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

Senate Budget Subcommitee number two on resources, environmental protection, energy will come to order. We are holding our hearing in the O Street building. We have five issues on today's agenda. We will first discuss issue number one, then take a break for public comment. Afterwards, we will discuss issues two through five, and after discussion, we'll public comment on all the other items. So we're going to start with issue number one, community solar.

And we'll first hear from the CPUC, who present an overview of the proposed decision on community solar. Thank you for being here. You go. Just go ahead when ready.

Great. Thank you. Chair Becker Vice Chair, Dahle my name is Leuwam Tesfai and I'm the deputy Executive Director for energy and climate policy at the California Public Utilities Commission. I'm pleased to present today on the proposed decision before the California Public Utilities Commission in its community solar proceeding as it relates to the previous $33 million budget allocation that the proposed decision would allocate through a newly created community renewable energy program that is not subsidized by ratepayers.

Before I proceed, I should note that the California Public Utility Commission's community solar proceeding is still an open, quasijudicial proceeding. The administrative law judge managing the proceeding issued a proposed decision on March 4. I want to note that this proposal is still subject to deliberation before a final decision is eligible to be voted on by the full Commission. This is a proposed decision that has not yet been voted on.

What I can do is share with you information from the proposed decision and the judge's stated rationale as written in the decision, which is based on the record of stakeholder evidence provided by parties in their sworn testimony. I can speak to some of the details of what is outlined in the proposed decision and answer factual questions from the Committee Members about its main components.

However, as I said, the proposal is still just that, a proposal and not a final decision of the commission stakeholders to the proceeding have until April 2 to submit comments as well as their reply. Comments to the proposed decision before I begin, I'd like to provide some context about solar development in California. First, California has more solar capacity on our electric grid than any other state in the country.

There are thousands of solar generation projects of all scales interconnected to our electric grid at the transmission level, distribution level, and on or near buildings. We will have thousands more new solar projects built in California over the coming decades. Load serving entities like our community choice aggregators and investor owned utilities are selecting hundreds of new clean energy projects through competitive bidding processes to serve their customers.

This brings me to the proposed decision before the commission on community solar or more accurately characterized as solar projects interconnected at the utility distribution level that either primarily export power to the electric grid or is produced and consumed onsite by a building.

This type of solar project is not new in California, and the proposed decision follows a long history of experience that has been pulled forward to help guide and shape the next generation of this proposed community solar program so that it benefits all customers, aligns with our suite of existing solar policies and programs, and provides greater grid and customer benefit than it costs.

And where there are costs, we are paying close attention to the fact that costs ultimately are borne by customers or ratepayers, and today these customers are acutely feeling the impacts of higher electric rates and bills. Turning to the proposed decision, let me start by outlining the guiding principles for the proposed decision, which can be found by the authorizing statute, AB 2316 AB 2316 required the CPUC to carry out three mandates.

First, evaluate existing renewable energy customer subscription programs and determine if they effectively serve distinct customer groups, minimize duplicative offerings, and promote robust participation by Low income customers. Second, to either terminate or modify any existing programs that do not meet those criteria. And third, determine whether it's beneficial to ratepayers to establish a new non ratepayer subsidized community renewable energy program consistent with a number of requirements in the bill.

In terms of affordability, I want to emphasize that AB 2316 requires the CPUC to pay close attention to the bill impacts of our programs on both participants and nonparticipants, and ensure we use ratepayer funding as effectively and efficiently as possible and specifically for our new community renewable energy program.

AB 2316 requires that nonparticipating ratepayers pay no more than they would otherwise pay a measure to protect against bill increases from the program while at the same time delivering bill discounts for participating subscribers, especially low income subscribers. Now for a brief outline of the proposed decision and its outcomes and reasoning in terms of existing renewable subscription programs. The proposed decision determines that an existing discount program for low income residents of disadvantaged communities is performing well and should be expanded.

In addition, the proposed decision determines that the existing green tariff program for market rate customers should be modified to reduce rate and enrollment volatility and provide an option for investorowned utility bundled customers to top up to 100% renewable energy for a small premium, similar to the existing options that are available for many community choice aggregator customers.

Additionally, the proposed decision determines that it's beneficial to establish a new community renewable energy program consistent with AB 2316 that is not subsidized by ratepayers as directed by AB 2316. The proposed new non ratepayer subsidized community renewable energy program does not increase bills for nonparticipants. The proposed decision sets the amount of compensation for solar power exports to the grid at generation costs avoided by each project.

In order to ensure bill savings for the low income customers, who must make up at least 51% of each project's capacity. The program design includes additional bill credits for low income customers. Those bill credits would utilize state and federal funding rather than ratepayer funds to avoid adding costs to customer electricity bills. To fund the subsidies, low income customers at highest risk of disconnection will be prioritized for auto enrollment.

Enhancing equity this program framework is compliant also with the federal legal requirements under the Public Utilities Regulatory Policies Act, or PERPA. Now, I want to stress that PERPA is a complex body of federal law. It's not always entirely straightforward to administer, and there's been a multi decade learning process between states and the Federal Government. We've had procurement tariffs challenged in the past, many of which that have passed muster but also required extensive litigation in federal court.

Through all that experience, we've been able to develop perpa compliant tariffs, which we are using here. This proposal supports solar while prioritizing affordability, the proposed decision elects not to implement a net value billing tariff proposed by solar developers. The proposed decision finds that this proposed tariff from developers would result in an $8.1 billion in costs for each gigawatt of solar over 25 years, tripling ratepayer costs for each gigawatt of solar procured per the statutory direction that nonparticipating ratepayers pay no more than they would otherwise pay.

The proposed decision does not adopt this proposal. The new community renewable energy program proposal in the proposed decision relies on PERPA compliant tariffs that compensate renewable generators at its true value, the wholesale avoided cost of generation. Finally, I want to highlight that this proposed decision takes very seriously the Legislature's directives to maximize the impact of non-ratepayer funds and to ensure bill savings for low income customers.

In order to do so, the proposed decision creates a dedicated mechanism to allocate and distribute external funds as bill discounts to low income participants. The $33 million budget allocation that the legislature has authorized for community solar would be used in this way to provide bill credits for low income participants.

The proposal will also help to leverage available federal funds, including funding through the US EPA Solar For All program that the state has applied for the solar for all program defines community solar very broadly and would provide funding for all types of distribution connected solar projects, including those primarily exporting power into the grid or serving onsite electric. Demand.

Determinations on solar for all funding are expected to be announced this spring, and the funding would plug in well to the new community renewable energy program that is in the proposed decision. Thank you for this opportunity to walk through the proposed decision. We value the input we've received from stakeholders over the last year in our public decision making process, and I look forward to answering questions from the committee.

Thank you, Deputy Secretary. Testify. And I do have a lot of questions on this. You'll find a theme, I'm sure, but that doesn't diminish my respect for you and the CPUC, but this is a very important topic. I do want to turn over to Senator Dahle first in interest of time. Go ahead.

Well, first, thank you, Chair. Good to see you. Thank you, chair, for giving me the opportunity to speak. This is something that I've been focused on getting, really drilling down into this area because the cost shift from solar to non solar people is something I've been tracking very closely. We know that in the recent programs that we've had that the cost shift is about $6.2 to $6.8. billion to folks who don't have, can't afford solar, quite frankly.

So we've had that discussion. A couple of points I want to make. That sub two is a committee where we do budgeting stuff, and unfortunately, where there's a lot of policy comes through our trailer bills. And so I think it's unfortunate that we don't have policy hearings for these huge decisions that the Legislature is making. And it's done through trailer bills, which is doing policy that really needs to be bedded out in the open.

So I want to just go on record saying that, first of all, this will be one of the instances where I actually want to say that your comments on the NVBT and the $8 billion that's going to be cost shifted is I think you're doing the right thing here. I think we need to look at these community solar projects and make sure that we aren't hurting again, folks that can't participate and subsidizing the program.

And the second point I want to say is that there was a letter sent to you by a whole bunch of legislators that signed from the California Community Solar Association on doing exactly what you're pushing back on. So I want to say it's unfortunate that legislators are weighing in and this secret, we need to have a policy hearing to weigh in on it.

So for those reasons, I want to say that I think I'm supporting you in the fact that this should be a policy discussion and we shouldn't do it on the backs of non folks who can't participate in the program. According to my math, that $8.1 billion over 25 years is $64 billion that would be cost shifted to somewhere else.

Whether it is, some of the proposals are that we should take the money out of the Greenhouse Gas Reduction Fund or we're going to draw down on federal programs. But at the end of the day, it's still somebody else paying for a subsidy that somebody else is receiving. And so, Mr. Chairman, it's unfortunate that I'm not going to be able to stay too much longer.

But I want to just let for the record, folks know that I'm going to be watching this solar, and I'm going to be commenting when these trailer bills come through that the policies we make are driving up. Your estimates are three times the cost of electricity. And I am hearing every day from folks in my district, and not even folks outside of my district that can't afford their electricity rate in California.

At the same time, we're going to have to increase generation by almost three to do all the things we're trying to do to get out of our, off of fossil fuels and natural gas and all those things. So this is an area where we really need to drill down and figure out who's paying the bill at the end of the day.

Because every time that we do a program where we give tax credit, tax credits, or we take money from greenhouse gas reduction fund or somewhere and cost shift it, somebody's paying the bill. And in the past, it's been those who couldn't afford to put on rooftop solar. So I want to commend you for realizing, and the CPUC realizing what we did in the past did hurt some folks, and we don't want to do that again. So I'll be watching this as the process goes.

I'll also be again advocating that we do. Mr. Chairman, a real policy hearing instead of a budget hearing, where we do what we're doing now is doing policy through budgeting. And I think that's unfortunate. We need to have all the players at the table. That includes solar, low income groups, turn all them at the table.

When we talk about the long term effects of what we're doing for these huge solar projects that are out there that are going to cost shift to either people who can't afford it, or the G draft fund or federal funds, which is all of us at the end of the day. So thank you.

Understood.

Thank you, Senator Dahle, and appreciate the comments. Sometimes we agree, sometimes we disagree. We disagree on this one. I did want to give you a chance to speak because I know there's some time constraints. And again, just to clarify, this is an informational hearing that is pertinent to a bill that we passed last year under great, with lots of discussion and a budget appropriation that we made last year. And I think the kind of underlying issue, and we'll have a chance to discuss it more later.

Understand you to head out, but to me this really, it is timely, obviously, given we're in the comment period right now. So consider this, some of our public comments, and many of my colleagues are very concerned about this as well, and certainly as I think we'll bear out with the questions, believe that any notion of the cost shift here is a mischaracterization of the program and sort of some of the underlying calculations. So we'd love to get into that.

And again, with respect, have a series of questions on this. So why does a post decision find that the net value billing tariff proposal, that under it, the community solar projects should be considered wholesale facilities?

Okay, apologies. Yeah, so the proposed decision finds that the net value billing tariff proposal from stakeholders depicts wholesale procurement as compared to what we call retail net energy metering. And this is for the following reasons. So first, the lack of a true up period to identify net surplus generation. Two, the practice of banking credits for surplus energy in lieu of providing net surplus energy compensation. And three, the absence of a geographic proximity between the generation and the subscriber load. These projects aren't on the customer's roof.

The structure of the net value billing tariff proposals represent a departure from a federal energy regulatory FERC President in the context of net energy metering. So the proposal as put forth by these advocates sought to calculate the tariff using the avoided cost calculator that the California Public Utilities Commission adopted for behind the meter storage, behind the meter storage and solar the avoided cost calculator compensates rooftop solar customers for avoided costs associated with behind the meter resources.

