AB 1975: Electrical corporations: distribution grid utilization metric.
- Session Year: 2025-2026
- House: Assembly
- Latest Version Date: 2026-04-27
Current Status:
In Progress
(2026-05-14: Joint Rule 62(a), file notice suspended. (Page 5030.))
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.
This bill would require the commission, on or before December 31, 2027, to establish develop a methodology for calculating a distribution grid utilization metric that calculates electrical load as a percentage of rated capacity, metric, as specified. The bill would require each large electrical corporation, each calendar quarter, in a manner, frequency, and geographic scope determined by the commission, to submit a publicly available report to the commission with the results of the large electrical corporations distribution grid utilization metric calculations, as specified. The bill would require the commission to annually establish and periodically update, as appropriate, a minimum value for the grid utilization metric within distribution grid utilization standard for each large electrical corporations distribution grid, corporation and would require that to ensure the distribution grid utilization metric minimum value increase annually, as provided. standard encourages, and does not inhibit, electrification. The bill would require authorize the commission to establish direct each large electrical corporation to implement programs, rate designs, or other incentives, or to establish financial performance-based incentives or disincentives correlated with achieving the distribution grid utilization metric minimum value, as specified, and would require each large electrical corporation, on or before July 31, 2028, to propose grid utilization programs to achieve the grid utilization metric minimum value, standard, as specified.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the above-described provisions would be part of the act and a violation of a commission action implementing the bills requirements would be a crime, this 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. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.
This bill would require the commission, on or before December 31, 2027, to establish a grid utilization metric that calculates electrical load as a percentage of rated capacity, as specified. The bill would require each large electrical corporation, each calendar quarter, to submit a publicly available report to the commission with the results of the large electrical corporations grid utilization metric calculations, as specified. The bill would require the commission to annually establish a minimum value for the grid utilization metric within each large electrical corporations distribution grid, and would require that the grid utilization metric minimum value increase annually, as provided. The bill would require the commission to establish financial performance-based incentives or disincentives correlated with achieving the grid utilization metric minimum value, as specified, and would require each large electrical corporation, on or before July 31, 2028, to propose grid utilization programs to achieve the grid utilization metric minimum value, as specified.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the above-described provisions would be part of the act and a violation of a commission action implementing the bills requirements would be a crime, this 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 Public Utilities Act vests the Public Utilities Commission with regulatory authority over public utilities, including electrical and gas corporations. Existing law authorizes the commission, after a hearing, to make and serve an order directing additions, extensions, repairs, improvements, or other changes to be made to an existing plant, equipment, apparatus, facilities, or other physical property of a public utility, if it makes certain findings. Existing law requires that the commission, as a basis for making any such order relating to the location of structures, give consideration to, and include in its order, findings on community values, recreation and park areas, historical and aesthetic values, and, except as specified, influence on the environment.This bill would require that the commission, as a basis for making an order relating to the location of structures, also give consideration to, and include in its order, findings on anticipated maintenance costs.Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.Because a violation of a commission action implementing this bills requirements would be a crime, 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 Public Utilities Act vests the Public Utilities Commission with regulatory authority over public utilities, including electrical and gas corporations. Existing law authorizes the commission, after a hearing, to make and serve an order directing additions, extensions, repairs, improvements, or other changes to be made to an existing plant, equipment, apparatus, facilities, or other physical property of a public utility, if it makes certain findings. Existing law requires that the commission, as a basis for making any such order relating to the location of structures, give consideration to, and include in its order, findings on community values, recreation and park areas, historical and aesthetic values, and, except as specified, influence on the environment.
This bill would require that the commission, as a basis for making an order relating to the location of structures, also give consideration to, and include in its order, findings on anticipated maintenance costs.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bills requirements would be a crime, 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 Legislature finds and declares all of the following:
(a)Utility spending on electrical grid distribution system expansion can directly impacts impact energy affordability.
(b)Electricity consumption is projected to increase dramatically in the next decade and beyond.
(c)In most hours of the year, electrical distribution circuits transmit much less electricity than their rated capacity.
(d)If increases in electricity consumption occur at times when portions of the electrical distribution circuits system are not operating near their rated capacity, investments in distribution system expansion can be avoided despite the increased consumption. may be avoided.
(e)Increasing electrical grid distribution system utilization reduces can reduce the average cost of the distribution rate, reducing services, which may help lower electricity rates.
(f)It is in the interest of the state to promote energy affordability by minimizing distribution system costs while consistent with maintaining electrical system safety and reliability.
