Senate Standing Committee on Energy, Utilities and Communications

Utilities and communications will come to order. Good morning. I want to welcome the committee to our first hearing of 2024. Today's hearing is our annual update from the California Public Utilities Commission and our Public Advocates office.

Similar to last year's annual update, we remain committed to keeping the focus on utility affordability that's critical. The inability to afford essential utility services, especially light and heat, can have devastating effects on residents' quality of life.

Although California had a long experience of high energy rates compared to other states, our utility bills are often averaged lower than other states, largely because of our mild weather and the energy efficiency policies that we've implemented over the years.

But that is no longer the case. Our energy utility bills are now trending higher and are expected to continue to grow and outpace inflation. We can no longer count on mild weather and energy efficient programs alone to help have a negative impact on our energy bills.

Today, we want to follow up on some of the issues we discussed at last year's hearing and also hear from about some of the new activities that have been in place since last meeting.

Specifically, we must not forget that last winter Californians experienced the effects of skyrocketing wholesale natural gas prices, which caused utility bills shock in the winter natural gas, utility bills I should say. We're encouraged that this year's natural gas prices have not repeated their surge.

However, we remain vigilant in identifying the causes of last year's price spikes, as the wholesale prices are nearly 10 times greater on the west compared to trending hubs in other parts of the country.

Many of our residents will continue to rely on natural gas to provide space and water heating and fuel for cooking, not to mention the critical role that natural gas generation plays in keeping the lights on.

And we must not forget that if it wasn't for natural gas two years ago, the United States would not have met its climate goal numbers. So natural gas is still critically important to what we do on a daily basis. Without identifying specific causes of price surges, we cannot expect to prevent similar events in the future.

We've all heard from constituents expressing concerns about soaring utility bills. As state policies propose to shift more Californians to switch to electricity as a fuel source.

We also need to ensure that electricity utility bills remain affordable. Affordability, along with reliability and safety, are the bedrocks the utility regulations. In November, the junior rate case of the Pacific Gas and electric was approved by the PUC, which results in a sizable increase in residents monthly bills. On average $34 a month beginning this year and increasing over the coming years.

We want to hear from the PUC and the Public Advocates office about those costs and opportunities to reduce the impacts on customers.

We know that wildfire mitigation is a key driver. California has unfortunately experienced several catastrophic fires related to utility infrastructure related ignitions. This past fall, we witnessed how pervasive this challenge is in other parts of the globe, specifically in Hawaii when we saw that tragic example.

What we are learning about how we can be more strategic and judicious with wildfire mitigation investigations, and what opportunities exist for funding beyond ratepayers shouldering these costs. Of course, we need to mention the state auditors report, which was released in August.

There are a number of findings and recommendations regarding the improvements for both the PUC and the Public Advocates Office to better protect California from excessive utility bills. We would like to hear from both entities about their response and their follow up actions.

There are other updates, including all the activities associated with the PUC's activity proceedings to implement the income based fixed charges authorized by AB 205 in 2022. We understand that there are several proposals that have been submitted by parties in the proceedings with varying designs, structures, income tiers, and fixed charge amounts.

Today is an important opportunity for members to hear from the PUC about what is being considered and the process and the expected timeline for a decision.

Other activities include how are we supporting efforts to secure federal funding from the Infrastructure Investment Act and Jobs Act and the Inflation Reduction Act? How can this funding displace what might otherwise be collected from our utility customers?

I look forward to today's update to learn what steps the PUC and the Public Advocates office are taking to ensure electricity and natural gas utility bills become and remain affordable for Californians. Now let's hear from our first set of presenters.

I welcome our PUC Commissioner President, Alice Reynolds, to join us and lead to staff for the PUC.

Good Morning Chair Bradford and Senators. Members of the Committee, I'm Alice Reynolds, President of the California Public Utilities Commission. I'm really pleased to be here today. I'd like to start with a brief introduction to provide some highlights from the past year and some challenges we face in 2024.

I'm joined by two of my colleagues, Rachel Peterson, the executive director of the CPUC, and Luam Tessfi, deputy executive director for energy and climate policy.

Rachel and Luam are available to assist with any technical questions that come up at the hearing today. So first, I'll start with a very brief overview of the CPUC's role. As you know, the CPUC regulates and monitors utilities that deliver essential services throughout California.

We regulate energy, water, communications, transportation, and rail. And for a bit of context, I'll note that in the energy sector, we regulate the investor owned electric and gas utilities, and our jurisdiction covers about 75% of the load.

In California, the utilities, of course, own a massive existing infrastructure. And for context, again, if you laid out their miles of transmission, distribution, and natural gas pipelines in a straight line up and down the state, you could make the trip approximately 360 times. So a lot of infrastructure.

Additionally, I'll note that it's not just the large investor owned utilities that are making decisions about the sources of energy that is supplied to our homes, businesses, and industries. We have 43 retail providers of electricity.

These are the entities that are procuring clean energy resources on behalf of their customers. They include the large investor owned utilities PG&E, Southern California Edison and SDG&E, as well as community choice aggregators and direct access providers.

So I wanted to emphasize the framework for our work at the PUC, our ultimate goals remain constant.

We focus our work on driving the utilities to provide all customers in every part of their territories with safe and reliable services, at least cost and in an equitable manner. In the energy sector, we are very focused on reducing greenhouse gas emissions produced in the generation of electricity.

And for our jurisdictional load serving entities, that means reducing reliance on natural gas. This is challenging when you consider the extreme weather events that are impacting our state.

They're forcing us to respond and adapt at the same time that we're reducing reliance on fossil fuels. So, additionally, as you know, the load in California has been very flat since the 1970s, and the Chair mentioned some of our early energy efficiency measures.

But we also know that this is changing. We're predicting new load from new industries, data centers, electrified warehouses and ports, cannabis cultivation in areas where the grid was built to serve different types of load.

And we predict increased load from electrification of transportation and buildings at the same time. Our electricity system was originally built decades ago and needs to be updated. It needs to be hardened to reduce the risk associated with extreme weather events and catastrophic wildfires.

And California is making a statewide push to do this. As you know, SB 844 allows utilities to seek conditional approval for costs associated with 10-year undergrounding plans.

And the state as a whole has substantially increased funding for wildfire prevention, response, and resilience through CAL FIRE and other agencies. But for the electrical infrastructure investments and maintenance, all of the funding comes from ratepayers, and it's collected through our energy bills.

And as you know, we're seeing these costs increase. So I have just two slides to illustrate some of the points that I'm talking about. So I'll start with the first one, which shows the trajectory of rates and the components of rates, electrical rates.

The largest source of rate increases is the distribution costs. What you'll see is the red on the bar charts. There's been a sharp increase on spending on wildfire mitigation, mostly including vegetation management and also insurance, wildfire insurance.

Distribution costs have grown 45% from 2016 to 2022. Other costs include maintaining poles and transformers, sending out repair crews after a storm, and these are the things that the utilities do to provide electric service to everyone and especially our most vulnerable customers.

Generation costs also go up and down because of trends in the market. And that's the blue part of the bar chart. And then we also have transmission costs, which is the green, the next level.

Transmission costs have gone up slightly in recent years, mostly due to costs of self approved transmission projects. These are local and regional projects that don't necessarily expand capacity of the grid, such as repairing and replacing old substation equipment.

You'll also see that Public Purpose Programs have also increased, and that's the next layer. Public Purpose Program costs have gone up for a variety of reasons. The main reasons are increased funding for Energy Efficiency Programs and the CARE program.

So this is a graphic depiction of what's happening with rates. I'll talk about the components in a little bit more detail and a few actions that we're taking with respect to rates. One way we evaluate rates and rate increases is through our general rate case applications.

We do general rate cases for each utility on a four-year cycle. Chair Bradford mentioned the PG&E general rate case. This is a proceeding that we conduct that we will receive applications from the utilities.

The costs are presented to commission staff and assigned administrative law judges and reviewed and analyzed. In PG&E's case, PG&E originally requested for their base year a revenue requirement of $13.5 billion.

What we ultimately approved was $2 billion less than the request, and over the period of four years, that amounted to a reduction of almost $9 billion. But of course, a lot of these costs are things that you see the impacts of.

So this is responding to catastrophic events such as storms and floods, and the work that is being done to maintain the system, as well as to support clean energy projects.

In addition to general rate cases, we also have additional costs that go into rates through other mechanisms. One mechanism is a memorandum account.

The memorandum accounts generally cover costs that were not foreseeable. Some of this is wildfire costs, something that was approved in AB 1054, the establishment of memorandum accounts for additional collection from ratepayers for the cost of wildfire mitigation as included in the Wildfire Mitigation Plans approved by the Office of Energy Infrastructure Safety.

So a few measures in addition to the general rate case that we use to evaluate costs, scrutinize them for reasonableness, and ensure that the utilities are working in the most cost effective way. We have ways to provide competition and cost effectiveness in clean energy generation.

So there's a request for offers solicitations done by each load serving entities that require least cost, best fit selections for new energy generation.

Last year, we eliminated subsidies for the extension of electric lines for new mixed fuel buildings, using natural gas or propane in addition to electricity. And this decision follows a 2022 decision in which we eliminated subsidies for the extension of gas lines. And so that means that the gas line extensions for new developments are no longer added to rates.

This decision is expected to save ratepayers $480,000,000 annually for the near term.

These decisions move us closer to the Clean Energy Future, and of course, they support electrification and disincentivize new gas hookups. Last year, we also modernized our rooftop solar tariffs, which also control overall system costs by reducing the amounts paid to customers who don't have rooftop solar.

The new tariff has improved price signals so that rooftop solar customers are incentivized to install storage to prevent their load from showing up on the grid as the sun sets, which is when we rely on power plants burning fossil fuels.

We are already seeing a significant uptick in the number of battery storage systems installed with rooftop solar as a result of the new tariff. And importantly, this new tariff controls costs for customers without rooftop solar, who are disproportionately low income customers. There's still a large legacy cost which adds to high electricity bills.

For instance, bills in SDG&E territory, customers who do not have rooftop solar would be 17% lower if they weren't covering the costs of rooftop solar customers, those legacy customers on the old num tariff and in PG&E, the bills would be 14% lower.

So changes to our rooftop solar tariffs helps to control the cost on electricity bills going forward and will also help to incentivize our clean energy goals.

It's also helpful to see some sources of non ratepayer funds to supplant rate payer funding. And this month, the PUC issued a proposed decision to allocate 280,000,000, which was authorized by the Legislature Fund upfront incentives for behind the meter solar and storage projects dedicated to low income and underserved customers.

I do want to speak briefly about the implementation of Assembly Bill 205, which the Chair mentioned.

