Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, gas corporations, sewer system corporations, and water corporations, while local publicly owned utilities, including municipal utility districts, public utility districts, and irrigation districts, are under the direction of their governing boards.

This bill would, for new housing construction, require the above-described utilities, on or before January 1, 2026, to publicly post on their internet websites (1) the schedule of estimated fees for typical service connections for each housing development type, including, but not limited to, accessory dwelling unit, mixed-use, multifamily, and single-family developments, except as specified, and (2) the estimated timeframes for completing typical service connections needed for each housing development type, as specified. The bill would exempt from its provisions a utility with fewer than 4,000 service connections that does not establish or maintain an internet website due to a hardship, and would authorize the utility to establish that a hardship exists by annually adopting a resolution that includes detailed findings, as provided. To the extent that this bill would impose new requirements on certain local agencies, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, gas corporations, sewer system corporations, and water corporations, while local publicly owned utilities, including municipal utility districts, public utility districts, and irrigation districts, are under the direction of their governing boards.

This bill would, for new housing construction, require the above-described utilities, on or before January 1, 2026, to publicly post on their internet websites (1) the schedule of estimated fees for typical service connections for each housing development type, including, but not limited to, accessory dwelling unit, mixed-use, multifamily, and single-family developments, except as specified, and (2) the estimated timeframes for completing typical service connections needed for each housing development type, as specified. The bill would exempt from its provisions a utility with fewer than 4,000 service connections that does not establish or maintain an internet website due to a hardship, and would authorize the utility to establish that a hardship exists by annually adopting a resolution that includes detailed findings, as provided. To the extent that this bill would impose new requirements on certain local agencies, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, gas corporations, sewer system corporations, and water corporations, while local publicly owned utilities, including municipal utility districts, public utility districts, and irrigation districts, are under the direction of their governing boards.

This bill would, for new housing construction, require the above-described utilities, on or before January 1, 2026, to publicly post on their internet websites (1) the schedule of estimated fees for a typical service connection, capacity, or other point of connection charge connections for each housing development type, including, but not limited to, accessory dwelling unit, mixed-use, multifamily, and single-family developments, except as specified, and (2) the estimated timeframes for completing typical service connections needed for each housing development type, as specified. The bill would exempt from its provisions an independent special district that does not a utility with fewer than 4,000 service connections that does not establish or maintain an internet website due to a hardship, and would authorize the utility to establish that a hardship exists by annually adopting a resolution that includes detailed findings, as provided. To the extent that this bill imposes new requirements on certain local agencies, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, gas corporations, sewer system corporations, and water corporations, while local publicly owned utilities, including municipal utility districts, public utility districts, and irrigation districts, are under the direction of their governing boards.

This bill would, for new housing construction, require the above-described utilities utilities, on or before January 1, 2026, to publicly post on their internet websites (1) the amount of any charge issued for a service connection, capacity, or other point of connection charge by the housing units address, and (2) the schedule of fees for a service connection, capacity, or other point of connection charge, as specified. The bill would, for new housing construction, require each utility to ensure that its internet website allows an applicant for a service connection to, among other things, receive a reasonable estimate regarding when the utility will complete the applicants service connection. charge for each housing development type, including, but not limited to, accessory dwelling unit, mixed-use, multifamily, and single-family developments, except as specified, and (2) the estimated timeframes for completing typical service connections needed for each housing development type, as specified. The bill would exempt from its provisions an independent special district that does not maintain an internet website due to a hardship, as provided. To the extent that this bill imposes new requirements on certain local agencies, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, gas corporations, sewer system corporations, and water corporations, while local publicly owned utilities, including municipal utility districts, public utility districts, and irrigation districts, are under the direction of their governing boards.

This bill would, for new housing construction, require those the above-described utilities to publicly post on their internet websites (1) the amount of any charge issued for a service connection, capacity, or other point of connection charge by the housing units address, and (2) the schedule of fees for a service connection, capacity, or other point of connection charge, as specified. The bill would, for new housing construction, require each utility to ensure that its internet website allows an applicant for a service connection to, among other things, receive a reasonable estimate regarding when the utility will complete the applicants service connection. To the extent that this bill imposes new requirements on certain local agencies, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The California Constitution establishes the Public Utilities Commission, with jurisdiction over all public utilities. Existing law defines the term public utility for certain purposes to include, among other corporations, every gas corporation, electrical corporation, water corporation, and sewer system corporation, where the service is performed for, or the commodity is delivered to, the public or any portion thereof.

This bill would, for new housing construction, prohibit a connection, capacity, or other point of connection charge from a public utility, as defined, or a special district, as defined, district, including a municipal utility district, for electrical, gas, sewer, or water service from exceeding 1% of the reported building permit value of that housing unit. The bill would require a public utility or special district to issue an above-described charge over a period of at least 10 years commencing on the date when the housing unit is first occupied, as specified. The bill would require a public utility or special district to publicly report on its internet website the amount of any charge issued each year pursuant the above-described provision by the housing units address. The bill would also require a public utility or special district to prioritize the processing, approval, scheduling, and completion of electrical, gas, sewer, and water service connections to new housing construction over the processing, approval, scheduling, and completion of service connections to all other structures. To the extent that this bill imposes new requirements on certain special districts, the bill would impose a state-mandated local program.

The California Constitution establishes the Public Utilities Commission, with jurisdiction over all public utilities. Existing law defines the term public utility for certain purposes to include, among other corporations, every gas corporation, electrical corporation, water corporation, and sewer system corporation, where the service is performed for, or the commodity is delivered to, the public or any portion thereof.

This bill would, for new housing construction, prohibit a connection, capacity, or other point of connection charge from a public utility, as defined, or a special district, as defined, for electrical, gas, sewer, or water service from exceeding 1% of the reported building permit value of that housing unit. The bill would require a public utility or special district to issue an above-described charge over a period of at least 10 years commencing on the date when the housing unit is first occupied, as specified. The bill would require a public utility to publicly report on its internet website the amount of any charge issued each year pursuant the above-described provision by the housing units address. The bill would also require a public utility to prioritize the processing, approval, scheduling, and completion of electrical, gas, sewer, and water service connections to new housing construction over the processing, approval, scheduling, and completion of service connections to all other structures. To the extent that this bill imposes new requirements on certain special districts, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

 UNFINISHED BUSINESS  

Bill No: SB 1210

Author: Skinner (D)

Amended: 6/24/24

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 15-1, 4/2/24

AYES: Bradford, Ashby, Becker, Caballero, Durazo, Eggman, Gonzalez, Grove, Limón, Min, Newman, Rubio, Skinner, Stern, Wilk

NOES: Seyarto

NO VOTE RECORDED: Dahle, Dodd

SENATE LOCAL GOVERNMENT COMMITTEE: 5-2, 4/17/24

AYES: Durazo, Glazer, Skinner, Wahab, Wiener

NOES: Seyarto, Dahle

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 33-5, 5/21/24

AYES: Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NOES: Dahle, Grove, Jones, Nguyen, Seyarto

NO VOTE RECORDED: Allen, Alvarado-Gil

ASSEMBLY FLOOR: 60-2, 8/19/24 - See last page for vote

SUBJECT: New housing construction: electrical, gas, sewer, and water service: service connection information

SOURCE: Housing Action Coalition

DIGEST:

This bill requires electrical, gas, sewer, and water service utilities, with exceptions, to post estimated fees and timeframes for new service connections needed to connect new housing construction projects.

Assembly Amendments:

(1) delete language related to the treatment of special districts; (2) exempt utilities with fewer than 4,000 service connections that do not establish or maintain an internet website due to hardship from the requirements of the bill; and (3) provide that a utility may establish a hardship exists with the adoption of a resolution that includes detailed findings.

ANALYSIS:

Existing law:

1. Defines an “electrical corporation” to include every corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state, except where electricity is generated on or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others. (Public Utilities Code §218)
2. Defines a “gas corporation” to include every corporation or person owning, controlling, operating, or managing any gas plant for compensation within this state, except where gas is made or produced on and distributed by the maker or producer through private property alone solely for his own use or the use of his tenants and not for sale to others. (Public Utilities Code §222)
3. Defines “sewer system corporation” to include every corporation or person owning, controlling, operating, or managing any sewer system for compensation within the state. (Public Utilities Code §230.6)
4. Defines “municipal utility district” as a district formed under the Municipal Utility District Act. (Public Utilities Code §11503)
5. Defines a “public utility district” as a district formed under the Public Utilities District Act. (Public Utilities Code §15501 et seq.)
6. Requires a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee. (Government Code §66000 et seq.)
7. Requires independent special district to maintain an internet website, unless a majority of the governing board adopts a resolution determining a hardship exists in their ability to establish or maintain a website (such as lack of broadband service). (Government Code §53087.8)

This bill:

1. Defines “utilities” for purposes of this bill to include:
   1. An electrical corporation, as defined in Section 218.
   2. A gas corporation, as defined in Section 222.
   3. A sewer system corporation, as defined in Section 230.6.
   4. A water corporation, as defined in Section 241.
   5. A municipality or municipal corporation operating as a public utility pursuant to Division 5 (commencing with Section 10001).
   6. A municipal utility district formed pursuant to the Municipal Utility District Act (Division 6 (commencing with Section 11501)).
   7. A public utility district formed pursuant to The Public Utility District Act (Division 7 (commencing with Section 15501)).
   8. An irrigation district formed pursuant to the Irrigation District Law (Division 11 (commencing with Section 20500) of the Water Code).
   9. A joint powers authority that includes one or more of the entities described in subdivisions (e) to (h), inclusive, and that owns electrical, gas, water, or sewer facilities, or furnishes electrical, gas, water, or sewer service over its own or its member’s system.
2. Requires utilities, on or before January 1, 2026, for new housing construction to publicly post on their internet websites:
   1. the schedule of estimated fees for typical service connections for each housing development type, including, but not limited to, accessory dwelling unit, mixed-use, multifamily, and single-family developments, except utilities that post a schedule of their fees with this information pursuant to Section 65940.1 of the Government Code; and
   2. estimated timeframes for completing typical service connections needed for each housing development type.
3. Exempts from its provisions a utility with fewer than 4,000 service connections that does not establish or maintain an internet website due to a hardship, and would authorize the utility to establish that a hardship exists by annually adopting a resolution that includes detailed findings. Provides that the findings may include inadequate access to broadband communications network facilities that enable high-speed internet access, significant financial resources, or insufficient staff resources.
4. Provides that no reimbursement is required by this act because a local agency has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by the act.

Background

1. Study on development fees for new housing construction. The Terner Center for Housing Innovation at UC Berkeley authored a study, It All Adds Up: the Cost of Housing Development Fees in Seven California Cities (March 2008), on the various development fees imposed on new housing construction. The study attempts to dive into the development fees which cities levy to pay for services needed to build new housing or to offset the impacts of growth on the community. Per the study, the development fees make up a significant portion of the costs to build new housing in California cities. The study states that on average these fees continue to rise, while nationally fees have decreased. The authors found that development fees for multifamily housing range from a low of $12,000 per unit in Los Angeles, to $75,000 per unit in Fremont. Fees for single family housing range from $21,000 per home in Sacramento to $157,000 per home in Fremont. They found that fees can amount from six percent to 18 percent of the median home price depending on the location. Development fees include service fees and impact fees. These include city staff time to process permits, and fees for new roads, and other infrastructure.
2. Connecting to the electric and gas distribution grid. Rules governing the ability of new buildings and generation and storage resources to connect to the electric and gas distribution grid are generally determined by statute, California Public Utilities Commission (CPUC) rules, and tariffs, (i.e., document that specify rates, charges, rules, and conditions under which an electrical corporation will provide services to the public) for each of the electrical corporations. New service connections refers to extending an electricity or expanding distribution infrastructure to service new or expanded customer load, known as “energization.”  Electric Tariff Rules 15 and 16 establish the guidelines for design, cost allocation, and responsibilities of a project applicant and a utility for electric distribution line extensions. The ability to connect to the larger electrical system can take months (if not, years, in some cases) as the process can entail the need for designs, assessments on costs allocations associated with improvements on the electric distribution system to allow for the connection, and other issues. In the case of new building developments, depending on the size of the development, the need for electric service extensions may be needed in phases over months, or years.
3. Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities (POUs), investor-owned utilities (IOUs), and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own water rates. As established by Proposition 218 (1996), the majority of these utilities are subject to state constitutional and statutory requirements that ensure water rates are restricted to cost-of-service. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers. The CPUC has regulatory oversight over water companies that provide water service to about 16 percent of California’s residents with annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately 1.175 million customers). However, the majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other IOUs, the CPUC regulates rates of the water utilities under its jurisdiction to ensure costs are just and reasonable. As with electric utilities, water utilities have similar service connection and capacity upgrade tariffs, in this case Water Service Tariff Rule 15.
4. Proposition 218 and Proposition 26. POUs are subject to differing constraints on their ability to collect rates for rate relief from one customer to another. Both Proposition 218 and Proposition 26 limit the ability of the local agencies to collect costs from a customer to fund activity by another customer, with specified limitations. Article XIIID of the California Constitution, added by Proposition 218 in 1996, requires, among other things, that the revenues derived from property related fees and charges not exceed the funds required to provide the property related service… Proposition 218 also requires that property related fees and charges not exceed the proportional cost of service attributable to the property. In addition, the service for which a fee or charge is imposed must be immediately available to the property owner, rather than for future or potential use. The systems bear the burden of proving compliance with these cost-of-service requirements. These substantive restrictions on ratemaking by publicly owned water systems prevent subsidization of one customer’s water rates by another… [Source: SB 401 (Dodd, Chapter 662, Statutes of 2015) report on funding low-income water assistance programs.]
5. Mitigation Fee Act. The Mitigation Fee Act generally applies a broad “reasonable relationship” standard to fees and exactions, meaning that fee amounts must be arguably reasonable relative to the impacts of the project. This component of the Mitigation Fee Act makes up the basis for each city’s “nexus study,” which cities must commission to determine the type and amount of AB 1600 (Cortese, Chapter 927, Statutes of 1987) fees charged on new development. Other fees include public good fees, such as art or affordable housing.

