Senate Budget and Fiscal Review Subcommittee No. 2 on Resources, Environmental Protection and Energy

The Senate Budget Subcommitee number two on resources, environmental protection, Energy will come to order. Good morning. The Senate continues to welcome the public in person and via the teleconference service. We are individuals wishing to provide public comment. Today's number is 877-226-8163 access code is 694-8930 we're holding our Committee hearings here in the o Street building. Before we begin, we have a quick announcement. We're going to pull issue 20, water compliance and enforcement, off of the vote only calendar.

We'll be hearing this issue at a later hearing. We do have 27 issues on today's agenda. We will be discussing all the issues listed in the discussion section of the agenda. After discussion, we will have a public comment on all the items, and then after public comment, we will have a vote only calendar on items one through 19. Item 21. Before we begin, let's establish a quorum consultant. Please call the role.

[Roll Call]

Quorum has been established. We are going to start with issue 22, implementation and reduction of the energy package. First, we were going to hear from. I'll invite up anyone who's going to testify. We're going to hear from the, I believe from the CEC and the CPUC and finance who will present the governor's proposal. Great. Welcome all. Whoever wants to lead off from the Administration, please go ahead.

Good morning. Amin Albin, Department of Finance. So I'm happy to be here today to present status updates on the energy package and solutions presented in the Governor's Budget. So the budget retains key funding for important investments to support clean, reliable and affordable energy and maintains about $7 billion in state funding for the clean energy transition, including preserving all 3.4 billion of funding for the critical reliability programs included in the 2022 budget.

Overall, the 23-24 Governor's Budget proposes $897,000,000 of General Fund reductions and $370,000,000 of General Fund delays into future years. If there is sufficient funding of General Fund in January 2024, up to $410,000,000 of these reductions will be restored. The reductions in the 23-24 state budget largely are where programs are still in the development phase, where there are available funds following program expenditures, and where there is potential federal support to supplement reductions and or shifts.

In General, we serve to maintain critical investments to achieve the state's energy and climate goals and prioritize equity, affordability, reliability and safety as the state continues to encourage efforts to decarbonize the grid. In General, the reductions are necessary because of the fiscal environment we find ourselves. I'll highlight a couple of key reductions, but then turn it over to our Department directors in order to give implementation updates.

Of the $897,000,000 of reductions, about 700 million come from two programs, the California Rearage Payment Program, where the budget reverts $400 million of emergency relief funds in 22-23 based off of actual applications received and approved for funding. Additionally, the budget includes a reduction of $270,000,000 in 23-24 from the Residential solar and storage program at the Public Utilities Commission, and this still maintains approximately $630,000,000 for solar and storage incentives prioritizing Low income utility customers.

I'm happy to go into additional detail on the other reductions, but in the interest of brevity, I'd like to turn it over to implementation updates from our Department directors, and I'll start with CEC and.

Good afternoon, Senators and Committee. My name is Deana Carrillo. I am the Director of a newly restructured incentives division at the California Energy Commission, helping to launch some of our new programs that we're implementing. I can provide some comments on our strategic reliability Reserve, specifically the demand side grid support program and the distributed electricity backup assets program. DSGS was launched quickly last summer in order to provide 300 extreme heat event this last summer.

We're now working on this program to expand it, have issued a few workshops, and we'll be launching with some new guidelines this month to expand the program to accommodate AB 209, which expanded the program into IOU and PUC jurisdictions. Regarding DEBA, which is the distributed electricity backup Assets program, we've hosted a number of workshops and we'll be issuing a summer challenge grant. While we continue to launch that program and seek stakeholder feedback, I can also provide some information on our equitable building decarbonization program.

This program is focused on our neediest Californians and decarbonizing our existing building stock, which produces about 25% of our greenhouse gas emissions. Under that program, we've issued an RFI, issued some stakeholder workshops. It's a very deliberative, complex process that we're working with community based organizations at a regional level to meet California's most vulnerable, and that program will continue to have guidelines issued this spring and will slowly launch with that stakeholder feedback. Happy to go ahead.

And good afternoon. I'm David Erne from the Energy Commission. I'm a Deputy Director of the Energy Assessments Division. I just want to give a quick overview of some of the reports that we've provided to the Legislature so far this year in response to SB 846 and AB 205. Those include a report that was provided earlier in February on reliability situation for this summer, basically for 846 through 2030 and for 205 through 2026.

The summary of that report shows that the CPUC procurement in the near term is going to be providing reliability surplus for the state or for the CalISO territory this summer and the next few summers.

Assuming that we have average weather conditions, if we have conditions similar to what we saw in 2020 or 2022 last year, so the the outages in 2020 and then in 2022, when we had the heat event in September, or if we had a coincidence event such as one of those heat events and the equivalent of the bootleg fire causing a 4000 megawatt out capacity reduction on the transmission imports, then we could be in a situation of not having sufficient resources available to keep the grid reliable.

For those cases, we have the strategic reliability Reserve, as Dina mentioned, which is providing backup support for the grid. In the event that we have those conditions that depending upon the severity of the event or the types of events that are coincident, that may be sufficient to cover and provide us sufficient support. But if we have again, a situation like the bootleg fire coincidence with a heat event, we would be challenged with the grid.

And so we are also recommending some additional augmentation of the strategic Reserve over the next few years to help support in those conditions. As far as what things look like moving out forward for supply, we have a healthy growth of supply in the state, new development of clean energy technologies.

But we have found that if you look at the amount of development that would need to be required to meet CPUC's procurement order, or the preferred system plan is going to require even greater build out over the next five to 10 years in order to meet the needs of the state for its clean energy goals, as well as system reliability. And we also acknowledge in that report some of the challenges that are currently existing with getting projects online, including permitting, interconnection and supply chain issues.

And the state is working on those issues with developers, with permitting authorities, with interconnection authorities to try to overcome some of those challenges. I think that's a quick overview. Anything else that you would like to add at CPC?

Good morning. Chair Becker, nice to see you. Senator Dahle as well. Rachel Peterson, Executive Director of the California Public Utilities Commission. I'll just give a brief update on two of the items that Mr. Albin mentioned as far as our implementation of the Budget act from 2022. The first is the self generation incentive program. As he noted, there is a proposed reduction to that program regardless of the final amount.

The CPUC needs to have an open, active rulemaking in order to determine how those funds will be allocated consistent with direction to prioritize Low income households. We have an active rulemaking open. A ruling was issued and stakeholders commented on it, and so our proceeding is active and ready to go on the grant program for clean energy access and other engagement.

We have engaged approximately 125 stakeholder groups since January of this year in a series of workshops, focus groups, webinars, in order to take comment on a program design that is consistent with the Budget Act of 2022. We have taken all of that input into account and are designing the program rules for implementation and expect to issue a staff resolution proposing program structure, rules, guidelines, criteria, et cetera in the spring so we can begin issuing grants over the summer. That's my report on the implementation to date.

I know we have a number of other energy related topics. I have deputy Executive Director Luam testify with me today for what I expect to be a deep dive into other energy matters. Thank you.

Great. Thank you. Next up, we'll hear from the LAO.

Thank you. Sarah Cornette with the LAO. So the Governor is proposing about 900 million in reductions. We find these to be mostly reasonable. Reductions are occurring across programs, and newer programs are ones that are early in implementation, are targeted. The largest reductions are in the residential arrearage payment program, residential solar and storage program, and the Equitable Building Decarbonization program, which is proposed for a delay. Again, we find these to be reasonable and benefits for low income communities are prioritized.

So, for example, in the residential solar and storage program, the retained funding would specifically support residents in a low income or disadvantaged community. And according to the Administration, the new proposed amount in the arrearage payment program would be enough to fully cover existing need under that program's current eligibility requirements.

The Governor is not proposing any reductions to reliability programs, and while reliability is clearly very important to California, we think these programs could be worth considering, as it's not clear if all of the funding is needed now. So, for example, there has been no spending so far in the distributed electricity backup assets program, or DEBA, which received 700 million last year. And these programs are also proposed to receive additional funding through the clean Energy Reliability investment plan.

We think additional solutions may be needed given the budget picture. So we provide a couple of examples in our report. The Climate Innovation grants program. This is a new program and hasn't really gotten off the ground for the Oroville pump storage project. We think the Legislature could provide funding for the permitting and planning for that project now so it can make some progress, but wait to provide the full amount until the project has a more accurate cost estimate. Thank you.

Thank you. We'll now start with questions from Members. Senator Dahle.

Thank you, Mr. Chair. Good afternoon, everybody. Thank you for being here. I want to talk about Orville for a minute because it's obviously in my district. First, I want to just know, obviously we have a budget problem. There's no doubt about it. And I want to talk about infrastructure, which I think the gentleman from the CEC talked about.

I want to talk about the grid stability and hookups because I've been hearing from CCAS and the likes of trying to actually get the IOUS and those people to actually so on. That's a second question. But for the pump storage project at Oroville, it's a really great environmental project. It's using water as the battery. We don't have to create the battery, though. And I know that we were about 500 mw short, I think, last year.

I think that was about the Delta between where we were going to have a blackout or not during these extreme events. I don't think we're going to see that this year. I think there's plenty of moisture in the Sierras right now to run the hydro plants. We saw Orville last year actually get below the amount, which is 800 mw. So I think we'll be in pretty good shape this year. Just because of Mother Nature has really blessed us with almost too much water.

But with that being said, we are going to end up at some point with electrification of our grid and moving towards our targets very short when it comes to the ability to be able to power these vehicles. And not only that, the technology of getting batteries and all that, that's a problem. But the grid is a place where we need to really grow our electricification of California. And some estimates say that by 2035 we need 10 power plants the size of Diablo.

I don't know how accurate that is, but that's a lot of power. And you know how hard it is to build something in California. And we're faced with those challenges. This project, by the way, is an existing project. I know that we need to prune it, but we need to put this on the fast track because this is actually one that is environmentally great for the environment.

It helps with the water problems we have for fish, and it also creates electricity and we can reuse that water. So I want to just go on record of saying I know the Lao is looking at it, but at the end of the day, this is one of those projects that really should happen, because not only for the environment, but also for the 500 mw. So I want to put that out there now.

I want to change over to talk about the grid and the ability to be able to actually get our grid in a place where we can get these hookups for the utilities, quite frankly, the ccas and for these micro grids, we call them, to be able to produce energy in a certain area and actually get those hookups.

And I'd like to know what you've learned in your study on that, because I'm hearing from providers, whether it's a CCA or somebody who is just doing a project, we have people coming in who are trying to electrify, putting in charging stations who can't get the connection. So can somebody expand on that, maybe.

For a minute, actually turn it to CPUC to discuss the interconnection at the utility level?

Thank you, Senator. We share the concern, and we've been very active on that front. And so Director Tesfai will speak more to that point. For us, it's about the connections by customers to the utilities distribution grid. So just to clarify, we're not talking about generation projects. Those are the province of the independent system operator. But we absolutely share the concern and have dedicated some staff resources internally to address the most urgent concerns first, which stretch across.

They're a lot focused in PG&E service territories, I think you're aware, but they actually do stretch across the other electric utilities as well. So I'll let Deputy Executive Director testify. Take it from there. Thank you.

Thank you. So over the past several months, the CPUC has received several requests for assistance from communities on this issue, several coming from different members'offices. And we really have a three pronged approach here. So short, medium, and long term. So as Executive Director Rachel Peterson mentioned, for the short term, we have put together a specific staff group who have been providing hands on service to these particularly large customers. I'm talking like, housing developments, things of that nature.

And those staff have been working directly with those customers and the utilities off in PG&E to help right size their projects, make sure know the plans that they have put in place for the amount of electricity that they need is actually what they need. And then coordinating with PG&E to do short term engineering solutions, to be able to bring those projects online. And we've had a lot of success and positive feedback from that specific interaction.

This is a level of staff work that has never been done before, and it's been great to be able to put that together. The second has been the medium term, and so a large focus there has been on PG&E's General rate case. And so this is their four year plan for their budgets or revenue requirements.

And so we have staff from that same distribution planning branch advising the decision makers in that proceeding, focusing in on the components of the application that are on interconnection and distribution planning to make sure that the budgets that we'll be approving in Q three of this year, that's when the final decision will be out, match what we're hearing from the communities and the amount of financial support that's needed to do these customer interconnections. And then the third is the long term.

And so there I wanted to highlight two different initiatives that we have going. So the first is a proceeding called the high distributed energy resources proceeding. And so that proceeding is focused right now on changing our distribution planning frameworks. So that's in a couple of different ways. One, how the utilities are interacting with local governments, with planning agencies in order to be well informed of what these communities are looking for, for economic growth, public safety, et cetera, and making sure that's informing the utilities distribution planning.

It's also looking at how we're using data and changing how we use data in order to be able to more accurately forecast scenarios of where load is going to be showing up on the system and making sure that the distribution planning is attuned to that new data. And for part of that work, we're also collaborating with the CEC and how they're doing their demand forecast and seeing are there opportunities to enhance that work in order to better inform where we're seeing load show up.

And then the last initiative that I did want to highlight is on the transportation electrification side. I think you mentioned electric vehicle charging as well. And that is a very important issue to us as well. And so we have a Staff initiative that's working with Air Resources Board, California Energy Commission, California Transportation Commission, in order to be able to inform the distribution planning to specifically support medium duty and heavy duty fleets and their charging. Many issues around that to support.

But really an equity issue as well as we know that charging is going to be going near ports, near distribution centers, areas that have been really impacted by vehicle pollution. So those are the short term, medium term and long term strategies for customer interconnection.

Thank you. And if I might add, the CEC is also incorporating or considering opportunities for improving interconnection and identifying those issues this year in our integrated energy policy report. So we'll be spending this year having workshops and digging into both interconnection on the distribution and on the transmission side and looking for opportunities to make the streamline those processes, recognizing that we have some challenges now, and it's going to get more challenging as we have more resources that we're going to be attaching to the grid, essentially.

So when we had our hearing and we had in front of the energy Committee, we had the CPUC. And I think a frustration is that there's so many different silos. So we have the CPUC, we have the CC. And I'm glad we're all in the same room at one point because I think as somebody who tries to look at California as a whole and says, ok, this is where we're headed and how are you going to get there?

There's a lot of planning that has to go into that and there has to be a lot of data figured out on where are we lacking transmission. So who takes care of the big transmission lines and then who takes care of the hookup for development? Who's in control of that?

So for the transmission lines or generator interconnection, as Executive Director Peterson said, that is the CalISO. And so they're running an initiative on generator interconnection and enhancements to improving that process on the customer side that is housed at the Public Utilities Commission in our regulation of the utilities, and if.

I might add, so for the coordination piece. So in preparation for incorporating interconnection in the Ipad this year, we coordinated with CPUC and with CalISO to engage to ensure that we have this conversation among the three entities and discuss these issues.

So we, so it's basically all three. It's the ISO, CPUC, and CEC that does it.

That's correct. And that kind of speaks to, we signed an MOU that was supported through legislation last year and that was signed in December. And so through that MOU, we're able to, for the generator interconnection side, enhance the way we're able to work together. So, for example, Public Utilities Commission has a lot of the confidential market sensitive PPA power purchase agreement information. We haven't been able to easily share that with the CalISO previously because of the current rules about market sensitive confidential information.

But the MOU that was signed in December pursuant to the legislation is going to be able to help us share that information and use it to enhance generator interconnection initiatives.

So in my previous life before I was a Legislature, I built power plants. And we had to have a PPA before we had to intertwine before you can build the plant, because you have to make sure you can get your energy out.

So as somebody who's looking at the state and we're trying to go to electrification, as legislators, we need a roadmap that says, hey, this is where we're short, so we can put the pressure on those who need to develop where we need to develop it. And that's been such a frustration. We get all these piecemeals coming in, and we have the developers of different types of clean energy projects who are coming to our offices and saying, hey. And they blame the utility.

The utility is target number one. But I have several different utilities in my district. I have PG&E, I have smud, I have rural electrics. And so I actually live in a rural electric where I vote for my board Member and the person that runs it. We went to high school together, so I can call him on the phone and say, hey, what's going on with getting connected? Now, what he would share with me is that availability of transformers is scarce, all right?

And so there's a lag time, and the costs have tripled or quadrupled in some cases. And I know that he gives great service because I receive service. Now, my farm is in PG&E, and I can't say the same for that utility, that the service is there. But it really boils down for legislators to know what is happening so we can make good, sound decisions to get us to where the goals we have set.

