Rule 38 Incentive Program

Learn about additional incentives available from SoCalGas for high-efficiency natural gas equipment or feasibility studies.

SoCalGas Rule 38 Incentive Program

The Rule 38 incentive program provides financial incentives for the purchase of new or replacement commercial or industrial natural gas equipment for energy-efficiency purposes and/or the cost of feasibility studies. The Rule 38 incentive is a SoCalGas shareholder-funded program, authorized by the California Public Utilities Commission, and available to eligible commercial and industrial customers of SoCalGas.

The Program is designed to:

  • Help customers buy down the initial cost of qualifying high-efficiency equipment.
  • Fund feasibility studies to evaluate the potential benefits of these kinds of high-efficiency natural gas equipment in commercially intensive locations throughout SoCalGas’ service territory.

Program Background

The Rule 38 incentive program was approved in 1994 by Advice Letter 2316, authorized by D. 93-12-043. In order to receive an incentive, the customer must sign a contract (equipment incentive agreement) with SoCalGas. As part of the contract, the customer must accept responsibility for purchasing, installing and operating the equipment, and may be required to sign an affidavit attesting that the incentive was a material factor in the decision to utilize the energy equipment identified in the contract.

Incentive Amount

The level or amount of incentive available:

  • Feasibility Studies: up to 50 percent of the study cost, up to a maximum of $50,000 per study.
  • Equipment Incentives: up to 50 percent of the installed equipment cost, up to a maximum of $500,000 per project or, in the case of air conditioning, up to $300 per ton for high efficiency natural gas cooling equipment.

Who is Eligible?

All existing and new nonresidential customers are eligible to participate in the Program on a first-come, first-served basis, based upon customer interest and qualifications. Qualifying customers, subject to the availability of funds, may apply for and receive one shareholder-funded equipment incentive per building per year. The minimum term of obligation for a customer receiving a shareholder-funded equipment incentive is to operate the equipment as specified in the contract.

A customer will be required to complete an application after a SoCalGas representative determines the project meets all of the pre-approval screening criteria.

The pre-approval screening criteria includes (but is not limited to):

  • The type of equipment being considered and it’s purpose
  • The size or capacity of the equipment
  • The total cost of the feasibility study and/or total cost to purchase and install the equipment
  • The customer’s estimated payback period and acceptable payback period
  • The customer’s willingness to share relevant data and provide access to the facility
  • The customer’s industry and location in SoCalGas' service territory
  • The customer’s time requirements
  • Whether project will improve or maintain the energy efficiency of the customer’s facility

Funds for the Rule 38 incentive program, including any funds utilized for rebates or incentives, will be allocated on a first-come, first-served basis until such funds are no longer available. This program may be modified or terminated without prior notice. The selection, purchase, and ownership of goods and/or services are the sole responsibility of customer. SoCalGas makes no warranty, whether express or implied, including the warranty of merchantability or fitness for a particular purpose, of goods or services selected by customer. Customers who choose to participate in this program are not obligated to purchase any additional goods or services offered by contractor or any other third party. SoCalGas does not endorse, qualify, or guarantee the work of any contractor or other third party. Eligibility requirements apply; see the program conditions for details.