For example, on a customer's roof, customers are compensated for avoided transmission, distribution and capacity costs because you're not transporting that electricity to the customer. The net value billing tariff, as put forward by these stakeholders would provide the avoided cost calculator for solar arrays that do not avoid any transmission or distribution costs.

Given how the advocates sought to define community, as across an investor owned utility's entire territory, not close to a customer on the roof, we could not find that these projects would actually avoid transmission or distribution costs.

So, to put this in the context, under the net value billing tariffs, use of the avoided cost calculator and the definition of community, PG&E's ratepayers would be required to compensate a 100 acre solar project built in Bakersfield that's associated with customers in Eureka for avoided transmission and distribution costs. And you can clearly see from that example, we would definitely be using transmission and distribution to be able to get that electricity from that project to those customers.

Great. Well, we'll dive into some of that rationale, but again, with respect, you are designing the program. So the absence of geographic proximity, that's something you could fix if you would like to, in designing the program. So we'll come back to that. So does the CPUC view, the community solar programs in 22 other states, including New York, Maine, Massachusetts, dissimilar to the one proposed by the net value billing tariff?

As I understand it, the net value billing tariff was designed specifically to be very similar to the existing community solar programs in other states, so that it would not raise any new concerns. Why does CPUC interpret the treatment of these community solar facilities differently than those other states?

So, yes, we really do view them as being dissimilar. So, first, the net value billing tariff may be considered similar to other states community solar programs in some ways, but it's also very different and unique in the most fundamental of ways.

And I'll be able to go into a few more details, but up front, I do want to note that other states have not adopted an avoided cost calculator like California created the net value billing tariff concept before the Commission sought to underpin the proposal with this avoided cost calculator. And that's the most fundamental component. That's very different from the other states. So this integral part of the net value billing tariff concept before the Commission, does not even exist in these other states.

And as such, the proposal for us is not really comparable to what other states have adopted. Additionally, California statute governing how we implement community solar specifies that non participants are not harmed beyond the avoided cost that governs our program.

I'm sorry, say the last part again.

So the California statute is 2316 governing how we implement this community solar program specifies that non participants are not to be harmed beyond that avoided cost. And I can go into more know, in comparison, I think you mentioned New York for. But.

Okay, so primary rationale that's different is what you're saying these states don't have.

The avoided cost calculator that California created and adopted.

Okay, we're going to get into the voided cost calculation here, so that'll be good. I do want to raise this point. So, given FERC has never asserted authority over very similar community solar programs as wholesale market participants, and in fact has explicitly declined to assert that authority, why does the CPUC think that FERC would require community solar facilities in California to be considered wholesale generators?

Yeah. So for retail generators, for example, on rooftop solar, that customer is consuming most of that electricity. For these specific projects, 100% of the electricity is going back onto the system, which makes it a wholesale product.

And we'll come back to that too. Have you considered the impact that your proposed decision could have on community solar in other states?

The decision that we're making is focused on California and California ratepayers and would be relegated to those customers that are under the CPUC's jurisdiction.

Yeah, I just want to resolve your comments. I think you're saying there's not comparable, even though I believe it was written to be very similar because they don't have an avoided cost calculator. But I believe other states actually are more favorable. Something closer to NEM. Is that the case?

So I can go into some know our staff have been working closely to understand what's been going on in other states. And so I can give a very good comparison, I think, with the New York tariff. So, unlike New York's value of distributed energy resources mechanism, the foundation of the net value billing tariff proposal from stakeholders is the use of the hourly avoided cost calculator, as I said, which was adopted only in California, and those values to calculate the retail compensation rates.

The avoided cost calculator is what we used for the net billing tariff recently adopted by the Commission at the end of 2022 and is not an accurate measure of value for the net value billing tariff proposal from stakeholders. The proposed decision finds that the net value billing tariff resources do not avoid transmission, distribution and capacity cost categories, as is in the avoided cost calculator, which would result in ratepayers paying that excess of the avoided cost.

So just like the example I gave earlier, versus having rooftop solar on a customer's building, versus having a community solar program in Bakersfield serving customers in Eureka, that electricity would have to leverage distribution system and transmission system, which has costs. Now getting back to New York, their value stack compensates projects based on energy capacity, environmental demand reduction, and locational system relief values.

Now, the net value billing tariff proposal from stakeholders compensates projects based on a mix of the CA ISO day ahead energy pricing and the avoided cost calculator based values that I talked about that California adopted specifically, which includes capacity, transmission and distribution, and environmental values.

So in addition to that, the New York program offers three alternatives for capacity payments based on two options for energy payments during a peak period, as well as a third option for a monthly contract based on a kilowatt per hour quantity of capacity, which is not in the net value billing tariff proposal from stakeholders. And I think something that's really key there is you have to look at what California's peak hours are.

So for California, our peak hours are between 4:00 and 9:00 p.m. That's when solar is coming off of the system. That's when we have the most costs versus looking at New York, which is a state that has far less solar than California.

Their peak starts at 8:00 p.m. I mean, starts at 8:00 a.m. And it goes into those daytime hours, which means that solar has a much larger value to New York at this point because they don't have as much solar on their system as in California. So those are really some key differences between the New York proposal versus what was in the net value billing tariff proposal from stakeholders.

I'm happy to look at that. I'm sure some people in public comment will comment. People who know the New York program better, I believe will have comments. But just regarding your earlier point, about 100% going back to the grid, the point of community solar is to go to the subscribers, right? That subscribe. So I would argue with that formulation. And again, if the CPUC, you design the program. So if you want to oppose geographic proximity, you could do that, right?

So then to say that it doesn't have that and therefore everything's going to the grid is sort of a straw man. I believe that was set up by the CPUC. So I do want to get into a few things here. You mentioned the avoided cost calculator and then the PERPA based avoided cost methodology. So do you agree that PERPA uses a narrow definition of avoided cost? Right. You mentioned that avoided cost calculator is based on a wider range of benefits, correct.

For distributed resources, avoided energy, avoided capacity, avoided transmission, distribution, investments and environmental benefits. Correct? Okay. And purple uses the narrow definition. Correct?

What do you mean by a narrower definition?

The avoided cost methodology. So the purpose avoided cost rate is set on the utility's avoided cost of energy that they could otherwise buy elsewhere. Correct.

Only for generation, for the generation component versus the avoided cost calculator is also showing the avoided cost.

But for generation, the rate is set based on the utility's avoided cost of energy you could buy elsewhere. Correct?

For purpose, for generation, yeah.

And then the voided cost calculator generally, is this wider range of benefits? Correct?

Wider range of avoided costs, including transmission and distribution. Because if the project is on the roof of top of the customer, you're not having to pay the cost of transmitting that across distribution system and transmission system.

Right. But setting aside community solar for a moment, do you agree that avoided cost calculator accurately calculates the benefits of distributed resources based on a wider range, a wide range of avoided costs?

Well, for example, rooftop solar, that is connected to the customer's building. Yes.

Right. But the voted cost calculator for distributed resources, you believe accurately, for rooftop calculator, yes. Okay. And that purpose has a narrower definition. So AB 2316 requires the CPUC to provide bill credits to subscribers of community solar, I'm quoting here, based on the avoided cost of the program's facilities, as determined by the CPUC's methods for calculating the, and again, I'm quoting here, full set of benefits of distributed energy resources. So that pretty obviously refers to the broader avoided cash calculator approach to avoided cost. Does that?

So what that means is that if a project is, for example, on the rooftop of a customer, it's avoiding the cost of transmission and distribution and has that added value. A community solar project is not required to be connected to a customer. And so as such, you are having to pay for costs of transmission and distribution. And that's why you have to leverage.

I get it. But for respect, I'm reading from the bill itself. The bill requires the CPUC to use the full set of benefits of distributed energy resources, which we just went through.

Exactly. So for community solar, it doesn't have the benefit of not using transmission and distribution.

That's not the point. The bill language says that use the full set of benefits of distributed energy resources. So I think that pretty obviously refers to the voided cost calculated approach. So you are using a narrower approach, in your opinion. You're using a narrower approach. But the bill very clearly says that we will use the full set of benefits of distributed energy resources. And we discussed the fact that no other state, not even FERC itself, has viewed community solar projects as wholesale generators governed by PERPA.

So I just want to make that very clear for the record. So, so again, I mean, I mean, do you not agree that 2316 indicates Legislature expected the CPUC to value the energy produced according to the voided cost calculator, given what I just read.

I don't because there are different types of distributed energy resources. So, for example, the one I gave of rooftop solar on a customer site has a different value than a distributed energy resource that is located somewhere on the distribution system that might be very far from a customer.

Okay, we're going to disagree here because I just read exactly what the Bill says, and I believe the CPUC should take that into account. The language of the bill. Just also referring to your previous point around peak periods, I believe that's an irrelevant argument because of what a cost calculator does take into account higher values for energy during the peak period.

And again, I just want to be on the record that this whole notion of a cost shift is based on assuming that wholesale prices are the correct valuation for community solar energy. But if the energy should be valued according to voided cost calculator, then the whole cost shift disappears. And this is really important because obviously people are very concerned about rates.

So I think it's irresponsible to throw out something saying $8 billion based on the way you choose to calculate it versus the way that 22 other states have been calculating it. And it's a big problem. I think it ties into very destructive and harmful narrative. Okay, let me just see where we are with some other questions here.

So, under the CPUC's measures for DER cost effectiveness, the NVBT scores better than any other community renewable program administered by the CPUC, scoring a total resource cost value between 1.2 and 1.45. Anything over one, as you know, implies the program will result in addition of resources that are cost effective for the system and a ratepayer impact measure of between 0.81 and 0.92. Yet the proposed decision found that there would be a significant cost shift to non subscribing ratepayers. What's the discrepancy there?

Discrepancy between what and what?

That the MPC scores better than any other community renewables program administered by the CPUC. But you're saying there's going to be this somehow a big cost shift?

Yes. Yeah, I can answer that question. So, looking at how maybe different resources score is not the same as actually valuing them for customers, which is why this decision needed to look specifically at this resource and what it's providing. And so through the proposed decision, the program that's set up there, we're looking very specific at community solar, not just ranking it against other distributed energy resources, but looking specifically at the value that it's able to provide customers, which is why the new program was created.

And then, in addition to that, making sure that it was designed in a way to leverage the $33 million from the legislature in order to be able to provide that added discount for low income customers that are subscribing to the program without shifting additional costs to other customers, given all of the affordability issues we're seeing with bills.

Well, again, I believe that what I just pointed out, as well as some of the other discussion, means that the cost shift undercuts the whole cost shift argument. Let's move on. The state already has a program similar to what is proposed by the proposed decision for community solar, the renewable market adjusting tariff, or remat, which is aimed at supporting small scale renewable energy facilities that sell into wholesale markets. Has this been a successful program that has helped to scale up community solar?

So I'm happy to talk a little bit more about the remap program or the renewable market adjusting tariff. So, since the rematch program's inception, which was in 2013, the investor owned utilities have procured contracts for 62 small renewable projects for a total of over 95 MW in capacity. In December of 2017, new procurement under that program was suspended and the program did not resume until October of 2020. So there has been a gap.

As such, there has been no additional procurement under REMAP between 2018 and 2020 in recent years, from 2021 to 2023, there have been an additional eight REMAP projects that have been procured for a total of 15.5 MW of capacity. The mechanism. And so through that program, we have seen some additional procurement in the more recent years.

But since the seven years that it was amended to align with PERPA, how many projects have been developed under this program?

I think that it's really important to look at this program among kind of what we call a constellation of solar programs, many, many diverse solar programs that California administers in order to increase solar for the state. So, of course, in response to this legislation, the CPUC has found that the Green Tariff and disadvantaged communities Green tariff program has shown initial success. And we'll be extending that program. But we can't look at the REMAP program in a vacuum.