And that's been a frustration of mine, and I've been trying to figure it out, and I literally can't figure it out because there's so many different silos. And you talk about the air resources border. Their focus is on disadvantaged communities and how we're going to take care of air quality in that community. And you mentioned the ports. Well, the ports is where we have all the big trucks to move all the supplies out.

So I would just love to have a report that says, hey, if we built a power plant in wherever, it would alleviate the strain on the grid so that we can actually do clean energy projects because we overproduce. We know that in some areas at certain times of the day and we underproduce in others, but we can't get the power from one place to the other to actually drive down our carbon footprint at the same time drive down prices.

My goal is to get the prices down so Californians are not suffering and at the same time save the environment. So that's a frustration, and it's just an overarching. And really, we need the ISO here and the cardboard to actually sit down and go, okay, what's the plan? Because at the end of the day, as a Legislator, we can set all the targets in the world we want and feel good about it.

But if we can't meet those targets, and at the same time, we're driving up the cost of electricity in California, it doesn't.

And I'll just add, the intent of the ... this year is to help develop those recommendations.

Thank you. Thank you, Mr. Chairman.

Thank you, Mr. McGuire. Any follow up on the interconnection issue?

Not an interconnection. I do have a question on item 22 in regards to the energy package. At the appropriate time, though, Mr. Chair, I'll take. Thank you so much. So, question for the CEC on this issue, if it's all right, Mr. Chair? Yeah, so I want to focus on the $45 million that was advanced last year to be able to move on port infrastructure. So I'm just wondering who would be here, who would be best to be able to talk about this issue?

I can talk about it at a high level, and if you get into details, we can respond back to the more detailed questions.

Okay, that's great. Thank you. So, bottom line is, as you know, port of Humboldt and grateful to the investment that has come in so far, approximately $10 million of state funding has been advanced to be able to look at development, putting together offshore wind turbines at the port of humble, the northernmost Deepwater port in the state. So last year, $45 million was advanced very General to the CEC.

Again, looking at the issue of port infrastructure, when we checked in prior to this hearing about what are the details in regards to the 45 million? Here's what we got. The program will advance the capabilities of California ports, harbors, and other waterfront facilities. I can go on, but literally repeated back what we already knew. So just sharing a little bit of frustration of wanting to be able to get a better understanding the timeline on how the 45 million is going to move. What are the guidelines that you have already set, and when will it be available for funding for ports?

So for those details, we will have to get back to you in writing on that question.

We already got writing, and it literally came back. And again, you're hearing my frustration, and I apologize. I totally understand. So I would rather not have it in writing. I'd like to have a conversation about it, because we've tried it in writing. And then it was just being candid, regurgitated back of what the program will do. We already know what the program will do. What we want to know is how it's going to be spent, when it will be available and how long will that take.

Be happy to set up a meeting with you and your staff to have a deeper conversation about.

That'd be perfect. Thank you so much. And love to be able to do that in the next couple of weeks.

Sorry for your frustration.

No, I appreciate it. It's just there's a lot of private capital out there that's dependent on both state and federal funding. Right. And we're waiting for the feds to be able to come in. Again, a little bit of frustration on the federal front, but we won't go there. And the state has been great. Right. So I want to make sure and say that. And CEC has been great in regards to that initial investment, but we want to be able to move on this additional 45. So I appreciate, look forward to getting together.

We'll be reaching out. Thank you.

Thank you. Do you have a number of questions? And maybe we'll spur other questions from my colleagues. And I want to thank Senator Dahle for raising the interconnection issue. I know that's a concern to many of my colleagues. I have a Bill SB 410 to work on this, but it's obviously very pressing for many of my colleagues. You're hearing now, I think in our previous hearing, we've got to hit three or four topics.

Just what I wanted to talk about is the last hearing, I asked all participants what they're doing to make sure that we're competitive for the IIJA and Ira, significant federal clean energy programs. And the CC mentioned that they're pursuing other future funding and bringing federal staff to visit. But unfortunately, of the 21 projects for battery manufacturing so far worth about 2.8 billion, we have not received any of those. So I'm wondering from folks in the agency, why do we think that is? What are we doing differently? Maybe just start with that and then I'll have some follow up questions.

Hi, my name is Jennifer Martin-Gallardo, and I'm an advisor to the chair of the California Energy Commission. I'm managing the Energy Commission's efforts around the federal funding opportunities. I'd like to talk to you a little bit about the battery manufacturing. We also were disappointed about that result. And so we did reach out to DOE for a briefing. And the situation is this. The solicitation that DOe put out for battery manufacturing had three General buckets of opportunities that you could go for it.

Upstream stuff like processing those materials needed for batteries, a second bucket, which is the cell pack manufacturing, and then finally recycling. Doe issued, I believe it was 21 awards. They issued 20 of those in the upstream manufacturing, one in recycling. And most of the California applicants were going for that cell and pack manufacturing, and Doe simply chose not to award in that space. So the Energy Commission did reach out and said, we'd like you to reconsider how you're funding these in the future.

There's another 3 billion that we are going to be able to compete for in the future. And the Energy Commission stands ready to support any of our state applicants to that opportunity. We have been providing support letters. We intend to provide federal cost share, potentially through the climate innovation program. So we want to set aside those match funds for our ability to support our state applicants. I will say that while no projects in California were funded, a few California entities did receive funds for projects outside of California.

Great. I got a few questions. I know you got to follow up on this as well real quick, because were we graded?

So, typically in a grant process, you get graded or you get scored. Was there information back to us on why we weren't successful?

DOE said that our project applicants were very strong. What they said is they simply made a choice not to Fund that part of the manufacturing process.

Things helpful. Who are the primary people working on doing that outreach and kind of coordinating for California on batteries specifically? Well, just in General, for some of these large infrastructure grants, I think it's.

Different for every opportunity for batteries. I know that Gobiz and the Energy Commission were very much aligned working. I know there was a battery day that was developed down in Southern California. There's those types of coordinated state efforts. I can say for some of our grid opportunities, we're coordinating with the CPUC, we're coordinating with Gobiz, CNRA. We're making sure that everybody is communicating so that we can bring the best opportunities forward. Same thing can be said of, like our Nevi or our charging infrastructure programs.

That's going to be Calsta, that's going to be our team at the CEC. In large part, that's CARB. There's a lot of entities who are working together on a regular basis.

Excellent. Well, that's good to hear. What I've heard, I guess, from other states, is that with working with their economic development agency, they've been able to really craft plans about the energy they have available for these plants, the workforce. And of course, I think California is leading in many of these workforces, but they're able to kind of give the DOE sort of a real roadmap, strategic roadmap of where the state's going.

And I want to make sure that we're able to do that as well because I believe it will help our competitiveness and look forward to future conversations and working with you on that going forward.

Can I amplify on that response?

Just sure, that'd be great.

There are a couple of things that you asked about that I can touch on, too, and I do want to give great credit to the CEC and the work that Jennifer has been doing on this work especially, but there has been significant coordination. So Gobiz, CEC, but also CalISO has been working with us as well as Department of Finance, a lot of work from Department of Finance. Again, much credit goes to Gobiz as well on organizing us around the federal funding efforts across the agencies.

And DOF has been helping to spearhead collaboration with DOE, in particular on the loan program opportunities. And we've had several meetings with the DOE loan program, and they're providing personal attention to California, to the agencies, but then also to the utilities on making sure that, and the independent transmission developers to make sure that they're able to maximize the opportunities.

CPUC and CEC, as Ms. Martin Gallardo said, have been working very closely with Gobiz to identify federal funding opportunities and also outline the different strategies the agencies are taking. So they've identified over 40 programs, and Gobiz is tracking the agencies, the dollar amounts, the milestones, and match funding requirements to support California making the most of these efforts. And then to your point about building decarbonization rebates, I think we got that in an earlier question.

Just an example of our work has been in our customer clean energy financing proceeding. And so there the proceeding is focusing on developing new low risk customer financing programs to help customers invest.

And that work had been ongoing, but we actually took a moment to pause and reopen the record to build in more information on how customers can stack the financing opportunities we're creating with the rebates and be able to get both of those, the federal as well as a financing opportunity and maximize that in order to invest in different customer programs and building decarbonization. So just thank you for the chance to share a little bit on what you're doing.

Certainly a big personal interest that I have a Bill on stacking of rebates. So that's great, too. We'll look forward to discussing, just to wrap up, I guess, on this kind of infrastructure planning. I guess just maybe a last question. Are any of the agencies kind of tracking economic development metrics for, say, clean energy jobs and how that's kind of part of our competitiveness for these grants?

I think CEC will be able to say a little bit about their work.

Our work on tracking economic benefits typically is associated with our epic projects. So evaluating the economic development opportunities associated with the research and the impacts of the research and the growth of those companies over time. And so those are the economic development activities that we're monitoring.

Great. Yeah, I guess I'm thinking also more generally about the high road labor standards and how that I think can help us be competitive going forward for some of these grants where I think, again, we're sort of leading the country in some of these areas and, yeah, just want to make sure that's part of the foot that we're putting forward for these plans and that we're sort of tracking those clean energy jobs. That's great.

I guess last piece we talked about the clean innovation program and I think she mentioned how we're using that to leverage federal funding. And I think there were some cuts in that program. So any just comments on that? Just a correction. No cuts. A deferral. Okay. Is that going to affect us being able to be competitive for federal funding?

No, we already have set aside a grant opportunity for federal funding support for those applicants that are interested in it for match share, and we feel like we'll be able to continue operating the program as appropriate with that deferral.

Okay, great. I want to move on to a demand response. Just wondering, we touched a little bit on dsgs. What are the key lessons Administration has learned from using the energy reliability funding in the summer of 22? And how is Administration planning on applying those lessons for 2023?

Good afternoon again. Dina Carrillo. I've been helping to stand up the demand responder DSGs and ... programs. So the launch of DSGs was pretty quick last year as we were bringing up backup generation and support for those extreme heat events. As we look into this next summer, we're doing a few things. One, we're trying to automate to make it less technical. We're synthesizing our communication. And AB 209 expanded this program into PUC territories.

We'll be looking at how to bring on cleaner technologies and also unlocking some demand response that wasn't available last year as we look at the coordination between the two programs of ELRP and dsGs. So that's definitely we saw that sharp drop in energy use on our highest peak day last September and understand the importance of that and are working to unlock that. It'll be a phased approach. We've got some guidelines launched for this spring that we'll be testing out for the summer.

Great. And I should have said at the beginning, I'm grateful for the swift response from the Governor and the Administration in combating and heading off blackouts last summer. And recognize in General, with all of these questions and all of these items we're discussing, there's a lot of funding to get out very quickly, which is a good thing. But we're trying to address these pressing issues. And I know it's not easy to develop these programs and get them out quickly.

And I continue to be excited about much of the work that is happening in a lot of these areas, including the role of the DCAR program from last year's budget. But just to dive a little quicker, deeper. Here at the energy Committee hearing with Alice Reynolds, I mentioned the need for additional demand response from non IOU programs because the click through proceeding to grant additional data to enable more demand response has taken five years and is still ongoing.

And at that time, basically we were told that it was going to extend until September 23, which is obviously far from this summer's heat waves. So just kind of why hasn't the PUC prioritized getting this done and what more can we do to kind of get this done quickly?

Yes. Thank you for the question, Senator. And I recall your questions to President Reynolds, and we do share the urgency as well. It's just know internal, sometimes work just doesn't happen as quickly as we all want it to. Deputy Executive Director testify will share more details about how we're picking up back up in that proceeding.

But we absolutely want demand response to play a verifiable, real role in meeting California's energy needs, particularly if we have another summer like we did last year, not just through the summer, but also in other times of the year, summertime being the most important. Do you want to share additional details.

It.

So the CPUC has issued a series of transformative decisions, really over the last 12 years that have made it a national leader in both third party and utility demand response and demand flexibility leading to over 1500 megawatts demand response on our system. So these efforts include authorization of over $4.5 billion in ratepayer funding for the deployment of smart meters by the three major IOUSs to enable more participation in all different types of demand response programs.

This also included the authorization of default time of use rates for eligible customers and critical peak pricing rates for large non residential customers.

This also included the integration of the event based third party and IOU demand response programs with the CaiSO, which operates the wholesale energy market as a condition for the program receiving resource adequacy credit, which was a real breakthrough, and a commitment to enhance these nation leading demand response programs by developing competitive technology neutral open market in California with a preference for services provided by third parties through performance based contracts that competitively determine prices. And now I want to drill into the proceedings.

So the CPUC is currently conducting three proceedings directly focused on demand response, the demand response programs, and budget applications for those programs. And then now I really want to focus on the click through proceeding. Really heard your focus on that proceeding, and we've been able to reallocate staffing. We have a new administrative law judge working with us on the proceeding, and we're still on track for the timeline that you were talking about.

But I just wanted to make sure that you knew that we understood your concern and have made sure that there's the appropriate staffing there.

Great. Just to mention default time of use. The time of use pricing is basically one cent different. I'm just trying to look at my own Bill and is it really only kind of like a, essentially on the time of use pricing.

So I can get in a little bit more detail. And it sounds like Senator Talley might have some detail too, but it really does vary, actually dependent on the zone that you're living in. So it can depend on which parts of the state your iou as well as your location in that part of the state. But I wanted to highlight our new proceeding on demand flexibility.

So yes, we have time of use rates, but we're actually trying to shift the paradigm so that customers are able to receive signals in order to, and their appliances are able to receive signals to seamlessly be able to enhance and support the grid without any kind of sacrifice from that customer.

And so yes, time of use rates have been really important in kicking off that work, but we're really shifting now to demand flexibility and the ability for dynamic pricing to be able to be kind of a new type of demand response. Really.

Yeah, I think demand flexible. That sounds so very exciting. I just was a little concerned that the time of use rates, if we're going to really try to drive behavior, that probably should be kind of a greater discrepancy or greater difference in rates. Do you have a follow up?

Well, I just want to say, as somebody who uses, in agriculture, we have time of use and it's more than $0.01. It's a lot more than one cent. And if you hear from your producers that are commercial producers, such as concrete plants and the likes, it's a significant difference. And they buy into that and have to be tripped off. Many of them. In previous years, they would maybe get asked to curtail a few hours two or three times a year.

Last year it was 20 days every day. So their companies really got hammered. And as a farmer, you can curtail for a few hours a day, but you have to water your crop at some point and then you get stuck because you have to water your product, doesn't work.

And so I heard a lot from those people who are in the curtailment or the industrial users we call them, and there is a significant savings, but with that comes a price of are you going to be able to produce the product that you have to produce? So it's changed a lot because of, we really asked them to divert last year, many days in a row, and I've heard from them that they can't continue to go down that path.

They have to produce their products at some point.

Thank you.

Well, thanks. I actually had a follow up on that as well, but. Good. I appreciate that there's a bit of a segue, but I appreciate the comments on demand flexibility. Just to confirm, we are paying two cent per kilowatt for the emergency load response program, is that correct?

Yes. The emergency, yes. And then for that program, it's continuing in 2023. May I share just a brief update?

Sure.

Okay. And so through a ministerial process, we are advice letter process, we are working on making small changes and enhancements that can be deployed by the summer. The summer is around the corner in order to make sure that third parties as well as the IOUS are able to really enhance the experience that customers had from last summer and really grow it for this summer.

And then in addition to that, as Ms. Carrillo already outlined, we're working very closely with the CEC to see how certain customers might perform better through the DSGS program and really being able to make use of those funds as well versus ratepayer funds.

Great. Okay, so wrap up on I just continue to make sure we prioritize grid integrated programs as opposed to the emergency programs, although it's important and it came through big time last summer. But over time we really prioritize these grid integrated programs and just kind of continue to be concerned that third party aggregators are being disadvantaged.

Again, we want to make sure we're prioritizing the most cost effective programs and that we open data to third party aggregators as part of this and then make sure we're using the metrics. I guess that's my last question is like what metrics are we using to make sure we're using the most cost effective programs?

So actually all of the demand, not ELRP isn't part of this, but all of our demand response programs, utility as well as third party, are actually required to be cost effective. And so something that we're trying to coordinate with CEC is what if there are some demand response programs that are not cost effective, but we want to try and figure out how do we commercialize them, scale them in order for them to start being cost effective and unlocking more demand response?

And so we're working together to try and identify those areas. But for rate payer funded programs and those that are participating in the market, they have to be cost effective in order to stay in the program, just like you said.

Sure.

