SF421 - Natural Gas Innovation Act Summary

• Establishes a framework allowing natural gas utilities to file innovation plans with the Public Utilities Commission to develop and procure biogas, renewable natural gas, hydrogen, ammonia, carbon capture, strategic electrification, district energy, and energy efficiency resources.

• First innovation plans capped at 1.75% of gross operating revenues or $20 per customer annually, with potential increases to 2.75% or $35 per customer for subsequent plans that meet cost-effectiveness objectives; additional recovery allowed for renewable natural gas from food waste, wastewater, or sustainably harvested prairie grasses.

• Commission must establish lifecycle carbon accounting framework and cost-benefit test by June 1, 2022, requiring utilities to demonstrate that proposed resources have lower greenhouse gas intensity than conventional natural gas and provide net benefits under the cost-benefit framework.

• Large utilities with over 800,000 customers must include pilots for thermal energy audits to small businesses, hard-to-electrify industrial processes, and cold climate electric heat pump installation in existing homes.

• Utilities must file new plans within four years of approval; approved plans last five years and require annual reporting on costs incurred, greenhouse gas reductions achieved, and progress toward cost-effectiveness objectives.