SEC. 2.Section 762.6 is added to the Public Utilities Code, to read:762.6.(a)On or before December 31, 2027, the commission shall, in a new or existing public proceeding, establish a grid utilization metric that calculates electrical load as a percentage of rated capacity. develop, to the extent feasible, a methodology for calculating a distribution grid utilization metric. The distribution grid utilization metric shall do both of the following: may be calculated as the average electricity delivered over a distribution segment over a period of time divided by that distribution segments maximum electrical capacity, expressed as a percentage. The commission shall determine both the geographic scope of each distribution segment and the time period used in this calculation.
(1)Be measured separately based on peak load and average load.(2)Be designed so that it can be calculated on individual distribution circuits and averaged across multiple distribution circuits.(b)Each large electrical corporation shall, each calendar quarter, in a manner and frequency, and the geographic scope, determined by the commission, submit a publicly available report to the commission with the results of the large electrical corporations distribution grid utilization metric calculations on individual distribution circuits, individual substations, and the entire service territory of the large electrical corporation. calculations. The report shall include, but not be limited to, all of the following:
(c)The commission shall annually establish a minimum value for the grid utilization metric within each large electrical corporations distribution grid. The commission shall develop a process to ensure the imposition of the grid utilization metric minimum value encourages, and does not inhibit, electrification. The grid utilization metric minimum value shall increase annually at the commissions discretion. The increase may be measured by distribution planning area or other segmentation, at the commissions discretion. (d)The commission shall establish financial performance-based incentives or disincentives correlated with achieving the grid utilization metric minimum value established in subdivision (c), if the incentive or disincentive results in a net benefit for retail customers. The commission shall leverage the performance-based incentive or disincentive to encourage large electrical corporations to propose the most cost-effective solutions for providing safe and reliable electrical service.(e)On or before July 31, 2028, each large electrical corporation shall propose grid utilization programs to achieve the grid utilization metric minimum value established in subdivision (c). In evaluating grid utilization programs, the commission shall consider all of the following and shall only approve a grid utilization program that is feasible and cost effective:(1)Any costs or benefits to utility customers, including rate impacts.(2)Reliability of electrical service and the electrical grid system.(3)Maximizing the use of existing electrical distribution grid infrastructure.(4)Maximizing the use of demand flexibility technologies to increase electrical load capacity and electrical grid services.(f)The commission shall establish a method of quantifying ratepayer savings through increased grid utilization.(1)The distribution grid utilization metric for each distribution segment, as determined by the commission pursuant to subdivision (a).
(2)Data on the performance of programs that are intended to increase distribution system utilization.
(3)Data sufficient to identify opportunities to improve distribution grid utilization and reduce distribution system costs.
(c)The commission shall establish and periodically update, as appropriate, a distribution grid utilization standard for each large electrical corporation. In establishing each standard, the commission shall ensure that the distribution grid utilization standard encourages, and does not inhibit, electrification.
(d)(1)In support of a distribution grid utilization standard established pursuant to subdivision (c), the commission may direct each large electrical corporation to implement programs, rate designs, or other incentives, or may establish financial performance-based incentives or disincentives, consistent with paragraph (2), correlated with achieving the distribution grid utilization standard, if the programs, rate designs, incentives, or disincentives are cost-effective and result in a net benefit for retail customers.
(2)The commission may establish a performance-based incentive or disincentive only after a methodology for calculating a distribution grid utilization metric has been developed pursuant to subdivision (a), large electrical corporation performance has been measured over a reasonable period of time, and the commission is able to evaluate the extent to which large electrical corporation actions and programs are found to have an impact on utilization, in order to then leverage the performance-based incentive or disincentive to encourage large electrical corporations to deploy the most cost-effective solutions for providing safe and reliable electrical service.
(g)(e)For purposes of this section, large electrical corporation has the same meaning as defined in Section 2827.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Utility spending on electrical grid expansion directly impacts energy affordability.
(b)Electricity consumption is projected to increase dramatically in the next decade and beyond.
(c)In most hours of the year, electrical distribution circuits transmit much less electricity than their rated capacity.
(d)If increases in electricity consumption occur at times when electrical distribution circuits are not operating near their rated capacity, distribution system expansion can be avoided despite the increased consumption.
(e)Increasing electrical grid utilization reduces the average cost of the distribution rate, reducing electricity rates.
(f)It is in the interest of the state to promote energy affordability by minimizing distribution system costs while maintaining electrical system safety and reliability.
SEC. 2.Section 762.6 is added to the Public Utilities Code, to read:762.6.(a)On or before December 31, 2027, the commission shall, in a new or existing public proceeding, establish a grid utilization metric that calculates electrical load as a percentage of rated capacity. The grid utilization metric shall do both of the following:
(1)Be measured separately based on peak load and average load.
(2)Be designed so that it can be calculated on individual distribution circuits and averaged across multiple distribution circuits.
