Senate Standing Committee on Energy, Utilities and Communications

Good afternoon. The Senate Committee on Energy, Utilities and communications will come to order. We're holding our Committee hearing in the Oak Street building in room 1200. I would ask that all Members of the Committee make their way over here as quickly as possible so we can establish a quorum. I would like to welcome everyone to the fourth Bill hearing of this 2024 legislative season. We have 17 bills on today's agenda.

SB 1305 by Senator Stern has been pulled by the author, and we have one just vote only, and we're waiting to establish a quorum, but we don't have one. In the absence of a quorum, I'm going to let our first author present her Bill. File item two, SB 1142 by Senator Menjavar.

Thank you Mister chair. Good afternoon Committee Members. First time here in this energy Committee. Excited to be here. Maybe not so excited. I will be accepting the Committee amendments, and while it completely changed my bills goals, we are moving forward with it because we want to make sure the conversation continues even with back debt forgiveness. About 2.4 million utility customers, or one in four Californians are energy insecure. In just the last three years, California's investor owned utilities, standard residential rates have increased at an extraordinary pace.

The affordability crisis has resulted in more and more customers being in jeopardy of getting shut off. As you are the experts in this field, I know you all have heard these high level talking points. SB 1142 seeks to establish a pathway towards protecting California's ratepayers who are behind on their electricity bills and in jeopardy of a shut off by directing the CPUC to review statute and consider limiting the amount a utility can request from a customer to avoid a shut off.

And we're requiring the shut off to review the CPUC to review this by July 1 of 2025. Currently, utilities have no guidance on how much they can and should request from a customer to avoid a shut off or get reconnected after a shutoff.

These unregulated practices means that customers who are already struggling to make ends meet and being crushed under the weight of high bills may receive a request for payment to avoid a shut off or restore service that would make it impossible for them to maintain or secure energy.

By directing the CPUC to develop maximum payment deposit limits for customers, we are supporting the health and safety of families who are struggling under the weight of the high bills and ensuring that all Californians rate base is not being forced to pay for on collectibles that might otherwise not be an issue if customers are able to make reasonable arrangements to that effect. Mister chair I'd like to now bring up my one witness to testify in support of this Bill.

Thank you. You have two minutes.

I'd like to welcome Constance Slider Pierre from who is the organizing Director at TURN.

Good afternoon, Chair Bradford, Members of the Committee, thank you for your time today. My name is Constance Slider Pierre and I represent TURN. A customer's inability to afford their utility Bill means facing hard questions about which Bill to pay. Reasonable disconnection and reconnect connections protections can insulate vulnerable customers from becoming disconnected without impacting the bottom line of other customers bills. This Committee passed landmark legislation, SB 598, the Shutoffs Reduction act, in 2017, directing the CPUC to implement disconnection protections for utility customers.

We have learned a lot since then, and with utility rates rising into the stratosphere, additional regulations are necessary. Currently, when customers are facing a disconnection or have been disconnected, they are at the mercy of the utility company's customer service representative to negotiate a reasonable amount to keep service or reinstate service. This means one customer may be required to pay 80% of the past due Bill, while another customer may be able to negotiate 10 or 20%.

This flexibility benefits the utility company, but creates uncertainty for customers and deep institutional inequity. You can basically get a reasonable payment plan only if you are connected with the right representative and are able to effectively advocate for yourself. I know this because I have witnessed the disparity in treatment firsthand. This Bill directs the CPUC to consider additional protections for customers facing disconnection or seeking reconnection, which would include limiting the amount that a customer must pay to avoid disconnection or be reconnected.

By establishing these requirements, the Legislature and the Commission can ensure that all customers are treated equitably, regardless of income, geography, language, or the utility representative they happen to connect with on that day. The Bill implementation timeline reflects how urgently these protections are needed. TURN respectfully requests your support of SB 1142. Thank you for your time.

Thank you. Any other witnesses in support of this measures come forward. State your name and organization and your position.

Alicia Priego on behalf of the City of San Jose and San Jose Clean Energy, which is the largest single jurisdiction CCA and strong support.

Hi there Megan Mekelburg on behalf of the Central Coast Energy Services, thank you.

Stephanie Barger the US Green Building Council strongly support thank you.

Now it's time for witnesses in opposition. Are your lead opposition to this measure?

Yes. Thank you Mister Chair Israel Salas with San Diego Gas and Electric and Southern California gas with the amendments as recommended in the Committee analysis, we should be removing our opposition. Thank you.

Next witness.

Mister chair, Members of the Committee, Valerie Turella with Pacific Gas and Electric Company in opposition, going to review the amendments. Definitely. Thank you for the Committee and the author of the amendments are moving in the right direction with the flexibility for the CPUC to evaluate these policies. Just wanted to say that we understand and are grateful for the widespread discussion of affordability in the Legislature.

We do think that in this particular instance, it's not the disconnections, but we think we should have a focus on arrears, for example, arrears management programs, which will be evaluated at the CPUC and we hope would continue on like basically debt forgiveness. So appreciate the dialogue with the author and want to continue that dialogue. Focus on arrears management for our customers. Thank you.

Thank you. Next witness.

Laura Parra On behalf of Southern California Edison, we are also reviewing the amendments, and we'll continue to work with the Committee on the Author to thank you. Our position. Thank you.

Anyone else here in room 1200 wishing to speak and support our opposition? Seeing none, we're going to bring it back to the Committee. Any questions, Senator? Ma'am? Move the Bill. Well, you have to establish a quorum, so. All right, Senator Eggman.

Thank you. Senator, have you, and to some of the opposition, have you thought about the reconnection versus arrears? Have you looked into that at all? And do you have thoughts?

Well, yeah, I mean, the Bill got really, really trimmed down. So I really, I do believe after the opposition reviews all of it, there shouldn't be any opposition. It does two things now moving forward, just to have the CPUC review two different approaches. And then one of the amendments was to remove the 24 month payment plans in regards to arrears because there is a pilot program right now happening and it ends in 2026. So then they were reviewed to see what worked, what didn't work, but 100% taking that into consideration.

Thank you.

Senator Seyarto.

Thank you. More of a comment than this issue is kind of a. I think it's an example of what we're seeing happening. And, you know, when you look at the arrearages now, $2.1 billion now versus just four years ago when it was 435, I think it's an example of when you have an energy policy that is driving these prices. So, you know, we can throw as many shot glasses of water as we want at the problem, but it's going to get worse and worse.

We have to look at that bigger policy from the state perspective and decide if this path that we're going down is only going to double and triple itself, or if we are going to have to look at our policies and kind of pull back, we are already one of the highest states and our energy costs are higher here, and that's passed on to our residential customers due to our energy policy. And that's in the United States. We're one of the highest in the United States.

And that's why people are in this situation in the first place. And delaying how long it takes for them to pay that arrearage for the year that they're in. How's that going to get better over the years? They're just going to be compiling on top and on top and on top.

So I think it's incumbent on us to not just look at how many shot glasses we need to throw water at a large fire, but how we put that fire out and ensure that going forward we have an energy policy that makes sense and doesn't cause this kind of astronomical rise in our cost, because this is part of what's making California unaffordable. And I hope you agree with that with the amendments.

I think your Bill is a little bit better, but I still see it as trying to deal with a small, tiny problem, I mean, a part of the problem that is a bigger problem that we have created. So thank you.

And the amendments take a very similar approach to what you mentioned. Right. They're going to see if it's, they're going to consider whether to implement this or not, and they're going to consider how to structure the approach with some of the issues that you brought up in mind.

Thank you. Any further discussion by Members here on this Committee hearing? Encina, I just want to thank you for working with this Committee. And truly, I want you to leave here with understanding that your goal and your intentions are needed. And as stated, California has some of the highest energy bills in the country. And we've seen during the pandemic the need for defraying and deferring a lot of payments and shut offs.

And that's critical because the last thing we want is folks without their lights on or their gas running in their homes. But at the same time, we know the PUC is doing a study on this. And I think instead of just jumping in front of what the PUC is trying to do, just work in concert. And again, I commend you for it because it's, a lot of constituents up and down to California will benefit from where you're trying to go here.

But I think this is the first step in addressing a much larger problem, as our Senator stated. From Hemet. Is that where? Seyarto.

Did you say Murrieta?

Murrieta. Okay. I'm sorry I touched him. All right. Would you like to close?

No. Thank you so much, Mister chair. I appreciate the questions, and I wish I could say, you know, I'll come back to you next year and work with you on this, but unfortunately, you won't be here. But definitely come back with the Committee next year and continue to work on this. With that, respectfully ask for an aye vote.

And you took the Committee amendments, right?

I did, yes.

Thank you. I appreciate it. And again, I appreciate your cooperation in working with us here. And for those who just don't know, I'll state the amendments, if you don't mind. Please remove the pilot programs and other requirements in the Bill that could limit CPUC's discretion in its activity. Investigating and piloting approaches to disconnections and reconnections. Instead required a PUC to make a decision by July 1, 2025 on the percentage of outstanding balance payments, instead of directing these decisions and statutes. You. So thank you. At the appropriate time, when we have a quorum, we'll make a motion on this Bill.

Thank you so much, Mr. Chair.

Thank you.

All right, all right. Just on time. We can take SB 1148. File item three by Senator Blakespear. When you're ready, you may begin.

Okay, thank you. Good afternoon and thank you, Chair and colleagues. As we move toward electrification and clean energy, a clear problem exists with the installation of microgrids and multi unit housing projects. We all have lived experience of grid failure. Due to unforeseen events or extreme weather, Californians have seen what happens when our grid goes down. Between 2017 and 2019, blackouts impacted the equivalent of about 51 million customers across the state, some people experiencing blackouts multiple times. As we all know, blackouts are more than an inconvenience.

They can be dangerous and life threatening to vulnerable Californians such as the elderly. We don't want unreliability in our grid as we continue to make progress with electrification. That is why the Legislature and the Governor have invested billions of taxpayer dollars and allowed the utilities to raise rates on our constituents. To be clear, these investments have paid off, and the CPUC, Energy Commission and Utilities continue to work diligently on that.

But the fact of the matter is that we don't have a truly reliable grid, and climate related disasters will only threaten the grid's reliability further in the future. Therefore, it's crucial that we make it possible for people to safeguard themselves from blackouts with their own resilient backup power systems known as micro grids. Microgrids are not a new concept. They've been around for decades. In California.

Our regulatory system makes it relatively easy for people in single family homes to install microgrids, but there is no feasible pathway to set up a microgrid in multi unit buildings. Multi unit residences make up 33% of the state's housing stock, and given the state's housing priorities, multi unit residences are undoubtedly the state's future. Simply stated, it's an equity issue that multi unit buildings cannot access microgrid power like single family homes can.

Low income or more resource constrained ratepayers are much more likely to live in multi unit buildings than single family homes. My colleague Senator Stern authored a Bill passed by the Legislature in 2017 that directed the CPUC to address this issue. The CPUC and PG&E took that direction and designed a program to address the issue called the Community Microgrid Enablement Program, or CMEP. But developers report that there are long delays, high uncertainty, and unnecessary inefficiencies involved in using the program.

Since CMEP's pilot project was completed in 2021, no other CMEP project has been completed, even though there have been dozens of applications for the program. My Bill, this Bill, SB 1148, is designed to tackle the unnecessary inefficiencies in CMEP. Basically, because of a 1980 statute that requires units to be individually metered, CMEP requires every unit in a multi unit building to have its own separate solution, solar panel and battery. This is complex and overly burdensome.

SB 1148 would allow multi unit buildings to be served by one consolidated panel array and battery, just like single family homes are. I have various diagrams which hopefully have been passed out to you and if not, we can hand them up. So if you're looking at the diagrams and have them in front of you, SB 1148 would allow for a simpler, more straightforward configuration.

It's also important to note that SB 1148 will provide enhanced cost savings to tenants and landlords beyond what virtual net energy metering allows. While my Bill provides clear benefits, there are still questions that must be answered before the Bill would be passed. One question that has been raised is how do we make sure that the billing is still accurate?

My sponsors and I have proposed this solution. Require private submeters on each individual unit, require landlords to bill tenants based on their electricity use as determined by the private submeters, and required landlords to provide annual reports comparing what they charge tenants based - what they charge tenants for based on their electricity usage versus what they would have been charged without the microgrid. Another question raised is how to share energy usage data from the private submeters with the utilities.

The solutions to this problem involve using technology that will cost taxpayer dollars to implement so the state likely will not be able to finance their implementation in this budget year. My sponsors and I are exploring these options and investigating how cost effective and successful they are in the states where they are currently in use.

Should this Committee pass my Bill today, I commit to adding the following to the Bill. Clarifying that tenants in SB 1148 buildings can use the CPUC formula and alternative dispute resolution processes to address landlord electricity billing violations, requiring private sub meter usage data to be provided automatically to utilities for the purpose of CARE and FARA subsidy allocation and billing accountability, and requiring landlords to provide informational materials to their tenants regarding tenants rights and landlord obligations for electricity billing.

Finally, the California State Association of Electrical Workers engaged my office prior to filing opposition to my Bill last week. My sponsors and I are considering their proposed amendments. Should my Bill pass today, I'm committed to working with them to address their opposition. I want to close by saying that having access to backup power should not be a socioeconomic privilege. All Californians should have it regardless of their income level or where they live. It's not only fair, but it's also safer.

I understand that the CPUC and utilities are working on this, but their progress is too slow. My Bill intends to offer faster pathways to make backup power a reality for residents of multi unit buildings, and with that, I'd like to introduce my witnesses and support. There are two. Ben Schwartz, Policy Manager at the Clean Coalition, and Craig Collins, Associate at Pacific Architecture & Engineers.