Our implementation of the bill will create an adjustment in the way costs are collected from customers to accelerate decarbonization and improve equity by minimizing bill impacts to low income customers.

The existing bill structure in California is outdated and not in line with utilities across the country and the municipal utilities in California and the way that they structure their electricity bills. So this is really an adjustment in the structure of bills.

So currently, for Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric, all the costs of building and maintaining the electric grid are bundled into the price that customers pay for electricity in their cents per kilowatt hour or their usage rate.

So think of it as the amount of electricity they use. All costs are currently bundled together and charged volumetrically.

By comparison, most other utilities like SMUD and LADWP, break out at least some of the fixed costs, such as the cost of transformers that send electricity to and from one's home.

They pull these out and put them in a separate line item on customer bills called a flat rate. The flat rate covers the cost to build and maintain equipment that allows everyone to receive the power whenever they need it.

And one of the benefits of making this type of billing adjustment is it shrinks the kilowatt hour per hour price for all customers. It's important to note that implementation of this bill to create a flat rate would not be a new additional charge, but instead would be an adjustment to one portion of the structure of electricity bills.

So in other words, this adjustment doesn't increase the total pie, it just changes the way the pie is divided.

That means that with this change, customers would be incentivized to electrify because it would be cheaper to add new electricity demand, which is what we want to incentivize. We want to make it easier for customers to replace gas powered vehicles with electric ones and switch to electric appliances.

And importantly, there would still be price signals to conserve electricity at times of the day when we do need to reduce our energy usage.

The PUC is currently considering the details of how to implement the billing adjustment required by AB 205. Proposals were submitted from a wide range of stakeholders, including ratepayer advocates, environmental groups, the investor owned utilities, and industry groups. In total, nine fixed charge proposals were submitted by 12 parties.

Another point to note is that while the proposals did include discounts for low income customers. They would not require customers to verify their income information in a new way because we already have a way to create discounts based on income using the current CARE and FERA programs, which incorporate a voluntary income self attestation process.

Additionally, concurrently with the proceeding on the fixed charge, the CPUC is engaged in a rulemaking that would consider dynamic charges based on real time grid conditions.

This would allow for more targeted price signals that further encourage load shifting. With respect to the timing on AB 205, we're considering the proposals and expect to reach a decision this quarter.

Okay, the second slide I'd like to talk a little bit about our clean energy supply and how ratepayers are paying for cost effective ways to clean up our grid supply so that we can all access clean energy. We're making great progress in cleaning up our electricity system.

Clean energy capacity has tripled over the last decade and we're ramping up the pace. The CPUC's integrated resource planning process ensures that California's electric sector meets its greenhouse gas emission reductions while maintaining reliability at the lowest possible costs.

And it is targeted toward the CARB California Air Resources Board scoping plan. So in line with the targets that we need to see from the electric sector to reach carbon neutrality by 2045.

So this graph depicts two lines. The lighter colored line is our original proposal, and the darker colored line shows our recent proposal, which sets reductions at a steeper pace so that we'll see some of those reductions in greenhouse gas emissions come sooner.

In February 2023, the CPUC adopted a portfolio of resources to meet a statewide target of no more than 3 million metric tons greenhouse gas emissions from the electric sector in 2030. This portfolio also feeds into Kaiso's transmission planning process to ensure that the transmission system development keeps on pace with resource development.

To get us to these targets, we have the over 40 load serving entities, including the community choice aggregators, who are making financial choices on behalf of customers in California to get to these targets.

So the proposed plan that is depicted in the slide, and which we're voting on this week, would reduce greenhouse gas emissions from the electric sector to 25 million metric tons by 2035 and put us on track to significantly reduce annual emissions from electric generation by 2045, down to 8 million metric tons by 2045.

This portfolio would achieve clean energy production beyond the SB 100 interim targets. It achieves clean energy production of 101% by 2035 and 113% of retail sales by 2045.

In addition to the clean energy mix, customers also need to be able to access supply every day at any time, and we need to guarantee that we're not going to run out of power. And this guarantee is expensive, especially in light of uncertainty around extreme weather events and needle peaks that we're seeing because of climate change induced events.

So the CPUC, in addition to the energy mix, we're very focused on capacity needs, the capacity of the system to serve customers, the capacity we need for energy supply, and the ability of electricity to reach load throughout the system through the distribution and transmission system to deliver clean energy even when demand is highest, especially during those hot summer months and extreme heat events.

So on the supply side, we're implementing improvements to the resource adequacy program, what we call the RA program, to ensure that energy supply is available to meet these peaks and unpredictable events. And we are also increasing demand response programs so that resources can be maximized as cost effective and ready when we need them.

A little bit on distribution system planning I know that this has been an issue that has been very much on the minds of many Californians as we're seeing delays in energization throughout the distribution system.

We are working to improve distribution system planning to prepare the grid for a high electrification future. A future where electric vehicle chargers, heat pumps, and electric appliances are prevalent and equitably distributed.

So this work includes implementing Senate Bill 410 and Assembly Bill 50 to improve electric utility planning and energization processes to facilitate timely energization. Just briefly, on the actions that we're taking to implement these bills since they went into effect, we have multiple proceedings.

First, the recommendations for distribution planning process improvements are being incorporated into our high DER proceeding. Second, the PG&E general rate case track two is considering PG&E's SB 410 rate making request.

So that's a request for a mechanism to collect costs for energization of distribution system projects. And to date, PG&E is the only one who has made this request under SB 410.

And finally, the commission established a new energization proceeding in January to establish timely energization criteria. So we're looking for time frames, criteria, and reporting requirements for energization for all of the large investor owned utilities.

So in closing, I'd like to say, just emphasize that we're very focused on affordability, while at the same time pushing forward on our clean energy, reliability and safety goals. And at the CPUC, we are continuing to focus on cost effective programs where we can enhance equity and reduce costs, which all fall on ratepayers.

We'll continue to improve price signals to incentivize storage and demand response and encourage energy usage when the grid is operating at least stressed. And with the highest penetration of clean energy supply.

We'll continue to work with our sister agencies and other entities to plan for the transformation and hardening of the distribution and transmission systems to enhance their resilience. And prepare for higher load and higher adoption of electric vehicles and electric appliances.

I'm grateful to have this opportunity to present to the committee. And I look forward to your questions. Thank you.

Thank you, President Reynolds, for your presentation. I will now open it up to Committee Members. Senator Dodd?

Yes. Thank you, Mr. President. If it's okay, make a couple of comments and ask a question. And then get an answer. And ask one more question, if that's okay with the Chair. First of all, President Reynolds, thank you very much for being here and your detailed report.

I appreciate the fact that the CPUC and PG&E. Have placed wildfire prevention and mitigation planning at the top of the agenda.

Lord knows I've spent more than half of my tenure in the legislature trying to get to this point. The fact is, as much of the recent $13.5 billion rate increase recently approved for PG&E is attributable to wildfire prevention and mitigation And in particular, attributable to undergrounding utility lines in high wildfire threat areas.

But at $3 million a mile. That rate increase gets California only 1230 miles of undergrounding of which 300 is already done. So we now have millions of PG&E customers paying as much as $40 more per month for a wildfire mitigation strategy that will take more than 10 years to complete, at best.

I'd like to know what alternatives the CPUC considered for PG&E. to provide similar wildfire protection sooner than the PG&E undergrounding timetable. And did the CPUC consider the time value of ratepayer money invested such that more ratepayer benefits from similar levels of protection, at perhaps lower cost over time?

And just in context, we took a legislative tour down to see Southern California Edison. When they were putting covered conductors. So, I mean, those are the type of things that I'm thinking that should be analyzed in terms of what is the best bang for the buck, for safety, for our ratepayers. Sorry I went on so long.

No problem, Senator. Thank you for the question. And I appreciate your leadership on this issue. And I'll try to take a stab at getting to the question. And it's an excellent characterization of the struggles that we face. In evaluating and approving the requested rate increases that PG&E brings forward to the CPUC.

We do look at risk reduction targets. So, looking at an overall risk reduction target, and we look at the measures that are possible to achieve that target and the cost of those measures.

And there are pros and cons, right? So with undergrounding, you might get some longer term benefits and some more certainty compared to covered conductor. The lines are no longer susceptible to high winds and trees falling on them, which can happen with covered conductor still can be susceptible to storm damage and potential ignitions, so some risk remains.

But as you note, undergrounding is incredibly expensive. It is usually funded through investments which are paid off over time. And so while this is an asset, undergrounding continues to provide protections as a long term investment in the system. It's also paid off over time by ratepayers.

And it's not paid, the costs don't all hit rates at once like they do with vegetation management. Which are essentially our cost of services that go directly into rates immediately. We evaluated information taking into account the wildfire mitigation plans that are approved by OEIS. We also have staff who evaluate different tools and look for a rate reduction target.

We received testimony from the parties that was considered and balanced all of those factors in coming up with the amounts that were approved. In the general rate case, PG&E is on a path, as you noted, to complete undergrounding.

We're hoping to see cost reductions, and they have presented a case that they will be able to achieve cost reductions over time as they become more efficient. And we'll be looking for that.

And we'll also be looking for that type of planned efficiencies and cost reductions as we evaluate any SB 884 proposal that might come forward, which will be the longer term expenditures. Let me turn to Ms. Peterson and Ms Tesfai to see if they have anything to add, because this is a really important subject.

Thank you. President Reynolds. Good morning. Senator Rachel Peterson, executive director of the CPUC. And I think your question and the President's response exactly encapsulate the trade offs that we're all considering, as we evaluate proposals like what P&E put forward to the commission.

The only thing I would add to the President's response is that PG&E and all of the utilities are using a toolkit to address wildfire risk mitigation. So there's enhanced fire aligned safety settings, which is colloquially known as fast trip.

That has been effective in several of the service territories. They do use, at a diminishing rate, public safety power shutoffs. We're thankful that it's at a diminishing rate, but they are definitely a tool still in use. And then there are several other engineering solutions that I'm not qualified to even say the name of, but there are other engineering solutions that they're using.

So there's kind of consistent with California's toolkit approach, there's a portfolio that each of the utilities, especially PG&E, is using at the commission's direction to reduce the risk of utility ignited or utility involved wildfire.

But I do want to ask, isn't the profit that's charged the ratepayer ultimately higher as a percentage on the undergrounding that would be on the covered conductor or the tree trimming? Because it seemed to me, the way I saw this is that this rate case was over, not over a long period of time. It seemed to me it was like, again, I forgot three to five years or something like that.

Whereas when they go out and do the tree trimming, they go out and bond for over 15 years. I think I just assume that you're really paying attention to that too, in terms of who's really making the decision to do what on these lines and for what reasons.