It's very important to also look at the disadvantaged communities Green tariff program. And from that program, over 23,000 customers have been enrolled with 23 projects launched or that have contracts to date with approximately 140 MW total available capacity. You also have to look at the Green tariff program, which has resulted in 153 MW in purpose built solar to be constructed in California. And then you also have to look at, of course, the new program that we're creating, the Community renewable energy program.

So, again, the REMAP program is a program, but there are many programs to support solar in California, and it's important to see how they all fit together in order to get the big picture.

Okay. Well, since this proposed decision really sets a program that is similar to REMAP, I'll answer my own question, which is that in the last seven years, since it was amended to align with PERPA, there have been four projects for a total of 10 MW solar and no storage. So, given that history, I just was skeptical this would be a successful model for encouraging the development of community solar going forward.

I think it shows that this model provides insufficient compensation for small scale renewables to make it economically viable, even before the additional requirement for community solar projects to share revenue with subscribers. Would you agree that this is evidence that that model does not provide sufficient compensation? There's only been four projects in seven years under that model.

I mean, the REMAP program is not specifically aligned with this program. It doesn't have, for example, additional funding mechanisms that are built into the program, like the $33 million from the legislature or the additional federal dollars that will be coming in. So I think those are some fundamental differences for this newly constructed program.

Again, that's in the proposed decision that we're still going to get stakeholder comments on but I think those additional funding streams that have been designed to directly feed into this program are going to be a key part for supporting the program, which the REMAP program doesn't have.

Well, I think you'll get some additional comments here today as well. And again, to me, this shows that there's just not going to be sufficient compensation. The pro decision acknowledges that compensation under pros program may. In fact, the decision actually acknowledges that it may be insufficient, quote, insufficient to create and grow interest in community renewable energy program projects and points towards a $33 million budget allocation appropriated to the commission for solar storage to make up the difference. Is that correct?

That's correct.

So could you please grab how the $33 million would be used to support a community solar market?

So when we were creating this program, we were in the fortunate situation of having that $33 million in order to make sure that the program was supported without increasing customer bills. So the proposed decision sets up that structure for collecting multiple funding streams, as I mentioned before, and distributing them to distinct beneficiaries. So project developers, of course, but low income customers and market rate customers. However, at this time, it is somewhat uncertain what quantity of non ratepayer funds will ultimately be available.

So, for example, the solar for all funding announcement has not been issued yet, but we do have the $33 million from the budget. So given that uncertainty, the proposed decision also notes that the proceeding will remain open to take further comment from stakeholders regarding additional funding streams that may or may not become available. And a key question that we'll be requesting stakeholder feedback on is how to best structure incentives for subscribing customers and how to allocate non ratepayer funding among the various recipients.

The Commission anticipates issuing a ruling in April requesting that further feedback with a final decision over the summer. We suspect that the timing is going to fit well with the award notices for the outstanding funding from the solar for all program.

So the budget appropriation tells the CPUC to spend the funds on community solar and storage backed renewable generation programs. But the proposed decision's proposal does not, number one, require storage. Two, provides no storage incentives. Three, no REMAP projects, as I just mentioned to date, have been paired with storage. So how would projects under this program even be eligible for the $33 million?

So the $33 million did not require that storage was there. But in addition to that, we're going to have a ruling coming out in April in order to be able to look at these additional opportunities for projects.

Look forward to seeing that the budget allows CPUC to spend the $33 million on the SGIP program, disadvantaged community single family solar homes DAC sash program, and the utility's existing share renewable program. So will the CPC spend the $33 million just for the proposed decisions, proposed programs, or will those other programs be eligible to receive those funds as well?

At this point, we do really want to focus the dollars from that $33 million on the community solar program. We do have other General Fund Dollars that have been able to help support battery storage from the S chip program. And we have a proposed decision on the agenda today, right now actually to implement that additional funding from the legislature. But at this time, the $33 million, we're really trying to focus it on community solar to help support this program.

Okay, so the other programs would be eligible, but you would.

We're focusing it on community solar.

believe that they should focus on community solar. Yeah I just want to note, I've seen estimates that a three megawatt solar plus battery storage system could cost somewhere in the range of $12 million to $15 million to build. Even if the full $33 million were used to provide community renewable energy grants, it does not sound like that money could lead to any meaningful scale of project development.

So just want to note that for the record, just I think kind of further points to some flawed thinking and how this has been considered. And again urge you to reconsider the proposed decision. Also notes the EPA's solar for all grant competition. Could you please describe that grant funding and how it would be used to support community solar?

Yes. So as I had mentioned earlier, the CPUC in particular the proposal that's before the Commission, is well positioned to compete for federal dollars, including the EPA solar for all grant. The proposed decision will provide a conduit for using these federal dollars to fund solar programs in California via the new program, and that the proposed decision would create. The proposed decision is complementary to our efforts, but it does not necessarily have to be operational in order for California to qualify for these federal funds.

So California has many solar programs and the solar programs in the EPA solar for all solicitation are very broad beyond community solar. But again, the application that the state put forward is focused on community solar in order to help support this program.

But we will be competing with other states for limited pool of solar for all funding. So do you believe that the proposed decisions, proposed community renewable energy program puts California, do you believe it puts California in a strong position to win?

I think it does.

From this funding?

I think it does. I think if we had, for example, only left the existing programs, perhaps there would have been a concern. But this proposed decision created a program specifically to be able to pull in these additional funds and make sure that they could be leveraged, which I think makes us uniquely situated to garner solar for all funds.

Well, I appreciate your optimism on that score. I know many people don't share that optimism and are concerned that this could cost our state hundreds of millions of dollars in community solar, because it's a very specific community solar program. And I'll note that one of the EPA's scoring criteria for solar for all is scalability, where a state needs to show has a robust policy framework in place that can support a market after a five year funding period.

So I'm certainly concerned, and I think we should be concerned as a state, that the proposed program, which would require significant grant funding to be economically viable, will make California less attractive for competitive solar for all funding. So I do appreciate, again, with great respect for the variety of programs that CPUC and you yourself administer and have been here in front of us on many programs, and I appreciate your engagement. I'm still concerned.

I just want to note for the record, many of my colleagues are very concerned about this proposed decision. And I strongly suggest the CPUC reconsider this proposed decision before taking it up for a vote. Community solar is extended to expand the benefits of solar to a broader set of customers, particularly those in disadvantaged communities. And this is an area where California has trailed the rest of the nation. Clearly, nobody would dispute that.

And this proposed decision creates a community solar program that many stakeholders view as not viable nor sustainable, which would severely limit the reach of community solar projects. Also, as we just discussed, troubled by the potential impact this proposed decision has on the state's ability to compete for solar for all funding. This is a once in a generation opportunity. Expand community to all for community solar to its highest potential. And I think clearly we are missing the mark.

And I just want to say in a lot of your remarks, you keep saying over and over, this energy would be sent to the grid. But that is only true if the load in the area of that generation is insufficient to consume that generation. Right. Community solar is really meant, and we've seen other places to be in a local community. So if we're citing the generation closer to load, even if it's not specifically on a customer rooftop, then that generation is avoided transmission.

That's why it's called community solar. And yes, if it was in some far prolonged area, then it might not be. But you can address that. The PUC has that power. So our Subcommitee will continue to provide oversight over the CPUC's budget over the next several months. And I just want to make it very clear that community solar is a high priority and we will continue to keep the CPUC accountable on this issue, especially as it relates to the state's ability to maximize state and federal funds.

So I appreciate it. I know, again, some of my colleagues who couldn't be here wanted me to raise this issue as well. I appreciate you coming before us and again, answering all these questions. And with that, I'm going to turn to some public comment on this issue. Okay, great. We'll now take public comment specifically on issue number one. If you could please limit your comments to one to two minutes, and you can, anyone can go ahead and ready.

Good morning. It's gone. It's good. Okay. Good morning. Steve Campbell, Regulatory Director, Vote Solar thank you Senator Becker and Senator Dahl, Committee Members, for the opportunity to provide comment today. Vote solar stands with everyone here and many at home calling for the CPUC to fix what appears to be a huge mistake. First and foremost, the scale of the netbelling billing tariff is far greater than the scale of the community renewables program, the PD.

This is a good thing and a primary reason why vote solar supported the NVBT in the first place. Perhaps the best part of the tariff is its ability to deliver 100% carbon free bill savings to a million or more income qualified customers, with this legislature intending for 51% of each project's capacity to primarily benefit homes and businesses that have been unable to access solar to date.

Regarding affordability concerns, one thing is clear, it will be difficult to arrive at affordability if the commission continues to issue decisions that prevent customers from accessing tariffs and programs that reduce their bills. The commission is considering a lot of novel utility ratemaking these days. Electrification rates default dynamic rates, IGFCs, subscription pricing, all this activities to support homes and businesses fuel, switch and electrify. But if it takes some households a decade or more to electrify, many of the benefits will not flow toward those households.

Community solar and storage is a helpful equalizer. Bill Savings clean power, fewer barriers the net valling billing tariff has the potential to yield more than eight gigawatts of solar and storage resources, directly improving grid reliability by lessening a load serving entity's resource adequacy requirements to further firm up reliability and dependability, as Senator Becker noted. Thank you. Locational setting requirements could be used. These setting requirements were acknowledged by the Commission as being useful in the PD and then not adopted for no reason given at this point.

There are still multiple modifications the commission could adopt to deploy community solar and storage resources to assist the state abate power plant emissions. Every hour that a power plant emits hazardous pollutants presents a new opportunity for the state to do something about it. Regrettably, this PD does not do something about it. Thankfully, the commission still has time to adopt a modified NVBT, and we're calling on them to do that. Thank you.

Thankfully does. Thank you.

Good morning chair and Members of the Committee. My name is Alexis. I'm here representing the California Environmental Justice Alliance, or CEJA. CEJA represents low income communities and communities of color who are suffering the worst impacts of fossil fuel pollution and have the most to gain from access to more clean, reliable and affordable energy. Local clean energy in our communities means less fossil fuel pollution by retiring our gas plants sooner. That means cleaner air, healthier lungs and less hospital visits for our families.

California should be supporting the rapid and robust growth of solar and storage in our communities. Putting more solar and storage on roofs, parking lots or industrial buildings means less harms to the environment and to the land and less unnecessary infrastructure buildout. In other words, this new distributed energy would avoid transmission and distribution costs. And contrary to what the commission shared earlier, solar on rooftops is not the only way to avoid costs from very large transmission and utility scale projects.

In other words, solar on a nearby parking lot would also reach nearby customers and have them use less energy from the bulk system. In reducing those costs, community solar projects can pass on those savings to community members who have long not had access to solar savings and get direct credits off their utility bills. This will also bring more local workforce opportunities and good paying jobs. Community solar is a win win, and it should be treated as a vital tool in our state's clean energy toolkit.

Over 20 other states have community solar programs up and running, and our state is far behind. For the last several years, a broad coalition of environmental justice, solar ratepayer and labor advocates have been championing the net value billing tariff proposal and recognize that it has our best chance to scale community solar and storage projects in California.

Our coalition is confident that this NVBT will get us to build community solar at the scale and pace necessary to get California off of polluting gas plants that are currently making our families sick. Unfortunately, the commission's recent proposed decision rejects the NVBT and proposes a different program that relies on methods that have a proven track record of failure. This would cripple chances for community solar in California, but it's not too late to correct course.

We urge the Commission to reconsider the proposed decision and to issue an alternate that can get us on track to lead the nation on community solar and be a champion for solar equity and environmental justice. Thank you.

Thank you.