Thank you. You'll have two minutes each.

Good afternoon. Chair, Vice Chair and Members, my name is Ben Schwartz with the Clean Coalition. We are a technical nonprofit working to accelerate the transition to renewable energy in a modern grid. The Clean Coalition strongly supports SB 1148, which creates standard and streamlined options for renewables driven backup power or resilience at Multi Unit Housing, Government Facilities, schools, and places of worship. Current rules and regulations prevent multimeter sites from unlocking an unparalleled trifecta of economic, environmental and resilience benefits.

Of more than 23,000 projects active in PG&E and SDG&E service territories, none can provide backup power. This must change. In the context of the state's electrification goals, resilience takes on added importance. As reliance on electricity grows, grid outages will increasingly result in the loss of essential public services and potentially even lives if no backup power is available. SB 1148 addresses the disparity in options for resilience available for single family and multifamily housing.

A single family home can deploy solar plus storage or a behind the meter microgrid, a standard option installed in less than a year. In contrast, no such option exists for multifamily housing across all three IOU service territories, let alone an option that can be deployed in less than two years. Thus, a grid outage always means a complete loss of power, uniquely impacting renters, low income residents, retirees, disabled Californians, and rendering key critical community services ineffective.

SB 1148 creates a standard path for resilience where none currently exists. Well designed resilient solutions are a win win. SB 1148 requires savings for renters and increases renewable deployments in disadvantaged communities. The Bill includes significant consumer protection measures while ensuring fair profits for landlords and developers. Finally, SB 1148 preserves the functionality of key critical facilities and emergency shelter sites. For these reasons, we strongly support SB 1148.

Thank you. Next Witness.

Hello. My name is Craig Collins. I work for PAE consulting engineers as an electrical engineer designing solar and battery based microgrid systems for project types ranging from city halls to multifamily housing. Currently, I am engaged in the design of a microgrid for a CEC grant funded affordable multifamily housing project that, when complete, will provide a pathway to homeownership for low income residents in Berkeley, California. This project will provide access to affordable housing in a high cost housing market.

I wish I could say the same about the ability to deploy a microgrid that significantly reduces energy costs for multifamily residents in a high cost energy market. Current design options are complex, expensive, and of limited benefit. California needs a simplified pathway for microgrid integration and multifamily properties that provides both full on site resiliency and real economic savings.

Currently, the viable design options for microgrid systems at multifamily facilities are limited to the following. Option one, design a microgrid system which provides resiliency for the facility commons and full economic benefit for the building operator, but no economic benefit to the tenants. Option two, attempt to navigate a non standard utility interconnection process for the design of a front of meter, single site community microgrid that will provide resiliency to all tenants but limited economic benefit. Option three, does not currently exist.

SB 1148 creates a standard pathway for full site microgrid resiliency that also provides full economic benefits to multifamily residents. These residents share the full costs of of developing the Title 24 energy code mandated PV and battery energy storage systems they deserve to share in the long term energy savings benefits. Please consider that multifamily facilities have been historically disenfranchised with respect to the economic benefits associated with solar energy and battery energy storage systems. PAE sees this problem universally in North America. Through adoption of SB 1148, California can create a model for equitable access to clean energy and microgrid resiliency, irrespective of socioeconomic status. For these reasons, the 350 engineers and staff at PAE strongly support SB 1148. Thank you.

Thank you. Any additional witnesses in support? State your name and your organization, please.

Good afternoon, Chair and Members. Kim Stone. Stone Advocacy on behalf of the California Solar and Storage Association in support.

Hi. Meg Snyder, Axiom Advisors on behalf of both Pearl X and SunPower in support.

Melissa Romero, California Environmental Voters in support.

Catherine Charles, on behalf of Housing Action Coalition in support.

Mary Ellen Shay, California Association of Local Housing Finance Agencies in support.

Katie McCammon from 350 Sacramento in support as well as support from Climate Action California, Santa Cruz Climate Action Network, Glendale Environmental Coalition. Thank you.

Stephanie Barger. US Green Building Council in support. Thank you.

Ashton Aaron Nagali. Environment California in support. Thank you.

Cynthia Shallit. Invisible Green Team.

Any additional witnesses in support? Now let's move to our witnesses in opposition. We allow two primary witnesses if there are, and you have two minutes each. Thank you.

Thank you. Rachel Koss, on behalf of the Coalition of California Utility Employees, we support multifamily microgrids, but this is not the way to get there. This is a total jailbreak. It would allow multiple properties to be served by microgrid that is owned, operated and controlled by any entity. The Bill is an end run around the core fundamental section of the Public Utilities Code, section 218, that requires entities distributing and selling power to consumers to be regulated by the state for public and worker safety, energy reliability, energy affordability, equity and state climate goals. All of these protections would go out the window with this Bill. Entire mixed use developments, residential developments, apartment buildings could get their power from totally unregulated entities and utility employees lives would be at risk.

When a microgrid islands from the grid and is then reconnected, there is back feeding risk or the distribution line is prematurely energized. After an outage, crews do restoration work to ensure that it is safe to re energize the utility's grid. Unregulated third party microgrid operators cannot be allowed to decide to energize customers whose generation or storage is actively discharging to the utilities grid, while utility employees may be working on that grid. It must be the utility who is in communication with those employees to make that decision. It is totally unacceptable for anyone else to control this.

The Bill would also increase electric rates by allowing customers to net their energy and consumption and generation, avoiding the actual costs to serve them. They won't pay their fair share for things like grid hardening, wildfire prevention, the CARE subsidy, energy efficiency. Finally, the PUC is currently working on a multi customer microgrid tariff that would serve multifamily residences. We should let that play out. It is a transparent process with many, many parties and lots of information being considered. This Bill is dangerous. It would raise electric rates for your constituents.

Thank you.

Thank you.

Before we continue, secretary, let's establish a quorum.

[Roll Call].

A quorum has been established. Now we'll continue with our second witness in opposition. Lead witness.

Good afternoon. Brandon Ebeck on behalf of Pacific Gas & Electric, I don't want to echo a lot of the - I want to echo a lot of the comments that CUE just made with regards to safety. And ultimately, we do share the same goals of resiliency. A lot of the programs that exist were previously focused on compensation benefits. As we're moving into the future, we are focusing a lot of those programs onto resiliency during grid outages.

As the author mentioned, there are two primary pathways to do this today. There is the CMAT program, which we launched our tariff in late 2021. There was one application in Senator McGuire's district, and that came online last year. There are additional programs that have applied. They're in the queue. We're looking forward through that. Those programs operate within a defined territory, and they use our distribution grid to divide the resources during a grid outage.

Additionally, there's the virtual net energy metering program, which again is designed for compensation benefits, mostly because it's virtual. They're not behind the meter. But there is a way through the virtual net energy metering program to have resiliency during outages. It's all about the mechanics of how the system is built.

So we think that those two programs that we are making modifications for should be the pathway that we provide resiliency while maintaining all the protections to customers that the utilities are responsible for, rather than creating a landlord that is an unregulated utility not subject to the PUC. So for those reasons, we oppose. Thank you.

Thank you to still witnesses in opposition state your name and organization.

Mister Chairman and Members. Scott Wetch, on behalf of the State Association of Electrical Workers. In opposition for the previous stated reasons.

Mister Chair and Members Hunter Stern with IBEW 1245 also in opposition. And I want to underscore the risk and the harm that could come if the GO 95 and other construction standards are not followed.

Mister Chair and Members. Israel Salas with San Diego Gas & Electric in opposition.

Good afternoon. Catherine Borg, Southern California Edison in opposition.

Thank you. Any additional witnesses in opposition. Seeing none here in room 1200. We'll move it back to the Committee. Any comments, questions or concerns? Senator Seyarto.

Thank you very much. I think my staff had contacted your staff about some of my concerns, and it concerns the whole sub metering process. Once the electricity has passed the main master meter going to a sub metering type of program, who monitors, who bills and who controls the submeter from the master meter through once it gets onto the property.

Yes, thank you for asking that, and I'm going to ask my sponsors to come forward to answer the technical side of that. But I really just also want to say that I think some of the opposition language I believe is fear mongering. This is not designed to be unsafe, unregulated. This really will be safe and regulated. And the idea is to provide more opportunities for people who live in multifamily housing units and landlords who build them to be incentivized to put in the solar panels and then the battery backup. I'll let my sponsors answer the question.

Yes. So the master meter would measure the initial grid usage. And the way we have it written in the Bill currently is every tenant would have an individual submeter. They would be billed monthly. There are a couple ways it could be done. The landlord could be a biller, the microgrid developer could do the billing.

But most common, what we see in other states and around the world is they have third party billing companies that specialize this, in this, including monthly audits of every Bill, verifying that there are line items in the Bill, so that any low income subsidies are clearly listed, as are any total usage for the month is listed.

And doing that also creates very clear paper trail, so that if there are any issues, not only is it clear to the landlord and the billing company, but it's also clear to the residents themselves who will have access to what they used and what they would have paid via the utility. So that on a monthly basis, it'll be very clear the level of savings that each customer sees.

And plus that sub metering company will then charge a service fee on each one of those meters for the privilege of servicing their billing. Correct.

So that is one way that it's done. That's also the way that it's currently done using the existing solar program. With virtual net metering, there is a starting fee to add individual meters or subtract them. But on the whole, the key is that there will be savings compared to what they otherwise would have paid. So the savings from the solar energy and the resilience will flow through to the individual tenants each month.

So my comment on that and the reason I bring it up is because a lot of the water companies have done that same thing and they lose control of it as soon as it hits the complex. And then once it goes in the complex, it's the metering company and the Association that handles all of the billing parts of it.

And the billing parts of it become so convoluted that nobody has any idea what is going on with their water bills, or in this case, electricity bills, which is even worse, because now you have a component of people working on electricity like that the opposition was talking about and getting this feedback back into the system when they have a power outage. So hard for me to support the Bill with the sub metering part of it. Until they can get their act together, I am not a big fan of expanding their program for them. Thanks.

Thank you. Any other questions or concerns. Senator Dahle.

I just want to make a comment. I happen to be around when they did the deregulation a long time ago, Steve Peace and Jim Brulte did the Bill of deregulation. This is similar. Along those lines. This is basically starting a utility, a small micro utility within - without the PUC's blessing. So for those reasons right there, I'm not going to be able to support the Bill the way it is today.

Senator Becker.

Thanks. I just want to thank the author for tackling this. It's an important issue and a wonky subject. And I appreciate you getting into the details of it. Sounds like, as you said, there's a bunch of work going forward that you're already committed to. And I know my team had reached out and has had a lot of conversations about this. So, you know, I'm gonna, I am, I will support it today.

I do, you know, have some reservations about how it can kind of practically work and especially, you know, make sure the billing's handled in a fair way that protects tenants and preserves the ability to provide discounts through care and fair and some of the things we've talked about. So we look forward to continuing discussion, you know, going forward with you on it.

Thank you.

Thank you. Any additional questions or concerns? Senator Durazo.

Thank you. Thank you. Thank you to the author. I also think this is an important subject to bring up. Unfortunately, what keeps happening on the side of good ends up being something that seriously could impact poor and low income people. And that's what I'm really, really concerned about here is how it would impact people who just can't afford. And as we do better, some better things on the environment front and clean energy front, then we're again taking the risk of how this could fall on the backs of low income people. And that's my biggest concern.

May I address her point here? Okay. Thank you. You know, there are a lot of tenant protections in the Bill and we've added them in because it is really important that the savings be passed along, that it not just be the landlords that are benefiting from having a microgrid.

And so the solutions that we've proposed, which I said, but I'll just repeat them, requiring private submeters on each individual unit, requiring landlords to Bill tenants based on their electricity use as determined by the private submeter, and requiring landlords to provide annual reports comparing what they charge tenants for based on their electricity use versus what they would have charged without the microgrid.

So the idea is that this is supposed to save tenants money and it's also supposed - we have a process where single family homes can have microgrids, so in the event of an outage, they are able to rely on their battery and their solar panel, and there's a process to do that. And I'd like to direct your attention in this packet that you received to page six, which talks about the number of pilot projects that have made it all the way through.

And it's just the one pilot project. So there were 11 other applicants who were proposing projects, but they're not even - almost all of them have fallen off by step four. So we don't have a process for multifamily homes to be resilient. And what that means is that people who live in apartments are not able to access energy, resilient energy, if the grid goes down, and they're also more reliant on the dirty energy, like having generators.

And so we're trying to create a grid where an apartment building, the whole building, could have the solar panels and then the battery, and that in the event of the grid going down, they would be able to still run their refrigerator and they'd be able to keep their oxygen machine going. And so right now the process that we have is just flat not working. So this is designed to have all the tenant protections and to provide the resiliency that we don't currently have in the system.

So the tenant protection part is a major part of this Bill, and it's something that we have spent a lot of time talking with different staff Members about in various offices that care a lot about this. And that's why there are all these tenant protections included.

Any additional questions, concerns? I've sat down with the author and I've expressed my concerns with this. I really think I get your intentions. But to sit here and say it's flat not working, it's a process that has never been done. So to say that it's flat not working has never been tried, and it's a regressive move versus a progressive move.

Again, we've been moving away from master meters for almost 40 years because it takes away the tenant's ability to interact directly with the utility and you become beholden to the landlord or the building owner who chooses to take their time, and whether paying the Bill or having your power restored or not, and this is going to hurt tenants more so. So I'm just curious, are you taking the Committee amendments that have been offered to move this Bill forward or not?

Well, given that you didn't have a support position, you didn't offer amendments?

We did offer amendments on when we met on Thursday.

Oh did it become a study?

Yes.

No.