If I may add, just to follow up on the concept of the ag use and water use and load shifting, I know there was a discussion of the Deba funds, but those funds will be used to test some of these elements, especially looking at Clean Technologies and help automate. So when we do have Ag use or perhaps irrigation districts, instead of someone driving around in a truck turning off pumps, we can add some smart technology and really do that load shifting and demand response technologies.

I think David has some other things to share about demand response, if you'd allow or would like.

Just as a reminder. So as part of SB 846, CC has a requirement to provide a report to you by June on Dr. Load shift goals and recommendations. And so to Ms. Despise comment, we are working collaboratively with the CPUC and Caliso to conduct that analysis and provide that recommendation of a goal and recommendations for the programs by June 1.

Great.

So when they did the original bonds for the industrial that got paid off and then they reauthorized those bonds for Diablo, are they looking at that in that scenario?

No, our scenario is not looking at the bonds for you.

I'm talking about originally during the California was buying power and there was amount that had to be paid back and the industrial users were charged a higher amount. And then when we did, we extended that under the Diablo bill legislation. And so those industrial users are now still on the hook to pay that extra amount. Is that being analyzed in the diversion of their load shifting?

We are looking at overall goal for the state with analysis. I'll have to go back and take a look at the talk to the team about whether that's incorporating any of the Diablo considerations. I was thinking maybe you were referring to the other report that is due to the Legislature this year on cost comparison of Diablo Canyon versus alternative resources.

I'm looking forward to that too.

So we'll be generating that to you as.

Right. Good. We did dive into the commercial side of this as well. And this is an area I certainly don't know nearly as well. I did get some concerns that previously we had the energy demand response programs, the demand bidding program, and just want to make sure we have full dual participation with the emergency reliability demand response, the BIP program and any quick comments on that you can nodding your head.

So industrial customers are still able to dual participate in demand response programs through the combination of the bit program and the capacity bidding program, both of which are integrated into the CalISO market. And the CPUC found that the demand bidding program, besides not being able to integrate with the CaiSo program, it had exposed ratepayers to more costs without a commensurate reliability benefit. So that was the old way. But with the current format, they are still able to participate in both, but under these two new programs.

So capacity bidding program and bit.

Okay, great. We'll move on again. I spend a lot of time with this because I know how important it is to grid reliability and appreciate all your efforts here. I got two other items here. Last time we spoke, I want to talk to DWR for a moment. I'd asked what DWR was doing to procure zero mission resources from the strategic reliability Reserve, and I just wanted to follow up on that today. Would that be appropriate here? Great.

Is it correct DWR finance installation of 120 fired generation at two existing generation sites. Is that correct?

That's correct. Good afternoon, chair. My name is Delphine Helm, Deputy Director of statewide water and energy for DWR, and happy to answer those questions. Let me take your last question first. So the two resources. I want to be clear. Those two resources again, one in PG and e territory, Yuba City, the other one in Roseville. Those were actually deployed from summer 2021, triggered by the governor's office emergency proclamation. It is now within the purview of my office, and so we consider the assets in totality.

But I just want to make sure that that was there prior to the actual Reserve being established.

Okay, great. But I think the report does show that we've committed 166.7 million through the end of 22. And will DWR continue to incur costs for these projects through 23, and what happens at the end of 23?

Great question. So currently, we have committed approximately 211,000,000 in total for those projects. The expenditures that have been. Sorry, the funds that have been expended thus far, was to secure those resorts from 2021, and our current contract with them ends this December 3123, and we are looking to extend those further. The Reserve itself, we're able to have funds encumbered through 2027 and then having everything closed out by 2030.

So we are hoping to extend the use of those resources as they were used for sure in 21 as well as in 2022 during the extreme heat event.

Okay, I guess. In response to questions I submitted after last hearing, DWR indicated that these units operate an average of five to 7 hours per month, and I asked DWR to provide a breakdown of those costs on a dollars per megawatt hour basis. The data I got back from dear shows the average price of electricity of the units was about almost 14,000. Does that compare to the market price for electricity during peak periods?

Thank you for the question. I don't have a comparison of the actual market price during peak periods, but we're happy to try to understand that question a little bit better. Is it in terms of the cost and usage of the units that you're seeking?

Yeah, I mean, that's a fundamental question raised, how much per megawatt hour we're paying and how that compares.

Okay, we can go back and provide that analysis and provide that to your office.

Okay, thanks. Because that was, again, based on some data we'd gotten from DWR. So just, I guess, cut to the chase. I asked my staff to perform some calculations of the cost of the capacity provided by these units, and even assuming a generous estimate of energy costs in these projects, the cost of the capacity is around $1,400 per installed kilowatt. Was we calculated or about the same as the cost of purchasing a new four hour battery storage project.

So I guess fundamentally, since the gas units burn fuel and only operate a few hours per month. Kind of wondering, why didn't DWR choose to spend the same amount of money to make an outright purchase of equivalent battery storage that would be able to operate every day at very Low additional costs without producing any emissions or requiring fuel?

Thank you for that question. I think at the time the requirement was to try to get resources onto the grid as soon as possible, and so we were able to secure those resources and have them installed and deploying to the grid within only a few months time. Unfortunately, I think in understanding the point in time, back in 2021, there was already a fair competition for cleaner resources such as batteries, as well as supply chain issues that was limiting the actual capability to secure those assets.

Furthermore, in order for those assets to be deployed and able to deliver energy, we would also probably have to have gone through a more elaborate interconnection process. So we wanted to make sure that at that point in time we were able to secure those assets in response to the governor's emergency proclamation and be online for usage that year, and then also the following years in 22 when we had the larger heat wave event.

Great. You understand, want to be the grid reliability point. But again, just making the point, there's about 100 x greater per hour by 10 x probably per hour. And that's really the fundamental problem it gets on the just last question on the supply chain, what are you doing to alleviate any potential supply chain issues kind of going forward in the next two years to make sure we're not in the same position?

Excellent question. So we're going through a lot of due diligence and trying to understand not only the assets that we're trying to secure and the technologies, but working very closely with our site partners. So to the extent that we are able to do those due diligence points up front, making sure that we have reasonable sites, that there's ability to interconnect, that the resource and assets are acceptable, for example, to the local community.

All of those things help to kind of smooth the pathway from analysis into fruition. We've been able to have a lot of success in getting those assets deployed in a very, very short manner as we are hoping for again this summer with the additional 143 megawatts we secured, which are again ultra low emission resources. So I think a lot of that upfront work, there's not much we can do about kind of the global supply chain impacts.

But to the extent that we can have everything set up in advance and make sure that we've done our due diligence, that decreases the amount of time we're able to spend and then obviously the cost incurred to bring those to fruition.

But again, you are still extending some of the contracts for some of those existing gas.

That is correct.

Plans?

That is correct. We want to make sure that we do still have capacity and assets on hand. So to the extent that those resources are there and they're running and they're reliable, we want to make sure that we have that capability available as we go through our portfolio. We want to also think about transitioning outside of sort of the emergency reactive phase of the Reserve. Again, in response to the emergency proclamation, in response to the legislation last year. Those are all very, very quick turnaround projects.

But as the Reserve matures, we want to be able to look at more opportunities. So, for example, we do have authorization up through July 31, 2033 to continue with diesel fired generators. We've made a decision not to pursue any of those anymore. So we do want to move the Reserve to cleaner assets. I do hear your frustration that we're not able to move completely off of fossil.

But again, the step that we're taking is to make sure that even if we're in fossil, that we are looking at better technologies that are again, acceptable to the communities that they're going to be placed in, but also would have the reliability aspects and characteristics that's required to respond during, in extreme events. So very rapid response, within just a few minutes, they can turn on and obviously provide electricity during that critical peak period between four to nine, especially in summertime when the grid needs that.

Okay, great, we'll move on. And again, the Dr. Is probably around 2000. It's also by comparison, but we will move on. But again, I think you kind of hear the concern that expressed here today. So I appreciate you answering these questions. I guess my last question along these lines for the CC and DWR, as the Bill passed last year, AB 1279 established 85% for direct emissions reductions in setting our 2045 targets and 15% for carbon removal.

And that'll be about estimate that's about 65 million metric tons of carbon we have to remove per year by 2045. And we currently have hardly any capacity in that area. I'm just wondering, are any agencies working on a roadmap around carbon removal? I saw there was a bit of a reduction in funding for carbon removal in the budget. Are we working on a roadmap around carbon removal?

David Erne again from the Energy Commission. So we're not working on a roadmap per se. We are working very closely with CARB that has responsibilities under 1279 and SB 905 to focus on carbon capture storage. And so we're working closely with them and then in line with the climate innovation program to be able to look at opportunities to Fund projects that can help demonstrate and test technologies that we'll be able to utilize for carbon capture.

Has any carbon removal been purchased under LCFS so far that you know of?lcfs

I cannot speak to that.

Okay.

Again, I think there's about 7 million tons per year by 2030 called for in the scoping plan. So I think we got a lot of work to do to get there and look forward to continue to follow up with you on that. Some other questions for my colleagues. Thank you for your indulgence on those. We'll move over to, I guess, hold open is recommended by the staff there. So we'll go accept that recommendation and move on to the next one.

Yeah.

Thank you very much for participating in all those questions. We're now going to move on to issue 23, which is implementation reduction of the Zev package. And similarly here we'll have Department of Finance CC NCARB presenting the governor's proposal.

Good morning, Mr. Chair and Members, Christian Beltran with the Department of Finance, happy to speak a little bit about the Zev implementation package. Over the last couple of years, the Administration has worked very closely with the Legislature to make these historic investments in the expansion and rollout of zero emission vehicles. Excuse me. And these efforts continue to be a top priority for the Administration.

As such, we remain committed to protecting these investments and maintaining the state's steady progress in making strides to reducing the amount of greenhouse gases emitted from the state's Transportation Sector, which amounts for approximately 50% of all greenhouse gases released from the state. With that being said, the Administration has taken a methodical and balanced approach in how we are protecting these investments while also solving for lower projected General Fund revenues. Overall, the Administration is proposing to maintain almost 90% of the original investments.

But before I jump into the administration's approach to the General Fund reductions, I'd like to first provide a high level summary of where the Air Resources Board and the Energy Commission are in implementing some of the 2021 and 2022 appropriations.

In looking at fiscal year 2122 CARB has encumbered over 90% of the $1.7 billion included in the ZEB package and has spent almost a quarter of those funds through the end of last year through investments in programs like the Clean Vehicle rebate project, Clean Cars for All, the Hybrid and Zero-Emission Truck and Bus voucher program. As well, CEC has encumbered approximately 90% of the 785,000,000 in 21, 22 funding and about 117,000,000 for 22, 23 funding from the 2021 Zev package.

This includes adding funding to block grants to accelerate ZEV infrastructure deployment for passenger vehicles, trucks, and buses and targeted investments where the private market may not otherwise act, including rural communities and apartments. For fiscal year 22, 23. The final budget Bill was signed into law in September 2022, and CARB's board approved its funding plan for the ZEV package investments in November 2022, dedicating the full 2.4 billion to projects, and will begin encumbering those funds this quarter.

For the 2022 ZEV package, a total of 874,000,000 was appropriated to CEC to support ZEV vehicle infrastructure, medium heavy duty and offroad ZEV infrastructure, and emerging opportunities to support electric and hydrogen fuel cell vehicles, and CEC is also intending to begin encumbering funds this quarter. Now I'd like to pivot to how the Administration approached the General Fund reductions and Fund shifts.

The budget maintains 8.9 billion of the 10 billion included in the multiyear spending plan for the zero emission vehicle package that was originally agreed upon with the Legislature in 2021 and 2022. The overall general Fund reduction for the ZEV investments is approximately $2.5 billion across multiple years beginning in 23, 24 through 25, 26. However, the Administration is proposing to shift $1.4 billion of the 2.5 billion reduction to be funded by the Greenhouse Gas Reduction Fund, resulting in a net reduction of $1.1 billion.

The administration's methodology for the ZEV Fund shifts and reductions included a prioritization of critical programs, focus on equity, and a consideration of where federal funds are available as a result of the Infrastructure Investment and Jobs act, or IIJA, and the Inflation Reductions act, the Ira. The budget also includes a control section that provides a mechanism to allocate any additional discretionary cap and trade auction proceeds towards zev programs that receive General Fund reductions and have not otherwise already fully been offset by GGRF.

Specifically, the control section authorizes the Department of Finance after the fourth cap and trade auction in the 23, 24 fiscal year if the GGRF revenues are greater than projected in the 23 Budget act, to allocate the remaining funds to programs which include fueling infrastructure grants, transit buses and infrastructure, school buses and infrastructure, ports and community based plans, projects and support and sustainable community strategies, as well as emerging opportunities and charter boats compliance.

One important note is that there is significant new federal funding that the Administration believes would help offset these reductions stemming from the IIJA and the IRA. Many of the same stakeholders that would benefit from the state programs would theoretically be able to apply to the same federal programs. In total, through the IIJA and Ira, the Biden and Harris Administration has made available nationally approximately $28 billion for direct ZEV related programs.

The administration's General strategy on the federal zev funding is to leverage formula funding wherever possible, directly apply or support partners applying for competitive funds create opportunities to use smart finance to stretch public competitive funds create opportunities to use smart finance excuse me. We note that there has been tremendous amount of interest in the competitive solicitations and there is no assurance that California will get those funds.

That being said, California is a leader in the ZEV space and the Administration believes that the state will be very competitive for those funds. Given that most federal program benefits related to zevs come in the form of non refundable tax credit, the Administration is maintaining all funding related to equity programs, such as CC, clean cars for all, and equitable at home charging via fund shift to cap and trade.

Additionally, given the role of drayage trucks and their impacts on Low income communities around ports and major rail corridors, the Administration has maintained a large majority of investments made in dryag trucks and infrastructure. To conclude, I would like to highlight that despite these reductions, the California Air Resources Board and the Energy Commission anticipate deploying a significant number of ZEVs and refueling stations.

This includes over 10,000 vehicles, 20,000 level two chargers for multidwelling units, as well as refueling capacity to support over 1300 medium and heavy duty trucks and buses, and 15,000 light duty fuel cell electric vehicles. This concludes my presentation, and I'm joined today by Dr. Verges from the Air Resources Board and Director Ralph Sewell from the Energy Commission to help answer any of the Committee's questions. Thank you. Thank you. Any comments? Right off the bat? Okay, great. We'll maybe turn to Lao then.

First.

Thank you. So the Governor is proposing about 1 billion in reductions and partially backfilling those reductions with greenhouse gas reduction Fund revenues. We find these to be mostly reasonable. The reductions are targeting newer programs and equity programs that support benefits to Low income communities are prioritized. The administration has also made an effort to consider available federal funds. We recommend that you begin with the governor's solutions, but consider additional solutions based on your highest priorities. Programs could be targeted to focus on highest priority needs.

For example, the Clean Cars for All Program could be focused on recipients whose incomes are too low to qualify for a federal tax incentive to support a purchase of an EV. We also recommend that you reject the governor's proposed GGRF budget control language trigger. We find that this would limit legislative flexibility and oversight over GGRF revenues.

We recommend that you, in addition, consider whether EVs are the highest priority for GGRF revenues, as the governor's proposal would allocate the majority of discretionary GGRF revenues to ZEV programs and commit out your GGRF revenues, which, which is unusual and would limit the availability of those funds in future years.

We recommend that you consider these proposals in the context of other investments in ZEV, including AB eight fees, which we'll discuss later, and also a proposal from the Department of General Services to install ZEV chargers at state owned and leased facilities. This is being considered in budget Subcommitee four, but we think it could make sense to include as part of the ZEV package.

Great. Thank you. I'll turn on my colleagues. First, a couple of introductory comments. One, despite the cuts, there's still tremendous investment in zero emission vehicles, from buses to medium heavy duty trucks to passenger cars. Really historic investment. Despite the cuts, I do have a number of questions, and part of this anticipates issue 25 as well. Calmatters had a story, I think, just the other day, saying that in the 20 zip codes where more than 95% of the population are Latino, they have zero to 1% Evs.

And the 17 to 20 zip codes, a large percent of black residents have zero to 2.6% evs. So obviously we have a massive challenge and responsibility in terms of making sure that we get these vehicles to these populations. I want to raise a couple of questions along those lines, and I'll turn it over to my colleagues and maybe I'll have some follow up first around long term deployment for chargers and multifamily buildings. We've sort of tried this legislatively and not succeeded.

We've had some conversations about building codes. Are there any comprehensive strategies to get chargers in most multifamily buildings, and what can we do to speed that up? I know it's happening, but really too slow.

