In the Philadelphia suburb of Wyncote, Pa., Michelle Lordi has taken notice of her higher gas bills.
"We had thousand-dollar bills this past winter," Lordi said outside her home recently, as construction crews replaced old gas lines in her neighborhood. Her bill combines gas and electric, but during the winter heating season, that's mostly gas.
Now Lordi is making the connection between her higher gas bill and the nearby construction. "It looks like they are tearing every single bit of infrastructure up here," Lordi says. "So, first of all, I know that's very expensive. There's crews and crews of people."
The local utility, PECO (formerly the Philadelphia Electric Company), says it is spending about $1.8 billion over five years to upgrade its gas pipelines and other infrastructure. Because it's a monopoly utility, regulators will pass those costs on to ratepayers.
This construction and Lordi's higher bill are part of a trend across the United States. Even though natural gas prices are relatively low now, residential gas utility rates are nearing record highs. That's because customers are paying more for infrastructure, construction, utility costs and taxes than they are for the actual fuel.
The construction aims to improve pipeline safety after a deadly 2010 gas pipeline explosion. But that spending on infrastructure, which will last for many years, comes as scientists say the world will have to shift away from fossil fuels, including natural gas. Now climate activists question why gas utilities are investing in new infrastructure that may not be needed within just a few decades.
In a few states, regulators have started telling gas utilities to look for cheaper ways to improve safety, including the option of shutting down sections of gas utility networks that are expensive to replace.
An explosion in spending
Gas utilities have increased construction spending dramatically in recent years — up 50% from 2022 to 2023, to $49.1 billion, according to the American Gas Association, the largest trade group for gas utilities.
The federal government encouraged this spending after a 2010 pipeline explosion in San Bruno, California. The blast killed eight people and destroyed dozens of homes in the San Francisco suburb. Investigators found that the explosion was caused by a faulty weld in a pipeline installed in the 1950s.
The federal push aimed to repair, rehabilitate and replace old iron and steel pipes with new pipelines to improve safety. But gas utilities, with approval from state regulators, have focused on the last and most expensive of those three options: replacing old pipelines. Understanding how gas utilities make money helps explain why.
Gas companies usually don't make a profit on gas itself — they pass along the wholesale price to customers. Instead, utilities make their money by building new infrastructure, such as pipelines, and replacing outdated infrastructure. Regulators then allow companies to recover those costs, plus profits, in customer bills.
"That has driven up rates substantially," says Abe Scarr, energy and utilities program director at Public Interest Research Group (PIRG), a consumer advocacy organization. "Doubling here in Chicago, the delivery rates. Tripling in BGE — Baltimore Gas and Electric — territory in Maryland."
Scarr led PIRG's campaign critical of the utility Peoples Gas' pipeline replacement program in Chicago. In addition to being overbudget, the program conflicted with Illinois' climate goals. After a study also showed that gas bills could double over the next 15 years, state regulators reined in the program and ordered the utility to focus on the pipelines at most risk of leaking.
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Pipeline replacement programs have contributed to a change in customer bills over the past 40 years. In 1984, about two-thirds of gas utility bills paid for the gas, and one-third covered infrastructure, utility costs and taxes, according to the Energy Information Administration. Now that has flipped. In 2024, less than a third of customer bills went to gas, and about two-thirds went to the other costs.
Gas exports could push prices higher
Gas utilities prefer to focus on other statistics. Natural gas remains the cheapest way to heat a home during the winter, according to the Energy Information Administration. PECO also says its gas utility rates have remained below inflation since 2011. And utilities point out that one reason that gas makes up a smaller share of bills is it's now relatively cheap. Construction costs, though, have increased.
"Inflation certainly plays a role there — the cost of materials, the cost of labor and so forth," says Richard Meyer, vice president of energy markets, analysis and standards at the American Gas Association (AGA).
In a statement to NPR, the AGA said that when utility rates are adjusted for inflation, current bills are near historical lows. More efficient appliances have reduced bills over the decades. Lower wholesale gas prices helped blunt the impact of increasing utility costs, keeping bills lower than they would have been with higher wholesale prices.
"Our industry has managed to invest considerably in upgrading the natural gas system in recent decades to enhance safety and lower emissions without significant variance in costs for consumers," said Karen Harbert, AGA's president and CEO, in the statement.
Still, the industry's critics say what customers see is higher bills with less of the money they're paying going to the gas itself.
"You're paying more and more to your utility, and you're not getting the savings you otherwise would have," says Scarr. He sees another risk for gas utility customers as the White House pursues policies that favor fossil fuels and hurt renewable energy.
The Trump administration wants the U.S. to export more gas around the world, risking tighter supplies at home and even higher gas bills for consumers. The AGA's Meyer counters that gas drillers are responding to meet increasing demand.
"The market can and will respond to those signals, including growing demand," Meyer told reporters during a recent presentation about winter heating costs. "When prices elevate, operators get back into the field and begin to drill more and produce more."
But increasing production risks more severe climate consequences. Scientists say for humanity to avoid the most catastrophic effects of a hotter climate, most of the world's fossil fuels need to stay in the ground, including nearly half of natural gas reserves.
Natural gas is a climate problem
Natural gas is mostly methane, a very powerful greenhouse gas. While gas utilities have made significant progress in reducing leaks, eliminating them is difficult.
A 2020 Princeton University study into the most cost-effective ways to zero out greenhouse gas emissions looked at five pathways to reach "net-zero" emissions by 2050. That's the goal of the 2015 Paris climate agreement, which aims to limit global heating and avoid some of the worst consequences of a warming planet. In the Princeton study, none of the pathways included gas utilities existing as they do now.
Other studies by the Energy Department's Lawrence Berkeley National Laboratory and the National Academy of Sciences echo the Princeton study's conclusion: Electrifying the country's buildings, making appliances more efficient and powering them with renewable energy are among the best paths to cutting emissions.
The gas utility industry is working on cleaner alternatives to methane, including what it calls renewable natural gas. It uses waste methane from landfills and manure. The industry also plans to mix hydrogen into its existing gas utility pipeline network, but those efforts have faltered amid local opposition.
State regulators decide gas utilities' future
"We do believe that we should in the coming decade, not overnight, transition off the gas system," says Scarr. "The science says we need to stop burning things, and part of that is burning gas in our homes."
Scarr is among activists around the country who are encouraging state utility regulators to consider a future without gas utilities. And, they argue, that could save customers money.
Instead of replacing old gas pipelines, they want utilities to first consider cheaper alternatives. That includes repairing the lines or even shutting down sections of gas pipelines and switching homes to electric appliances and heaters.
Massachusetts is one of the states heading in this direction. This year, regulators overhauled a gas pipeline replacement program in the state. The goal is to limit the amount of ratepayer money spent on costly infrastructure that the state hopes to phase out in the coming decades as part of its climate goals.
The Massachusetts Department of Public Utilities told gas companies to prioritize repairs over replacements and consider whether it might be cheaper to shut down segments of leaky pipes and install electric heat pumps in homes.
State officials say gas utility customers could see up to a 17% decrease in a pipeline replacement surcharge on their monthly bills because of these changes.
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