Okay. So again, for the 40 years, California has required individual meters for electricity and gas, utility service, for new apartments, condominiums and other multi unit residential structures. So again, this would be moving backwards. And a master meeting has been riddled with problems. Again, as an individual who worked for a utility, I remember us having to respond to folks in apartments and most importantly in our trailer parks about not having power and having to go to the landlord and saying what are you doing here. And we had no power to help that individual, be it a family of small children or a senior who needed their power put back on. So I think this is a move before its time. Again, the PUC is doing a study on this currently right now.

So I would think we would be better served for the tenants, the building owners, and for California as a whole to wait until that study has been completed by the PUC or that work has been done by the PUC to move us forward in this area. So anyway, we had a due passed as amended to the Committee on Labor, but it's clear that she's not taking those amendments. So I hear for amendment, if there's a motion for this Bill. It's been moved by Senator Becker.

May I close?

I'm sorry. Yes, you may close.

Okay. Thank you very much. So I appreciate the consideration of the Committee. I think the idea that master metering is just inherently a bad way to go is really an unfair comparison. You know, the mobile home parks of the 1980s are from 40 plus years ago, are a completely different environment when it comes to our energy and our regulation of energy and our goals and our concerns. And so at that time, there were tenants who were taken advantage of by landlords.

But this Bill incorporates all of the tenant protections that we can conceive of, and we are open to more tenant protections. That's a core principle of this Bill. But the reality is that an apartment complex is going to need some type of master metering in order for it to be able to function. You can't envision that every single individual apartment has its own solar panel and its own battery. So there has to be some way for that to work.

And the fact that our colleagues, Senator Stern passed a Bill in 2017 indicates that seven years ago this was also of concern. But what we're seeing right now is a proliferation of generators of people who which is dirty energy as backup energy. And we also see that there are many buildings and people who do not have resilient power when the grid goes down. So this Bill is aimed at addressing that problem. And with that, I respectfully ask for your aye vote. Thank you.

Thank you. We have a motion by Senator Becker. Secretary, please call the roll.

Due passed and re referred to the Committee on Labor, Public Employment and Retirement. [Roll Call]. One to five.

It's currently one to five. We'll leave the roll open for absent Members to add on.

Thank you.

Thank you. Next up is Senator Jones. I believe he's presenting SB-1326.

Thank you Mr. Chair and Members, I am indeed presenting SB-1326, the Cost of Living Reduction Act, which would repeal an unfair law mandating that the California Public Utility Commission to impose an uncapped monthly fixed charge on electricity bills. In 2022, Assembly Bill 205 authorized the CPUC to permit larger income graduated fixed charges on residential ratepayers. And I will also point out that at that time, Assembly Bill 205 was a budget Bill that was passed at the end of session with very little debate or discussion.

The fixed charges were no longer set by statute as they had been before, but rather by the whims of the CPUC. The CPUC has proposed a $24.15 fixed charge on energy customers. This proposal may be voted on as soon as May 9, 2024, and must be approved no later than July 1, 2024.

While the CPUC's decision to implement a fixed charge of $24.15 is an improvement over the utilities and others proposals earlier in the year, which would have added a fixed charge of up to $128 and based the charge on a ratepayer's income, it still remains excessively high. Families will be on the hook for almost $300 a year in additional fees, regardless of their electricity usage. And this is just where it starts.

Under the flawed AB-205, the CPUC can authorize new fixed charges any time it wants, just by drafting and voting on a new plan. This move not only contradicts the principles of fair pricing and consumer protection, but also discourages energy conservation and sustainable living. Allowing the utilities to issue massive charges regardless of energy consumption just takes away a major incentive for consumers to conserve their energy usage.

If consumers are paying hundreds of dollars for something, whether they need it or not, you better believe they're going to use it more freely. This Bill reverts charges back to before AB-205 passed, thus capping the fixed charges at $10. This cap will prevent the CPUC from being able to increase the fixed charge whenever it sees fit. Without proper guidance from the Legislature, we must stop deferring legislative authority to a regulator and take back responsibility for making critical decisions such as this.

22 of our Democrat colleagues in the Assembly signed on to a letter expressing "significant concerns about the direction of the CPUC's implementation of AB-205 and its potential negative impacts on our constituents." Additionally, thousands of Californians have signed a petition in support of this measure. I respectfully ask for your aye vote to ensure fixed charges are kept at a reasonable level and consumers are protected from unfair changes to their electricity bills. Thank you, Mr. Chair.

Thank you. You have any primary witnesses in support?

Yes, sir.

Okay. Stone. You have two minutes.

Kim Stone of Stone Advocacy, California Solar and Storage Association. In enthusiastic support. Without a limit on the fixed charge, people who use less energy are going to pay more. We fear that the overall bills will not go down. When I go to hotels and there's a resort charge of $50 on $150 hotel room, they don't reduce the rate of the hotel room to $100 and only charge me $150, they charge 200, plus another 24 for parking.

And we feel like this is exactly what's going to happen to our electricity bills. People who use less energy, either through conservation or solar, or turning the lights off or making their kids wear sweatshirts, should be rewarded by paying less for that energy rather than having to pay a high fixed amount, no matter what. Respectfully ask for your no vote.

Thank you.

Are you I vote or no vote?

I'm sorry. Support the Bill. It's been a day. I apologize.

So when I said just, what I meant was just brief comments in support.

I'm sorry. Thanks for the help. I clearly need it.

All right, any additional witnesses, not sure where they are on this Bill, are in support of this Bill?

It's been a long day already.

Seeing no one coming forward. Witnesses in opposition. Your primary witness in opposition. You will have two minutes, please.

Thank you, Mr. Chair and Members of the Committee. My name is Matt Friedman I'm a Staff Attorney with the Utility Reform Network. SB-1326 would prevent the Public Utilities Commission from moving forward with equitable rate reforms designed to align retail rates with grid value to fairly allocate system costs, to reduce bills for low-income customers, to lower average bills in hotter inland parts of the state, to reduce seasonal Bill volatility, and to promote electrification of transportation in buildings.

The $10 cap in this Bill would be insufficient to collect fixed costs beyond a small portion that are directly attributable to connecting the customer to the grid, thereby forcing a wide array of fixed costs in the system to be collected exclusively through volumetric charges. So what are those costs that would be excluded from the cap? It would include public purpose programs, climate programs, all the wildfire spending that has been the topic of a lot of discussion here. Nuclear decommissioning, grid hardening costs.

The use of volumetric rates to collect these costs is inefficient and economically regressive. Collecting these fixed costs through volumetric rates places significant burdens on lower income customers and inequitably charges customers for shared cost obligations. The Legislature should not hamstring the Commission in this respect. Now TURN originally supported the $10 cap that was enacted as part of AB-327 that was heard in this Committee in 2013. But since that time, the world has changed. Rates have skyrocketed for the three major utilities.

Much of the spending that has driven those increases is attributable to costs that are completely unrelated to customer usage. Wildfire mitigation being the number one cost driver today, we think it's time to revise the way we think about collecting these costs and rates to do it in a manner that's fair for everyone. And while this Bill would impose the $10 cap for the investor owned utilities, it would exempt the publicly owned utilities from any similar cap.

And most of the publicly owned utilities in California have fixed charges for residential customers well above $10, $20, and $30 charges. Here in Sacramento, the charge is currently $24.15 a month. It's not clear why publicly owned utilities should get different treatment under the state law. So, finally, just to wrap up, we think that this Bill is. It's not appropriate at this time. The Commission has a proposal on its agenda for a $24 fixed charge, a $6 charge for low-income customers. This will provide widespread benefits.

It's a step forward on a number of fronts, and we urge a no vote on this Bill. Thank you.

Thank you. Any additional witnesses in opposition? State your name and your organization.

Rachael Koss, on behalf of the Coalition of California Utility Employees. Our current electric rates are mostly based on the amount of energy a customer uses, but a lot of the costs don't actually change with the amount of energy used. A lot of them are fixed. For example, wildfire prevention costs are the same regardless of usage. The care subsidy is the same regardless of usage. The current structure makes electricity far more expensive for customers in hot inland areas who must use air conditioning.

They pay much more than coastal customers. Because of the current structure, low-income customers pay a higher percentage of their income towards electricity than higher earners, even if they use less. A meaningful, well-structured fixed charge, like the one that PUC is currently considering, will help with these inequities by pulling out fixed costs from the volumetric charge, that portion of the rate that changes with usage. This will also help incentivize electrification.

We need rates to be lower if people are going to switch to electric vehicles and appliances. We also need rates to be lower if we're going to get all of the grid work done. We have a lot of work to do still for wildfire prevention, and we have a ton of work to do to upgrade the system's capacity for all of the electrification work that California wants to do. Low income and inland customers cannot carry that burden, and they shouldn't have to.

It makes no sense for customers in the Inland Empire or the Central Valley to pay more for wildfire prevention or upgrading the system for electrification, even though it does not benefit them any more than it benefits coastal customers. Also, I want to address conservation.

I'm going to need you to wrap. That's probably your two minutes.

Okay. This Bill does not disincentivize conservation. It would bring the volumetric portion of rates down to 2021 levels. And nobody was complaining then that there was a disincentive to conserve energy. Thank you so much.

Thank you. Any additional witnesses in opposition? State your name and your organization, please.

Scott Wetch on behalf of the California State Association of Electrical Workers and the California State Pipe Trades Council. In opposition.

Thank you.

Merrian Borgeson with the Natural Resources Defense Counsel. In opposition.

Catherine Borg with Southern California Edison. Respectfully oppose.

Valerie Turella of Lajos Pacific Gas and Electric Company. In opposition.

Hi. Laura Desaillon with San Diego Gas and Electric. In opposition.

Thank you. Any additional witnesses in opposition here in the room? Seeing none, I'll bring it back to the Committee. Any questions or concerns? Senator Becker.

Thank you, Assemblymember Jones. I appreciate you focusing on this issue. I was certainly very concerned initially when some of the proposals were being floated around and there were proposals being floated around as much as $100 plus for the fixed charge and actually wrote an op-ed with some of Assemblymember Marc Berman on this. I do, you know, I appreciate the PUC.

I think taking that feedback into account and coming up with this number, I think we can still, we could argue a bit about the number, but I think coming up with the same number that SMUD uses successfully here in Sacramento is a well-respected public utility.

I'm going to, well, I'm not sure I'll abstain or not support the Bill just because again, I do appreciate the fact that they took that into account and came up with, I think, a much lower fixed charge than had been anticipated or certainly feared. Concerned about the, if you had too big a fixed charge, then, you know, to lower the incentives for conservation. But again, I think they took into account. That's why I won't support the Bill today. But I do appreciate you focusing on this issue.

Great. Any additional comments, concerns? It's been moved by Senator Seyarto. Would you like to close Senator Jones?

That would be great. I would appreciate that, yes. Just to address a couple of comments in opposition. I think one of the comments that struck me in the original, in the initial comments and opposition is hamstring the PUC. Well, that's the exact point of the Bill, actually, is as legislators, we have the authority over these fixed rate charges. We should be the ones looking at that as is displayed by the $10 charge that was originally approved by the Legislature.

And as far as it being equitable, the current proposals that are floating around the state are not equitable. I believe that this undoing AB-205 is what would be more equitable. And then to the comments of the PUC, picking the fixed charge that SMUD uses. Well, I don't know if I'm a little bit cynical about that or what, but that's just the charge that they've picked for this year because they can justify it by saying that's what SMUD charges.

But what rate are they going to pick next year or the year after that? And I think that it's important that as Legislators, we maintain this authority and bring it back to the Legislature. Keeping fixed charges low and requiring utilities to recover their costs through volumetric crates will protect hardworking Californians from an unfair CPUC plan and promote sustainable energy consumption practices.

This would ensure that those who use the most energy pay their fair share and those who are careful to conserve electricity are not unduly burdened with the sudden increase in their monthly utility bills. I ask for your aye vote.

Okay. We have a motion by Senator Seyarto, and it's a do-pass to the Committee on Appropriations. Secretary, please call the role.

[Roll Call]

It's currently 3-0. We'll leave the roll open for ops and Members add-on. Thank you.

Thank you, Chairman.

We'll take Senator Grove. I believe that's an order that we have. You'll be presenting SB 1087. When you're ready, you may begin.

Thank you, Mister chair and Members. Before I begin my presentation, I'd like to accept the two Committee amendments proposed in the analysis to ensure that the information shared with the California Air Resources Board must comply with the existing confidentiality provisions and the monitoring done by the Energy Commission is handled with existing resources. Thank you. Each year, Californians consume 1.45 million barrels of oil every single day. That's about 530 million barrels of oil every year.

But last year, only 124 million barrels were produced here in the State of California by California's workers under California's environmental compliance that we have in the state to ensure the best energy produced. The rest of that oil is imported, with about 321 million of those barrels coming from states or foreign states and countries that are transported here by huge tanker ships. The amount that Californians spend on imported oil is enormous.

If oil is produced at roughly $80 a barrel, Californians will pay $26 billion a year to import the oil that we need and use every single day. I truly believe that the state's energy policy doesn't make sense with foreign oil imports. We have placed California's energy security in the hands of countries that are actively hostile to California's values when it comes to human rights, labor rights, environmental rights. The top four countries we do business with account for two thirds of the foreign oil that we import.

That's about 589,000 barrels a day, or 215 million barrels a year. Those countries are Iraq, Saudi Arabia, Brazil, and Ecuador. Currently, California's top two sources of foreign crude oil is Iraq and Saudi Arabia. These countries are annually highlighted by the US State Department as well as groups on Human Rights Watch and Amnesty International for their deplorable human rights violations in these two countries. And we send billions of dollars to these countries every year.

