Assembly Standing Committee on Utilities and Energy

Okay, good afternoon, everyone, and welcome to Utilities and Energy. We're going to get started first with a couple of the housekeeping reminders that we traditionally have to read for the record. And if we don't have a quorum as we wrap that up, we will start off as a sub-committee, and we'll begin with the first item. So good afternoon and welcome, everyone. Like to convene this meeting. Please call the absent members, Sergeant. We will hear today 15 measures on the agenda, four on consent.

We will follow special order. AB 1182, Petrie-Norris, is removed from our agenda today. It will be heard in appropriations. AB 1538. Testimony will be heard first. 538, not 1538. 538 is limited to three speakers with two minutes each, twelve minutes in total: six minutes in support, six minutes in opposition. Regular order of business testimony is limited to four minutes total: two minutes support, two minutes opposition. For any additional witnesses on a measure, only state your name, position, and affiliation, if any.

If we exceed this time, please submit your testimony through the email address on our website. So we won't be able to establish a quorum quite yet, but we will ask for the first presenter, which is our colleague on the committee, Mr. Holden, to please come forward, and if witnesses will also come with him. We appreciate that. Mr. Holden, thank you. Thank you for coming before us. Before we start, I wanted to just to kind of put some remarks out there for the record.

As you know, we want to recognize that this is a difficult policy. And we've heard from many of the stakeholders for a few weeks, both colleagues and stakeholders. As Chair, I've sought to create an open dialogue environment because collaboration, conversation is what I believe this proposal needs. And what I strive for as Chair, we wanted to make sure that we gave you the opportunity to present the bill, but also allow for this committee to deliberate and debate some of the policy questions that remain unanswered.

I know this bill isn't perfect. It isn't in its final form we also know. But I also know through conversations with the author and commitments he's offered, that he's committed to resolving a lot of the difficult points in this bill that still need some ironing out. To my friends in labor and others who have adamantly, strongly opposed this bill over the last few weeks, there will continue to be some conversations, and we've expressed that loud and clear, hopefully again just now.

There are two main points that the committee has focused on and trying to address, although we recognize these are not the only concerns. We've really focused on the issue of impacts on jobs and bringing the CAISO governance back to the Legislature. We've made an attempt on the piece related to jobs. We've heard from you that it doesn't go far enough, but I hope that you view this as a sign of our commitment to address the concern and our commitment to coming up with a solution.

And I'm looking forward to some ideas being presented here from the dais today. On the second issue, bringing it back to the Legislature, we couldn't land on a final agreement with all parties. However, I know that there is a commitment to finding a solution that looks at the bill through the lens of what I think we'll hear today is wanting to have legislative oversight and some type of check-in.

So with that, Mr. Holden, we're going to pause, going to call the members to establish a quorum, and then we'll proceed. But thank you for allowing me to say a few words before you present your bill.

[Roll Call]

Thank you. The floor is yours, Mr. Holden.

Thank you, Mr. Chair. And let me just say I appreciate your opening comments and I also appreciate your time that you've spent with me and others to examine the fullness of the bill and understand that we are doing our very best to line up with concerns that have been expressed. And you have played a very important role in terms of helping us to move to this point today. So I want to say thank you on that point.

I'd also like to start by taking the amendments reflected in the committee's analysis in comment eight at the bottom of page 19. And not in the amendments, but also important, is that I have heard the concerns of members of the committee as well as folks in my own community, which have concerns regarding this particular bill. And I want to let you know that I'm absolutely committed to exploring the issue of how the governance structure can come back to the Legislature for further review.

We have a looming energy crisis right before us. Not enough non-fossil fuel sources of electricity to keep the lights on and still meet our climate change goals. This crisis requires us to dig deep and restore, explore, and utilize every tool we have. AB 538 is one of those tools. The western states share a transmission grid and 80% of the electricity sold originates in states or utilities with 100% goals just like California. Fifty-seven percent of that electricity serves customers in Washington and in Oregon.

Across the west, states and utilities are having the same challenges as we are and meeting those goals with the additional challenges of resource constraints, fires, and extreme weather events. CAISO is the best grid operator in the country with the most experience managing renewable resources like wind and solar and tracking GHG resources. Other states and utilities in the west are interested in joining the CAISO. Why? Because they have the same interest in getting rid of fossil fuels from their generation portfolio as we do.

They have a tough time going back home and making the case to join our ISO without an independent board that isn't appointed by the governor of one state. AB 538 would facilitate that expansion. Same structure as it has had for more than 20 years: a nonprofit organization, same laws, same utilities, and CCAs making decisions about electricity generation, but a bigger pool of customers and fleet to power plants across the west.

Under its purview: to use electricity more efficiently, reduce costs, share resources during heat waves, fires, and other challenges of climate change. The governing board would follow principles adopted by western regulators, including our own CPUC. A year ago, they called for an independent board selection process from disinterested parties.

A western states Committee with a role in policy development and decision-making, transparency and access to information and performance data. Representatives from all states to, and also continue, to be under the jurisdiction of the Federal Energy Regulatory Commission, which it has been for years. There are no studies, there is no research that doesn't support the need to expand our grid and work with our neighbors.

Under every scenario, California benefits from CAISO's expansion, and bigger the footprint, the greater the benefits to electric customers, reliability, and achieving our climate goals. The next energy crisis has nothing to do with Enron and events that happened more than 20 years ago and everything to do with how we are going to address climate change impacts, meet our clean energy goals, and keep the lights on.

I have with me today Dr. Michael Wara and Jan Smutny-Jones with the Independence Energy Producers Association to speak in support of this bill. I respectfully ask for your aye vote.

Good afternoon. My name is Michael Wara. I work at Stanford University in the Climate and Energy Policy Program at the Woods Institute. Thank you for allowing me to appear before you. It's an honor. I support continuing a conversation on change in governance in order to get to a workable solution on independent governance for the ISO. I want to start by noting that this change is not a silver bullet.

We face an enormous challenge in achieving California's clean energy goals that I'm confident we can meet as long as we recognize that it will require an all-hands-on-deck strategy in order to meet the SB 100 target and the Scoping Plan targets. We need to build something like 120 gigawatts of new renewable capacity over the next couple of decades. We currently have about 30, including both utility and rooftop resources.

So we're going to have to build something like three times as much as we have over the next 20 years. That's an enormous challenge that will face numerous constraints. How many acres of available roof is there? How will we balance clean energy against local impacts, especially to habitats and species? We're going to need to build everything we can, both behind the meter at utility scale plants in California and, I would argue, at utility scale plants in other states.

This bill is really about facilitating the last of these issues. In this context, regionalization is part of a multi-pronged set of solutions, and I strongly believe we need all of them. Last time around, I didn't support Assembly Member Holden's bill, and I think the reason I do now is that the situation has changed fundamentally in a number of respects. First of all, reliability concerns for the grid are a much larger and much more real issue than they were six to seven years ago.

Second, coal is a five cent product in a three cent market. We've seen lots of retirements and there are many planned retirements in the near term. Third, changes in the economics of new build of utility scale plants favor solar, wind, and to a lesser degree, natural gas or storage unlike seven years ago. Gradual deployment of half steps by the ISO has increased confidence in the value of greater market integration. I'm referring to the energy imbalance market and the recently enacted enhanced day ahead market.

It's also demonstrated the credibility of the ISO on emissions accounting, pushing ARB to be more rigorous on imports through the EIM accounting process. Finally, and importantly, passage of the Inflation Reduction Act means that concerns around incentives to reduce build in California, because building in other states that are right to work will will reduce costs, are significantly reduced after January 1, 2024. The question is really where non-California projects are going to get the unionized labor they will need to take full advantage of federal tax credits.

I personally wonder if it will be from California workers. A growing list of states and utilities have joined California in setting ambitious clean electricity goals. Five western states plus numerous utilities. So if the risks are lower, what are the benefits of the approach? I think the key benefits to focus on are reliability. Authority to control a larger footprint of resources can optimize dispatch during crises, and we've had multiple close calls. A second important benefit.

If you can wrap up your comments, please.

I will. Thank you. I just say reliability, access, affordability, greater access to out of state renewables. And the opportunity, and this is important, to play a role in defining what a regional governance regime looks like that is consistent with our values, where we get to decide what is important to us, I think, are all reasons to support continuation of this conversation. Thank you very much.

Thank you. I know we have next witness. Three minutes. There might be some questions already. We'll hold off on those questions, but let's finish that.

Great. Thank you. Thank you very much. Mr. Chairman, Members of the Committee, I'm Jan Smutny-Jones with the Independent Energy Producers. My members have been building clean energy in California since 1982. So we're not new to any of this. And we are here in support of this bill. I brought along two presentations here. One is a 16th century map of California as an island. A lot has changed since 1589, when this map was done.

We are now pushing 40 million people with fourth largest economy on the planet and very aggressive climate change goals. And I think if you just heard Dr. Wara, what has changed over the last several years is there a number of the states, five of them, have similar positions that we do, complementary, and a number of transmission owners in states without those have expressed interest in actually basically greening up their grids. So a lot is moving forward, and I think that's a positive thing.

There is another RTO forming in the west, and you need to be aware of this. It's called the Southwest Power Pool out of Little Rock, Arkansas. They are aggressively working in our neighboring states to try to get them to join their RTO. This will be a different RTO than the one that would be built by the ISO. And I think Dr. Wara did a good job of laying out some of the benefits there.

So the second handout I gave was basically illustrative diagram of transmission development that came out of the ISO's 20-year plan. And I put it here because I know people have been very concerned about jobs. Nobody is leaving this state because they think they're going to get a lot cheaper jobs anywhere else for two reasons. One is the resources are good here. And if you add up all the numbers here that appear in black, there's 47,000 megawatts of solar that's looking to be developed in California, that alone.

And sorry about that. And that was at two minutes. At any rate, so basically, there's a lot of development going on. My members are building now using PLAs. So this is not an anti-labor thing at all. And I think the amendment that Mr. Holden took will basically freeze in time the existing buckets that exist under the RPS, which have a long history.

So in closing, I just want to point out that this bill sets forward a process, that's all it is, to basically determine how we can structure a multi-state RTO with an independent board, recognize the interest of the State of California there as well. So that's all it does. And it's very important to recognize that there will be an RTO forming in the west. The question is that whether we want it to be located in Folsom, California, and reflecting our values, or Little Rock, Arkansas.

And that really is what we need to be working on. We look forward to working with not only the committee, but some of the people that are going to pop up here in opposition in a short matter of minutes.

Thank you.

Thank you very much.

I'm going to ask. Thank you for providing the map.

There you go.

Some of us have a question. Why are you providing the Spanish conquest map here from Christopher Columbus?

You'll have to bring it up with a consulate in San Francisco. I don't speak for Spain.

Just wondering. We have two folks who will be testifying in opposition. I'll ask them please come forward. Three, actually, we have three. And then we did offer that we have three witnesses in support as well, if I'm not mistaken. And each one will have three minutes. Each one will have three minutes as well.

Mr. Chairman and Members, Scott Wetch, on behalf of the California State Association of Electrical Workers, the Western States Council of Sheet Metal Workers, the California State Pipe Trades Council, and the California--I'll let you do that. Today is an important day. It's not often that you all get an opportunity to vote on a bill that could eliminate over a million construction jobs. We've circulated our study, our economic study that you all have.

I won't go into detail, but I'm more than happy to answer any questions regarding it. We've also circulated our eight principles. I want to be clear. We're not opposed to regionalization. We just want it to be done responsibly. AB 538 authorizes an unelected entity, CAISO, to negotiate away California sovereignty and control of not just our grid, but the future of our energy policy, as well as how billions of ratepayer funds will be spent.

And it does so without giving the Legislature the final say on the deal. Think about that. The bill gives California one vote on the policy committee that will set the RTO's policies and rules equal to Idaho, Montana, Utah, et cetera despite the fact that California will represent between 55 and as much as 75% of load. It eliminates having the California Board Members appointed by the governor and is silent, silent as to who will select those members to represent California. Think about that for a moment.

Mr. Holden is basically asking you to give CAISO a blank check to trust that they will work out the details that will protect California. Two final thoughts before I hand it over to my colleagues. Ask yourself what happens if we surrender our control over our energy policy to FERC via a regional RTO and we have a Donald Trump FERC? Are you comfortable and trust that California's energy policies won't be undermined?

And lastly, it's not the Legislature's job to make ISO's negotiation position easy for the other western states. It's your job to protect California, our policies, our workers, and our ratepayers. I'll be here to answer questions. Thank you.

Thank you. Next witness. Three minutes, please.

Thank you. Mr. Chair, Members. My name is Mark Joseph, testifying on behalf of the Coalition of California Utility Employees. Everyone is in favor of greater regional cooperation. Everyone is in favor of meeting our SB 100 goals, both supporters and opponents of this bill. But those aren't the questions. Right now, the ISO is a federally-regulated utility. It is not regulated by the CPUC or any other state agency.

California's only control over the CAISO is if the governor appoints and the Senate confirms the members of that governing board. AB 538 would repeal that provision of the Public Utilities Code and substitute instead an independent board, not answering to anyone in California. So the real question is whether the Legislature should throw away that last bit of control before you know the terms of the deal for the new utility that would replace the CAISO.

Now, I've negotiated hundreds of labor agreements. I would never throw away the only card I have to play before locking in the terms that I would get in exchange. You shouldn't either. Before the Legislature plays its only card, you should know that the terms of the deal will ensure, one, that we still have development of new resources in California. Entities in other states are explicit that they want our ratepayers, your constituents, to pay for developing new generation in their states.

Two, that California will still be able to achieve our 2045 carbon goals. Do the terms negotiated help or hurt that goal? Three, that California's vote in the new RTO will be proportional to our electric usage. Wyoming and Montana should not be able to team up to outvote California. And four, that California ratepayers won't be used as the deep pocket to pay for transmission across the west. That does not benefit California. If SB 538 were enacted, the Legislature would play your only card governance of the CAISO.

Before you know any of these things, your vote on AB 538 could be the last vote you ever take regarding the entity that controls the transmission grid. If the author will not accept an amendment that would bring the terms of the deal back to you to decide whether they're good enough, you should not support the bill. Finally, I want to briefly discuss the proposal in the analysis to address the problem that expanding the CAISO to a wider footprint eviscerates the bucket system.

Without the bucket system, we don't get renewable energy delivered to California customers and we don't get the jobs building that generation in California. We appreciate the effort and the analysis to address this crucial issue. Unfortunately, the proposal does not work. I wish it did. The idea was floated in 2018. The last time Mr. Holden had a bill on this topic, it was thoroughly vetted. It was discussed with the ISO. The conclusion was clear. it does not preserve the benefits of the bucket system to California customers or workers. I could give a more detailed response, but I hear the bell ringing.

Thank you.

Thank you.

Next witness.

Thank you, Mr. Chairman, Members of the Committee. Matt Freedman, Staff Attorney with the Utility Reform Network. AB 538 before you today is pretty much a carbon copy of the bill that was before the Legislature in 2018, AB 813 that Assembly Member Holden authored. Five years have passed, but the bill basically remains the same. We've provided a four page letter and an eight page fact sheet for consideration.

I can't go through all the issues, but I encourage you to read them if you want to go deeper on any of our issues. This bill isn't about whether California can meet its low carbon and clean energy goals or whether California refuses to trade with the rest of our western partners. California is already part of a regional market. Trading happens every hour of every single day. It's not a choice between isolationism and engagement. The question isn't whether we should engage in better regional coordination, but how.

And there are different options for increasing regional integration in markets, but the Legislature is being asked to consider only one of them. Under this bill, California would give up meaningful control over the California ISO, marginalize the role of its elected officials and state regulators, and invite greater involvement by the Federal Government and hostile private interests throughout the west.

If this bill passes, it's the last bill the Legislature will ever consider relating to wholesale electricity markets. The creation of the multi-state RTO divests the Legislature from having any ongoing role. And in fact, you're being asked to make yourselves and state agencies and the governor completely irrelevant.

Regional expansion could lead to higher costs for California customers, greater utilization of coal and gas-fired power plants, higher in state greenhouse gas emissions, fewer in-state jobs, and an increased risk that cutting-edge state policies will be subject to federal preemption. As mentioned, the bill fails to provide key details regarding the structure of expected governance, changes to wholesale markets, terms and conditions for new utilities to join, regulation, and much, much more. These details would only be known after the Legislature provide its approval.

The lack of any clear role for California in the governance is problematic because the conditions and the intent language in this bill intending to protect California policies are vague, unenforceable, and they're not subject to any ongoing oversight by the Legislature. These commitments are simply not durable.

The only enforcement mechanism is a requirement that California's utilities withdraw from the multi-state RTO if certain commitments are not maintained. But there are serious questions about whether this is feasible and implementable and whether it's even preempted under federal law. In short, the bill offers a one-way ticket that cannot be unwound. There is no way to go back to the current situation, and the risks are numerous.

The elimination of a key provision of the state's RPS program, the potential for tens of billions of dollars of transmission costs across the west to be dumped on California ratepayers, greater risks that private companies and other western interests will pursue challenges against California's cutting-edge policies, and the potential for federal regulators to take additional actions that devalue clean energy resources serving California--and even could force us to subsidize dirty resources throughout the west.

So, to sum up, California can engage in greater regional coordination without approving the creation of a multi-state RTO. We think there are alternatives that need to be considered. Thank you.

So I need to correct the record here. I was just told that, Mr. Holden, you were not notified that you could bring a third witness an additional three minutes. So for leveling the playing field here, wish to use an additional three minutes either yourself or any of your witnesses? Or would you like to defer to go into public comments? I leave it up to you. Three minutes. Any of your witnesses want to use the three minutes, say no, sir.

Okay, we're going to go to public comments now. We'll go to public comments. I know that we have a series of questions that members are already eager to ask. We're going to be going with Ms. Carrillo first, but we'll ask public comments those wishing to speak in favor or against the measure, will you please state your name and affiliation and your position, please.