Good morning, Mr. Chairman, my name is Diana Cassidy. I'm with Third Act Sacramento. We're a group of activists over 60 who are deeply committed to addressing the climate crisis and the environmental injustices associated with that. We have about 7000 members throughout the state and 40,000 nationally. I'm here to speak on the Public Utilities Commission's proposed decision in a 2205022 regarding community solar. I'm asking the Commission to please revisit this issue and issue an alternative proposed decision that adopts the net value billing tariff, or NVBT.

The NVBT proposal is supported by a broad coalition of environmental, solar rate payer and labor advocates and could help us meet our environmental and climate goals. Environmental and solar equity advocates strongly support the net value billing tariff proposal because it's the best opportunity California has to meet the requirements of AB 20316 and quickly deploy clean energy and storage projects that can be called on when the grid meets them most.

Furthermore, low income and environmental justice communities have long faced the disproportionate impacts of air pollution, wildfires, power outages, economic insecurity and other climate threats. Meanwhile, these same communities have been locked out of accessing clean and distributed energy and its many economic, health and resilience benefits. California is already behind on our clean energy and electricity reliability goals. We must move faster on real solutions that are clean and justice oriented. Thank you.

Thank you, Mr. Chair, for having us today. I'm Derek Chernow with the Coalition for Community Solar Access. A number of important studies and reports have come out over the last few weeks. One, from the National Renewable Energy Lab, or NREL, said that at its full capacity, the national potential for community Solar is one terawatt serving over 53 million households.

In addition, the Department of Energy came out with a report or updated guidelines saying by 2025 they want 20 gigawatts of community solar serving 5 million households, resulting in over $1.0 billion of savings to subscribers to occur. However, based on this proposed decision, Wood McKinsey, which is a leading consultancy firm in this arena, revised their complete outlook on the community solar market. California was expected to make up 19% of the national five year outlook for community solar.

Now, based solely on this proposed decision, that outlook has been revised where California is going to be producing less than 2% of the national outlook. That's a dramatic shift. Simply put, we cannot get to our national community solar goals without California and California cannot get there with this proposed decision, however, it is time to make it right. We do have the net value billing tariff that has been proposed and as others have said, widely supported by the building industry, labor, environmental justice ratepayer advocates.

We can move forward and get this correct and we encourage the PUC to do so. Thank you.

We can indeed. Thank you.

Good morning, Mr. Chair Members. Brian White on behalf of Cypress Creek Renewables, we are a community solar and storage developer based in Santa Monica. As noted in the Committee's analysis, California has a long history of the community solar program.

Unfortunately, it's been a failed effort over the last 10 years, which is why Cypress Creek believes that the net value building tariff proposal meets the intent of AB 20316 as it seeks to improve the state's community solar program while also benefiting customers who have never had access to solar. In addition to the added benefit that we must not forget is union labor jobs associated with this?

We're highly concerned with the ALJ's decision, proposed decision and believe the commission, if it adopts it, the state will continue to have an inefficient community solar program that will not help meet our energy reliability goals or our climate change goals. Must note that community solar is not rooftop solar and I think folks get that confused. It's not wholesale solar at all. It's not even regulated by FERC.

To that end, we think there has been significant confusion and assuming that community solar projects have the same characteristics as the aforementioned projects and they're really just mid sized distributed energy resources that are closer to load. So it's essential that we allow for local communities and local residents to access this solar just as well off homeowners are able to do with rooftop. It was designed, AB 2316 was designed to develop an updated community solar program.

We heard from the CPUC that while the AB 2316 they went through the process, they did not believe it was beneficial to use the ACC. We actually disagree with that. AB 2316 actually informs that the CPUC should use the ACC, which the Commission did use for the net metering update in 3.0. So it's a little bit perplexing.

While it's not being used for the community solar program, we also want to note that the $8 billion cost shift that was mentioned, we do not agree with that. We think it's a false choice between comparing the net value billing tariff to those projects that are regulated by PERPA or as wholesale facilities. Those two just aren't the same, so they can't treat them the same and the bottom line is that we cannot afford to lose this opportunity.

We have potential to make California a leader in community solar, but we won't do it at the risk of creating a bad program. It just won't pencil out for community solar developers. So, respectfully, Mr. Chair, we appreciate you getting involved in this process and hope the Legislature does as well. We'll stay involved with the CPUC, with the Administration. We'll talk until we get this right. But we have time to do it and let's make sure we get it right. So thank you.

Thank you very much.

Good morning, Mr. Chair, Members of the Committee. My name is Adam Hotafi. I'm here on behalf of Arcadia, the largest subscription manager in the community solar industry. Thank you for taking up the issue of CPUC's compliance with AB 2316 today. I just want to echo the comments that were given on the NVBT and the nature of the PD. We do believe that the proposed decision goes directly against the legislative mandate in AB 20316.

The adoption of the PD's PERPA avoided cost proposal will not lead to a functional program that helps reduce burdensome electric bills. This is a budget issue because it will fail Californians who need an alternative to rooftop solar and California will miss out on federal funds. We intend to file comments to that effect in the docket asking the PUC to set aside this PD and reopen the record.

We hope that the legislature holds the commission to its legal obligations created by AB 2316 and would like to echo your comments around the straw man nature of the argument around the program construction. Thank you.

Thank you

Mr. Chair, Danny offer for dimension energy and just wanted to echo the comments of Mr. Chernow and Mr. White and urge a pause on this proposed decision. Thank you.

Thank you

Mr. Chair, I'm the CEO of Renewable America. We are headquartered in Santa Clara City and we have started our company about five years ago focusing on community scale solar. And today we have very little options. So we have about 20 megawatt. That's going to be income online this year mainly by community choice aggregators. But the huge opportunity of our pipeline is 20 times bigger than that and we can deploy a lot of energy storage. That is highly need for California.

And this community solar program with the NVPT is the solution. We all share your concerns that you just pointed out with the avoided cost calculator. It seems it cannot work out. It's the same thing that we have with remit and the last seven years exactly shows the result of that with the low income they need badly. This community solar. It's going to create a good avenue for them to participate.

And we will have very little upgrade costs because on all the distribution lines today there is a lot of capacity left out, which we have been seen in the last five years through all the projects that we are having under development. And that's the opportunity where we are leaving out the growth potential to not have more upgrade costs on distribution and transmission lines and use existing capacity to deploy that. So thank you for everything you're doing.

We are hope to be considering that proposed decision and there will be the path for NVPT.

Thank you.

Chairman Becker, thank you for your time today. Delaney Hunter, on behalf of the Solar Energy Industries Association, we're the national trade group for solar and represent one of everything across the market segment. I want to echo the comments of our colleagues at CCSA and our member companies and let you know that obviously this PD misses the market.

It will not drive new investment, it will not drive savings for customers, and it'll leave federal dollars and frankly state dollars unused to realize our clean energy and climate reduction goals. We know what we need. We need enormous amounts of new renewables on the system by 2030 and 2035 to miss community solar is such an opportunity missed that we won't actually meet our goals if we can't sort of tap every angle of the market, most importantly in the community space.

We also are really, really worried that this PD is sending rippling effects across the country. The rest of the country is paying attention to California, sometimes for the good and sometimes for the bad. This is the bad. Let me just tell you as a rep for a national trade group, the number of calls we've gotten about what the heck California is doing is enormous. We've got to fix this. We've got to fix it now. And we have time to do so.

One for California, but two for the viability of community solar across the country and the way that we're going to as a country determine how to fight climate. Thank you for your time and attention. We really appreciate you bringing this issue forward and hopefully we can get it right.

Thank you.

Good morning, Mr. Chair. Ignacio Hernandez on behalf of turn, the Utility Reform Network, I want to thank you for the discussion today and for the questions that was right on point with our view. Turn believes the proposed decision is inconsistent with the plain language and clear intent of AB 2316. We do urge the rejection of the proposed decision, and we do support the adoption of a proposed net value billing tariff, which we believe would provide bill reductions to subscribers at least 51% of which would be low income customers.

And of course, as was discussed today, will accelerate the deployment of new distributed renewable energy and energy storage projects in California, which we really need turn will be filing comments on Monday asking for the rejection of the proposed decision and adoption of the net value billing tariff with some modifications. We're happy to share that with the chair and with the Committee at least a summary and or the filing.

We also believe that the proposed decision is not only inconsistent with 2316 but we also believe it provides insufficient certainty to project developers. It will not result in material subscriber bill savings and because of that will likely to fail. So we do urge everyone to take appropriate action at this time regarding the decision.

Thank you. I look forward to seeing those comments.

Good morning. Elise Von Rick on behalf of Environmental Defense Fund and EDF supported AB 2316 which was passed to expand access to renters and low income Californians who have been unable to participate in distributed energy resources. But the proposed decision from the CPUC falls short of this mandate and the commission should reject the proposed decision and instead ensure that cost effective community solar is as accessible as the legislation intended.

Community solar and storage can also unlock additional land use opportunities that wholesale projects would otherwise render unable to access for the state. And finally, we agree with the chair that the current proposed program undermines the state's competitive advantage for federal funding. So would ask that the CPUC take the time to adopt a financeable and scalable program that aligns with the solar for all funding opportunities. Thank you. Thank you.

Good morning Chair Becker and staff Isabela Gonzalez with The Nature Conservancy TNC simply wants to reiterate our support for the net value billing tariff and we support the staff recommendation to hold the issue and issue an alternative. Thank you.

Thank you.

Good morning. Nico Molina on behalf of the NRDC Action Fund regarding community solar. NRDC has a strong interest in the state adopting a new community renewables program that would lead to new solar and storage projects, improve grid reliability, lead to robust participation and meaningful bill savings for low income and disadvantaged communities, and do so in a way that minimizes any cost shift.

NRDC believes that the only proposal under consideration that would have accomplished all these goals is the net value billing tariff, which the Commission's proposed decision unfortunately rejects. We urge reconsideration of this issue and adopt the net value billing tariff as the basis of a new community renewable program. Thank you.

Thank you.

Good morning, Chair. Charles Watson on behalf of Volta Energy, a developer of community solar projects across the country and headquartered here in California, echoing many of the previous comments, under the current proposed decision, we would not be able to feasibly develop projects in California if adopted. And we strongly urge the CPC to further refine and adopt the net value building tariff. Thank you.

Thank you.

Hello, my name is Meg Snyder and I'm here on behalf of the California Building Industry Association with concerns about the community solar proposed decision. Every three years, the California Energy Commission updates our building code. And in 2019, the Energy Commission required and the building industry supported our solar mandate for all new residential construction three stories or less to have solar. As you may know, most multifamily buildings simply don't have enough roof space to support the systems needed and required by these CEC standards.

Multifamily construction, as you know, is critical for our housing needs. And so we'd like to see a net value billing tariff and a viable community solar program that supports a title 24 compliance option for builders of multifamily projects to bring us closer toward our renewable energy and our housing needs. Thank you.

Thank you.

Good morning chair. My name is Armin Garcia. I'm here on behalf of CNN Incorporated. We're a California benefit corporation focused on developing community solar and storage power plants in low to medium income communities, specifically the California Central Valley. We are one of the two Department of Energy funded California startups tasked with making the community solar vision a reality in our state. Many of my peers here today are reinforcing how the Commission's proposed decision misses the mark on the basic tenets of community solar.

I am no different. However, let me illustrate our experience. For almost a year, we've been collaborating with the city of fireball to develop the fireball clean energy complex. The city itself ranks at the highest levels of pollution and vulnerability on both state and federal indices. Unemployment level is at a whopping 15%. During my time visiting fireball, I've had the pleasure of meeting extraordinary people and extenuating circumstances. Take for example, Maria Chui, who served my meal at the local burger joint.