(b)Each large electrical corporation shall, each calendar quarter, submit a publicly available report to the commission with the results of the large electrical corporations grid utilization metric calculations on individual distribution circuits, individual substations, and the entire service territory of the large electrical corporation.
(c)The commission shall annually establish a minimum value for the grid utilization metric within each large electrical corporations distribution grid. The commission shall develop a process to ensure the imposition of the grid utilization metric minimum value encourages, and does not inhibit, electrification. The grid utilization metric minimum value shall increase annually at the commissions discretion. The increase may be measured by distribution planning area or other segmentation, at the commissions discretion.
(d)The commission shall establish financial performance-based incentives or disincentives correlated with achieving the grid utilization metric minimum value established in subdivision (c), if the incentive or disincentive results in a net benefit for retail customers. The commission shall leverage the performance-based incentive or disincentive to encourage large electrical corporations to propose the most cost-effective solutions for providing safe and reliable electrical service.
(e)On or before July 31, 2028, each large electrical corporation shall propose grid utilization programs to achieve the grid utilization metric minimum value established in subdivision (c). In evaluating grid utilization programs, the commission shall consider all of the following and shall only approve a grid utilization program that is feasible and cost effective:
(1)Any costs or benefits to utility customers, including rate impacts.
(2)Reliability of electrical service and the electrical grid system.
(3)Maximizing the use of existing electrical distribution grid infrastructure.
(4)Maximizing the use of demand flexibility technologies to increase electrical load capacity and electrical grid services.
(f)The commission shall establish a method of quantifying ratepayer savings through increased grid utilization.
(g)For purposes of this section, large electrical corporation has the same meaning as defined in Section 2827.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SECTION 1.Section 762.5 of the Public Utilities Code is amended to read:762.5.The commission, as a basis for making any order pursuant to Section 762 relating to the location of structures, shall give consideration to, and include in its order findings on, the following factors:(a)Community values.(b)Recreational and park areas.(c)Historical and aesthetic values.(d)Influence on the environment, except that in the case of any structure located in another state that will be subject to environmental impact review pursuant to the National Environmental Policy Act of 1969 (Chapter 55 (commencing with Section 4321) of Title 42 of the United States Code) or similar state laws in the other state, the commission shall not consider influence on the environment unless any emissions or discharges therefrom would have a significant influence on the environment of this state.(e)Anticipated maintenance costs.SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.The commission, as a basis for making any order pursuant to the provisions of Section 762 relating to the location of structures, shall give consideration to, and include in its order findings upon, on, the following factors:
(a)Community values.
(b)Recreational and park areas.
(c)Historical and aesthetic values.
(d)Influence on the environment, except that in the case of any structure located in another state which that will be subject to environmental impact review pursuant to the National Environmental Policy Act of 1969 (Chapter 55 (commencing with Section 4321) of Title 42 of the United States Code) or similar state laws in the other state, the commission shall not consider influence on the environment unless any emissions or discharges therefrom would have a significant influence on the environment of this state.
(e)Anticipated maintenance costs.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
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Date
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Status
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|---|---|
| May 14, 2026 | In committee: Held under submission. |
| May 14, 2026 | Joint Rule 62(a), file notice suspended. |
| May 14, 2026 | Joint Rule 62(a), file notice suspended. (Page 5030.) |
| May 13, 2026 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 28, 2026 | Re-referred to Com. on APPR. |
| Apr 27, 2026 | Read second time and amended. |
| Apr 23, 2026 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 16. Noes 0.) (April 22). |
| Mar 4, 2026 | Re-referred to Com. on U. & E. |
| Mar 3, 2026 | From committee chair, with author's amendments: Amend, and re-refer to Com. on U. & E. Read second time and amended. |
| Mar 2, 2026 | Referred to Com. on U. & E. |
| Feb 14, 2026 | From printer. May be heard in committee March 16. |
| Feb 13, 2026 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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| Apr 22, 2026 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Utilities and Energy |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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|---|---|---|
| 350 Bay Area | ** Support | |
| 350 Humboldt: Grass Roots Climate Action | ** Support | |
| Alliance Of Californians For Community Empowerment | ** Support | |
| Altadena Energy and Solar | ** Support | |
| Brighten Solar | ** Support | |
| California Community Choice Association | ** Support | |
| California Solar and Storage Association | ** Support | |
| CALPIRG | ** Support | |
| Center for Community Energy | ** Support | |
| Center For Environmental Health | ** Support | |
| City of Pico Rivera | ** Support | |
| cleanearth4kids.org | ** Support | |
| Cleantech Energy Solutions INC. | ** Support | |
| Climate Action California | ** Support | |
| Community Environmental Council | ** Support | |
| Derapi | ** Support | |
| Emerald Eco | ** Support | |
| Environment California | ** Support | |
| Environmental Protection Information Center | ** Support | |
| Excite Energy | ** Support | |
| Living Green Solar | ** Support | |
| Open Doors Management | ** Support | |
| Pacific Gas and Electric | ** Against | |
| Peak Demand | ** Support | |
| Physicians for Social Responsibility | ** Support | |
| Qcells | ** Support | |
| Rise Energy | ** Support | |
| San Diego Gas & Electric | ** Against | |
| Sierra Club California | ** Support | |
| Six Rivers Solar | ** Support | |
| Solar Insure | ** Support | |
| Southern California Edison | ** Against | |
| Sunrun | ** Support | |
| The Climate Center | ** Support | |
| The Utility Reform Network | ** Support | |
| Voltus | ** Support | |
| Vote Sola | ** Support |
Date of Hearing: May 13, 2026
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 1975
Author:(Schultz) – As Amended Ver:April 27, 2026
Policy Committee: | Utilities and Energy | Vote: | 16 - 0 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill, among other things, directs the California Public Utilities Commission (CPUC) to establish and periodically update a distribution grid utilization standard for each large electrical corporation (also known as a large electrical investor-owned utility (IOU)) and requires the CPUC to develop, to the extent feasible, a methodology for calculating an electricity distribution grid metric.