Mr. Chairman and Members, Delaney Hunter, on behalf of the Solar Energy Industries Association, EDF Renewables and EDP Renewables in strong support. Thank you, Mr. Holden.

Lillian Marvis with MCE, here in support. Thank you.

Tim McCray, Silicon Valley Leadership Group. We strongly support the bill.

John White with the Clean Power Campaign. We support the bill.

Alex Jackson with the American Clean Power Association in support.

Rocky Rushing, with the Clean Energy Buyers Association. For the sake of reliability and affordability, we urge your aye support.

Adam Smith, Southern California Edison, support.

Nick Grubb. I'm here on behalf of Microsoft in support.

Hi, I'm Cynthia Shallit. I'm here on behalf of all 80 groups in Indivisible California StateStrong and on behalf of all 40 local environmental groups. In our coalition letter, which you have before you, which is a total of 120 groups, we strongly oppose AB 538 and urge you to vote no on this bill. I'm also here on behalf of the Los Angeles County Democratic Party who voted 88 to 17 to oppose AB 538, and we urge your no vote now. I've asked for the sergeant to distribute this letter, which I think you have in front of you.

Thank you.

Thank you. Melissa Cortez, on behalf of the California Wind Energy Association. We are a little bit of a tweener. We have a support if amend position on this bill, and would ask that the author and this committee, as this bill moves forward, consider amendments to preserve the economic developments within the State of California for both land-based and offshore developments.

Thank you, Chair, Members. Amisha Rai with Advanced Energy United, here in support.

Katelyn Roedner Sutter from Environmental Defense Fund in strong support. Thank you.

Jena Price, on behalf of Enviro Voters and NL in support.

Mr. Chair and Members, Victoria Rome, with the Natural Resources Defense Council, NRDC, in support.

Natalie Higley, on behalf of John McIntagart, local IBW 551, in opposition.

Rene Cruz Martinez, on behalf of IBW local 1245, in opposition,

Christina Scaringe, with the Center for Biological Diversity, in opposition.

Kim Stone, Stone Advocacy, on behalf of Consumer Watchdog, in respectful opposition.

Meghan Loper, on behalf of Western Freedom, in support.

Chirag Bhakta, with Food and Water Watch, in opposition,

Patrick Welch, California Municipal Utilities Association, opposed unless amended. Look forward to further discussions with the author. Thank you.

Amara Eger, on behalf of Series, in support.

Brady Van Engelen, here on behalf of the California Chamber of Commerce, in support. Thank you.

Ruth Marino, with San Jose Community Energy Advocates, a community group in opposition.

Chair, Members, Dean Talley with the California Manufacturers and Technology Association, in support.

Alfredo Medina here on behalf of the Imperial Irrigation District. While we don't have a support or opposed position on file, we're here to echo the comments made by CMUA and hope to work with the author. Thank you.

Timothy Jefferies, International Brotherhood of Boilermakers, representing a thousand boilermakers in California, standing with State Building Trades in opposition to this.

Good afternoon. Erin Lehane, on behalf of nearly half a million members of the State Building and Construction Trades Council of California in strong opposition to this bill.

Good afternoon. Mark Plubell with the Heat and Frost Insulators, Local 16. We stand with the Building Trades in opposition to this bill.

Hi, my name is Rachel Schumake with IBW Local 302, representing over 1300 electrical workers in Contra Costa County. We are in opposition of this bill. Thank you.

Hi, good afternoon. Anthony Viscuso, also with local 16, Heat and Frost Insulators. And we are also in opposition to this bill. Thank you.

Good afternoon. I'm John Hershey with the Plumbers and Pipe Fitters, local 447, here in Sacramento in opposition. Thank you.

Stan Stosel with IBW 47. About 15,000 people in Southern California. We oppose the bill.

Good afternoon. Randy Thomas, business manager, secretary, treasurer, Boilermakers Local 549, Pittsburgh, California. Represent 753 journeymen and 90 apprentices, and we oppose this bill. Thank you very much.

Benjamin Hoteo with the Local 549, oppose this bill.

Andy Casares with Local 549 Boilermakers and we oppose this bill.

Hi, Michael Dryling, Local 549, Pittsburgh, California. Oppose this bill.

Andrew Hayes, also from Boilermakers Local 549, one of our instructors. Also opposes this bill.

Graciela Castillo-Krings, here on behalf of California Energy Storage Alliance, in support.

Salena Durrell with Tradeswoman, Inc. We stand in solidarity with the Building Trades in opposition of this bill. Thank you.

Bill Allayaud, Environmental Working Group or one of the other. We're looking at the amendments closely. I haven't really looked at them yet, and we'll keep analyzing. Thank you.

Thank you very much. Anyone else? No one. We'll bring it back to dais. I know we have several questions from here. We'll start with Assembly Member Carrillo.

Thank you, Mr. Chair and Members. And I want to thank the author for bringing forward an important piece of policy that we should all be considering and looking at more closely. I do have a couple of questions for the opposition over here. It's a lot of people on the dais. My understanding is that under the multi-state RTOs, the cost of system infrastructure costs are allocated to states based largely on their load. What are the ramifications for California ratepayers?

Thank you, Assembly Member. Matt Freedman, on behalf of turn. I think one of the concerns is we have no idea what kind of cost allocation would occur in a multi-state RTO. It's not spelled out. The bill simply says it has to be something that's approved by the Federal Energy Regulatory Commission, which doesn't really give us much comfort because it would be developed by management and an independent board that has no association or representation of California interests.

And one thing we do know is that other western states would very much like for California to pay for all the transmission that they build. And their position would be, they're building it for us. They're building it because of California being the large consumer in the west, because we're a large developer of renewable energy projects through our procurement policy. So we have no idea what the end result will be in terms of transmission cost allocation to California.

But what we do know is that we have no representation in the decision-making process. There's a proposal in the bill to establish a Western Wtates Committee, but that committee would only provide guidance to the members of the board and to the management. That's not very encouraging. Anybody who's worked on bills knows that guidance is kind of a weak word. In addition, California would have one seat. Idaho, Montana, Wyoming would each have a seat.

So that's three seats for states that have about 4 million people total. We've got 10 times the population. It's just not very encouraging. And in this conversation over the last couple of years, we've heard repeatedly an interest in other utilities around the west really wanting California to pay for their infrastructure development. I think that's the risk we face.

And I'll just add one more thing, which is all of the studies that are mentioned that analyze the economic benefits to California, potentially under a regional expansion scenario, exclude the impact of transmission costs. They specifically exclude it as part of their modeling. So we really don't know whether additional transmission costs swamp the other benefits that are being promised.

So as a follow up, Mr. Chair, are there any protections that the opposition might propose to ensure California ratepayers don't unfairly--our funds don't unfairly go to other states projects?

Well, back in 2016, when this issue first surfaced, there was a proposal to have a governance committee composed of state representatives with a weighted voting structure, where each state would have weighted voting based on either their share of total load in the west or population. And this kind of a structure, then under that proposal, that board would be required to approve any transmission cost allocation policy before it could be proposed to FERC. Under such a structure, California would effectively have veto power over a bad proposal. But as the conversation evolved, that concept was dropped, and now we're down to one state, one vote.

So was it a few years ago? Last year? I lose track of time. During COVID we moved forward additional access to offshore wind. So I'm curious, if under this RTO, if California wanted to build a transmission line 100% within the State of California, would we then need to obtain approval from the RTOs in other states to authorize it?

Well, the way that it works now is that the California ISO approves a transmission line to be built, and it's doing so today based on the resource plans that are submitted by the state agencies. So the PUC, for example, sends over what the resource planning looks like based on all of the aggregated commitments of the California buyers. And the California ISO then pre-approves essentially the need for certain lines. Under a multi-state RTO, we don't know how they would do it.

We don't know whether the California Resource Plan would be simply a consideration, whether it would drive outcomes, or something else. There's really nothing in here to help us to better understand how that would play out.

Is there a different opinion from the supporters of the group that could talk about how do we move forward in California based on all of our climate goals and things that we want to do within the state without having to seek approval elsewhere?

Respectfully, I think a couple of things are worth saying. One is that various decisions over the last decade have made it clear that there has to be some sort of rough justice in RTOs in terms of how costs are allocated, and that the beneficiaries of projects do need to pay for them. So if it is in fact the case that Montana is benefiting from a project that was built in the new structure, then Montana ratepayers would have to pay for it, at least to some degree.

Right. And it's rough justice. I want to emphasize that there's no perfect way to allocate these costs, given the way energy flows. So that would be one point. Another point I would make would be just to refer to something that Mr. Freedman just said, which is that the CPUC tells the ISO which resources it intends to procure, and then the ISO is responsible for building the transmission to connect those resources to the demand centers for electricity.

So we still have some control there because the PUC decides which power plants we are going to build to serve our load. And that's an important balance. And I would agree that there is some loss of control, right. We won't have as direct control as we do now in an independent governance structure. That's what independent means. But there are significant benefits to that as well that I think are worth emphasizing.

In response to that, I would just ask Professor Wara if he could point the committee to where those two provisions are in the bill that the PUC has to approve and direct the ISO, and also where the RTO would have to allocate costs based on which state benefits, because I haven't found that in the bill.

So if we could kind of go through the Chair when we want to ask some questions, I'd appreciate that. That way we have a little bit of some order. I know Ms. Carrillo still has the floor with questions.

Thank you, Mr. Chair, and I appreciate the exchange. Thank you for allowing that. I just, with all due respect, I just find some control over what California can potentially do within state boundaries to be a little challenging.

So if we don't have control over the infrastructure that we are now mandated to do based on the climate goals that we have put in place, it gives me pause to now be in a position where we have other states potentially giving us a yes or a no on what we can potentially do internally within our state. So thank you for the responses. Thank you, Mr. Chair.

You know, I think the question posed by Mr. Wetch is a valid one. So I'd like, for those who could answer it to respond.

Yeah, two points. One is that the transmission lines offshore, it's a wholesale transaction. It will have to be approved by FERC, who does set the rates for wholesale transmission lines. So the sighting of the line would fall under the California law because that's what states do. But the actual rate making treatment is at FERC. There's a long process of that. The ISO has an extensive process to determine what transmission gets built or not, and I think Mr. Wara suggested that.

I want to be clear what's in the bill, because I think everybody's reaching the conclusion that this is what it's going to do, and it's a parade of horribles. It lays out a process with 18 points of legislative guidance and three major policy principles for us to work out as this goes forward. That's what it does. So there's no end use.

It didn't predetermine how many board members sit for whatever state or whatever else, and it didn't predetermine whether or not how that state governance group works. So what I would encourage is let's move this thing through and see if we can work out the details of it. It's not designed to be the end product.

The question was where in the bill is it? Right by the Honorary Chair, Scott Wetch, Chair Committee. But if you want to respond, please.

What I was alluding to wouldn't be in the bill because the current system and the future system are controlled by federal law. And there are federal court decisions, appellate court decisions that determine how cost allocation of transmission in federally regulated electricity markets occurs. And that is what I was referring to. So that's not in the bill because California law does not control it.

Thank you. Thanks for your answer. Any other questions from Committee Members? Mr. Santiago, I'm sorry. Please.

And it referenced a Minnesota case in the 8th Circuit involving coal generator from North Dakota.

Could you explain to us the relevance of that, of that particular case to California, if you might?

Sure. Thank you. I'm sure Mr. Wara is going to have something to say about this as well. This is the Hadinger case that was decided by a three-judge panel in the Eighth Circuit. This was a suit against the State of Minnesota for a law that enacted, that was designed to prohibit the import of coal-fired electricity. The three-judge panel struck down the Minnesota law for a variety of reasons.

But one of the reasons that seemed to be persuasive to the judges was the fact that Minnesota is part of an RTO, the MISO, M-I-S-O, along with other states like North Dakota, and that Minnesota's actions would be subject to much stricter scrutiny to the extent that it affected resources outside of its borders.

The decision says a lot of different things, but I think what it stands for is the notion that when you're part of an RTO, I think courts are going to apply a lot more scrutiny to policies that affect other states within the same RTO, or that are seen as protectionist, or that are seen to have extraterritorial impact from the state itself. We don't know how courts are going to decide. And in fact, recently Minnesota passed 100 percent clean energy law.

And in response, the State of North Dakota has already sent Minnesota a letter saying, 'remember that case where we beat you in the Eighth Circuit? Well, we may just sue you again under the same principles' because the State of North Dakota is concerned that this law will adversely affect its coal industry. So there's a lot of risks here. I'd also point out that, for example, the State of Utah, the Legislature there has authorized money in their state budget to investigate suing California under its--California's climate policies and the discriminatory impact that they believe it has on Utah's coal industry. If we're all part of the same RTO, I think it puts California at greater risk than under the current structure.

Yeah, please.

Yeah, Chair. I just want to press a little bit. So give me an example of what could happen, because I read that, I generally understand that, but the relevance.

A number of California policies. For example, we have an emissions performance standard in California that prohibits long-term contracts for coal-fire generation. We have a cap and trade system that applies carbon pricing to imports, particularly from coal plants. They pay the highest import adder. And we also have clean energy policies like the Renewable Portfolio Standard. We have an integrated resources planning process, lots of different state policies that drive outcomes for buyers and really make it almost impossible, in fact impossible, to buy coal on any long-term basis.

If you've got a state that has a significant base of coal-fired power plants and they're arguing that California can't do that as part of an RTO, we don't know what's going to happen. I could argue it both ways. I'm sure Mr. Wara could argue it both ways, but then we're in the federal courts, and I do believe that under a single RTO we are at much greater risk than under the current structure.

Thank you. Any other questions? Is there a response to that from the opposition on that? I'd love to hear perspective on that.

I think Mr. Freedman has a reasonable position, but I think there are other very reasonable positions as well. In particular, recent decisions by the Supreme Court on this issue of Dormant Commerce Clause, you know, the sort of preemption of federal law over state laws that are protectionists, has strongly supported California's efforts where they regulate what buyers in California can do with respect to out-of-state products. That's what the Supreme Court is saying. Just because there are circuit courts that have said other things does not necessarily mean that litigation, if it were to occur, would turn out this way.

Thank you. Assembly Member Chen, followed by Bauer-Kahan.

Thank you, Mr. Chair, for your time. Mr. Holden and Doctor, thank you so much for bringing this discussion to the table. And Doctor, you stated early on talking about the regional governance regime and that if California is going to give up its energy sovereignty, that we're going to have to share some of that policy. I think that's what gives me a bit of trepidation of what that policy is going to be returned and what is our role in that policy.

So one of the numbers I've been hearing about time and time again is load and California's role in its load. And a number that I keep on hearing is 55 to 75. Is this something that you would agree with in terms of the load that California has been doing its output in?

I think it depends very much on which other utilities decide to join a regionalized ISO or RTO. I agree with the assertion that we are likely, especially for the early years, to be the majority of load, and I think that raises a question about a future conversation about how governance and state input should be created for that RTO.

Thank you, Doctor. So if California is responsible to, as you say, the majority of load and numbers have been gone from 55 to 75, part of this regionalization, this RTO Policy Committee, is that other states involved, Utah, Idaho, Montana--Montana is what? Its population, 1.1 million? LA County has a population of 11 million. Why in terms of the RTO policy coming, what is the rationale in terms of they get one vote, we get one vote? So in my opinion, if we're going to be making the bulk of a load as USS in the first couple of years, why are we going to have the same amount of say in terms of the policy?

So far as I know, the bill doesn't specify voting rights within the body of state governors. So I think that's an important question to consider in future conversations around this legislation. And I would say that we need to strike a balance between representing the fact that we do have 40 out of the 100 million people in the western United States and the fact that other states need to be given some sort of a voice over--that is meaningful, that is not trivial over their role in a regional RTO.

We need to strike a balance, and I think that would be a question of detail, perhaps to be worked out here or within this body, and perhaps to be worked out with the ISO and other partners.

Thank you very much. A follow-up question on that, which I'll ask the opposition later in terms of if that is in the policy for this bill per se, but as you stated early on, I think there's a lot of discussion to be had. And this is, as stated by both sides, this is a work in progress.

It may not be the final policy that ends up on the plate of if it does pass this Committee. Why would we not, if we're going to take away California's energy sovereignty, including management control of the grid, why would not come back to the Legislature, the appointed body, to ratify the final product that is decided by the policymakers?

Well, I'd say that's above my pay grade. I'm the academic in the room, but I leave that conversation to folks who are better to answer it.

Did you want to have?

Well, I'm a non-academic. I think the idea here was the policies are laid out beforehand in terms of what are the legislative guidelines, guardrails, if you will. The ISO is supposed to give that document, then it comes up with a policy that can address all those. It goes over to the Energy Commission to check all the boxes and ultimately gets reviewed by the Governor.

So that's my understanding of what we're doing, and last time around, the Legislature had a similar process, although we had an oversight board at the time that checked all the boxes and then it got approved by the Governor. So that created the ISO. So I understand that the people want a little more direction there, and we're happy to talk more in terms of how that might work.

And I think that was what I was alluding to in my opening statement was that this Committee, members of my community have raised the concern as well, and so I said that this is something that we need to continue to have conversations on to see just how we can best address the concern. And that's part of my commitment as we continue to move forward should the Committee allow that to happen.

And there are going to be other stakeholders that are going to have to be a part of this conversation. The energy entities need to be a part of it--labor, other stakeholders that have been part of this conversation at this point--because you're getting more into the process of how it would come together and what would you do in order to address potential triggers that would cause other participants outside of California to want to be a part?

If there was an expectation that there could be a fully invested time frame, that all of a sudden later down the road, it doesn't look like it's going to materialize and other opportunities to move to other RTOs may have been missed. That's real, but the issues that are being talked about in terms of having some element of connected tissue, I think we're open to trying to figure out what that might look like and to have conversations to see what we can do about finding the right balance.

Follow-up question, Mr. Chen?