Yeah, that's a fantastic question and something. We're very sorry. Hand and refuel California Energy Commission. That's something we're very focused on. You mentioned building codes. Those are going to play an important role because we want to make sure all the new stock that's being developed is actually being developed the right way. The multi unit dwelling building codes require 25% of parking spaces to be EV ready and an additional 10% to be EV capable. That is certainly part of the solution.

We're also taking a lot of the money that has been entrusted to us through the General Fund and through AB eight to also make investments. Multi unit dwellings. We do that in a couple of ways. We have a portfolio approach of block grants to move quickly. For those, we actually have an adder. So our base rate would be about $3,500 per level. Two, if you deploy that in a multi unit dwelling, it'll be $7,000.

Recognizing that it's a harder segment to break into, we've also had dedicated solicitations focused solely on multi unit dwellings. We held one about a year ago, which was quite successful, and we're going to have another one coming up as well. So I think between a combination of making these investments in the legacy stock as well as building codes will be really important. I do want to note as well, though, that we believe that the public network will play a role in that as well.

The way people fuel electric vehicles is going to be different than how they fuel gas vehicles. So when we get more infrastructure at workplaces and public charging where people already travel to, that can be beneficial to multi unit dwelling residents as well.

Okay, Great. Obviously super important. A couple of other. One of the recent issues we learned, again, is just not really being on track to cut gas use in half by 2030. And I want to bring up the issue of super users. We touched on it at a previous hearing. These are users that are consuming a large portion of gasoline because they're traveling long distances. There are organizations that are aggregating the data and can tell you down to the zip code level where super users are concentrated.

So have CARB and CC looked into using any of that data when targeting incentives, and how can we do that better?

Sydney Burgess with California Air Resources Board, thank you so much for the question. I recognize this will certainly be an active area for discussion for the Legislature this year, and we're always looking for ways to improve our programs. I would say that historically, the program has served a couple of different purposes. So just to give some perspective there, when our clean vehicle rebate project was in its early days, it was really meant as a tool to help accelerate the market for zero emission vehicles.

And now that we're kind of there, at least for the middle of the road consumers, we started shifting to have more of an equity focus. And so what you see is a lot of our outreach is really intended to try to target equity consumers, whether they be super users or anything in between. But of course, looking forward to continuing the conversation. We're always open for ways to refine our programs to make them more effective okay, thank you.

Yeah. Obviously, that calm matters data shows that we got a lot of work to do with that. I have some follow up. I'll turn over to my colleagues if you have any questions.

Thank you, Mr. Chairman. I just wanted to touch on. I mean, I'm really concerned about the shift from General Fund or basically the greenhouse gas reduction Fund. And so I want to just start out with saying cap and trade. Since its inception almost 10 years ago, cap and trade has generated $23 billion in gross receipts. More than 5.6 billion of that has gone to high speed rail. And along with that, 12.5 billion from taxpayers, state and federal, have gone to that project as well.

So over 18 billion spent on the train, a train with a new price tag of $128,000,000,000. The public was told it was going to cost us 33 billion, and now it's 128. And they have no idea where the 100 billion is going to come from. And I'd bet most or all of that will come from taxpayers in one form or another.

So if this body is going to continue to take the people's money and perhaps we should look at better uses and better places to spend that money in this budget, there's still $750,000,000 that's allocated from GGRF to the train, which is going to limit the amount of discretionary funds that's part of that discretionary budget.

So from somebody who's not a fan of the train, obviously most people know that because I sat on this Committee and on the Transportation Committee and heard the reports, and every three years we get a new Director. That's been the history. We get a new Director, and they say the last Director just couldn't figure it out. And we're going to give you a high speed train at some point.

In the last report at the Transportation Commission, they talked about it being a single track, possibly not electrified. And this is really something I think Californians are going to struggle with. And I think that we need to look at that $750,000,000 and say, look, we need to really analyze the train and what we're going to get and who's going to pay and when we're going to deliver that project.

In my mind, it will never be built to what it was sold to the public as number one. And we can really take that $750,000,000 and actually do programs that actually reduce carbon and actually help those disadvantaged communities that Senator Mcguire and myself have that travel long distances just because of geographics. But they're also the poor people who can't afford the cars for all programs. They're the people that we really need to focus on.

If you look at the data, and I didn't see the calm matters report, but last year there was a data that came out of where sevs really are. And they're not in the Central Valley where the poorest of the poor people are with the worst air quality. They're coastline communities where we have more wealthy people using. And that's where the infrastructure is built as well. So I heard from the California Resource Board. I'm glad to hear that.

We're focusing on those disadvantaged communities where we really need to focus because they're the folks, they're the inner city folks that Senator Bradford talks about when we're in the energy Committee. And they're folks that I'm talking about in areas where there is no public transportation, there is no ability for them to do anything but drive a gas powered vehicle, and they can't afford a zip. So this $750,000,000 would go a long ways to help those disadvantaged communities.

And I think that the public deserves to have a real clear plan on the high speed rail money and why we're putting it there. Look, we talked about the Federal Government coming to the table. They have participated some, but I think that funding is going to drive. We are not going to come up with $100 billion to finish out this train. And I think we need to talk about it in the open. I always propose if we really want to cut carbon production.

I know that all carbon is not the same in California. There's carbon from vehicles and then there's forestry carbon that we don't count. And we can do a lot better if we look at the reduction of carbon throughout the state. If we look at forestry. And I know that actually, Assembly Member, I had a Bill and one of the Assembly Members picked up the Bill to actually count carbon from forest fires in California because carbon is equal.

Carbon is carbon at the end of the day, anyway, my point is that this $750,000,000 needs to be looked at by this Committee and it needs to be looked by the governor's office to go into the ZEB program. So we have more discretionary funds for programs that actually help disadvantaged people get into an electric car and get the infrastructure put in place. So I just want to make that comment.

I think it's something that every year we're on the floor, we hear about, but nothing really happens. And it's a waste of money at the end of the day, we've spent almost $7 billion of taxpayers money, and the cost of gasoline is the reason where we get most of that is from our refineries. And we had a big discussion about that today on the floor, and I think we need to focus on the 750.

Well, I do share some of Senator Dolly's concerns on GGRF funding and the bang for the buck we're getting, but we are going to discuss that next week's hearing, so we'll have a chance to dive more into that.

Senator McGuire, thank you so much, Mr. Chair. So just. I'll be very quick for CARB.

Some initial deep concerns in regards to where CARB was moving last year on the issues of charter boats and compliance. On the issue, since there were no electric engines available for charter boats to be able to comply with. And I do want to say thank you to the board and to the CARB staff for making some practical changes to that policy, and also front loading funding to be able to help both charter as well as commuter boats ferries be able to comply.

I think obviously, this is where Department of Finance and the Governor want to go in regards to GGRF funding. I think the issue is that 100 million that's in there is absolutely critical to these small mom and pop businesses that run these charter boats. You have less than 150 across the state and in rural parts of the Golden State. These charter businesses are some of the only economic development businesses left on the water.

So I just wanted to check in on that 100 million, understanding that you want to be able to backfill, I believe, about 40 million for compliance in the GGRF discussion where we're at on rollout of the program.

Christian Beltran with Department of Finance. I can definitely speak to the funding for the charter boats. It is maintained. 100% of the 100 million is maintained as part of the solutions. There is no plan to sweep those dollars.

I thought that part of it is dependent on the GGRF discussions.

Well, that is built into the multi year GGRF.

I appreciate what Department of Finance is saying is that this is kept whole. I think that if we're all being truthful, we're not sure it's going to be kept whole. It's dependent on the GGRF discussion of the Legislature, is my understanding. So these are all recommendations that you all are advancing, and we keep saying that everything is going to be kept whole. And I think that we should all be very clear that high likelihood of a lot of these programs may not be kept whole.

Just based off of our budget and out, your budgets quickly become zeroed out. But I hear you on that, Mr. Beltran. I just want to make sure that my understanding is that CARB is talking about the rollout of the program and just wanting to get a better understanding.

Yeah, no, definitely. And just to kind of build on top of what I was saying earlier, Senator Mcguire, the 40 million in the out years is based on current Administration projections of where cap and trade sales will go. It's not tied to the control section language that's being built into the budget. The 40 million is based solely on where the Administration believes cap and trade revenue will be based on the out year floor prices and CPI adjustments. So it's a very conservative estimate.

It's probably safe to say that that $40 million will be maintained as part of the out year build out. So it's not tied at all to that control section language that maybe you're thinking.

That's carp feels the same way.

Of course. But Senator, you were also asking a little bit earlier about the rollout of the funds, so I can certainly help there. The Legislature did appropriate dollars last year. We're working on a competitive solicitation so we can get those dollars out the door as fast as possible for what we do have in hand. Thank you.

All right. There we go. I think that was no comment. Got it. That's great because I do have a little bit of a different point of view, but I hear you, Miss Beltron, and I will let Carl off the hook on that one on the issues of implementation. Would love to be able to follow up on that. And my understanding you have some points on implementation as far as the specifics and how they'll roll out.

Do you want to wait on talking about that in regards to those at a later date?

Absolutely. We'd be happy to talk to your office more about how the solicitation is going and expect that to go out in quarter two of this year. So we can certainly circle back with you, but appreciate your interest.

No. And again, I know that folks get frustrated with cart, but I just want to say how grateful I am that the board engaged, engaged with the industry. Again, a lot of these folks are mom and pops, and you phase this in more reasonable approach and actually seen some money to it. So I just want to give some credit to that because it's important and really grateful that you all listened because it was a big deal for many rural ports. So thank you so much.

Great. I had one other question on charging as we've seen, implementation of charging infrastructure can face many delays, including interconnection and construction. How is CEC working to reduce these types of delays? Ensuring chargers are built and interconnected in a reasonable time frame. And just as a follow on, how's the Nevi funding impacted the CEC's approach in planning implementing EV charging infrastructure programs?

Yeah, thank you for that question. So I know some of our colleagues at the public Utility Commission spoke about interconnection earlier, just to emphasize that they have been taking some steps to try to move that along and get more data and reporting. On the Energy Commission side, we've learned some lessons, too, over the years. One thing we're doing with our new block grant is to require projects to be more shovel ready.

Previous block grants allowed projects to come in first come, first serve, and we want to move quickly. As the market's matured, we're expecting those projects to be more shovel ready, and we've moved away from first come, first serve for those block grants to evaluate the projects which are the most ready to move forward. So our program design reflects that as well, and we think that'll be a major improvement. With regards to Nevi, this is something, obviously we're really excited about. There's 2.5.

Well, let me actually start with the formula funds. There's 384,000,000 in formula funds that are going to come to California over five years. The Energy Commission and Caltrans have been working very closely. We developed our Nevy plan, which the Federal Government approved, and we are currently working on the solicitation design of that, and hope to get the Nevy funding out for the first window of those five years this summer. And that is having a direct effect on how we plan for the other money we have.

The Nevi funding has to be spent on alternative fuel corridors, and it has to be a certain four DC fast chargers, high power fast chargers of 150 kw or higher, and they must be no more than 50 miles apart. So we believe using that Nevy federal funding, we can do a good job of starting, just starting to saturate the highways and interstates and the alternate fuel corridors that frees us up to use our money for more charging in communities.

So fast chargers at shopping centers, places where people travel, more charging at multi unit dwellings, as you mentioned before. So we're definitely using a portfolio approach to understand the limitations and advantages of the federal money and what that frees up for our money as well. zero, I'm sorry. I should also note there is a 2.5 billion competitive funding from the feds as well for EV charging 700 million of that has just been noticed that we can compete for.

Those applications are due at the end of May, and we'll be competing for some of that money as well.

Okay, great. Well, with that, I think we do have a hold up in recommendation on this matter. So we will accept that recommendation and move on to the next issue. Thank you very much. Now, moving on to issue 24, supporting energy reliability and clean energy transition. And again, we'll hear from Department of Finance about the governor's proposal pool when ready.

Good day. Amin Albin, Department of Finance. So the budget proposes two new key actions to support our continued clean energy transition while ensuring reliability. To advance a diverse and balanced clean energy portfolio, the budget proposes establishing an optional forward central procurement function at the Department of Water Resources, providing CPUC--sorry--the option of selecting DWR to take over essential procurement function for long lead-time, diverse, large clean energy resources or select an IOU to do so.

Additionally, to further bolster the state's reliability outlook, the budget proposes establishment of capacity payments by load-serving entities that rely disproportionately on the state Electricity Reliability Reserve due to higher levels of energy resource deficiencies. This will help mitigate potential overreliance on the Strategic Electricity Reliability Reserve for near term electricity demand and help ensure that the Reserve will be able to achieve its purpose of providing capacity to support reliability during extreme events. I'm going to hand it off to Leuwam to testify at the Public Utilities Commission to go a little bit more into detail on the proposals.

Thank you so much. Welcome back.

Thank you. So thank you, and I appreciate the opportunity to share remarks on behalf of the California Public Utilities Commission on the central procurement function from the trailer bill. So, through our stakeholder proceeding on the Integrated Resource Planning, the Commission has determined that clean, diverse, and long lead-time resources are needed to meet California's 2045 climate and reliability goals within the electric sector. This need has been confirmed in the CEC's SB 100 report process as well.

There is a need for resource diversity within the state's electric sector, resource portfolio, and long lead-time, diverse resources provide reliability and greenhouse gas benefits to the system that would not be procured in the typical procurement activities of the load-serving entities, which have largely been contracting for solar photovoltaic, battery, and in-state wind resources, and those are onshore wind resources.

We have continued to see a disproportionately high amount of procurement of these resources, which won't be sufficient in the long-term to meet our reliability or climate goals, and planned action will be needed in order to support that effort. So why use a central procurement entity? Long lead-time resources can be hard to procure. We push for the most competitive and clean resources, so resources like offshore wind, for example, despite its value, will not come to the top of a resource solicitation.

Electric market competition and energy resource development complexities have thus far prevented significant procurement of certain long lead-time and diverse clean energy resources. And as I stated earlier, most of the new energy resources procured in the state to date have been solar photovoltaic, battery storage, and onshore in-state wind resources.

Long lead-time resources like offshore wind, large-scale duration energy storage, and geothermal have features that make them likely to require the support from some form of centralized procurement entity if they are to be procured at all.

These features include a high level of development risk, long development timelines, economies of scale, a need for significant new transmission to access key resources, federal and state permitting processes and sighting processes, as well as non-transmission infrastructure like the buildout of ports and material supply chains that require extensive state level interagency coordination, which we are doing. All electric customers and ratepayers will benefit if all or some of these hard to procure energy resources are procured centrally.

More specifically, the CPUC's midterm reliability order required long load-serving entities to procure 11,500 megawatts of net qualifying capacity--this is in 2021--which included 2,000 megawatts of long lead-time resources, originally for 2026. We have been studying the trajectory of these efforts, and early indicators are showing that load-serving entities are struggling to meet these procurement requirements for long lead-time resources. As such, the Commission last month extended the deadline for these resources to June 1st of 2028.

Having the option to leverage Department of Water Resources or another load-serving entity as the central procurement entity is going to take a key tool on the table--it's going to be a key tool on the table to procure these long lead-time, diverse resources. As you saw in the trailer bill language, the identification of a central procurement entity will actually occur in the CPUC's stakeholder proceeding for the Integrated Resources Planning Process.

But in order for us to consider all viable options on the table, we need the authority in the proposed trailer bill language to include DWR as one of those potential options. DWR has the procurement experience, and through the trailer bill language, will have the authority and resources to act if identified as a central procurement entity. And of course, that stakeholder process is going to include ratepayer advocates, environmental as well as environmental justice organizations, labor, the developers themselves, as well as all of the load-serving entities.

DWR is already one of the largest procurement entities in the state through the DWR's administration of the energy resource management and procurement for the State Water Project, and they play a unique role during the--and they played a unique role during the California electricity crisis of 2001, and now under Deputy Director Hou's leadership with the management of the Electricity Supply Strategic Liability Reserve Program.

DWR has demonstrated over the years that it has the knowledge and capability to procure large amounts of needed energy resources. In partnership with the CPUC, DWR may be best to lead the issuance of competitive solicitations, establishing and administering revenues and expenditures for energy resource development, and overseeing the review and evaluation of energy resource developer proposals.

Looking to the issue of timing, as I mentioned previously, early indicators have already showed us that load-serving entities may be struggling to procure some of these long lead-time resource types, such as geothermal as well, and thus could benefit from a central procurement entity right away.