We import about 60 million barrels of oil every year from Iraq, which last year passed a law that made it illegal to use the word homosexual, and it also proposed the death penalty for imprisonment and engaging in consensual same sex relationships. Again, colleagues were sending money to these governments that don't align with California's policies on any type of energy, but much less human rights violations and their rights for same sex marriage.

There's about $5.6 billion that the government of Iraq gets from us, and it's directly to support policies that we send to these countries. These governments directly support policies like open air flaming that causes cancer which we abandoned over three decades ago. Our second highest partner is Saudi Arabia. The same statistics are there. We use about $4 billion to support these governments and policies that they don't let women vote. There's women's rights that are violated every single day. And again, we support these countries.

In Ecuador, we bulldoze down the rainforest, which is like the world's lung, where we have clear cutting of the rainforest. On one state, this state, California, imports over half of the produce crude from Ecuador. So California produces over half of everything that Ecuador produces. We also track things like on vessel finder and we try to get the carbon emissions from ships from point of origin to point of destination.

It's roughly 126 metric tons, million metric tons of carbon emission in order to bring a ship here so we can get the oil or the crude oil that we need every single day to meet our constituents needs of demand. California only accounts for the 12 miles outside of our coastline.

So when you get a report that says a ship came from Ecuador, Saudi Arabia or another location, and it says we only used 20 metric tons of carbon emissions, that's not a true accurate account because we're only counting 12 miles off our coastline. It takes about 600 taker ships every year to bring us over our ocean and ecosystem. The oil that we use every single day. I understand that my colleagues and I, we see the energy future different.

And I know that there is a transition that has been put in place by this Legislature and this Governor, but that transition has to be somewhat just. You can't keep eliminating what we produce here and bring it from foreign countries that I just described that are hostile to us. Not only is oil the oil that we used, used for just our cars. We also have about 6000 products every single day made from petroleum.

Like shoes, our Iphones, toothpaste glasses, these glasses, disposable diapers and even it takes 35 gallons of oil to make tires for a Tesla and including all the plastic parts. So there's a lot of things that we need to do to achieve carbon neutrality. But the policies that we have now are not something that are working.

The 2045 scoping plan says that we reduce oil consumption here in the State of California by roughly 2% of a year, but respectively that's been 9% the first year and 10% the second year.

And I can tell you that when we figure out what's going on and we pass policies and we figure out what's going on and realize that everything we're doing is actually increasing the cost of fuel, it might be just too late to restart everything we have in the state where we oversee the process, we control the labor cost, we set labor wages. We have OSHA, we have California Department of Health, we have California Department of Housing.

We have the labor Standards enforcement Department that makes sure that we do things right here. And then we have environmental policy that we provide every year. I'm particularly passionate about this issue, colleagues, because 70% of the state's oil comes from my district. I have second chancers at 55%, people of color at over 60% that work in this industry or did work in this industry.

And the bottom line is they went from 125 million, excuse me, $125,000 a year, roughly on average, for their wages. And now we have replacement jobs for Amazon and dollar tree. And no offense against those industries, but I don't need other Amazon and dollar tree, I need these people to be able to provide for their families and have the benefits that they've been earning. I respectfully, I will ask my witness in support to come up so I don't continue to go on and on about this.

I apologize. I'd ask the Theo Pahos to come up with the California Independent Petroleum Association to be a witness in support.

Mister Panos, are you here? He's not here. Theo's not here.

That's pretty sad when I got dogged by my own support witness. Let's put that on the record, that Theo Pahos did not show up for this Bill.

Duly Noted.

That he worked on for hours and duly noted, sir, that I would consider, I don't know, some type of reprimanded not having him come into the Committee for a period of time since he didn't show up. Just saying.

Okay. Are there any other witnesses in support? Absent Mister Panos.

Good afternoon, Mister Chair and members. Michelle Welgava with Nielsen Merksamer on behalf of the Associated Builders and Contractors of California, in support of SB 1087.

Thank you. Next witness.

Clifton Wilson, on behalf of the Fresno County Board of Supervisors, in support. Thank you.

Thank you. Any additional witnesses in support? All right, seeing none, how about opposition? Witnesses in opposition to SB 1087 come forward now. Seeing none, we're going to bring it back to the Committee. Any questions or concerns by Committee Members? It's been moved and it states do pass, as amended, to the Committee on Appropriations. You have accepted the Committee amendments?

I have, sir.

And I just want to go on record. I totally agree with so many of the products that we use on a daily basis are derived from oil. With one exception. My shoes are all leather. Okay, you may close.

I was. I had a comment, sir.

Do you have a leather sole, too, sir?

Yes.

Oh okay.

I'd asked a comment.

Sorry.

All right, Seyarto.

Okay, Senator, thank you for pointing out the absurdity in a lot of what we're doing, because the rest of what we're doing today is a byproduct of our efforts to do something in the face of this type of information. So what your Bill is doing is trying to course correct a little bit to ensure that we at least have accurate data for us to make our decisions on. And I appreciate you bringing it up, and we'll be supporting your Bill today, thank you.

Would you like to close?

Absolutely. Thank you, Senator Seardo, for those comments. But I do think that, you know, you know, Europe and other countries, and California followed along with the United States about going to what they considered green technology. I'm totally not against green technology. There are 58 counties in this state. My county produces 53% of the state's renewable energy and sends it to Los Angeles and other mechanisms or other counties via mechanisms of mostly Southern California Edison pipelines.

This is an all of above state, and I think we should consider that. But I don't think we destroy an industry that we control locally and control the labor process, the environmental process, to make sure it's the most quality produced energy that we have and then import it from countries that does not have that same quality or that same characteristic that we expect here in the State of California. Respectfully ask for an aye vote.

Okay. We have do pass, as amended to appropriations. Please call the roll on SB 1087.

[Roll Call] 11 to zero.

11 to zero? 11 to zero. That measures out. We'll leave the roll open for Absent members to add on. I see we have Senator Padilla. He's ready. He's going to present file item five, SB 1351. You may begin.

Thank you, sir. Mr. Chairman and members, I'm pleased to present SB 1351. I want to first by thanking the Chair and the committee for working with our staff who will be accepting committee amendments. Basically, SB 1351 requires the PUC, the CEC, and CARB to add to their joint report, which they already conduct to the Legislature, a clean energy infrastructure development plan. In 2018, as we are all more than well aware, California set a goal of 100% clean energy by 2045.

In addition, there's been subsequent clean energy goal legislation, such as SB 1020, which has been adopted. Cal ISO has estimated that our state needs approximately 7000 megawatts of transmission capacity added to the grid every year to meet our energy demand, and we are far from that.

The PUC, CEC, and CARB have embarked upon what is called the joint agency report, and this is what the bill would address, would require a clean energy infrastructure development plan, be a component of that beginning in January 2026 and as part of the reporting that already is mandated thereafter. So this bill adds to that. Cal ISO's 20-year transmission outlook estimates the state will need over 10.74 billion in upgrades to just existing facilities and over $30 billion of investment in new transmission capacity by 2040.

SB 1351 will basically collate in one reporting and analysis for use and planning in one place, that which has already been incrementally addressed by a number of other ad hoc groups, and incremental planning that doesn't take in the whole comprehensive picture. And that's simply what the bill would do. And I have to check with staff. Emily, I don't think that our. All right, well, that will be it. With that, I would respectfully ask for an aye vote.

Thank you. Are there anyone, anyone here in the room in support of SB 1351? State your name and your organization, please.

Good afternoon. Alejandro Solis, on behalf of Clean Power Campaign, in support. Thank you.

Thank you.

Katie McCammon, supporting on behalf of Climate Action California.

Thank you. Any additional witnesses and support? Hearing and seeing none. Now we'll move to opposition. Are there any primary witnesses in opposition to SB 1351? All right. Anyone just want to be a me-too in opposition to 1351? Not seeing anyone. So we're going to move it back to the committee. Any questions? Senator Seyarto.

Thank you very much. I have a question concerning the plan. Once they do the plan, does it include a cost estimate or is it just strictly the infrastructure itself?

The bill doesn't prescribe. It does loosely ask that it be addressed in the joint report looking at what are the demand side needs from new infrastructure, existing upgrades, enhancing, effectiveness, and reliability. We already, as you well know, Senator, we already have a number of sort of ad hoc efforts and some official reporting efforts, but they get at distinct pieces of that. But they don't look at it from an integrated standpoint.

And I would also want to clarify that, as is reflected in the amendments, this doesn't supplant or doesn't replace existing statutory reporting by other elements here, but it is the one place where you would have it all together in a planning document that specifically addresses the transmission grid.

Right. And I think cost is a super important part of that because the cost itself will determine whether short-term or long-term or longer-term is more appropriate for California, especially in the economic times that we're in. Thank you.

Move the bill.

Okay. It's been moved by Senator Dodd. We have a do pass as amended to the Committee on Appropriations. Senator Padilla, would you like to close?

Thank you, Mr. Chairman and Senators, I respectfully ask for an aye vote.

Okay. Secretary, please call the roll on 1351.

[Roll Call]

The current vote is seven to one. We'll leave the roll open for absent members.

Thank you, Mr. Chairman.

Thank you. Searching for. Okay, we have Senator Min. Are you ready for SB 1221 for Allen? Do you want to do that one first or yours?

Either way.

All right, let's do 1221, and then we'll move to Senator Allen.

Thank you, Chair Bradford. Committee members, I want to thank your staff and yourself, Mr. Chair, for working with my office on this measure. And I'll just be stating that I will be accepting the committee's proposed amendments. SB 1221 would require the CPUC to evaluate zero-emissions alternatives to gas pipeline replacement projects. This bill also encourages utilities to pilot cost-effective zero-emission alternative projects.

This February, the CPUC released a gas transition whitepaper outlining how several agencies could collaborate in creating a long-term plan to transition from natural gas to zero-emission sources for heating, cooling, and other energy needs. Currently, there is no process for the CPUC to consider zero-emission alternatives to long-term investments in the natural gas system. Instead, dollar amounts are approved for spending categories, such as pipeline replacements, that can cost ratepayers over $3 million per mile.

This will lead to California ratepayers committing decades of payments into an energy system that may be obsolete before those investments are paid off. By piloting cost-effective zero-emission alternative projects, California can save ratepayers money, reduce emissions, and better inform the CPU's CEC's long-term planning process. The energy transition is massive undertaking for the state, but necessary if we want to meet our 2045 zero-emissions goals, particularly if we want to do this in a way that does not leave key stakeholder groups behind.

My office has been working with many stakeholders, including environmental groups, labor groups, and utilities, to figure out how this program can be equitable for everyone involved. We look forward to continuing to work with the chair and staff as this bill moves forward to find the right balance on key details such as cost recovery, renter protections, and the obligation to serve as it relates to the pilot programs. Here to testify in support of this program, I have with me Marion Borgeson with the Natural Resources Defense Council and Jose Torres with the Building Decarbonization Coalition.

Thank you. You'll have two minutes each.

Good afternoon, Chair Bradford and members of the committee. My name is Merrian Borgeson with the Natural Resources Defense Council. First, I do want to thank the chair, the committee consultant, and the parties who have expressed concerns with this bill for working to try to find a way to have this bill make some targeted, thoughtful progress on the clean energy transition. There are still several issues to work out, but we look forward to productive conversations in those areas.

The future of the well more than 100,000 miles of gas pipelines in the state is not a question that can be ignored for 5, 10, or 20 years. We know that that would put vulnerable communities in the health of all Californians, the livelihood of workers, and our ability to mitigate and adapt to climate change in grave danger. The future of pipelines in California must be managed with great care. We know that gas use is decreasing.

We know that wealthier Californians are already abandoning the gas system for clean energy systems and for more electric use. And we know that we spend hundreds of millions of dollars each year, which can be around $15 to $20,000 per home, just to safely maintain the existing gas service. That's not sustainable. The PUC has just embarked on a next phase of the long-term gas planning proceeding, and we're hopeful that progress can be made through that process.

However, we also think that it's important that the Legislature push this proceeding and progress on the issue in the right direction. With the amendments that we've discussed, this bill would allow, not require, but allow the gas utilities to move forward with a handful of pilots to replace small segments of the gas system with zero-emission alternatives and require a report back on the lessons learned to the Legislature.

It would also ensure that the utilities are providing the data and information needed to enable the commission to oversee work in this area. This is needed and important progress. We urge your aye vote today on SB 1221. Thank you.

Thank you. Next witness.

Good afternoon. Chair Bradford and members of the committee. I'm Jose Torres with the Building Decarbonization Coalition. We're an organization made up of energy providers, manufacturers, environmental NGOs, local governments, and others focused on decarbonizing our nation's buildings. Like Merrian said, I'd also like to thank the chair, the committee consultants, utilities and labor for working with us to allow utilities to pilot zero-emission alternatives that will help us take on 20% of emissions that come from the built environment through a thoughtful, inclusive and holistic approach.

We look forward to continuing to work with stakeholders, the committee, and the chair on cost recovery, rental protections, and other details of the bill, as is related to the pilots. SB 1221 will help California regulators and utilities make responsible utility investments and open the door to piloting zero-emission alternatives like neighborhood-scale decarbonization in a way that aligns with the state's affordability, air quality, and climate targets.

Powering homes and buildings with clean energy can save consumers money, improve indoor and outdoor air quality, make our communities more climate resilient, and collect climate emissions. Neighborhood-scale decarbonization can power homes in economically disadvantaged communities with clean electricity and free zero-emission appliances. This can provide access to cooling during extreme heat and stabilize utility bills for Californians in the long term.