Comments

1. Purpose of this bill. According to the author, “California is in desperate need of more housing, and particularly more affordable housing. Hook-up fees for electric, gas, sewer, or water service can add tens of thousands of dollars to the cost of each new housing unit. …High fees and a lack of transparency are an ongoing obstacle to housing creation at a time when California is focused on streamlining and other measures to build more housing units. SB 1210 will require utilities to provide clear cost information for their hook-up fees to customers, and require them to inform customers of the estimated service completion date. By increasing transparency and accountability in utility hook-ups, California will incentivize the production of new homes, and increase the affordability of housing state-wide.”
2. Seeking additional transparency of fee schedules and estimated timeframes for housing projects. This bill requires each utility to include additional functionality on their website to allow new housing construction applicants to view the schedule of estimated fees and the estimated timeframes for completing typical service connections needed for each housing development type. While some utilities may have the ability for an applicant to check their status online, not all utilities provide this information, especially if a utility only sees a handful of connection requests for new housing construction. As a result, this bill exempts utilities with fewer than 4,000 service connections that do not maintain an internet website due to hardship. It’s unclear whether the proposed exemption addresses all of the concerns for the utilities remained opposed, as many of their letters speak to previous versions of this bill.

Related/Prior Legislation

AB 50 (Wood, Chapter 317, Statutes of 2023) required the CPUC, by July 1, 2025, to determine the criteria for customers to receive timely electricity service when requesting new service connections or upgraded service, known as “energization.”

SB 410 (Becker, Chapter 394, Statutes of 2023) required the CPUC to establish by September 30, 2024, reasonable average and maximum target energization time periods in order to connect new customers and upgrade the service of existing customers to the electrical grid.

AB 602 (Grayson, Chapter 347, Statutes of 2021) required, among its provisions, a city, county, or special district that has an internet website to post and update on their websites specified information, including a current schedule of housing development project costs, zoning ordinances and development standards, annual impact fee reports, and an archive of specified impact fee nexus studies.

AB 1026 (Wood, Chapter 446, Statutes of 2019) required an electrical or gas corporation to apply only those construction and design specifications, standards, terms, and conditions that are applicable to a new extension of service project for the 18 months following the date the application for a new extension of service project is approved.

AB 1600 (Cortese, Chapter 927, Statutes of 1987) required a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Assembly Appropriations Committee, “No state costs”.

SUPPORT: (Verified 8/19/24)

Housing Action Coalition (source)
Ava Community Energy

East Bay for Everyone
Eden Housing

Grow the Richmond
Habitat for Humanity Greater San Francisco
How to ADU
LeadingAge California
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
People for Housing - Orange County
Progress Noe Valley

Resources for Community Development

South Side Forward
Streets for People
Supportive Housing Alliance

Urban Environmentalists
YIMBY: Action, California, East Bay, Mountain View, San Francisco, San Luis

Obispo, Santa Cruz, Santa Rosa, South Bay, and Ventura County

OPPOSITION: (Verified 8/19/24)

City of Oceanside

El Dorado Irrigation District
Mission Springs Water District

Pacific Gas and Electric Company
Palmdale Water District

San Diego Gas and Electric Company

Southern California Edison

ARGUMENTS IN SUPPORT: In support of this bill, YIMBY California states:

The excessive hook-up fees for essential utilities such as electric, gas, sewer, and water services add significant cost to each new housing unit, exacerbating the affordability crisis. These fees, often undisclosed and unpredictable, pose a substantial barrier to housing creation and deter both homeowners and developers from pursuing construction projects. SB 1210 seeks to rectify this issue by requiring utilities to provide clear cost information for their hook-up fees to customers and informing them of the estimated service completion date.

ARGUMENTS IN OPPOSITION: El Dorado Irrigation District states:

SB 1210 also will require local agencies to post estimated timeframes for completing typical service connections needed for housing developments. The requirement lacks specificity and will lead to meaningless information that varies from one jurisdiction to the next in terms of content being posted on Internet websites. Worse, only four types of local agencies will be required to post this information, leaving county water districts, county waterworks districts, and other urban retail water suppliers without a mandate to post timeframes for completing service connections.

SB 1210 is the proverbial solution in search of a problem.

ASSEMBLY FLOOR: 60-2, 8/19/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Rendon, Luz Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NOES: Davies, Wallis

NO VOTE RECORDED: Chen, Megan Dahle, Dixon, Essayli, Flora, Gallagher, Lackey, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Ramos, Reyes, Sanchez, Ta, Valencia, Waldron

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

8/19/24 17:46:38

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1210

Author:(Skinner)

As Amended Ver:June 24, 2024

Majority vote

SUMMARY

Requires electrical, gas, sewer, and water service utilities – both public and private – to post estimated fee schedules and timeframes for typical service connections for new housing construction projects. Exempts utilities with fewer than 4,000 service connections from the requirements due to a showing of hardship, as demonstrated by the utility consistent with the requirements of this bill.

Major Provisions

COMMENTS

The sale price of a home typically does not include the cost of any fees a utility may charge to establish a connection for service such as gas, electricity, sewage or water. The Terner Center for Housing Innovation at UC Berkeley authored a study, It All Adds Up: The Cost of Housing Development Fees in Seven California Cities (March 2008), on the various fees imposed on new housing construction. The study notes that these fees make up a significant portion of the costs to build new housing in California. They found that fees can amount from 6%-18% of the median home price depending on the location. The wide range of these fees are largely due to differences in locally-assessed, rather than state- or utility-assessed, fees.

Calls for increased transparency regarding connection charges are not new. AB 602 (Grayson), Chapter 347, Statutes of 2021 placed requirements on local agencies to post fee schedules on their website. While AB 2536 (Grayson), Chapter 128, Statutes of 2022, requires publicly-owned utilities subject to the Mitigation Fee Act to evaluate and publicly post information on the amount and reasoning behind fee amounts. This bill is aligned with these efforts, and may provide more detailed information on connection charges. The author notes that many of these fees, especially those arising from investor owned utilities which have not been the focus of past legislative efforts, can be opaque and difficult to scrutinize.

However, it is likely to cost utilities – especially those that to date have not been required to post fee information – time and money to develop service connection, capacity, and connection charge information for each housing type as called for under this measure. Moreover, utility service territory can vary greatly. Utilities often work with customers at an individual level to develop quotes unique to the specific project, location, and load. This bill ignores this subtlety, and instead requires a schedule of fees based only on housing type.

According to the Author

According to the author, "California is in desperate need of more housing, and particularly more affordable housing. Hook-up fees for electric, gas, sewer, or water service can add tens of thousands of dollars to the cost of each new housing unit. The final cost often comes as a surprising shock, as the fees charged by various utilities are rarely disclosed in a publicly available form and are difficult for the builder of the housing unit, whether a home owner or developer, to determine in advance. Timelines for the utility's completion of the work can also vary widely, with some housing projects having to wait a year or more for service completion. High fees and a lack of transparency are an ongoing obstacle to housing creation at a time when California is focused on streamlining and other measures to build more housing units. SB 1210 will require utilities to provide clear cost information for their hook-up fees to customers, and require them to inform customers of the estimated service completion date. By increasing transparency and accountability in utility hook-ups, California will incentivize the production of new homes, and increase the affordability of housing state-wide."

Arguments in Support

A coalition of housing advocates and housing developers are in support of the measure, citing greater transparency in hook-up fees is needed; otherwise these fees pose a "substantial barrier to housing creation and deter both homeowners and developers from pursuing construction projects."

Arguments in Opposition

This bill is opposed by the state's large electric and gas utilities, who note they do not maintain anything resembling an existing "schedule of fees," and it would be cost prohibitive to attempt to create one pursuant to this bill solely for new housing projects. They also note ongoing proceedings at the California Public Utilities Commission will address some of the problems this bill seeks to solve.

FISCAL COMMENTS

According to the Assembly Committee on Appropriations, this bill will result in no costs to the state.

VOTES

SENATE FLOOR: 33-5-2

YES: Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NO: Dahle, Grove, Jones, Nguyen, Seyarto

ABS, ABST OR NV: Allen, Alvarado-Gil

ASM UTILITIES AND ENERGY: 13-1-2

YES: Petrie-Norris, Bauer-Kahan, Boerner, Calderon, Friedman, Hart, Holden, Joe Patterson, Reyes, Santiago, Ting, Wood, Zbur

NO: Wallis

ABS, ABST OR NV: Jim Patterson, Chen

ASM LOCAL GOVERNMENT: 6-0-3

YES: Juan Carrillo, Haney, Kalra, Pacheco, Ward, Wilson

ABS, ABST OR NV: Waldron, Essayli, Ramos

ASM APPROPRIATIONS: 10-1-4

YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin

NO: Dixon

ABS, ABST OR NV: Sanchez, Jim Patterson, Ta, Villapudua

UPDATED

VERSION: June 24, 2024

CONSULTANT: Laura Shybut / U. & E. / (916) 319-2083 FN: 0003798

Date of Hearing: August 7, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 1210

Author:(Skinner) – As Amended Ver:June 24, 2024

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires a utility, whether public or private, by January 1, 2026, for new housing construction, to post on its internet website (a) a schedule of estimated fees for typical service connections for each housing development type and (b) the estimated timeframes for completing typical service connections needed for each housing development type.

The bill defines a utility as being an entity that provides electrical, gas, water or sewer service, as specified, and defines different housing development types as including, but not limited to, accessory dwelling unit, mixed-use, multifamily and single-family developments.

The bill makes an exception to its requirements for any utility with fewer than 4,000 service connections that does not establish or maintain an internet website due to a hardship, as demonstrated by the utility consistent with the requirements of this bill.

FISCAL EFFECT:

No state costs.

COMMENTS:

The sale price of a home typically does not include the cost of any fees a utility may charge to establish a connection for service such as gas, electricity, sewage or water. The author decries the desperate need for additional housing California, contends that “hook-up fees” can add tens of thousands of dollars to the cost of each new housing unit and argues it is difficult for a housing developer or potential homebuyer to determine the amount of such fees in advance. According to the author, this bill will increase “transparency and accountability” and, thereby, “incentivize the production of new homes, and increase the affordability of housing state-wide.”

The bill is supported by a number of housing developers and housing advocates. The bill is opposed by the state’s large electric and gas utilities, who raise a number of objections:

• Electrical and gas corporations do not maintain anything akin to an existing “schedule of fees,” and it would be cost prohibitive to attempt to create one solely for new housing projects.
• The process to receive an estimate is simple: apply for service as all costs are project and location specific.
• The bill does not define what kind of project would meet the criteria of new housing construction.
• Active California Public Utilities Commission proceedings will implement a framework of reasonable average timelines and greater enable utilities to energize projects for all industries.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: June 26, 2024

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Juan Carrillo, Chair

SBPCA Bill Id:SB 1210

Author:(Skinner) – As Amended Ver:June 24, 2024

SENATE VOTE: 33-5

SUBJECT: New housing construction: electrical, gas, sewer, and water service: service connection information.