Other resource types, such as offshore wind, have such long development timelines that developers would require a clear procurement signal of a large number of megawatts of that resource within the next one to two years for sufficient quantities of the resource to be online in time to meet the state goals. Thus, action on part of the CPUC, as well as a central procurement entity, whether DWR or another load-serving entity, may be needed as soon as the fiscal year 23-24. That concludes my planned remarks, and I'll turn it back over to Mr. Alblin.

That ends our presentation.

Okay, great. Thank you. We'll turn it over to LAO for comment.

Thank you. So we see this as two main proposals. So first, new state authority to procure electricity on behalf of electric utilities and second, new payment requirements for electric utilities that experience energy deficiencies during months in which the state is using the Electricity Supply Strategic Reliability Reserve. We have four questions that we think that this proposal raises and that we recommend that you consider as you deliberate it. First, how will ratepayers be affected?

So there are a number of ways in which this proposal could affect rates. First, the capacity payment requirement for utilities that do experience deficiencies in the months in which the reserve is used, it's not clear how these payments could affect rates. In addition, the proposal would also give the CPUC the authority to impose a non-bypassable charge for ratepayers to cover DWR's procurement costs. It's also not clear how much these could raise rates.

And California already has some of the highest electricity rates in the country, so any actions that could affect them should be considered carefully. The market effects of DWR entering the market to centrally procure are also somewhat unclear. It's not clear how energy developers could alter prices and how energy resources are priced will ultimately affect rates. The second question is: are current processes insufficient?

So in our report on this proposal, we outline the existing Integrated Resource Planning Process, as well as other required planning processes to ensure that utilities have sufficient energy. It's not clear to us that those are necessarily insufficient to meet future energy reliability needs. And third: what are the risks to the state? So the Administration has indicated that it intends to use a central procurement for larger, long lead-time resources, such as offshore wind and geothermal.

These are newer technologies in California and very expensive to build, and the Legislature could consider creating additional requirements or guardrails to help limit some of those risks and better assess the trade-offs. And finally, what is the status of recent investments and is more funding really needed? So, as we mentioned with the energy package, it appears that some of the reliability programs appear somewhat slow to spend down funds.

The Reserve itself has been spending consistently, but there could be a concern that the capacity payment to fund the Reserve could be redundant given that significant funds remain in the Reserve's balance.

Thank you. I'm going to start with questions. I'll turn over to my colleagues on this. What about ratepayers? Because my understanding is part of the reason to do central procurement is to lower the cost for ratepayers because if the market knows there's a large offtake provider, then a lot of this is going to be borrowing, right, and we can borrow at better rates. So what would be your response on that question to what LAO just raised on concerns on ratepayers?

Thank you for that question, Chair, and I think you hit the nail on the head. There are a number of different opportunities, and I'm happy to let DWR fill those details in on why a procurement entity like DWR would be able to procure at potentially lower prices. I do want to highlight one thing before that, though, which is these are resources that we've already determined are needed. So this is not additional resources that would be nice to have.

We determined in 2021 that we need to have these resources, these long lead-time resources. The attributes of them are what the system is going to need, not just for reliability, but in the long-term in order to meet our SB 100 goals. And so when thinking about is this going to be an additional cost to rate payers? This is a cost to rate payers that would need to be incurred no matter which entity is doing the procurement.

But through this proposal, we're trying to identify an entity that will be able to do it expediently and with the best cost to customers. And then one other thing that I wanted to mention there as well is that this is the start of a conversation. Having this trailer bill language will allow for PUC staff to be able to put together a proposal that brings together ratepayer advocates--I mean, all the stakeholders; I already mentioned them--in order to determine what the CPE should really look like and what resources it should be procuring.

And so I just want to make sure that I'm clear that there's going to be a thorough stakeholder process in play with all of the relevant parties to make that determination. I want to turn it over to Deputy Director Hou to talk about some of the attributes or things that DWR might be able to do to reduce the cost to ratepayers.

Thank you very much. Again, Delphine Hou, Deputy Director with DWR. Thank you for that lead up. So again, as Executive Deputy Director Tesfai mentioned, in order for us to be a viable option, we're here to kind of provide our input of what DWR could do. And there's largely sort of two different pathways that we can look at. I think for more traditional resources--and again, not necessarily knowing what the resources are--for the more traditional resources, there could be two different pathways, the first one being a power purchase agreement, which I think most load-serving entities can execute themselves or are familiar with.

The difference though is DWR can take a position of having much longer terms within a power purchase agreement. So maybe something in a realm of 15, 20 plus years, and that by having the longer term, that could reduce the overall costs of the project. So that's one benefit, even though it is very similar to what load-serving entities can already do under a power purchase agreement.

The balance there is that the funds would then need to be--DWR would then need to work with the CPUC for CPUC to agree to have those funds then allocated through a non-bypassable charge for ratepayers.

On the other pathway, if the project, for example, is very large, very complex, some of the projects, the resource types that was already mentioned, it could be in a situation where the developer is unable to secure financing, in which case DWR could issue bonds through a bonding authority to support the project. So there again, the bonding authority through DWR, because we're tax exempt, we have a tax exempt status, we can also look at much longer terms, again, for 15, 20 plus years depending on the project.

And again, as a state agency, we're not looking to have any returns more than just simply the cost of the issuance. So through that, we think that we would be able to have more cost savings. But again, that all needs to be determined again at the CPUC, compared to the other options that might be available, and associated with the bond issuance, we would also be seeking a non-bypassable charge for those funds.

So either pathway could be possible, but again, through the process at the CPUC, that open stakeholder process, whether or not a DWR is even selected or whether or not the non-bypassable charge will be passed on, those are all part of the actual stakeholder process through determination and a balance of what the CPUC will see as the most cost-effective and appropriate pathway forward.

Great. Thank you. You mentioned guardrail, so that's positive to hear about that. Are you open to limiting the types of resources that can be procured via this essential procurement?

Thank you for that question. So just kind of taking a step back, California really does have a long history of technology-neutral policies in our clean energy programs, and we think that this has delivered the best value resource portfolio for the grid and keeps the market competitive. As is our past practice, we aren't upfront identifying the resource itself, but rather looking at the attributes needed to reach our policy and reliability directives, which include large, clean, and diverse resources, and these have long lead-times for their development.

We would leverage the robust Integrated Resources Planning Process to make this determination of what resources will require a central procurement entity to be successful. This is the ideal venue because again, we have the participation of a very diverse group of stakeholders that have in-depth knowledge of this area.

In order for the CPUC to be able to analyze this option, though, we would need to be able to have DWR have the authorization and this funding level to get started and be a viable option on the table.

As I had said earlier in relation to timing, we would need a central procurement entity to come online around--to start getting started around 23-24 in order for it to be a viable option here, in order to get the offshore wind started in the timeline we were talking about, as well as the geothermal resources. But we like to keep all of our decisions technology-neutral in order to keep the procurement field as competitive as possible. I wanted to see if any of--yes. Go ahead.

Thank you for that, and I failed to mention before that for the pathways that we're looking at, it would still be a competitive solicitation. So that is still the foundation of what we're looking at exactly as Executive Director Tesfai just mentioned.

Okay. I guess what are the lessons learned from other states? What other states have done this kind of central procurement? And are there other lessons learned for what they've done, say, with offshore wind or other resources?

So thank you for that question, and we have had the chance to explore some of these other models from other states. The central procurement mechanism as proposed so far would be more similar to the New York model. So in New York, NYSERDA, which is the New York State Energy Research and Development Authority, is coordinating in this case, offshore wind opportunities to bring clean and locally produced renewable energy and clean economic development in New York State.

So NYSERDA receives the authorization from the New York Public Service Commission, which is the PUC equivalent there, to issue competitive solicitations for offshore wind energy. This is a very similar relationship as to what we've been talking about here, where the CPUC would have the Integrated Resources Planning Process in order to identify what type of resources the CPE would need to be focusing on.

In the case of NYSERDA, they allocate the offshore wind resources to the utilities and other load-serving entities who are required to purchase clean energy in order to meet their state's goals, which I note are 70 percent of their electricity to be produced by renewable sources by 2030 and 100 percent zero-emissions by 2040 for New York. So very similar goals to what we're trying to achieve in California.

And so, again, we have already identified in 2021 that we need these resources to be coming online by June 1st, 2028, and so we would be able to leverage a model that we have seen has been successful in order to try and do that for California as well.

Okay. Let me open it up to my colleagues, and I may have one last follow up. Senator McGuire? Senator Dahle?

Thank you, Mr. Chairman. Where do I start? So we basically have, I want to talk about, the elephant in the room is procurement. At the end of the day, we have incentivized wind and solar big time through tax credits and local, not having to pay local taxes. And our grid reliability has not seen the benefit of that. My first question is: are the existing procurement processes requirements insufficient? So, we have--there's more than just the Cal ISO right now. There's several load-servicing agencies throughout the state.

I think there's three or four. Most people don't know that. They all think that just ISO does it, but that's not true. So this is a huge shift. This is the government. And the last time the government got in the energy business, rates went up, and we talked about that earlier in the earlier panel about who ended up paying when the government got in. This is a huge shift.

And I want to thank the LAO's office for bringing up some of my concerns that I had originally. And I'm concerned about rates at the end of the day and technology. So what is happening with the ones that we have now? And what do you see the shift--I heard the part about you are tax exempt. So this is because you're a government organization. You can issue tax exempt bonds and you can get money at a less expensive price.

You talked about the cost because really, at the end of the day, we want to talk about the cost to the ratepayer because Californians are paying 70 percent higher than most places across the nation because we have extremely aggressive goals to get there. But when you answered your question, you didn't say the rates were going to go down. All of us are thinking the rates are going to go down if we do a different load base or a different authority, quite frankly.

But you said they might not go up as much, is what I heard. You didn't directly say that, but you alluded to that because we can borrow money cheaper. So let's talk about what we have available today and what the difference is other than just the cost of borrowing money because that's no reason to shift from where we're at. I think some of our policy problems are the reason we're here.

We've heavily invested in wind and solar, which when the sun doesn't shine and the wind doesn't blow, we have a load balancing problem. So let's talk about that for a minute.

I can start, and I tried to take notes on a couple of things that you had mentioned there. First, I do want to start on rates. So procurement or the cost of energy is a significant component of rates, but there really are many other elements that are cost drivers that wouldn't be in relation to resources being procured here.

I know that you know this, but I'll just share for the record, wildfire mitigation costs, costs to harden the system, make the system--upgrade the distribution system, prepare ourselves for decarbonizing our grid, and so those are all a very significant component of the rates that customers pay. Looking at the cost of renewables, we have steadily seen the price of renewables go down, and that's documented in our RPS reports to the Legislature as well.

And so looking at what we're talking about here, just rates have multiple components. We've seen the price of renewables come down. And Deputy Director Hou has outlined just a couple of the facets of DWR as a potential procurement entity that would come into that. I really want to emphasize that this is the beginning of a conversation.

We want to have DWR as a potential option on the table, but we will have a robust stakeholder process that are going to be looking in detail and gathering a record on what these costs might look like, being able to do comparisons, and identifying which entity could be the best central procurement entity for these types of long lead-time resources.

Through that process, we would also look at potentially other load-serving entities as potentially fulfilling this function and be able to put proposals together and get information from those load-serving entities in order to see: do they have other attributes to them that make them more cost-effective for customers, skill sets, things of that nature.

So at this point we're really trying to just make sure that we're able to bring all of the tools to the table and be able to put a proposal together and compare all of the different options, but what we have seen is that things that we do know is that we need these resources. We need them in a pretty near timeframe, but there's still long lead-time, but we need to get started on them.

And so we're trying to operate kind of under those two things. But definitely understand the concerns about rates going up. And this is a potential opportunity to mitigate costs while still doing the procurement that we already know has to happen. So I'd like to start there and then give an opportunity for Deputy Director Hou or Deputy Director Erne to share any other thoughts. No?

No additional perspective from me.

Okay.

I'll just say, just to interject quickly, that I think one of the things about offshore wind is that it's kind of perfectly correlate, prepares perfectly with onshore wind and solar, right? So it comes on right when onshore wind and solar are going down. So that's, I think, the positive piece there. I just want to interject that, but go ahead.

Appreciate that. I wanted to just have a few more comments. The power purchase agreements are in many cases long-term for most of the hydro plants I was participating in building 30 years, right?

And you know what you're going to sell your product for. You have to build the project, and those projects served the public well. When we saw early on in power purchasing, when utilities were purchasing renewables, when they were forced to, we saw 25 cent solar and now we see three cent solar. But if you look at solar and you look at the tax credits that go with it, that doesn't get equated into the ratepayers cost, but we're still all taxpayers as well.

So there's somebody benefiting from another pot of money that comes in. And as we all know, our national debt and our debt are going up because of tax credits. So when you want to put apples to apples, you have to really look at, we're all the same people. We all are ratepayers and we're all taxpayers. And so I'm concerned that we're going to lock into some long-term contracts like we did with solar at 25 cents.

Thank God some of those are coming offline now and we're seeing the reduction, but they've been balanced off of tax incentives. And the other thing that is concerning is technology. We haven't talked about technology. Technology is rapidly changing for the better. We're seeing new technologies out with storage for batteries, and I got the lady's card over here because I was interested in some of those technologies and why we weren't competitive at the federal level.

And so I hate to see us lock ourselves in on long-term contracts when technology is rapidly changing and then we're stuck for 30 years with something that is more expensive. Across the board, rates have not come down. They are going up and they're going to continue to go up, whether it's wildfire, whether it's hardening of the lines. There's a lot of factors in.

But when it comes to raw production of the resources that are out there, we've heavily invested in two resources: wind and solar, and our grid is now reaping the harvest of that. When the wind is not blowing and the sun's not shining, we have a real problem. And then we have to figure out how to fix that problem. And we've also heavily invested in the grant systems for batteries.

And batteries are a long way away from getting us for those extended periods of time where we don't have the wind and sun doing their thing. Battery technology is increasing, but you're talking about thousands of megawatts hours that we are not going to meet. And then I think the last report was we have 4,000 megawatt storage for like two hours, though. It's not for days or times when we see extreme heat events. So I just want to caution.

I think this is a really big policy change for the Legislature to be looking at putting DWR, any other load-servicing entity. It's basically the government now is going to be involved in it and procuring electricity for long-term contracts. That makes me very nervous because the people that testify and come in are people that only care about the environment or only care about their issue.

But you have to take all those into consideration when you're looking at how the rates are going to be for Californians. And as a Legislator, I hear every day about the spikes in our energy costs, whether it's natural gas recently or it's just the ongoing cost of natural resources. Gasoline, diesel, and electricity are all going up and Californians are suffering because of that. And are we really getting the bang for our buck when it comes to the environment? The other thing I'm concerned about is leakage.

We are leading the world when it comes to setting targets and we're going to allow these load to be--they're talking about the western states becoming an authority. That's other conversations. And I'm worried about leakage, that we're going to be getting dirty energy into California when we're paying the rate for clean energy.

So just some comments and concerns, and I do appreciate the LAO's Office brought up many of the things that I was concerned about, and mainly it's the ratepayers and making sure that we're actually getting good, clean energy in California.

Senator McGuire.

Thank you so much, Mr. Chair. For the Public Utilities Commission--and good afternoon. It's always good to see you. Thank you so much. On SB 1339, which was Senator Stern's bill--gosh, I think back in 2020--focused on microgrids, and just wanted to do a check-in on the proceeding.

Look, I think that we've seen, and especially in the North Coast, the benefit of large microgrids and what it can do to be able to protect Californians, especially during power shut-offs, like what we saw with Blue Lake up and up in Humboldt County, and obviously 1339 with Senator Stern was meant to expedite, right, the build out of these systems and wanted to be able to see where you're at with the proceeding and what that looks like within the Public Utilities Commission.

Yes. Happy to give that update. Thanks for the opportunity. So the CPUC has taken several actions to support the commercialization of microgrids, in addition to the policy direction and funding we have directed through the CEC's EPIC program. Of course, we have the microgrid proceeding, and this was 1339 from 2019. And so in June of 2019--sorry--in September of 2019, we opened the proceeding, and that's where we started.

But in June of 2020, the CPUC adopted our first decision in that proceeding, which was really focused on short-term actions to accelerate micro grid development and deployment. This really focused on development of single-line diagrams to help support interconnection and improve those processes, as well as requiring the utilities to create data access portals for distribution and transmission systems so that tribes and local governments would be able to better understand what type of distribution and transmission system was serving them and analyzed: is a microgrid the right option for them?