Those are really good considerations and something to think through when we think about all of the tools that PG and E is using. So, bonds have been issued pursuant to AB 1054. The utilities were allowed to issue bonds for lots of the mitigation measures, including tree trimming and those activities that are normally not funded with debt. They're normally just passed through immediately and collected from ratepayers. But in order to spread out those costs over a longer period of time, bonding was allowed.

And we have approved requests for issuance of bonds for some of those activities normally. Again, they're collected immediately from ratepayers, so there's no return on the capital investment. But they also hit rate pairs immediately, so trade off there. Investments in infrastructure like both covered conductor and undergrounding are financed by the utilities. So they put capital forward. And then there is a regulated rate of return. Not an unlimited rate of return, but a regulated. But there is a rate of return. So there's debt financing, equity financing.

Some of the covered conductor could be, or the undergrounding could be financed by debt. But we do have a set rate of return for all types of financing.

Thank you, Mr. Chair. One more and I'll be. So on the CPUC system planning ghg targets that we've got here in front of us today. This is an amazing graph, I tell you. Actually, this would have been really nice. It's not your fault, because you guys are just doing what we told you to do with these bills that we've been passing as of late.

But this would have been a nice graph for the Legislature to have before we passed some of the bills, because I'm interested on that dark blue line from 2026, that bend in the curve from 2026 to 2045, which is speeding up our ghg, speeding up our decrease in the amount of ghgs we have. Do you have any idea at this point in time? And if you don't, I'd like to get it in the future. What is that costing us? What is that costing ratepayers going forward?

Because in my district, and I'm sure with my colleagues in their districts, this is what we're hearing the most about. And so this is not a criticism of the CPUC, because once again, you're just enacting what we told you to enact. But I think it's something that's very important that we know and understand. What percentage of these, how much is this going to increase ratepayers rates going for?

And if you'd like specific numbers, we can certainly do follow up, but I'll just address that from a general perspective. So for generation costs, generation of electricity, you saw in the bar graph that generation is not growing at a substantial rate compared to previous years. Part of that is because the new resources, clean energy resource contracts, are largely cheaper now than they were, say151015 years ago when investments were starting, in particular solar projects.

There are still some very expensive legacy contracts because we have a combination of long term, short term contracts that all of the load serving entities enter into the new contracts are bid out. So there's a cost effectiveness requirement. Solicitations are made to make sure that the projects that come back in response to the solicitations are that the cost is as low as possible. So there is a cost, but it's not a significant driver of rate increases at this point.

When we do our analysis, we also incorporate. So we model for the least cost, best fit portfolio to fit our future needs. And we include in that the costs of any transmission upgrades that might be needed for the project. So all of those are incorporated to get the least cost, best fit projects.

And then the load serving entities go out and based on what we say we need for reliability and to meet the needs of the system and to meet greenhouse gas emission reductions they procure to meet those portfolios. We've seen already a large increase in projects. And in fact, last year we had the record for bringing new megawatts online at 5700 mw were brought online, and that's over 100 projects, I would estimate. I know there were 36 in December alone that came online.

So many, many projects are happening now and again, these are through competitive biddings where the cost is kept down. They're to project out into the future to meet growing need, to meet the retirement of Diablo Canyon, but also to replace gas emissions. And so we do this in an iterative way, too. So portfolios are put together on a two year cycle and then we also project out into the future.

But there's more uncertainty in the future, and so we don't know what the portfolio will look like and what projects will be the most effective to meet our need based on the combination of resources on the system and what's available.

So I'm a supporter of the policy. Obviously, I've voted for the policy. But I think now knowing what we know about rates and everything else, so what I'm getting from you is the price increases are negligible for transition now on transmission. It would just be nice for us to know, like in the 2035 goals, we're decreasing by the policy that we supported and passed here by 5 million metric tons of co2 reduction to accelerate our transmission. We got to do this anyway, right?

I mean, that's our future here. But I guess it would be interesting to kind of just understand what this policy really is costing us on the transmission side.

Yeah, no, it's an excellent question, and I don't want to minimize it, which I maybe did in my remarks, because there is a cost to this. There's a cost to this transition, and the transition impacts our distribution system, our transmission system. We're having to upgrade all of it in order to accommodate these new projects, which are throughout the state. And there's a cost for doing it more quickly. Let me turn to Ms. Tesfai to see if she has any more specifics on the numbers. But we can certainly get those to you because the faster you go, the more expensive it is.

Right.

Great. Good morning. Leuwam Tesfai, deputy Executive Director for energy and climate policy at the CPUC I think where I would focus my response here is on the activities that the CPUC is undertaking in order to make sure that ratepayers are getting the best value for the transmission investments and are getting as many savings as possible. Our staff at the CPUC appear before the Federal Energy Regulatory Commission.

Through that process, we've helped to save ratepayers over $5 billion in transmission costs, and a lot of that with the support of the Legislature. And so I think we have to make sure that we keep up with that work at the Federal Energy Regulatory Commission to advocate and make sure that cost overruns are accounted for and that we're able to save as much money for ratepayers as possible.

Okay. That's all.

Thank you, Vice Chair Dahle.

Thank you, Mr. Chairman. Members, good to see you again. I just want to kind of springboard off of Senator Dodd's comments because obviously in California we know that rates are going up to the ratepayer. It doesn't matter. They just know the rates are going up. But to us, we need to be looking at what kind of policies are driving the rates up.

And so obviously, most of my area is PG E. My constituents are in PG E. So, one, I wanted to ask about, I know generation is low, but our transmission is very expensive and our transition from renewables is going to impact because we're going to be phasing, we're going to go higher on those percentages from to 2000 and 32,045, we're going to be reducing gas and we're going to be reducing other.

Diablo Canyon is one of those that I believe it'll be running for a long time. So I don't know how we're going to get there. So can you talk about how we're going to get there, not just on the generation or the transmission, but the generation part into the future and what that looks like for the rate payer?

So you're saying that the transmission and the generation that's needed to get to the future...

You're saying generation is pretty stable right now, but is that taking into consideration that we're going to transition to more cleaner energy in the future?

Right. We will see increases in transmission costs because of upgrades that are needed. Those are looked at in our planning process together with the cost of generation. So we estimate for particular projects at particular places in the system, what are the generation options and what is the transmission needed? What does the system need to accommodate the transmission? This is both to displace gas and to meet our growing load. So that is incorporated into our integrated resource plan process and the Kaisos transmission planning process.

So there are costs, but to meet reliability needs and to meet clean energy targets, we evaluate the best way to do that on the system. So the least cost and the best fit, including the transmission that's needed. So those costs, yes, do go into rates. We're not seeing them as the biggest drivers right now. Right now we're seeing wildfire costs and distribution system costs. And again, there's the legacy cost of rooftop solar that is carried by customers every year.

So maybe I'll ask it in a little different way to try to get where by 2035, we're not going to be able to buy a combustible engine vehicle in California. That's where we're headed. And we have a customer base that is, they're not buying those electrical vehicles right now. And so I guess my point is, if you're going to electrify our transportation system at the same time reducing gas and we're talking about store, I think the Legislature needs to know what those projections look like.

And I looked through information I have here today doesn't talk about electrification of cars that I saw. Maybe it is in here somewhere, but to take on this task in a very short time, it's 2024. That's six years to 2030. And then I think it makes 2035 is the actual date for electrification in California of transportation that's like that fast.

So as a policymaker, the charts are great that show us our greenhouse gas reductions because nobody's going to be left in California, I guess, or nobody's going to be. How are we going to get there? At the same time, we have to transition all these people from combustible engines to electrification. That's a ratepayer. That's another added cost to them.

So I think we have to compare apples to apples here and let the people know where we're headed and what the cost is going to be and can we get there? Can we get there? When I have interconnection question I want to ask, too. So is there somebody taking into consideration all the legislation that's been passed or executive orders and saying how much energy we're going to need by 2035 and what the rate is going to be?

Because I think those, if we have that number, we can then make good decisions because I'm hearing from my ratepayers, they don't care about anything but their rate. They don't care that it's undergrounding. They don't care that it's generation. They don't care that they're reducing carbon. They care about the $40 a month more it's costing them. And I have to be responsible for that. But I can't be responsible if I don't have all the information that I need to make good decisions.

That's my point, and I know that not all this lands on you. I just came from the GGRF hearing, which is going on in 1200 or 2100. But they're in their silo. They're in their silo of getting carbon off out of the air. And so everybody's in their silos, but at the same time, it all has to work together because the rates continue to go up. So I'm frustrated because the legislators can't make good decisions if they don't have all the information.

And that means not just your silo and not just their silo, but everybody's silos. And I don't expect you to have all the answers because you're in your silo. But I think as a group of legislators, we need to be talking about that.

And then let me follow up. I do have one more question. So I have projects in my district that are having green energy projects that are not being able to get their connections. And they're dealing with the caliso as part of the problems. It's not the utilities. The utilities were blocking, but the utilities are pretty much out of the generation business. They're in the transmission business at this point. And so who's in control of that?

So I can know where to put some pressure on to get these projects. Is it the ISO, is it Caliso, or is it you guys?

It would depend on what the particular issue is. I'd say probably both. The utilities do have a role with doing studies to ensure the interconnection can work, but Caliso is working on queue reform. So you're probably talking about the queue for interconnection in certain places. But it's likely also a need for upgrades to accommodate the project. And so there will be upgrade projects that will have to go through local approval and siqua. But I just am guessing about the nature of the delay.

Thank you.

But we're certainly happy to look at particular projects and talk about whether there's anything we can do to expedite.

All right, Senator Rubio.

Thank you. Good morning. And thank you for this presentation. I don't know if it's more of a comment rather than a question, but I do want to validate what Senator Dahle said, because I heard you say right now that you're trying to find the least cost and the best fit, and again, nothing that you can do right in this moment but acknowledge the fact that there's going to be increases because we know we have to make investments for some of the projects.

And I think I have the same concern. As of today, I'm already getting a lot of calls from my constituents. I guess they know that this hearing is going on and they're already complaining about what they're seeing, the high rates, and we don't necessarily have the right answer for them. And they want to know is it going to go down, what are you going to do about it?

And again, without that information and seeing in the future, it's really difficult because I'm trying to tell my constituents not to worry, that we're working on it and we're trying to make sure that we reduce the cost. It's not just this, but everything else, food, housing, everything that comes with it. And so they're already really distressed over this.

If we can figure out a way to project, what are these projects that are needed? And there's no crystal ball. So I'm sorry, I'm not trying to put you in the spot, but I do agree that before we proceed and move in a fast pace, we have to kind of look at these little unknown factors because we have to be responsive to our constituents. And they're seeing the cost right now.