SUMMARY: Requires electrical, gas, sewer, and water service utilities – both public and private – to post fee schedules and estimated timeframes for new service connections and capacity upgrades needed to connect new housing construction projects. Exempts certain utilities from the requirements of the bill due to a showing of hardship. Specifically, this bill:

1. Defines, for the purposes of the bill, “utility” to mean any of the following that furnish electrical, gas, water, or sewer service, or any combination thereof, where the service is performed for, or the commodity is delivered to, the public or any portion thereof:
   1. An electrical corporation, as defined.
   2. A gas corporation, as defined.
   3. A sewer system corporation, as defined.
   4. A water corporation, as defined.
   5. A municipality or municipal corporation operating as a public utility, as defined.
   6. A municipal utility district, as specified.
   7. A public utility district, as specified.
   8. An irrigation district, as specified.
   9. A joint powers authority that includes one or more of the entities described in e) through h) above, that owns electrical, gas, water, or sewer facilities, or furnishes electrical, gas, water, or sewer service over its own or its member’s system.
2. Requires, on or before January 1, 2026, utilities to post both of following on their website for new housing developments:
   1. A schedule of estimated fees for typical service connections for each housing development type, including, but not limited to, accessory dwelling unit, multifamily, mixed-use, and single-family developments. However, this requirement does not apply to a utility, as defined above, which continues to post their fee schedule with this information when complying with existing law, as specified.
   2. The estimated timeframes for completing typical service connections needed for each housing development type, including, but not limited to, accessory dwelling unit, mixed-use, multifamily, and single-family developments.
3. Provides that this bill does not apply to a utility with fewer than 4,000 service connections that does not establish or maintain an internet website due to a hardship.
4. Allows a utility with fewer than 4,000 service connections to establish that a hardship exists by annually adopting a resolution that includes detailed findings based on evidence that is publicly noticed before the meeting and included in the meeting agenda that supports the determination that a hardship prevents the utility from establishing or maintaining an internet website. The findings may include, but shall not be limited to, inadequate access to broadband communications network facilities that enable high-speed internet access, significantly limited financial resources, or insufficient staff resources.
5. Provides that no reimbursement is required by this bill because a local agency or school district has the authority to levy service charges, fees, assessments sufficient to pay for the program or level of service mandated by the bill.

EXISTING LAW:

1. Establishes and vests the California Public Utilities Commission (CPUC), with jurisdiction over all public utilities. (Article XII of the California Constitution)
2. Defines “public utilities” to be private corporations and persons that own, operate, control or manage a line, plant, or system for the transmission, or furnishing of heat, light, water, power, or storage, directly or indirectly to or for the public, and common carriers, subject to the control of the Legislature. (Article XII, Section 3, of the California Constitution)
3. Includes every common carrier, toll bridge corporation, pipeline corporation, gas corporation, electrical corporation, telephone corporation, telegraph corporation, water corporation, sewer system corporation, and heat corporation, where the service is performed for, or the commodity is delivered to, the public or any portion thereof. [Public Utilities Code (PUC) § 216]
4. Defines an “electrical corporation” to include every corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state, except where electricity is generated on or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others. (PUC § 218)
5. Defines a “gas corporation” to include every corporation or person owning, controlling, operating, or managing any gas plant for compensation within this state, except where gas is made or produced on and distributed by the maker or producer through private property alone solely for his own use or the use of his tenants and not for sale to others. (PUC § 222)
6. Defines “sewer system corporation” to include every corporation or person owning, controlling, operating, or managing any sewer system for compensation within the state. (PUC § 230.6)
7. Defines “municipal utility district” as a district formed under the Municipal Utility District Act. (PUC § 11503)
8. Defines a public utility district as a district formed under the Public Utilities District Act. (PUC § 15501 et seq.)
9. Defines “special district” as any agency of the state established for the local performance of governmental or proprietary functions within limited boundaries. Provides that “special district” includes a county service area, a maintenance district or zone, an air pollution control district, or a redevelopment agency. States that “special district” does not include a city, county, city and county, or school district. [Government Code (GOV) § 82048.5]
10. Requires a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee. (GOV § 66000 et seq.)
11. Requires independent special district to maintain an internet website, unless a majority of the governing board adopts a resolution determining a hardship exists in their ability to establish or maintain a website (such as lack of broadband service). (GOV § 53087.8)
12. Requires cities, counties, and special districts to post fee schedules, exactions, and affordability requirements on their internet websites, as specified. (GOV § 65940.1)
13. Requires local agencies to evaluate the amount of the fee or capacity charge prior to levying a new fee or charge, and requires supporting evidence used in the evaluation be made publicly available, as specified. (GOV § 66016.6)
14. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for electric distribution line extensions necessary to furnish permanent electric service. (Electric Tariff Rule 15)
15. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for the extension of electric service from an investor-owned utility (IOU) distribution line. (Electric Tariff Rule 16)
16. Establishes guidelines for design, cost allocation, and responsibilities of a project applicant for water service from an investor-owned water utility. (Water Service Tariff Rule 15)

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS:

1. Bill Summary. This bill requires, on or before January 1, 2026, utilities, both public and private, to post on their websites their estimated fee schedule for typical service connections to different types of housing developments, except for those publicly owned utilities that comply with similar requirements in existing law. The bill also requires utilities to post their estimated amount of time to complete a typical service connection to the specified housing developments. The bill does not apply to utilities with less than 4,000 service connections, if that utility does not maintain a website due to a hardship. The utility must establish that a hardship exists by annually adopting a resolution.
   
   This bill is sponsored by the Housing Action Coalition.
2. Author’s Statement. According to the author, “California is in desperate need of more housing, and particularly more affordable housing. Hook-up fees for electric, gas, sewer, or water service can add tens of thousands of dollars to the cost of each new housing unit. The final cost often comes as a surprising shock, as the fees charged by various utilities are rarely disclosed in a publicly available form and are difficult for the builder of the housing unit, whether a home owner or developer, to determine in advance. Timelines for the utility’s completion of the work can also vary widely, with some housing projects having to wait a year or more for service completion.
   
   “High fees and a lack of transparency are an ongoing obstacle to housing creation at a time when California is focused on streamlining and other measures to build more housing units. SB 1210 will require utilities to provide clear cost information for their hook-up fees to customers, and require them to inform customers of the estimated service completion date. By increasing transparency and accountability in utility hook-ups, California will incentivize the production of new homes, and increase the affordability of housing state-wide.”
3. The Utility Universe. Californians receive their utility service through a variety of public or private utility providers, some with elected governing bodies, some with appointed regulators, and some with a hybrid structure. These utilities also range in size and service territory, from very small rural water companies serving less than a few hundred people over a small area to very large electric utilities serving millions of people over tens of thousands of square miles. Customer service and communication across these disparate utilities can vary. Likewise, the rules governing how utilities not only communicate with, but respond to, customers can vary either due to statute, regulation, or self-imposed decisions.
   1. Electric and gas utilities. California residents are served by over 80 electric and gas utilities, including publicly owned utilities (POUs), investor-owned utilities (IOUs), rural cooperatives, and community choice aggregators. Some utilities are hybrid, offering both gas and electric service; while others are exclusive to one type of energy. For the most part, these utilities are not subject to competition, except at retail; meaning they have exclusive rights or agreements to operate within a given territory.
   2. Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including POUs, IOUs, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. Water companies, which are separate entities and subject to CPUC regulatory oversight, provide water service to about 16% of California’s residents. The majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other IOUs, the CPUC regulates rates of the water utilities under its jurisdiction to ensure costs are just and reasonable. As with electric utilities, water utilities have similar service connection and capacity upgrade tariffs, in this case Water Service Tariff Rule 15.
   3. Publicly owned utilities. POUs are subject to differing constraints on their ability to collect rates for rate relief from one customer to another. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own rates. Both Proposition 218 and Proposition 26 limit the ability of the local agencies to collect costs from a customer to fund activity by another customer, with specified limitations. These Propositions require a cost-of-service only model for POU services, and require that the service for which a fee or charge is imposed must be immediately available to the property owner, rather than for future or potential use. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.
4. Mitigation Fee Act. When approving development projects, counties and cities can require the applicants to mitigate the project's effects by paying fees—known as mitigation fees, impact fees, or developer fees. The California courts have upheld impact fees for sidewalks, parks, school construction, and many other public purposes.

When establishing, increasing, or imposing a fee as a condition of approving a development project, the Mitigation Fee Act requires local officials to:

1. Identify the fee’s purpose;
2. Identify the fee’s use, including the public facilities to be financed;
3. Determine a reasonable relationship between the fee’s use and the development; and
4. Determine a reasonable relationship between the public facility’s need and the development.

When imposing a fee as a condition of approving a development project, the Mitigation Fee Act also requires local officials to determine a reasonable relationship between the fee’s amount and the cost of the public facility. In its 1987 Nollan decision, the U.S. Supreme Court said there must be an “essential nexus” between a project's impacts and the conditions for approval. In the 1994 Dolan decision, the U.S. Supreme Court said that conditions on development must have a "rough proportionality" to a project's impacts.

In the 1996 Ehrlich decision, the California Supreme Court distinguished between “legislatively enacted” conditions that apply to all projects and “ad hoc” conditions imposed on a project-by- project basis. Ehrlich applied the “essential nexus” test from Nollan and the “rough proportionality” test from Dolan to “ad hoc’ conditions. The Court did not apply the Nollan and Dolan tests to the conditions that were “legislatively enacted.” In other words, local officials face greater scrutiny when they impose conditions on a project-by-project basis.

As a result of these decisions and the Mitigation Fee Act, local agencies must conduct a nexus study to ensure any proposed impact fees meet these legal tests for most impact fees. Other requirements in the Mitigation Fee Act ensure that impact fees are appropriately levied and spent, including that a local agency must:

1. Hold at least one open and public meeting prior to levying a new fee or increasing an existing one;
2. If they decide to adopt capital improvement plans, indicate the approximate location, size, time of availability, and estimates of cost for all facilities or improvements to be financed with the fees;
3. Deposit and spend the fees within five years of collecting them; and
4. Refund fees or make specific findings on when and how the fees will be spent for construction, if the fees are not spent within five years of collection.

If a local agency levies an impact fee to fund a capital improvement associated with a development, it must deposit the fees with any other fees for that improvement in a separate account or fund.

Local officials must also produce an annual report within 180 days of the end of the fiscal year that includes information on the fee amounts, how they used the revenue, and any unspent funds.

1. Connection and Capacity Charges. For publicly owned utilities, connection fees and capacity charges are one-time fees assessed on new customers that reflect the reasonable cost of providing service, typically for water or sewer systems. A local agency assesses a connection fee when it physically connects a structure to the water or sewer system, which pays for the physical facilities necessary to make a water connection or sewer connection, such as meters, meter boxes, pipelines, and the estimated reasonable cost of labor and materials for their installation of those facilities. A local agency assesses a capacity charge on the customer to cover the proportional cost of maintaining or constructing system wide infrastructure necessary to meet the additional water or sewer demand for new users of the system. The Mitigation Fee Act governs connection fees and capacity charges, but state law provides separate provisions related to their oversight and accounting.
2. AB 1483 of 2019. In response to a 2019 Terner Center for Housing Innovation report that studied fee transparency, among other issues, AB 1483 (Grayson), Chapter 662, Statutes of 2019, required cities, counties, and special districts to post specified housing related information on their websites. This information included the following:
   1. A current schedule of fees, exactions, and affordability requirements imposed by the city, county, or special district, including any dependent special districts, of the city or county applicable to a proposed housing development project, which must be presented in a manner that clearly identifies the fees, exactions, and affordability requirements that apply to each parcel.
      
   2. All zoning ordinances and development standards, which must specify the zoning, design, and development standards that apply to each parcel.
      
   3. A list that cities and counties must develop under existing law of projects located within military use airspace or a low-level flight path.
      
   4. Specified annual fee reports or specified annual financial reports.
      
   5. An archive of impact fee nexus studies, cost of service studies, or equivalent, conducted by the city, county, or special district on or after January 1, 2018.