In January of 2021, the Commission voted to approve another decision that adopted rates, tariffs, and rules for facilitating the commercialization of microgrids. And this included the framework for the Microgrid Incentive program, which is a 200 million dollar program focused on equity and targeting customers most vulnerable to outages, and also supporting commercialization of clean microgrid technologies.

The program rules for that program have been in development, and the rules for the program will be voted on by the Commission next month, actually. But in between that time, in July of 2021, we also approved a decision that adopted the suspension of the capacity reservation component of the standby charge for eligible microgrid technologies. And this was an effort to support what we call third party microgrid development and for customers looking to invest in these technologies.

I also do want to draw the link between microgrids and summer reliability and specific action that we expedited in December of 2021. This included the approval of temporary microgrids, leveraging temporary generation at substations in PG&E's territory, which had been heavily impacted by public safety, power shutoffs at that time, and then supporting immediate reliability needs, which included four new circuit level microgrid projects providing peak and net peak grid reliability.

So really looking into both supporting third parties in creating microgrids, creating a Microgrid Incentive Program to support disadvantaged communities most vulnerable to outages, and then also approving a few utility-scale microgrids as well.

Just on the proceeding that you're saying you believe it's going to--on the rules for next month, so just walk us through that and what you expect on that.

So, for the Microgrid Incentive Program, we are not only focusing on microgrids themselves, but really trying to perpetuate clean microgrid technologies. So there are microgrids out there that do use solar in storage, but they often have diesel backup there. And so trying to look at how these new microgrids can leverage longer duration energy storage rather than having diesel there. The program rules are really focused on our most vulnerable communities. So disadvantaged communities, but in particular those that have had multiple outages in that area.

It's a limited pot of money. And the purpose of the program is not just to fund the microgrid in total, but really support communities that are seeking out all of these federal funding opportunities that are on the table, so that they can combine, of course, their own funds, these funds from the program, but also different federal funds and grant funds in order to put together a microgrid for their community, if they're interested in that.

Got it. Thank you so much. I appreciate that.

Okay, great. Thank you. I guess one last question around capacity payments. Several stakeholders raised concerns with capacity payment to the Electricity Supply Strategic Reliability Reserve Program on top of the penalties assessed by CPUC and CAISO. Given the tight near term energy resource capacity market, is the Administration's view that the existing penalty by CPUC is not a sufficient incentive for LSEs to meet their capacity requirements?

Great question there, and I'm happy to provide kind of more insight there. So the purpose of these payments, it's different from the penalty. The purpose of the payments are in order to replenish the program so that it can be self-sustaining. There's limited funds that were used to set that up, but in order for it to be able to be used, need to have a stream of funds that come in from those entities that use it.

And so given that the program can be leveraged by all of the load-serving entities through this capacity payment, we'll be able to replenish the funds in the program. The penalties that you were talking about in order to support compliance, those penalties don't go back into the Strategic Reliability Reserve, and they're also not priced in a way to replenish a program. So the penalties are a way to get a load-serving entity to be compliant, but it wouldn't be a way to make sure that the program is self-sustaining.

Okay. Well, thank you for your responses on all these. I guess just to reiterate, I mean, I do appreciate the LAO's concern, but it does seem, as we discussed, that the central procurement has potential to really lower rates by lowering those borrowing costs if the market knows through this that there is a large offtake provider.

But I appreciate you discussing that and some of the guardrails that you could put in place around this. So I appreciate you addressing those. We do have a hold open recommendation on this issue, so we'll move on. But thank you, Deputy Director Tesfai.

Deputy Director Hou. Deputy Director Erne. Thank you. Now moving on to Issue 25, which is Reauthorization of the Clean Transportation Program Fees and Program Amendments. And we will hear from this CEC when ready to present the Governor's proposal. The Commissioner of--yes.

Oh, well, that works better. Good afternoon. My name is Patty Monahan. I'm a Commissioner at the California Energy Commission, and I'm the lead for transportation, and I'm here to represent, sort of writ large, the AB 8 reauthorization package. So both the California Air Resources Board and the Energy Commission work hand in glove in implementing this program. And I want to emphasize that our roles are very distinct and complementary.

So my agency, the Energy Commission, is focused on the analysis and build out of infrastructure for zero-emission vehicles. And the Air Resources Board is responsible for establishing the vehicle standards and for the vehicle incentives. And we try to work really closely with a whole-of-government approach. So grantees don't perceive us necessarily as separate agencies, but as a single government entity providing grants in this space.

Reauthorizing AB 8 funding will support programs at both of our agencies to cut harmful pollution from transportation and help the state transition to a healthier zero-emission future. So let me just talk for a minute about the Clean Transportation Imperative. You heard a little bit about this two issues ago. But just to emphasize, transportation is responsible for half of the state's greenhouse gas emissions, close to 80 percent of smog forming nitrogen oxide pollution, and over 90 percent of toxic diesel pollution.

So this is just a real public health imperative. And we're on the cusp of a major transition to zero-emission transportation. We're seeing this not just here in California, but play out globally. In California, we reached 19 percent of new vehicle sales being zero-emission last year. That's more than double what it was two years ago. So we're seeing just this rapid ramp up in zero-emission vehicle commercialization.

And as the transition accelerates, we need to make sure that this is a transition that works for everybody, including priority communities, rural communities, low-income communities, disadvantaged communities, all need to get access to zero-emission transportation and to be able to capitalize on the benefits in terms of paying less for fuel. As the Air Resources Board sets increasingly stronger standards to reduce harmful air pollution and move towards a zero-emission future, AB 8 reauthorization will provide consistent funding to help meet state goals.

Our agencies are committed to supporting the adoption of zero-emission vehicles and infrastructure in an equitable manner and creating access for all Californians. So where are we today? We currently have 80,000 light-duty chargers deployed in the state. With existing state and federal funding, we are going to reach our near term goal of 250,000 chargers. And in fact, this year, we're going to meet our goal of having 10,000 DC fast chargers.

So, two years ahead of schedule. Existing state funding is also sufficient to get us to 200 publicly available hydrogen stations. So, as required by the Legislature through AB 2127, we conduct an analysis every two years of charger needs through 2030 and beyond. So we published the inaugural analysis in 2021. We found that we're going to need 1.2 million chargers by 2030 for light-duty vehicles. The challenge ahead is that we estimate there's a 900,000 charger gap in meeting that 1.2 million target.

And we're also going to need investments in medium and heavy-duty infrastructure. So I want to emphasize we do not expect the state to be responsible for all 900,000 chargers. The private sector has a critical role to play here, but our plan is really to prioritize investments with where the private sector is not going to act. And this is to make sure that we have convenient charging across the state, and especially in rural, low-income, and disadvantaged communities.

So the Governor's budget proposes to extend existing fees that would total approximately 185,000,000 dollars per year. These fees were originally authorized in 2008 through AB 118. They were reauthorized through Assembly Bill 8 in 2013, and they are slated to end at the end of this year. This proposal would extend the program through 2035. There are three important programs that are funded through these fees.

I'm going to start with the one managed by the Energy Commission, the Clean Transportation Program. So that one gets the biggest share of funding, 110,000,000, or about 60ish percent of the total. And it goes towards the CEC's Clean Transportation Program, which provides funding for infrastructure for zero-emission vehicles as well as other clean transportation projects. I want to thank you, the Legislature, for the historic ZEV budget over the past two years.

As you discussed earlier, the Governor proposes to preserve 90 percent of that fund and we're in the middle of a very strange budget year. Hard choices have to be made. AB 8 reauthorization ensures that there is consistent funding to help fund this package. In addition, AB 8 funds, if reauthorized, will support ZEV infrastructure for many years after the end of the current ZEV package, which ends in fiscal year 25-26.

So currently, we've invested about half of the funds to benefit low-income and disadvantaged communities, and we're also leveraging the private sector. So for every dollar we invest, a dollar is leveraged from the private sector. Two additional programs are funded through AB 8 reauthorization, the Air Quality Improvement Program nicknamed AQIP, which is managed by the Air Resources Board. That program receives 42 million per year to support the deployment of cleaner combustion and zero-emission vehicles and equipment.

AQIP is a critical part of the Air Resources Board incentive portfolio and has been used to start up many of CARB's flagship programs like the Clean Vehicle Rebate Project and the Hybrid and Zero-Emission Truck and Bus Incentive Project. So currently it's being used for a loan assistance program that provides loans to small businesses that probably cannot qualify for conventional financing, and this is a way to make sure that small businesses can get access to cleaner vehicles.

Since program inception, nearly 100,000 cleaner vehicles have been funded. The third and last piece of this is the Enhanced Fleet Modernization Program, which is also nicknamed EFMP, an awkward acronym managed by both the Air Resources Board and the Bureau of Automotive Repairs. It receives about 33 million per year and provides incentives to low-income individuals to scrap high polluting vehicles and replace them with cleaner alternatives.

Removing these oldest vehicles from the roads is a key part of the state's strategy to reduce pollution, and it helps families struggling with old, often unreliable cars. So BAR's scrap-only option offers eligible low-income consumers a 1,500 dollar incentive to retire their older, high polluting vehicle. This accounts for about 90 percent of the funding for the program. To date, nearly 100,000 vehicles have been scrapped.

ARB's Scrap and Replace Program provides low-income motorists with a retirement incentive and additional compensation toward the purchase of a cleaner hybrid or zero-emission replacement vehicle or for a travel voucher. This is run through the Air Districts and provides vouchers valued at up to 4,500 dollars. The Air Resources Board coordinates this closely with its related Clean Cars 4 All funding. To date, about 3,700 vehicles have been retired and replaced. So in conclusion, again, I want to thank the Legislature for your leadership on zero-emission transportation.

The ZEV packages in recent years have really helped us accelerate progress. We have a strong, shared vision for a cleaner, healthier transportation future, and I and the Administration look forward to partnering with you on making that vision a reality. Reauthorizing AB 8 will provide stable, consistent funding to help ensure California can meet its goals for clean transportation even in the face of a strained General Fund. So we need ZEV infrastructure more and more as we tip into the broader mainstream market.

This isn't an existential chicken and egg problem dilemma anymore. The cars are here. More are coming. We need to be ready for them. We need to make sure that if you're like Senator Dahle in a rural community, that you have access. If you're a lower income community and you're struggling disproportionately with air pollution, that you have access. We want to save consumers money, make sure everybody benefits, make sure this is not just a solution that works for what I would call the coastal elite, but for everybody in California.

So I'm accompanied by Hannon Rasool, who leads the Energy Commission's Fuels and Transportation Division, as well as Sydney Vergis from the Air Resources Board, the Chief of the Mobile Source Division, and we welcome your questions and comments. Thank you.

Thank you, Commissioner Monahan. Let's hear from the LAO first and then Department of Finance--okay. Great.

Thank you. So the sunset date is offering the Legislature a good opportunity to consider these fees and to revisit whether they are still essential. And I'll refer to them as fees as they're defined in statute, but constitutionally, these are tax revenues. Vehicle fees have increased significantly over the past decade, so it's worth considering the cost burden these fees do place on households and whether they merit the benefits.

The fees were last reauthorized in 2013, and since then, a lot has changed in this space, with significant new funding coming from the ZEV packages of the past two years and also funding from the Greenhouse Gas Reduction Fund, which has supported ZEV programs. Extending AB 8 fees could provide a reliable source of funding for these efforts to help offset General Fund reductions, but reauthorization is also an opportunity to consider highest priority needs.

The Legislature could support a different mix of clean vehicle programs or use the revenue for an entirely different purpose. The Legislature could also consider restructuring the fees to try to ease some of those cost burdens on low-income households. One approach could be using a more progressive structure to take vehicle value into consideration. The fees could also be applied to medium and heavy-duty vehicles.

About half of the revenue from these fees currently supports that category of vehicles, but the fees themselves are paid by passenger vehicle owners. Overall, we recommend that you consider whether these fees are still necessary in the context of other regulations and funding, and if you choose to reauthorize them, consider the highest priority for the funds, which could include a different mix of programs that are currently being funded.

Thank you. Department of Finance, please.

We don't have any additional comments.

Okay, great. Well, thank you again for that testimony, Commissioner, and for the LAO. It's good to hear about the EFMP program. I thought that was my Myers-Briggs score for a second, but I do think those programs are--when we talk about bang for the buck--are really valuable, and I appreciate the attention there. We covered some of my questions of this on the prior section, so I'll just see if my colleagues have anything.

Real quick, I just wanted to mention that, and I mentioned earlier that, you know, and actually, according to LAO's Office, the research shows, and the census data shows that the people that are using the rebates are people who probably would have bought a ZEV in the first place. So I think that's worth noting. And we talk about disadvantaged communities and people that really need it and those who travel along. In addition to that, this is a tax, this is a two-thirds vote.

I remember it when I was in the Assembly, and at that time Carl Moyer was attached to it and it was a different battle we had on the discussion of it. But I just want to, just for the record, we pay 22 cents a gallon in cap-and-trade funds. That's what it equates to.

So for somebody who has a car that gets roughly 24 miles to the gallon and drives 1,000 to 1,500 miles a month, per month, it's 109 to 164 dollars annually that the 22 cents covers. So that's already in the cap-and-trade funds that we do all kinds of other programs for the ZEV. So I have some concerns about, you know, it's double hitting. It's getting you at the registration side and it's getting you at the gas pump at both times.

And Californians are struggling and it's also vessels that pay into this as well. So I think we need to be conscious about the fact that we're double dipping on the rate payer or the person that's driving. I think we should take a look at the program as a whole and who's actually using it.

At the end of the day, it's a lot easier to vote for fees or taxes, however you want to say it, if you're actually getting it to the people that we really are trying to target. And in this case, the data shows that people that are using these programs are wealthy people who aren't disadvantaged.

Well, thank you. I certainly agree. Question about super users and EFMP and we need to better target our incentives. I appreciate that. I guess my last question is how is CARB coordinating its transportation planning efforts with the Department of Transportation? If somebody wants to take that.

Sure. Happy to. Sydney Vergis, California Air Resources Board. Appreciate the question. I would say our coordination points are kind of program-specific. So it's really kind of wide and varied. So just a couple examples include things like CARB. We have our innovative clean transit regulation, and so we coordinate with Caltrans on their LCTOP and TCIRP programs. We also work with agencies in terms of developing quantification methodologies for their GGRF-funded programs and certainly extend that collaboration to Caltrans as well. And then, of course, we're working with them on their upcoming California Transportation Plan. So there's a number of touch points.

Okay, well, thanks. I think that coordination is critical, especially even going back to our first conversation around those battery manufacturing plants and our sort of holistic applications for these funds. Well, thank you, commissioners and staff and team. We'll have a hold open recommendation on this as well. So we'll move on now to the next issue. Thank you. This is Issue 26, which is Implementing the Hourly Electricity Retail Resource Accounting, and let folks come on up and get organized. Great, thank you, and we'll hear from the CC when you're ready.

David, do you want to take the program slide?

Dr. Cook, is that right?

Yeah so, so--

Sure, go ahead.

David Erne. So this request is to help us build the capability to expand our program to gather additional information on retail and greenhouse gas emissions for resources so that we can expand our ability to analyze and provide overview of the different resources and their greenhouse gas emissions for different entities. So we're continuing to work that out and develop the regulations. We submitted an RFI to gather information or to identify what information we can gather and the challenges associated with that. And so that RFI has gone out and we're going to be reviewing that information and developing our regulations.

Great. The LAO have any comments?

Just quickly, we did review this request and didn't have concerns with the request itself. However, we do agree with staff comments that the energy resources programs account, which is proposed to fund the request, is in a structural deficit. So this is something that the Legislature will want to consider, just the health of ERPA and making sure that deficit is managed.

Thank you. Mr. Evans. Any?

No, sir.

Okay, well, thanks. We don't need to spend, I think, a lot of time on this. I just appreciate the concerns raised by the LAO when I shared them about the ERPA account. And we're happy that this was part of the Senate working group package and obviously passed Legislature and just really important that this bill is coming from a sustainable source of funding and we just want to raise that level of concern and issue. Any follow up there?

Yes. Rob Cook with the Energy Commission. With the support of this Subcommittee, the ERPA has gone through 40 million--as the staff analysis notes--40 million dollars worth of fixes over several budget cycles that have helped dramatically improve our cost structure. We also have taken advantage of opportunities. We're very careful with our funds. We try to be careful stewards of those funds. And for example, as a result of telework, we've been able to shrink our real estate footprint by 39 percent, saving funds, internal operating funds.

