The author is an attorney, a former EPA worker and a volunteer with the Sierra Club in Virginia. A slightly different version of this article was previously published in the Virginia Mercury News.
As winter approaches, Washington Gas is offering discounts to its Maryland customers if they purchase new gas appliances, including home heaters (up to $805) and water heaters (up to $460). What they don’t tell you is that this is a bad deal. If customers wait until January to buy electronic devices, they will be able to get more rewards.
Under the newly passed Inflation Reduction Act (IRA), Uncle Sam will provide a tax credit of up to $2,000 per year for electric heat pumps that provide heating and air conditioning, and heat pump water heaters. For low-income customers, the incentives are even bigger—up to $8,000 for heat pumps—and will be offered in the form of upfront discounts. If you are switching from natural gas and your panel is not sized for the extra electrical load, IRA will even help you with the upgrade. (For a complete list of home discounts and tax credits, see this list from Rewiring America.)
In the past, gas stoves were more efficient and cheaper to run than most electric heating options, but today the opposite is true: EnergyStar heat pumps use energy more efficiently and are cheaper to run than fossil fuel stoves or boilers. Heat pump water heaters are more efficient than gas or standard electric water heaters and also save on running costs.
Advances in heat pump and induction furnace technology, climate change concerns, and growing awareness of the dangers of burning fossil fuels indoors mean that the transition from gas to electricity will happen without an IRA. But IRA rebates are expected to help transform and change the construction industry.
Many consumers have not heard of IRA rebates and probably have not thought about electrifying their homes. They want this information, but they certainly won’t get it from their gas company.
Now, however, Washington Gas is promoting discounts on its gas equipment for an even bigger reason, and it’s all the more important to let customers opt out: Installing an expensive new gas oven gives you a warm hug from the company for the life of the oven. , no matter how high natural gas prices are.
It’s true that home appliances tie you even more to the power company (unless you have solar panels) and electricity bills are constantly rising. But electricity prices have risen mainly due to the sharp rise in the cost of fossil fuels. Government data show that gas prices are now two to three times higher than they were a few years ago. As Maryland’s power grid becomes greener every year, less expensive wind and solar power will have a dampening effect on electricity prices. On the other hand, your gas company will never sell you anything other than natural gas.
The situation has worsened. No matter how many customers they have, gas companies must maintain their pipeline networks and other infrastructure. As more customers switch to electricity, these costs are spread across a shrinking tariff base, increasing tariffs for the remaining customers. If you buy a new gas stove now, you’ll be stuck with a dwindling customer base paying more for plumbing maintenance.
Washington Gas today charges customers a flat “system fee” of $11.55 per month plus supply and distribution costs based on the amount of gas used that month. Customers who electrify their homes waive monthly system fees and enjoy the convenience of dealing with just one utility. But the real savings come from lowering the base rate, which covers a growing share of gas companies’ fixed costs.
This makes the Washington Gas rebate a double whammy for customers who don’t understand the IRA. Someone whose old gas stove is scrapped might decide to use this small discount to buy a new gas stove, and they might as well leave the old gas stove to limp for a few more months. By 2023, they will benefit from electric heat pumps and receive big discounts or tax breaks.
Consumers will save a lot of money and energy under the IRA’s incentives to electrify homes, but not if they switch to fossil fuels first.
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The authors write that few measures united Democratic, independent and Republican voters.
Ahead of the county council vote, the gas industry is working to make Montgomery County dependent on fossil fuels.