Since the passage of AB 1483, the information required to be posted on a local agency’s website has changed. AB 1473 (Senate Committee on Governance and Finance), Chapter 371, Statutes of 2020, required local agencies to separately post their connection fees and capacity charges, without being tied to specific parcels, and made technical fixes to ensure that special districts were properly accounted for by AB 1483. Additionally, AB 602 (Grayson), Chapter 347, Statutes of 2021, required local agencies, among other things, to do the following:

• 1. Post a written fee schedule or a link directly to the written fee schedule on its internet website.
     
  2. Request from a development proponent, upon issuance of a certificate of occupancy or the final inspection, whichever occurs last, the total amount of fees and exactions associated with the project for which the certificate was issued. The city or county must post this information on its website, and update it at least twice per year. A city or county is not responsible for the accuracy of the information received by the development proponent.

1. Related Legislation. AB 1420 (Schiavo) requires local agencies to provide developers with more information on fees and exactions at various stages of the housing development approval process. AB 1420 is pending in the Senate Housing Committee.
   
   AB 2729 (Joe Patterson) limits local agencies ability to collect impact fees prior to final inspection or certificate of occupancy, and makes other changes to the impact fee collection process. AB 2729 is pending in the Senate Local Government Committee.
   
   AB 3016 (Grayson) requires cities and counties to make available on their internet websites a fee estimate tool that the public can use to calculate an estimate of fees and exactions for a proposed housing development, and requires HCD to develop a fee schedule template and a list of best practices, as specified. AB 3016 is pending in the Senate Housing Committee.

SB 937 (Wiener) makes various changes to the process for local agencies for local agencies to collect development impact fees, and extends development entitlements. SB 937 is pending in the Assembly Housing and Community Development Committee.

1. Previous Legislation. AB 50 (Wood), Chapter 317, Statutes of 2023, required the CPUC, by July 1, 2025, to determine the criteria for customers to receive timely electricity service when requesting new service connections or upgraded service, known as “energization.”
   
   AB 2536 (Grayson), Chapter 128, Statutes of 2022, required local agencies to evaluate and show specified evidence when imposing or increasing connection fees and capacity charges, and excludes school districts from certain nexus study requirements.
   
   AB 602 (Grayson), Chapter 347, Statutes of 2021, required, among its provisions, a city, county, or special district that has an internet website to post and update on their websites specified information, including a current schedule of housing development project costs, zoning ordinances and development standards, annual impact fee reports, and an archive of specified impact fee nexus studies.
   
   AB 1026 (Wood), Chapter 446, Statutes of 2019, required an electrical or gas corporation to apply only those construction and design specifications, standards, terms, and conditions that are applicable to a new extension of service project for the 18 months following the date the application for a new extension of service project is approved. Authorized an electrical or gas corporation to adopt modifications, as specified, of the construction and design specifications, standards, terms, and conditions of a new extension of service project.
   
   AB 1600 (Cortese) Chapter 927, Statutes of 1987, required a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee.
   
   SB 410 (Becker), Chapter 394, Statutes of 2023, required the CPUC to establish by September 30, 2024, reasonable average and maximum target energization time periods in order to connect new customers and upgrade the service of existing customers to the electrical grid. The bill also required reporting by electrical corporations and authorizes specified annual cost-recovery, subject to a cap.
2. Arguments in Support. Housing Action Coalition, sponsor of the bill, writes in support, “Currently, utility hook-up fees levied on new housing can add tens of thousands of dollars to the cost of each housing unit. This significant increase comes alongside the other varying costs developers are responsible for, making penciling a much-needed project all the more difficult. With SB 1210, electrical, gas, sewer, and water service utilities are required to post fee schedules and estimated timeframes for new service connections and capacity upgrades needed to connect new housing construction projects. Given the current housing crisis in California, we need to alleviate barriers to affordable housing development where we can, and SB 1210 is a great step in that direction.”
3. Arguments in Opposition. The Southern California Edison Company, San Diego Gas & Electric Company, and Pacific Gas and Electric Company write in opposition, “SB 1210 would require all utilities, including electric and gas corporations, to publish a schedule of fees for a service connection, capacity, or other point of connection charge for each development type of new housing projects, without providing an exhaustive list or definition of ‘new housing construction.’ The bill would additionally require posting of estimated timeframes for completing typical service connections for each housing development type, again undefined. While we understand the intent behind this bill is to create transparency, reporting this information will likely be misleading or confusing to the end-user and come with a significantly increased compliance cost to utility customer.”
4. Double-Referral. This bill was double-referred to the Assembly Utilities and Energy Committee, where it passed on a 13-1 vote on June 19, 2024.

REGISTERED SUPPORT / OPPOSITION:

Support

Housing Action Coalition (Sponsor)

Ava Community Energy Authority

California YIMBY

East Bay for Everyone

East Bay Housing Organizations

Eden Housing

Leadingage California

Our Future Los Angeles

People for Housing - Orange County

Resources for Community Development

Supportive Housing Alliance

Opposition

El Dorado Irrigation District (Unless Amended)

Palmdale Water District (Unless Amended)

Pacific Gas and Electric Company

San Diego Gas & Electric

Southern California Edison

Analysis Prepared by: Linda Rios / L. GOV. / (916) 319-3958

Date of Hearing: June 19, 2024

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Cottie Petrie-Norris, Chair

SBPCA Bill Id:SB 1210

Author:(Skinner) – As Amended Ver:April 22, 2024

SENATE VOTE: 33-5

SUBJECT: New housing construction: electrical, gas, sewer, and water service: service connection information

SUMMARY: Requires electrical, gas, sewer, and water service utilities – both public and private – to post fee schedules and estimated timeframes for new service connections and capacity upgrades needed to connect new housing construction projects. Exempts certain special districts from the requirements due to a showing of hardship.

EXISTING LAW:

1. Establishes and vests the California Public Utilities Commission (CPUC), with jurisdiction over all public utilities. (Article XII of the California Constitution)
2. Defines “public utilities” to be private corporations and persons that own, operate, control or manage a line, plant, or system for the transmission, or furnishing of heat, light, water, power, or storage, directly or indirectly to or for the public, and common carriers, subject to the control of the Legislature. (Article XII, Section 3, of the California Constitution)
3. Includes every common carrier, toll bridge corporation, pipeline corporation, gas corporation, electrical corporation, telephone corporation, telegraph corporation, water corporation, sewer system corporation, and heat corporation, where the service is performed for, or the commodity is delivered to, the public or any portion thereof. (Public Utilities Code § 216)
4. Defines an “electrical corporation” to include every corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state, except where electricity is generated on or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others. (Public Utilities Code § 218)
5. Defines a “gas corporation” to include every corporation or person owning, controlling, operating, or managing any gas plant for compensation within this state, except where gas is made or produced on and distributed by the maker or producer through private property alone solely for his own use or the use of his tenants and not for sale to others. (Public Utilities Code § 222)
6. Defines “sewer system corporation” to include every corporation or person owning, controlling, operating, or managing any sewer system for compensation within the state. (Public Utilities Code § 230.6)
7. Defines “municipal utility district” as a district formed under the Municipal Utility District Act. (Public Utilities Code § 11503)
8. Defines a public utility district as a district formed under the Public Utilities District Act. (Public Utilities Code § 15501 et seq.)
9. Defines “special district” as any agency of the state established for the local performance of governmental or proprietary functions within limited boundaries. Provides that “special district” includes a county service area, a maintenance district or zone, an air pollution control district, or a redevelopment agency. States that “special district” does not include a city, county, city and county, or school district. (Government Code § 82048.5)
10. Requires a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee. (Government Code § 66000 et seq.)
11. Requires independent special district to maintain an internet website, unless a majority of the governing board adopts a resolution determining a hardship exists in their ability to establish or maintain a website (such as lack of broadband service). (Government Code § 53087.8)
12. Requires cities, counties, and special districts to post fee schedules, exactions, and affordability requirements on their internet websites, as specified. (Government Code § 65940.1)
13. Requires local agencies to evaluate the amount of the fee or capacity charge prior to levying a new fee or charge, and requires supporting evidence used in the evaluation be made publicly available, as specified. (Government Code § 66016.6)
14. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for electric distribution line extensions necessary to furnish permanent electric service. (Electric Tariff Rule 15)
15. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for the extension of electric service from an investor-owned utility (IOU) distribution line. (Electric Tariff Rule 16)
16. Establishes guidelines for design, cost allocation, and responsibilities of a project applicant for water service from an investor-owned water utility. (Water Service Tariff Rule 15)

FISCAL EFFECT: Unknown. This measure has not received a fiscal committee hearing, due to a determination by the Senate Committee on Appropriations, pursuant to Senate Rule 28.8, that the cost of implementing this bill is not significant.

BACKGROUND:

The Utility Universe – Californians receive their utility service through a variety of public or private utility providers, some with elected governing bodies, some with appointed regulators, and some with a hybrid structure. These utilities also range in size and service territory, from very small rural water companies serving less than a few hundred people over a small area^[1] to very large electric utilities serving millions of people over tens of thousands of square miles.^[2] Customer service and communication across these disparate utilities can vary. Likewise the rules governing how utilities not only communicate with, but respond to, customers can vary either due to statute, regulation, or self-imposed decisions. Some of these utilities include:

Electric and gas utilities – California residents are served by over 80 electric and gas utilities,^[3] including publicly owned utilities (POUs), investor-owned utilities (IOUs), rural cooperatives, and community choice aggregators.^[4] Some utilities are hybrid, offering both gas and electric service; while others are exclusive to one type of energy. For the most part, these utilities are not subject to competition, except at retail; meaning they have exclusive rights or agreements to operate within a given territory.

Water utilities – California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including POUs, IOUs, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. Water companies, which are separate entities and subject to CPUC regulatory oversight, provide water service to about 16% of California’s residents. The majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other IOUs, the CPUC regulates rates of the water utilities under its jurisdiction to ensure costs are just and reasonable. As with electric utilities, water utilities have similar service connection and capacity upgrade tariffs, in this case Water Service Tariff Rule 15.

Publicly owned utilities – POUs are subject to differing constraints on their ability to collect rates for rate relief from one customer to another. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own rates. Both Proposition 218 and Proposition 26 limit the ability of the local agencies to collect costs from a customer to fund activity by another customer, with specified limitations. These Propositions require a cost-of-service only model for POU services, and require that the service for which a fee or charge is imposed must be immediately available to the property owner, rather than for future or potential use. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.

CPUC-regulated utilities – Rules governing the ability of new buildings and generation and storage resources to connect to the electric and gas distribution grid are generally determined by statute, CPUC rules, and tariffs. These service connections include extensions or expansions of distribution infrastructure to service new or expanded customer load, known as “energization.” Electric Tariff Rules 15 and 16 establish the guidelines for design, cost allocation, and responsibilities of a project between applicant and a utility for electric distribution line extensions. The ability to connect to the larger electrical system can take many months as the process can entail the need for designs, assessments on costs allocations, and other issues. In the case of new building developments, depending on the size of the development, the need for electric service extensions may be needed in phases over months or years.

Mitigation Fee Act – When approving development projects, counties and cities can require the applicants to mitigate the project's effects by paying fees – known as mitigation fees, impact fees, developer fees, connection fees, and capacity charges. The California courts have upheld impact fees for sidewalks, parks, school construction, and many other public purposes. Connection fees and capacity charges are one-time fees assessed on new customers that reflect the reasonable cost of providing service. Connection fees are assessed when utilities physically connect a structure to their system; capacity charges are assessed to cover the proportional cost of maintaining or constructing system wide infrastructure necessary to meet additional demand brought by new users of the system. The Mitigation Fee Act governs these fees, but state law provides separate provisions related to their oversight and accounting. The Mitigation Fee Act generally applies a broad “reasonable relationship” standard to fees and exactions, meaning that fee amounts must be reasonable relative to the impacts of the project. When a local agency imposes fees or charges, the fees or charges cannot exceed the estimated reasonable cost of providing the service without a 2/3 vote.

Study on development fees for new housing construction – The Terner Center for Housing Innovation at UC Berkeley authored a study, It All Adds Up: The Cost of Housing Development Fees in Seven California Cities (March 2008), on the various fees imposed on new housing construction. The study notes that these fees make up a significant portion of the costs to build new housing in California. The study states that on average these fees continue to rise, while nationally fees have decreased. The authors found that development fees for multifamily housing range from a low of $12,000 per unit in Los Angeles, to $75,000 per unit in Fremont. Fees for single family housing range from $21,000 per home in Sacramento to $157,000 per home in Fremont. They found that fees can amount from 6%-18% of the median home price depending on the location. The wide range of these fees are largely due to differences in locally-assessed, rather than state- or utility-assessed, fees.