She's a hardworking woman living the American dream. Her husband works in the produce processing center. Her kids join her at a workplace after school. The family lives in the RV at the trailer park. Last summer, their electric bills were over $500 a month. Maria Chui was at a loss. She faced a simple reality of foregoing their air conditioning because their dual income wasn't enough to cover their electric Bill while the weather outside was scorching.

This reality was shared by many of the residents we met while distributing food. The energy burden in these areas is as high as 9%, whereas the state average is 2%. As a developer and as an engineer, I'm blessed with the talent to solve problems, whether it's figuring out how to design a solar power plant in a flood zone to figuring out how to finance these projects.

From the onset of the proposed decision, we openly embrace the direction, only to clearly discover that an impact analysis does not inform the decision. Take for example, one of the proposed sites for the fiber clean energy complex is a cap landfill adjacent to the San Joaquin river. The site itself is within the city limits. Yet a purple like tariff must not compel us to Fund a non existent transmission line. I can appreciate the legal argument leading to a purple foundation.

I am perplexed as to the innovation and heavy handedness of such arguments in light of the broad interpretations across federal and state energy regulatory entities. Second point of contention is the second significant delay in time. Federal incentives have been in place for well over one year and are being exhausted without any opportunity to be considered. The powering affordable clean energy program is officially closed and the low income communities bonus is fully subscribed to.

Every grant dollar, every interest rate point, and every tax credit significantly impacts the opportunity to develop community solar for our LMI communities. The vision set forth by EB 2316 is clearance request. CN is not confident the proposed decision fulfills such vision, much less so in a timing manner. CN further requests the net value billing tariff be reconsidered as a prevailing decision. Thank you.

Thank you. And I thank everyone who gave a public comment on this issue. And I think we heard a lot about. So not to repeat ourselves too much, but this is community solar is maybe closer to load as people mentioned. That is the point. We heard concerns about undermining our ability to get federal dollars. We heard of the chilling effect nationally along with other concerns. So I appreciate everyone who weighed in. We're going to take a brief recess before we go to the next issue.

All right. Thank you, everyone for that quick recess. We're going to move on to issue number two, cap and trade spending plan, and we'd love to hear from the Department of Finance first who will present the governor's proposal. When you're ready. Go ahead.

All right. Good morning, Chair Becker. Brandon Merritt with the Department of Finance. I'm here today to present the cap‑and‑trade expenditure plan as proposed in the 24-25 Governor's Budget. This plan primarily uses the Greenhouse Gas Reduction Fund, or GGRF, to protect many previously General funded priority climate investments. Specifically, the plan shifts a total of 1.8 billion in eligible General Fund climate program spending to GGRF, including 557,000,000 in current year funding proposed as early action and 1.2 billion in 24-25 across various climate programs.

In addition to the proposed fund shifts, the plan incorporates appropriations that were previously agreed to last year with the Legislature, which includes 250,000,000 for AB 617 and 230,000,000 for the Zero Mission Transit Capital Program. The Administration can accomplish this spending plan by utilizing updated revenue projections for BY budget year higher than anticipated auction proceeds in the current year and delaying 600 million for multiple planned ZEV program investments.

The delays for ZEV programs- the ZEV program shifts planned investments from 24-25 to 27-28 to enable other priority climate programs to be shifted onto GGRF in 24-25. The Administration remains committed to supporting Californians access to cleaner transportation options and to protect critical investments associated with the transition to zero emission vehicles.

As part of identifying ZEV package solutions, the Administration focused on balancing and maintaining previous investments associated with building out critical infrastructure to further support the state's growing ZEV network while also addressing the projected budget shortfall. One of the key tenets of this budget is keeping our commitments to the extent possible, and how we are able to keep some of our commitments on various climate programs is by shifting them to GGRF.

The Administration looked at what general funded climate programs still have funding available that most align with the administration's priorities, including supporting equity, meeting GGRF goals, and that have also been previously funded out of GGRF. The mix of programs that are proposed to be shifted to GGRF meet these considerations. Thank you, and I'm happy to take further questions as we continue this discussion on the 2024-25 cap‑and‑trade expenditure plan.

Thank you. We'd love to hear from the LAO.

Thank you. Sarah Cornett with the Legislative Analyst Office. So, as we heard from the Department of Finance, the Governor is proposing a 2.3 billion discretionary spending plan from GGRF this is mostly for fund shifts from General Fund to GGRF for climate packages, as well as 557,000,000 proposed for early action in the current year for the ZEV package. The proposal total commits 3.5 billion in out year GGRF as well primarily for the ZEB package. So the use of GGRF to achieve General Fund savings has merit.

And ultimately the Legislature can choose a different set of priorities if you have a different set of goals as compared to the Governor, the reliance on out your GGRF does make assumptions about state priorities and revenue. So that's something that we would encourage you to consider in terms of making those commitments now, as opposed to waiting until that year to determine what your highest priorities are. There is also substantial uncertainty about future revenues in GGRF.

This is due to CARB's rulemaking, which you've heard discussion about previously, as well as some uncertainty around the extension. So both of those factors could really impact the revenues that the state will be receiving in GGRF. The Legislature can also revisit the statutory appropriations. If your priorities have changed, 65% of GGRF revenues again goes to those continuous appropriations.

And then we also want to note that while the administration's estimates for revenues are more accurate than they have been in previous years, because the Administration is using a new methodology, there will still be some additional revenue available as compared to the administration's estimates. This is because the past couple of auctions have resulted in a higher yield for GGRF than the Governor expected. So, in sum, we would just encourage you to adopt a spending plan that focuses on your highest priorities and maximizes General Fund savings. Thank you.

Thank you. Okay, so you touched on this a bit for the Department of Finance, but that some of the programs chosen to backfill include energy, ZEV, wildfire, water, extreme heat. Could you touch again what is the administration's rationale picking these programs in particular to be backfilled?

The Administration looked at what general funded climate programs still have funding available that most align with the administration's priorities, including supporting equity, which ones meet GGRF goals, and which ones had previously been funded out of GGRF. The mix of programs that are proposed to be shifted to GGRF meet these considerations.

Does the Administration view GGRF as a Fund that should be focused on projects specifically related to climate mitigation, e.g. emissions reductions? Or does it extend that focus to climate adaptation and even General environmental concerns, like using GGRF for DPR, for example.

The Administration is proposing to allocate GGRF for programs that align with cap-and-trade priorities as prescribed in current law within the context of statutory obligation. The Administration then additionally considers critical areas of investment that may extend to using GGRF where it is identified as an eligible source of funds.

This could include programs such as AB 617 that align with the statutory requirements for investments in priority populations which face disproportionate harm from pollution and the climate crisis, as referenced with the proposal to use GGRF for DPR.

Sorry, DPR fits in there. In which way is what you're saying?

For the BCP that was I think you were asking about was DPR sustainable funding BCP.

You say it fits under?

Under the AB 617 area of activity.

What do we know specifically about the cost effectiveness of these programs with regards to emissions reductions? I'll note that the conservation strategy group put out a report analyzing the cost effectiveness of GGR spending, found that a small number of programs responsible for the majority of emissions and that most GGR funded programs provide emission reductions at more than $1,000 a ton, which is probably not cost effective relative to many well understood alternatives for emissions reductions.

These programs proposed to be shifted to GGRF this year are predominantly newer programs funded by GGRF for the first time in the last budget. So, for example, CEC's programs oil well plug and abandonment, extreme heat and community resilience programs. So we do not have any data on many of these newer programs and therefore cannot speak to their cost effectiveness. These agencies might have their established cost effectiveness to date, but we do not have that information.

The California Air Resources Board does release an annual cap and trade climate change investments report, which does include information on cost effectiveness for the various programs that have previously been funded out of GGRF, and we can provide the information for those programs. We would also like to note that while cost effectiveness is an important factor, it is not the only factor.

So focusing solely on cost effectiveness would provide missed opportunities to support programs that also focus on equity and supporting disadvantaged communities, which is also an important lens and statutory priority for cap-and-trade funds.

How can we think about cost effectiveness for funding programs aimed at adaptation? How should we think about cost effectiveness rather than programs focused on emissions reduction? How would you suggest we think about cost effectiveness?

Cost effectiveness shouldn't be viewed in a silo between adaptation and emission reduction. The Administration is proposing to allocate GGRF for programs that align with cap-and-trade priorities as prescribed in current law, while also trying to protect critical programs that were previously prioritized by both the Administration and the Legislature over the last few budget acts.

Okay. Yeah, just note that it is called the Greenhouse Gas Reduction Fund. So I'd posit that we really do need to focus predominantly on greenhouse gas reduction. Getting to the methodology and the budget, can you briefly explain the new methodology? It seems to be a different methodology than in the past?

Right the methodology used to develop the administration's projections were the same used for the 23-24 enacted budget. The methodology uses the average settlement price from the previous four auctions to update the assumptions for the last two quarters in the current year. And then we also use that same four auction average for budget year projections while adjusting for reduced allowances per regulatory requirements.

The administration's May revision update will take into account the February 2024 auction results, but will not include the May auction results since that will not occur until after the May revision has been released.

So February 24 and then three auctions previous to that. Just to get the LAO's input, what is your assessment of the estimated revenues, and do you expect additional GGRF revenue for discretionary spending after this?

So, as we mentioned, and as the Department of Finance clarified, they are using a different methodology, which we think will yield a more accurate reflection of true GGRF revenues. However, just thinking about the recent February auction, so the number that the Administration is using, they were assuming about $33 for the allowance prices. The February auction actually resulted in an allowance price closer to $42. So we know already that we will receive more GGRF than the Administration expects, probably in the range of a couple 100.0 million.

But it's not yet clear. There's still some uncertainties, and we're not sure yet what the may auction will yield. So it's a bit too early to tell for sure, but we can say with confidence that there will be more than what the Governor is planning for based on that February auction.

Okay, that's good. The LAO, just to continue on has raised questions about whether the continuous appropriations from GGRF still reflect Legislature's priorities. We've heard that a number of times since I've been chairing. In your bench, what extent is the Legislature bound by these continuous appropriation commitments, or do you believe Legislature should view them equivalent to any others? These decisions equivalent to any other Legislature, could change as part of our budget decisions this year.

So those continuous appropriations started out via statute. So about 10 years ago, I believe the bill was passed that directed those appropriations. That's ultimately still in the Legislature's purview. These are legislatively appropriated funds. So if the Legislature does desire to take another look at that. That is certainly something that is within your authority to do.

Okay. And how much money is associated with those continuous appropriations?

So about 65% of GGRF revenues go to those continuous appropriations. So just for a bit of context, GGRF has yielded between four and 5 billion for the last couple of years, and I think we expect something similar. So 65% of upwards 5 billion. That's a significant number.

Got it. And is there any way, do you measure the cost effective or any estimates of the cost effectiveness of the continuous appropriation programs versus the discretionary funded programs?

So the Administration does estimate the cost effectiveness, I believe, for all GGRF funded programs, including the continuous appropriations, except for the High-Speed Rail Program. And something that our office, you may have, remember, we've noted before some concerns and questions about the administration's methodology for estimating cost effectiveness, just generally. So that's something that our office and the State Auditor, as well as other researchers have noted that those estimates, there's some uncertainty there about their reliability.

I also would just maybe note on a slightly different topic, but still somewhat related, GGRF, because it was authorized with a two thirds vote, these revenues can be viewed as tax revenues, so theoretically could be used for any purpose. So as you're in the midst of making really hard budget decisions, we recommend that you think about this revenue kind of broadly for your whole list of priorities.

So GGRF could, in theory be used to backfill reductions to core ongoing programs that don't fit the historical use of the fund. But we just want to highlight that that is something that is in your toolkit during this tough budget environment.