More specifically, this bill, among other things:
- Directs the CPUC to establish and periodically update a distribution grid utilization standard for each IOU and, in doing so, ensure that the distribution grid utilization standard encourages, and does not inhibit, electrification.
- Requires the CPUC, by December 31, 2027, to develop, to the extent feasible, a methodology for calculating a distribution grid utilization metric and authorizes the CPUC to calculate the metric as the average electricity delivered over a distribution segment over a period of time divided by that distribution segment’s maximum electrical capacity, expressed as a percentage.
- Requires each IOU, in a manner, frequency and geographic scope determined by the CPUC, submit a publicly available report to the CPUC with the results of the IOU’s distribution grid utilization metric calculations, as specified.
- Authorizes the CPUC to direct each IOU to implement programs, rate designs, or other incentives, or to establish financial performance-based incentives or disincentives correlated with achieving the distribution grid utilization standard, if the programs, rate designs, incentives or disincentives are cost-effective and result in a net benefit for retail customers, but provides the CPUC may do so only after the CPUC has developed a methodology for calculating a distribution grid utilization metric, IOU performance has been measured over a reasonable period of time and the CPUC is able to evaluate the extent to which IOU actions and programs are found to have an impact on utilization, in order to then leverage the performance-based incentive or disincentive to encourage IOUs to deploy the most cost-effective solutions for providing safe and reliable electrical service.
FISCAL EFFECT:
This bill creates significant new analytical workload, both one time and ongoing, to the CPUC to establish and periodically update a distribution grid utilization standard and, if feasible, to develop a methodology for calculating a distribution grid utilization metric, and ongoing administrative workload to accept, organize and make public the IOUs’ distribution grid utilization metric calculations. Cost will likely be hundreds of thousands of dollars annually (Public Utilities Commission Utilities Reimbursement Account (PUCURA).
The CPUC estimates this workload requiring $513,000 (PUCURA) annually to fund two new positions—an administrative law judge ($257,000 annually) to preside over the proceedings to establish (1) the distribution grid utilization standard and (2) rate designs, programs, or financial performance-based incentives or disincentives that correlate with achieving the distribution grid utilization standards and a utility engineer specialist ($256,000 annually) to support those proceedings. The CPUC contends the need for both positions is ongoing because, as required by the bill, the CPUC will need to periodically update a distribution grid utilization standard and collect and publicize IOU reports, as well provide ongoing direction to the IOUs, as authorized by this bill.
COMMENTS:
California has ambitious clean energy goals. Achieving them will take a tremendous, and costly, expansion of the electricity generation, transmission, distribution and storage resources. That expansion is well underway and partly explains recent increases in electricity rates paid by electric utility customers.
One strategy to reduce costs associated with transmission system expansion is to make better use of the existing electricity grid. This can be achieved through, among other things, installation of resources and measures, such as battery storage or scheduled charging, throughout the electricity distribution system that reduce electricity demand at its peak and shift to times of lower demand.
This bill is premised on the idea that a metric can measure how effectively an electrical IOU is utilizing such resources and measures to make efficient use of its electrical grid, and that, the CPUC can encourage or require IOUs to take actions to meet the metric. Or, as stated by bill supporter the California Solar and Storage Association:
This bill would first establish grid utilization metrics at the CPUC for each large IOU, and then it would require IOUs to create load flexibility programs to help them meet these grid utilization metrics. This will serve as an important tool in helping curb the rise of electric rates and put the infrastructure already built to better use.