New polling conducted this year by FM3 for building decarbonization also shows us not only that this benefits California, but there's a broad majority that support this approach. The survey also showed us that voters are broadly concerned that California's gas pipelines are aging and carry high costs to maintain and replace them. SB 1221 will enable the state to make smarter decisions around energy infrastructure planning and invest in a way that makes energy more affordable for Californians while prioritizing the communities most in need. For these and many other reasons, I thank you for your time and please urge you for your aye vote on SB 1221.

Thank you. Additional witnesses in support, state your name and your organization, please.

Thank you, Mr. Chair. Mark Fenstermaker for Earth Justice, a co-sponsor of the measure. Echo the comments to get the details on renter protections correct. Thank you.

Melissa Romero, California Environmental Voters, in support.

Katie McCammon on behalf of California Climate Action, in support.

Chair and members, Edson Perez with Advanced Energy United, in support.

Hello. Meg Snyder, Axiom Advisors, on behalf of Rewiring America, in support.

Valerie Turella, Pacific Gas and Electric Company. Associate my comments with Building Decarb Coalition, a trade association that we are members.

Gabriella Facio, Sierra Club, California in support of the current version of 1221. Thank you.

Any additional witnesses in support? Now we'll move to opposition. Are you the two primary in opposition? Yes. Yes. Two minutes.

Thank you, Mister Chair Israel Salas with Southern California Gas Company. Appreciate the work of the Committee. I think the Committee analysis did a pretty good job of unpacking some of the complexities. Complexities and unintended consequences of eliminating the gas utility's obligation to serve. But with the Committee amendments we should be able to remove our opposition and look forward to being able to support the Bill.

We do appreciate the dialogue with the author's office and the sponsors to address our concerns. Thank you.

Thank you, Mister Chairman and Member Scott Wetch here on behalf of the California Coalition of Utility Employees, the State Association of Electrical Workers and the California State Pipe Trades council. With the Committee amendments we would remove our opposition. But the sponsors of the Bill mentioned that there was additional things which they wanted to try to work out.

And I just want to notify the Committee that one of those issues is having the rest of ratepayers pick up the costs of the electrification on the customer side of the meter for those customers giving up their gas. So that would mean all ratepayers paying for panel upgrades, paying for perhaps appliances and other things. And with that amendment we will be back opposed to the Bill. But for now we're neutral.

Okay, I heard you. So, yeah, I had Senator Durazo's movement of the bills, but it doesn't matter. You guys can harm us before. Okay. You would probably win. Senator Min, would you like to close?

Yeah. Just. I appreciate the efforts of the author in here. I'll move the Bill,time comes.

Thank you. Thank you. Any additional witnesses in opposition? You can come forward at this time seeing no one move toward the microphone. I'll bring it back to the Committee. Any questions or concerns as it relates to this measure 1221? Senator Becker.

Okay, we have a do pass. Is amended to the Committee on Labor. Secretary, please call the roll.

Respectfully asked your aye vote.

Roll Call

Current vote is eight to three. We'll leave the roll open for APPCn Members. Now we're going to go back to Senator Allen's Bill. File item six, SB 1474.

Thank you, Mister Chair. And Members, on behalf of Senator Allen, want to thank the Committee for their work on this Bill and let you know that Senator Allen will be accepting the Committee's amendments.

The intervener compensation program is intended to ensure that qualified parties have the financial resources they need to bring their concerns and interest to the Commission during formal proceedings. Currently, an intervener planning to seek compensation for participating in a CPUC proceeding must file a notice of intent within 30 days after the pre hearing conference is held. As amended, SB 1474 would allow for an intervener to file the notice of intent within 30 days after becoming a party to the proceeding.

SB 1474 will increase access to intervener compensation for groups that are disadvantaged by failure to be notified in a timely manner about an upcoming proceeding. Thank you. And on behalf of Senator Allen, I respectfully ask your aye vote.

Okay. Are there witnesses in support here of SB 1474? Seeing none. Okay, let's move to opposition. Are there anyone here in the room opposed to 1474? Are you the two primary oppositions or one? You can have two minutes.

Valerie Turella, Pacific Gas and Electric Company. We are in opposition to the bill in print and look forward to seeing the Committee's amendments and thank the author through Senator Min. Thank you.

Israel Salas with San Diego Gas and Electric and Southern California Gas Company, also in opposition, but neutral with the Committee amendments. Thank the committee.

Thank you. Next witness.

Rod Brewer for Southern California Edison. Our comments are aligned with PG and E and Southern SDG and E, and we want to thank the author and Senator Min for further work on the bill.

Thank you. Any other witnesses? Support or opposition? Going once. Going twice. All right, we're moving on. We'll bring it back to the Committee. Any questions or concerns? Senator Dahle.

So who pays for the intervener?

It's not my bill, so I.

Let me help you. The ratepayers pay. So for that reason, I won't be supporting this bill.

Senator Rubio.

Thank you. And I will give the author courtesy of voting as well. But, you know, considering that I sit on the Insurance Committee and intervenors are a big part of what we do in the insurance market, and I like to continue the conversation with the author, but he's not here. And I'll just vote for it. But it does.

You know, I'm not going to echo exactly what the Senator from Bieber said, but I will say that sometimes they do have unintended consequences where the cost ends up being on the backs of those ratepayers. And I have a little bit of concern. So again, once I have a conversation with the author, I'll figure those concerns out, but for the moment, I will vote for it.

Thank you, Senator Grove?

Thank you, Mister Chair. I too echo my colleague's comments from Bieber. But just to add that recently we've been comparing bills from California versus right across the river in Arizona, and we have an individual, we just got a bill the other day where they used three times as much as electricity than they did in California, and their Bill was almost 400% lower.

So it's absurd to think that we have our costs in California are so exorbitantly high compared to just cost across the river in Arizona. And this person that shared their bill with us also has a house in Taft, California, where, like I said, their bill was almost dollar 400 a month and they used just. And again, the one in Arizona, they used a lot more electricity and their bill was like 88 dollars a month.

So it is very concerning to me that the continued policies that come out of this building still impose fees that get hiked onto ratepayers. Again, it's just something passed on to the utilities and they have to address it and the ratepayer ends up paying for it. And California's rates are extensively higher than almost any other state and specifically our neighboring states. I can't support the bill. Thank you.

Okay. Any additional comments or concerns? Do we have a motion on this measure? It's been moved by Senator Durazzo. We have a do pass as amended, to the Committee on Appropriations. Secretary, please call the roll.

Senator Bradford? Bradford, aye. Dahle? Dahle, no. Ashby? Becker? Becker, aye. Caballero? Caballero, aye. Dodd? Durazzo? Durazzo, aye. Eggman? Gonzalez? Grove? Grove, no. Limon? Min? Min aye. Newman? Rubio? Rubio, aye. Seyarto? Seyarto, no. Skinner? Skinner, aye. Wahab? Wilk? Seven to three.

Seven to two? Seven to three. We'll leave the roll open for absent members to add on as they see fit. Next up, we're going to bring up Senator Rubio, are you prepared? You have SB 1054. Senator Rubio, you may begin.

Thank you. Good afternoon, Chair and members of this committee. Today I present Senate Bill 1054, which aims to improve the public health of low-income and disadvantaged communities by establishing the Climate Pollution Reduction and Homes Initiative. I want to thank the chair and his staff and all the stakeholders have worked on this and have engaged my office. I will be accepting the committee amendments. Historically, low-income communities have disproportionately shouldered the burdens of poor air quality and higher energy costs.

According to the American Council for Energy Efficient Economy, low-income households spend 8.1% of their income on energy costs, on average, compared to just 2.3% of the non-low income households. Considering that low-income households spend this much of their monthly income on energy bills, any cost savings the state can offer with improved technologies will have a major impact on the economy and security of these households. As previously mentioned, poor air quality poses a dangerous risk as well.

For example, 12 million Californians without access to properly ventilated appliances are routinely exposed to nitrogen dioxide levels in their homes that would exceed federal and state health-based standards if found outside the home. The bill requires the Energy Commission to consult with the Department of Community Services and Development to develop and supervise a grant program that would provide financial assistance to low-income households for the purpose of purchasing zero-carbon-emitting appliances to improve air quality within their homes.

The California Climate Credit would find this program where the CPUC will require gas corporations to annually use up to 15% of the revenues received as a result of that allocation of allowances. The remaining 85% will be credited directly to the residential customers of gas corporations. A grant program like the one identified in this bill allows low-income communities to be at the forefront of climate change by making direct impacts to reduce greenhouse gases in their homes. Today with me, I believe my witnesses are Stephanie Barger, Stephanie, and Reed Addis okay, they're both here when you're ready. Thank you.

When you're ready, you may begin.

Thank you, Chair and members. Reed Addis on behalf of the Central Coast Energy Services. We are one of many organizations throughout the state providing low-income services for ratepayers. Sometimes that's dealing with their bills, other times it's helping them transition with new technology and appliances. Extreme heat is creating a bigger problem for all of our communities. Those who maybe have air conditioning, but it's not a great setup or their systems aren't running effectively.

Some of you live in communities where we haven't even thought about air conditioning before, and now we need to. We want to make sure as the state deals with this issue and is putting climate-friendly technology in our homes that all Californians are benefiting, including low-income communities. This measure helps do that.

It creates a grant program specifically designed to work with organizations like ours and many others throughout California to go into homes, help meet people where they're at, provide the right kinds of technologies and solutions for them in their communities. I don't want to geek out, but some of you have heard about one of these technologies, which is a heat pump.

It's a very specific technology that actually if we can deploy those in homes, it not only saves you time and money on air conditioning, but it also helps heat you in the winter. A great win-win for Californians in low-income communities. We need funding for a program like this, and we love the work the author has done with this committee to come up with a great solution that provides adequate and sustained funding for this program and therefore in strong support today. Thank you very much.

Thank you. Next witness.

Good afternoon. Chair and members of the committee. My name is Stephanie Barger and I am director of the US Green Building Council, an organization dedicated to advancing sustainable, healthy building practices globally. In California alone, we have over 27,000 lead professionals, 7500 certified buildings, and over 500 member organizations. Today, I am here to express our support for Senate Bill 1054, the Climate Pollution Reduction in Homes Initiative.

This bill is a critical step forward in improving public health and economic security for California's low-income and disadvantaged communities who have historically faced disproportionate challenges due to poor air quality and high energy costs. Reiterating what Senator Rubio said, with low-income households sending an average of 8.1, Senate Bill 1054 addresses this disparity by providing financial assistance for the purchase of zero-carbon-emitting appliances, which can significantly reduce energy costs and improve air quality.

Additionally, poor ventilation, as discussed, is harmful levels of nitrogen dioxide, often exceeding health-based standards that are set for outdoor environments. By enabling the purchase of zero-emission appliances, the bill not only improves indoor air quality but also supports California's broader environmental goals. The initiative is thoughtfully designed to be funded through the California Climate Credit, with provisions that ensure a substantial part of the revenue from gas corporations is directly utilized to empower low-income households in their transition to cleaner technology.

While the primary focus of today's discussion is the establishment and funding of the grant program, I would also like to highlight a future consideration. As we continue to refine this bill, we see a valuable opportunity to incorporate recycling and repurposing measures for replacement appliances. This would ensure a comprehensive approach to environmental sustainability, reducing waste, and further supporting California's climate goals. In closing, the US Green Building Council is committed to supporting SB 1054, recognizing its potential to make significant environmental and social impacts. We are eager to work with the committee and stakeholders to ensure the success of this initiative.

Thank you.

Respectfully say aye. Thank you.

Appreciate it. Okay, any other witnesses here in the room and support of SB 1054? State your name and your organization, please.

Merrian Borgeson, Natural Resources Defense Council, in support.

Edson Perez with Advanced Energy United, in support.

Melissa Romero, California Environmental Voters, in support.

On behalf of the Building Decarbonization Coalition, in support.

Gabriella Facio with Sierra Club California, in support.

Mark Fenstermaker for Earth Justice, in support.

Thank you. Now let's move to opposition. Are there witnesses in the room in opposition to SB 1054? All right, seeing none, we'll bring it back to the committee. Senator Dodd.

Yeah. I appreciate what the author's trying to do here. I guess I get asked the question, as I have so many times since this year, this climate rebate or whatever ultimately comes out of rates. I just wonder when it's worthy. But when are we going to start looking at what we're doing to rates overall from, you know, from this committee? I don't know. It's just.

Can I respond? Oh, wait.

Well, we have Senator Skinner up with a question. Senator Skinner.

Thank you, Mr. Chair. So I'm reading the committee analysis, and I want to make sure I understand this correctly. So the bill, Senator Rubio, or your bill would have us. So the GHG allowances on the natural gas have not prescribed the way that our electricity ones are. So in other words, if you're an electricity ratepayer, you get a credit on your bill as part of the GHG allowance. So in other words, that's how you get your. But with the gas, we don't.

It's only CPUC who specified it. So far, we've not put into statute. So your bill would first and foremost put into statute that Legislature directing how that GHG allowance under gas is used, and then secondarily setting up this pilot. I'm assuming I won't use pilot. It's only a pilot if the amendment for sunset, but the ability to use it to support low-income households being able to get these appliances. So am I understanding that right?

That's good. And I should have clarified the amendments that were offered is a four-year sunset and a report just to see how this is working in the interim. But 15% of the revenues received are part of the cap and trade program to fund the Climate Pollution Reductions Act. And the 85% of the revenues received by the gas corporations will be credited directly to ratepayers. But can I have someone up here that can answer further?

It's analogous to how we do it with the electricity. Yeah, I'm seeing a nod from the consultants.

Okay. Simple answer is yes, Senator.

Okay, so what I now want to understand, if assuming that the bill is amended with the four-year sunset, is it that the four-year sunset is only on the part that says how the money is used? It still allows the Legislature to direct these GHG gas allowances. Okay.