Yeah, good. Well, I do appreciate that historical perspective. Again, I'll note it is called the Greenhouse Gas Reduction Fund. So this really is really our money focused on that. And so I think in this Committee we're going to continue to look through that lens, but I appreciate that. Lastly, for Department of Finance, as you know, CARB is considering amendments to the cap-and-trade program this year, and those amendments could influence allowance prices and revenues. How's Administration taking these uncertainties into account in the GGRF spending plan? Especially because there's a lot of commitment to out year dollars.

CARB is undertaking a public process to evaluate increasing the stringency of the cap and trade program. This entails removing allowances from the program before the end of 2030, depending on how many allowances are removed and additional features that may be needed for cost containment. The amount of allowances sold at each auction may be reduced and prices are expected to increase at auctions. CARB continues to evaluate options for removing allowances and options to ensure cost containment, to minimize costs to regulated entities.

Okay. So to be clear on that you're saying you believe that those changes could result in more revenue? Is that what you're saying?

Within the cause and effect bounds, possibly. That's certainly a possibility.

Okay, let's see. The recommendation is hold open on this one. So we will do that and appreciate it. I'm sure, I know, again, my colleagues who couldn't be here today are very interested in this as well, and we'll be returning to it. Thank you.

Thank you.

We now move on to issue three, prescribed burning and exceptional events. And when ready, we will, I believe, hear from the Air Resources Board first to present the governor's proposal on prescribed burning and exceptional events.

The California Air Resources Board is requesting a total of three permanent positions and $3.8 million in grants and contract funds to support or to carry out statutory requirements set forth in Senate Bill 1260 and duties associated with the State's Wildfire and Forest Resilience Action Plan as codified by Senate Bill 456, while at the same time demonstrating attainment of a lower national ambient air quality standard for annual fine particulate, or PM2.5.

The resources being requested in this BCP will allow for sustained expansion of CARB's prescribed Burn Reporting and Monitoring Grant program, which provides funding to the air districts to support their smoke management programs. The funding will also provide necessary support for smoke forecasting of prescribed burns and public outreach and alerts through the California Smokespotter mobile app.

Over the past five years, the grant program has successfully led to an increase in both the monitoring of burns and reporting of prescribed fire activity through the Prescribed Fire Information Reporting System, or PFIRS. For example, North Coast Unified Air Quality Management District has seen an increase in monitored burns from 20 to 40 per year to now over 300 per year. At the same time, there has been a three to fourfold increase in prescribed burn acres reported through PFIRS.

These efforts are critical in the planning of prescribed fire and to minimize air quality impacts as we make progress towards the governor's near term goal of treating 400,000 acres annually with prescribed fire. The current grant program is funded through this fiscal year only, and without continued funding, we risk slowing the pace and scale of the state's prescribed fire efforts while also supporting cultural burning.

US EPA has also recently promulgated a lower annual PM2.5 air quality standard, and the three positions will support the exceptional event process which will be necessary to demonstrate attainment of the lower standard. The Exceptional Event Process is provided for under the Federal Clean Air Act as a way of excluding from regulatory consideration air pollution from those events that are not reasonably controllable. Examples of exceptional events as defined by the Clean Air Act include volcanic eruptions, wildfires, and prescribed burns.

The exceptional event process is extremely rigorous and a typical submission can require upwards of 200 pages of documentation. California is facing a challenge with the need to increase prescribed burning to combat catastrophic wildfires and improve forest health, while at the same time demonstrating attainment of the new annual PM2.5 standard.

Achieving both goals requires supporting district smoke management programs and the responsible use of prescribed fire, as well as providing support for the Exceptional Event Process, which will allow districts to pursue more prescribed fire on the way to meeting the state's goals of treating 400,000 acres annually with prescribed fire, while also demonstrating attainment of the national air quality standards. The majority of prescribed burns occur in smaller districts with few staffing resources.

These districts were previously an attainment of federal air quality standards, but with the new lower annual PM2.5 standard will now be a nonattainment and will need to rely on the Exceptional Event Process to help demonstrate future attainment of the standard. Failure to demonstrate attainment may result in the loss of billions of dollars of federal highway funds. This BCP provides the additional resources needed for air districts to more readily show attainment while also increasing the pace and scale of prescribed burning in California. Thank you. I'd be happy to answer any questions you may have at the appropriate time.

Thank you. Department of Finance, have anything to add?

Nothing to add. Thanks.

We did review the proposal, and we don't have concerns or comments for you.

Okay. I wouldn't spend a lot of time on this. I think it was pretty comprehensive overview, just to be clear. So the proposed funding, you believe, will support streamlined permitting for prescribed burns?

That's correct. A range of programs that will ultimately streamline the permitting process and enable more prescribed fire.

Okay. And of course, it is very important to keep the public informed. You mentioned the Smokespotter app, other resources, and some dollars allocated to that. So, just something I'd like to keep following up on in the future. So we could maybe see some, our office could see some, just kind of examples of how that works and how people are alerted just so we can keep an eye on that. That'd be great in the future.

Absolutely.

Okay. Recommendation is hold open on this item as well. So we will do that. Thank you all for your testimony. And we're going to move on to issue four, which is resources to implement more stringent PM2.5 national ambient air quality standards. I would love to hear from you again on first on that proposal.

Thank you, Chair Becker and Members, again, I'm Michael Benjamin, Chief of the Air Quality Planning and science division at the California Air Resources Board.

One of my responsibilities is working with the local air districts to develop state implementation plans to demonstrate attainment with the National Ambient Air Quality Standards. Today I'm going to be discussing our proposal for resources to implement a more stringent PM2.5 national ambient air quality standard.

The California Air Resources Board is requesting $2.85 million for 12 full time permanent positions, $1 million for one time air measurement equipment purchase, and $1 million for air quality modeling computing resources and research to be funded from the Air Pollution Control Fund.

The requested funding is needed to ensure that CARB has adequate resources, staffing, and funding for newly designated nonatainment areas in California to develop plans to attain the more stringent fine particulate, or PM2.5 National Ambient Air Quality Standard, or NAAQS, as quickly as possible. The US Environmental Protection Agency is setting this new standard because the health science shows that the lower standard is needed to protect public health.

Once the standard is set, California will need to identify areas that do not meet the standard within one year and then develop plans, called State Implementation Plans, or SIPs, in the middle of 2027 to address the new standard. Once plans are developed, it will take ongoing state oversight to monitor and implement them well beyond 2027.

The 12 requested positions will support implementation of the new PM2.5 NAAQS efforts for developing SIPs, including research and monitoring into the causes of high PM2.5 source emission inventory development, control strategy development, air quality modeling, and information technology support for an expected 15 new non attainment areas. Further, these positions will ensure the local air districts have the tools needed to meet the new PM2.5 NAAQS in their district.

The onetime equipment costs will be used to support the air quality modeling and control strategy development. The funding will be used for computing resources and ongoing research to ensure that the emission inventory and air quality modeling make use of the most current and accurate source activity information and the adoption of welltested emission estimation methods that are quantitatively validated using observational data.

Working closely with the air districts, CARB has successfully improved PM2.5 air quality across the state, with many areas now meeting the older PM2.5 NAAQS. The new PM2.5 NAAQS brings many more areas of California into nonatainment, including many smaller rural air districts such as Shasta County and Great Basin Unified Air Pollution Control District, which have limited resources and knowledge in developing air quality plans.

As the lead air quality agency for the state, it's CARB's responsibility to provide support to these local air districts. The positions, equipment, and contract funds will be critical in ensuring CARB can provide adequate support for all air districts to chart a path to attainment of the new PM2.5 standard.

This BCP ensures that California meets the PM2.5 NAAQS in a timely manner and avoids the health effects associated with the exposure to PM2.5, which includes premature death, especially in people with chronic heart or lung diseases, and reduced lung function growth in children. Thank you. I would be happy to answer any questions you may have at the appropriate time.

Thank you, Mr. Benjamin. Let's first turn to Department of Finance. Anything to add here?

Nothing to add. Thank you.

LAO.

No comments? No.

Well, yeah, I think that was comprehensive. I guess anticipating my colleague Senator Dahle, particularly, you mentioned some newly out of tainment districts, particularly maybe some rural districts. What challenges do you anticipate in developing SIPs for these newly out-of-attainment air districts?

We have actually already begun working with the potentially impacted air districts to help them prepare and understand the scope of work that's going to be required. The new standards were finalized in February, just a few weeks ago, and so we now have basically a year to work with these local air districts. I think the challenge that is going to be faced, again is having those districts have the technical expertise needed to be able to determine or analyze the air quality data and assess whether or not they are truly a non attainment.

Right now, we're looking at current air quality data, but final area designations will be based on air quality data that is still being collected. And so I think that the challenges are, in many cases, technical on the part of these smaller districts who do not have this expertise. And that's where, with this BCP, we feel that we can step in and really assist in this effort.

Okay, well, thank you. I appreciate that. We will hold that open again. I know my colleagues, particularly General Dahle, may have comments on this in the future, but thank you. We're going to move on to issue five. That's the Southern California headquarters building operations maintenance contracts, and I believe we have a different presenter from CARB on this issue. This is, I believe, our final issue. And. Go ahead.

So thank you, Chair Becker and Members, I'm Grant Harris. I'm the acting Division Chief over the Administrative Services Division. I'm going to discuss our proposal for California Airsources Board. Southern California headquarters building operations and maintenance contract. CARB requests $149,000 for one permanent position and contract funding to renew CARB's current southern headquarters building maintenance contract. CARB requests 6.1 million for 24-25, 9 million 25-26, and 9.4 million 26-27 and ongoing. The one full-time position will primarily focus on the building management and maintenance contract oversight. Currently, several analysts in the southern facilities unit manage various aspects of the contract.

Centralizing the duties will alleviate the additional workload placed on these analysts and allow them to focus on their primary duties and ensure completed staff work while completing those. CARB is charged with protecting Californians from harmful effects of air pollution and developing programs and actions to fight climate change. By providing a State of the art modern laboratory that integrates the latest emission testing technology and equipment and placing employees in a functionally efficient, accessible and code compliant building, employees are more productive.

CARB's new southern headquarters building provides a singular, reliable base of operation for carbs activities in Southern California. The facility complies with Executive Order B-18-12, ensuring that the project will meet or exceed standards for green building practices. The building management contract will manage critical facility systems and ensure equipment warranties remain in effect to ensure the facility achieves zero net energy rating as expected.

This role is central to the success of CARB's new southern headquarters building, providing a safe, efficient environment for CARB staff to continue to build on the important work that they do. Thank you and I'll be happy to take any questions you may have at this time.

Thank you. Department of Finance.

No further comments. Thank you.

We did review this proposal and pose a number of questions to the Administration, and ultimately we find the proposal to be justified and we don't have comments or concerns for you today.

Okay, thank you. I did have a few questions. Tell us again why this is necessary as an outside contract.

Yes, when we started to bring the facility online back in 2019, we went through an exercise with the Department of General Services and assessed the building. And at that time they let us know they did not have the necessary resources or expertise to manage a facility of this nature. We additionally went through that exercise again, February of this year, walked the facility with DGS, and again they confirmed they still do not have the resources or necessary expertise to support such a sophisticated facility.

How did the cost of an outside contract would compare to if DGS was doing it too?

Yeah, we went through and we pulled a couple classifications and compared our current contracting rates to what FMD would charge, and it is on par. Some of the positions we pulled were custodial FMD charges for a custodian about $62 an hour and up to 86 for a supervisor. Our contracting rate currently is $40 to $60 an hour for those two classifications. For electricians, we have electrician 1 and 2 through FMD, approximately 125 an hour to 130. We currently pay 90 through our contract.