Thank you, Mr. Chair. Mr. Holden, thank you so much for that response. My district is a suburban veteran community and the needs of my district are drastically different from my colleague over in 81 where it's a very rural area, so I certainly would appreciate an opportunity for this to be coming back to the Legislature to get ratified for final approval. So I'm looking forward to see if there's a possibility in that.

And I do have one final question before I go, and I'm happy to have some of the folks in the opposition discuss this bill. I've had another discussion in terms of the workforce, and the workforce is something I think in my personal opinion, the skill and trained workforce of the Building Trades is second to none, and concerns about workforce and employment opportunities for Californians leaving the State of California and being provided by folks outside the state.

My concerns are within the 40 million residents to have jobs stay in California. And one of the responses I heard was there's enough jobs to go around, that there's so many construction projects in the State of California that they'll be so busy that we need outside construction. So I have a question for the opposition. I'll ask the Honorary Vice Chair, Mr. Scott Wetch, for that question. Is that true? I mean, is that true, Mr. Wetch? I mean, you have enough construction jobs to go around?

Thank you, Assembly Member. No, we don't, and we're very concerned, as was, I think, ISO back in 2015 when this Legislature passed SB 350 by Kevin De Leon that took us to a 50 percent renewable portfolio standard. Embedded in that legislation was direction asking CalISO to conduct a study on what the impacts would be if we went to an RTO without the bucket system in place.

Their study--and these are the folks who want to do regionalization--came back and found that we would lose 160,000 construction jobs, primarily in the solar sector. Okay? So when Mr. Holden introduced this bill, we asked our economist, a Stanford-trained economist who does all of our work before the PUC, to take the CalISO study from 2015, take the methodology, and take the new numbers that now that we're looking--back then we were at 50 percent by 2030. Now we're at 100 percent by 2045.

And PUC projects that we're going to have a 28 percent increase in load just between now and 2031. So we took those numbers, which are quite conservative, because we don't know that we didn't have the load growth projections beyond 2030, and you all have received it, and they found that using the ISO-zone methodology, we would be putting at risk 1.1 million construction jobs. Now, you ask, why is that?

The reason for that is because the surrounding states that would be part of the RTO have lower tax rates, property tax rates, cheaper land, less environmental obstacles, and their right-to-work states. Now, this isn't some theoretical exercise. The CalISO today does an economic analysis when they have transmission, competing transmission projects.

And for instance, after San Onofre went down and we had to replace 2,200 megawatts of GHG free power, when CalISO was considering building a transmission line to Imperial to bring in more geothermal or building the Palo Verde two line in Arizona, they did an economic analysis, and we have circulated a copy of that to your offices.

In that analysis, that economic analysis, they found in part why the Arizona Palo Verde line was more advantageous was because it would be built cheaper for all the same four factors that I just outlined. They gave points to the Arizona line because the labor rates were cheaper because it's a right-to-work state. They gave points to them because they don't have environmental laws like we do. They gave them because their property tax structure is cheaper, and they gave them points because land is cheap.

So that is exactly what our concern is. Not just our concern, but when CalISO was going through this exercise six years ago, the Imperial Irrigation District, having the same fears that we had, filed an antitrust suit in federal court challenging that the CalISO scheme to create a regional state would collude with other generators and other utilities in other states and push California generators out of the market. Okay? That was a suit brought by IID.

They ended up settling it with CalISO in return for--we would assume CalISO then approved another project that IID wanted, and because the regionalization issue kind of went away, they dropped their suit. So, yeah, that's a very real concern.

Follow-up questions? I know that there was a hand up when you were asking about the weighted vote and the ratification, and I think opposition wanted to make a comment.

But before you do, could we at least get a thought in on this because I think that it goes to the effort behind trying to address the buckets in this bill. And there's been a reference to how it was addressed in 2018 versus now. I was going to ask Mr. Smutny-Jones to sort of create the distinction between the two, because there is a difference.

Yes. I'll point out that that study they did--the author himself suggest--or the author suggested that the data they're using may not be accurate. They were assuming 26 jobs per megawatt. It's actually two and a half. So you can do the math there. But more importantly, let's just get to the point. The point is, the reason I sent this around, this map--it comes out of an ISO document, 20-year outlook of where they think transmission needs to be built in California.

All of those numbers that are in there are plants that are proposed in California, or at least that's the plan coming out of the Energy Commission and the PUC. It's California-centric. And what I'm saying is there's 47,000 megawatts of solar identified in here. I can't guarantee you that they all get built, and I can't guarantee you we have the people to build it all. We don't know that, but that's where the target is.

That's A. B: the big difference between the last time we had this discussion is in the Inflation Reduction Act. There's an investment tax credit and a production tax credit that give huge incentives for people to use labor. That didn't exist before. So the idea that someone is going to run off to Arizona to build projects and forego because they want to avoid labor unions, because they're going to forego literally millions of dollars worth of tax benefits, just doesn't hold water, okay? It just doesn't. And the fact of the matter is California has very nice property tax incentives for building out solar, and if we want to talk about changes to environmental laws, I'm all ears.

So I know, Mr. Chen, you had a question, and the opposition wanted to also respond too as it relates to the weighted vote and ratification. Did you want to touch on that still?

If I could briefly, Mr. Chairman. There was a question brought up about this Western States Committee, the one state, one vote issue, and I think the response that you received was, well, this is just a conversation. It will evolve. We don't know what it's going to look like.

I'd point out that the bill itself specifically says that the utilities in California cannot join a multi-state RTO unless it includes a Western States Committee that first of all has equal number of representatives from each state, and secondly, that this Committee provides guidance. So if the Committee were to be constructed differently under AB 538, the California utilities would not be allowed to participate. This is the bill you're being asked to vote on.

So if there's a different idea for how this would work, I think it's important to understand this is your only chance to vote on this. There is no conversation involving the Legislature once this bill goes through. It is a conversation between the ISO and other stakeholders, namely the utilities and other states that they would seek to have come in.

There is no second bite at the apple for the Legislature, no chance to review, and a deviation from the way it's drafted here under the bill's own language would make the proposal illegal under state law.

I think the author wants to respond and I would like to hear his response.

Yeah, and I think we were trying to make the point early on that what we're attempting to do is to put together a framework that allows us to reasonably approach how we would enter the marketplace with a new RTO approach. We still have entities that need to be a part of this conversation.

I appreciate the comments around--based on what's in front of us, how bad it may look because I don't think it looks like that. There are elements of it that need to be further flushed out. To say that the Legislature will not have a further conversation, we're not at the end where this is out there. We're at the beginning in our first policy Committee to have a conversation about how we engage, how we move forward, what additional tweaks we need to make.

I'm taking notes about what you've been talking about, even before today. We tried to address the buckets and I think we did a good job. I think that there may be still some concerns about what that looks like, but the idea of locking in the RPS is a big deal. Now, if we can collaborate and figure out, 'well, how do we make it tighter,' then let's do that.

But to ignore the fact that we are trying to address the fact that there are jobs that are potentially in the balance, we're making our every effort in this Committee, at this point in time, in this process to give our best effort to try to make sure that we are being responsive to that concern. We don't want to see jobs leave. I mean, I'm fighting for jobs. I'm still getting hammered about last year's effort to help workers. So I think what we're trying to do here is to engage in a dialogue with a Policy Committee that has supreme insight and understanding around this subject matter.

But we also recognize there are other parties that are going to ultimately have to weigh in on this to add additional insight to their expertise, their fine tuning, their creative thinking, to help us get to address some of the concerns and also to expand and give clarity around some of the proposals that are outlined that the Committee has recommended. And we hope that you allow us to continue that conversation. I just wanted to add that.

Thank you, Mr. Holden. We have a list of other questions coming from our colleagues. Mr. Joseph has been raising his hand very politely there. I'd love to hear your perspective. This is where we want to hear this debate. So please.

Thank you, Mr. Chair. I'd like to address two issues that have been raised. First, on the Inflation Reduction Act, which Dr. Wara mentioned in his initial comments--Mr. Smutny-Jones just mentioned it--the idea was, well, with the Inflation Reduction Act, don't worry, California no longer has higher labor rates. And so don't worry, that won't disadvantage us. The Inflation Reduction Act requires that projects pay prevailing wage in order to get the full tax credit benefits. The prevailing wage in other states is lower than in California.

They have lower rates, especially in right-to-work states, and they will still have a cost advantage when it comes to labor, not to mention all the other things: land permitting, environmental laws. I stood at the construction of a solar plant very close to the California border. I could see across the border another project being--identical project being built by the very same company. On the California side, it was being built union at California wages.

On the Arizona side, it was being built non-union. Identical plant. That's exactly the thing we will have happen. Second, if you'd like to hear it now, more discussion about why the proposal to save the bucket system is insufficient. Would that be appropriate now?

It is if you could do that quickly. We do have another list of questions here.

I will do the shortest version I can. You have the benefit here of having the two people who actually drafted the language for the bucket system, as well as the person who named it the bucket system. That's Mr. Smutny-Jones. It was good. There are two ways to qualify for bucket one, which is the thing we're trying to protect. First, that a power plant has its first point of interconnection to a facility controlled by the California ISO.

That means that most, though not all plants to get first point of interconnection qualification would be in California. Some would be other places, like around Las Vegas; there are CAISO facilities. The second is that the generation be scheduled in, in advance. Scheduled into the California ISO in advance. If we have a wider RTO with a wider footprint, then everything's going to qualify as first point of interconnection because it will be the first point of interconnection with the new RTO.

The proposal is to say, 'okay, we're not going to count the first point of interconnection to things that are beyond the border that we have right now for the ISO.' The problem is that everything will still qualify under the second option, the scheduled in option, that everything will be treated as scheduled in up to the physical transfer capacity of the transmission system. And in most hours of the year, there is slack capacity on the transmission system.

And so for most hours of the year, everything within the footprint will qualify as bucket one. I wish this proposal worked. If this proposal worked, we'd be here sitting here advocating saying, you have to put this in the bill. It unfortunately does not.

Thank you. Mr. Wallis.

Thank you, Mr. Chair. I will be very brief, but I do have a couple of questions for Mr. Joseph. So we've all heard and proponents have argued that without an RTO, California will become an energy island. I was wondering if you could share your thoughts on that.

Yes, I love Mr. Smutny-Jones's map. It's highly entertaining, but California is not now and has never been an energy island, and it never will be. Right now, even without a west-wide RTO, every minute, every second of every day for the last 50 years, we have imported or exported energy to states around the west. All we need are generators who want to sell, buyers who want to buy, and transmission lines connecting them. That's why we're not an energy island now, and we will not be.

I'm going to give two very recent examples why failure to--not proceeding with a wider RTO does not mean we're an energy island. On April 3rd, three weeks ago, the ISO issued its draft transmission plan to authorize major new transmission which the ISO says will deliver Arizona solar generation, New Mexico wind generation, Nevada solar generation, Nevada geothermal generation, and Wyoming and Idaho wind generation to California without a west-wide RTO.

Second example: in December, the CAISO approved the TransWest Express transmission line, which will deliver 3,000 megawatts of new wind energy from Wyoming to California without a west-wide RTO. It's just not true to say we will be an energy island. We're not now and we won't be in the future. The CAISO is ensuring that we have lots of access to lots of resources around the west.

Follow-up question?

And yeah, just one more question. Professor Wara has argued that we need an RTO in order to meet our generation needs in the short term and to meet our 2045 goals. Is that something that you agree with or can you speak to that?

I disagree. We are getting energy from all over the west all the time. We can do it. We are doing it. The ISO is doing it. It's in the PUC's plans. In the Integrated Resource Plan, which the PUC transmits to the ISO. The ISO figures out how to do it. They come out with transmission plans just like they did three weeks ago, which accomplished exactly that, where we get resources from all around the west. He is certainly correct that we will need these resources. We will need to use resources elsewhere. That's certainly true, but we don't need a west-wide RTO to get there.

Thank you. Thank you, Mr. Chair.

Is there a different perspective from the witnesses?

Two different issues. Issue number one on the buckets--because as Mr. Joseph indicated, we came up with this idea--currently, what the amendment it does is it freezes the delivery points as of this year in terms of how people schedule into California. And he's quite right. There are delivery points at Palo Verde, which is outside of Phoenix, and one outside of Vegas. Right now, people can schedule into there. It doesn't change any of that.

There's resources coming from Eastern New Mexico that have the transmission capabilities that tie into Palo Verde and count as bucket one. Nothing has changed. The only thing that's changed there is the response to concerns that the buckets were somehow going to go away of freezing those scheduling points. So we think that problem's solved. If it's not, let's talk. But we think that that's solved. In terms of energy island, I didn't put that out there just to be entertaining, but to make a point.

If we have SPP creating their own day-ahead market and their own real-time market, one of the big successes we've had is what's called the Energy Imbalance Market that resulted in over four billion dollars of benefits, significant amount of that going to California, reduction to CO2 by real-time markets. Our other states around us that would like to join us aren't going to stay in two different markets.

That EIM will be--get eroded if SPP moves forward. So we may not be a complete island, but we're going to be playing by other people's rules. And again, we can either do this from Folsom or we can do it from Little Rock. And I'd much rather drive to Folsom than drive out to Little Rock.

One quick additional point, which--I think we haven't talked enough about reliability today. My fear for the RPS is not about where we get that first bucket, it's that we have a blackout that's driven by the renewables to natural gas transition in the evening. We've all experienced that. We were saved by a text message the last time.

A fundamental reason to move toward a regional footprint is to give the ISO direct operational control over resources that will keep the lights on during difficult times in the summer. And I think that to me, what I worry about is what the pressure this Committee will face the day after a disruption caused by our best efforts to keep the lights on confronted by impacts from climate change.

And I think it is really important for the Committee to keep in mind the reliability benefit in addition to the potential procurement benefits of moving toward regional governance.

Thank you. No other questions? We're moving on to Assembly Member Connolly, followed by Gomez Reyes and then Schiavo.

No, and I appreciate it. I'm going to have to leave shortly for another hearing, but really appreciate the conversation, the work of the author over several years in bringing this forward. I share a lot of the concerns that have been raised. So I want to put a finer point on a couple of the issues and then actually directly ask a question to the author. What's weighing on me is, does this proposal actually further the interests of California ratepayers?

And we do need to look at issues around reliability, affordability, and also, I think, our demonstrated leadership in renewable energy through our RPS standards, through the bucket system. So I want to delve into the bucket issue more. There are those who believe that if we were to go forward with this, it would eviscerate the bucket system, the real world impact of that, because we're talking about in law, state law, prioritizing qualifying renewable energy--to simplify it--is produced in California. That's California jobs. It's California goals.

What guarantee do we have under the principles of federal preemption and in an RTO structure that will be governed by FERC, the Federal Energy Regulatory Commission, that the bucket system will not go away? I understand the amendments. I think to the extent possible, we're talking about that issue, but the legislation itself recognizes that we're really just talking about, to the fullest extent possible, consistent with federal law, market rules and policies that do not conflict with and allow for consideration of state authority over generation preference.

The Federal Case Law that's been cited, perhaps not directly on point, but is in the realm, and so what kind of certainty do we have that the bucket system and the jobs and the green energy goals that come with it would not be in peril?

To the author?

Thank you. And I think what I've tried to say at different stages of this presentation today and prior to that, is that we're looking, and I think it was part of the amendments to embrace California's policies and to move forward with integrating those policies into how we move into a RTO.

I think it's also important to note that with the buckets, it was our expectation, our goal to lock in the RPS to what it is today, to lock it in so that that 60 percent would be in place. Absent this approach, is there some exposure there? And we recognize that. So this was our attempt to try to lock it in. The previous effort, as I understand--and I'll have to look to the architect of the buckets--is that it was initially designed for the ISO. Okay, let me let you then.

Yeah, well, it has many fathers. So what the buckets were designed to do is something very--there was a bill that got vetoed that would have pretty much required everything just to be built in California. That would have raised a significant Commerce Clause issue. So the buckets was an attempt to basically distinguish different products in interstate commerce that could basically serve California.

Now this was a Californian, and this is very important because the Supreme Court has been clear that we, California or the other states, get to choose what kinds of resources our utilities buy. By the way, that's in Talon Hughes. So that's there, but it was an attempt to basically make sure that we were able to do that. It has gone 12 years without challenge. It seems to work. We haven't had no fights about how the bucket works, the buckets work, and the situation currently is--and maybe we have a difference of opinion here.

If you can schedule into the first point interconnect with the ISO, you're in bucket one. That's how it is today. That was the intent of the amendment. If there's an adjustment, that language that needs to be made, let's make it. Going forward, that's where it is. It's pretty clear that when it comes to rates, the feds set rates in interstate commerce or interstate transmission, but when it comes to procurement choices, that's left to the states. And so I'm confident that this amendment would work, but if we need to fine tune it, then we've done that before, let's do it again.

Thank you Assemblymember. The proposal on the Bill doesn't work, and the reason it doesn't work is actually spelled out in part in the analysis. There is no requirement in any other rto by any other state that there be delivery from one part of the rto to another part of the rto. We don't have any analogs across the country. So this is a brand new concept and it's not recognized by FERC.

FERC recognizes boundaries of isos and of rtos, these sub boundaries, and the idea that states can set their own delivery requirements within a larger footprint. This is new ground, and we don't think FERC is likely to be favorably inclined to this. The decision that's cited in the analysis, this is the Alcove versus CLE second circuit decision. This was a challenge to Connecticut's RPS delivery requirements, which required delivery into the ISO New England.

And one of the things the court said there is, they said, well, this is reasonable because FERC recognizes that the ISO New England has established boundaries. This is recognized by federal regulators as legitimate. So if you want to require delivery to the whole rto, that's fine, but this takes it a step further and establishes what only State of California would recognize as a boundary. We think this makes the program much more susceptible to a dormant commerce clause challenge. There's been no analysis on this point.

