Morgan Hill

City Council Staff Report

Introduce Ordinance Adding Chapter 15.63 (Prohibition of Natural Gas Infrastructure in New Buildings) to the Morgan Hill Municipal Code Reducing Climate Impacts by Requiring New Buildings to Be All-Electric


Department:CS (General)Sponsors:



The purpose of this agenda item is to introduce an ordinance requiring all new buildings to rely solely on electricity for their energy.


The following developments from the past two years have precipitated this report:


·         The growing body of evidence that the Climate Crisis is real and demands action;

·         The abdication of the federal government in taking action to address the Climate Crisis which necessitates that state and local governments play a leading role in steering societal changes that may lead to climate stability; and

·         The successful decarbonization of the regions electricity supply, via Silicon Valley Clean Energy (SVCE), which clearly makes electricity the cleanest fuel for building energy. Natural gas combustion in dual-fuel buildings is now the second largest source (after transportation) of climate-changing emissions in our community.


When taken in total, the above three developments have led City and agency staff throughout the region to conclude that local government actions to reduce or eliminate natural gas emissions from buildings are the next logical frontier in addressing the Climate Crisis.


What is the Problem

Emissions from natural gas combustion, and propane in areas unserved by natural gas, have become the largest source of greenhouse gas emissions associated with buildings. These emissions make up about one-third of the greenhouse gas emissions in our region. Of these emissions in a typical dwelling, about 49% come from water heating, 37% from space heating, and 7% from cooking, with the remainder being pool heating, clothes drying, etc. While the exact numbers for nonresidential buildings vary widely with the type of occupancy, the aggregate nonresidential numbers are 32% for water heating, 36% for space heating, 23% for cooking, and 9% miscellaneous.


Advantages of Electrification (Using electricity to heat and cook)

Many of us grew up hearing that natural gas was superior to electricity because it was more efficient. While this used to be true, three modern electric appliances (heat pump water heaters, heat pump space heaters, and induction cooktops) now offer enhanced efficiency and performance.


In terms of construction costs, avoiding the installation of gas pipelines into a development can save approximately $7,000 per unit. While the increased cost of installing larger electrical transformers will reduce the net savings, depending on the location, all-electric construction is expected to be less expensive on average. One developer in the community, City Ventures, typically already chooses to construct all-electric homes without natural gas.


On the operational cost side, it is difficult to definitively determine whether an all-electric building will cost more or less to operate because the relative costs of electricity and natural gas fluctuate over time. What is certain is that property owners have the opportunity to own their own solar energy systems, which can offset some or all of their electricity use, and the same cannot be said for their natural gas use. The only practical way to zero-out your gas utility bill is to rely solely on electricity.


Lastly, all-electric homes are considered substantially safer than their dual-fuel counterparts because there are no emissions within the home from gas combustion and there are no gas pipes that can leak due to wear, age, or earthquake.


Why Focus on New Buildings?

The greatest opportunities for electrifying buildings are present when the building is being designed and constructed. In fact, if one assumes that all buildings will need to be eventually converted to electricity, each new dual-fuel building being constructed is creating a future retrofit liability for either the government or private property owners.


The proposed ordinance generally requires all new buildings to rely solely on electricity as their energy source if they apply for a building permit after March 1, 2020. The delayed implementation date allows the public and developers time to continue with their existing plans, for projects that are close to submission, and ample time to adjust their plans to the all-electric design for projects that are still many months away from applying for a permit.


While the ordinance, if adopted, will apply to the vast majority of new buildings, buildings could still be constructed with dual fuels if they meet one of the following exemptions:


·         The Energy Code does not provide an all-electric prescriptive compliance approach for the specific building type and the building is unable to achieve the performance compliance standard using commercially available technology; or

·         The City Council determines that it is in the public interest for the specific building to be constructed with natural gas.


What about Construction Costs?

Some people, who are unfamiliar with the housing market, have remarked that these efforts will increase the already-high cost of housing. This is ultimately not the case because:

a)     The market sets the price of housing not the costs of construction; and

b)     Even if housing construction costs impacted the price of new homes, all-electric construction is less expensive so, if anything, this requirement will reduce the price of new homes.


What about Power Outages?

The recent power shutoff initiated by PG&E serves as a good reminder that we have all grown accustomed to having uninterrupted electricity. Some may question whether having an all-electric house makes one more inconvenienced by power outages. While this is partly true, the dynamic is largely mitigated by the fact that modern gas appliances typically rely on electricity for their control and ignition systems, so they are also unavailable during a power outage. The day-to-day advantages of the all-electric home vastly outweigh this slight disadvantage. Similarly, a large percentage of the population no longer has a classic nonelectronic phone that will function during a power outage when paired with a landline. People are abandoning both their nonelectronic phones and their landlines in high numbers - even though it makes their phone service less resilient.


Staff recommends that the Council introduce the attached ordinance.



Based on the Councils policy direction on September 4th, staff shared the proposed ordinance with members of the development community. At the time this report was prepared, staff had only heard from one developer, Dick Oliver, and has attached the e-mail conversation.



Instead of introducing the proposed ordinance, the Council could alternatively direct staff to suspend efforts to require new development to be greener or to return to the Council with a different ordinance.



The proposed ordinance follows the policy guidance received from the Council on September 4, 2019. Prior to that meeting, the Council had last adopted a green building ordinance in 2009.



There are no direct fiscal impacts from this item and no budget adjustment is requested at this time. Evaluating program options is included in the work program of the Community Services Department.


CEQA (California Environmental Quality Act): 

Not a Project.


In accordance with CEQA Guidelines section 15378(b)(5), action on this item is not a project subject to CEQA because policy direction is an administrative action that will not result in a physical change to the environment.


Meeting History

Oct 23, 2019 7:00 PM Video City Council Regular Meeting
draft Draft

Program Administrator Anthony Eulo along with John Supp with Silicon Valley Clean Energy provided the report.

The meeting recessed at 8:16 pm.

The meeting reconvened at 8:23 pm.

The public comment was opened at 8:30 pm. The following people were called to speak:

Dick Oliver

Doug Muirhead

Swanee Edwards

Dashiell Leeds

Ida Rose Sylvester

Sharon Duncan

There being no further requests to speak, the public comment was closed.


Waiving the first and second reading of the ordinance.

MOVER:John McKay, Council Member
SECONDER:Larry Carr, Council Member
AYES:Rene Spring, Yvonne Martinez Beltran, Larry Carr, John McKay
NAYS:Rich Constantine