Groundskeeper same 84 for a groundskeeper, 95 for a lead. Through FMD. We're currently paying 90 and same for engineering. An apprentice engineer is 103, a stationary engineer is 131 through FMD, and we currently pay a flat rate of 145. So across those that we looked at, we're comparable. And some of those rates are also inclusive, like the janitorial. A lot of the expendable supplies are inclusive in our contract rate, so there are additional benefits.

Yeah, it just feels like a lot, say $6 million or $9 million for really maintaining the building, right? Yes, it is. It's for maintaining the 14 plus acre site. The building itself is over 400,000 sqft. It encompasses office space, vehicle testing facility, as well as chemical laboratories. So it's a very advanced facility unlike anything most people have seen.

So it's imperative that we keep all the equipment and operating within the facility performing at the right level in order to meet our ZNE ratings and support the mission of CARB.

Okay. Yeah, I mean, when you mentioned the vehicle testing or the chemicals, obviously I haven't seen that. Maybe I will at some point, but I can see how that could lead to some additional costs.

But just first blush just seemed like a lot of money for $9 million to say to maintain even that size of a building. But maybe we'll have a chance to dive more into that later. I appreciate it. Our recommendation is to hold open on this item. I appreciate your coming forward to testify for us on these and answer questions. So thank you all. We were now going to move to public. Thank you, everyone.

Are we going to move to public comment on any issues that we discussed today? Yes, issues two through five. We already did public comment on issue one and go ahead.

All right, Mr. Chair, thank you. Alchemy Graham. On behalf of Caltrain, the San Mateo County Transit District, San Francisco Municipal Transportation Agency and San Joaquin Regional Transit District. On issue number two, we would like to express our sincere thanks to the Legislature for its support last year in providing $5.1 billion in flexible funds to transit agencies for operations and capital projects statewide. We would also like to express our thanks to Senate leadership for supporting the governor's proposal to maintain funding for the TIRCP in this year's budget and sustainably shift the expenditures from the General Fund to the GGRF as outlined in the early action budget plan.

We understand the difficult reality of the budget situation and appreciate all of the tough choices that the Legislature is poised to make this year. However, because these funds are necessary for transit agencies to swiftly deliver electrified service and support state climate goals, we urge you to preserve the critical $5.1 billion in public transit funding and the shift to the GGRF. Thank you.

Thank you very much.

Chair Becker. Bill McGovern with the Coalition for Clean Air on the Greenhouse Gas Reduction Fund. We know that transportation is by far the biggest source of greenhouse gas emissions, so we need to prioritize. In our opinion, we should prioritize cleaning up our heavy-duty vehicles, the trucks and buses that are spewing toxic diesel exhaust into our communities, and also providing access to clean mobility to our residents of disadvantaged and low-income communities. And by funding those programs, we reduce both greenhouse gases and also local air pollution.

So we're very concerned that the governor's proposal would zero out those programs, those zero-emission vehicle programs. A three-year delay really is tantamount to a cut. We have no reason to think that money will be there in three years to fund these programs. And, of course, as you know, there's an urgency to solving our air pollution and climate crises. So we need to spend our transportation dollars smarter.

So, for example, the $365 million in Transient Inner City Rail Capital, a program that we support, the proposal is to backfill it with GGRF. We would propose instead that should be backfilled from the state highway account, gas tax funding, which would then free up the GGRF to restore, that could restore more than half the cuts in zero-emission vehicles, medium heavy and light duty, for trucks and buses and clean cars for all and other equity projects that provide clean mobility and clean air to disadvantaged and low-income communities. So I urge you to consider that we support the funding for community air protection, or AB 617.

And then also on issue four, we support the funding for CARB to implement those life-saving particulate matter standards. Those standards are extremely important. They'll also be difficult to implement. So we need to get going on that. Thank you.

Thank you very much.

Chair and Staff, good to see you. Nate Solov, on behalf of the Port of LA, I wanted to talk about GGRF funding. The Zero Mission Port Funding is a critical piece of the supply chain investment that you all made several years ago. The zero Mission port program was delayed in the GGRF plan. Originally, it was in the General Fund, moved to GGRF and delayed to 26-27. Why that's problematic is that all the ports are transitioning to zero mission by 2030, and we're also applying this year to the Federal Government. And so in order to draw down as much federal funding as possible, we're asking that a portion of that initial 400 million be put in this year's GGRF spending plan.

So that we can get those state dollars and help us to draw down additional federal dollars as we try to meet our goal of zero emission ports by 2030. That's cargo handling equipment and infrastructure. It's a huge expense, and we're all working hard to get there. So I appreciate your collaboration. Thank you.

Thank you very much.

Mr. Chair and Members, Michael Pimentel, Executive Director of the California Transit Association. Joining you today on behalf of my more than 230 Member organizations to address issue two in today's agenda. Last year the Legislature stepped up and met our call to save public transit from the fiscal cliff by providing $5.1 billion of transit agencies statewide. Year one of this funding will soon begin to move out the door following review by CalSTA.

We know that the budget outlook is dire, but we urge the Legislature to maintain this critical funding and to keep services running to continue to also build out major capital projects and draw down significant federal opportunities brought online by the IIJA. We believe the governor's proposal, including the backfill of General Fund with GGRF, is sensible and would help accomplish these goals.

We would urge you to move forward with the governor's proposal as outlined within the Senate early action plan, and we look forward to our engagement with you in the weeks ahead. Thank you.

Thank you.

Good afternoon, Mr. Chair. Kendra Harris with the Climate Center like to echo the comments of my colleague from the Coalition from Clean Air. Beacon Economics Next 10 just released a persuasive report that the state is not on track to meet our 2030 reduction target.

The report says we need reductions of 4.4% when our annual average is 1.6% currently. These cuts and delays will hamstring the state's ability to meet its climate goals as outlined by CARB's scoping plan. Instead of cutting Critical Climate, zero emission transportation, and clean air programs in the state budget, we must eliminate all subsidies for polluting industries that are worsening air quality and climate change.

Let's build on the governance proposal to limit subsidies for oil and gas and eliminate all subsidies available to oil and gas companies in the budget. Thank you.

Thank you very much.

Hi Chair. Mariela Ruacho from the American Lung Association and also would like to support the comments made by Coalition for Clean Air and also say California has the most polluted air in the nation. We can't afford cuts to clean air programs. We oppose a proposal that cuts, differs, or delays critical climate air, clean air and zero emission programs that Californians depend on to improve local air quality. And concerned by the announcement of agreements related to the ZEV and GGRF package. All Californians deserve to breathe cleaner air, especially those living near ports, warehouses, and other major traffic areas. Who would benefit the most from equitable clean air and climate programs?

Programs at the heart of cleaning up pollution are the clean cars for all commercial harbor craft, zero-emission port trucks, and equitable building decarbonization programs, which are facing serious cuts. The state budget should not be balanced by delaying cleaner investments while polluting, causing investments in fossil fuel subsidies and highway expansion continues. We cannot cut funding that protects vulnerable communities, clean air, and public health. Thank you.

Thank you.

Different mic needs here. Good afternoon, Chair and Staff. Jeanie Ward-Waller on behalf of Leadership Council for Justice and Accountability, I want to urge the Legislature to restore full funding to critical climate resilience and environmental justice programs, specifically the Community Resilience Center, transformative climate communities, regional climate collaboratives, and the Equitable Building DCAR program. These programs, along with investments in basic infrastructure like drinking water, wastewater service, and active transportation, address urgent household and community needs to confront climate change and deepening inequality and simultaneously build the fabric for long-term sustainability.

We urge the Senate to consider funding these programs in whole and in part. Along with continued funding for safe drinking water through the GGRF. These programs will have immediate and lasting benefits for the State of California. In stark contrast, we oppose allocation of funding for livestock methane, the vast majority of which goes to dairy digesters, which benefit a very few while exacerbating air pollution for residents in the San Joaquin Valley.

We look forward to working with the Legislature and the Administration to inform a strong and equitable climate budget, along with a complementary climate bond that safeguards the future for all Californians. Thank you.

Thank you very much.

Good afternoon, Mr. Chair. Ross Buckley on behalf of South Coast Air Quality and Management District. We very much appreciate the AB 617 funding being provided in the governor's cap and trade spending plan for air districts implementation and incentives, especially given the budget shortfall.

However, we request continuing prioritization of the AB 617 funding, which provides targeted support for disadvantaged communities in terms of improving air quality and protecting public health. Currently, AB 617 is severely underfunded. There are not enough resources to support the existing communities throughout the state. In particular, the south coast region includes almost two-thirds of the EJ communities. These communities are harmed the most by the reduction in resources. To help address this, we respect the request the AB 617 funding be restored to last year's levels. Thank you.

Thank you.

Mr. Chair. Brendan Tuig on behalf of the California Air Pollution Control Officers Association representing the air Pollution Control Officers from all 35 local air districts. Associate my comments with my colleague Mr. Buckley related to the AB 617 program. Then also for the farmer program, which, as you know, cleans up dirty diesel engines with agricultural equipment. Cost-effectively does that to get both significant air quality emissions reductions as well as climate GHG reductions.

And we are asking that funding be restored to the 2022-23 level because it already experienced a 50% cut and it's very cost-effective. So that would be 150 million. And then, we also believe that the GGRF should be reserved for programs that provide cost-effectively provide significant air quality and climate benefits like the two programs I just discussed.

Additionally, we support the CARB Prescribed Burning and Exceptional Events Proposal outlined in issue three, as well as the proposal for implementing the new PM2.5 national ambient air quality standard outlined in issue four. And thank you. I hope you have a restful break and you won't have to hear from me on these programs. I know I'm here quite a bit, so thanks for your indulgence. Thank you.

We're back. Thank you.

Good afternoon. Elise Fandrich from Tratten Price Consulting on behalf of the Asian Pacific Environmental Network, who is urging the Legislature to restore 160 million for the SGC Community Resilience center program. This is the amount that was previously earmarked for this fiscal year, but has been zeroed out. CRCs are trusted neighborhood-level facilities that provide year-round shelter and resources during climate and other emergencies, and there is an astronomical demonstrated demand for these funds. Round one was oversubscribed by about 700% beyond their existing funding capacity.

This budget request is an environmental justice priority and they are requesting that the program be funded via GGRF alongside other priority programs, including the Transformative Climate Communities Program and Equitable Building Decarbonization. APEN additionally wants to urge the Legislature to move to support an equitable and robust climate bond that supports EJ priorities, including 420 million for CRCs, 420 million for transformative climate communities, 400 million for Equitable Building Decarbon, and 80 million for community solar and storage. Thank you.

Thank you. Certainly pushing forward on a bond. Thank you.

Yeah, we need a bond. Good afternoon. Isabella González Potter with the Nature Conservancy. First, want to start off by thanking the Chair for his comments related to the GGRF expenditure plan, particularly reminding folks that GGRF does stand for Greenhouse Gas Reduction Fund and that funds should be used to reduce greenhouse gas emissions. So we appreciate that as the LAO highlights, the Legislature could reevaluate and potentially modify both current continuous appropriations and ongoing discretionary spending commitments.

But this would be difficult if this year's proposed budget solutions rely on extensively out year GGRF revenue. We urge the Legislature to evaluate the spending commitments made this year and to begin to consider allocating a greater portion of GGRF funds to programs that demonstrate the emissions reductions we need to avoid the worst impacts of climate change, including nature based solutions. And then on issue three, we support the funding highlighted for a prescribed fire. Thank you.

Thank you.

Mr. Chair and Members. Andrew Antwih here today on behalf of the Southern California Regional Rail Authority, otherwise known as Metrolink, largest commuter rail operator in the state, and also for the Los Angeles County Metropolitan Transportation Authority, largest transit agency and bus operator in the state and operator of an increasingly growing rail network, including recipient of a federal grant recently. That's why we're very happy with the package that the governor's proposed.