The IOUs object. For example, San Deigo Gas and Electric describes the bill as conflicting with “sound planning practices and risks undermining electric reliability, affordability, and the state’s climate and energy goals.” Pacific Gas and Electric and Southern California Edison together write:
AB 1975 could be constructive if amended to focus on analytical insights. At a minimum, the bill should be amended to direct the California Public Utilities Commission (CPUC) to explore potential use cases for grid utilization metrics, refrain from prescribing how the metric is defined and calculated, remove the use of performance-based incentives or penalties, reduce the granularity of reporting requirements, and ensure alignment with existing CPUC proceedings. These changes would allow the state to gain valuable insights without compromising reliability, affordability, or California’s clean energy transition.
Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081
Date of Hearing: April 22, 2026
ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY
Cottie Petrie-Norris, Chair
ABPCA Bill Id:AB 1975 (
Author:Schultz) – As Amended Ver:March 3, 2026
SUBJECT: Electrical corporations: grid utilization metric
SUMMARY: Requires the California Public Utilities Commission (CPUC), in a new or existing public proceeding to establish a grid utilization metric that calculates electrical load as a percentage of rated capacity. Specifically, this bill:
- Requires the CPUC, on or before December 31, 2027, in a new or existing public proceeding, to establish a grid utilization metric that calculates electrical load as a percentage of rated capacity, to be measured separately based on peak load and average load, and to be calculated on individual distribution circuits and averaged across multiple distribution circuits.
- Requires each large electrical corporation, each calendar quarter, to submit a publicly available report to the CPUC with the results of the large electrical corporation's grid utilization metric calculations on individual distribution circuits, individual substations, and the entire service territory of the large electrical corporation.
- Requires the CPUC to annually establish a minimum value for the grid utilization metric within each large electrical corporation's distribution grid.
- Requires the CPUC to develop a process to ensure the imposition of the minimum value encourages, and does not inhibit, electrification.
- Requires that the minimum value increase annually at the CPUC’s discretion and may be measured by distribution planning area or other segmentation.
- Requires the CPUC to establish financial performance-based incentives or disincentives correlated with achieving the grid utilization metric minimum value, if the incentive or disincentive results in a net benefit for retail customers.
- Requires the CPUC to leverage those incentives or disincentives to encourage large electrical corporations to propose the most cost-effective solutions for providing safe and reliable electrical service.
- Requires each large electrical corporation, on or before July 31, 2028, to propose grid utilization programs to achieve the grid utilization metric minimum value.
- Requires the CPUC, in evaluating those programs, to consider rate impacts, reliability of electrical service, maximizing the use of existing distribution grid infrastructure, and maximizing the use of demand flexibility technologies, and to only approve programs that are feasible and cost effective.
EXISTING LAW:
- Provides that the California Constitution authorize the CPUC, among other things, to establish its own procedures, subject to statute and due process, and to fix rates and establish rules for all public utilities, subject to control by the Legislature. (California Constitution, Article XII, §§2,3, 5, and 6)
- Establishes it is the policy of the state that each electrical corporation continue to operate its electric distribution grid in its service territory and to do so in a safe, reliable, efficient, and cost-effective manner. (Public Utilities Code §399.2)
- Authorizes the CPUC to fix the rates and charges for every public utility, including electrical and gas corporations, and requires that those rates and charges be just and reasonable. (Public Utilities Code §451)
- Requires the CPUC, in establishing residential electric and gas rates, to ensure that the rates are sufficient to enable the electric or gas corporation to recover a just and reasonable amount of revenue. (Public Utilities Code §739(d)(2))
- Requires the CPUC, on or before February 1, 2023, and biennially thereafter, to report to the Legislature and the Governor on the progress toward modernizing the state's distribution and transmission grid and the impacts of distributed energy resources. (Public Utilities Code §913.6(a)
- Establishes that it is the policy of the state that eligible renewable energy resources and zero-carbon resources supply 100% of all retail sales of electricity to California end-use customers and 100% of electricity procured to serve all state agencies by December 31, 2045. (Public Utilities Code § 454.53)
FISCAL EFFECT: Unknown. This bill is keyed fiscal and will be referred to the Committee on Appropriations for its review.
BACKGROUND:
The Road to Grid Modernization. In 2007, Congress passed the Energy Independence and Security Act of 2007 in response to growing concerns over U.S. dependence on foreign oil, rising energy costs, and the need to reduce greenhouse gas emissions.[1] The Act established a national smart grid framework to modernize the electric grid using digital and communications technologies, and directed states to work towards smart grid deployment. In 2009, the American Recovery and Reinvestment Act made billions of dollars in federal grants available for smart grid deployments.[2] In response, California passed SB 17 (Padilla, Chapter 327, Statutes of 2009), which established the state’s smart grid policy to modernize California’s electrical transmission and distribution systems. It required each electrical corporation to submit a smart grid deployment plan to the CPUC for review and approval. Building on this foundation, AB 327 (Perea, Chapter 611, Statutes of 2013), among its many provisions, required each electrical corporation to submit to the CPUC a distribution resources plan to identify optimal locations for distributed resources and evaluate locational benefits, costs, and avoided investments in distribution infrastructure.