And with everything that we're moving towards and the investments that we have to make, I can only imagine it's going to keep going higher. And so there's no certainty here. But if you can't privately for me in the future, sit down with me. I'd like to see what we see in the future.

If you can give us an estimation, projections, anything that you can offer us so that I can internalize it and be able to talk more intelligently with my constituents and give them a sense of where we're headed, that's just really a comment. Thank you.

Thank you, Senator Seyarto.

Thank you very much. So what doesn't escape me is the reason we're here in the first place, and that's because we've developed over the last few years a really unrealistic and a really expensive agenda to address climate change or energy policy. Our energy policy is what we have developed. And unfortunately, we've also developed several agencies that I call firewall agencies that we stick in the middle.

And so we come up with all these great ideas at the executive branch and legislative branch, and then we give them to you so that our constituents have somebody to yell at. Because I know this because I used to be one of those.

And every time someone come out from the PUC or I'd be mad as a hornet at the CPUC or the Air Resources Board or the recycle agencies, whatever they are, only to discover, as I learned more during my time in both city politics and the Legislature, that you guys are just doing what we have directed you guys to do. And I fear that as we keep doing these unrealistic policies, we're going to keep going down that path.

We will have people spending their entire careers trying to appease and create something that's realistic. But the reason that this is happening is, number one, the relentless attacks and the insistence that we eliminate reliable and abundant energy sources that have always been part of and played a critical role in the quality of life that we enjoy today. And that in and of itself is really unrealistic. Another reason is we're creating this over reliance on a single energy source.

And when you have a single energy source, that means the cost for that source is going to be tremendous because you've created a demand on one thing, and it's also, some people would call that a monopoly once you have reliance on just that one thing and you're the only producer of that. So trying to achieve this all in one basket, all our eggs in one basket agenda, in addition to having a time frame, as my colleague had noted, it's totally, totally unrealistic.

And that's something that I would hope from our agencies that are trying desperately to appease and keep up with what our demands are from the Legislature and the executive branch, that they can tell us what's realistic and what's not. This all electrification. I've talked to some industry people related to transportation, and they said they were all on board, absolutely on board with it. But now they're finding there is no way they can physically get it done in the time frames that we've been giving.

So if we don't start looking realistically at those time frames, we're going to lose everybody, because, believe me, the public is getting sick and tired of rate increases and things like that. So another thing is, if we're going to try to achieve what I think is a very ill defined goal of supposed equity into an energy policy that's going to wreak havoc on our economy, and it's already wreaking havoc that hits every level of socioeconomic or socioeconomic makeup. Everybody is suffering.

What we're doing is really trying to decide who's going to feel the pain the most. It's not about protecting people from feeling pain. It's who's going to get the most pain. That's bad policy. So if we insist on hurdling our state down this path, regardless of the financial consequences for our already struggling citizens, then we should use the money that we already collect from them to advance these goals.

And we, the collective elected bodies, should go to our constituents and try to convince them that this path is what your money is best well spent for, instead of coming up with all these ideas that simply add on to the burden of an already too expensive California for taxpayers that are already the highest tax paying taxpayers in the United States. And so adding to that already skyrocketing cost of living in California so that I think the best word I can use is virtue.

Signaling on the 1% or less impact we might make on the issue of global warming if we were 100% successful is both unrealistic and it's irresponsible. And I place a lot of faith in the people that are really experts in this. I know from an elected political position people aren't. We're not experts in this stuff, but a lot of the people we rely on are.

But they're kind of silenced because they've been given the goal of, hey, get this done in 10 years, when they know darn well this can't be done in 30 years. Or if we want to have a reliable system, it can't just be all our eggs in one basket.

And so that's what I ask of you guys, is to ensure that along the way, you're not only giving us the reports on what we hope to achieve, but a realistic idea of whether our policy making is outside the realm of being realistic. Because that's what I fear what we're having right now. I think people out there are really suffering, and all we're offering them is we're going to raise your rates even more. And I think they're done. So hopefully we can work towards that.

And I look forward to being a partner in trying to achieve that, trying to get our energy policy right so that we have the redundancy that we need, we have the reliability that we need, and that regardless of the weather, that we can adjust to any of that. And that takes us being better at prioritizing the money that we already get, the billions and billions of dollars that we already get from our taxpayers, and ensuring that we're really addressing these issues in a responsible way.

Otherwise, we will fail, and I don't want that. So thank you.

Thank you, Senator Durazo.

Thank you. Good morning. I want to echo some of my colleagues, obviously, the concerns about utility bill affordability, and that was the focus of today. I know we're having Mr. Baker from the Public Advocates office focusing on utility bill affordability, but is there anything that you could summarize or identify from the CPUC that has to do not only affordability, but in particular low income Californians? What is it that the CPUC, which policies or which decisions have you made that really will address, again.

Not to disregard all Californians, but low income Californians are the ones that have to that $40, that's food, and that's a lot of other real basic things. And then I just have one more question. You don't have to give a long one, but something that I think wraps up what the PUC has done.

Sure, it's a big question, but I'm happy to try to address it at a high level. And we've been talking about rate increases, pressure on rates. A lot of that has to do with responding to climate change. And so those are the types of things that are hard to drive down.

We will eventually see downward pressure on rates as more people electrify, as we have more customers electrifying, having more of megawatts on the system, essentially, and you're spreading out costs among more customers for more end uses. So that means keeping customers on the system and then finding the best way to control the cost increases and spread them out among all of the customer on the system.

Specifically for low income customers, one thing that will start to provide some relief is the flat rate that the Legislature directed the PUC to develop under AB 205, the flat rate we were directed to make it income graduated. And so for low income customers, the rate will be low. And as we discussed earlier, there are a number of possible proposals to do this with a wide range of proposals on what that rate might be.

And as I mentioned before, the public utilities use this kind of model. And so we're looking at an adjustment in bills. But one element of that will be that low income customers will pay less. And the legislation directs us to make sure that low income customers are paying less. When you compare the same type of usage, the care program and the FARA program continue to be very, very important. About a third of the customers in the investor owned utility territories are on the care program.

And so this provides a subsidy of about 30% for utility bills. So that's something that we continue to focus on and is a very important piece of the way energy prices work. We also try to direct any kind of subsidy towards low income customers. So we're kind of thinking about that across the board. So to the extent that subsidies are provided for things like battery systems, that they are targeted towards low income and vulnerable customers.

So we continue to look at ways to both drive down costs for everybody, but also to focus on low income customers and make sure the programs that we have are targeted to those customers.

Okay. And then if I could ask you about the broadband affordability, and I guess it's the federal program that is winding down or has finished. We're at that level. We're at that point yet, but if you could talk about broadband affordability.

Sure. So broadband affordability is broadband for all statewide kind of initiative. The PUC has part of that. One of the things that we're working on and very focused on is infrastructure. So getting last mile infrastructure in place in areas where it is not accessible currently. So we have maps of areas that do not have infrastructure in place now. And we are implementing federal funds. So this is taking advantage of federal funds to issue grants to providers. We currently have an open proceeding to accept.

We have proposals in now. We're evaluating those, and then we'll be looking at getting money out the door for projects. So there'll be many projects throughout the state. The funding is divided by county, so each county gets an allocation looking to target those areas where service is most needed. Service meaning infrastructure and service that goes along with that.

And we're partnering with the Department of Technology because they have a middle mile project where they're working to develop a statewide middle mile, hoping to use that kind of to leverage, to get costs down. We issued technical assistance grants in almost every single county in California to encourage tribes, local governments, local JPA, RCRC has been very involved to develop projects to provide cost efficient service and then use the grant process to apply for grants and have infrastructure that can provide cheaper service to customers.

I'm sorry. So the idea is by helping to build the infrastructure in certain areas, that.

Should result, that should result in lower cost plans and also bringing in new types of service providers to offer plans.

But there is no low income option for service right now, except whatever a company might want to offer.

So for subsidies, we are using the federal, our providers in California use the federal affordable connectivity program that is still in place, that's set to expire if Congress doesn't act. We also have state subsidies that help low income customers. Providers do provide low income plans, and in our grant program, we provide extra points for a commitment to provide a low income plan as well. We also have other grant programs that help with adoption, and so those are ongoing state programs. Okay.

Senator Rubio, thank you.

I just want to follow up on what she just said. And you said that the federal program is going to expire. Can you share if you know, I know that I've talked to several stakeholders in this area, and they're saying that for some reason, California hasn't taken advantage as much as other states on the grants provided by the Federal Government, and there's a lot of money left on the table. Can you speak to that if you know at all?

I have not heard that that's the case. We have a very active program, so the Legislature acted to create the programs both at CDT for Middle Mile. Given the size of our state, it's a very important project, the statewide middle mile, and then partnered with us for last mile projects to go with that. We have a big state. Urban areas have different needs than rural areas, but we're really looking at it for broadband for all.

So let's match infrastructure, get it to the places that need it, both in urban areas and in rural areas. And we are taking advantage of the federal funds. The program is oversubscribed, so we don't have money on the table for that federal program. We're also looking forward to what's called the Bead program, broadband equity and adoption program. What is it?

Broadband equity and adoption and deployment.

And deployment. Okay. Bead. And so we will be taking advantage of that program as well with different types of projects. So if you are aware of something where we're not spending federal money, we'd love to have a conversation about that.

Thank you.

Great.

Any other questions from Committee Members hearing? I, in my opening statement, mentioned the sticker shock that customers saw last year from natural gas. And I, along with many of my colleagues, sent a letter to the PUC asking for an investigation. Can you tell us where you are with that investigation and what's the most current information that you might have available from the FERC?

Sure. We have an open proceeding, and then, as you know, FERC is undertaking an investigation. We don't have an update on the FERC investigation, except that we know that it's ongoing. And what they have told us about it is that it's ongoing on our end. We're not investigating. So the regional market is in the FERC realm.

We're looking at California and what both the customer notifications or the utilities doing a better job with, letting customers know what's going on, anticipating what's happening, communicating with customers, and then also evaluating some of the factors that we do have access to information for, such as storage levels and the gas system itself.

There were some outages of pipelines, and so we monitor any outages and the repair activities that are undertaken with the utilities to try to make sure they're done quickly so that the entire system is up and running. This year we were in better shape than last year, and we did take action to increase storage levels. And we saw this year rates in PG and E territory were down 35% compared to last year, and in Southern California, 64%. So, as you noted, we weathered the winter better.

We also had some milder last year. The temperatures were cold early, which is not something the market looks favorably on. And so this year, we didn't have as extreme conditions.

Do you think some of your flow orders impacted gas capacity as well last year?