COMMENTS:

1. Author’s Statement. According to the author, “California is in desperate need of more housing, and particularly more affordable housing. Hook-up fees for electric, gas, sewer, or water service can add tens of thousands of dollars to the cost of each new housing unit. The final cost often comes as a surprising shock, as the fees charged by various utilities are rarely disclosed in a publicly available form and are difficult for the builder of the housing unit, whether a home owner or developer, to determine in advance. Timelines for the utility’s completion of the work can also vary widely, with some housing projects having to wait a year or more for service completion. High fees and a lack of transparency are an ongoing obstacle to housing creation at a time when California is focused on streamlining and other measures to build more housing units. SB 1210 will require utilities to provide clear cost information for their hook-up fees to customers, and require them to inform customers of the estimated service completion date. By increasing transparency and accountability in utility hook-ups, California will incentivize the production of new homes, and increase the affordability of housing state-wide.”
2. Cost Comparisons. Calls for increased transparency regarding connection charges are not new. AB 602 (Grayson, Chapter 347, Statutes of 2021) placed requirements on local agencies to post fee schedules on their website. While AB 2536 (Grayson, Chapter 128, Statutes of 2022), requires POUs subject to the Mitigation Fee Act to evaluate and publicly post information on the amount and reasoning behind fee amounts. This bill is aligned with these efforts, and may provide more detailed information on connection charges. The author notes that many of these fees, especially those arising from IOUs which have not been the focus of past legislative efforts, can be opaque and difficult to scrutinize. Publicly posting fee schedules may aide developers and homeowners in comparing costs across jurisdictions, or identifying potentials to mitigate some costs.

However, it is likely to cost utilities – especially those that to date have not been required to post fee information – time and money to develop service connection, capacity, and connection charge information for each housing type as called for under this measure. According to the electric IOUs, they do not label requests for service according to housing type; it is either a new connection or an upgrade to an existing customer. This bill would require utilities to develop category labels for these housing types in order to provide associated fees. Such labels may not be uniform across utilities, leading to confusion when the public seeks to compare cost information. Moreover, utility service territory can vary greatly. Utilities often work with customers at an individual level to develop quotes unique to the specific project, location, and load. This bill ignores this subtlety, and instead requires a schedule of fees based only on housing type. This may lead some utilities to provide an average fee value across their service territory for each housing type; while others may further subdivide their fee information based on region or project complications. The bill is unclear, leading to lack of uniformity in the publicly posted information.

As Mark Twain reportedly observed, “the surest way to convey misinformation is to tell the strict truth.” If the desire for the publicly posted data required under this measure – the fee and estimated timeframes for service connections – is to increase public awareness and knowledge of these fees, then having consistency and clarity in how the data are collected and reported is important. Otherwise utilities may report a variety of accurate fee schedules that still provide little useful insight to individual applicants. This bill does not provide such consistency, leading to the potential for information to be so different in its reporting as to be ambiguous or even misleading. Given these challenges, the committee recommends specifying that the schedule of fees is estimated and represents a typical service connection. The committee also recommends striking the requirement for utilities to report capacity or other point of connection charge information. While capacity charges are a common term in Government Code,^[5] this bill adds such terms in the Public Utilities Code where “capacity” might mean very specific electric upgrades subject to Electric Rules 15 or 21. In most of these circumstances, at least for the electric IOUs, allowances are provided so that customers do not realize a cost with these upgrades. In such circumstances, a publicly noticed fee schedule for costs rarely borne by individual customers may lead to unnecessary confusion.

1. Additional hardships. This bill provides some exceptions to specified utilities from its requirements to publicly post connection fees and timeframes on a utility’s website. Namely, those utilities already required under statute to post a schedule of fees, or independent special districts with such financial hardships that they are not required to maintain an internet website. Other utilities, equally small and without a website, have sought inclusion in this exemption. The author acknowledges all Californians deserve fee information for their local utility, however to mandate such public notice on utility websites for utilities that do not even own or maintain an internet presence is outside the scope of this bill. As such, the committee recommends the hardship exemption in §8401(b) be expanded from just independent special districts to any small utility that annually demonstrates a hardship.
2. Prior Legislation.

AB 50 (Wood) required the CPUC, by July 1, 2025, to determine the criteria for customers to receive timely electricity service when requesting new service connections or upgraded service, known as “energization.” The bill proposed several policies to address delays in connecting customers to the electrical grid, including improved information sharing with local governments, reporting by electric IOUs, and other measures. Status: Chapter 317, Statutes of 2023.

SB 410 (Becker) required the CPUC to establish by September 30, 2024, reasonable average and maximum target energization time periods in order to connect new customers and upgrade the service of existing customers to the electrical grid. The bill also required reporting by electrical corporations and authorizes specified annual cost-recovery, subject to a cap. Status: Chapter 394, Statutes of 2023.

AB 2536 (Grayson) required local agencies to evaluate and show specified evidence when imposing or increasing connection fees and capacity charges, and excludes school districts from certain nexus study requirements. Status: Chapter 128, Statutes of 2022.

AB 602 (Grayson) required, among its provisions, a city, county, or special district that has an internet website to post and update on their websites specified information, including a current schedule of housing development project costs, zoning ordinances and development standards, annual impact fee reports, and an archive of specified impact fee nexus studies. Status: Chapter 347, Statutes of 2021.

AB 1026 (Wood) required an electrical or gas corporation to apply only those construction and design specifications, standards, terms, and conditions that are applicable to a new extension of service project for the 18 months following the date the application for a new extension of service project is approved. Authorized an electrical or gas corporation to adopt modifications, as specified, of the construction and design specifications, standards, terms, and conditions of a new extension of service project. Status: Chapter 446, Statutes of 2019.

AB 1600 (Cortese) required a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee. Status: Chapter 927, Statutes of 1987.

1. Double referral. This bill is double referred; upon passage in this Committee, this bill will be referred to the Assembly Committee on Local Government.

REGISTERED SUPPORT / OPPOSITION:

Support

California Yimby
East Bay Housing Organizations
Housing Action Coalition
Leadingage California
People for Housing - Orange County
Resources for Community Development

Oppose

Pacific Gas and Electric Company and Its Affiliated Entities

Oppose Unless Amended

El Dorado Irrigation District
Palmdale Water District

Other

Association of California Water Agencies (ACWA)
California Association of Mutual Water Companies
California Association of Sanitation Agencies
California Municipal Utilities Association
California Special Districts Association
California Water Association
California-Nevada Section, American Water Works Association
Desert Water Agency
Inland Empire Utilities Agency
New Livable California Dba Livable California
Walnut Valley Water District

Analysis Prepared by: Laura Shybut / U. & E. / (916) 319-2083

1. Class D Water Companies, for instance, serve less than 500 connections. https://calwaterassn.com/about-cwa/regulated-water-utilities-in-california/ ↑

2. Pacific Gas and Electric Company, for instance, serves approximately 16 million people throughout a 70,000 square mile service area. https://www.pge.com/en/about/company-information/company-profile.html#:~:text=Fast%20facts%20about%20PG%26E&text=The%20company%20provides%20natural%20gas,in%20northern%20and%20central%20California. ↑

3. Number is not inclusive of Electric Service Providers or Transmission Operators which are technically defined as electrical utilities as well. ↑

4. CEC list, accessed on 06.16.2024; https://www.energy.ca.gov/sites/default/files/2023-09/California_Electric_Load-Serving_Entities_ADA.xlsx ↑

5. See GOV § 54999.1 (b) ↑

 THIRD READING  

Bill No: SB 1210

Author: Skinner (D)

Amended: 4/22/24

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 15-1, 4/2/24

AYES: Bradford, Ashby, Becker, Caballero, Durazo, Eggman, Gonzalez, Grove, Limón, Min, Newman, Rubio, Skinner, Stern, Wilk

NOES: Seyarto

NO VOTE RECORDED: Dahle, Dodd

SENATE LOCAL GOVERNMENT COMMITTEE: 5-2, 4/17/24

AYES: Durazo, Glazer, Skinner, Wahab, Wiener

NOES: Seyarto, Dahle

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT: New housing construction: electrical, gas, sewer, and water service: service connection information

SOURCE: Housing Action Coalition

DIGEST:

This bill requires electrical, gas, sewer, and water service utilities to post fee schedules and estimated timeframes for new service connections and capacity upgrades needed to connect new housing construction projects.

ANALYSIS:

Existing law:

1. Establishes and vests the California Public Utilities Commission (CPUC), with jurisdiction over all public utilities. (Article XII of the California Constitution)
2. Defines “public utilities” to be private corporations and persons that own, operate, control or manage a line, plant, or system for the transmission, or furnishing of heat, light, water, power, or storage, directly or indirectly to or for the public, and common carriers, subject to the control of the Legislature. (Article XII, Section 3, of the California Constitution)
3. Includes every common carrier, toll bridge corporation, pipeline corporation, gas corporation, electrical corporation, telephone corporation, telegraph corporation, water corporation, sewer system corporation, and heat corporation, where the service is performed for, or the commodity is delivered to, the public or any portion thereof. (Public Utilities Code §216)
4. Defines an “electrical corporation” to include every corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state, except where electricity is generated on or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others. (Public Utilities Code §218)
5. Defines a “gas corporation” to include every corporation or person owning, controlling, operating, or managing any gas plant for compensation within this state, except where gas is made or produced on and distributed by the maker or producer through private property alone solely for his own use or the use of his tenants and not for sale to others. (Public Utilities Code §222)
6. Defines “sewer system corporation” to include every corporation or person owning, controlling, operating, or managing any sewer system for compensation within the state. (Public Utilities Code §230.6)
7. Defines “municipal utility district” as a district formed under the Municipal Utility District Act. (Public Utilities Code §11503)
8. Defines a public utility district as a district formed under the Public Utilities District Act. (Public Utilities Code §15501 et seq.)
9. Defines “special district” as any agency of the state established for the local performance of governmental or proprietary functions within limited boundaries. Provides that “special district” includes a county service area, a maintenance district or zone, an air pollution control district, or a redevelopment agency. States that “special district” does not include a city, county, city and county, or school district. (Government Code §82048.5)
10. Requires a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee. (Government Code §66000 et seq.)
11. Requires independent special district to maintain an internet website, unless a majority of the governing board adopts a resolution determining a hardship exists in their ability to establish or maintain a website (such as lack of broadband service). (Government Code §53087.8)
12. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for electric distribution line extensions necessary to furnish permanent electric service. (Electric Tariff Rule 15)
13. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for the extension of electric service from an investor-owned utility (IOU) distribution line. (Electric Tariff Rule 16)
14. Establishes guidelines for design, cost allocation, and responsibilities of a project applicant for water service from an investor-owned water utility. (Water Service Tariff Rule 15)

This bill:

1. Defines “utilities” for purposes of this bill to include:
   1. An electrical corporation, as defined in Section 218.
   2. A gas corporation, as defined in Section 222.
   3. A sewer system corporation, as defined in Section 230.6.
   4. A water corporation, as defined in Section 241.
   5. A municipality or municipal corporation operating as a public utility pursuant to Division 5 (commencing with Section 10001).
   6. A municipal utility district formed pursuant to the Municipal Utility District Act (Division 6 (commencing with Section 11501)).
   7. A public utility district formed pursuant to The Public Utility District Act (Division 7 (commencing with Section 15501)).
   8. An irrigation district formed pursuant to the Irrigation District Law (Division 11 (commencing with Section 20500) of the Water Code).
   9. A joint powers authority that includes one or more of the entities described in subdivisions (e) to (h), inclusive, and that owns electrical, gas, water, or sewer facilities, or furnishes electrical, gas, water, or sewer service over its own or its member’s system.
2. Requires utilities, on or before January 1, 2026, to publicly post on their internet websites (a) the schedule of fees for a service connection, capacity, or other point of connection charge for each housing development type, including, but not limited to, accessory dwelling unit, mixed-use, multifamily, and single-family developments, except as specified, and (b) estimated timeframes for completing typical service connections needed for each housing development type.
3. Exempts from its provisions an independent special district that does not maintain an internet website due to a hardship.
4. Provides that, to the extent that this bill imposes new requirements on certain local agencies, this bill imposes a state-mandated local program.