Distribution Investment Deferral Framework. In 2018, the CPUC established the Distribution Investment Deferral Framework (DIDF). The goal of DIDF was for IOUs to identify low-cost opportunities for Distributed Energy Resources (DERs) to defer traditional capital investments, and for the IOUs to pursue an open market solicitation for DER solutions. The DIDF process has focused on non-wired alternatives to distribution investments at specific grid locations. The CPUC adopted various metrics for identifying and selecting these opportunities, including metrics for cost-effectiveness, forecast certainty, and market assessment. The DIDF process also provided information on the actual cost of distribution system upgrades and the process of distribution planning to the CPUC and the public.
Although it has been revised several times, DIDF has not resulted in significant non-wire investments. The CPUC has reported that non-wires alternatives can fail for many reasons including changing project needs and locations, barriers to DER deployment such as interconnection delays, uncertainty in the contracting process, and developer failure. Therefore, DIDF has been considered ineffective at increasing DER implementation but has provided transparency into IOU distribution planning.[3]
California's Evolving Grid. Despite these efforts, integrating distributed energy resources into the electric grid remains a complex challenge. The electric grid is a vast interconnected system composed of power plants that generate electricity, high-voltage transmission lines that move electricity over long distances, and local distribution networks that deliver electricity to homes, schools, and businesses.[4] Historically, California’s distribution system was designed to move electricity in one direction from centralized power plants through the transmission system to distribution substations, where voltage is reduced and power is delivered through local circuits and transformers to customers. However, the state’s clean energy and climate policies, along with electrification goals in the transportation and building sectors, have accelerated the deployment of distributed energy resources such as rooftop solar and battery storage. As these resources expand, they can change the timing and location of electricity flows across distribution circuits, resulting in two-way power flows and new operational challenges for utilities.[5]
Upgrading the Grid Will Be Costly. The cost of upgrading California's distribution grid to keep up with growing electricity demand could be significant. A CPUC study estimated that approximately $50 billion may be required for distribution grid investments by 2035 under scenarios with high adoption of electric vehicle charging and other new loads if they are not managed to reduce peak demand.[6] The California Public Advocates Office conducted its own analysis and found demand management to be critical at reducing these investment costs. Their analysis reached a significantly lower estimate when EV charging load, in particular, was moved to better times of day, finding preliminary costs in the range of $15 billion to $20 billion through 2035, roughly one-third of the CPUC’s initial estimate.[7]
COMMENTS:
- Author’s Statement. According to the author, “Grid expansion due to growing electricity demand is a primary cause of increasing electric rates. Given the significant increase in rates over the past decade and the burden these pose on California residents and businesses, measures are needed to decrease grid spending and put downward pressure on rates. This bill addresses this issue by requiring that utilities meet grid utilization metrics and implement programs to increase load flexibility to meet these requirements. The net result will be more use out of the existing grid and ratepayer savings.”
- Metric Design. This bill requires the CPUC, on or before December 31, 2027, to establish a grid utilization metric for each large electrical corporation that calculates electrical load as a percentage of rated capacity. The bill also requires the metric to be measured separately for peak and average load and to be calculated at the individual circuit level and aggregated across circuits. Additionally, each large electrical corporation is required to submit quarterly reports to the CPUC with the results of its grid utilization metric calculations. This approach presumes a single metric can be applied uniformly across all large electrical corporations.
However, the one-size-fits-all model of this bill may not account for the significant variation across California's distribution systems in geography, load profiles, and system configuration. PG&E serves more than 70,000 square miles, across Northern and Central California, and encompassing agricultural regions, dense urban corridors, and remote rural communities.[8] SCE on the other hand covers roughly 50,000 square miles across 15 counties, spanning from the Los Angeles basin to inland desert and mountain communities[9] Differences of this scale raise questions about whether a uniform metric can provide consistent, comparable results across service territories.
AB 1975 requires the CPUC to define the metric by a specific date but does not address how the CPUC should account for differences across service territories. This may result in a metric that does not reflect the conditions of each utility’s system, limiting its usefulness for distribution planning and review of utility investments, including planning for load growth. To address this concern, the committee recommends directing the CPUC to develop, to the extent feasible, a methodology for calculating a distribution grid utilization metric, rather than prescribing a specific metric in statute.