So I think I'll turn to Ms. Tesfai for that. I think the answer is no. But why don't I let her explain? Yeah.

Okay, there we go. The operational flow orders are a way to make sure that, in particular, large customers on the gas system, non core customers like power plants, for example, are quickly replacing the gas that they are using. And so the CPUC has made some modifications to the penalties that some of these customers will pay so that they're a bit more graduated.

But these penalties and orders are really critical to make sure that in a time of gas tightness in the market, when these large generators are taking gas from the system, they're also replacing the gas from the system that they are using. And so the CPUC had made some changes, but it related to the penalty structure. But these weren't really a main driver of the high gas prices.

Okay, and how successful have we been in accessing federal funds, specifically the Inflation Reduction Act, infrastructure investment dollars?

So that's a question that I think the answer is still to be determined. It's ongoing. The investment tax credits that were recently extended by the Federal Government have been very helpful to us. And many of the new projects that we've. Well, all of the new projects that we've seen come online essentially take advantage of these tax credits. And it's a big part of why we're able to keep costs of generation down and that the projects are able to be successful.

And so in that sense, I think the recent actions of the Federal Government have been very important to California. We have also encouraged the investor owned utilities to apply for funds and take advantage of funds in any way they of. I know liberty Utilities has received awards. We have seen some of the smaller utilities receive awards. We know PG E is in conversations with the loan program office. And so with respect to the funding for utilities themselves, it's still ongoing.

And I think we'll still continue to see that play out.

And I think I'm not to belabor this, but I think the overall sentiment of my colleagues is that we find ourselves here because of some of the aspirational and flawed policies that we as legislators have implemented. And we talk to our constituents, as they say, what they are concerned about when they open up the bill is how much they owe. They don't care where it comes from, how we got it. It's can I afford it?

And ratepayers, especially working class people, are paying for most of these aspirational projects that, like you say, are way down the line. And we haven't even proven that they're going to pan out and hit our environmental goals and to continue to have that discussion that we should move away from natural gas. When I stated, even in my opening statements, the US would not have made its climate goals targets two years ago if it were not for natural gas.

So natural gas still plays a critical role in power delivery in California and reliability. And I just wish we would have more honest conversations that are picking winners and losers all the time.

And that's what finds ourselves in many of these tough minds right now to make tough decisions, to say we have to reach this goal by this certain date when at the end of the day, as my colleague said about undergrounding, why are we spending $4 million a mile, thunderground poles and wires and transmission lines that have been there for decades, and we didn't have these ongoing forest fires because we're not clearing lines and we're not having those conversations.

We're not doing the line clearing that we were doing 101520 years ago. And that's what's leading to most of this. It's not climate change alone. It's the fact that we're not managing our forest. And I've taken tours up there, and those landowners will tell you I can't cut down the trees or the utilities will tell you we can't access property anymore to cut down these trees. So wouldn't that be a better investment in line clearing than $4 million a mile to underground?

That leads to longer outages for customers once it's underground versus when it's overhead. I'm just curious.

I think that that's a good question, something to take into effect, to account what are the trade offs and what are the options? And part of that is that we provide the utility with some flexibility to choose the cheapest projects. And so in general rate case, we'll provide a limitation on the amount of money. Of course, we have memorandum accounts where they can say, oh, we did this, X, Y and Z. We need funding for that. But in general, here's the risk reduction targets.

Here's how we see you meeting it. Here's funding attached to that. You need to do it in the most cost effective way possible.

$4 million a mile is not the most cost effective way, as well as subsidizing NiM on rooftop solar for folks who many times live in their homes three months out the year and working people have to pay for that. So, I mean, we need to really have better, honest discussions about who's paying for this, the best way to go about achieving our climate goals, our energy efficiency goals and whatever else anywhere. Other questions? Senator Dodd?

Yeah, I'm sorry to do this again, but first of all, I appreciate all your time here and the work that you're doing on behalf of repayers. I think in light of the comments that you made, though, on transmission and generation, that it may be fruitful for us just to have a hearing in the future on what other items are in rates that aren't generation and that aren't transmission for a briefing on that, because we've talked about that a lot, and I don't really think that we fully kind of get it. What's going on there.

And again, a lot of this was the Legislature passing these bills that at the time were the best case going forward for trying to get to the point where we are today. So I think we just need to understand and look at and say, okay, what is it our ratepayers are paying and is it valid any longer? And it may very well be. We just don't know. But I think I'd like to see that. Mr. Chairman, thank you very much for your time.

Thank you.

Any comments?

We'd be happy to do that. And we'd be happy to also provide information to your staff. We do do an AB 695 report every year. I think our report is coming up for release. It's providing transparency. There's a lot of detail behind it, but we try to pull it up and explain some of the numbers. And so you can start there. But happy to respond to any questions you have.

Well, thank you, President Reynolds, and your team, for being here today and providing great testimony and information as we go forward. We do want to do this in a collaborative manner and work closely with you, with the Legislature, as well as your agency to make sure that we deliver reliability, safety, but most importantly, affordability for our customers here in the State of California. So thank you for your presentation.

Thank you very much. And thank you for all the Senators for your attention to these matters.

Thank you. Next up, we're going to hear from our Public Advocates, and we're going to have Mr. Matt, just, the Director of the program, and his team come forward.

When you're ready, you may begin.

Thank you, Mr. Chair. Thank you for having us here today. It, you should all have our annual report, which outlines a lot of the work that we did over the past year. It details our work to protect consumers in water, telecommunications and energy. That's the three areas that we work in. I'll keep my comments brief to address specific questions or concerns. I plan to focus on electricity prices, how we got there, what we can do about it, and in the process. I'd like to describe our advocacy in this area.

First, a little background on our office. I'm not sure if the presentation is on. It is now. Okay, great. But first, I think it's important that the two organic powers that are most important at the Public Utilities Commission are telling a utility what they can build, how much they can charge for it, and what they can charge is called the revenue requirement. The President and the commission went over in great detail kind of what the revenue requirement has been.

And our role in all of this process really is to scrutinize every utility application that could increase cost to ratepayers. Our focus is on keeping the lights on in an affordable, safe, sustainable manner while addressing our climate goals and doing all this through the lens of affordability for all, particularly low-income ratepayers. I think the most important way to look at affordability really is how it affects ratepayers.

And we're in a position right now where almost 20% of all, one in five of all ratepayers, is either late on their bills or in arrears with an average amount of about $700. This is because we have seen a dramatic increase in rates, which I think is a really, which is why we're all here today. I do want to point out the period, like, we started deviating from inflation around 2014, but it was a relatively manageable issue at that time.

After 2020, our rates went up fairly dramatically. And I'd like to talk a little bit about that. As the President has said, a lot of it is this increase in the revenue requirement. If you look at the 2020 revenue requirement, it was just under $30 billion. In 2023, it was approaching $40 billion. We estimate that in 2024 we'll be interested in the report that's going to be coming out from the PUC. It'll be over $42 billion. And where are those costs increasing?

I'll just be really quick, because the President really went through this well, they're not increasing in generation. That's been a relatively good success story. They are increasing in distribution, transmission and public purpose programs. And I think that, again, if you think about it, I just want to put a point on the idea that I think the reason we are here and the reason this is such a dramatic issue right now is because of the shocks to the system that we've experienced through wildfire.

And we can't forget the high inflation that we experienced over the last few years and the high interest rates that we're living with right now. So those are really important parts of the problem. And I think that it's important to address those parts of the problem because that is causing the most immediate pain, but also to look at kind of issues that are more structural and how do we do that.

So again, if you look at this slide shows that there have been, since 2020, $14 billion in utility wildfire requests since 2020. I would just say in the last two years, about 2 billion of the wildfire dollars have been for ONM, which are like the most important immediate cost drivers and things we could be looking at. So that's the story on why the pie is getting bigger.

I think it's also important to make sure that the slices of the pie are equitable, so everybody feels like they are paying their fair share. This is what the President has referred to kind of as the unit price of electricity, which we measure in terms of the rates that are being assessed to consumers. And these rates are increasing even faster than the revenue requirement.

And that is, I would argue, mostly the result of rate-based subsidies, particularly legacy NEM 1.0 and legacy NEM 2.0 customers, where we calculate that about $6.8 billion a year starting this year, is being concentrated in fewer ratepayers. So it's making the nonparticipants charge go up by that amount of money. And that is a large amount of money. I'm sorry, Net Energy Metering. So it is the rooftop solar programs that have not been addressed in NEM 3.0.

So we grandfathered a whole bunch of folks in, and I don't want to talk about whether that's good or bad, but it is a huge amount of money and we have to deal with it. So our objective here really is to bend the cost curve to get this cost curve down over time so that rates are not increasing faster than inflation. And we like to categorize the problems. Our approach to this really in three buckets.

We've got these kind of exogenous shocks or climate shocks that through wildfire or through big storms, I think I could put Covid, it isn't a climate, but it is definitely a shock to the system. And so how can we normalize these kinds of shocks? How can we smooth them out over time, either through pre-funding them in rate cases where we're looking at all of the expenses and judging them before they're incurred, or through some form of insurance to help protect ratepayers for it.

I think our second big bucket of solutions would be how do we economize the clean energy transition? The clean energy transition is going to cost money, so how can we make it as economical as possible? The President has mentioned electrification. Electrification is very important. We have to do that in a cost-effective way. We can't just use rate subsidies to do that to encourage electrification, or we start to eat any of the savings that we have right there.

I think it's also important to look at the need to sequence things. Could we do transportation electrification first, since it's coming up, it's something that's got legs on it right now and sequence the building electrification parts of it. After we've kind of started to swallow that ball, we should look at those issues. And I think we also need to figure out how can we apply like the generation side of things, the actually making of electrons through wind and solar and batteries and things like that.

That's a big success story. What we're seeing now is the rest of how we arrange the system around those costs. How can we economize there? How can we make transmission less expensive? How can we make distribution less expensive? How can we require, do the investments in a way that are closely matched to electrification as it's coming? So that's bucket number two, economizing the clean energy transition.

And I think the third bucket is one that we're kind of most familiar with, is really how do we refocus on the basics of utility regulation? And I think this is a conversation that needs to be statewide, but I think it's important for us to prioritize what is most important.

And we would argue what's most important is safe, reliable service, decarbonizing the grid, electrifying in a cost-effective manner, and doing all of this through the lens of affordability and least cost with an eye towards how it impacts people who are least likely have the least ability to pay their bills. If we look at those buckets there, this is what a utility should do.