And through the early budget action, the Senate seems to be leaning towards sustaining, which is to take the prudent action of shifting General Fund Dollars to GGRF to sustain the commitment for the zero emission transit package that was approved and the TIRCP package that was approved. We worked in coalition with the California Transit Association to get that package approved by your colleagues in both houses and sustained by the Governor. And so we're grateful for that.

We understand a lot rides on the May Revision, but we're hopeful that these budget actions are sustained and we thank you.

Thank you very much.

Good afternoon, Chair Becker. Alan Abbs with the Bay Area Air Quality Management District, associating my comments with my counterparts from CAPCOA and South Coast.

But also just to underscore briefly our support and hopeful augmentation of the AB 617 portion of the budget which supports GHG and criteria pollutant reductions in disadvantaged communities, including four in the Bay Area, East Oakland, West Oakland, Richmond, San Pablo, and Bayview Hunters Point, and also support for issue number three, the CARB Prescribed Burning and Exceptional Events Budget Item. Thank you.

Thank you very much.

Good morning, Mr. Chair, Staff. Beth Olhasso from West Coast Advisors with a few comments on dairy methane reduction and GGRF funding.

As you know, climate scientists agree on the critical importance of methane reduction as a key short term strategy to addressing climate change. As a result, maintaining GGRF support for CDFA's highly successful and highly cost effective dairy methane reduction program should be a top priority for this year's expenditures. Moreover, state funding is necessary to match and leverage $85 million in federal USDA climate smart dairy funds being implemented at CDFA.

These funds are important as we are rapidly approaching the state's goals of a 40% reduction in manure methane by 2030. As it stands today, the dairy sector has already achieved approximately a 35% reduction in manure methane. And with this GGRF funding at CDFA, with the federal dollars, we will exceed the full 40% reduction in the next few years. This will be three to four years ahead of the goal and is a major milestone, especially as other programs appear to be falling short on actual GHG reductions.

Secondly, restoring the $425 million in funding under GGRF for Enteric Early Adopter Incentive program is critical and we know it's on your radar. We appreciate that, more progress on Enteric is also very important and we expect to finally have FDA approval on the feed additive in the next few months. And so restoring this funding should be a top priority. Appreciate your time today. Have a nice break.

Thank you very much.

Thank you, Mr. Chairman, my name is Dan Jacobson, Senior Advisor to Environment California and Staff. Always good to see you. I wasn't planning to talk about bonds, but since some of my other colleagues did, I would say climate bond is critical, but also adding in a billion to make sure that the ports can be upgraded for offshore wind. We can't get to the 100% and a lot of the clean energy projects that we have unless we're using offshore wind.

We can't do offshore wind unless we have the ports to be upgraded to be able to do it. In terms of Section two that you were discussing, I was really happy to hear you talking about and focusing on the efficiency of the projects and how do we make sure that we're using them as efficiently as possible. And as a General point of view, I'd say it's very inefficient to continue to Fund programs that cause the climate crisis at the same time that we're then giving smaller amounts of money to try to solve it.

So we should be looking at some of the incentives that we're giving to the fossil fuel industry or some of the highway expansion programs that we have that are costing us not only money from the budget, but also having a negative impact on our climate and moving us backwards in those projects. We should cut those programs first before we look at some of the clean air projects that we want to be cutting and that my colleague Mr. McGavin has already referred to.

But there's clearly, there's the $45 million for the Clean Cars 4 All Program. There's the $100 million cuts for the drainage programs that people have talked about at the ports. And there's the $200 million active transportation programs. These are critical pieces that move us forward. And when we talk about efficiency, we can't be delaying these projects now because they're going to cost more and more in the future. Thank you very much. Have a great break.

Thank you.

Mr. Chairman Becker, my name is Marco Lizarraga and I'm the Executive Director of La Cooperativa Campesina. We're an Association of farm worker programs serving over 154,000 farm workers a year. For the last six years, I've been coming to argue that we have about 800,000 farm workers and about 18% of them own homes, and that we need them to be served to lower their carbon footprint at the same time that we raise their disposable income by providing weatherization and solar panel installations.

We have been doing that for the last six years. Last year we didn't get an allocation. So we're asking you please consider allocating funds to the state program called Lightweb, that CARB has called a very successful program, and that this year allocation be done to serve our farm workers in the State of California on the single family site. Thank you very much.

Thank you very much.

Thank you. Good afternoon, Mr. Chair. Mark Fenstermaker, here for the California Association of Resource Conservation Districts. Would echo the comment made earlier by the Nature Conservancy that we need to be investing in nature-based solutions. We really need to make sure that our natural environments are acting as carbon sinks and not carbon sources. And so for that reason, we support the early action for the fire prevention grants proposed today. We also support the governor's proposal for funding to the regional forest and fire capacity program out of GGRF.

We need to have the resources to plan and put in place the projects. We need to restore our forest health and ensure that the fire that we see on the landscape is good fire, not extreme wildfire that is wiping out our forests and the opportunities for our forests to sequester carbon. I would also like to support the inclusion of SWEEP in CDFA's budget.

We need to ensure that we continue to provide our agricultural partners with the tools so that they can reduce their water consumption, which in turn reduces greenhouse gas emissions. Thank you very much. Obviously, you've heard a lot of calls for need, which means we really do need that climate bond.

Thank you.

Good afternoon, Chair. Amara Eger. On behalf of SERIES, I'm reemphasizing the full funding for SB 253 and 261. As you know, over 30 major businesses supported these bills, and the laws have built-in filing fees, meaning only a small portion of funding is needed for the beginning stages of implementation for these critical climate bills. Thank you so much.

Thanks.

Good afternoon, Mr. Chair and Staff. Thank you for your time today. My name is Kai Cooper. On behalf of CALSTART, a global nonprofit dedicated to accelerating clean transportation, we appreciate today's GGRF funding conversation and are supportive of making the necessary Fund shifts to address this year's budget shortfall. Additionally, we support the governor's proposal to use GGRF funding this year for zero-emission school buses.

Given the large amount of GHGs that come from the transportation sector, we highly encourage the Legislature to prioritize GGRF funding for clean transportation programs to ensure that ZEV adoption, infrastructure development, and opportunities for clean mobility options continue to support those most in need. Thank you for your time. Have a good break.

Good afternoon, Chair and Staff. Nicholas Mazzotti on behalf of the Building Decarbonization Coalition. We request that the state maintain at least the funds for the CEC's equitable building decarbonization program and urge the Legislature to ensure that the 87 million in proposed Fund shifts from last year's General Fund are included in this year's GGRF spending plan. This program is critical for low-income communities making the transition to clean energy and also just got to plug the climate bond. Thank you very much.

Thank you.

Good afternoon, Chair and Staff. Rebecca Marcus on behalf of the Union of Concerned Scientists speaking on several issues. Much of the state continues to be out of attainment with federal air quality standards, and fossil fuel use in the transportation sector is a huge reason why. So we urge the Legislature to avoid cuts and delays to vital zero-emission vehicle incentives as much as possible.

Further, we encourage the Legislature to target the funding that it does have for ZEVs to replacing the oldest cars on the road where the state can get the largest emission reductions per dollar spent. A report we released last year showed that pre-2004 vehicles make up 19% of the cars on the road but emit 73% of the smog-forming nox emissions. These cars also disproportionately are concentrated in disadvantaged communities and should be replaced as soon as possible.

We're late to comment on the community solar, but we just like to align our comments with our colleagues at SEHA and then on behalf of the California Climate and AG Network, I would just like to express support for the proposed shift to cap and trade dollars to fund the SWEET Program as well as the Methane Reduction, but specifically the AMP program. That is very helpful for small and medium-sized farmers. Thank you. And yes, to a climate bond.

Thank you.

Good afternoon, Chair Becker. Samantha Samuelson, on behalf of the People Food and Land Foundation, with regard to the comments and the staff analysis regarding the GGRF continuous appropriations, we agree that it is time for the Legislature to reopen this issue and evaluate the effectiveness and merits of the activities over the past years. The People Food and Land Foundation is co-sponsoring SB 1135 by Senator Limón, which we believe is a much better use of continuous GGRF funds.

SB 1135 provides a tax credit using GGRF for compost utilization for ranchers, farmers and other landowners on natural working lands. Spreading compost is an inexpensive way to reduce GHG emissions, and studies show just one application continues to reduce emissions for up to 85 years. We respectfully request that when you look at the GGRF, you consider providing 1%, not to exceed $120 million per year for 10 years to fund SB 1135. Thank you for your consideration of this request and also would love a climate bond.

Thank you.

Good afternoon. I'm back. Alchemy Graham on behalf of Via Transportation, we offer software and public transportation services to more than 50 public transit agencies in California. I'm here today to voice our concerns on the governor's proposal to delay funding for CARBs equity programs, including the Clean Mobility Options, Sustainable Transportation Equity Project, and Clean Mobility in Schools. These funds are critical in protecting clean, accessible, and affordable public transportation options for communities throughout the state.

And for that reason, we respectfully request that the Committee reject the governor's proposal to delay this necessary funding. Thank you.

Thank you.

Thank you, Senator Becker, for this hearing. I'm Janet Cox from Climate Action California, and we submitted a letter from about 60 other groups on February 29, yes. Asking that the Legislature restore the funds that the Governor left out of his budget to fund SB 253 and SB 261. Our experts looked at all of the cost estimates for those bills, and we feel they're really high. And so we're hoping that the Budget Committee Staff will look carefully at those assumptions and those budget numbers because even though it's still a tiny piece of the budget, it seems exaggerated and unnecessary to put on as many staff when this is going to be outsourced work and it's going to pay for itself once the programs get going. So that's why I came up here today.

But the other thing I want to say is that we're understanding that Assemblymember Connolly is going to be giving the committees a proposal to end the waters edge subsidies for oil and gas and refineries. If you don't have those proposals already, that's something we think will mean. Imagine here's California is in a horrible budget year and we're cutting subsidies for oil and gas. That's the best headline we could ever have.

And the money that cutting those subsidies will free up in the budget can certainly fund SB 261 and SB 253 programs and a lot more. So thank you.

Thank you. Thanks for being here. And certainly very supportive of those bills. Making sure they get funded, so thank you.

Good afternoon, Mr. Chair.

Last but not least, you got to bring it home.

Last but not least. Thank you. Edson Perez here with Advanced Energy United. We're a national industry association representing clean energy, clean transportation companies. I want to echo some of the comments made by other trades regarding the need for supporting medium and heavy-duty zero-emission vehicles. As I'm sure you know, we're at a pivotal moment in determining whether California will meet its transportation electrification goals. And we're already hearing from truck and vehicle fleet owners about them facing difficulties in planning to meet these goals, especially in trying to meet advanced clean fleets, advanced clean trucks.

And so we really need to send a strong signal this year that California is planning to invest in meeting these goals and regulations, and that means investing GGRF funds this year in programs that support this, like the Drayage Trucks and infrastructure program, clean trucks and buses, the Set Fueling Infrastructure and Grants Program, as well as the Sierra Mission School Bus Funding Programs. So really asking for your support for those as the JGRF conversations continue. Thank you for your time.

Thank you Well, thank you for letting others go in front of you and bringing us home. So I appreciate it. I want to thank everyone who participated in public testimony. If you were not able to testify, please submit your comments or suggestions in writing or visit our website. Comments, suggestions are important to us.

I want to appreciate all the panelists who gracefully took all of my questions and our questions here today, and I want to thank everyone for their patience and cooperation creation. Budget Subcommittee number two is adjourned.