We never installed phones in our new space. We simply gave everybody a cheap and inexpensive mobile solution accordingly. And overall, we've looked very carefully and kept our operating costs low and we will find a way to meet our mission.

Okay, great. Thank you. Yeah, that's the point, really. Just make sure that this continues to be funded regardless of the fund because it's really critical for us to meet our 24/7 energy goals. Thank you.

Just a quick comment. I know this is very minute, I think, in the scheme of the budget, but it goes back to the ratepayer. I think staff was saying it's like two dollars per ratepayer through the state, and I just can't resist. But this morning the Legislature passed something that's going to probably get to the CEC, which is going to be another burden on top of your other responsibilities. And so we'll look forward to seeing how that gets paid for as well.

Great. With that, we'll have a hold up and request on this one, and we'll move on to the next one. Thank you, Deputy Director Erne. We'll move on to Issue 27: this Implementation and Delay of the Broadband Infrastructure Funding, and we will hear from the CPUC, probably Executive Director Peterson and Director Osborne, when you're ready. This is our last issue today.

They were largely determined why the programs were still in the development phase. They had available funds following program expenditures, and there was potential federal support to supplement the shifts with that. I'll turn it over to the CPUC to just kind of talk about some of the programmatic elements.

Good afternoon, Chair Becker and Senators. Thank you again for the opportunity to be here this afternoon, shifting gears to Broadband for All. I'm Rachel Peterson, Executive Director of the California Public Utilities Commission. I'm joined by Director Rob Osborn, Director of our Communications Division, and thank you for your continuing engagement in our Broadband Program. I have an overview of our progress toward implementing the last-mile portion of the initiative.

Happy to walk through that, or happy to focus in if you have specific questions in the interest of time.

Okay, yeah, I think questions would be great. Let's hear. Well, I guess that's it. Why don't we turn right to questions? Does LAO have any comments? Thank you. Sorry.

Brian Metzger with the Legislative Analyst Office. Our office recently published a brief on broadband infrastructure, which includes an updated spending plan and the Governor's proposed funding delays for both the broadband loan loss reserve fund as well as last-mile projects totaling 1.125 $1.0 billion.

We find the proposed delays to be prudent and worthy of legislative consideration, given their approval would maintain the bulk of the funding in the original spending plan. Also, there is a significant amount of additional federal funding, at least hundreds of millions of dollars, that will be available from the broadband equity access and deployment program. And the two programs for which these delays are proposed remain in planning or early implementation, with significant funding remaining for program awards.

If we had a status quo budget year, 2 billion more, plus oversubscribed technical assistance Fund, we got to keep it at least status quo on how to be able to get there this year. The last piece we just mentioned is our last conversation with Department of Technology. They are still waiting to be able to figure out what additional federal funds may be coming in for the Middle Mile, to be able to potentially backfill any of the General Fund share.

In the near term, however, we project the budget problem will increase by about $7 billion at May revision, and so the state likely will be unable to afford the overall spending levels proposed in 2024-25 through 2026-27. So as a result, the delayed broadband infrastructure funding likely will not be affordable in future years without reductions in other areas.

So we recommend the Legislature direct the Administration to prioritize the encumbrance and expenditure of the 2.91 billion in ARP fiscal relief funds and report more frequently to the Legislature on the expenditure and encumbrance of those funds.

Thank you. Let's start out with Senator McGuire, one of the leaders on this issue.

We also recommend the Legislature evaluate the updated spending plan to see how additional federal funds could supplement existing and or planned appropriations, how available general fund might be prioritized among existing programs and projects to achieve the goals of SB 156, and how, based on this prioritization, spending delays and or reductions could be made with the least adverse impact on meeting statutory goals.

Thank you so much, Mr. Chair.

So look, I know that we're in a crappy budget this year, so let's just all be blunt about that, but live in an area where large incumbent utilities like AT&T, Verizon and or the cable companies don't give two flips about connecting rural residents, it doesn't make financial sense. So what we heard all along from these large corporations is the state's not going to be able to get this done. Fast forward to this year.

Understanding that we have a crappy budget situation, we're looking at a deferral of 550,000,000 at the PUC for last mile infrastructure grants. What I am deeply concerned about, and I think we probably all are and don't need to ask the honest answer, but that this 550,000,000 won't get deployed.

So I worry, number one, is that we are deploying all the middle mile and now we have these rural poor communities that aren't going to be able to connect to that fiber that's going up Highway 101, for example. So I got to be candid, I just don't see how this is going to stand if we have sold this program and now what we're going to say to Californians is just kidding. We're not going to connect you. That doesn't work.

So I think that we're all, I don't have a question in this, just a statement that we're going to need to be able to develop a strategy to be able to get these communities connected because it will be egg on all of our faces. And this was a Bipartisan Bill along with the Administration. This 550,000,000 in deferrals are all, say, potential cuts. We can't let this move. This is America's largest public broadband project and we have to ensure that this continues to be advanced.

I'm happy to get a comment back from Department of Finance, but then I have some very specific questions on what my comments just were.

Nothing further. Senator Mcguire, we continue to prioritize these investments. They're not cuts right now. They're deferrals. Obviously, the budget may change in the out years. We don't know what that's going to be.

And again, I'm not trying to be crunchy, but we all know that this 550,000,000 most likely won't come back, especially if we're looking at an enhanced deficit. So my editorial won't ask to comment on that. So given what we know now on when or if the middle mile infrastructure is going to be deployed, how are the last-mile guarantees that we have already given the feds ARPA funding and the deadline is going to be met?

Thank you for the question, Senator, and I'll start and then turn to Director Osborne. And so for the CPUC, two key components of making sure we're meeting those deadlines are in progress, in part, already completed and in progress. So the first was the local agency technical assistance grant program, totaling 50 million. Those grants have largely gone out the door.

More than 100 entities applied for and have received grants, and we think those are performing the function that they were intended to perform, which is helping the local entity that plans to build a network, conduct that pre-engineering, pre-conceptual, pre-work that enables them to put together a better, more competitive and more realistic package when they do apply for federal funding account. So that's the first step that's already in motion. We started issuing those grants last October.

Then the second part is the federal funding account map that we, the CPUC, have put out. As I testified to you a few weeks ago, we made some technical missteps with that map when we first released the first version in January. We since have gone back to the drawing board. We've spoken with stakeholders.

We've updated the data in order to center it more on socioeconomics and low income communities and are preparing and on track to issue the next version of that map by the end of March. That's the next key component, because then in April, we work with local entities that wish to provide, to apply for these grants to get ready to understand the map, look at the unserved areas, and use their ladder grant funds to prepare their applications.

In May, we do a soft launch of our grant management system, and then by the end of the end of June, the grant management system is open and ready to accept applications. So those key steps that are happening right now are key to getting the money out the door in order to meet the federal encumbrance and eventual construction requirements.

We have two deadlines staring us down, right? 2024 and 2026?

Yes.

And you think that we're going to meet them?

Yes.

Yes.

Even with Fund deferrals?

So, just to clarify here, in terms of the funding delays, there's a General Fund, pursuant to control, Section 11.96 removed all ARPA funding from CPUC to General Fund. The remaining federal funds in CPUC's budget for last-mile are capital projects funds. Those have a federal requirement that they be allocated by 2024, but they need to be expended by 2026.

How?

What I just said. 2026. Exactly right.

Are you talking about last mile or are you talking about the middle mile for the ARPA funds?

So I think the Senator's question is about last-mile because they're all connected, right.

I mean, truly and be able to get it all done. So you think that we're going to be able to hit those deadlines, though?

Yes, Senator.

Okay. And so then again, I am not at all trying to be crunchy, and I hope I'm not coming off as crunchy, just deeply concerned, because I think everyone worked day and night to be able to get this done, including, and I want to be very clear, the Governor was way out in front of this and working hard to be able to get the deal done, which we're really grateful for. And we already know the technical assistance program is oversubscribed.

I think that we're probably about 2 billion short of where we need to be on last-mile. That's just some projections of where we'll potentially be on what the last-mile needs are going to be for communities.

Director Osborn is closer to those specific projections. I think you're in the ballpark, but I'll turn to him.

Yes. The investment model that we ran back last year estimates roughly 6.3 billion to do last-mile using all fiber. And we know that when we're looking at getting out to the very fringes of where we would build network, particularly when we're looking at the BEAD Program going forward, which requires us to establish a high cost threshold, at which point we decide we're not going to build fiber. It's more cost effective.

But for the most part, we're planning to build fiber to the extent that we can, given the funds.

And I do want to talk about the BEAD Program here in just a moment, because, look, I think the bottom line is, and again, I am not at all trying to be crunchy with you, but when you take a look at, especially rural areas, of the state, highest rates of poverty. Right, highest unemployment, absolutely desperate for high speed internet. And we're never going to be served by incumbents. Never. It's going to mean a public option.

And what I am deathly afraid of is that we have over promised and we're going to under deliver. I understand that we're facing a challenged budget, but I also believe budgets are value statements. And I think we're going to need to be able to follow through on this commitment that we made, especially to those in urban areas that are either underserved and or rural areas that are underserved or unserved.

So I think that the concern that I have in regards to the federal funds is that dollars won't even roll out. I thought, though, until January 2024, correct?

Yes. Once we start to receive applications, just the timing. We're estimating January of next year.

Okay. All right.

So just on the BEAD Funding, and again, I appreciate the patience of the Chair and the Vice Chair. So how do you expect to administer the funds given the time it's taken to be able to get the rule set, especially with the federal funding account?

Granted, it has taken a little bit of time, but we are actually working at quite a rapid pace in order to set up the rulemaking, which will serve as the vehicle for setting those rules. So just before we appeared before you on March 7, the Commission opened a new rule making on BEAD that will serve as that vehicle. And there's an assigned commissioner and assigned judge, and it's ready to roll. Do you have any details you can share?

Yes. So the BEAD Program, we received some initial planning funds, and we are now in the process of procurement for consulting services to do the five year action plan, which is something, it's a high level strategic plan that will lay out how we plan to use the BEAD funds to close the digital divide. The BEAD Program requires a 25% match in most cases, so it can be combined with the federal funding account or with CSF or private equity money.

And so that BEAD plan, that five year action plan is due around mid-August. We won't know the allocation for California probably until around June, and we want to have access to those funds until we've submitted what's called an initial proposal, which is due 180 days after we get the allocation announcement in June. So roughly by December, we'll be able to tap into the first 20% of those BEAD funds for last-mile.

Okay. Thank you so much for that. I think, Mr. Chair, this is going to need to be I know this is an issue that is bipartisan in the Senate. This is an issue that has been a deep concern, at least on our side in our caucus, of making sure that we're going to be able to follow through with those commitments.

I also know, and I don't want to imply that it's not a priority for the Public Utilities Commission, Department of Finance, or the Governor's Office, because I know it is. I just think it's going to take all of us thinking in an innovative fashion to be able to follow through with the commitments. And again, with this budget shortfall that we have, plus knowing how much we're going to need to be able to complete all of the last-mile projects above and beyond.

Is there any update on that, on the middle mile of additional infrastructure funds coming in from the feds that would be able to assist us on the deployment of those 10,000 miles?

So I don't have an update for you, but I'm happy to find one and get one.

That'd be great. And Mr. Monroe has been great on that. I just wanted to see if there's anything, because I think that was, and I don't want to put words in your mouth, but that could also be a strategy of seeing if there's additional dollars that would come in from the feds that then can help us. Again, my words backfill what some of those commitments? I mean, I think that could be a strategy potential.

Yeah. The federal pot for middle mile is considerably smaller, though, and from the IIJA, I'm not sure what California's share will be of that and our potential, but

Hopefully 12%, right. I mean, if we're looking at standard of what we've seen, it's about 12%, typically, yes, if not larger, but a minimum of 12%. knock on wood. So, Mr. Chair, this one item would love to be able to flag and how we can continue to bird dog this and then come back on this. Obviously, I know we will. But again, I appreciate the patience with the questions with our panelists.

Really grateful that you're here and also want to say thank you to the PUC, who's engaging with our broadband working group with the Senate, along with CDT as well. So thank you so much, Mr. Chair, for your indulgence.

Absolutely, Senator Dahle.

If I may, just real, I want to say that this issue, I'm not going to belabor everything that Senator McGuire did. We are district similar in constituencies, and we've been working in a bipartisan fashion for some time since we've both been here. But I would just want to say it was his day to be crunchy. It was my day to be crunchy when we were in the energy Committee. And so I just want to say we look forward to getting this done.

It is a high priority, and we know that budgets are tight. And I'm glad to hear that you went back and was able to get some of those programs up and going, because the time is of the essence. And quite frankly, every day we wait, too, to get the money out as inflation is happening and the project's costs go up dramatically. And this is aggressive program for such a short time. We're talking 10,000 miles. I think it is. It's a huge undertaking.

When you talk about boots on the ground, getting it done.

Well, thank you to both my colleagues for providing that focus here. And I know June is an important deadline, but Echo Center, Dahle, thanks for the work. We know you are working hard on this, but obviously a number of big concerns that we'll continue to focus on. But with that, I think we do have a hold open recommendation here. So we will wrap up on that issue and accept that recommendation. But thank you. We'll look forward to following up.

Thank you for the opportunity to be here.

It's good to see you. Thank you.

Well, thank you. We'll now move on to public comment, and we'll start with anyone in the room who'd like to provide public comment.

Thank you, Mr. Chair Members. Brian White with KP Public Affairs on behalf of Offshore Wind California. We are a trade group of offshore wind developers, industry leaders in technology, and we support responsible development of offshore wind. Speaking on item 24 regarding the proposed energy Trailer Bill, specifically the central procurement mechanism, we do support the central procurement proposal. We think it will help provide some certainty in the process that's long needed. The challenge we have right now is that there's too much uncertainty.

We need to act quickly to establish a permitting structure. We need to develop ports. We need to have a workforce, need to have transmission lines. All these things go together. It's almost like a house of cards. But the one that's at the top is procurement. And without that, we're not going to get the other things that will help build into this need for all the things that need to be done to get this industry started. This is why we support the administration's proposal.

It's not like previous felt bills that have been done on central procurement before. Those have all been mandates for one specific technology. This Bill is an option. It's saying DWR, you could do it, but only if CPUC says you can do it after they do their analysis. So there is a stop go red process. It's not just automatically go and procure these long lead time resources. We agree there needs to be some, probably narrowing down of the definitions that needs to be clarified.

But for right now, we support the proposal. Look forward to working with you, Mr. Chair. Everyone on the dais, Committee Members and the leadership, look forward to working with you. Thank you.

Great. Thank you.

Hi, Melissa Cortez, on behalf of the California Wind Energy Association, I think I can probably just echo all of the comments of the Offshore Wind Organization, California Offshore Wind. We very much are in support of the budget Trailer Bill, specifically the central procurement piece, specifically because of the benefits it'll have towards offshore wind. So we hope that you'll support that proposal as it moves forward. Thank you.

Thank you.

Thank you Chair, Sean McNeil, California Community Choice Association. First off, we want to applaud the Governor's commitment to energy security. Certainly should be a priority for him, for us, for everybody. However, we do have three significant concerns with the BCP on energy reliability. First, central procurement. We don't yet understand what problem they're trying to solve. We don't see a procurement problem. LSE's are out there procuring. In the last midterm reliability procurement order, LSE's met the requirements, and in fact, the CCA is over procured by 500.

We're not seeing a problem. And I would like to correct one of the comments made. There was a mention of LSE's not meeting the 2026 long lead time reliability resources and that they had to move it to 2028. That's not exactly accurate. Many of our members wanted to procure those resources by 2026. The developers weren't ready. So that date had to move to be moved to 2028 because that's the most realistic time that we could meet those resources.

And I'm not even sure 2028 is correct. Right.

It may be longer than that, but characterizing it as LCE's were struggling, it's not really a fair representation. So we're not seeing a procurement problem. What we are seeing is an interconnection and transmission problem. So an infrastructure problem. And Senator Dahle mentioned that on the floor this morning. He's mentioned it today again in Committee. We polled our members. We have 793 megawatts of clean, renewable resources ready to be added to the grid right now, but we cannot because of interconnection delays. That's significant.

And as our Members continue to go out and procure because the PC wants us and we need to, that's only going to get greater if we can't solve our interconnection problems. On the issue of transmission, as mentioned, we want to go out and procure. Our members are ready, willing and able to go out and procure offshore wind now. But the infrastructure is not there. It's a significant cost. It's a significant time.