Background

1. Study on development fees for new housing construction. The Terner Center for Housing Innovation at UC Berkeley authored a study, It All Adds Up: the Cost of Housing Development Fees in Seven California Cities (March 2008), on the various development fees imposed on new housing construction. The study attempts to dive into the development fees which cities levy to pay for services needed to build new housing or to offset the impacts of growth on the community. Per the study, the development fees make up a significant portion of the costs to build new housing in California cities. The study states that on average these fees continue to rise, while nationally fees have decreased. The authors found that development fees for multifamily housing range from a low of $12,000 per unit in Los Angeles, to $75,000 per unit in Fremont. Fees for single family housing range from $21,000 per home in Sacramento to $157,000 per home in Fremont. They found that fees can amount from six percent to 18 percent of the median home price depending on the location. Development fees include service fees and impact fees. These include city staff time to process permits, and fees for new roads, and other infrastructure.
2. Connecting to the electric and gas distribution grid. Rules governing the ability of new buildings and generation and storage resources to connect to the electric and gas distribution grid are generally determined by statute, CPUC rules, and tariffs, (i.e., document that specify rates, charges, rules, and conditions under which an electrical corporation will provide services to the public) for each of the electrical corporations. These service connections include:

New service connections refers to extending an electricity or expanding distribution infrastructure to service new or expanded customer load, known as “energization.”  Electric Tariff Rules 15 and 16 establish the guidelines for design, cost allocation, and responsibilities of a project applicant and a utility for electric distribution line extensions. The ability to connect to the larger electrical system can take months (if not, years, in some cases) as the process can entail the need for designs, assessments on costs allocations associated with improvements on the electric distribution system to allow for the connection, and other issues. In the case of new building developments, depending on the size of the development, the need for electric service extensions may be needed in phases over months, or years.

1. Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities (POUs), IOUs, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections.
2. Publicly owned water and sewer utilities. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own water rates. As established by Proposition 218 (1996), the majority of these utilities are subject to state constitutional and statutory requirements that ensure water rates are restricted to cost-of-service. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.
3. CPUC-regulated water and sewer utilities. The CPUC has regulatory oversight over water companies that provide water service to about 16 percent of California’s residents with annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately 1.175 million customers). However, the majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other IOUs, the CPUC regulates rates of the water utilities under its jurisdiction to ensure costs are just and reasonable. As with electric utilities, water utilities have similar service connection and capacity upgrade tariffs, in this case Water Service Tariff Rule 15.
4. Proposition 218 and Proposition 26. POUs are subject to differing constraints on their ability to collect rates for rate relief from one customer to another. Both Proposition 218 and Proposition 26 limit the ability of the local agencies to collect costs from a customer to fund activity by another customer, with specified limitations.

Article XIIID of the California Constitution, added by Proposition 218 in 1996, requires, among other things, that the revenues derived from property related fees and charges not exceed the funds required to provide the property related service… Proposition 218 also requires that property related fees and charges not exceed the proportional cost of service attributable to the property. In addition, the service for which a fee or charge is imposed must be immediately available to the property owner, rather than for future or potential use. The systems bear the burden of proving compliance with these cost-of-service requirements. These substantive restrictions on ratemaking by publicly owned water systems prevent subsidization of one customer’s water rates by another… [Source: SB 401 (Dodd, Chapter 662, Statutes of 2015) report on funding low-income water assistance programs.]

1. Mitigation Fee Act. The Mitigation Fee Act generally applies a broad “reasonable relationship” standard to fees and exactions, meaning that fee amounts must be arguably reasonable relative to the impacts of the project. This component of the Mitigation Fee Act makes up the basis for each city’s “nexus study,” which cities must commission to determine the type and amount of AB 1600 (Cortese, Chapter 927, Statutes of 1987) fees charged on new development. Other fees include public good fees, such as art or affordable housing.

Comments

1. Purpose of this bill. According to the author, “California is in desperate need of more housing, and particularly more affordable housing. Hook-up fees for electric, gas, sewer, or water service can add tens of thousands of dollars to the cost of each new housing unit. The final cost often comes as a surprising shock, as the fees charged by various utilities are rarely disclosed in a publicly available form and are difficult for the builder of the housing unit, whether a home owner or developer, to determine in advance. Timelines for the utility’s completion of the work can also vary widely, with some housing projects having to wait a year or more for service completion. High fees and a lack of transparency are an ongoing obstacle to housing creation at a time when California is focused on streamlining and other measures to build more housing units. SB 1210 will require utilities to provide clear cost information for their hook-up fees to customers, and require them to inform customers of the estimated service completion date. By increasing transparency and accountability in utility hook-ups, California will incentivize the production of new homes, and increase the affordability of housing state-wide.”
2. Seeking additional transparency of fee schedules and estimated timeframes for housing projects. This bill requires each utility to include additional functionality on their website to allow new housing construction applicants to view the schedule of fees charged for each housing development type and learn about the estimated timeframes for completing typical service connections needed for each housing development type. While some utilities may have the ability for an applicant to check their status online, not all utilities do, especially if they only see a handful of connection requests for new housing construction. As a result, this bill exempts independent special districts that do not maintain an internet website. It’s unclear whether the proposed exemption address any concerns for the utilities remained opposed, as their letters speak to previous versions of this bill.

Related/Prior Legislation

AB 50 (Wood, Chapter 317, Statutes of 2023) required the CPUC, by July 1, 2025, to determine the criteria for customers to receive timely electricity service when requesting new service connections or upgraded service, known as “energization.” The bill proposed several policies to address delays in connecting customers to the electrical grid, including improved information sharing with local governments, reporting by electric IOUs, and other measures.

SB 410 (Becker, Chapter 394, Statutes of 2023) required the CPUC to establish by September 30, 2024, reasonable average and maximum target energization time periods in order to connect new customers and upgrade the service of existing customers to the electrical grid. The bill also required reporting by electrical corporations and authorizes specified annual cost-recovery, subject to a cap.

AB 602 (Grayson, Chapter 347, Statutes of 2021) required, among its provisions, a city, county, or special district that has an internet website to post and update on their websites specified information, including a current schedule of housing development project costs, zoning ordinances and development standards, annual impact fee reports, and an archive of specified impact fee nexus studies.

AB 1026 (Wood, Chapter 446, Statutes of 2019) required an electrical or gas corporation to apply only those construction and design specifications, standards, terms, and conditions that are applicable to a new extension of service project for the 18 months following the date the application for a new extension of service project is approved. Authorized an electrical or gas corporation to adopt modifications, as specified, of the construction and design specifications, standards, terms, and conditions of a new extension of service project.

AB 1600 (Cortese, Chapter 927, Statutes of 1987) required a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT: (Verified 5/8/24)

Housing Action Coalition (source)
East Bay for Everyone
Grow the Richmond
Habitat for Humanity Greater San Francisco
How to ADU
LeadingAge California
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
People for Housing - Orange County
Progress Noe Valley

Resources for Community Development

South Side Forward
Streets for People
Urban Environmentalists
YIMBY: Action, California, East Bay, Mountain View, San Francisco, San Luis

Obispo, Santa Cruz, Santa Rosa, South Bay, and Ventura County

OPPOSITION: (Verified 5/8/24)

California Water Association

City of Oceanside

El Dorado Irrigation District
Mission Springs Water District

Pacific Gas and Electric Company
San Diego Gas and Electric Company

Southern California Edison

ARGUMENTS IN SUPPORT: In support of this bill, YIMBY California states:

The excessive hook-up fees for essential utilities such as electric, gas, sewer, and water services add significant cost to each new housing unit, exacerbating the affordability crisis. These fees, often undisclosed and unpredictable, pose a substantial barrier to housing creation and deter both homeowners and developers from pursuing construction projects. SB 1210 seeks to rectify this issue by requiring utilities to provide clear cost information for their hook-up fees to customers and informing them of the estimated service completion date

ARGUMENTS IN OPPOSITION: The entities opposed to this bill have letters that reflect previous versions of this bill. It is unclear whether they have specific concerns with the current language in this bill.

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

5/8/24 16:11:29

**** END ****

SENATE COMMITTEE ON LOCAL GOVERNMENT

Senator María Elena Durazo, Chair

2023 - 2024 Regular

New housing construction: electrical, gas, sewer, and water service connections: charges

Requires utilities to post specified information on the connection fees and capacity charges they charge for new housing construction on their website, and allow applicants for these developments to check their status online.

Background

Local government finance after Proposition 13. A series of propositions have drastically cut into local revenue sources, requiring local governments to look elsewhere to fund services the public demands. First, Proposition 13 (1978) capped property tax rates at 1% of assessed value (which only changes upon new construction or when ownership changes) and required 2/3 voter approval for special taxes; as a result local governments turned to general taxes to avoid the higher voter threshold. When Proposition 62 (1986) required majority voter approval of general taxes, local agencies imposed assessments more closely tied to the benefit an individual property owner receives. Subsequently, Proposition 218 (1996) required voter approval of parcel taxes, assessments, and property-related fees.

In response to the reduction in property tax revenues from Proposition 13 and the difficulty of raising taxes, local agencies have turned to other sources of funds for general operations, including sales taxes and transient occupancy taxes, also known as hotel taxes. Commercial enterprises generate sales tax and hotel tax revenue, and simultaneously pay property taxes and demand relatively few services (such as public safety or parks). Residential developments, by contrast, do not directly generate sales or hotel tax revenue, and the new residents demand a wider variety of more intensive services. As a result, cities and counties face a disincentive to approve housing because of the higher net fiscal cost of residential development, particularly if they have the option to instead permit commercial development that may produce net fiscal benefits, also known as the fiscalization of land use.

Since they cannot impose broad-based taxes without great difficulty, cities and counties follow a simple principle: new developments should pay for the impacts they have on the community and the burden they impose on public services.

Mitigation Fee Act. When approving development projects, counties and cities can require the applicants to mitigate the project's effects by paying fees—known as mitigation fees, impact fees, or developer fees. The California courts have upheld impact fees for sidewalks, parks, school construction, and many other public purposes.

When establishing, increasing, or imposing a fee as a condition of approving a development project, the Mitigation Fee Act requires local officials to:

• Identify the fee’s purpose;
• Identify the fee’s use, including the public facilities to be financed;
• Determine a reasonable relationship between the fee’s use and the development; and
• Determine a reasonable relationship between the public facility’s need and the development.

When imposing a fee as a condition of approving a development project, the Mitigation Fee Act also requires local officials to determine a reasonable relationship between the fee’s amount and the cost of the public facility. In its 1987 Nollan decision, the U.S. Supreme Court said there must be an “essential nexus” between a project's impacts and the conditions for approval. In the 1994 Dolan decision, the U.S. Supreme Court said that conditions on development must have a "rough proportionality" to a project's impacts.

In the 1996 Ehrlich decision, the California Supreme Court distinguished between “legislatively enacted” conditions that apply to all projects and “ad hoc” conditions imposed on a project-by- project basis. Ehrlich applied the “essential nexus” test from Nollan and the “rough proportionality” test from Dolan to “ad hoc’ conditions. The Court did not apply the Nollan and Dolan tests to the conditions that were “legislatively enacted.” In other words, local officials face greater scrutiny when they impose conditions on a project-by-project basis.

Connection and capacity charges. Connection fees and capacity charges are one-time fees assessed on new customers that reflect the reasonable cost of providing service, typically for water or sewer systems. A local agency assesses a connection fee when it physically connects a structure to the water or sewer system, which pays for the physical facilities necessary to make a water or sewer connection, such as meters, meter boxes, pipelines, and the estimated reasonable cost of labor and materials for their installation of those facilities. A local agency assesses a capacity charge on the customer to cover the proportional cost of maintaining or constructing system wide infrastructure necessary to meet the additional water or sewer demand for new users of the system. The Mitigation Fee Act governs connection fees and capacity charges, but state law provides separate provisions related to their oversight and accounting.

When a local agency imposes water or sewer connection fees or capacity charges, the fees or charges cannot exceed the estimated reasonable cost of providing the service without a 2/3 vote. If the local agency imposes a capacity charge, it must deposit revenues in a separate capital facilities fund to avoid any commingling with other moneys of the local agency, except for investments, and must only spend those charges for the purposes for which the charges were collected. Any interest income earned from the investment of moneys in the capital facilities fund must be deposited in that fund.

