End of the Line for Gas Subsidies in Oregon

Posted on November 10, 2026 by Charlotte Shuff
Tags, General Interest, Energy

After nearly four years of work by CUB and many other advocates, Oregon regulators decided to end customer-funded subsidies to expand the gas system for all gas utilities in the state. Oregon is only the fourth state in the country to end this practice.

This is a major win for Oregonians and the climate. Now, if a developer wants to build a home or business with gas, those costs will fall on the developer, not other gas customers. By reducing the incentive to build new gas buildings now, we can help reduce emissions for decades to come.

End of the Line: The Controversial Subsidy for Gas Expansion

For decades, existing gas customers have paid for expanding gas utilities’ business through a subsidy called a “line extension allowance.” These funds offset the costs of building developers, encouraging new homes to be built with gas.

Expanding the Gas System No Longer Makes Sense

While in the past it made sense to add more customers to spread out costs on the system, it no longer benefits existing customers. The old theory of this subsidy was that it was good for customers. As new customers joined the system, they would help reduce bills for everyone by spreading costs to more people.

But now, new customers add more costs to the gas system as utilities must focus on reducing emissions. These subsidies for expanding the system are recovered from customers over decades. If these new customers leave sooner, as we expect them to, everyone else has to pay those costs.

Utilities Abused the Subsidy at Customers’ Expense

One major issue with the line extension allowance subsidy was that gas utilities spent massive amounts of money with very little oversight. Even when regulators capped the amount that existing customers were paying, the actual cost to households was often much higher than was reasonable.

CUB spent years digging into these numbers and successfully eliminated the subsidies from the worst offenders.

NW Natural (Subsidy Ended in 2024)

In 2022, state regulators ordered that NW Natural must reduce the number of customer dollars it spends on its expansion subsidy. That year, NW Natural was allowed to invest up to $ 2,875 in existing customer dollars to hook up a new customer. Regulators required NW Natural to lower that amount each year, allowing only about $1380 by the end of 2024. CUB fought hard to win this reduction.

Despite regulators ordering the utility to reduce the amount they spend on new customer hookups, NW Natural provided subsidies that were above the cap. CUB dug into NW Natural’s subsidies dating back to 2018, and the results are shocking. In that time, the utility added around 40,000 new customers, costing $82.6 million.

But NW Natural spent more than allowed on 7,599 new customer subsidies totaling $16.2 million since 2018. The gas utility overspent on almost 1 in 5 cases of adding new customers.

Avista (Subsidy to End in 2027)

Avista has no monetary cap for its subsidy. The average Avista new customer hookup subsidy in 2022 was $5,644. This is more than twice NW Natural’s maximum. In 2020, one very high Avista hookup subsidy cost Avista customers $42,032.

These costs don’t stop at the price tag of pipes and labor, though. Gas utilities are allowed to make a profit off of these investments, in addition to charging customers for the investment itself. Between the initial cost, profits, and taxes, the $42,032 hookup subsidy for a single home from 2020 will actually cost ratepayers $108,367 in total.

In 2023, CUB won a cap and phase-out of Avista’s subsidy by 2027. The amount allowed for connecting new customers was $2,500 in 2024, $1,250 in 2025, $750 in 2026, and will be $0 in 2027. This will save existing customers money now and into the future.

The Final Demise of the Dirty Discount

This year, Cascade Natural Gas became the final gas utility to end the controversial expansion subsidy. The final win has made Oregon the fourth state in the country to eliminate the line extension allowance for gas utilities.

Cascade (Subsidy to End in 2028)

While Cascade did not have as big of an overspend issue at NW Natural and Avista, the subsidy was still putting customers into a financially risky position. Regulators agreed with CUB that these policies are not in the best interest of customers. These subsidies also undermined climate policies in Oregon communities, such as Bend and Ashland, that discourage new homes from being connected to the gas system.

Now, Cascade must phase out its growth subsidy for households by 2028. The cost it can charge existing households to add a new home will drop to $1,750 this October, down to $678 in October 2027, and finally $0 in October 2028.

Oregon Once Again Chooses Smart Climate Policy Over Fossil Fuel Profits

Continuing to grow the natural gas system will harm the current and future customers of gas utilities. Adding gas service to new buildings increases the cost of service to existing customers. It adds additional risk to customers in the future.

Climate change requires a reduction in the combustion of fossil fuels, including natural gas. The state’s Climate Protection Program requires that gas utilities reduce their emissions by 50% by 2035.

To meet climate regulation targets, gas utilities continue proposing energy efficiency investments and “renewable” natural gas (ex: factory farm gas). With the largest increase in spending coming from energy efficiency, this cost will continue to go up as new customers are added. Expanding the system through customer-funded subsidies does not make financial sense.

As the cost of gas increases, many customers may opt to convert to high-efficiency heat pumps, which provide efficient heating and cooling. This could create a significant problem for the customers who are left – customers who cannot afford a heat pump or do not control the heating equipment in their building.

Low-income households and renters could be particularly hard hit by increasing costs of the gas system. These customers would be asked to pay for not just the high cost of compliance, but the stranded costs associated with customers who have left the system.

Limiting the expansion of the gas system by limiting new customers hooking up to the system reduces emissions compliance costs and benefits existing NW Natural customers. It is why CUB supported phasing out expansion subsidies and limiting overall expansion for natural gas.

Will Rogers once said that “if you find yourself in a hole, stop digging.” Oregon has decided to stop digging.

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