Additionally, to provide a more consistent basis for comparison across systems with different load profiles, the committee also recommends revising how the metric may be calculated, reframing the bill’s calculation as a consideration not a mandated outcome. Instead of requiring separate peak and average load measurements, the metric is suggested to be calculated as an average over a defined period, expressed as a percentage.
While recommending a broader, average calculation, the committee also recognizes the merit – as expressed by the author – in considering the different capacity constraints faced across electric service territories depending on location, customer class, and weather-driven demand patterns. Applying a uniform calculation across an entire service territory could obscure areas of the grid that are operating near or above capacity while others are underutilized. In addition, a single calculation period set in statute may also fail to reflect how demand shifts across service territories. Peak summer demand in SCE's inland desert communities, for instance, may look very different from winter demand in PG&E's northern territory. As such, the committee therefore recommends that the CPUC determine both the geographic scope of each segment of the distribution system and the time period used in this calculation.
- Reporting Requirements. This measure requires each large electrical corporation to submit quarterly reports to the CPUC with the results of its grid utilization metric calculations on individual distribution circuits, individual substations, and across the entire service territory. Requiring quarterly reporting at multiple levels, including individual circuits and across the entire service territory, may be infeasible or expensive to implement. Therefore, the committee recommends deleting prescriptive provisions and instead requiring that the CPUC determine the reporting frequency and geographic scope through a public proceeding.
As written, this bill requires each large electrical corporation to submit quarterly reports to CPUC with the results of its grid utilization metric. lt does not specify what information must be included in those reports, which may limit their usefulness for evaluating grid utilization. The committee therefore recommends expanding the reporting requirements to include additional information, such as data sufficient to identify opportunities to improve grid utilization and reduce distribution system costs and data on the performance of programs intended to increase distribution system utilization.
- Utilization Standard. This bill requires CPUC to annually establish a minimum value for the grid utilization metric within each large electrical corporation’s distribution grid, and to increase that value each year at the CPUC’s discretion. Changes in the metric, however, may be driven by factors outside the utility's control, such as when customers charge electric vehicles, the pace of building electrification, or the interconnection of distributed energy resources. An annually increasing minimum does not distinguish between these factors and changes resulting from utility actions and could hold utilities accountable for outcomes they did not drive. Therefore, the committee recommends replacing the annually increasing minimum metric requirement with a utilization standard that the CPUC may update over time. This gives the CPUC discretion to set and revise the standard as appropriate.
- Implementation and Incentives. This bill requires the CPUC to establish financial performance-based incentives or disincentives correlated with achieving the grid utilization metric, and to leverage those incentives to encourage large electrical corporations to propose the most cost-effective solutions. The bill also requires each large electrical corporation to propose grid utilization programs by July 31, 2028, to achieve the metric minimum value. Establishing financial incentives and requiring program proposals before the CPUC has had sufficient time to observe utility performance and evaluate what is driving changes in utilization may be premature. Given these reasons, the committee recommends making these provisions discretionary, allowing the CPUC to consider programs, rate designs, or incentives rather than requiring them. Further, the committee recommends that incentives or disincentives can only be considered after the metric has been established, utility performance has been observed over a reasonable period, and the CPUC has evaluated the extent to which utility actions are driving changes in utilization.
- Clarifying Amendments. This legislation contains several other provisions that may benefit from additional clarity. As such, the committee recommends other technical amendments for clarification purposes.
- Prior Legislation.
AB 44 (Schultz, 2025) requires the CEC to create and share methods for adjusting LSEs’ energy demand forecasts. These methods will be based on the use of technologies and programs that reliably reduce or shift electricity use, as agreed upon by the CEC, the CPUC, and the CAISO. Status: Vetoed by Governor.
AB 1117 (Schulz, 2025) requires electrical corporations to offer dynamic pricing tariffs to large customers that reflect hourly or sub hourly variations in electricity costs and grid conditions, with the goal of encouraging customers to shift electricity use to periods when demand and system costs are lower. Status: Held in Assembly Committee on Appropriations.
SB 500 (Stern, 2025) authorizes the CPUC to evaluate performance metrics and financial performance-based incentives to identify mechanisms that may serve to better align electrical corporation operations, expenditures, and investments with delivering safe and reliable electrical service and achieving public policy goals, while minimizing costs for ratepayers. Status: Chapter 765, Statutes of 2025.
SB 541 (Becker, 2025) requires state agencies to establish load-shifting targets and track progress toward those targets, including the use of technologies and programs that shift electricity demand to off-peak periods. Status: Vetoed by the Governor.
SB 947 (Dodd, 2024) would have required the CPUC to evaluate financial performance-based incentives and performance metric tracking to identify mechanisms to better align electrical corporation operations, expenditures, and investments with delivering safe and reliable electrical service and achieving public policy goals, including safety and reliability. Status: Vetoed by the Governor.