Secondly, we did have conversations about a similar proposal several years ago with the ISO management about how they would implement such a proposal, because a very similar provision appeared in Assemblymember Holden's prior Bill, Assembly Bill 813. We said, how would you do it? It turns out it would be basically an assumption that everything in the west is deliverable. It kind of blows up the whole structure because there's no process for scheduling delivery from one part of the footprint to the other.

So it becomes kind of a spreadsheet analysis. We just think that it ends up being all symbols and no substance. That's the concern we have and is a really sets a big target for California to be sued by other private generator interests probably throughout the west.

No, and I certainly share those concerns. In the interest of time, I'm going to just move on to a couple other quick things. And then the question. I'm also concerned about governance. We are by far the biggest player in the western region, and the notion, as written in the current draft, that somehow it's going to be one state, one vote that has to be changed if this is even to go forward in any form.

So understandably, I think the author is recognizing additional work would need to be done on that. Finally, I think Assembly Member Chen raised a very valid point. The role of the Legislature, frankly, it would be preposterous for us to vote this out today and just let it go off and all these complex issues be figured out with no additional role for the Legislature. That's a non starter, frankly. Maybe my colleagues have a different view, but I don't think so.

So, Mr. Holden, let me ask you this question. I want to ask you if you are willing to commit to parking this Bill in the Appropriations Committee, given the uncertainty around key issues, I e. Explicitly making this a two year Bill. This is something we had discussed, and I know that you're open to engaging more with the governor's Administration stakeholders, including labor, and working in a greater capacity with the Legislature to receive meaningful input on this proposal.

The Legislature understandably wants to play this role before any proposal even could be submitted to FERC for final approval. Can you commit to parking the Bill in appropriations to allow for this expanded dialogue with the understanding that if an adequate resolution is not reached, the Bill would then be held in appropriations?

It would be my intent to, as I said before, to work on these issues. They're very important. My goal is to see the Bill move forward because that needs to continue. If we find in that process that it adds complexity beyond what we think that we can accomplish or that others coming in, being a part of that conversation, within the time frame that we would have in appropriations to work and it was necessary to go beyond that time frame, I would be willing to do that.

So that sounds like a yes to my question. Thank you.

Thank you. I know following the list, we have Schiavo.

Thank you. Thank you for that. I shared a lot of the concerns of my colleagues, which I don't want to belabor, but I just want to say, I know this is a monster that you are taking on. I know that your heart is in the right place. And we all are very concerned about reliability of energy for our constituents. Being from LA, we have seen the impacts of rolling blackouts. We know that lives are at risk when people's medical equipment depends on energy.

And as we electrify more and more, I sure can't go anywhere if I can't plug in my car, I'll tell you that much. I really respect that you are taking this on and really trying to solve a problem that we are all facing, and I want to thank you for that. It's deeply appreciated, and I know it's not been an easy road. I share.

The concerns coming out of the labor movement. Obviously, I think these concerns around labor are real. Right. And I've talked with people in the labor movement. I've talked with people outside of the labor movement. And there's pretty broad agreement that this could lead to a lot of lost jobs in our state.

And at a time when we are working so hard to transition from a fossil fuel economy to a green economy, we have to do everything that we can to make sure that we are protecting these good new green jobs. Right. And creating this new good green economy, living wage union jobs that can help with that transition for those workers who could be left behind in this transition. And so that's, for me, really important. And I appreciate your commitment to move forward and continue those conversations.

I think there really has to be a coming together of everybody who's concerned here because like you said, these are serious concerns. They are real concerns. And then just to say that I also share concerns around the governance piece. I know we had a prior conversation and I was like, it just feels a little bit like we're just handing our baby to someone and saying, just crossing our fingers and being like, please take care of it and do the right thing.

And we don't really get to have any input or come back to us. And so us being able to have some process, to be able to give that feedback, to give input, to still have our hands on it, I think is really important and would just echo my colleagues and I know you intend to work hard to find resolution to these challenges, but wanted to share some of my concerns around moving this forward.

I know there's a lot of moving parts and there's a lot of problems you can find. I want to make sure that we're really focusing on the ones that have the biggest impact and really do the most to get to the goal that I think we all want to get to. So just appreciate that and appreciate to make sure that we continue this conversation and really hold the line on those areas.

Thank you. Thank you, Mr. Chair. I want to start by saying I don't think anybody sitting at this table, including the author, wants to be in the position to have to have this conversation. We are where we are because of climate change, and it has changed the west in real and meaningful ways that require significantly more energy on extremely hot days, that are changing the way we create energy, use energy and have to think about energy.

And it puts us in what I see as an impossible position, which is what climate change is doing writ large. And I think that there are so many things that are so important in this conversation. And I appreciate Professor Wara talking about reliability. Again, I think everybody at the table agrees that reliability is paramount. As someone who lives in the area that had week long psps, people died from not having their medical devices, seniors died from falling in the dark.

I mean, when we don't have power on, it affects people's lives in real ways. And so this is really critical that we talk about how we ensure California's energy security. And that's the conversation that, Mr. Holden, I think you're trying to put forward and is such an important one. And to be Frank, I don't feel like any of the solutions are perfect. And so what is the best solution for the 40 million people that we're responsible for?

And what should drive that decision for every single one of us is our values and the values of the state. And so much of that is wrapped up in this decision, whether it's the incredibly good jobs that give people the living wage they deserve to retire in dignity and live in this beautiful state. And I found Richen's remarks about, well, we have enough jobs that confused me because even if this made more jobs, that'd be a good thing. Right?

So whether our entire workforce is at work today, if we could create more jobs, we could give more high paying wages to more people. So that would be a good thing. So I do think the idea of creating good union jobs and not putting the power into the hands of states that have already said they don't care about that right.

The right to work states that could care less about the workers and whether they have the dignity of retirement and good living wages and all the things that come with the ability to organize and be represented in the way the workers are represented here today, our climate goals. Right. We are a state that stands proudly behind our climate goals. And being leader in the world and pushing forward on that, also something that we want to be at the forefront of this conversation.

I think there's a lot of things here that are really challenging. And I guess part of what this comes down to at the end of the day, I think, is two things. And the first I would actually like Professor Wara to comment on because I don't think I got clarity where you think this question of the island is. Right.

So I kind of understand that we think that we might end up an island because if everybody else joins this RTO and then it's California and the RTO, we're last in line for the energy. When the whole west is burning in the middle of July. I think that's the. I've not, you talked about reliability, but would you comment on this notion of would we be able to continue to trade if we did go it our own way?

Sure. So there's two issues to think about. Thank you for the question. One is kind of contracted renewables and where those are coming from, and I think it is possible to, and we do it today to buy renewables from Nevada and use a schedule transfer. And the buckets do create limitations on that sort of thing and have helped to generate an enormous industry in California, which has created, as you point out, lots of great jobs.

And we need to make sure that industry continues to grow, not just stay the same, but grow. When I talk about reliability, the other advantage of what an ISO does is on any given day, it's saying which power plants turn on and which power plants don't turn on within its footprint. And so if we can bring things into our footprint that help to ensure our reliability, we win.

Right now, on a tough day in the ISO in California, the CEO is calling, say, calling up his former colleagues at Bonneville Power Administration and saying, hey, I could really use some of that power from the Columbia river hydro system, please. We really need it in California. And everybody helps everybody else, right, because that's what you do. But having more resources like BPA in our footprint is going to help to ensure reliability.

Having greater diversity of resources in our footprint, that where the sun is shining in one place but not in another. It's hot in California, but not in Oregon and Washington. Those are the kinds of things that help to ensure not just our reliability, but also the reliability up in Portland. And that's really what I'm talking about is having that ability to control a system that's larger, that's where the reliability benefit will come from. It's not so much a transactional thing. It's much more like what happens in the day ahead market and the real time market.

I've seen the charts of what the cost of energy is on the average day when things are great and it's pretty Low. Right. But then on those days when it's really, really hot and there's demand across the entire west, those prices go, they skyrocket. And actually the prices we pay are then covering for those really high days. Right. And if we could bring those high days down, then energy costs would actually be lower overall.

Do you believe this would do that if we had more reliability across the RTO? That there's a chance that we could bring those really high demand days costs.

Down or no, what it would allow us to do is rely on a greater diversity. Let me just back up and say there's ensuring resource adequacy, which is kind of, do we have enough power plants around to keep the lights on? Problem is something that we will maintain control over. Right. There's a western resource adequacy program. As far as I know, we're not planning to join that, but we will protect our authority to have that RA.

But certainly in a pinch when things are really hard, we are going to rely on imports just like we always have. Having greater control over that dispatch across a larger footprint will help. That's the message on reliable.

Okay, that's helpful. And I think I'm compelled by the author and what I'm hearing that I understand the current markets, but that again, if we are the only ones that don't join this RTO, that it could impact our ability in the day ahead market and et cetera, which we rely on pretty significantly. And so I guess then to me it comes down to this question of the representation, which I think you hear each one of us talking about over and over and over again.

And I think it's because when you look at the percentage of energy that we use in the west, it is significantly higher than any of our neighboring states. Right. And the idea, and I'm glad that it was clarified, that the Bill does say that the western states Committee requires the Committee to have an equal number of representatives from each state. So that isn't an open question in the Bill.

The Bill requires equal representation at this point, which I think is hugely problematic because we're not equal in the market. Right. And I think if we were to be able to correct that, and it says that those individuals should be appointed by the Governor and subject to confirmation by the Senate. Right. So those individuals would go through the process of the Legislature. Well, not the Assembly, but as always, the Senate, and theoretically represent the values of the Legislature and the Governor.

And if we had more control in that space, I think it could protect California's values. We could make sure those are individuals who are going to fight to keep production in California and keep our workers at work, who will make sure that there aren't increased greenhouse gas emissions, who will ensure the rates aren't going up, who will ensure that we have reliability. But we need that representation, and it's not here. The opposite is actually in the language.

And that's incredibly concerning to me because I just don't see how we don't put ourselves at the whim of right to work states, as you've heard Mr. Wetch say. And I think that's real and that is concerning to me. And I don't know, Mr. Holden, if you want to address that, I know it's something we've said we'd work on, but that is the thing in the Bill that I think most concerns me because I think it does take everything California cares about and put it into the hands of states who don't always share our values, although some do. Oregon and Washington also have their 100%.

And I think that's important to note. I know that we've referenced, or that it's been referenced about Utah and Idaho and other states, but, I mean, you're looking at Oregon and Washington and others that have been a part of this conversation before and together would represent 60%, if not more of the area I think it is.

And I've said before to each of you individually and here throughout the course of this meeting that I do believe that there are some important elements here that we need to really unpack. And I don't think it was ever our expectation that we were delivering a 100% present with a bow on it and all is done.

There's still a lot of work to be done, and there are a lot of people who are going to need to be a part of this conversation that are not sitting around this table right now, that are going to bring expertise, that are going to bring political muscle, that are going to bring a variety of important elements of how we can ultimately land on a governance structure that takes into consideration some of the concerns that have been pointed out. What does that look like?

We don't want it to be cookie cutter, but we also know that this is a part of the process that we're hoping that we can continue on. And as I've made a commitment, to the extent that we are unable to get that done, then it becomes a longer conversation with the particular Bill.

Yeah, and Mr. Wetch, I think, wanted to chime in.

Yes, I just wanted to put a finer point on that. The Advisory Committee, the policy Committee, the Bill dictates to California gets one vote. The Bill is silent on who selects the board Members that will actually have the power to make the decisions completely silent. Nobody on this Committee knows. Nobody in this room, nobody in this capitol knows what the process is going to be and who is going to select them and how they're going to be selected. It's not in the Bill.

Right. So I think, obviously an important point. And I do think I would add not only proportional representation but also the role of that western states Committee which was pointed out by Mr. Friedman. Trying to get all your names right by Mr. Friedman. Right.

Not only do we need representation, we need to know what they're going to do and what their role is to ensure California has enough oversight over this to give us the comfort to say, okay, this is the entity that's going to look out for the 40 million people we spend every day worrying about. And so I really appreciate your commitment to both work on that piece.

The whole Bill, I'm sure, also the piece Mr. Wetch pointed out and also this question of how do we get comfort that we hand this over to the CEC and ISO and they don't go strike a deal that we all hoped was a good one but wasn't right. And I think as long as this Bill is tight enough, we can feel comfort in that. But at this point it's not.

And so hopefully, I know we have your commitment and you have kept your word to me in the past, so I know you will today. Thank you.

Thank you. Gomez Reyes.

Thank you, Mr. Chair. It took me a while to warm up to the idea of regionalization with my chair when he was chair. And now as my colleague, it took me a while to get to that point. But I do recognize that if we're going to meet our renewable energy, our climate goals, to keep the lights on, to avoid the blackouts, we have to look at options.

There are two things that I have always said that are my biggest concern, and we've talked about it here, has to do with labor. And I see my IBW local representative here and pipe trades. Those are the jobs we have to protect. There's no question about it. And that has to be at the top of whatever it is that we do, that we protect those jobs. The second has to do with the control.

We are a sovereign state and to give up so much and to let somebody else have an equal vote. I've expressed that concern for years and I continue to have that concern. My colleague is right. The way the Bill is written does not provide that. It does not provide for California to have the seat at the table with the power that we should have at that table with our share of vote at that table.

It isn't in what we read now, I heard somebody talk about striking a balance. We have to strike a balance, but representation has to be representative of who we are. We're the fourth largest economy in the world and our goals have been, I suppose Washington and Oregon are along the same lines, but with the goals that we have had, we want to continue with those goals. We've had lots of sacrifice to get to where we are, and we have to be able to count on whoever it is part of that region to

Have the same goals that we do. So finding a way to take care of those two things. And I know with the buckets, there's been a lot of work there, and we're probably very close, but we aren't on the governance structure. The legislative review is for me extremely important. California oversight is extremely important. Union versus nonunion. We're not protecting our Members if we allow non union to take over the jobs. I, like my colleague, have great faith in you.

Whatever you have said, you're a man of your word. And when you say you're going to work on this, I know you are. And to be able to continue the conversation is extremely important. To engage the Administration is extremely important. If we were to let this go now, the Administration would never be involved and we would be right back here next year trying to get things started again. If we're going to move forward, it's going to be all of everyone who's here.

I'd like to have some women in the group, though, as we move forward. And then with the administration's involvement, I know that we can move towards something that, a semblance of where we want to be, but I know we're not there yet, but I trust that we can get closer. Thank you.

I guess the good news on that is that women here may be determining the fate of this Bill and not those who have been testifying. Point I want to make. I want to ask if there are any other questions. There's no one to my left, please. Calderon.

It's more just a comment. I just want to thank you, Mr. Holden. We've had many conversations in the last 24 hours, late at night, early in the morning, and I really appreciate your thoughtfulness and all the work that you've put into this Bill. You are a man of your word, and I also appreciate your commitment to work with the opposition and if necessary, make this a two year Bill. And I also appreciate the advocacy on both sides.

I've heard from a lot of you, and I think that this is what makes the process work. The opposition and I wanted to see if Scott has been in this thinking pose. So I want to see if there's any closing comments from Scott.

Yes, thank you for that. Assemblywoman Calderon I think that the discussions from our perspective has been really good. I think the comments by several of you recently, Assembly Member Rebecca Bauer-Kahan summarized, I think where we are at the moment, which is given. All of. The issues that have been highlighted and the concerns that have been framed, that my clients would be comfortable supporting moving the Bill out of Committee today for the purposes of continuing the dialogue and the work on this issue. I don't know. We tried for four years last time around, so I don't know that this Bill and this new structure is going to come to closure this year, but we're certainly willing to put in the effort beyond today.

Thank you.

Thank you. Another question? Comment?

Sorry, I forgot to ask my question earlier and appreciate the opposition's willingness to move forward. And I think we all want to see how this proceeds and am hopeful that there's some really good dialogue and some really good discussion to help get us to the next step. One of the things that I haven't heard, and I had to step out to present a Bill.

So forgive me if I missed it, but I just wanted to check, I know there's discussion in the Bill about tracking emissions, but one of the questions I just wanted to get clarity on is how do we know what kind of energy we're getting if it's green energy, if it is not green energy, what levers do we have around that?

What I'd say is it is harder when you don't have a seam to do that accounting, and I don't want to hide the ball on that at all. So if we had a regional market, it would be a more challenging effort to determine especially what is so called unscheduled power, where that might or might not have come from, and to ascribe emissions to it.

What I would tell you is that the ISO and its current formation has really been a leader on trying to develop better accounting methods, and they have pushed the Air Resources Board to do a better job on accounting for imports of electric power into California as the EIM has grown. The other factor I think that really is important to think about is the dynamics in the west that we are seeing retirements of coal fired power plants.

There's still going to be natural gas fired power plants both in California and in other places for a long time. And a question will be, how do we account for those emissions moving around the grid? But we're increasingly moving towards a time when there just aren't going to be coal plants to worry about. Thank goodness. And that's a huge victory for California. It's also going to make the accounting a little bit easier. But it's a hard problem. There's no perfect solution. There's only kind of rough justice that's frankly possible because electrons are going to go where they're going to go.

Yes, please.

Thank you, Matt Freedman. And with turn, I think two concerns we have on this point. One, the Bill itself says that the emissions tracking system that would be established by the multistate RTO would track emissions for resources directly dispatched to serve California load. Those are the words in the Bill. What's the problem with that? The problem is what's called resource shuffling. And this is actually a piece of what is embedded into the SB 100 targets that the state has, the 100% zero carbon electric target.

The concern being that you take a large footprint with both dirty and clean generation. You assign the clean stuff to the people who want to buy the clean stuff, the dirty stuff to everybody else who doesn't care. And maybe what you end up with is no net benefits because this is a big shuffling exercise. Will the multistate RTO try to get at this, get at the issue of shuffling and what's called secondary dispatch? This gets kind of technical. No idea.