Then things that fall outside of those buckets, we should be asking ourselves, well, is that really worth something that ratepayers should be paying for? So let's set priorities and let's work through that. I think part of another cost control measure that falls into this bucket is we really want to try to return to basic budgeting and cost control through rate cases. The rate case is where we set a budget. It's where the utility comes in with their priorities. All parties kind of play in that world.

So this is a way know really start to make sure that we're doing what we are prioritizing. And I would say finally, we're really interested in cost-based and equitable rates. We're a party in the PUC proceeding around income-graduated fixed rates. We support modest fixed charges or flat fees. To address these concerns, we're looking at things like in the level of what this Sacramento Municipal Utility District has proposed.

And we think it's important, in addition to it's important to have these tools, the Commission to have these tools, as well as the ability to set time-based price, because time-based prices are also important.

And if we do all this, this will have a benefit of not just creating more equitable rates, it'll help promote electrification and it'll help set us up for a world where there are many more people who are putting power into the grid and taking power out of the grid because we're making sure that that connections between the pluses and minuses is well funded.

So I just want to close with three questions that I think are really important and that we ask ourselves, and we'd really love the legislature to also think about are there costs that could or should be shifted from electric ratepayers? We're asking electric ratepayers to decarbonize the transportation sector, to decarbonize the building sector, places where those are whole sectors, we're asking them to do so in the face of kind of a climate storm. Can we help ratepayers that way through either other funds or other sectors?

Two is, are there costs that can be more equitably borne by future ratepayers? Last year, over the last two years, we spent about $2 billion on enhanced vegetation management, tree trimming, things like that. Those are big operating costs that hit ratepayers right away. A lot of that was because we weren't necessarily doing it in the past. So ratepayers today are paying for things that we could have been doing in the past.

It's also the case that to some degree, once we get through this kind of slug, there'll be a lot less that needs to be done in the future. So we're creating a benefit for people in the future. What kind of expenses are ones that we could spread out either through securitization or through revenue bonds or other means that can possibly help us in that area.

And then finally, I think, based on the priorities that we're looking at right now, are there costs that we can stop incurring? Right now, we need to look for the nickels and the dimes in the couch. At this point, there are no costs that are too small that we should be seeing.

So we're in favor of scrutinizing as many of the programs as possible and through a cost-effectiveness test, if it's not providing benefit for the ray pairs, we need to come back and ask, why are we doing this? And should we be doing this? I'll stop there. Thank you for the opportunity to present today. I want to reiterate that we share many of your goals and concerns. I do think that it's important to look at rates that people pay, kind of like a tax.

Like it's a $40 billion tax that is assessed every month, because you guys are in the hot seat for a lot of these concerns. And so thinking broadly about solving the problem, I think is really helpful. So we stand by ready to support you with making these tough decisions. I'm happy to answer any questions you might have.

Thank you, Senator Dahle.

Well, thank you for your comments. I want you to go back to your page six. It's the cost unrelated to consumption. Can you talk a little bit about distribution and transmission? What's the difference between those two and why are the cost, maybe explain it to me. Distribution is up 15% in 2023, and in 2020, it was up 10. So that's 25% in three years.

Yeah, it's 40%, actually, for distribution. And I think that is where we see the impacts of wildfire. So a lot of the distribution system has been burned down. That's where we see the money that's gone into hardening of the distribution system through automatic shut-offs. And that's where veg management comes in, or tree trimming and things.

So transmission is 34%. So between the two of them, it's 76%. What's transmission that's building new lines or accessing to new customers that oncoming, like development.

It's mostly building new lines versus replacing existing lines. So as it's reaching out to wind and solar sites, there's a couple of lines that are going out, out of state to help with our reliability as well as meeting our climate goals. And we expect a great deal. Part of the energy transition will require a lot more transmission, and that's a very important cost.

Then the public sector or public purpose is up 110%. What are those programs?

So that would be a lot of the programs that we have for energy efficiency programs, for self-generation. The care program is in there, and that's a very big expense. So as the rates go up, more people can't afford their bills. So we subsidize their rates further, which gets put into there. That's mostly what those programs are.

Which gets paid by who? If you subsidize somebody, somebody else has to pay.

That is true.

Who pays?

For all of the programs that we list in the revenue requirement, they're paid for by ratepayers.

So wealthier ratepayers, because if you're getting subsidized, you're getting the benefit of somebody else's not benefit, I guess.

Yeah. So let's say we're. The 30% of the care program is about, the customers who fall into the lowest, roughly third of income are eligible for a 30% discount on their electricity rates. And that is paid for by the rest of,

The 70% that don't fall in that category.

Yes.

Then I want to talk about NEMs, and I asked for the acronym because I don't know if all the public, if they're watching, understands.

I think that's reasonable. I shouldn't have used that. Yeah.

So let's talk about who subsidizing who in that program.

So, in that program. And I might ask Mike to jump in on some of these specific ideas. So that program covers about 1.7 million meters. And these are customers who had applied for solar and were accepted into the solar program before the Commission changed how they were renumerating customers. So the new, what's called NEM 3.0, Net Energy Metering 3.0, which is kind of technically more of a net billing program that is much, much more cost-effective.

But for those 1.7 million customers, they receive the full retail rate. So every time the rate goes up, the effect of that subsidy gets larger. So whether it's wildfire going up because of wildfires or it's going up because of increased investments in the distribution system, those customers pay very little of those bills. And those bills are then shifted to the rest of the customer base.

Is this rooftop or is this.

It's mostly rooftop. Yeah.

So it's all rooftop. This isn't a solar field that's subsidizing an agricultural well or a manufacturer. This is rooftop. So people that have solar on the rooftop who got a tax subsidy, got a benefit to their tax, are getting their energy at the rate, whatever the rate is, even if it goes up, somebody else is paying for that. We, the taxpayer, subsidizes them. And on top of that, the energy is getting subsidized at the same time.

Yeah, I would just say we think roof.

Anybody that didn't, let me put it to you this way, anybody that was not in that bucket is paying for somebody that's in that bucket.

That is correct.

And that's everybody that's low-income, middle-of-the-road, high-income earners across the board. So the disadvantaged folks that my two colleagues that just left that were worried about, they're subsidizing somebody who had the ability to be able to put, in the first place, rooftop solar on their homes.

People who could afford to put rooftop solar. Put rooftop solar on their homes. People who couldn't, could not.

Poor get poor and the rich get richer is really what's happening here. Let's just say for what it is, what's the opportunity to address that issue maybe?

So, one of the opportunities to address that is really to try to find a way, equitable way that we can pay for the costs of the system that aren't dependent on whether or not you use more or less electricity in our mind.

Wait, say that. Say that one more time.

There's the parts of the electricity bill that go up and down with your use, which are mostly generation, so you use more generation. It's more. And then for the most part, the system itself, the wires and the poles, those what are called the fixed costs or the public purpose programs that everybody has to pay for. Those are, you know, those fixed costs are the things that we need to develop ways to equitably pay for.

So we are a party in the income graduated fixed charge proceeding, or the flat fee, as the President has described it. And we believe that setting an appropriate flat fee helps reduce those inequities for existing.

How? You have to have the,

Because everybody would pay for it. If you have solar on your roof, you would have to pay that fixed fee and that fixed fee.

Why don't we just make it? The people that have solar on the roof have to pay. Everybody else is paying the fixed fee. If you don't have solar, you're paying the fixed fee. Well, if you have solar, you're not.

Our position in the NEM proceeding was closer to that, which was to set a fixed fee. That proved to be very controversial.

I voted against the flat fee because there's no incentive for somebody to actually reduce their consumption. In my mind, if you don't have to pay for your consumption, you're going to use more. And the goal is to actually get away from carbon and actually use less energy is the goal.

I think the rates are so high that if you enacted our fixed fee, which is about $25 on average, that you're taking the rate at what it is in 2024, and you're basically moving it back to what it would be in 2021. What we were paying in 2021 was an enormous incentive to conserve. It's still there. That signal is still there. I also think that making our electricity system more focused on electrification, like we need new load, it's got to be the good stuff.

It's got to be cars, it's got to be trucks, it's got to be heat pumps and things like that. And to get to that, we need a lower marginal rate. So that's why it's really helpful to put some amount of those fixed costs into fixed rates or into flat fees.

Well, I thank you for trying to answer my questions. I'm frustrated, as you can obviously see. I've sat on this committee for 12 years, 11 years. I wasn't on my first year. They wouldn't let me on it. But I've been the Vice Chair and I've had a great Chair who we have a lot of the two of us, not considering most everybody else, have these conversations a lot about who's really paying for what. And the public really doesn't understand it.

At the end of the day, it's what I said. Everybody's in a silo. And I just came from the GGRF thing because we have two committees going at the same time. I'm the Vice Chair of EQ. I'm the Vice Chair of this committee and I'm the Vice Chair of sub two where all the money goes in natural resources.

And I'm frustrated because I get the calls from the people whose rates are going up and they don't care about electrification of a car, especially in my district where they have hundreds of miles to drive to get to their health care and they're being told this is the future. And what they do is they look at their checkbook and they go, gosh, I'm on a fixed income. There's an article today that was in Cal Matters. It's my community Bieber, where I come from.

It's the store there and it's the owners of the store. And there's a gentleman whose mom gets $400 a month on Social Security. And he's living with his mom, trying to help her get her. And she's got a heart failure and she has to drive a long ways to get her meds. And her electricity rate went up $50. That's the call I get.

And they don't give a crud about anything else other than getting that $50 off because that's something they have to pay or they don't heat their house or they can't cook their food. So I know that you're not the problem, but it's not your problem. And it's not the person in the other room's problem because their problem is only their silo. And I think that's what I've been trying to push as a legislator to say, we have to look at all the problems and then we have to say, how do we solve those problems?

And you can't just focus on the low-income guy because somebody else is impacted by that. And businesses are leaving California at the same time, we have an exodus of people who pay the bills because they're like, they can move and they are. And so I thank you for coming. And I'm not here beating up on you, but I'm pissed.

It's my last year and it's gotten worse. It's not getting better. And on top of that, I can take you to my district and show you where PG and E is burying a power line through an agricultural field at how many dollars per mile. When we should just insulate that pole and we could do it cheaper because there is a mass amount of money going into these projects and you can't see every one of them.

Anyway. I'll just continue to say I didn't vote for these bills. I will tell you, these guys talk about the bills. Maybe the legislature caused them. I voted against those bills because I'm looking at the broader picture. So thank you for your time. I'm sorry I'm frustrated, but at the end of the day, Californians are going to wake up and they're going to throw the bums out. Hopefully, they do.

Hopefully, they throw everybody out of this place because we have to look at this holistically or it's not going to solve the problem.

So can I just one thing. Thank you.