Well, from what I understand, and the amendments offered, it will expire in four years, and we would free.

But there's two parts of the bill. Only one part expires in four years.

True. You know what? I'm sorry. Can I? Because I know there was changed last minute. Can you add to that, please?

I would like to maybe refer to. Yes. Just the program.

Right. Okay. All right. Now I understand it better, and I think it makes sense that we should be, we should be, the Legislature should be directing those gas allowances, and I think it's perfectly legit to initially direct them towards supporting low-income households to get the type of appliances that otherwise might be difficult for them to afford. So I will support the bill, and whenever is appropriate, I could move it.

Now is appropriate time for making a motion. Thank you, Senator Skinner. Senator Becker.

Thank you. Chair. Yeah, I just want to say I appreciate this bill and I plan to support it today. I don't know if this was raised. I don't think so. But just want to ask if you consider directing the funding to an existing program like the Equitable Building Decarbonization program, rather than creating a new program. That would sort of be my ask. I don't know if you thought about that or we can talk about it going forward.

Well, there are two different programs. I mean, the difference is that the equitable building, I'm sorry, the Equitable Building Decarbonization Program is funded through the budget process, and this is funded through the cap and trade and the credit. So, yeah, we can try it later, but as it stands, it's funded differently right now.

But, I mean, it's already standing up rather than just kind of doing a new program, just something to consider. We can talk about that. But thank you. I will be.

Yes, I would. Thank you.

Thank you, Senator Dodd.

I just wanted to make sure, so this, this is already part of the rates. What we're doing is we're directing this, or is this in addition to the rates that are being charged today for gas?

From what I understand, this is already part of the rates that are being charged, and so from the revenues received by the gas corporations and it gets credited back to the rate peers. But you can clarify that.

Senator, I want to say that there may be a rate impact, but these are not ratepayer dollars. These are from, as Senator Skinner pointed out, a special program, and it would allow this bill if it were to pass, would allow the Legislature for a portion of those dollars to be spent on this program. But these are not ratepayer dollars per se.

So they're not charged? The ratepayer does not pay these, does not pay anything for this?

This is a program that the utilities benefit from. There may be a ratepayer benefit from that, but I think it's fair to say it's.

Ratepayer benefit. That sounds better than a repayer charge.

Any additional questions? Senator Grove.

I want to echo my colleague's comments from Napa. I really feel like sometimes we create policy that increases cost to our constituents, and then we have a government program that subsidizes the cost for those constituents and it becomes more dependent on government instead of just making sure we pass policy out. That's fair and works well for our constituents. I didn't support the cap and trade program. I like your bill because it actually takes resources that are already there to be applied to benefit our constituents.

But for instance, like Searles Valley Minerals, an organization in my district out in the central, in the Owens Valley of Trona, they have over a $40 million cap and trade fee this year because they're a plant built in the 1860s, but they produce things that we have to have in California. It's the only plant in the entire Western Hemisphere. So California is blessed to have this. Provides tons of jobs, labor jobs, the whole bit. And it's got borax, boric acid, soda ash, salt cake, and salt.

And they also have a railway company there. And if that company wasn't in existence and it's being regulated out of existence, we miss all of that and have to import that from other countries. That product that we use every day makes stop signs. I mean, just think about all the plastic stuff that we use. It makes all those things. We have to have that product to do that.

So part of that $40 million that this company pays goes to the cap and trade program, which I'm supporting your bill and all of that to say I'm glad that that money that my constituents are paying into is finally going to something good to at least try to offset some of the utilities costs that are created by some of the programs that are passed out of this building.

Senator Seyarto.

Thank you. So I struggle with the bill because it does eventually increase costs on the consumers that are actually benefiting from the upfront cost of this. Essentially, you're taking what you're saying is the lower income folks, people that struggle the most to pay their bills off of a utility that is arguably much less expensive than electricity, and then moving them into a utility that's really pricey.

I know I have pretty much a 50-50 mix of gas and electricity at my house, and my gas bills are much lower, even in the wintertime, than my electricity bills are, and I have solar. And so once you start thinking about, okay, so they get this money, this rebate money to put in their electric appliances and replace their gas dryer. They replace their gas stove with electricity, they replace their furnace with electricity. They have a pool. They replace their pool heater with electricity.

Well, now they need an upgrade to their electric panel, because if they don't upgrade that panel, they'll probably have a fire, or they'll consistently be tripping the wires, which means the wires are heating up in the attic. We get a lot of attic fires in the fire service, and a lot of it's because of outdated wiring that is not capable of handling the load that's been put on them.

So here we are, increasing the load on some houses, and I think of the little old house I grew up in. It was 700-square-foot in Baltimore that you're familiar with. I'm Binbot, and if I were to do this to that house, that house would burn down to the ground, or I would have to invest a lot more money. And here comes the rub in all of the other stuff to support trying to do what I'm doing with these new appliances that I'm bringing in.

So that's where all of the contracting and all of the sales folks come at you, and they get these people to go on programs. They cost them hundreds, thousands of dollars, and some of them, they just put it on their taxes, so they don't even know they're paying them, except when they try to sell their house, and they can't. So you know what? I just see this as when people want to use electrical appliances, they'll use it.

I grew up in a 700-square-foot house, and we had gas, and nothing became of any of us health-wise. And it continues to this day. I don't know of any health-affected people from having gas appliances in our houses. And so, you know, that one's really hard for me to base a policy decision like this. It's going to cost people a lot of money. So that's why I struggle with this.

I understand what the Legislature is trying to do, but in doing so, they are causing so much damage. Our policies are causing so much damage to what people are trying. People are just trying to live their lives out there, and this isn't helping. Giving them the money to put in stuff that's going to cost them a lot of money down the road is not helpful to people who are struggling to pay their bills.

So I'm not going to be joining my colleagues in voting for this today. I appreciate that you're looking out for people, but I also have to look farther ahead than just the actual appliance arriving at the door and getting reimbursed for that. It's all the other stuff that goes with it that I'm concerned about. Thank you.

Thank you. Vice Chair Dahle.

Thank you. So I do have a question. I know there's been a lot of comments today. So first off, I just want to make, so I'm excited that you did not go after the CEC to Fund the program, which is where I think the Senator from Napa and I have been focused on at least this session in trying to drive down electric rates. So this is not going to impact electric rate payers. But I wanted to kind of maybe springboard off of Senator Becker's comment.

So we have in place right now we have the pace program, which is a program which I support. It's where low-income folks can they help, they get provided assistance to put in efficient dryers and washers and the likes, and as the rate goes down, they use that money to pay back those loans. We have the low-income weatherization program. We have SCHIP, SGIP, and we have a lot of more federal programs on top of that.

So for me, we're creating a whole new program with this piece of legislation. Isn't there somewhere we could fit this in with one of those other programs already so that we don't have to be redundant with this product? I know that it is going to drive up the rates for those who have to pay the carbon offsets.

But so that's the question I have for, we have a whole host of programs out there already existing, and this is going to set up yet another program that there's administrative costs to do that. At the same time, we want to get those heat pumps for those Low income people out there to actually drive their rates down and keep them warm and cool in the summer.

Well, first of all, I want to appreciate the comments of the Senator from Napa, and I think Mr. Seyrato left. But you know, first of all, I felt good alongside you every single time here on our committee. How you know, I also feel like a lot of the times, it's the rapiers that end up carrying the burden. But in particular, this bill is very specifically tasty to those that can't afford it.

It's not a mandate for them to do it, but it does help, you know, there is risk factors. You know, Mr. Seyarto mentioned that there are risk factors and this helps them if they want to change their appliance. I often feel that in particular those that can't afford it, the Low income families are left behind. This is just an opportunity for us to help them. But I will ask our gentlemen, our witness, to speak on the issue.

Yes, again, Reed Addis with Central Coast Energy Services. I'll make two comments, one to the Senator Sayarto's comment that our job on the ground working with low-income communities is to make sure that the scenario he laid out doesn't occur. We are only working with low-income communities where it makes sense for them to have that technology and there's long-term cost benefits to them as it relates to the hodgepodge of different programs that are out there.

I do think the Senators really focused in on the low-income community. And while there are lots of programs out there that do support various climate' technologies, climate-beneficial technologies, none of them are fully focused on low-income communities. The closest, as Senator Becker mentioned, is the EBD program. There very well could be some sense of maybe having this be a subset of that, or I could imagine a scenario they're not speaking for the author, where you could do that.

But that's the closest program where the state has set up a system by which you could go in and provide appliances. And there is a discussion of focus and criteria in there about low-income communities. But the Senator's measure is solely focused on low-income communities. And that's why we think this program would be beneficial to pass.

Okay, any other questions or concern by committee members? Senator Durazo.

Just a small comment here. I think there are many benefits to doing this kind of program. I appreciate you moving it forward. I think it also adds to our economy because appliances will be built, will be made, manufactured. Hopefully. Maybe the next bill is about appliances made in the US or in California, then we'd really be assured of some better jobs. But anyway, I support you, bill.

Thank you. Any other additional questions or concerns here? Senator Rubio, would you like to close?

Thank you for your consideration. With that, I ask for an aye vote. Thank you.

All right, members, we have a do pass as amendment to the Committee on Appropriations. Do we have a motion on this already? Moved by Senator Durazo. Okay. I think. Yes, you had moved it. I think Senator Skinner had originally moved it. Okay, we have a motion by Senator Skinner. Secretary, please call the roll on SB 1054.

[Roll Call]

Eleven to zero. We'll leave the roll open for absent members. Now we're moving on to file item 10. Senator Becker, when you're ready, you may begin.

Thank you. Good afternoon, Chair and members. I'd like to first start by accepting the committee amendments that are noted on page five of the analysis. And I would like to thank the committee staff for their work on this bill. This is a 1206. SB 1206.

SB 1206 would authorize the Governor's Office of Business and Economic Development, GO-Biz, to create a public private partnership for a next generation solid state battery technology and manufacturing innovation hub. California is on the forefront of global competition to create the most cost effective and efficient batteries to electrify the grid and transition away from fossil fuels. The rapid growth of demand for batteries creates an important opportunity for California, home to one of the world's leading lithium deposits, to lead the development of next generation battery technologies.

We already have demonstrated the potential of a public private partnership with Arches, a statewide hydrogen hub hosted by the governor's Office of Business and Economic Development. Similar to how we're leading with Arches program, we need a holistic strategy for batteries that leverages our technology, leadership, lithium reserves, skilled workforce and role as a market maker.

And I want to mention here in this effort, that having good worker standards in this case is a positive, both in terms of the overall job quality and also getting dollars from the Federal Government. So this will prioritize our role in creating next generation batteries by authorizing this public private partnership and putting us in a better competitive position for federal funding. I have two witnesses here today on our behalf. Michael Monaghan, the State Building Construction Trades, and Orville Thomas from the California Mobility Center. Thank you.

Both have two minutes as primary witnesses in support.

Thank you, Mr. Chair and members. Mike Monaghan. On behalf of the Building Trades, with proud sponsors of this bill, I'd like to spend a couple of minutes, or less than a couple minutes, to talk about the project labor agreement that's included in this language. I think you're all familiar with PLA's and the obvious benefits of PLA with labor, peace and wages to support a family. But there's other things in PLA's that really are beneficial to the local community.

I had an opportunity to look at a PLA that's current now with the public water district and the disadvantaged. Communities that they reach out to during the construction include veterans. And I think you're all familiar with our hard, excuse me, helmets to hard hats, homeless or been homeless in the last year, former foster youth, formerly incarcerated, and graduates of an apprenticeship readiness program. And that's just a small portion of the outreach that we do in local communities.

There's one more piece of a PLA that I think gets overlooked or ignored, but section 2500 of the Public Contract code prohibits discrimination against non-union contractors, so anybody who's qualified, union or non-union, can participate. Thank you.

Thank you. Petition witness in support.

Thanks Chair Bradford and committee members also. Happy Earth Day. My name is Orville Thomas, CEO of the California Mobility Center.

The Mobility Center is a nonprofit partnership between UC Davis, Sacramento State, SMUD, and the Greater Sacramento Economic Council to develop a 25 acre site in South Sacramento and turn that into a clean energy, power and zero emissions innovation campus. This campus would be built in a Justice 40 disadvantage zone, and if this legislation passes, it would help draw down federal dollars to help accelerate that construction.

SB 1206 will be vital to our goal as it brings together various partners in the clean energy industry and creates a statewide plan similar to arches for the future of next generation batteries. The United States currently represents only 10% of global battery storage technologies, according to Lawrence Berkeley National Laboratory. To meet the demand and fuel for the energy transition, 10 times of this need will be required by 2045.

These future batteries that power homes, businesses, vehicles and other equipment necessary for the demand should be built in California in SB 1206, and the policy push accompanying it would put California in a leading position for research, development and manufacturing of those next generations of batteries, an opportunity valued at $400 million right now and growing into the billions by 2045.

If implemented, a statewide strategy around batteries will allow organizations like mine to potentially draw down hundreds of millions of dollars in existing federal funds to research, develop and manufacture next generation technology and also train the workforce that manufactures and maintains that technology. I ask you to support our research, development, manufacturing and workforce goals and vote aye. Thank you.

Thank you. Next witness.

Thank you Mr. Chair. Keith Dunn here on behalf of the Self Help Counties Coalition, the 25 local sales tax counties support this measure. We can have this type of technology built in California. It helps us attain our policy goals of clean energy and also environmental protections and good jobs. Thank you.

Thank you. Next witness.

Mr. Chair and members, Sara Flocks, California Labor Federation, in support. Thank you.

Hey there. Megan Mekelberg here on behalf of Calstar, in support.

Thank you.

Katie McCammon in support for Climate Action California and 350 Humboldt.