In fact, the Bill doesn't really get into it. It specifically kind of avoids that issue. The other thing I'd point out is under the prior presidential Administration, there was a proposal to require subsidies of coal plants within rtos, and those subsidies would be paid for by all of the participants. Now today we have an ISO that has no coal in it. So that kind of a heavy handed federal policy from a hostile Administration couldn't be used to force California to subsidize coal from throughout the region.

But if we're all in the same footprint, there's clean and dirty generation, and we have a return of somebody in the White House who might try to force California customers to pay to subsidize coal. The multi state RTO actually provides a pathway to do that. That's something that we're concerned about, and it was specifically under consideration before President Biden got elected.

Any other questions, comments, concerns? I want to just thank everyone here who has provided testimony, and I guess I'll allude to the opposition's position not necessarily shifting entirely, but certainly creating a space for us to continue this conversation. And so thank you for that and to our colleagues who have asked the hard questions and the direct questions both to the witnesses and the author. So, Mr. Holden, you do have a I recommendation to move this issue forward.

We hoped and anticipated that the conversation that we've had today would be such that would allow us to continue in good faith the dialogue. And I hope that that's what's been kind of witnessed today. We created a space to make sure that we had the necessary back and forth. So I ask you to close, and then we'll entertain a motion to move this policy forward.

Thank you, Mr. Chair. And to the Committee, I would have expected nothing less. We put forth a resolution last year, ACR 188, to at least start bringing together the information so that we could be in a position to understand what's happened from the last time that this Bill or a Bill like this was before us and where we are today and the different elements of the marketplace that have changed politics, that have changed patterns of how other states are looking at, quite frankly, the policies of California and are changing.

You now have states that were not focused on 100% carbon free for a stated period in the future, 2045, that now have the same kind of policies that California does, and they're not Oregon and Washington. And so I think that our influence continues to radiate around the region.

And I guess for me, the other thing that's changed is what Dr. Wara talked about in 2020 when we had the rolling blackouts, even for a very short period of time, it created a lot of disruption around the state. And can you imagine having to continue to be in that position where we're having to address the demand based on flex alerts? It doesn't seem like that's the right way to go.

And clearly, we're still using the ones through cooling power, through gas powered to keep the lights on. We now have nuclear power back on the portfolio to keep the lights on. And so I'm very concerned about what that foretells in terms of the kind of crisis dynamics that we seem to find ourselves staring face to face at. There's a lot of work that needs to be done on this Bill. There are issues that I've made commitments to.

I don't think that there's one thing that the opposition has raised or that any of you have raised that I've said we don't need to talk about. I've said we need to not just talk about it. We need to try to figure it out. It's going to take other folks, as I said before, engaging.

And I think our energy entities play an important role in that because they understand the region, they understand the regulatory scheme and how all of their thoughts and input, I think, can come into this conversation, along with all the stakeholders and especially my good friends at labor. So I appreciate the discussion. I look forward to the conversation as we move forward. I think the chair for his leadership look forward to him being a part of this conversation as we move forward. And I respectfully ask for your aye vote.

Thank you, Mr. Holden. This does enjoy an aye recommendation, amendments have been accepted motion and a second and glad we didn't have to undertake any rough justice here. Thank you for your cooperation. And with that being said, I'll call the question, madam secretary.

Item number one AB 538. The motion is do pass as amended to appropriations. Garcia aye. Patterson aye. Bauer-Kahan aye. Calderon aye. Carrillo. Chen. Connolly aye. Holden aye. Mathis. Muratsuchi. Reyes aye. Santiago. Schiavo aye. Ting. Wallace aye.

That's nine. We'll keep the roll open. Okay. So that Bill is out. Congratulations, Mr. Holden. And we will. Can I entertain a motion on the consent calendar? Perfect. We have four Bills on the consent calendar. AB 1293. Dupat. As amended to appropriations. AB 1181. Do pass, as amended to appropriations, AB 1349. Do pass as amended to the floor. And AB 1580. Do pass as amended to appropriations. Please call the roll.

[Roll Call]

That's eight. That Bill is out, but we'll keep the roll open. Keep the roll open for absent Members. Mr. Wood is here, so we will take up AB 50. Thank you for your patience, Dr. Wood. I know. Patient man. Okay.

I will note the seat is still warm, so I'm not sure what that means. Good afternoon, Madam Chair. And Members. I want to start by thanking the Committee for their excellent work on this Bill. And I'm happy to accept the Committee's amendments. Members. California has led the nation with some of the most ambitious climate change goals in the world. Yet as we all know, creating goals and targets is only the beginning of the war on climate change.

The real challenge lies in winning the battles along the way. As we move to electrify our grid by 2045, we rely on our many partners, but most importantly, the electric corporations, the utilities, to make it happen. The truly scary reality is in many areas of California, they are not moving at the rate we need them to. Severe electric energization delays have become the everyday reality of utility customers in California.

Who would have thought that if you need electricity five years from now, you'd need to get in line? Right now, customers seeking electricity for new developments or for upgrades to existing conditions are experiencing huge spikes in their wait times for interconnectivity. My office, like many of yours, I'm sure, is hearing from countless customers who have applied for power and received what's called a will serve letter from their electric provider. These customers are not only individuals, but are builders trying to meet our housing goals.

New companies that want to hire people and contribute to local economies, schools, and the creators of much needed new and expanding healthcare facilities. After receiving these commitments to serve, customers pay large fees, sometimes hundreds of thousands of dollars, only to find out it might be months or even years until they receive power. Think about that. A developer builds 100 homes with significant financial outlay to only find out that the families wanting waiting can have the keys for several years. So it turns out that will serve.

Really means we'll serve eventually. In Humboldt County, in my district, local representatives learned last fall that 67 customers would be waiting years to turn the lights on. 23 of these new business applicants will be left waiting for power for four years. 37 customers were told that they would have to wait more than 10 years. An entire decade. That's totally unacceptable. We are failing businesses, housing developers, school districts, individual residents and more. AB 50 is about getting real about this problem and providing real solutions.

AB 50 does two critical things. First, it requires a CPUC through the regulatory process to determine the energization timelines and guidelines for utilities. Through this process, it also requests the CPUC to consider whether impacted customers should be compensated for the negative economic impact caused by long delays before the regulatory process is complete. Because this can take years, this Bill sets its own timelines for energization 30 days for upgrades to existing interconnections 90 days for new connections. I lost my last page period.

Pause, after discussions with the utilities, engineers and planners, I believe these timelines are fair and reasonable, though I know there is more work to be done in refining the language. Second, AB 50 requires utilities to evaluate and update their distribution processes and meet regularly with county staff to discuss the status of electrical capacity. Right now, we have local governments trying hard to meet housing needs and economic growth, and their planners need to understand the implications of electrical capacity restraints.

This Bill was crafted with input from a coalition of ratepayer advocates, business owners, engineers, local governments, housing developers, climate change champions and more. With me to provide testimony today is Ben Schwartz from the Clean Coalition and John Kennedy from Rural County Representatives of California.

Great. We'll do two minutes each. Whoever wants to go first.

My name is Ben Schwartz. I'm the policy manager with the Clean Coalition. Clean Coalition is a nonprofit dedicated to accelerating the transition to renewable energy and a modern grid through technical policy and project expertise. To start, let's consider how this Bill fits in with the state's ambitious climate and energy goals.

The 2022 CARB scoping plan projected that to reach our 45 goals, overall demand for energy is projected to increase by 68%, which will require an unprecedented rate of deployment, an efficient and predictable process to conduct upgrades as loads increase as needed, both at the main service panel for facilities and at the local distribution level. Slow existing processes, if not addressed today, will become significant impediments to progress in the future.

AB 50 will better codify the process for facilities seeking new or increased services and for governments conducting residential, economic and resilience planning. The Clean Coalition has experienced many projects limited by a constrained grid, such as Humboldt County, or a lack of timely utility service. For example, a farm in Santa Barbara learned that distribution grid constraints would make increased service impossible for at least five years.

In Northern California, several transitional housing projects received permission to deploy solar microgrids and later learned the utility would not provide a grid connection for over a year. And a housing community in imperial irrigation district received two equally untenable options. Pay $30 million for an entirely new substation or 10 million to completely reconductor each of the houses individually. What is needed is certainty. Ratepayers need accurate timelines. Governments need transparent and actionable information about the existing grid for planning purposes.

Grid capacity maps do exist, called ICA maps, but the granularity of the information needs to be improved and the maps need to provide actionable information to enable and enhance two way discussions between utilities and governments to forecasts, not just for now, but the coming years. For these reasons, I strongly support AB 50.

Thank you.

Good afternoon. John Kennedy with RCRC. We represent 40 of the state's 58 counties and are pleased to be here in very strong support of AB 50 today. You've heard of the experiences in Humboldt County and from some other experiences elsewhere. As you can tell, this is happening throughout the state. Political notes in a recent article, there are delays connecting hundreds of projects homes throughout the state.

Even worse, many counties and projects has been indicated are told it will take two to five years to provide service or increase load for existing customers. These delays are simply unacceptable, especially when utilities have a monopoly on the provision of electricity. These delays predate Covid and supply chain disruptions associated with COVID These lengthy delays have long throttled economic development and growth opportunities in many areas, especially rural areas.

More recently, these delays and decline in energy reliability are frustrating the state and local ability to meet energization and decarbonization goals. So what does this look like? The hospital delays in rural Humboldt County charging stations that are delayed in Sonoma county and elsewhere, fleets being able to comply with ARB's new fleet electrification rules move in delays for homeowners. The ability to commence operations at State of the art food processing facilities that traditionally rely on large quantities of natural gas but are trying to shift to electricity.

So these are the problems. AB 50 is part of the solution. AB 50 importantly establishes time frames for connection. AB 50 importantly tries to improve the distribution planning process to increase coordination between locals and their incumbent utilities so that the distribution plans more closely meet the needs of locals and local housing and economic development objectives. It seeks to facilitate information sharing between locals and utilities.

We need to know where the capacity exists on the grids in our areas so we can ensure that the local housing maps, the local economic development plans, are actually implementable and actionable. For these reasons, we urge your support of AB 50, and I've also been asked to convey the support of CSAC, the California State Association of Counties.

Thank you. Do we have anyone in the room who wants to add on in support of this Bill?

Madam Chair and Member Scott West, on behalf of the California Coalition of Utility Employees, we had an opposed position. We've worked some amendments out with the author. There's still some fine tuning that needs to do, but generally we're supportive of the Bill in its current form. Thank you.

Look at that.

Ethan Nagler, on behalf of the cities of Belmont, Foster City, Mountain View and Santa Rosa, in support.

Matt Friedman with the Utility Reform Network in support of the Bill. We've appreciated working with the author on where it is today. Thank you.

Katherine Brandenburg representing Sonoma Clean Power, in support.

Jason Ikerd, on behalf of the California Community Choice Association, also in support.

Hi, Ellen Madill, representing San Diego Community Power, in support.

Hello. Mark Fenstermaker, on behalf of Valley Clean Energy, serving the cities of Davis, Woodland and Winters in the unincorporated Yolo County, in support.

Hello. Audra Hartmann, on behalf of the California Large Energy Consumers Association, in support.

Izzy Swindler Shaw Yoder Antwih Schmelzer & Lange, on behalf of the Sonoma County Board of Supervisors, in support. Thank you.

Thank you all. Do we have any primary witnesses in opposition? I guess not everyone was as pleased as Mr. West.

Thank you, Madam Chair and Members of the Committee. Brandon Ebeck here on behalf of Pacific Gas and Electric Company. While we submitted an opposed letter prior to this hearing, we have been committed to working with the author to address the issues and customer energizations, and the amendments today take a significant step in the right direction. We appreciate the author and his staff's continued engagement and outreach since last fall to address the very complex problem that we're dealing with here.

I'd like to start by saying that PG&E acknowledges the dissatisfaction with customer connection timelines and acknowledges that the author's district has been subject to particularly acute issues. We're not satisfied with our timelines either. PG&E has already taken steps to begin fixing these issues and customers already are experiencing some improvements. We'd also like this Committee to know that PG&E has spent more resources on new business connections in the last few years than we ever have.

In fact, we've invested more than the authorized spend by our regulators in the General rate case, which has more than doubled in the last five years and is still not enough. We must acknowledge how the existing regulatory process impacts the ability to have cash flow and resources to invest in this basic work while remaining affordable for customers. I highlight this because of the potential false assumption that somehow PG&E has not been invested in connections we have and are continuing to do so.

At the same time, PG&E has invested unparalleled financial and worker resources towards wildfire safety in recent years, which I believe we all agree is the absolute right thing to do for communities. This unprecedented wildfire safety spin has come in combination with increasing load demand amidst growing electrification, electric vehicle buildout, housing, cannabis cultivation and other unexpected economic development changes in our territory.

So while we agree PG&E can and will get better and faster at customer connections, we ask that you work with us and the other utilities on policy solutions that fix the issues and align legislative and regulatory frameworks to meet increased demand and not simply set artificial timelines and penalties that only serve to make things harder or worse or fail to account for customer responsibilities or dependencies that are outside of utility's control.

With me today in the audience is Matt Ventura, who is our senior Director of service planning, who can answer any technical questions about our process and what can be done to improve performance. And lastly, we look forward to the Committee holding an oversight hearing in the coming weeks or next month about customer interconnections and distribution planning process.

And we also welcome all the Members and staff for a tour of our new business command center, which is in our Oakland headquarters, to get a really deep dive into what we're doing to address this. Thank you.

Thank you. Anyone else that wants to add on an opposition here in the room?

Good afternoon. Andrew Kosydar with Southern California Edison. Really appreciate the work of this Committee. The Member, the author, and also the staff. We respectfully are opposed to AB 50. Thank you.

Good afternoon, Chair, Members Lourdes Ayon here with San Diego Gas and electric in opposition.

Thank you. Seeing no additional folks wanting to add on? Any Members have any comments or questions? Seeing... yes, Ms. Schiavo,

I just wanted to say thank you so much for bringing this is, it's been eye opening being on this Committee and having people come into my office and talk about interconnection problems and at a time when we are working to transition to make our energy goals to be told that it's going to take a year or two or four years before solar battery storage locations can be connected or housing.

When we are in the middle of a housing crisis, whole housing communities are not being connected. And so it's something that we have to figure out. I understand it's a struggle on the side of the utilities, but I think we have to dial down on what really is the issue and figure out how we can move this forward much more quickly because as we know, we just had a very long conversation about regionalization.

And one of the challenges is that we are worried that we can't provide the kind of energy that we need for demands, especially going forward. Right. And so we have to get faster at connecting, at connecting up our grid to people who need it and sources that can provide it.

And so I know we're doing a whole host of bills around this issue today, but this is, for me, popped up as the most important issue that we really need to take on in terms of being a barrier for us to getting where we need to get around addressing our housing crisis, around addressing our energy challenges to make our goals as well. So just want to say thank you for that.

Ms. Calderon.

Yeah, it's just more of a comment. Thank you, Assembly Member Wood, for talking to me earlier, and just wanted to note that I share my concern with you about putting timelines and deadlines around this type of work because it can be a safety issue, and that's my primary concern. But I want to thank you for having that conversation with me.

Thank you. Seeing no one else, I'll just say I think we've hit on a clear need. We have four bills today on the topic. So clearly it's something that Californians are concerned about up and down the state, and I think it's really critical work. So I appreciate your leadership in this space. And I couldn't agree more with my colleague from the San Fernando Valley that it's stopping a lot of our goals.

And in mean, we're hearing from hospitals and other essential resources that this is a critical need. So we need to get this fixed. So thank you. With that, would you like to close?

Yeah. I want to thank the Committee for their Attention to this issue. When we had a hearing last year, when we were discussing the climate package, this Committee convened a hearing in August. I actually sat in on this hearing, on that particular hearing, and one of the things that came out of that hearing was comments about challenges with transmission connection. And I remember asking some pretty pointed questions to everyone in the Administration, everyone, what are we doing about this issue?

And it became apparent that it wasn't as high a priority at that point. There's an awareness. Obviously, people knew this was a challenge. And then a few weeks later, I found out in my own district that suddenly I've got huge swaths of areas that are going to be waiting for years and years and years for power. And so as we started digging through this, we found it isn't just our district, it's other parts of the state.

And so I welcome the other utilities to work with us on this as well. We've been working with the opposition in General, but it clearly is not just a position in my district in Northern California. This is a statewide issue. It may not be to the scale that I'm experiencing it, but it's coming, folks. And I don't like penalties. What I want is for folks to be able to do the right thing in a timely manner. With that, I want to thank you for your time, and I know there are other bills on this issue, so I will just at this point, respectfully ask for your aye vote.

Thank you. Do aye have a motion on the matter? Thank you. Motion by Assemblymember Schiavo seconded by Mr. Connolly. Let's call the roll.

[Roll Call]

We'll keep the roll open. Thank you. Thank you, Mr. Wood. We will move to Ms. Calderon despite the fact that she's last.

She's the only one here, so we'll take up AB 1513 when you ready, Miss Calderon.

Thank you, Madam Chair and Members, I want to thank the Committee for working with us on this Bill, and I will be accepting the proposed Committee amendments. Assembly Bill 1513 would stabilize electricity fluctuations by allowing an electric utility to request CPUC authorization to finance wildfire mitigation efforts, including their operational and maintenance costs, through securitization.

Existing law allows electric utilities to seek CPUC authorization to take out bonds and tie them to ratepayer bills, or securitize the bonds to pay for just and reasonable cost as determined by the PUC. With longer and more destructive wildfire seasons, electric utilities have increased their wildfire mitigation efforts, such as their vegetation management. These associated costs are typically required to be recovered by electric utilities within 12 months without the option of stretching the recovery period.

With financing mechanisms like a bond, constant wildfire mitigation can lead to significant rate hikes for ratepayers. This Bill, I lost my spot. This Bill is a reintroduction of my Bill last year. AB 2937 upon the concerns raised by this Committee last year, I have narrowed the Bill and removed an electric utility's ability to securitize just and reasonable costs stemming from any wildfires in 2018. Rate affordability is a priority of mine and the primary focus of this Bill.