And for us, we think that's where our focus and energy should be right now is on how we resolve those problems, not creating a new mechanism or a new central procurement entity, because we don't see how that solves the problem. Issue number two is, if I can, 30 seconds on behalf of CMUA on issue number two, because we both kind of share it. It's the RA capacity payment. So the issue there is, we both feel it's duplicative. We're being penalized for the same thing.

And when I say we, it's not us, right? That gets passed on to the consumers, your constituents, they're going to pay twice for the same thing. And there's no new resources that are being added to the grid of that. There's no additional energy security. So we're at a loss as to why we're doing that. There has been a market analysis done on this. The information has been shared with the CPUC, the CEC, CalISO Academics, and many of the legislative staff.

We had a meeting last month with all of them. And the reality is the market is short. The product is not there to buy, and we're being asked to go buy it. We try. We can't. We get penalized. That's not solving any problem there, and so we really think that that proposal needs to be revisited. So thank you.

Thank you. I did raise that today, but I appreciate both those comments. Next up.

Hello, Maddie Munson on behalf of the Agricultural Energy Consumers Association, speaking today on Issue 22 and specifically the food production investment program at the CEC. We're very supportive of that program. It's been very popular and very effective in getting energy efficiency and decarbonization programs built for food processors in the state. So we would just ask that that continue to be supported.

We'd also like to appreciate the comments around rate payer impacts today and just ask that that continue to be part of the conversation of this Committee. Thank you.

Thank you.

Hello. Excuse me, Chair and Members, my name is Michaela Elder. On behalf of the Electric Vehicle Charging Association and Cal Start here to speak on behalf of Issue 23, the ZEV budget package. We're appreciative of the Governor's proposed proposal on the ZEV package. We feel that it's incredibly important to provide access to clean transportation and disadvantaged communities, as well as decarbonizing our transportation sector, and we feel that they're very important in reaching the state's climate goals as well.

We understand that the state faces a deficit, but we implore the Legislature to refrain from any further cuts. Thank you.

Thank you.

Good afternoon, Mr. Chair, Members, Erica Romero, on behalf of Valley Clean Air Now here in strong support of the $125,000,000 for clean cars for all included in the ZEV budget proposal from the Governor. And additionally, really excited to see the Administration engaging on the reauthorization of clean transportation fees. We're very excited to work with both the Administration and the Legislature to ensure that those fees can continue to support critical clean transportation programs. Thank you.

Thank you.

Good afternoon. Chair and Members Rebecca Marcus, on behalf of the Union of Concerned Scientists, we feel that the Legislature should uphold the ZEV commitments made in previous budget cycles to the greatest extent possible and advance sustained funding solutions. We look forward to working with you to reauthorize the AB 8 funding while also ensuring that these funds are prioritized for advancing clean air and frontline communities and for zero emission technologies that are most cost effective and prevalent in the state, which is currently battery electric vehicles.

Agencies should continue to be given discretion on infrastructure spending if certain technologies take off unexpectedly. But for now, carve outs for hydrogen fueling diverts funding away from charging, which gives the overwhelming majority of ZEV's on the road today and those projected to be on the road in the future. Additionally, on behalf of leading age California, prior to completing the funding proposal for the Federal Broadband Dollars, we encourage the CPUC and the Department of Technology to include the perspective of older adults in the stakeholder process.

Broadband not only prevents isolation in that population, it can be essential in communicating with their healthcare teams as well. There are senior affordable housing communities without access both in the rural parts of our state, but also in downtown Los Angeles. Thank you.

Thank you.

Good afternoon, chair and Members Tricia Geringer, with Agricultural Council of California here in support of a California Energy Commission Program called the Food Production Investment Program FPIP.

The Governor's Budget allocated 40 million for this project and program in 23-24 and we're strongly in support of that. It is considerably helping food processors based right here in California to considerably reduce energy use and lower carbon emissions through implementation of advanced technologies.

And impressively, 82% of those projects are going into disadvantaged and low income communities to lower emissions and improve air quality for priority populations and going to something you mentioned in a prior hearing, Mr. Chair, the return on investment for the state is rather significant and substantial in that the food production investment program is placing in the top 10 of all of the California climate investment programs with regard to cost per ton of GHG and total reductions of GHG.

And so with that, we very much hope that the Subcommitee will support 40 million for this program. Thank you.

Thank you. I appreciate all those that were here in person. We will have participants on the phone now. Again, the number 872-226-8163 access code 694-8930 given the time, we are going to have to limit each person to 1 minute. Moderator please prompt when ready.

Please press one, then zero for any comments. We'll go to line 38. Please go ahead.

Yes, good afternoon. My name is Chris Chavez. I'm with Coalition for Clean Air as well as the Invest in Clean Air Campaign of Charge Ahead California. We urge the Governor and Legislature to find alternative to the massive cuts to clean transportation. As somebody who lives in a community with a six to eight year shorter lifespan, in large part due to air pollution, this isn't just a matter of only caring about the environment, as suggested earlier in the Committee hearing, but also about public health.

Further, we urge both the Governor and Legislature to prioritize the following points with the state's limited climate dollars. First is equity. California must prioritize its limited resources to maximize investments that benefit our most vulnerable Californians and improve air quality. This includes medium and heavy duty incentive programs, clean mobility, transit capital programs, and equity focused light duty programs like clean cars for all.

We also need to maximize air quality benefits as California is home to the dirtiest air in the nation, with low income and disadvantaged communities taking the brunt of the impact. We support AB 18 reauthorization with using the equity framework negotiated over the past few years as a starting point. We are also leery of potential carve outs. We also want to raise the concerns about using cost effectiveness as the sole metric as these programs require significant amount of case management given the populations they serve.

We also want to make note that the clean mobility programs did not get a great amount of funding last year. And, for example, the clean mobility voucher program got a $33 million appropriation, and that money was exhausted in a day. Thank you for your time.

Thank you. And thanks for raising public health. Next moderate, how many are in queue? About 10. Okay. Next caller, please.

Line 31, please go ahead.

Good afternoon. Teresa Cooke, testifying on two items today, 24 and 25. First, on behalf of Equinor, one of the offshore wind developers in Morro Bay, thanked the Administration on centralized procurement proposal and really appreciated the dialogue today would otherwise align our colleagues or our comments with those of Brian White from Offshore Wind California. And then second, and on behalf of the California Hydrogen Coalition and California Hydrogen Business Council, I want to express our gratitude for the CEC's clean transportation program.

The 2014 reauthorization allowed us to launch the state's hydrogen fueling network. But as Commissioner Monahan noted today, the hydrogen fueling network will end at 200 stations in 2026. For these reasons, we are asking the Legislature to continue its support for hydrogen by allocating 30%, up from 20% to now finish the build out of a statewide and self-sufficient fueling network. Thank you very much, Senators.

Thank you. Next caller.

Line 58, please go ahead.

Good afternoon, Senators, and thank you for your time today. My name is Stephen King and I'm the clean energy advocate with Environment California. Environment California is also part of the Invest in Clean Air Campaign with Charge Ahead California. The Governor's Budget cuts billions from clean transportation programs that address the state's critical air pollution problem. California has some of the worst air quality in the country. Over 90% of people live in a place where the air is unsafe to breathe.

We must do more to address this major health issue. The budget proposal also cuts clean energy programs that are so important, including vital home battery storage incentives. We urge you to make your clean transportation and your clean energy promises whole again. You can do this by restoring the active transportation program to encourage more biking and walking and restoring investments in the electric vehicle transition. You can also support clean energy through central procurement of long lead time, diverse resources.

Thank you, next caller.

We want to ensure these resources support projects like Geothermal and Offshore Wind and do not include fossil fuels or other dirty forms of energy. It's time to move forward with these clean energy projects while maintaining critical support for successful clean transportation and clean energy programs. Thank you.

Line 55, please go ahead.

Thank you, good afternoon, Mr. Chair, Members, Ignacio Hernandez, on behalf of The Utility Reform Network, return calling on behalf of the California Ridge Payment Program, we urge this Committee, the Legislature, to reject the governor's proposal to retract $400 million for this program. California ratepayers were significantly impacted by Covid and got behind on their payments, not just within the time period that was covered in the initial program, but beyond.

So we urge this Legislature to simply extend the relevant dates that someone would be eligible to receive some of this funding to help with their utility bill. Thank you.

Line 35, please go ahead.

Thank you, next caller.

Hello. Thank you for your time. Sakira Carter with Sierra Club, California. Regarding item one, we urge the Legislature to restore and promptly allocate funding for CEC's equitable building decarbonization program to promote healthy, resilient homes, address health ailments associated with gas infrastructure and appliances, and support California's transition to a clean energy economy. The EVD program is critical for protecting low income communities from financial stress associated with being tethered to aging gas infrastructure, health harming pollutants from dirty fuel sources, and inefficient gas systems in underserved communities.

For these reasons, we urge the Legislature to retain critical funds for the equitable building decarbonization program. Thank you.

Thank you very much, next caller.

Line 67, please go ahead.

Hi. Good afternoon. Mr. Chair Members Glenn Farrel, on behalf of the State Water Contractors with regard to issue number 22, want to express appreciation to Senator Dahle for highlighting the Oroville pump storage issue earlier in the hearing, and we encourage the Subcommittee's approval of that specific item as budgeted in light of the Legislature's enactment of SD 1020 last year, which accelerates the 100% renewable and zero carbon goals for state agencies, including the State Water Project 2035.

The Orville Pump Storage Project is an important component of that goal achievement, and the accelerated timeline supports a level of urgency to approve and rapidly advance construction of that project. Additionally, the Oroville Pump Storage Project would provide valuable energy storage public benefits to help improve statewide grid reliability and stability. We really encourage your prompt action on that item. On issue number 24.

If there is momentum to continue exploring the Department of Water Resources as a potential centralized procurement entity, we encourage the Subcommitee to strongly ensure that there are appropriate firewalls between DWR's centralized procurement role and the traditional and core role as the operator of the state water project.

DWR has a critical role in providing water supply reliability and resilience for more than 27 million Californians through the State water project, and we want to ensure that any new centralized procurement role doesn't diminish or compromise statewater project operations or impose any collateral costs on the public agencies who are contracting with DWR for state water supplies. Thank you very much. Appreciate it.

Thank you, next caller.

Line 50, your line is open.

Good afternoon. Thank you, Senator Becker, Senator Dahle and the full Committee today for this hearing. It was very interesting. This is Allie Detrio on behalf of the Microgrid Resources Coalition, and just a few quick comments, and we'll follow up with some more written comments as well.

Microgrids can solve nearly all of the problems that were raised in this hearing today between affordability and trying to maximize private capital and investment, leveraging federal funding to quicker interconnection and more affordable electricity as the state moves to electrification, as well as decentralization to mitigate the risk of climate vulnerable infrastructure like transmission. Where now we are moving into an age of climate change with electricity rates rapidly rising. Transmission and large power plants are very expensive, and they are the chief cause of customer rates increasing.

For the CPUC's own affordability report. With regards to the DEBA program and the LAO report, we're really thankful for the $700 million in DEBA funding and the CEC moving quickly to get that program launched. We appreciate that. It appears the funding will remain intact as is, but on page 14 of the LAO report, it stated that maybe funding should be delayed because the DEBA program has not been launched yet or had any projects deployed.

Microgrids are explicitly eligible for DEBA and they are ready to be deployed by customers to provide reliability services right now. And we think that the DEBA should create a standard customer incentive program, not a grant challenge, so that we can get the money out the door to customer microgrids ASAP and so that there are no budget cuts to DEBA. And the DEBA funding will be helpful to incentivizing clean energy microgrids that are zero or low in emissions.

In contrast, the DWR program that sounds like is still funding high cost fossil generation.

Okay, thank you. I do have to ask you to wrap up.

Yes, we think that microgrids can be deployed rapidly across California to provide firm capacity, load reduction, and resilience to mitigate the risk of power outages and affordable that, that funding should be.

Thank you very much. We got it. Thank you for your comment. Next caller, please.

Line 61. Please go ahead.

Mr. Chair Members. Dan Chia with Omni Government Relations testifying on two items. First, reliability proposal. I'd like to associate comments with CalCCA on behalf of Clean Power Alliance. CPA is the state's largest CCA. We're particularly concerned about the capacity payment proposal. A bigger stick is not going to get the state the resources that are simply not available at a cost effective price.

Second item, reauthorization of the Clean Transportation program on behalf of flow EB, charging strongly in support of the governor's proposal, like to also acknowledge the work of Senator Gonzalez and Assembly Member Reyes on that effort as well. Thank you so much.

Thank you very much. Next caller, moderator let's move on to next one. Do we lose moderator?

Next, we'll go to line 66. Please go ahead. Your line is open.

Thanks. Good afternoon, Chair, Members, Laura Lane, on behalf of the California Association of Port Authorities, or CAPA. Collectively, the ports are one of the most consequential port systems in the nation, supporting millions of jobs and bringing lots of cargo into our country's trade volume. The ports have a record of going above and beyond environmental and regulatory requirements. While striving to remain competitive in challenging economic environment. Implementing new green technologies has been key to the success of our ports.

Eliminating funding for the CARB CEC program aimed at reducing emissions for port equipment we think is short sighted. And this cut should be treated like other programs and paused to ensure that the state's resources are being directed to fund programs that are making an impact on the state's greenhouse gas reduction goals. California ports need to adopt strategies that are not only adopt for low emission drainage trucks, but also the handling equipment, moving freight and cargo on and around our ports.

We respectfully request that the Legislature include this critical investment and look forward to any further discussions. Thank you so much.

Thank you very much. Next caller

next, we'll go to line 64. Please go ahead.

Thank you. Chair Members of the Committee, Jesse Cuevas, on behalf of the Building Decarbonization Coalition in support of the governor's proposal for the equitable building decarbonization allocation. As the Legislative Analysts highlighted in their analysis, this funding will be critical to support efficiency and energy improvements for low income households that would not otherwise be able to undertake these upgrades.

We do not support any additional delays or cuts to this funding on top of the government proposal as it risks leaving low income communities behind in the transition to a zero emission future. Additionally, the Building Decarbonization Coalition strongly supports item number two on the vote only calendar, the Building Decarbonization Financing and Incentive Assistance program, which will further support the development of long term financing options for the building decarbonization. Thank you.

Thank you. Last caller I believe.

Okay, last one will come from the line 59. Please go ahead. Your line is open.

Good afternoon. Elise Fandrich from Tratten Price Consulting, and I'm here representing a few groups on a couple of issues. First, on behalf of the Asian Pacific Environmental Network, the California Environmental Justice Alliance and Green New Deal Coalition, we provided a letter to this Committee and want to request that the Legislature reject the delays and cut funding for the equitable decarb programs at the CEC. In addition, we want to urge Legislature to protect the full commitments for community solar programs and community resiliency centers.

Investments in these programs would have intersecting benefits, including lowering energy bills, enhancing grid reliability, creating good jobs, and reducing emissions. State level funding for these programs is also essential to make California competitive for the billions in funding from the IRA for these types of projects with these groups and the Coalition for Community Solar Access.

While they're supportive of the funding to the CPUC to support positions for implementation of AB 2316 more funding is needed to fully implement all these programs that are essential for making our vulnerable communities more resilient and safe.

And then secondly, on behalf of the National Park Conservation Association, want to elevate some concerns with the central procurement mechanism raised today, particularly the lack of definition on what projects and technologies qualify for long duration energy storage and the lack of side guards regarding what would trigger a central procurement action. So we think adding those definitions and sideboards would be helpful in advance projects that are cost effective and necessary, and we look forward to the Legislature to ensure those guidelines are added. Thank you.

Thank you very much. I believe that concludes our public comment. And now we will move on to voting Members and voting items in the vote only calendar. So first, we're going to take a motion to approve the staff recommendation for issues 2, 3, 7, 9, 11, 12, 13,15, 16, 17, 18, and 21. Motion from Senator Dahle. We would call for a roll.

Roll Call

Motions approved on voted three to nothing, and those budget items are out. Now we'll move on to items issues 1, 4, 5, 6, 8, 10,14, and 19. Do I have a motion? Motion from Senator Mcguire. Please call the roll.

Roll Call

Those motions, those items, issues are out on a two to one vote. They are passed. And let's see. I think that is it. Okay. Well, thank you to all individuals who have participated in our hearing today, quite an eventful and fruitful one. If you're not able to testify, please submit your comments or should suggestions in writing to the budget and fiscal review Committee or visit our website. Your comments, suggestions are important to us. Thank you again. We appreciate the participation.

This concludes the agenda for today's hearing. Senate Budget Subcommitee two is adjourned.