Thank you. Any additional witness in support. Now let's move to opposition. Witnesses in opposition.

Good evening, Senators. Richard Markuson for the Western Electrical Contractors Association. The proponents of project labor agreements frequently cite public contract codes 2500 as prohibiting discrimination against contractors. What they never talk about is the fact that project labor agreements discriminate against non-union construction workers and non union apprentices. Nonunion apprentices are prohibited by the standard language in project labor agreements from being employed on these projects.

A nonunion contractor who is permitted to bid on the project is typically limited to only three or four of their own core workers. Everyone else has to come from the out of work book. It's not discrimination against contractors, but it's a discrimination against against workers. What this bill does is it grants a no bid, sole source contract for all construction and maintenance labor to the sponsors of the measure, and it should be rejected. Thank you.

Thank you. Any additional witnesses in opposition, see none now to the Committee. Any questions or concerns by Committee Members? Hearing none. Senator Grove.

Thank you. When you talk about these lithium-ion batteries that are going to be developed, are we ethically sourcing that lithium? Like, is it coming from the State of California, like in the Salton Sea, where Senator Padilla is at, or in my community, where lithium is produced at the Boron land plant, which is 100% labor? Is it sourced there? Or are you getting it from the Democrat Republic of the Congo, where child slave labor is there? So where is this?

I want to know if this energy that we're going to, that is in this Bill that your colleagues are supporting, what is it, ethically acquired energy.

Well, I appreciate you raising that concern, and certainly the goal, I mean, as I mentioned in the bill, that is our competitive advantage that we have the workforce, the know how, but also we have this lithium that can be the greenest in the world, as you mentioned. So the nill is really about the battery manufacturing hub itself. But I certainly believe that if we succeed in establishing this hub, we will be.

It gives us a much easier draw to the California source of lithium, and that I think that will prevail, and I think it will be synergistic.

Okay. I was just curious because, like, you know, I understand the hub. I understand what you're saying on that. I just. It just makes me sick to my stomach that we continue to bring in, you know, whether it's lithium, whether it's cobalt, whether it's oil. We bring all these energy sources from countries and places that are really hostile to us and also that have horrific human rights and environmental policy in these different countries.

And so I just didn't want to support one more thing that had anything to do with that. Was there anything that you wanted to say on the opposition that says that it doesn't discriminate against the contractors, but it doesn't discriminate against the employees because when you have a project labor agreement, you do. You're not allowed to engage in the project labor agreement and keep your own employees. So is there an argument against that?

Because that's actually discrimination against employees that really have the desire to work and have the capabilities and the training to work that are not signatory.

Well, just to wrap up on your first point, and again, I think we should applaud then the Biden Harris Administration, where they've put all the incentives in the IRA, are for domestically produced content. So to your point.

Oh, it is.

Okay. And again, that is the goal. It doesn't explicitly say it, but that's the goal. I think it's all about building that domestic supply chain and building it here in California. To your second point, these are new facilities. So this is not a facility, someone else coming out. We're coming in and trading out employees. So this is really to encourage these new facilities. Build new battery manufacturing hubs, build them from the start with good jobs, I don't think excluded.

We can have more conversations about that if we like, but it's really. This is all about new, new efforts, and I think it will help us actually access the federal dollars, too.

But these new efforts are built under a project labor agreement, correct?

That there are points, yes. For the project labor agreement.

Okay, thank you.

Thank you. Any further discussion or debate on this item? Oh, it's been moved by Senator Durazo. We have a do pass to the Committee on Appropriations, as amended. Yes, do pass as amended to the Committee on Appropriations. Secretary, please call the roll.

Senators Bradford? Bradford, aye. Dahle? Dahle, no. Ashby? Becker? Becker, aye. Caballero? Caballero, aye. Dodd? Dodd, aye. Durazo? Durazo, aye. Eggman? Eggman, aye. Gonzalez? Grove? Grove, no. Limon? Min? Min, aye. Newman? Newman, aye. Rubio? Rubio, aye. Seyarto? Skinner? Skinner, aye. Wahab? Wilk? 10 to two.

That measure has 10 votes to two. We'll leave the roll open. Oh, she missed. No, she called Limon. Let's call her again.

Oh, I called. Yeah. Senator Limon? Limon, aye. 11 to two.

So it's 11 to two.

Yes.

All right. Now we're moving on to Senator Becker's second bill, and that is SB 1374.

Thank you, Chair and Members. We spend a little bit more time on this one. I know it's hours late, but I know there's been some concerns about this bill. I want to try to address some of those in the statement. This is SB 1374, restoring self-consumption for distributed solar. When the PUC changed the rules for net energy metering for homes and other buildings with rooftop solar, they decided what they thought was a fair way to treat that kind of behind-the-meter electricity generation.

SB 1374 is just telling the PUC to give the same deal to properties that were part of virtual net energy meeting before the properties like schools and apartments and farms where the solar powers are generating energy behind a separate meter from the meters measuring usage.

If you put a solar on the roof of a house, then when you are using electricity for air conditioner and your washing machine at the same time the solar panels are generating electricity, you avoid paying the utilities high rates for that power. That's called self consumption. That's what the PUC recognized and said, okay, we're going to take away some of the incentives to sell back to the grid, but we're going to encourage this kind of self consumption. And it makes sense.

You only pay the utility for power that you take from the utility, and you don't pay for power that you generate yourselves. If I generate more power than I consume during a 15 minutes period, the utility pays me for the excess power at the utilities avoided costs, which is about 75% lower than the price I'd have to pay to buy that same power from the utility given that low export price, again, it's in my interest to self consume that as much of solar as possible.

In fact, it makes no sense to install rooftop solar unless you save money by self consuming it to avoid paying those higher rates. Unfortunately, the PUC took away that ability to self consume solar from all the properties that were relying on net energy meeting. So this is a problem.

If you have a school, for example, that's generating power on a solar canopy on the parking lot behind 1 meter, and the school building are consuming power behind separate meters, then 100% of the solar power being sold to is being sold to the utility at low value, while the school is simultaneously purchasing power from the utility at four times the price at the same time on the same property. And that's what we believe is a fundamental unfairness of that ruling. The same is true for churches.

Again, we actually were incented by the IRA to have nonprofits and churches benefit. The same is true for commercial buildings, farms, anywhere that solar is not behind the same meter as the appliances that are using that energy. Realizing how unfair these rules are, the PUC made a last minute change to give the residential accounts at apartment buildings the same ability to self-consume within 15 minutes intervals. Which seems fair, right?

But the new rules are still a problem for apartment tenants because the building owners who have commercial accounts now have no incentive to install solar because they can't get credit for self consumption for their usage, for the hallway lighting, for pool pumps, or EV charging the parking lot. So then they won't see any value in selling solar. So there'll be no solar for them or for the apartment tenants to share. So again, this Bill is about telling the PUC to give everyone the same deal.

If you generate power in your own property, you can self consume it and avoid paying the utility for it. If your generation exceeds consumption, then the utility only has to pay you its avoided costs for that excess. If that was fair for single families homes, why wouldn't it be fair for everyone else? Now I do want to address this notion that this will cause a cost shift and raise rates for consumers, because that's an important point.

And again, that was behind their net energy meeting bill ruling for residential and it's important rates are high. Nobody wants to make it worse. Under the net billing tariff rules, pretty much everyone agrees exported energy is not being overcompensated anymore. So the only way there could be a cost shift is if self-consumption is a problem.

So those claiming a cost shift are saying that a school or a farm or an apartment building should be required to sell any energy they produce to the utility at a very low price and then simultaneously buy it back for four times the price. In their view, anything else is a cost shift. I think that's simply a flawed way to think about a cost shift and to calculate a customer's fair share of costs.

It would be fundamentally unfair not to let people self consume the power they generate and consume on their property. Another part of the cost shift argument is the worry that if people with solar buy less electricity from the grid than the fixed cost of the grid will be spread across a dwindling amount of electricity sales. But electricity demand is not declining. I think that's the important point here.

The CC expects electricity demand to double by 2045 as we switch to EV's and heat pumps and add data centers and more housing. And I just heard this weekend, last Friday as a PPIC event, they said nationally they're expecting a 5% increase in energy use. Nationally just in the next couple of years. People who are reducing demand by installing solar are not only partially offsetting all of their increase in demand from other uses. There's not a dwelling set of demand, just a slower increase.

And that slower increase in demand lets us avoid making as many new investments in the grid. That's helpful, not harmful. I appreciate the concerns raised by the chair and if this bill moves forward, I will continue to work on these concerns raised by the chair and staff. This bill again does not bring back the old NEM rules that created a lot of worries about a cost shift.

It just requires the pc to allow everyone to self consume power generated on their own property, including for cases where the consumption is behind separate meters from the same generation, and give schools and apartment buildings the same deal as we give to single family homes. To me, this is simple matter of fairness and respectfully ask for your aye vote. I have two witnesses here with us today.

Your two primary witnesses will have two minutes.

Thank you, Madam Chair, Members. Nancy Chaires Espinoza on behalf on behalf of the School Energy Coalition, who is a co-sponsor and also doing a me too on behalf of the Community College Facility Coalition and the County School Facility consortium. Today you have an opportunity to rectify a fundamental unfairness that was inflicted on commercial utility customers by the PUC and its December 23 NBTA ruling.

The ruling makes it economically infeasible for schools, community colleges, universities, water agencies, municipal facilities, farms, multifamily housing and many others to install photovoltaic systems and battery storage. Making clean energy more expensive undermines our ability to meet the greenhouse gas reduction goals set by this Legislature in AB 32. California cannot meet its energy goals without properly supporting the over 10,000 k 12 school sites in California, energy expenditures are already the second largest component of school district budgets.

We need self generation to preserve education funds for students instead of having to transfer them to investor owned utilities. We're not businesses. We can't charge fees to pass higher energy costs on to our customers. This ruling directly takes money out of the classroom.

Reliable solar and storage is the only way to prevent disruptions in education, nutrition and payroll caused by frequent public safety, power shutoffs, wildfires and other conditions that are becoming the new normal as our climate changes to ensure that we can operate as emergency shelters and staging grounds for emergency personnel. This ruling punishes us for that self reliance. And the timing couldn't be worse.

Just when the Federal Inflation Reduction Act makes unprecedented resources available to aid in the transition to clean power, the PUC makes it no longer financially feasible to adopt these technologies. If the Legislature doesn't remedy this soon, California will leave billions of dollars on the table. The Legislature created Nema and VNAM programs for good reason. Just because a property has more than 1 meter doesn't mean that a customer should be denied the opportunity to generate their own electricity.

The PUC made a bad decision and we need you to set things right. We are only asking for what's fair. Tell the PUC that commercial customers should be billed for the energy they actually consume from the grid, rather than pretending that none of the generation is consumed on site. We respectfully request your aye vote.

Thank you. Next witness.

Good afternoon, my name is Allie Detrio I'm the chief strategist of Reimagine Power. I was the sole representative advocating exclusively for multifamily interests, both property owners and renters in the V and MNEME docket, the CPUC for the last three years. As stated before, the core value proposition for single and multi unit buildings alike is the ability to self-generate and directly consume electricity produced on site. Multi-unit buildings like apartments, schools, farms, anyone that has multiple meters on a single property.

All multimeter customers are required to have a dedicated generating account with a production meter. Measuring export and benefiting accounts have individual meters that only measure consumption. These customers are physically consuming their electricity directly on site, per the laws of physics, which I can explain more in questions and netting is required to accurately measure on site self consumption and properly account for its value on these properties. It ensures that production can be measured against consumption or netted in a given time interval.

Unfortunately, the CPUC decision eliminates the ability of multimeter properties to recognize self generation value. Multifamily housing owners, for example, who were installing shared solar systems on their properties and sharing the electric bill savings with their tenants are no longer able to realize those benefits. Many projects in development at both existing and new housing are now being canceled. If property owners can't recognize self generation value, they won't invest in on site clean energy at all.

And their tenants, who are overwhelmingly low income and or communities of color, will not see the economic environmental benefits that they were starting to realize before this rule change. All customers have the right to self-generate and use electricity for their own use. It's a fundamental property right under state and federal law. The CPUC decision undermines that right and eliminates these customers self generation value in an arbitrary and discriminatory manner.

This legislation seeks to remedy this problem, and it's essential to ensuring fairness and equal treatment between all customers seeking to install clean energy and support state policy goals without swift corrective action. By the Legislature, millions of Low income and minority populations who rent their homes or businesses will be unjustly and equitably left behind in the state's clean energy transition. I'm happy to answer any technical questions or elaborate further on the details, and we strongly encourage your aye vote. Thank you.

Thank you. Additional witnesses, just state your name in your organization.

Hello. Meg Snyder, Axiom Advisors, on behalf of four different groups, rewiring America, Pearl X, Sunpower, and the California Building Industry Association. Thank you.

Thank you. Next witness.

Hello. My name is Sonja Wooley. On behalf of the Davis College Democrats and strong support.

Thank you.

Hi, I'm Katie, an environmental policy major at UC Davis and a renter, and I'm in strong support.

Thank you.

Hi, my name is Samuel Bathfield. I'm also of the Davis College Democrats and I am also in strong support.

Hi, I'm Alex Wolff of the Davis College Democrats and I am also strongly in support.

Sasha Horwitz, Los Angeles Unified School District, in support.

Kim Stone, Stone Advocacy for the California Solar and Storage Association, in support.

McKinley Thompson-Morley with California Advisors, on behalf of the Solar Energy Industries Association, in support.

Good evening. Erin Norwood, on behalf of the Almond Alliance, in strong support. Thank you.

Cynthia Shallot, on behalf of the 60 chapters of Indivisible California: StateStrong and also 40 other organizations that signed on at the coalition letter of Indivisible Green Team.