Simply, AB 1513 is seeking to ensure the CPUC consider the short term rate stability that securitization provides when evaluating securitization applications. Here with me to testify in support is Adam Smith from Southern California Edison, Maritza Mekitarian from San Diego Gas and Electric.

Thank you, acting chair and Members of the Committee. Adam Smith, Southern California Edison sharing our strong support for AB 1513, SCE applauds the leadership of this Committee on the issue of affordability. We've been here for the Committee hearings. We've heard the important questions and perspectives from the chair and other Members. Here we see rates rising and we're all looking for ways to smooth the spikes and offer relief to electric customers facing increased bills.

That's why we thank assemblymember Calderon for bringing this important Bill forward and strongly support it today. As you've heard from the author, AB 1513 would allow electrical corporations to file an application requesting the PUC issue a financing order to authorize the recovery of wildfire related expenses. For context, in the last couple of years, we've incurred approximately 325,000,000 in incremental wildfire mitigation and vegetation management work. Our wildfire and veg management work is necessary every year.

It's necessary to keep our system safe, but we also recognize it has impacted affordability and we will continue in the future. AB 1513 puts an important tool in the PUC's toolbox to help smooth these necessary costs over time. The Legislature has previously established securitization as a tool for spreading out the rate impacts of other utility wildfire costs.

Securitization allows utilities to access funds immediately to start our important work through the sale of bonds while spreading out the cost recovery of these projects over the approved securitization period. That securitization period would be approved by the Public Utilities Commission, but existing law does allow the PUC to consider the benefits of rate stability when evaluating whether to allow electrical corporation to use this option. And we think it's an important consideration.

And as your Committee has highlighted, it's important to think about rate stability and benefits to customers in the short term, but also in the long term. I think that was the Committee amendment, and we think it was a good one. In closing, AB 1513 will help manage significant rate spikes caused by the immediate need to harden our system against the threats of wildfire and climate change, and also deliver on our shared safety and affordability goals. For those reasons, we support the Bill today and urge your aye vote.

Thank you.

I am not Maritza, Kent Kauss on behalf of San Diego Gas and Electric in support of the Bill as well. As you know, the last several months we've had experience with significant high bills. Our rates have been increasing at a rate higher than inflation. We have wildfire costs. We have, as we just discussed on the previous Bill, a lot of energization costs that are heading our way. This is one of the tools that we have to help mitigate some of those rate impacts.

There's a lot of investment. We're going to be investing billions of dollars as we move towards the 2045 decarbonization goals. This is just one piece that will help us mitigate those rate impacts and ask for your support.

Thank you. Do we have anyone else who wants to add their support here in the room?

Good afternoon. Brandon Ebek, Pacific Gas and Electric in support.

Thank you.

Good afternoon. Brady Van Engelen, California Chamber of Commerce here in support.

Thank you. Any opposition to this Bill? Yes, come on up.

Thank you. Madam Chair and Members Bruce Magnani, on behalf of the California Large Energy Consumers Association, by way of introduction, CLECA Members take their load at either subtransmission or transmission levels. So they have bills that range in the hundreds of thousands, if not over $1.0 million a month. So these are large energy consumers, as the name implies, and they provide goods and services that we require in our modern society, including medical gases, food distribution, cold storage, cement, steel, et cetera.

And we want to point out, I think the analysis got this correct in that securitization CLECA reluctantly agreed to in Mr. Holden's 1054 a few years ago, understanding that the costs needed to be mitigated. But we were very consistent in our opposition to on m costs being securitized, because those are maintenance costs. They are not capital costs where the ratepayers get the benefit over time of the use of that capital expenditure. These are current costs that are taken on today.

And we participate at the CPUC and we see this as kind of going around that process where they specialize in rate making and approving rates and one of the most recent proceedings, Southern California Addison asked to securitize a portion of their costs on O and M, and the PUC rejected it as not being just and reasonable because those costs, the securitization, may flatten rates today, but by SCE's own numbers, the future rates could be as high as 35% higher for future ratepayers. So for all of these reasons, we're opposed.

Thank you. Anyone else want to add in an opposition to the Bill? Seeing none, I'll bring it back to the Committee. Any questions? Yeah. Ms. Schiavo.

I appreciate that. A lot's being put on energy companies right now, right. For us to be able to meet our energy goals and that you've got to be able to recover some of this, that it's really challenging. I share some concerns about what this could mean for rate payers, and I'm really worried that our rates continue to just go up and up and up and up.

And so I hope that there's some discussion that can continue around addressing some of the concerns there, but happy to support it today and hope those conversations go forward.

Thank you. Okay, well, I'll say that I live in a high wildfire zone, and my constituents are also concerned about rates. So these are the two things that vex my constituents, wildfires and high utility rates, and they tend to intersect.

And so I appreciate the effort by the utilities to ensure that they have the resources to prevent the loss of life and community that results from the wildfires, and I'll be supporting the Bill, but I think it is really critical that as the years go by, we ensure that we keep those rates as Low as possible because it hurts Californians when they go up with that. You have a motion? Second, Mr. Connolly. Seconds. Wait. Do you want to close? Sorry.

Thankfully. Ask for an I vote.

Let's call the roll.

[Roll Call]

That's 50. We'll keep the roll open. Thank you for your flexibility, Ms. Calderon, to keep us moving. Mr. Berman, you are up. We're back in file order with AB 643.

Do you know that? I was on a radio commercial? Explains it all.

Does anyone else want to chair the Committee?

I'm doing great. Does anybody else want to present?

Just curious. If there were options.

I didn't. Well, I wish I saw another author in the room. We could just move on to another Bill.

Madam Chair and colleagues, I'd like to start by thanking the Committee consultant for her work on this Bill. I will be accepting the Committee's amendments today. As amended, AB 643 directs the CPUC to open a proceeding related to electric rule 21 in order to adopt mechanisms to enforce interconnection timelines, reduce administrative burden, and provide transparency and certainty to customers. The Bill also directs the CPUC to address a number of common areas of solar interconnection delays.

California will need to roughly triple its current electricity power capacity in order to meet our goal of becoming carbon neutral by 2045. This means that California will need to sustain its expansion of clean electricity generation capacity at a record breaking rate for the next 25 years. We know how important and timely solar adoption is, and yet solar interconnection is riddled with prolonged delays.

As we've heard today, solar customers across the state are experiencing unnecessary wait times as they try to get their systems connected to the grid. These delays are a significant burden for Californians and California businesses, who are struggling to get, maybe sometimes even a response from the investor owned utilities. Interconnection delays also stall the state's critically important progress towards cutting carbon emissions from generating electricity.

The state has established interconnection timelines, but these timelines are not enforced, and there is no accountability mechanism for the IOUs or the PUC. AB 643 creates an open and public stakeholder driven process to ensure we reach a fair, balanced solution. Respectfully ask for your I vote. And with me today are Michael Lindsay of Ng Solar and Brad Hevener of California Solar and storage Association.

Great. Two minutes each, when you're ready.

Thank you, ma'am. Chair Members of the Committee, Brad Hebner. I'm the policy Director of the California Solar and Storage Association. In addition to my work participating at the PUC on interconnection issues, I tend to be a point person for complaints from contractors and customers about utility delays in interconnection. And I can tell you I get a lot of complaints. Customers are upset and frustrated by the delays and inconsistency from the utilities. It causes financial harm to the customers.

People tend to borrow money to build things like solar and storage. And if you have to pay those loans without being able to use the facilities because of utility delays, you're double paying, and it's financial harm that really upsets customers. There are timelines in rule 21 for various steps in the process. They're well outlined in the Committee analysis of this Bill. The utilities have certain number of days to do certain steps of the process, and we can live with those numbers, but they're not enforced.

There are no consequences for repeated systematic failure to meet those timelines. Another thing I'd like to point out is that customers pay for the utility time to process and study the interconnection reviews, that there is an interconnection application fee that is based on the real cost of the utilities to process and study interconnection requests. So we're paying for the service and not getting it.

Currently, utilities have the ability to adjust those interconnection application fees if their costs go up to really meet the timelines in rule 21. There was an extensive discussion of this by a stakeholder working group at the CPUC four years ago, and we got consensus on getting more detailed reporting of the extent to which utilities are meeting the timelines or failing to meet them. We did not get any consensus on what to do afterwards and the only thing that existed is a workshop.

After some period of reporting, there will be a workshop at the PUC, and that has finally been scheduled for this summer, and that's good, but workshops come and go with no action, and we need the Legislature to direct the PUC to adopt enforcement mechanisms for rule 21 timelines. Thank you.

Good afternoon. My name is Michael Lindsay. I'm a project manager at Ng. Ng is a company we partner with customers to provide renewable energy solutions. Just wanted to share a real life example today of a specific project we have with Yukipa Valley Water District. The water district serves 51,000 residents in San Bernardino and Riverside counties, providing drinking water, recycled water, and sewer services. In recent years, the district has had many utility outages from fires and psps events.

Because of this, they partnered with NG for a microgrid solar and battery backup system. The Internet connect applications for the projects were submitted in June of 2021, and the utility did not complete initial review of these applications until March of this year, almost two years. It took over 20 meetings with the utility and numerous emails to complete the initial review. And now we have begun the utility engineering studies.

That will take much more months, and then after that we have the actual timeline of them constructing the utility upgrades they will require, the two and a half years it will take to complete the review of this initial review and the engineering studies is going to result in a massive cost increase, loss in savings for the customer, and continued risk of outages for the water district. Microgrids are a path customer and companies are pursuing, and it's not unique to this project.

If the utility had completed the initial interconnection application review in a timely fashion, instead of partial reviews and delayed responses, the utility could have started their engineering study 18 months ago. The project would be operational today, and their customers would not have a risk of an outage, and their drinking water would be safe. Thank you.

Thank you. Anyone in the room want to add on in support of this Bill?

Madam Chair, John White with a Clean Power Campaign. As the Committee's heard today on other occasions, this interconnection problem is a nightmare and it's up and down the system. It's everything from truck stop, battery chargers.

Name organization and support, please, sir, you're okay.

Support the Bill. John White, Clean Power Campaign

Madam Chair and Members Delaney Hunter, on behalf of the Bioenergy Association of California and the Solar Energy Industries Association, both in strong support. Thank you.

Hi, Kim Stone of stone advocacy. I represent CALCIF, but have been asked by a number of organizations in support to list this. I'm going to go super fast. Ecoactive 101 Romero Institute, Climate Reality Project, Orange County Chapter, Sustainable Mill Valley Climate Mobilization, San Diego.

Extinction Rebellion San Francisco Bay Area Oil and Gas Action Network Morongo Basin Conservation Association, Sunflower Allowance 350 Bay Area Action Indivisible East Bay. The Climate Reality Project, Silicon Valley Wellstone Democratic Club, Alameda County Democratic Party Sunrise Bay Area Aztec Solar Sunrun Teraveri Sonova SunPower JKB Energy Ng Project Development Solutions New Gen Energy Sierra Club California San Joaquin Valley Democratic Club, Albany Climate Action Coalition Resource Renewal Institute, Solidarity Info Service Racolete Energy Santa Cruz Climate Action Network. Mcgee Spalding, neighbors in Action Center for.

I think he was just here. Environmental Working Group, 1000 grandmothers for future generations. Thank you. I mean, you spoke for 1000 grandmothers, so it's perfectly acceptable. Hi, Ellen Medill, representing San Diego community power, in support. Catherine Brandenburg, on behalf of Sonoma clean power, in support.

Ben Schwartz, on behalf of the Clean Coalition in support.

Thank you. And do we have a primary witnesses or witness in opposition?

Good afternoon again. Brandon Ebeck with Pacific Gas Electric. Us and the other utilities have an opposed position on the Bill in print because it would be overly onerous for reporting. It would have unreasonable timelines. And just to clarify, the rule 21 proceeding and all the timelines in there, they were kind of picked out of a hat. There were metrics in a workshop setting that everyone agreed in a collaborative fashion of what would work.

So we're working towards those and we're reporting, and the data from that is in the community analysis. And on average we still connect small rooftop solar within five business days. We typically receive about 100,000 applications for rooftop solar every year, and we've had 100,000 so far this year because of the changes in net billing tariff. So there's a big backlog currently. We'll hope to work through that.

Finally, we are looking forward to seeing the amendments and possibly might be on neutral, just depending on what the language looks like. But thank you.

Thank you. Laura Parra on behalf of Southern California Edison will be reviewing the amendments and hopefully go to neutral as well. Thank you.

Thank you. Chair Members Lourdes Ayon with San Diego Gas and Electric also will be reviewing amendments and hoping to support afterwards. Thank you.

Thank you bringing it back to the Committee. Yes. I don't think you were here earlier because you were out missing your turn.

That hurts.

But what I was saying is, no, I just want to thank you for bringing this forward. It's a huge, huge issue and something I have heard from nearly everyone who's come to me either around connecting up solar battery storage sites or housing. And also just, I was looking at some of the timelines.

I don't know if there's still conversations going on about fine tuning some of those and making sure there's broad consensus around them, because I think that was the only thing that I wanted to just check in on. But we can't be waiting 1, 2, 4 years for housing to get online or energy when we're transitioning to net zero to come online. And so I think this is one of the most urgent issues we can deal with here.

Appreciate that. Thanks. And that's exactly what we're trying to accomplish. And if the timelines need to be reevaluated, then that's something that can happen. But if we have timelines, they should be followed. And so we're just asking that the timelines that currently exist be followed.

Thank you. That sounds so reasonable. I try. Although I personally am regretting my purchase of solar right now, I do think solar rooftop solar is really important. And obviously, with reliability issues as they are, we need to make sure we're getting as much energy on the grid as quickly as possible before the summer heat hits. So with that, do we have a motion moved by Miss Schiavo, seconded by Mr. Holden? Would you like to close?

Respectfully ask for aye vote thank you.

[Roll Call]

Thank you.

Thank you, Mr. Berman. Mr. Gabriel, you are up next.

This is AB 1482. Mr. Gabriel, when you're ready.

Just waiting for our.

Here he comes.

Here we go. All right, we're ready. Okay, no problem. Thank you very much. Madam Chair and colleagues. I want to start by accepting the Committee amendments. I want to thank the Committee staff for their thoughtful feedback and assistance on the Bill, and also thank you for the whimsical headings in the analysis. We appreciate that. As all of you are well aware, we have committed to electrify our transportation system to help meet our ambitious climate goals.

And the only way we're going to do that is by building a lot more EV infrastructure in this state. We need about approximately 1.2 million chargers. We currently have about 70,000 chargers. So we are a long way from getting to where we want to be. And one of the significant challenges there is delays in energization.

And as was noted by some of the supporters of this Bill, it cost approximately 50% more, on average, to design and construct an EV station in California than to build a similar station in another state. And a lot of that is driven by permanent delays and energization delays. And so this Bill aims to create uniformity across California by requiring that all public electric vehicle chargers be energized within 125 days of an application.

This is, and I should be very clear, as the analysis notes, our way of starting a conversation around what that timeline should be. The Bill has built into it a public process for feedback, a public process to allow for flexibility. But really, we need to create an environment, a regulatory environment, create uncertainty, so that those who are going to build and deploy the EV infrastructure that we desperately need can do so with that knowledge and with that comfort and with that certainty.

So we are already far behind, but I think by getting all of the stakeholders aligned and on the same page, we can do that. I will note that we had some late opposition that came in, but we are firmly committed to working with the POU's, the IOUS, everybody involved in this process to get on the same page.

I think we all share similar goals and we need to think about how we can work together, given the practical realities, given the demands on the POUs and on the IOUS for this and for everything else, but how we can work together to come up with a consistent, uniform process that is going to work and is going to give us the certainty we need. So with that, I have with me to testify Ryan Mccarthy from Electrify America and would respectfully request your. I vote. Thank you.

Thank you, chair and Members, my name is Ryan Mccarthy. I'm here on behalf of Electrify America. We support AB 1482. Electrify America is the nation's largest open DC fast charging network for electric vehicles. Just to add a couple additional statistics here as of the end of Q three. 2022 new service utility interconnection process for electrify America stations averaged 190 business days, or about 38 weeks, in California. Since that data was reported, those numbers have been going up outside of California.

For reference, this is 117 business days. And since that data has been reported, those numbers are going down. We realize that there are a number of priorities and issues that utilities have to address, but we believe 125 business days is a reasonable expectation for energizing EV charging stations in California. And it would be powerful and helpful to have a statewide, consistent guideline towards that effect. So for these reasons, we urge your support of the Bill and thank you for your time.

Thank you, sir. Two minutes when you're ready.

Madam Chair Members. David Bunn, representing the Electric Vehicle Charging Association. We're an Association of 20 charging companies and just don't need to reiterate, but the energization issue is one of the major challenges of getting chargers up and online throughout the state. So we strongly support the Bill today. Thank you.

Thank you. Anyone else here in the room that wants to add their support on seeing nobody? Do we have any primary opposition? Appreciate the participation in denim day. Two minutes each, when you're ready.

Thank you, Madam Chair Members. Patrick Welch with the California Municipal Utilities Association. Our public power Members are working with their communities to provide EV rebates and facilitate the installation of EV chargers. At the same time, they're decarbonizing their power systems and rewiring the entire grid. Appreciate the comments from the author about commitment to resolve our concerns. We are not in official opposition, but we do have strong concerns with the Bill. We submitted amendments to the author and Committee three weeks ago.

We're hopeful that those will be accepted in their current form or in some form. The Bill, as it's currently written in our view, proposes a one size fits all approach that doesn't reflect the unique communities that our Members serve. The Bill asserts an interim CPUC decision on public power utilities which are not subject to PUC jurisdiction.

The Committee analysis, and I'll read notes that it is not clear how much, if any, input the POU's were allowed during the process, or how representative the 125 day timeline is of POU energization efforts or deficiencies. The application of an interim CPUC decision with clearly acknowledged data limitations to a separate set of utilities which are largely independent of the CPUC raises questions as to the appropriateness of the timeline proposed by the Bill.