Within 180 days after the last day of each fiscal year, the local agency must make the following information for that fiscal year available to the public:

• A description of the charges deposited in the fund;
• The beginning and ending balance of the fund and the interest earned from investment of moneys in the fund;
• The amount of charges collected in that fiscal year;
• An identification of all of the following:
  • Each public improvement on which charges were expended and the amount of the expenditure for each improvement, including the percentage of the total cost of the public improvement that was funded with those charges if more than one source of funding was used;
  • Each public improvement on which charges were expended that was completed during that fiscal year; and
  • Each public improvement that is anticipated to be undertaken in the following fiscal year.
• A description of each interfund transfer or loan made from the capital facilities fund.

Before levying a new connection fee or capacity charge, or prior to approving an increase in existing fees or charges, the local agency must hold at least one open and public meeting. The local agency must notify by mail any person who requests notification of new or increased fees or charges the time and place of the meeting at least 14 days before it occurs. At least 10 days before the meeting, the local agency must make public data indicating the cost to provide the service for which it levies the fee or charge and the revenue sources to finance those costs. Without voter approval, the local agency cannot levy a fee or charge that exceeds the estimated amount required to provide the service. If fees or charges generate revenue in excess of that amount, the local agency must use the excess amount to reduce the fee or charge.

Recent work on impact fees. On February 26, 2020, the Senate Governance and Finance Committee, Senate Housing Committee, Assembly Committee on Local Government, and the Assembly Committee on Housing and Community Development hosted a hearing titled, “The Price of Civilization: Benefits and Costs of Impact Fees on Housing in California.” At this hearing, committee members heard from experts on the legal framework governing impact fees, learned about common uses of impact fees, reviewed how local governments use impact fees to achieve local policy goals, and heard from academic experts on recent research on the effects of impact fees on the building industry. This recent research is summarized below.

Concerned that mitigation fees may be increasing the cost of housing, in 2017 the Legislature enacted AB 879 (Grayson), which required the Department of Housing and Community Development (HCD) to complete a study to evaluate the reasonableness of local fees charged to new developments. On August 7th, 2019, HCD released the study, performed by the Terner Center for Housing Innovation (Terner Center). The study’s findings concerned three categories: fee transparency; fee structure; and fee design. Among other conclusions, the study argued fees can be a barrier to development and raise prices of both new and existing homes. However, the study also noted that local governments face substantial fiscal constraints and thus have turned to fees as a source of revenue to fund public services for new developments.

Consistent with previous studies by the Terner Center and others, the report found fee transparency could be substantially improved. According to the study, many jurisdictions do not post their fee schedules or their nexus studies online, making it hard for developers to know their costs ahead of time. Meanwhile, other jurisdictions have adopted best practices, such as offering an estimate of the fees a project would pay. The study recommended requiring local governments to post fees and nexus studies online, as well as annual reports on fee collections, and requiring jurisdictions to provide fee estimates.

To address transparency concerns, AB 1483 (Grayson, 2019) required cities and counties to post specified housing-related information on their web sites and requires HCD to establish a workgroup, as specified, to develop a strategy for state housing data.

Recent transparency efforts. Based on the information gathered at the informational hearing and these studies, over the past couple years, legislative staff met with multiple stakeholder groups to assess how to improve the impact fee process. These efforts culminated in the enactment of AB 602 (Grayson, 2021), which required a city, county, or special district to conduct a nexus study prior to adopting an impact fee. This bill amended the law to require the preparation of nexus studies to follow certain standards and practices including:

• When applicable, identify the existing level of service and proposed new level of service, explain the metric being used, and include an explanation of why the new level of service is necessary;
• In calculating the fee, require the fee to be proportionate to the square footage of the proposed units, unless the local agency makes a finding that another standard is more appropriate. Local agencies can still establish different fees for different types of developments;
• Adopt a capital improvement plan in jurisdictions located in counties with over 250,000 residents;
• Adopt studies at a public hearing with at least 30 days’ notice, which must be provided to members of the public that request it;
• Calculate fees using standards that comply with existing law, including, but not limited to, vehicle miles traveled; and
• Update studies every eight years, from the period beginning on January 1, 2022.

While many of AB 602’s requirements did not apply to utility connection fees and capacity charges, the measure did require local agencies to post schedules of their fees online, if they have a website, including connection fees and capacity charges. Additionally, AB 2536 (Grayson, 2022) imposed new requirements when a local agency imposes a connection fee or capacity charge. Prior to levying a new connection fee or capacity charge, the local agency must evaluate the amount of the fee or charge, which must include evidence the fee or charge amount does not exceed the estimated reasonable cost of providing service. The local agency must make all the information included in the evaluation available at least 14 days prior to the public meeting it must hold.

The author wants to increase transparency requirements for connection and capacity charges.

Proposed Law

Senate Bill 1210 requires utilities to post the following information for new housing construction on their websites:

• Amount of any charge issued for a connection, capacity charge, or other point of connection charge by housing unit’s address; and
• The schedule of fees for a service connection, capacity charge, or other point of connection charge.

Additionally, utilities must ensure their websites allow an applicant for a service connection to new housing construction to:

• Track where the applicant is at in the queue for service connection; and
• Receive a reasonable estimate regarding when the utility will complete the applicant’s service connection.

SB 1210 defines utility to include private electrical, gas, sewer, and water corporations. It also includes the following publicly owned utilities:

• A municipality or municipal corporation operating as a public utility;
• A municipal utility district;
• A public utility district;
• An irrigation district; and
• A joint powers authority that includes one or more of the above entities that owns or operates electrical, gas, water, or sewer facilities or services.

Comments

1. Purpose of the bill. According to the author, “California is in desperate need of more housing, and particularly more affordable housing. Hook-up fees for electric, gas, sewer, or water service can add tens of thousands of dollars to the cost of each new housing unit. The final cost often comes as a surprising shock, as the fees charged by various utilities are rarely disclosed in a publicly available form and are difficult for the builder of the housing unit, whether a home owner or developer, to determine in advance. Timelines for the utility’s completion of the work can also vary widely, with some housing projects having to wait a year or more for service completion. High fees and a lack of transparency are an ongoing obstacle to housing creation at a time when California is focused on streamlining and other measures to build more housing units. SB 1210 will require utilities to provide clear cost information for their hook-up fees to customers, and require them to inform customers of the estimated service completion date. By increasing transparency and accountability in utility hook-ups, California will incentivize the production of new homes, and increase the affordability of housing state-wide.”

2. Too much is never enough. Calls for increased transparency regarding connection and capacity charges are not new. The Legislature recently passed AB 2536 (Grayson, 2022), which required publicly-owned utilities subject to the Mitigation Fee Act to evaluate the amount of the charge, include evidence the charge does not exceed the reasonable cost of providing service, and make that information available before a public meeting to adopt the fee amounts. Additionally, AB 602 (Grayson, 2021) already requires local agencies to post fee schedules on their website. On the one hand, SB 1210 may provide more detailed information on connection and capacity charges. Posting this information may help developers compare connection and capacity costs across jurisdictions so they can identify the places where housing construction costs are lowest. On the other hand, it may cost these utilities time and money to separate costs by each housing unit, and post this information on their website, and, in the case of fee schedules, duplicate information publicly owned utilities already post. Connection fees and capacity charges cannot exceed the estimated reasonable cost of providing service, and the local agency must already produce, and make publicly available, the evidence to show they do not exceed the reasonable cost of providing service. Requiring local agencies to post more information won’t lower the costs of providing service. In fact, additional requirements could increase costs if utilities need to recover their costs through higher fees. The Committee may wish to consider whether the benefits of requiring publicly owned utilities to post this information online exceed the costs for them to do so.

3. Sure, but will it work? SB 1210 requires each utility to include additional functionality on their website to allow new housing construction applicants to check their connection status and receive an estimate when the utility will complete the connection. While some utilities may have the ability for an applicant to check their status online, not all utilities do, especially if they only see a handful of connection requests for new housing construction. For some utilities, adding this functionality may prove costly and time-intensive. Additionally, the measure does not provide clear direction to utilities on how frequently they must update this information. Regularly updating an applicant’s status could be resource intensive for both small utilities with limited resources and large utilities that must process many applications for projects that could range from single-family homes to high-rise apartment buildings. Finally, this requirement could set utilities up for disappointing their customers if they cannot meet their estimated connection schedules or if other connections need to take priority due to emergencies or other unexpected events. Utilities may be able to provide more reliable, real-time information over the phone, rather than having developers rely on information posted to a website which may be out of date. The Committee may wish to consider amending the bill to remove this requirement, or replace it with a requirement that utilities instead post estimates of the timeframes for completing service connections by housing development type on their websites.

4. Implementation. SB 1210 makes changes to the information utilities most post on their websites that warrant further consideration:

• SB 1210’s requirements apply when the bill goes into effect on January 1, 2025. If utilities do not immediately update their websites, they will be violating state law. Some utilities may need time to update their websites, especially if they do not currently have a portal for applicants to log on to check their application status. The Committee may wish to consider amending the bill to delay implementation so utilities have time to comply.
• SB 1210 requires utilities to provide the connection fee or capacity charge for new housing construction by each housing unit’s address. However, when utilities receive a request for service, they may not have the address of each housing unit in the proposed development. The Committee may wish to consider amending the bill to remove this requirement.
• Current law already requires local agencies, including publicly owned utilities, to post schedules of their fees online. SB 1210 duplicates this requirement. The Committee may wish to consider amending the bill to make it clear that utilities that already post a schedule of their fees do not have to post a separate schedule to comply with SB 1210.
• While most local agencies have websites, not all of them do. Specifically, SB 929 (McGuire, 2018) exempted special districts from a requirement to have a website if the district adopts a resolution declaring its determination that a hardship exists that prevents the district from establishing or maintaining a website. A utility that has adopted such a resolution would have to create a website to comply with SB 1210’s requirements. The Committee may wish to consider amending the bill to exempt publicly owned utilities that do not have a website.

5. Related legislation. The Legislature is considering several other pieces of legislation concerning the Mitigation Fee Act:

• SB 937 (Wiener, 2024), which the Committee passed at its April 3^rd hearing on a 6-0 vote, makes various changes to the process for local agencies to collect development impact fees, and extends development entitlements. The measure is currently pending in the Senate Housing Committee.
• AB 1820 (Schiavo, 2024) requires a city or county to provide an estimate of fees and exactions for a project within 10 days of receiving a preliminary application for a housing development project upon a request from the project applicant for an estimate. The measure is currently pending in the Assembly Local Government Committee.
• AB 2553 (Friedman, 2024) redefines “major transit stop” for purposes of exempting housing developments within ½ mile of a major transit stop from specified impact fees. The measure is currently pending in the Assembly Housing and Community Development Committee.
• AB 2663 (Grayson, 2024) requires local agencies to post certain information regarding affordable housing impact fees on their websites. The measure is currently pending in the Assembly Housing and Community Development Committee.
• AB 2729 (Joe Patterson, 2024) removes the requirement on local agencies that fees must be paid prior to the date of final inspection or issuance of the certificate of occupancy, whichever occurs first. The measure is currently pending in the Assembly Housing and Community Development Committee.
• AB 3177 (W. Carrillo, 2024) prohibits land dedications for the purpose of mitigating vehicular traffic on housing developments. The measure is currently pending in the Assembly Housing and Community Development Committee.

6. Incoming! The Committee on Energy, Utilities, and Communications approved SB 1210 by a vote of 15 to 1 on April 2^nd. The Committee on Local Government is hearing the measure as the committee of second reference.

Support and Opposition

(4/12/24)

Support: Housing Action Coalition (Sponsor)
California Yimby
East Bay Housing Organizations
East Bay Yimby
Grow the Richmond
How to Adu
Leadingage California
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
People for Housing - Orange County
Progress Noe Valley
Resources for Community Development
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Streets for People
Urban Environmentalists
Ventura County Yimby
Yimby Action

Opposition: Association of California Water Agencies (ACWA)
California Association of Sanitation Agencies
California Municipal Utilities Association (CMUA)
California Special Districts Association
California Water Association
California-Nevada Section, American Water Works Association
City of Oceanside
Desert Water Agency
Edison International and Affiliates, Including Southern California Edison
El Dorado Irrigation District
Mission Springs Water District
Orange County Sanitation District
Pacific Gas and Electric Company and Its Affiliated Entities
San Diego Gas and Electric Company
Save Lafayette
Walnut Valley Water District

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Steven Bradford, Chair

2023 - 2024 Regular

Bill No: Hearing Date: 4/2/2024

SUBJECT:

DIGEST: This bill would impose a cap on the amount that may be recovered by utilities to provide service and upgrade capacity to serve new housing construction. This bill would also require utilities to provide financing over 10 years for any charges, prioritization of housing applications for service, and require specified transparency of utility fees/charges for new service and capacity upgrades.