And by the way, I love this guy. He's a great Chairman and I can say things he can't because I'm on the other side of the aisle and I'll say them for him sometimes. And he can deny that if he wants to.

I would just like to point out two short-term things that I think could make a difference. I do think addressing this cost shift with legacy solar is very, very important, and I do think a fixed charge starts to get us in that direction. But I would say, though, I referenced before that we had spent about $2 billion in addressing vegetation management. So that's $2 billion. And there's a revenue requirement that's about $40 billion.

If you were to take $4 billion of that revenue requirement and enact some longer-term reforms, because I do think we can bend that curve over time. But if you were to take $4 billion in operating expenses, you could get anywhere from 10, depending on what it is, 10 to 15% rate reductions for those customers today. So are there things that could be spread out over longer periods of time, like maybe that $2 billion?

Because those aren't going to necessarily repeat themselves into the future. And are there things that ratepayers should not be covering, maybe some other source could be covering, and that can provide immediate relief very quickly. I would caution you, though, we really want to combine it with some of this, what we would call kind of basic utility regulation, because that's also very important. In addition to the concerns you have on everybody, what the goals are, what they cost, and can we make a decision collectively about them?

I had a question. What's your office response to the State Auditor's report that states that you should improve the utility's balancing account to the review of that?

Yeah. So I thought the auditors provided some good insights, and there are things that we are moving forward with. We are interested in increasing our capacity to audit all of the audit-balancing accounts. Right now, we audit about, I think, 85% of the dollars in all of the balancing accounts. So maybe we could cover more of that.

But I do think that one of the questions that the auditors weren't asked to answer is, why do we have so many balancing accounts, and what are we using them for? So a balancing account, like a memo account, is kind of like saying, okay, we want you to do this thing right now, and we're giving you a credit card to do it. And then we'll look back later to see if something that you spent was imprudent, which is a pretty high standard.

It really makes it very difficult to set a budget and to keep in with expenses. So that was one thing. There are a couple of other things in there. So the Auditor also highlighted that we might want to formalize how we deal with advice letters, which we have instituted that. But, yeah, I'll let my deputy Linda talk about any other things that we're also doing in response to what the Auditor has highlighted.

So we review the accounts that the utilities put before the Commission in applications, primarily general rate cases. There are other proceedings, too. And those accounts are what the utility is requesting is cost recovery for costs that are booked to those accounts on a forward-looking basis. Those are costs that have not been approved for recovery yet. That's where we spend as a public advocate's office.

That's where we spend our time in terms of looking at whether what the utility is asking for is reasonable and cost-effective. And most of those requests are in the form of memo accounts as well. That's what we look at is what the utility is asking for on a forward-looking basis, what's not in rates already. And what the State Auditor was saying was that we should be looking at accounts where the utilities have already been authorized to recover those costs.

Given our resources, we want to focus on the costs that have not been authorized yet to make sure they're reasonable.

Thank you.

Yeah, I want to follow up on that. So offshore wind is going to be the wave of the future and we're going to fix everything. We're going to get 25 gigawatts supposedly from offshore wind, and that's future, and that's going to be funded by the flat rate. Right. The bonds that was proposed. So talk about that.

Well, I would just say, my understanding is that what a developer will come in and they'll say, well, the way the process works is we have an integrated resource plan. So we look ahead, the Commission looks ahead, the energy division staff looks ahead. They say we're going to need this much power. How are we going to get it? What's the cheapest way to get it?

And if that IRP spits out offshore wind as part of the lowest cost portfolio, the actual cost of the wind might be higher, but it has to have the portfolio that it's included has to be less. Then the Commission would figure out a way to procure that.

My expectation would be what they would do would be go out for bids like they would for wind and solar farm, which is asking for a fixed price contract or with escalators, but it would be a power purchase agreement and that's how the process.

McGuire did a bill last year that allows them to bond out and we're moving down that track. We already said that the trades and everybody was in here praising the bill that said, hey, we're going to go, this is the way we're going, it isn't a bid process. We are going to build offshore wind and the ratepayers are going to bond it out. I think it was SB 398, don't quote me on the number, but there was a McGuire bill.

I raised hell about it on the floor, and everybody's like, oh, it was cooked, and we're going to pay for that.

Well, I should get back to you on that.

I like to know, because I think there's legislation already passed that said this is where we're going. We're going to get 25 gigawatts, which is 25,000 wind, and we're going to land it in Humboldt and in San Diego, and we're going to figure out how it gets to the rest of California.

I think it's a target bill. And my recollection is that it still has to go through the PEAC IRP process and go through a cost process at the CEC. But I could be wrong.

All right, thank you.

I don't know if anyone else has.

No, thank you. Any further questions for the advocates? I appreciate you, Mr. Baker, and your team for being here and your testimony this morning. It's been very useful and helpful to us moving forward as a committee and as a legislative body. So if no other questions, I will now open it up for public comment. We're going to allow individuals 1 minute to make a statement or ask a question for the committee. Thank you.

Hello, my name is Dr. Jean Nelson. I'm with Californians for Green Nuclear Power, the guy with the green headband. And I'm here today protesting the CPUC's cutting our January 30, 2023 intervener compensation request to zero. And I've been working for some time with Alice Stebbins, the former Executive Director of the CPUC. She told me via email last night that the San Francisco jury said that she was a whistleblower. Alice and her team were cleaning up the payment process for intervener compensation.

She recognized that CGNP is owed a lot of money for the advocacy work they've been doing. This is another fiscal area the SEUC needs to review. Millions of dollars are owed to interveners who support good government like CGNP. And then I sent you folks a letter on Monday, and I concluded the letter with, while CGNP is not privy to the CPUC deliberations, we can't avoid wondering if these gargantuan sums from Pacific Corp. Lobbying may have influenced all the intervener compensations in the first paragraph.

So I sincerely hope that you can get to the bottom of this and correct this injustice. Thank you.

Thank you. Next witness.

Thank you, Mark Tony, Executive Director of TURN, the Utility Reform Network. We have a broken system where the sky is the limit to how much or how many times a year utilities can come in for a rate increase and how much the CPUC can authorize for rate increases. What we need is a ratepayer relief act to reduce bills, enforce fiscal discipline, and limit increases.

We need to incentivize greater utility spending discipline to drive down monthly bills, strengthen existing tools at the PUC to maximize cost-effective spending plans, and limit bill increases to the annual Social Security cost of living adjustment.

Thank you, Mr. Chair. And Mr. Vice Chair, Valerie Turella with Pacific Gas and Electric Company. Thank you so much for bringing this robust discussion forward today. PG and E takes our commitment to reliability and safety very seriously in the service that we're privileged to provide in the least cost as possible. But to deliver on this responsibility, we have been looking in the couch cushions and more than the couch cushions. We've been looking at how to do processes more efficiently.

We've been looking at the Federal Government for grants and loans. As was discussed today, we have brought bills forward, unfortunately, not in your house two years in a row, for PPP costs to be shipped off of our customer bills to securitize the costs that we were discussing today on wildfire mitigation. So we look forward to having this opportunity for this affordability discussion this year to find solutions for the immediate pain and some longer-term solutions. Thank you and look forward to the discussion.

Hi, I'm Rob Holly from San Jose. I oppose the AB 205 utility tax. The Clean Coalition has proved that the tax fails in all of its goals. The working poor will subsidize the largest users of electricity. It will penalize conservation, which will make the system even more expensive. Over 200 groups have joined together to propose this poorly considered idea. When Howard Jarvis and the Greenpeace agree on something, you have to take note.

AB 1999 is happening because the public wants this insane idea killed and wants to restore the caps that the old law before AB 205 had in place. And by the way, on another topic, if you would like me to explain how NEM 2.0 really works, because there are a lot of statements that I've heard this morning that are just totally inaccurate. I'm happy to stick around afterwards and give you that explanation.

Good morning. My name is Esperanza Vielma and I'm here representing the Coalition for Environmental Equity and Economics, CEEE. We're a statewide coalition of over 220 grassroots advocates from various sectors. We strongly urge the repeal of the utility tax. We don't need to add any more pieces to the utility cost pie. It was a rushed implementation of the fixed charge policy by the CPUC without public hearings, and that is unacceptable.

This tax is regressive and it'll burden millions of residents, particularly those that are in apartments and small homes. It discourages energy conservation efforts and undermines California's clean energy goals. The working poor will be hit the hardest by this tax, further exasperating inequalities. This isn't equity. Our environmental justice working class are not at the table, but they're still having to pay the whole pie. And so we implore you to prioritize the equitable representation of all Californians and reconsider this detrimental policy. Thank you for your attention.

Good morning. Patricia Barrett, as a constituent from Stockton representing millions of Californians on limited incomes, I urge you to consider the impact of proposed utility tax increases on families. I have solar panels and a monthly bill of less than $26 gas and electric, but I understand the struggles faced by renters and those in smaller homes. A recent San Francisco Chronicle opinion highlighted burden on working families with potential increases up to $30 per month for those already struggling to make ends meet. This is not equity.

This places a heavy financial burden on working people. On working poor. Do you truly understand the realities of poverty and aspirations? I know you do, I heard it this morning, and I appreciate your compassion. The working class should not bear the cost of electrifying homes or modernizing the grid, especially when utility companies continue to profit. None of these proposals address the issues of lowering their guaranteed profit margin. I urge you to prioritize the needs of constituents like myself and reject proposals that further burden working families.

Thank you for your attention. I do want to add a lived experience. I do make less than $1880 on Social Security. I do have a house payment. I did get my solar put on through a program offered to low-income families. I live in southern Stockton, which is one of the poorest counties, parts of the counties. My bills, gas and electric are under $26. Okay. Usually my electric is like five or $8.

I'm trying to be a part of the solution, not a part of the problem. I don't get a tax write off because I did go through that program for low-income people. Something like this has really got to be looked at. And seriously, I can't afford another $30. I tried to get away from the $30. I need to go waterless and electric on my gas tank. I need to go electric on my stove. How can I do that if they're going to keep taxing me?

Because when I go down on gas, I'll go about electricity. But then I still got to pay this extra bill. It's not fair to the consumers. Thank you.

Good morning, Mr. Chair and members. Beth Olhasso, on behalf of the Agricultural Energy Consumers Association, wanted to bring in a little bit of an ag side. As we've been talking about residential rates a lot in the PG and E rate class for the ag community, we're looking at a 36% rate increase starting at the beginning of the year. And there's another half $1.0 billion pending at the PUC.

So for the ag community, where prices are fixed in most cases, it's a hard time for us, climate-smart Ag has to start with renewable energy on farms. And the PUC just eliminated AG's ability to put solar on their farms with the elimination of the Net Energy Metering aggregation program as part of the larger NEM program we were talking about. But now farms can't aggregate their loads behind a single meter on the farms.

