being passed on to all users. The policy at the time aimed to encourage households to transition from high-polluting energy sources like coal and oil to natural gas. Hochul stated in a release that the current energy and economic environment is different from before, and having existing users foot the bill for service lines in brand-new residences is “not fair,” especially when many families are facing cost-of-living pressures.
According to data from the non-profit organization Public Utility Law Project, in 2021, the ten natural gas distribution companies in the state spent around $450 to $500 million expanding services for new customers. The organization estimates that the “100-foot rule” imposes a subsidy cost of about $600 million on all users annually. With the new law in effect, residential developers or homeowners applying for new service lines will have to bear all material and construction costs themselves, which could range from thousands to tens of thousands of dollars depending on the area.
Democratic State Senator Liz Krueger expressed that the previous system forced all users to subsidize new service lines, and the new law will help alleviate the burden on users. State Assemblywoman Jo Anne Simon commented that this move will aid in restricting polluting investments and align with the state government’s climate policy objectives.
Republican State Senator George Borrello cautioned that this change could potentially increase home buyers’ costs by an average of around $14,000, subsequently driving up housing prices and impacting economic and energy stability. Earlier this month, 47 state Assembly members co-signed a letter to the governor requesting the bill to be vetoed, highlighting that New York is facing housing shortages, rising energy prices, and affordability pressures, deeming this additional burden as “non-constructive.”
The Hochul administration believes that the new law does not prohibit the construction of new natural gas pipelines but merely adjusts the cost-sharing mechanism, which will help enhance rate fairness and predictability. The state government stated that the law only applies to residential projects, and new pipelines can still be installed according to demand in the future, but no longer with subsidies from all users.
Policy advocate Liz Moran from the environmental group Earthjustice mentioned that many users are unaware that such subsidies are included in their bills, and some low-income households are already spending more than 6% of their pre-tax income on energy expenses.
Similar adjustments have been implemented in recent years in California, Massachusetts, Colorado, Maryland, and Oregon. The new law in New York is expected to take effect 12 months from now. The specific implementation details will be further developed by regulatory agencies, as per the state government’s announcement.