ANALYSIS:

Existing law:

1. Establishes and vests the California Public Utilities Commission (CPUC), with jurisdiction over all public utilities. (Article XII of the California Constitution)
2. Defines “public utilities” to be private corporations and persons that own, operate, control or manage a line, plant, or system for the transmission, or furnishing of heat, light, water, power, or storage, directly or indirectly to or for the public, and common carriers, subject to the control of the Legislature. (Article XII, Section 3, of the California Constitution)
3. Includes every common carrier, toll bridge corporation, pipeline corporation, gas corporation, electrical corporation, telephone corporation, telegraph corporation, water corporation, sewer system corporation, and heat corporation, where the service is performed for, or the commodity is delivered to, the public or any portion thereof. (Public Utilities Code §216)
4. Defines an “electrical corporation” to include every corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state, except where electricity is generated on or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others. Exempts from the definition certain corporations generating electricity via cogeneration technologies, landfill gas technology, digester gas technology, and independent solar producers. (Public Utilities Code §218)
5. Defines a “gas corporation” to include every corporation or person owning, controlling, operating, or managing any gas plant for compensation within this state, except where gas is made or produced on and distributed by the maker or producer through private property alone solely for his own use or the use of his tenants and not for sale to others. Does not include within the definition of a gas corporation a corporation or person employing landfill gas technology for the production of gas for its own use or the use of its tenants or for sale to a gas corporation or state or local public agency, with some exceptions. (Public Utilities Code §222)
6. Defines “sewer system corporation” to include every corporation or person owning, controlling, operating, or managing any sewer system for compensation within the state. (Public Utilities Code §230.6)
7. Defines “municipal utility district” as a district formed under the Municipal Utility District Act. (Public Utilities Code §11503)
8. Defines “special district” as any agency of the state established for the local performance of governmental or proprietary functions within limited boundaries. Provides that “special district” includes a county service area, a maintenance district or zone, an air pollution control district, or a redevelopment agency. States that “special district” does not include a city, county, city and county, or school district. (Government Code §82048.5
9. Requires a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee. (Government Code §66000 et seq.)
10. Requires an electrical corporation to permit any new or existing customer who applies for an extension of service from that electrical corporation to install an electric extension in accordance with the regulations of the CPUC and any applicable specifications of that electrical corporation. (Public Utilities Code §783)
11. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for electric distribution line extensions necessary to furnish permanent electric service. (Electric Tariff Rule 15)
12. Establishes guidelines for the design, cost allocation, and responsibilities of a project applicant and a utility for the extension of electric service from an investor-owned utility (IOU) distribution line. (Electric Tariff Rule 16)
13. Establishes guidelines for design, cost allocation, and responsibilities of a project applicant for water service from an investor-owned water utility. (Water Service Tariff Rule 15)

This bill:

1. Prohibits, for new housing construction, a connection, capacity, or other point of connection charge from a public utility or a special district, including a municipal utility district, for electrical, gas, sewer, or water service from exceeding one percent of the reported building permit value of that housing unit.
2. Requires a public utility or special district to issue an above-described charge over a period of at least 10 years commencing on the date when the housing unit is first occupied, as specified.
3. Requires a public utility or special district to publicly report on its internet website the amount of any charge issued each year pursuant the above-described provision by the housing unit’s address.
4. Requires a public utility or special district to prioritize the processing, approval, scheduling, and completion of electrical, gas, sewer, and water service connections to new housing construction over the processing, approval, scheduling, and completion of service connections to all other structures.
5. To the extent that this bill imposes new requirements on certain special districts, the bill would impose a state-mandated local program.

Background

Study on development fees for new housing construction. The Terner Center for Housing Innovation at UC Berkeley authored a study, It All Adds Up: the Cost of Housing Development Fees in Seven California Cities (March 2008), on the various development fees imposed on new housing construction. The study attempts to dive into the development fees which cities levy to pay for services needed to build new housing or to offset the impacts of growth on the community. Per the study, the development fees make up a significant portion of the costs to build new housing in California cities. The study states that on average these fees continue to rise, while nationally fees have decreased. The authors found that development fees for multifamily housing range from a low of $12,000 per unit in Los Angeles, to $75,000 per unit in Fremont. Fees for single family housing range from $21,000 per home in Sacramento to $157,000 per home in Fremont. They found that fees can amount from six percent to 18 percent of the median home price depending on the location. Development fees include service fees and impact fees. These include city staff time to process permits, and fees for new roads, and other infrastructure.

Connecting to the electric and gas distribution grid. Rules governing the ability of new buildings and generation and storage resources to connect to the electric and gas distribution grid are generally determined by statute, CPUC rules, and tariffs, (i.e., document that specify rates, charges, rules, and conditions under which an electrical corporation will provide services to the public) for each of the electrical corporations. These service connections include:

New service connections refers to extending an electricity or expanding distribution infrastructure to service new or expanded customer load, known as “energization.”  Electric Tariff Rules 15 and 16 establish the guidelines for design, cost allocation, and responsibilities of a project applicant and a utility for electric distribution line extensions. The ability to connect to the larger electrical system can take months (if not, years, in some cases) as the process can entail the need for designs, assessments on costs allocations associated with improvements on the electric distribution system to allow for the connection, and other issues. In the case of new building developments, depending on the size of the development, the need for electric service extensions may be needed in phases over months, or years.

Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities (POUs), IOUs, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections.

• Publicly owned water and sewer utilities. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set their own water rates. As established by Proposition 218 (1996), the majority of these utilities are subject to state constitutional and statutory requirements that ensure water rates are restricted to cost-of-service. As a result, these entities have limitations, not imposed on the CPUC-regulated utilities that may hinder their ability to increase rates to fund programs or provide rate relief to customers.
• CPUC-regulated water and sewer utilities. The CPUC has regulatory oversight over water companies that provide water service to about 16 percent of California’s residents with annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately 1.175 million customers). However, the majority of the CPUC-regulated water utilities (92) have 2,000 or less customer service connections, and 87 of those have service connections of 500 or less. As with other IOUs, the CPUC regulates rates of the water utilities under its jurisdiction to ensure costs are just and reasonable. As with electric utilities, water utilities have similar service connection and capacity upgrade tariffs, in this case Water Service Tariff Rule 15.

Proposition 218 and Proposition 26. POUs are subject to differing constraints on their ability to collect rates for rate relief from one customer to another. Both Proposition 218 and Proposition 26 limit the ability of the local agencies to collect costs from a customer to fund activity by another customer, with specified limitations.

Article XIIID of the California Constitution, added by Proposition 218 in 1996, requires, among other things, that the revenues derived from property related fees and charges not exceed the funds required to provide the property related service… Proposition 218 also requires that property related fees and charges not exceed the proportional cost of service attributable to the property. In addition, the service for which a fee or charge is imposed must be immediately available to the property owner, rather than for future or potential use. The systems bear the burden of proving compliance with these cost-of-service requirements. These substantive restrictions on ratemaking by publicly owned water systems prevent subsidization of one customer’s water rates by another… [Source: SB 401 (Dodd, Chapter 662, Statutes of 2015) report on funding low-income water assistance programs.]

Mitigation Fee Act. The Mitigation Fee Act generally applies a broad “reasonable relationship” standard to fees and exactions, meaning that fee amounts must be arguably reasonable relative to the impacts of the project. This component of the Mitigation Fee Act makes up the basis for each city’s “nexus study,” which cities must commission to determine the type and amount of AB 1600 (Cortese, Chapter 927, Statutes of 1987) fees charged on new development. Other fees include public good fees, such as art or affordable housing. In the case of the Mitigation Fee Act, many of the opponents of the bill note the application of the Act that will limit their ability to comply with the requirements of this bill. Another Terner report, Residential Impact Fees in California (2019), states that the Act would not apply to utility fees. However, the special districts opposed to this bill argue otherwise. This is an issue that may be best addressed in the Committee on Local Government, if needed.

Comments

Costs to ratepayers. By capping fees on new service connections, new housing developments would reduce their costs. However, any delta from the capped fee is likely to result in a need for a utility to collect the funds from some other source. As noted above, the ability for utilities to engage in such a practice can be limiting by legal limitations and concerns about increasing costs to other customers. Additionally, the ten year financing of the utility fees will result in utilities risking the recovery of these costs, and of occupants of the developments (rather than the developer) to take on the costs of this financing. As such it is not clear that the financing will help reduce the costs for the housing construction as intended.

Need for amendments. Based on conversations with the author’s office about the pieces of the bill that may be workable at this time, the committee may wish to delete the provisions of the bill that would cap fees, impose the ten year financing period, and prioritize housing construction applications for new service connections. As such, the committee may wish to amend this bill to strike these provisions and make clarifying changes to the transparency requirements regarding costs for new service connections, as the need for increased transparency on these charges was identified in both the Terner Report and the author’s exploration with the California Research Bureau. The author and committee may wish to apply these transparency requirements to all utilities, including all publicly owned utilities who do not seem to be included in the bill at this time.

Dual Referral. Should this bill be approved by this committee, it will be re-referred to the Senate Committee on Local Government.

Prior/Related Legislation

AB 50 (Wood, Chapter 317, Statutes of 2023) required the CPUC, by July 1, 2025, to determine the criteria for customers to receive timely electricity service when requesting new service connections or upgraded service, known as “energization.” The bill proposed several policies to address delays in connecting customers to the electrical grid, including improved information sharing with local governments, reporting by electric IOUs, and other measures. The bill is pending on the Senate Floor.

SB 410 (Becker, Chapter 394, Statutes of 2023) required the CPUC to establish by September 30, 2024, reasonable average and maximum target energization time periods in order to connect new customers and upgrade the service of existing customers to the electrical grid. The bill also required reporting by electrical corporations and authorizes specified annual cost-recovery, subject to a cap.

AB 1026 (Wood, Chapter 446, Statutes of 2019) required an electrical or gas corporation to apply only those construction and design specifications, standards, terms, and conditions that are applicable to a new extension of service project for the 18 months following the date the application for a new extension of service project is approved. Authorized an electrical or gas corporation to adopt modifications, as specified, of the construction and design specifications, standards, terms, and conditions of a new extension of service project.

AB 1600 (Cortese, Chapter 927, Statutes of 1987) requires a local agency when increasing, or imposing a fee as a condition of approval of a development project, on or after January 1, 1989, to take specified actions, including identifying the purpose of the fee.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Housing Action Coalition, Sponsor
LeadingAge California
Resources for Community Development

OPPOSITION:

American Water Works Association California-Nevada Section

Association of California Water Agencies
California Association of Sanitation Agencies
California Municipal Utilities Association
California Special Districts Association
Desert Water Agency
El Dorado Irrigation District
Inland Empire Utilities Agency
Mission Springs Water District

Pacific Gas and Electric Company
San Diego Gas and Electric Company

Southern California Edison

ARGUMENTS IN SUPPORT: In support of this bill, Housing Action Coalition states:

Currently, utility hook-up fees levied on new housing can add tens of thousands of dollars to the cost of each housing unit. This significant increase comes alongside the other varying costs developers are responsible for, making penciling a much needed project all the more difficult. Given the current housing crisis in California, we need to alleviate barriers to affordable housing development where we can, and SB 1210 is a great step in that direction. With SB 1210, each utility hook-up fee would be capped at 1% of the cost of the building permit value, as well as would require utilities to prioritize hook-ups for housing utilities over other structures

ARGUMENTS IN OPPOSITION: In opposition to this bill, public and private utilities express concerns about the legal and practical limitations on utilities’ ability to waive or discount fees. In general, all utilities express concerns that the capped fees and ten year financing period would put utilities and their customers at risk of having to absorb these costs (and result in legal risks). Additionally, utilities in opposition express concerns that prioritizing housing applications for new service connections may be unworkable, as these applications may represent the majority of new service connections for some utilities. Additionally, such a prioritization could result in other customers never receiving the requested service as new housing applications could continue to pile up.

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