AB 242 (Holden) repealed the annual smart grid reporting requirement and replaced it with a biennial reporting requirement, requiring the CPUC, in consultation with the Independent System Operator and the Energy Commission, to report to the Legislature and the Governor on or before February 1, 2023, and biennially thereafter, on the progress toward modernizing the state's distribution and transmission grid and the impacts of distributed energy resources. Status: Chapter 228, Statutes of 2021.
AB 327 (Perea), among its many provisions relating to electrical rates and net energy metering, required each electrical corporation to submit to the CPUC a distribution resources plan to identify optimal locations for the deployment of distributed resources, including an evaluation of locational benefits and costs on the distribution system, reductions in local generation capacity needs, and avoided investments in distribution infrastructure. Status: Chapter 611, Statutes of 2013.
SB 1438 (Padilla) would have established California's smart grid policy, declared it the policy of the state to modernize the state's electrical transmission and distribution system to maintain reliable and secure electrical service, and required the CPUC, by July 1, 2010, in consultation with the Energy Commission and the Independent System Operator, to determine the requirements for a smart grid deployment plan consistent with state policy and federal law, including the Energy Independence and Security Act of 2007, and required that the smart grid improve overall efficiency, reliability, and cost-effectiveness of electrical system operations, planning, and maintenance. Status: Held in the Assembly Appropriations Committee.
SB 17 (Padilla), established California's smart grid policy, declared it the policy of the state to modernize the state's electrical transmission and distribution system to maintain safe, reliable, efficient, and secure electrical service, required the CPUC to determine smart grid deployment plan requirements, and required each electrical corporation to submit a smart grid deployment plan to the CPUC for approval. Status: Chapter 327, Statutes of 2009.
REGISTERED SUPPORT / OPPOSITION:
Support
350 Bay Area
350 Humboldt: Grass Roots Climate Action
Alliance of Californians for Community Empowerment
Altadena Energy and Solar
Brighten Solar
California Solar & Storage Association
Calpirg
Center for Community Energy
Center for Environmental Health
City of Pico Rivera
Cleanearth4kids.org
Cleantech Energy Solutions INC.
Climate Action California
Community Environmental Council
Derapi
Emerald Eco
Environment California
Environmental Protection Information Center
Excite Energy
Living Green Solar
Open Doors Management
Peak Demand
Physicians for Social Responsibility
Qcells
Rise Energy
Sierra Club California
Six Rivers Solar
Solar Insure
Sunrun
The Climate Center
Voltus
Vote Sola
Support If Amended
California Community Choice Association
The Utility Reform Network (TURN)
Opposition
San Diego Gas and Electric Company
Oppose Unless Amended
Edison International and Affiliates, Including Southern California Edison
Pacific Gas and Electric Company
Analysis Prepared by: Lina V. Malova / U. & E. / (916) 319-2083
Energy Independence and Security Act of 2007, Pub. L. No. 110-140, 121 Stat. 1492 (2007). ↑
American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5 (Feb. 17, 2009). The Act appropriated approximately $4.5 billion to the U.S. Department of Energy for smart grid investments, including the Smart Grid Investment Grant (SGIG) and Smart Grid Demonstration Program. https://www.energy.gov/oe/recovery-act-smart-grid-investment-grant-sgig-program ↑
CPUC, “Staff Proposal for the High DER Proceeding,” April 5, 2024 ↑
U.S. Energy Information Administration, “Electricity Delivery to Consumers”; https://www.eia.gov/energyexplained/electricity/delivery-to-consumers.php ↑
National Renewable Energy Laboratory, “An Overview of Distributed Energy Resource (DER) Interconnection: Current Practices and Emerging Solutions” April 2019; https://www.nrel.gov/docs/fy19osti/72102.pdf ↑
Kevala, “Electrification Impacts Study Part 1: Bottom-Up Load Forecasting and System-Level Electrification Impacts Cost Estimates,” prepared for the California Public Utilities Commission, May 2023; https://www.kevala.com/resources/electrification-impacts-study-part-1 ↑
California Public Advocates Office, “The Costs of Upgrading the Distribution Grid for Electrification, June 14, 2023, https://www.publicadvocates.cpuc.ca.gov/-/media/cal-advocates-website/files/press-room/reports-and-analyses/230614-cal-advocates-distribution-grid-impacts-study-fact-sheet.pdf ↑
PG&E, “Company Profile”; https://www.pge.com/en/about/company-information/company-profile.html ↑
SCE, “Southern California Edison's Service Area”; https://newsroom.edison.com/_gallery/get_file/?file_id=5cc32d492cfac24d21aecf4c&ir=1 ↑
Discussed in Hearing
Assembly Standing Committee on Utilities and Energy
Bill Author
Bill Co-Author(s):