And I don't know how we can do that, how we can have solar on farms if we can't aggregate. There's no evidence that AG was part of the cost shift. We've never gotten the full retail rate that residential did, so very different. We're not part of that cost shift conversation station. So we really want to urge the legislature to continue looking at that and find a way for Ag to be able to generate on their farm.

If we can't create our own energy, we are just subject to the prices that we're getting from the utilities. We have no way to take our energy future into our own hands. So really hope we can consider it. Thank you.

Great. Thank you chair and Members of the Committee, my name is Alexis. I'm here representing the California Environmental Justice Alliance. We represent Low income and disadvantaged communities across California that are suffering the cumulative and worst impacts of pollution, climate disasters and economic insecurity as rates increase for everyone. We know that these are the communities that are especially impacted and we urge California to work on solutions to protect these communities and also pave the way for long term energy affordability.

We believe this will take a combination of progressive rate reform so we are supportive of equitable income, graduated fixed charges designed correctly, greater utility accountability, also rejecting unnecessary or harmful energy investments and really maximizing the potential for clean and distributed energy resources that can cost effectively support our clean energy goals while also preserving state land and providing numerous community benefits. So definitely want to see a community solar option open up for renters who have not had access to rooftop solar thus far.

Low income Californians can't afford to wait any longer and we are excited to work with California lawmakers and regulators to act now on these solutions. Thank you.

Hello, thank you for letting us speak here today. My name is Susannah Porty. I am a music teacher and an extreme conservator of energy. I'm here to oppose the IGFC. It's a supposedly modest charge of even $25 a month is almost three times the national average and will increase bills on people who don't qualify for care, or ...., who live in apartments, condos and small homes, and who conserve.

That's millions of Low and middle income people, including single moms, families making just 76 k a year, transit drivers, teachers, nurses, cops, et cetera. I also oppose a solar tax of any form to address a misconception here. There is no cost shift. Every rooftop solar system reduces the cost of the electrical grid for everyone by reducing the required number of long distance power lines, by creating infrastructure at the local distribution level, and by reducing the needed capacity of utility scale generational facilities built over wildlands.

And solar users already pay a fixed charge of $12 a month. Multiply that by 2 million people. That's $24 million a month that they are paying so the utilities won't profit. Line about the IGFC is just not true. A utility tax that punishes Low energy users and rewards large ones will result in more electricity use while giving the utilities a steady stream of income with unlimited potential to grow. So please, no IGFC, no Solartex. Thank you so much for your time.

I'm Charlene Woodcock. I want to say that as a main driver of the climate crisis. The reduction of gas should be our highest goal, and it will reduce rates as well as reduce home fires. I strongly oppose a utility tax. It removes the incentive to conserve, and Californians are already paying a high cost for utilities. I strongly oppose a solar tax. Instead, the state should work to incentivize more people to install rooftop solar panels and use less electricity.

A fixed rate charge for energy would require a whole new bureaucracy to attempt to verify everyone's actual income and incomes change from year to year. The unintended consequences of a new income based utility tax are significant. PG E, in its efforts to maintain control over its customers, seems determined to discourage rooftop solar, the most efficient, affordable, quickly achieved way to reduce our carbon footprint in California.

Industrial scale solar takes longer to build, is vastly more costly, usually involves litigation before projects can proceed, is damaging to the environment, and requires new transmission lines, which rooftop solar does not require. The investor owned monopolies such as PG E, that play a large and often costly role in the daily lives of Californians, exist to make profits for their stockholders. This fact is increasingly at odds with the needs of Californians for clean, safe, affordable, environmentally responsible energy sources.

Don't let PG e keep us enslaved to gas and net metering is not a solar subsidy. It was outrageous to hear it being treated as that. And the graph that I've seen in a paper that was presented to you shows it as a solar subsidy. It is payment for energy produced and returned to the grid. And it has allowed the energy system in California not to need to build another gas plant because of the number of people who are producing energy on their roofs.

And that should be encouraged for everyone who can possibly do it. It's the cheapest way to get us cleaner. Thank you.

Good day, Mr. Chair, Members of the Committee. My name is Hunter Stern. I'm with IBEW Local 1245. Is a Member of the Coalition of California Utility Workers. So, three things. First and foremost, our Members. In addition to working for the IOU utilities, PG&E, and Liberty, they also work for 28 different municipal utilities. Of the largest municipal utilities. Our Members work for SMUD being the largest.

They have fixed charges in their bills, in their rate structure, and they have had for many years, 15 years for sure. This is because the change in the rates or the change in the costs have moved the structure so that a volumetric rate no longer fits the Bill. So the IBEW and 1245 and Q overall supports the fixed charge specifically, and we've filed such comments in the proceeding at the PUC specifically, a well crafted fixed charge will not increase overall rates.

A well crafted fixed charge will reduce the electricity bills for Low income customers. A well crafted fixed charge will reduce that volumetric amount that all customers pay for each kilowatt of electricity consumed. And that's probably the most important part of this change. And a well crafted fixed charge will encourage electrification and conservation because you will be paying for what you use more consistently and more accurately, and that will apply to each customer, not groups of customers. So we encourage that structure. Thank you.

I'm Megan Shumway, a retired public health nurse who lives in Sacramento. And I have rooftop solar, and I am very middle income, as most people who have rooftop solar are. It's a myth that it's all rich people, and we need to keep that in mind. One of the other things that you need to keep in mind is the cough shift was invented by a right wing think tank.

Rooftop solar is a way to conserve energy, and it's the same as if you put your clothes on the line to dry them in the sun rather than use your dryer. So you're being more efficient and not using a lot of electricity. It's the same if you have rooftop solar and you're not using a lot of electricity.

So there's more electricity for the rest of the people who can't have rooftop solar for whatever reason, whether they're in an apartment building or their trees are all covering their entire roof and those kinds of things. One of the other things I think that might be something that would be a solution is to go to the cap and trade people.

I was listening to them this morning, and one of their suggestions was that maybe they could use some of the income they're generating to have a subsidy to a rebate to electricity users so that can bring their electricity bills down. And that I thought was maybe a really good idea that somebody should look at. There's a lot of other solutions to this than to have a fixed rate applied. I live in SMUD area.

I have one of the highest fixed rates in the nation, and it has increased my Bill in the last 10 years. Even though I'm an early adopter of electrification, my Bill has increased tremendously, and I'm paying like $200 a month sometimes, which is I go, what? But I've done all those things that everybody tells you you should do because I believe in it. I think that we need to be all electrified, but it's going to be hard for people to swallow if their bills go up. So you need to do something to mitigate that. Thanks.

Mr. Chairman, Members, always nice to be in front of you. I'm John White with the Center for Energy Efficiency and Renewable Technologies. Thank you for this excellent hearing today. I just want to touch on something that didn't get a lot of attention, but we think is really important, and that is the urgent need to build out transmission to connect all the clean energy resources that will lower our bills and lower our dependence on gas.

The time it takes to get projects approved at the PUC is simply not acceptable. People want to have their prerogatives and their authority and their discretion preserved. But these projects are very important to the future of both reliability and affordability, and we urge the Legislature to keep working on this. Last year, we worked with Senator Padilla on SB 619, which was almost unanimously approved by the Legislature but vetoed by the Governor because the Governor doesn't yet fully get how urgent this problem is. So we'd urge you to keep working on it, and thank you for your attention.

Hi, I'm Bill Allayaud with Environmental Working Group. You're used to seeing me here on toxics issues for various things, but we've been getting more and more involved with energy and reform at the PUC and the Cal-ISO. We urge you to be very careful on the fixed charge thing. There could be very likely unintended consequences to groups, including middle class people or middle income people, apartment dwellers, because of.

Well, we urge you to read the Flagstaff research report, which was handed out to you and given to the PUC last year. And that goes into detail on this, which you don't see reflected in the PUC's analysis so far, or the Public Advocates. You could discourage conservation and hurt our climate goals by this large fixed charge. If I'm paying $900 a year, no matter what, why should I hang out my clothes to dry?

I go, zero, well, I'll just pay the 900 and turn on the dryer. I looked at the Bieber case that Senator Dahle talked about just now on Cal matters. So a small store is expecting us pay about $40,000 in utility electricity bills the next year. It just isn't not sustainable. And so there's one begging for rooftop solar with a robust battery thing. So they go off, the energy goes off. They've got the batteries. Meanwhile, they're producing their own energy.

But I don't think PG&E is interested in that setup. They want to sell us electrons. They don't want us to make the electrons and put them back into the system. And they also are very interested in large transmission lines because they get a guaranteed profit there.

Distributed generation is not profitable to PG&E, but building a new transmission line, and I've heard the Senator mention there could be one even built in an agricultural field or being underground in agricultural field when there's other ways around that. So we just think there's a built in conflict there between what PG&E and the other IOUs are getting for transmission versus what could be done. Arnold Schwarzenegger set the million solar roof school and we easily met it.

I'd like to see us go for 5 million solar roofs and get it on every church and school and small building and warehouse and home and see where we are in 10 years. And I think we'll do really well. And I know some fixed charge is needed. No one should have a free connection to the grid. But we urge you to be really careful on a large fixed charge which could have unintended consequences. Thank you very much.

Thank you. I want to thank everyone for their testimony. Does any of my colleagues have any closing statements?

I just wanted to say one thing. Sometimes we have to step out and go to another meeting, but we can hear your comments on the monitor in our offices. So I was hearing your comments and then picked a time to come back down. So I just want you to know my colleagues and I are always, we are listening. We're not stepping out when you start talking, but sometimes we have those conflicts. So I appreciate that you understand that, but know that we are listening. Thank you.

Thank you. And I want to thank all the individuals for participating in today's public testimony. And if you were not able to testify, you may submit your comments in writing to the Senate Committee on Energy, utilities and Communications or visit our website. We appreciate your participation. I think if there's an overarching theme that we heard today, it's about clean, reliable, safe energy. But paramount is affordable.

And affordable always has to be at the top of that chart on making sure that residents here and businesses here can afford to turn on the lights. Many of the reasons why businesses are leaving California is due to the high escalating cost of utilities here in California, and they need predictability, and we're constantly moving the marker.

So we've heard from some valuable testimony today and will guide our consideration on issues affecting energy utility bills, as well as areas where we continue to follow up with the PUC and advocates office for advice and moving forward. Again, I'm committed to making sure that we ensure that we address affordability for all Californians. That has to be paramount and we intend to keep this the focus of our conversation as we move forward this legislative year here in this Committee. So I want to thank everybody for participating, and we stand adjourned. Have a good afternoon.