POU's were not involved in the CPUC process and we agree it is not appropriate in the current form to extend it to POU's. The Committee's analysis also notes that staff time and workforce limitations, particularly for smaller POU's as well as supply chain issues such as true transformers, are primary drivers of project duration. We think the Bill needs to reflect those real world conditions. Our amendments do that.

Just to give you a specific example, we have a Member utility that is working with Tesla to new Tesla chargers. They cannot get the transformer that they need for that bank of chargers until 2025. That is a circumstance that is outside of the utility's control. And we think it is a little bit unfair to hold those utilities to an average energization timeline because of those reasons. So hopefully to work with the author's office, look forward to sitting down with him and his staff and the Committee to work that out. Thank you.

Thank you.

Great. Adam Smith, Southern California Edison in a respectful, and I want to stress respectful opposition to AB 1482. I informed the Committee, and I think this is the mention of the late opposition. We didn't have a read and I think the Committee analysis kind of agreed with that read that we weren't actually implicated in the timelines portions of this Bill. And so once we realized through the Committee amends process, we would be brought in.

That's what sort of spawned, I think the joint IOU opposition letter that we submitted. This Bill, I think as you heard, would be codifying 125 day energization target that is in a draft PUC resolution. I got it right here. Draft is right at the top. It's on the top of every single page. The draft resolution and Committee analysis point out that the PUC didn't have data to set clear energization targets. At best, 125 days is a mildly informed guess in their own words.

And from the draft resolution at the PUC put forth. It says that they do not have sufficient data to determine an appropriate permanent average service energization timeline at this time. And I would pause it if the PUC didn't feel like they had the ability to start with a permanent number. I don't know why the Legislature would vote on one today.

We think putting any number in a Bill is premature, especially one that is in draft pc documents and clearly not supported by data, in the Commission's own words. This resolution is great, though, and it actually starts taking us towards the goals that are outlined in this Bill. It directs us to go out, collect data, hold workshops, report back, so the PC can set a standard timeline for these EV connections.

With the benefit of a full year of implementation data, the PC can issue another resolution adopting a permanent service energization timeline, maybe out in 2024. That's the regulatory path we are on, and it's going to set informed data, informed timelines for energizing EV projects. There's a clear path at the pc to get towards this goal and to push a kind of a holistic look at all interconnection timelines, which I think we've got a number of bills on today.

I'm going to close right here in respectful opposition, because it really is respectful. We completely agree with the goal of getting more evs on the road, more electrical vehicle charging infrastructure out there in the world. We think the Bill is premature. Timelines aren't based on data, and there's already a pc process to deal with these issues underway. For those reasons, we respectfully ask for your no vote.

Thank you. Any additional opposition in the room? Name, organization and position, please.

Madam Chair and Members Greg Cook, representing Northern California Power Agency. I'd like to associate myself with the comments made by CMUA. Thank you.

Thank you. Chair Members Lourdes Ayon with San Diego Gas and electric in opposition.

Good afternoon. Brandon Ebeck, Pacific Gas and Electric. Align or comments with SoCal Edison. Thank you.

Thank you. Okay. Seeing no additional comments. Bring it back to the Committee. Yeah. Mr. Connolly.

interested in kind of just a response to the opposition?

Yeah. So I'll just say we reached out to folks ahead of time before we introduced them, let them know that our understanding, we intended to include both IOUS and POUs in this, and then took the amendments to clarify that at the recommendation of the Committee. So we were very transparent about that. The 125 days is not something we just pulled out of thin air.

This is something that, as the analysis points out, the EV industry recommended 90 days. The IOUs proposed 160 days the PUC looked at this and said, well, this is something in the middle that maybe people can work towards. But I do agree we need more data. We need to have a process here. And so the point here is to begin a conversation around that. We are very committed to talking with all folks, understanding the realities.

We're not going to ask people to do things that are impossible. The Bill already has certain exceptions. We are open to hearing other circumstances where there might need to be exceptions because we want to be realistic and we want to understand what the demands are of different size utilities and what they can do.

But with that, we do think the sort of overlying idea here of having a uniform, consistent statewide standard that everybody can feel good about, irrespective of whether it's an IOU or a POU that's serving that area. That consistency, I think will be essential for the deployment of this EV technology. And that's not something we're saying. That's something that the industry is saying. Right. And they have data to support that. So I think you're hearing a respectful tone both ways.

We are 1000% committed to sitting down, talking with folks, understanding how we could do this, but we're behind on meeting our goals here and so we don't want to slow the process down anymore. I think it's important for the Legislature to get involved, push folks towards together. And again, we've already built flexibility into this process, robust opportunities for public participation, robust opportunities to actually change things from year to year as circumstances change.

And so I hope we'll have the opportunity to continue to move this Bill past the Committee and continue to have those conversations because we want something that works, but ultimately that's something that pushes us towards our goals. I appreciate that and I'll move for approval.

Thank you. Mr. Connolly, do you have a second? Okay. zero, yeah, no, of course. I just wanted to get the second. Sorry, Calderon. We're moving right along here.

So as someone remember we talked briefly earlier and I just learned of the late amendments and I understand that the original intent of the Bill just it dealt with POUs, but then in the amendments it pulled in the IOUs. And so you committed that you would continue working with the opposition. And I appreciate that. So that being said, I'll support the Bill today.

Thank you.

Thank you, Ms. Calderon. You good? Okay. She's good. So, seeing no additional comments, we have a motion and a second. zero, would you like to close, Mr.

Respectfully request an aye vote.

[Roll Call]

Thank you. Ms. Friedman, you are up. AB 914. Mr. Ta, see you. You're next.

Good afternoon, Madam Chair and Members. We accept the suggested Committee amendments on the top of page six of the analysis. The analysis also notes that I took an amendment in the natural resources Committee that removes the CEQA exemption in the Bill. AB 914 is an attempt to get us moving quicker in terms of being able to transmit renewable energy.

It would establish a two year time limit from the date that the application submitted for a lead state agency to complete the sequel review and approve or deny an application for an electrical infrastructure project. We all know that climate change is an emergency and this will help speed up the process. We, I believe, have no registered opposition.

I'm not going to say that, but we had bipartisan support in the last Committee and the goal is to work with the natural Resources Committee and with stakeholders on limiting the CEQA exemption to where it's acceptable to the environmental community that it has strong guardrails, but also helps our utilities move forward with their projects more quickly. And with that, we have a couple of witnesses.

Thank you, Ms. Friedman. Two minutes each. You've both been up here. You know the drill.

Yeah, thanks. Yeah. Thank you. Acting chair, Members of the Committee, Adam Smith, Southern California Edison in support for AB 914. Over the past few years, the state has dramatically increased the ambition of our climate goals and Edison supports that. We've enshrined carbon neutrality and law. We've passed regulations in the state to dramatically convert fleets and buses over to electricity. Massive electrification is coming. We need to prepare our grid for carbon neutrality, and we need to do that in a way that's responsive to our customers.

According to our forecast from the state, electricity needs. So that's demand increase 40% relative today by 2035. That's 12 years from now. It takes us candidly, on average about 10 years to build a transmission line, 10 years to build a substation. That's a lot of work that needs to be done in a short amount of time. And that electricity demand just ramps up beyond there as we move towards carbon neutrality, 80% higher than current levels of demand by 2045.

As a state, we need to move more swiftly when customers need upgrades or when they are connecting Low carbon solutions. We've heard that in a number of the bills today. We think there are opportunities to streamline permitting. As Assembly Member Friedman has mentioned and applaud the focus that she's brought to this issue. We know there will be ongoing discussions with this Committee, the Natural Resources Committee, and other stakeholders, and we look forward to those.

As amended right now, AB 914 would require a lead agency to complete its environmental review for an electrical infrastructure project and to approve or deny that project within two years of submission of an application. But if the state doesn't meet that soft deadline, the Bill would require the state agency to submit to the Legislature a report for kind of clarifying why that could not be completed within that time period.

This will give us an understanding of why some projects take longer to approve than sequel guidance calls for, which can inform further policymaking. We think this is a reasonable Bill, an important conversation. We respectfully ask for your. I vote Kent Kaus with San Diego Gas and Electric. I'll associate my comments with Adam Smith's as well. But just point out that this is the first and only Bill being discussed by this Committee today that actually gives us the tools to get where we're trying to get.

We want to connect customers. We don't like customer dissatisfaction with our interconnection or energization projects. This Bill addresses one of the concerns that we have in doing that work. That is not easy. It does take time, and with that, we ask for your support.

Thank you. Any additional support in the room? Name, position, organization.

Madam Chairman. John White, with Clean Power Campaign. We support the Bill.

Tim McCray, Silicon Valley Leadership Group. We support the Bill.

Mikhail Scovarli, here on behalf of the California Council for Environmental and Economic Balance of business labor organization in support.

Thank you. Melissa Cortez. On behalf of the California Wind Energy Association, in support.

Good afternoon. Brandon Ebeck, Pacific Gas Electric, in support. Thanks.

At this coalition you've built, any witnesses in opposition? No. You were right. No opposition in the room. Bring it back to the Committee. Yeah. Mr. Connolly?

Yeah. Just a real point of clarification and appreciate the work of the author and supporters. So when does a two year time clock start? Now with the amendments? Yeah. It's when the application is deemed complete. We took that Committee amendment. Perfect. Okay, I'll move.

Thank you. Yeah. zero, you second it. We got a motion in a second. Great. You've got two motions, 2 seconds. You're just flying out of Committee. I will add, I really appreciate this. I represent a community that is doing a lot in the green energy space, both large scale solar and wind.

And it has been interesting to see the tension at times between the environmental goals we have on the clean energy side and the need to connect to the grid and the environmental goals we have with preserving open space and our creatures. And actually what has been the saving grace is that you actually can't interconnect everywhere. So it has solved a lot of those problems by limiting where we can do it.

And so the question we're asking here, which is a really important one, is how do we build out those interconnections to allow for additional resources, I think requires the kind of environmental protections that you're going to committed to putting in there. So I really appreciate that because I think both are laudable goals and we need to be able to find the intersection there. So with that, I'm happy to support the Bill. And would you like to close, Ms. Friedman?

We love bringing all the sides together to solve real problems and that's what we're trying to do here. And with that, aye would appreciate an aye vote and your consideration.

Thank you. Call the roll

Item number six. AB 914, the motion is do pass as amended to appropriations. [Roll Call]

That's 5-0. We'll keep the roll open.

Thank you. We will ask now for item 11, AB 1710. Assemblymember Ta.

Chair and Member of the Committee, I'm here today to present AB 1710, an important Bill which would restrict investor or utility ability to increase rate above the rate of inflation while allowing a part for necessary increases. I want to begin by thanking Committee staff for working with my office in this Bill and it will be accepted.

The Committee proposed amendment to AB 1710 section 747 of the Public Utility Code declared that ac intent of the Legislator that the California Public Utility Commission lower electric city rate to the lowest amount possible. Despite this investor old utility have since 2013 consistently increased prices above the rate of inflation. Folks in California resident to make difficult choice about energy uses UC Berkeley and environmental nonprofit next 10 filed that Low income customers are banning the branch of this high energy price.

Between February and December of 2020, California accumulate more than 650,000,000 in late payment to their utility providers. The energy affordability rises will only continue to worsen for rate payers and it is forecast that by 2025 the average residential rate will be higher by approximately 60% for Pacific gas and electric, 25% for sun California Edison and 70% for San Diego gas electric than they would have been if 2013 rate for each IOU had roll at the rate of inflation.

Over the next decade, California household will struggle with energy affordability folks in California residents to have no choice but to pay exceptionally high energy Bill or suffer during extreme weather, especially given a lack of competition in the energy industry to try Dow price. The Legislator has an obligation to take action and respond to this role in energy price rises before price reach an unsuccessful level.

AB 710 would assist in this effort, encouraging IOU to find reasonable balance when between raising sufficient revenue for operation and ensuring that customer are protected financially. This legislation provide reasonable exception for costs directly related to safety, enhancement, modernization and higher commodity or fuel cost. This means energy corporation will still be able to meet legal obligation regarding combating Wi Fi, climate change and more.

Our office is committed to strengthening and verifying this exception to ensure that the effectiveness of the final legislation outside this reasonable exception, California Public Utility Commission would need a certification to improve any rate increase above the rate of inflation, providing ratepayers with essential protections against runaway costs. The opposition has argued that the inflation is an inaccurate metric for the California Public Utility Commission to use, stating that the PUC has rejected as an appropriate measure of price chain faced by electric utility.

However, as AB 1710 Committee analysis note that this rejection is based on utility cost broadly and given exception including in this view, California Consumer price index would be an appropriate index when evaluating IOU rate role related to inflation at just rate AB 1710 begin ridiculous conversation about the high cost of energy in this state. My office remain committed to working with all stakeholders to draft an effective piece of legislation that offer rate payer the relief they need.

The Utility Reform Network is supportive of this view concept and he's here to answer any technical questions the Committee Member may have regarding AB 1710 and energy rate. So I appreciate your support and ask when I go. Thank you very much. Do you have any primary witnesses that you want to bring forward? I have an expert from turn and nonprofit organization. Just answer questions. Yes. Okay, so seeing that there aren't any primary witnesses in support of any primary witnesses in opposition, please come forward.

Two minutes each. Thank you. Good afternoon Mr. Chair and Members Brandon Ibuk again here on behalf of Pacific Gas and Electric and also on all the IOUS in the state. So I'll take up a little bit more than two minutes. We are opposed to the Bill in print and will remain opposed even with the proposed Committee amendments. For sake of time, I will speak to the Bill as proposed to be amended at the outset. We are committed to keeping customers costs as Low as possible.

We have a company goal of between two and 4% inflation over the long term, and we also appreciate any and all discussions about affordability. But we argue that this Bill goes about it the wholly wrong way and will do nothing to address the cost drivers such as IU customers spending five times more than the state on critical wildfire mitigation. Further, it's likely not realistic to implement an unconstitutional as well as ignoring the basic fundamentals of utility rate making and cost recovery.

The General rate case is now a four year process where utilities propose a revenue requirement to the CPUC based on historical data and forecasts about what will be required to safely and reliably operate, maintain and upgrade the utility energy system. This process involves more than two years of deliberation, auditing, public hearings, and settlement with interested parties to arrive at a cost figure that is divided among customer classes.

The GRC represents about 60% of our annual revenue, and the remaining expenses must be recovered from customers, but only if the CPUC determines those costs to be just and reasonable. These can include large buckets of expenses such as storm restoration work, which just totaled over several $100.0 million this year alone, wildfire mitigation expenses, energy procurement costs which have annual rate true ups, or any interim rate relief procedures. All of these can and do result in adjusted rates.

This Bill creates a situation where costs that are required to operate the system, related to factors outside of our control, would not be able to be recovered from our customers, even if the PUC would otherwise determine them as just and reasonable. That's likely unconstitutional for a variety of legal cases. It's also prudent public policy because the only other alternative is for decisions to be made about what activities we should not undertake to reduce costs.

As the Bill analysis states, the exemption of this Bill can either be defined so broadly as to render this entire process a mere accounting exercise and an administrative and additional cost burden for us in the CPUC, or so narrow as to prohibit the basic funding of utility operations. Inevitably, we'd be left with a bucket of expenses that don't fall into these exemptions and no pathway for cost recovery.

The PUC has consistently rejected a firm inflation related cost cap, noting that the CPI simply does not and will not reflect how utilities incur costs. Thank you.

Thank you, chair Members. Good afternoon. Lourdes Ayon with San Diego Gas and Electric, also in opposition to AB 1710. I want to thank the Assembly Member for bringing this Bill forward because even though we oppose it, it's a really important Bill with respect to discussion about rates and how all of us are tired of paying high rates in electricity, in particular, San Diego gas and electric being the utility with the highest rates.

We certainly do not want to see any, we certainly don't want to see any increase in our rates anymore. And we feel that our rates can only be as reasonable and balanced as the policies and mandates will allow. The truth of the matter is that every time there's a new policy, every time there's a new mandate, that's cost, that's increased cost to our rates. So to the extent that we can manage those mandates would be great.

And with respect to CPI, there's really no relationship to wildfire and or 2045 goals. What we need to do is look at public purpose programs, how we can remove those from current rates and even provide some sort of an evaluation in which we can review these programs to see if they're actually working.

Are the money going where they're supposed to be going, or are we just keeping it because it feels good to present a Bill that's going to help Californians when at the end of the day we're just striking hard in California's pocketbooks and in San Diego in particular. I think that's all I have to say other than we just oppose the Bill. Thank you.

Thank you. We'll open up for public comments. Those wishing to speak in favor or against the Bill, please state your name, affiliation and your position, please.

Yes, my name is Katy Morsony and I'm here on behalf of The Utility Reform Network. As the Assembly Member said, we support this Bill in concept and we've been talking to the office and plan on continuing to talk to the office about improvements that we believe will best support ratepayers.

Good afternoon. Laura Parra on behalf of Southern California Edison, in opposition to the Bill,

Mr. Chair and Member Stellini Hunter on behalf of Pacific Court in opposition.

Okay, seeing no one else lined up, we'll bring up the conversation to questions.

Yes, thank you, Mr. Chair. And I just want to thank the Assembly Member for bringing this Bill. I think that we are at a point where the PUC is just rubber stamping whatever rate increase is coming from these IOUS and it is hurting California consumers and we need better control of what is happening.

And obviously inflation is real and there are reasons to increase rates, but there needs to be tighter controls on that because the standards as laid out by Mr. Rebeck is clearly not working at the PUC right now. And I know that, like many of my colleagues, the new rate increase based on income level that many of our constituents are very, very concerned about.

And let me be clear, someone in California who makes $69,000 would see the rates go up $51 a month on top of their Bill. People in California are not making 69,000 is not a lot of money, especially if you live in the Bay Area or other parts of the state. And so, I mean, rates just keep going up. And I think the IOUS will continue to just ask for rate increases unless we as a Legislature do something. And so I appreciate the effort.

Any other questions, please?

I do appreciate that in the Committee, this was something that was taken into consideration, and the Committee noted that the exceptions appear to allow the utility to receive a return on the actual cost needed to operate the utility. Clearly, as with every case when we have opposition, I would always ask that you do speak with the stakeholders opposition and continue those discussions.

Yeah, I really appreciate your question and concerns. And actually, a few weeks ago, probably last week, I had a meeting with the opposition and I listened to their concerns. And I think that our office, I think that we already work with Committee amendment to remove election component. So I think that during that meeting, we listen to the concerns and we try to work with all the stakeholder or side to come up with the language of the Bill.

I think this Bill is really fair and I think that it's a tool to protect our constituent. I believe that we all heard, we all receive either by email or by call from the last few months that our constituent from whole State of California, they call us, they raise concerns. They have a fixed income, but they have to pay really high price. And I think at the end of the day, we're here to serve and we serve our constituents.

So I had a meeting with the opposition. I really appreciate their input, their concerns and our office. We did remove the election component, and I think that right now, I think that our view can really consistent. So I hope that I have support from the Committee. Thank you.

Any other questions? Okay. All right. We don't have any other questions or any comments. Is there a motion to move the Bill? We have a motion. We have a second. Would you like to close?

I humbly ask for an aye vote.

Okay. Does have a do pass as amended to appropriations.

[Roll Call]

Okay, we'll leave that open for other Members to add on. Any other authors in the audience, okay?

Hey, Mr. Chair is up. Which Bill do you want to present first? Mr. Chair?

Start with 1373.

We'll hear 1373 when you're ready.

Proud to present AB 1373, a measure put forward by the Administration and the budget that my colleagues in I and budget sub three thought deserved to have a policy discussion in this Committee. We were hoping that the Administration would have someone here to kind of articulate the kind of reasoning behind their effort and add value to this conversation, but they're not, and so we'll continue to have that discussion here, as was intended. Happy to discuss the aspects that I find very valuable.

We have some expert witnesses here that could answer technical questions respectfully, are asking for your support. But I'll just say this often it's said that our procurement needs to weigh both lease costs best fit so we don't have gaps that lead to reliability issues.

We had a robust conversation at the end of session last year related to reliability issues, and we hope that by taking an approach of this manner, we will avoid having to have the conversation of extending a nuclear plant in the State of California, which we had already taken a strong position to shut down. Having DWR be able to buy these resources when our utilities haven't been able to or have chosen not to is the cheapest and most efficient way to get these needed resources online. I am happy to be joined by Matt Friedman, Utility Network Reform and representative from the Clean Power Campaign.

Great. Two minutes each, when you're ready.

Thank you, Matt Friedman. On behalf of TURN, we support many of the key provisions of AB 1373 that would fill the gaps in the current statutory framework governing electric reliability and resource planning, and establish a new central procurement option through the Department of Water Resources. The Bill would first establish some modifications to the resource adequacy program to ensure that resource diversity, renewable integration needs, and the state's 100% zero carbon electricity target are incorporated into the operation of the resource adequacy program.

In recent years, the resource adequacy and integrated resources planning programs have been increasingly intertwined. They need to work together to ensure the capacity that's used to meet reliability needs is compatible with adopted resource planning goals. On the integrated resources planning side, these code sections were first enacted in SB 350, which was in 2015. But since the initial rollout by the PUC, this program has evolved significantly both in scope and impact.

The IRP is now the central driver of new resource procurement by lses, or load serving entities regulated by the PUC. We think that the code needs to be updated to reflect the central role of the IRP program, the expectation that all load serving entities will meet their assigned obligations, the need for a robust backstop mechanism and the development of additional tools to procure long lead time resources and this Bill would adapt the relevant code sections to achieve each of these objectives.

The Bill also provides authority to assign backstop procurement to the Department of Water Resources in the event that the collective procurement by load serving entities is inadequate to achieve resource planning objectives. The analysis points to the staggering quantities of new resources needed to meet our goals. The state needs as many tools as possible at its disposal.

The primary tool is for load serving entities to procure to meet their obligations, but there are some resources that may be challenging to procure using this approach, in particular, long lead time resources that involve a small number of sellers or constrained geographic areas that may not be easy to develop without more coordinated efforts.

We think that the use of DWR in this role is appropriate, and we think that the structure of the Bill, which provides both upfront authority from the PUC and backend review and approval for any commitments that are made, will ensure that the state regulatory agencies remain in control of any commitments that are made.

Thank you.

This Bill has a lot of stuff in it, obviously not enough time to discuss, but happy to talk more about any of these issues.

Thank you so much.

Good afternoon, Members. My name is Molly Croll with the American Clean Power Association. We support AB 1373 and the center of Procurement mechanism for three reasons. First, as my colleague identified, we need to diversify our energy mix to meet our clean energy goals reliably and affordably. Long lead time resources like offshore wind are critical piece of the puzzle by producing zero carbon energy when the sun sets and when our grid is under the most stress, as found in SB 100 studies.

Second, we need to be proactive in ensuring we have the right tools to bring diverse energy resources online. Unlike solar and batteries, the CPUC has recognized that diverse resources may be difficult to procure due to their size, lead time and development risk. AB 1373 ensures we aren't caught flat footed if those challenges persist. Going forward, we agree that there may be a need to narrow the intention behind central procurement to fill the gap that's really designed to fill.

Most procurement will continue by individual lses for things like solar and batteries, and as the analysis notes, this provides more tools for the CPUC to exercise when planning efforts identify a need, but individual llses are not procuring those resources. Finally, we need to leverage economies of scale and provide market certainty to reduce costs for ratepayers. The more certainty we can provide, the sooner we can get projects in the pipeline and take advantage of federal tax credits as well as stimulate local investment.

Using DWR authority can promote cost savings due to the state's bonding authority, tax breaks, ability to incorporate new funding sources, and reduction of development risks. By having a state entity organizing solicitations and negotiating contracts, we can not only reduce risks but also maximize local benefits and investments from diverse resources. AB 1373 provides tools to diversify our energy procurement. We respectfully ask for your. I vote.

Thank you. Anyone else in support will take. Name organization Madam Chair.

John White, representing the Clean Power campaign. We support the Bill.

Thank you.

Madam Chair Members. Brian White, on behalf of Offshore Wind California. We are in support of the central procurement provisions of the Bill.

Thank you.

Merrian Borgeson with Natural Resources Defense Council. There's a lot of details here we're still reviewing, but we support in concept.

Thank you.

Marc Joseph, on behalf of the California State Association of Electrical Workers and the Coalition of California Utility Employees in support.

Thank you. Melissa Cortez, on behalf of the California Wind Energy Association, in support.

Thank you. Madam Chair, my name is Dan Jacobson with Environment California in support.

Thank you. Do we have witnesses in opposition to the Bill that aren't on the dais? Welcome, gentlemen. Two minutes each, when you're ready.

Thank you. Patrick Welch again with the California Municipal Utilities Association. Want to first just thank the chair, Mr. Garcia, and the Members of sub three for placing this trailer Bill in the policy Committee process so that it receives the analysis that we think is needed. CMUA is opposed unless amended. Section seven of the Bill creates a new capacity payment penalty on CMUA's Members and their customers if there is a shortfall on meeting their planning Reserve margin.

We believe this does not have a place in the Bill and we urge you to strike it from it. The Committee analysis correctly notes that the resource adequate market is significantly constrained and prices for energy projects have risen significantly and a new penalty would punish utilities and their customers, and I quote, for a market condition outside of their control. The analysis also correctly notes that the penalty is duplicative.

There's already two safety net procurement processes that assign costs to our Members if there is an observed shortfall. And last year, the Legislature enacted a new collaborative process for many of CMA's Members to develop a new planning Reserve margin. That's the cushion that utilities need to have for excess power for when there's high demand on the grid. That process isn't started.

That process isn't near to concluding, and the analysis correctly notes, that this Bill would have the effect of holding the POU's to a standard still in development and for the potential that payments will be assessed against a value the POU's were unaware of they needed to meet. So for these reasons, we urge the Committee to remove section seven of the Bill.

And finally, just want to note, given the tight market conditions, we also urge the Committee to narrow the scope of DWR's authority in the Bill to only clearly define long lead time resources to ensure DWR maintains its core mission of water management. We think an interesting idea also is to see if there's a place for a sunset for DBR's authority as well. And with those, I'll turn it over to my colleague from CalCCA. Thank you.

Good afternoon. Chair and Members Sean MacNeil with the California Community Choice Association. We currently have an opposed unless amended position, and our opposed and less amended position is focused on three issues, central procurement, IRP jurisdiction, and the RA penalties that were cited by CMUA. First, on the central procurement issue, we're not convinced that a CPE is necessary at this point, and I can elaborate on that more if needed.

But if the state feels that we need to have this tool, it needs to come with clear boundaries. And the current proposal is really just too much of a blank check for the CPUC, in our opinion. As the analysis points out, procurement should be limited to projects that take five years or more. We support this, but we would add more parameters on this, such as limiting procurement to resource rich regions where infrastructure build out is necessary.

Good examples of this are obviously offshore wind and geothermal in the Salton Sea. We also need to limit the CPE's work so that it doesn't compete with the work that LSE is already doing. That's really important to us. We think that if you don't do that, you could actually stall development. Lastly, we believe the CPE should be with DWR. Putting the IOUS in a CPE role for us creates a conflict of interest.

You're asking them to take on two different roles, and we think this actually kind of creates problems down the road that we're just going to have to come back and fix. Issue number two, IRP jurisdiction. The Bill seeks to clarify the CPUC's current practice of issuing procurement mandates and requiring llcs to comply.

We don't have an issue with that, but the language that's in there is broader than that, and it gets at sort of the core decision making authority that ccas currently have is sort of the core to our model and model that has been successful. And so we would ask that amendments be taken on that issue. Issue number three, that was more or less talked about by CMUA on the RA capacity payment.

The only thing we would argue is if you're going to have a situation where the market is this constrained, you need to have a sort of off ramp. So we would suggest a waiver process for system RA, and we think that's reasonable. For those reasons, we still are opposed unless amended, but want to thank the author for focusing on energy reliability as well as being open to meeting with us and the time commitment that his staff has spent working with us over the last month.

Thank you. Anyone else who wants to register opposition on the Bill? Name, position and organization.

Madam Chair Members, Theo Pahos of the Alliance for Retail Energy Markets. We would like to associate our remarks with the CCAs and just also add some of our Members have already bought long term resources and we would like a mechanism to be able to sell them to the CPE so we're not stranded with them. Thank you.

Good afternoon, Madam Chair, Members of the Committee. Valerie Ontiveroz with Pacific Gas and Electric Company and truly testifying as a tweener, because I'll just say we are convinced a central procurement entity is needed and likely the most efficient way to ensure that we can, as a state, procure a diverse set of clean resources in a timely manner that come with a lot of risks and costs that we should be distributing allocating fairly to a very large group of customers. So we think a well designed CPE is needed. Thank you.

... Summercado. On behalf of Clean Power Alliance, California's biggest CCA down in Southern California. Opposed unless amended and our concerns are aligned with CalCCAS. Thank you.

Thank you, Alicia Priego. On behalf of San Jose Clean Energy, and also align our comments with CalCCA. Thank you

Katherine Brandenburg. On behalf of Sonoma Clean Power, and we also align with CCA.

Lillian Marvis with MCE, California's first community choice aggregator. Respectfully opposed unless amended as outlined by my colleague from CalCCA. Thank you. Thank you.

And thank you, Mark Fenstermaker. On behalf of Peninsula Clean Energy and Valley clean energy. Opposed unless amended for the reasons stated by CalCCA.

Thank you. Okay. Seeing no one else, I'll bring it back to the Committee. Ms. Reyes.

Thank you, Madam Chair. First, I want to thank the chair for taking up this measure and for ensuring that the Assembly has the appropriate level of review for this proposal. As the experience of the last few summers has shown we are in the midst of a major transition. How we generate electricity and how we ensure reliability is changing rapidly. Generally speaking, I think the concepts in this Bill are reasonable.

They're a reasonable response to the deficit of procurement that has made it harder to maintain reliability in a hotter climate. I look forward to seeing the proposal work its way forward. I do have a problem, though. I'm concerned that the Administration did not bother to send anyone to the Committee today. This is their proposal, and they should have had somebody here to also provide information to us.

And I'm particularly concerned because I would have liked to ask the Administration about the safeguards needed in this Bill, including to prevent the central procurement entity this Bill authorizes from procuring suspect resources. This language currently lacks any firm guardrails except for the POC's discretion. That's it. As this Bill moves forward, I would like to see how this mechanism will consider the impacts of the energy procurement on the frontline communities closest to where the resources are cited.

This includes the need for new clean resources procured under the bill's authority to displace polluting existing resources that we have struggled to get rid of. There are no limitations on the scope of this experiment if we are talking about offshore wind and geothermal resources. I think we should restrict this proposal to those clean resources.

I fully expect that the author of this Bill will ensure this policy continues to get the attention it deserves, and I look forward to seeing the fruits of your labor, and I will support the Bill today. Thank you.

Thank you, Ms. Reyes. Mr. Connolly.

Thank you, Madam Chair. And I too appreciate the work of the chair on this Bill. And second, my colleagues comments. But more specifically, I'm also very mindful of the issues raised by CCA. Two of the ccas in my jurisdiction are here, marine clean energy and Sonoma clean power. Appreciate their remarks and wondering what is the status of any negotiations with the ccas on possible amendments. On one hand, we get the concept and need of some sort of central procurement. On the other hand, recognizing kind of the unique nature of those entities and trying to go forward with those goals as well.

So I'll respond to the first part of the question, is that we're very open to the suggestions that have been made by CCAs and the publicly owned utilities, specific mechanics of that.

I'll let Matt Friedman kind of address some of those questions that have come up, but we certainly see a potential path for a consensus around those issues with the objectives remaining the same of having some state entity be able to get in front of the procurement needs of the State of California and the points made by Ms. Gomez Reyes. I think narrowing it down to very specific type of firm renewables, something that we're very interested in as well.

Yeah. Just to address some of the concerns and to be clear, this is not turns Bill. We've been asked to provide our comments on it and we're generally in support. I think we do recognize some of the concerns about Section seven that have been raised, the assessment of fees related to capacity procurement deficiencies. I think that that provision could be amended or even struck from the Bill. It wouldn't affect our position on the overall package.

With respect to the two other pieces, the role of the central procurement entity. I know Calcca has raised concerns about what is it going to buy? Is this just kind of a broad grant of authority or are they really going to be filling gaps in the resource portfolio, specifically those that involve resource constrained, long lead time resources where there's new infrastructure required? Maybe you have a five or a 10 year horizon and you need a coordinated effort that might involve financing and new transmission and whatnot.

And offshore wind is certainly one of those candidate resources, I think that's aligned with our vision for how this should work. This should not be a short term procurement entity. We've watched DWR do short term procurement in the last couple of years and the results are uninspiring. We think that they should be focused on long term new resources that aren't getting bought in the market, and we think there are ways to incorporate the concerns that Calcca has raised into that on the IRP section.

I think, I disagree with the characterization that this Bill would infringe upon core decision making authority by the CCAs or any other load serving entity. Really.

The amendments to the existing code here, in my view, are designed to ensure that the PUC has the authority to properly enforce the IRP requirements on all load serving entities, utilities, ccAs, direct access providers. This is important because the enforcement of these requirements will minimize the need for backstop procurement. So I don't see the nightmare scenario that the CCA has put forward here. I think the CCAS still retain flexibility, but the PUC has already been pretty directive in its IRP program. I think this is more a matter of the code catching up to the reality on the ground. That's how we see it.

Yeah. I appreciate those perspectives and the ongoing discussion. It sounds like we'll continue. Thanks. All support today.

Thank you. Mr. Connolly.

I'll let Mr. Ting go first.

Thank you, Madam Chair. And then to Mr. Chair. I really appreciate you for carrying the Bill and having this discussion in Committee. I can't support the Bill today. I'm a little bit surprised at all the folks in clean energy who are supporting it, simply because I think if they had been in our budget sub three hearing last year, I don't know that they would be hearing it or supporting it. I do agree that we do need a central procurement program organization.

I don't know if DWR really is the right organization, because when they had the opportunity to procure energy, what they bought were natural gas peaker plants, not clean energy. They didn't follow the direction that we're going, which was to move toward clean energy that is reliable, that would have been very usable. They decided to go with natural gas, which I don't believe is clean. Now, it might be clean under the definition of this Bill, because the definition is not defined.

So I guess, broadly speaking, that could be clean energy. So I just point that to all the folks in the room in terms of making sure that there's a balance between reliability and the cleanliness of the energy, I think is very important. I believe that in the past DWR did not balance that. They just focused only on reliability. Or frankly, maybe they only focused on convenience, what they felt they knew what to go purchase and when to go get.

Which is also why I don't think that DWR is necessarily the right agency or the right organization to either oversee this or to do this work, because they haven't exemplified a history of being able to understand and to really procure the right energy, at least for California. Maybe it might be the right energy for Texas or Florida, but not for our state. But just in summation, I think this idea needs a significant amount of work.

I do appreciate you for bringing this Bill forward so that we could actually have a deliberative process in Committee and actually have your utilities team really take a hard look at it. But given their track record and frankly, their inability to procure the energy that Californians want, which is clean energy at this point, I cannot support this legislation and really can't support the direction this Bill is going.

Thank you, Mr. Ting. So the chair was the former chair of the Committee. I now chair the Water Parks and Wildlife Committee, where we deal with a lot of DWR's core responsibilities, which are large at a moment in time when we're facing extensive drought and flooding and the need to do incredible amounts of work to ensure the reliability of water in California in the years to come.