Kim Craig, on behalf of Sonova, in support.

Good evening Chair and Members. I am Anna Ferrera on behalf of Wine Institute and the 1000 wineries and their affiliates throughout the state. Thank you. In support.

Andrew Dawson with the California Housing Partnership, in support.

Sierra Cook with the San Diego Unified School District, in support.

I'm Stephanie Seidmon with UndauntedK12. We're a proud co-sponsor of this bill, in support.

Ashton Aron Ugale with Environment California, in support. Thank you.

Chair, Members. Edson Perez with Advanced Energy United, in support.

Mary Ellen Shay, California Association of Local Housing Finance Agencies, in support.

Gabriella Facio, Sierra Club California, in support.

Rick Brown, TerraVerde Energy, in support.

Katie McCammon with 350 Sacramento in support, as well as support from Climate Action California, Climate Reality Project California, 350 Humboldt, Glendale Environmental Coalition and Santa Cruz Climate Action Network.

Good evening, Mr. Chair, Members. Beth Olhasso, on behalf of the Agricultural Energy Consumers Association, the Western AG Processors Association and the California Cotton Ginners and Growers Association, in strong support. Thank you.

Ben Schwartz with the Clean Coalition, in support.

Cecilia LeBlanc, concerned citizen, in support.

Thank you. I think that exhausted our witnesses in support. Now we're moving to witnesses in opposition. Do we have primary witnesses in opposition? If so, you have two minutes.

Thank you, Mr. Chairman, Members of the Committee. Matt Freedman, on behalf of The Utility Reform Network. Today, the subsidy for net energy metering that's collected in utility rates is about $6.5 billion per year. These are numbers calculated by the Public Advocates Office. What does that mean?

It means about 15% of every residential electricity bill is the subsidy for net metering today. And that number is going up. This bill would exacerbate the level of the subsidy and the pace of rate increases going forward for residential customers by overturning the PUC's recent decision which limits the generous treatment that was historically provided for multifamily, multi-parcel, non-residential customers. The use of retail rates to compensate customers for behind the meter generation is extremely costly.

It's inequitable, it's unnecessary, and it would produce substantial cost shifts. Extending this treatment to multiple customers located on the same parcel or to a customer with operations extended across multiple properties would dramatically increase the cost of these programs. For non-residential customers, small businesses, small agricultural customers, schools, the level of compensation provided by retail rates is about five to 10 times the value of that solar power being provided to the grid. And the problem is that that money is coming from all other customers.

It's not coming from the utilities, it's not coming from their shareholders. It's coming from all customers. If the Legislature believes that more generous compensation is appropriate for non-residential customers, we have a proposal. Find another source of money to pay for it. Don't force all other customers to pay higher bills to provide the subsidy. Get it from the general fund, from cap and trade money, from some other source.

Given the affordability crisis facing current and future electricity ratepayers, the Legislature should take all available measures to avoid exacerbating the current cost shift and avoid increasing the crisis of affordability for residential customers. Thank you.

Rachael Koss, on behalf of the Coalition of California Utility Employees. Every time you heard supporters say benefits, you should have heard the word costs for other customers. That's exactly what it means. If you care about electric rates, you need to vote no on this bill. This bill will raise electric rates for your constituents. The PUC extensively considered property wide netting and found that it raises bills for non-participating customers.

When customers consume their own generation and buy fewer kilowatt hours from the grid, they avoid paying their fair share of fixed system costs such as grid hardening and grid upgrades to support electrification and policy programs such as the care subsidy and energy efficiency programs. But all these costs have to get paid, and as you heard from Mr. Freedman, this shifts costs to non-participating customers.

In PG&E's territory, for example, the PUC found the annual cost shift is $15,300 per customer for non-residential customers and 500 for residential customers. By comparison, the NEM 2.0 tariff has an average cost shift across all three IOUs of $3,171 per customer for non-residential and 1857 for residential customers. We agree with Mr. Freedman, if the Legislature wants customers to have these subsidies, they need to find another source. Ratepayers cannot afford it. We have heard concern about schools.

We would be open to limiting the bill to schools. If that was the case, we would consider removing our opposition. Thank you.

Thank you. Next witness.

Hunter Stern on behalf of the California State Association of Electrical Workers, in strong opposition.

Thank you.

Good afternoon. Brandon Ebeck, Pacific Gas and Electric. Align our comments with CUE and TURN. Thank you.

Good evening. Andrew Kosydar with Southern California Edison, opposed for the cost shifts. Thank you.

Thank you. Any additional witnesses in opposition? Seeing none. Let's bring it back to the Committee. Senator Min.

Hi. Senator Becker, thank you for bringing this bill forward. And so I guess I just want to know if you'd expound upon the cost shift that it's describing, because in reading the analysis, it seems like the cost shift that people are describing would occur if some of these different industrial and agricultural concerns were to invest more in renewables and also to move more of their energy usage during non-peak hours when energy production, renewable energy production is at its highest. Is that right? Is that a correct read of what they're talking about with the cost shift?

Well, number one, I'd like to have Allie come on up. While she's coming. I'd like to address a few things. There was a lot of information that out there, and a lot of it was really, I'd call it the FUD (fear, uncertainty and doubt) because a lot of what was thrown in was cost shift based on residential NEM 2.0, not NEM 3.0. Nothing else that we're talking about.

I just wanted to drill down because the way I'm trying to understand this, and maybe I can have the opposition come up, but like the cost shift is, maybe you're describing because it really wasn't articulated, but it's being driven by the fact that you're expecting more of these industrial concerns to invest in more renewable energy and move more of their energy consumption to, say, daytime hours. Is that the cost shift you're describing?

So, number one-- You want the opposition to talk about this? The argument is based on the premise, any cost shift is based, what I was trying to say on this premise, that you will sell low and buy high, and anything other than that is a cost shift. But people aren't going to do that. Schools are not going to put on-- they're not going to sell low and buy high. They're not going to do that. I'll ask my witness then. If you want opposition to expand, you can.

Yeah. Just to expand upon this notion of cost shifting. So any multimeter property, especially multifamily buildings, multi-mixed use, residential, commercial, any sort of schools, farms, et cetera. When you have multiple meters or multiple, multiple customers behind a single service delivery point, it's actually cost shifting in the other direction. Those customers are paying more than their cost of service for electricity. So actually, when you're installing solar on site at a multimeter facility, you're actually reducing costs for all ratepayers.

You're serving at one single service delivery point, but you're being charged as if you are your own individual house. We actually asked the CPUC to study that in more detail, and they declined to do so. And there are several stakeholders here that were not involved in this segment of the docket to back up any of these assertions about that data. So, just to reiterate, the cost shift is being blown completely out of proportion.

And when you're talking about multimeter facilities that are reducing demand on the system, that actually reduce costs for all ratepayers, and again, when you're serving multiple customers in one service delivery point, like a multifamily building or any sort of school or farm, anything that's multimeters on a single property, you're actually reducing costs.

Got it. And maybe if you guys want to come up, because I'm trying to understand, like, we talk a lot about the cost shift, we're just trying to drill down on what is driving that in your mind? What would drive it?

Thank you, Senator, for the question. Well, the solar industry doesn't believe there's a cost shift, right? That's their fundamental proposition when they come at all of these issues, we differ.

The Public Utilities Commission has actually developed a specific tool to measure the value of solar electricity at the distribution level. It's called the avoided cost calculator. And that's the measure that's being used to determine what kind of cost shift is occurring. Meaning the difference between the value that that solar system is providing to the grid and all customers as compared to the bill credits that the customer gets, which are retail rates. And those retail rates are five to 10 times higher, typically.

Right. But I guess here's my question. I have two follow up questions. First, if I were to generate more energy through the solar-- I'm like an agricultural concern-- than I use, do I get more money back? Can I sell, or is it just zero out to zero?

Well, it's complicated. To the extent that it's being treated as an export, then you would be compensated at the avoided cost calculator--

But you couldn't make money off of the utilities, right? Like at the end of the day, I'm going to either pay nothing or I'm going to-- If I over-invest in energy production, I either pay nothing or I get, I pay them something, right?

You can actually get a check, but it's at a reduced value even relative to the export because of the provisions of federal law and the treatment under net surplus compensation, which is its own animal.

I guess I'm just like, I'm wondering about this, Senator Becker, because, you know, we all talk about the need to want to shift more consumption to those daylight hours, right? And if this has the effect of doing that, I don't know if that's a cost shift per se, but that's something that we are trying to incentivize right now because that is when energy production is at its cheapest.

That is when, like, we know that we're, you know, trying to get people to charge their cars during the daytime hours. We're trying to get people to invest in more solar, more wind, more renewables, right? So if we're investing in more energy production, at the end of the day, I guess I'm still kind of wondering how this is going to be more expensive for consumers. But I guess I'll just leave that as an editorial comment. I would move the bill at the appropriate time.

And I'll just kind of, just one quick response. Yeah, I just say, actually, yeah, I think we're actually in agreement there, right, that we actually are with this. We will be moving it to more daytime hours when we want it to be, right? And avoid the peak. That's what everyone's trying to avoid.

Senator Durazo.

Yes. So I'm trying to, as I'm trying to understand this whole issue of cost shift and if the author could answer as well as the primary opposition witness. Does it matter-- When you're debating this about the cost shift, does it matter what sectors we're talking about? Like, is it different if you're in Ag, because that was mentioned as one of the areas that could benefit from this, or multifamily or schools?

And I'm particularly interested with schools because when I saw, you know, the possibilities that sort of stuck out to me as, oh, I would be supportive if it was done in the schools, I'm not so sure about the other sectors, but is there a solid reason for why I feel this way? Yes, if we could both.

Great. And tell me again for the first part of the question, again.

Well, forget my first comments. Just, does it matter if this is being applied to Ag or multifamily or schools or other sectors?

Yeah, I have my response. And we'll hear the opposition and I'd like to have my witness come back, probably there at the end. There's not supposed to be-- between rate classes, this is all non-residential, right? So this is not relitigating anything happening with residential, which is the cost shift that you've heard mostly about for the last few years. You know, they decided on that, this bill's not about that. So there's not supposed to be cost shifting between rate classes.

Now, I think the argument they would make is that, hey, you're taking, what you seem to be making is you take any load off the grid and that's less people who are paying in, and therefore someone's got to pay somewhere. And if we're going to follow that argument to its logical conclusion, we should have no distributed generation at all. We should just completely get rid of distributed generation.

And I don't think anyone would argue that that makes sense as a policy and to destroy that entire industry at a time, again, when we're increasing energy use. So again, there's not supposed to be rate shifting between residential and non-residential. I think the argument would be that somebody has to pay. But again, I disagree on a number of fronts. One is that we're actually increasing energy use. I mean, I have solar in my house. I still have very large energy bills.

I'd be happy to show you. So as we decarbonize transportation, as people put in heat pumps, we're putting more load on the grid. So I don't agree with that. I don't think that will be the case. And again, if you follow that to extreme, then we should just have no distributed generation, period. That's my response. I'd love to hear.

Thank you, Senator, for the question. There absolutely is a cost shift between non-residential and residential customers.

There's no firewall that ensures that costs that are spent on the non-residential customer classes stay within those classes. That would be a potentially useful amendment to this bill to ensure that residential customers are not adversely affected by the treatment provided by to non-residential customers. But that's not currently on the table, as I understand it. It's not in the analysis.

If the bill were limited to schools, which I understand is one of the groups of customers that many people are interested in protecting, it would constrain the impact on residential customers. But as the bill is drafted, it applies to all non-residential customers: small business, large business, agriculture, everybody who's not a residential customer.

And the unbounded nature of that authorization is what gives us a lot of concern and makes us really worried about how it's going to drive future rate increases for all customers because of the mismatch between the value these systems provide to the grid and the level of compensation provided in retail rates, given that retail rates are in the stratosphere.

Yeah, just go right ahead. And is your follow up question directed to the Senator? Okay, great.

Did you consider, or have you considered limiting and narrowing the application to, for example, schools?

You know, for us, I think I'd say two things. One, I mean, this is a fundamental issue of fairness. I'm producing it, I should be able to self consume. So to me, whether you're a school, whether you're apartment, but should we also, is it, I think a societal benefit? We want to encourage a civic center where you're putting on your civic center and you want to have solar also power the attached police station, or whether you're an apartment building or a farm. To me, it's fundamental fairness.

You produce, you should be able to consume. In terms of the other amendment that was just suggested, and again, we're not negotiating from the dais. I'd certainly be open to that. There is a reason we have rules for a different set of customers to say, to pretend like there's no differences would be silly, but I'd certainly be open to considering that to make it more clear that we want to keep that separate between non-residential and residential.

I would ask my witness if you want another quick comment.

Yeah, just to elaborate on that. On the CPUC's own NEM 2.0 look back study, one did not study the cost of service for multifamily buildings at all, even though it was asked. When it comes to schools, commercial entities and agriculture, all were found to actually pay more than their cost of service. Again, so there's actually a cost shift in the opposite direction.

So just note that as well, agriculture customers, which I think are really important segment of the customer segment as well, that should be still investing in distributed generation. They do not get any retail, the same full retail credit for exports, it's not the same system. NEM A and virtual net metering are different tariffs with their different set of rules. And again, I would really encourage everyone to be reminded that when you are reducing demand on the system, you are reducing costs for all customers.

And when you have multiple customers or multiple meters that are being served at a single service delivery point, they are actually paying more than their cost of service. And are still being charged as though they are a single family house. And the Senator's bill here is also not really debating the value of exports. So again, talking about subsidies, we're not talking about that.

We are talking about the fundamental right to self generate and consume your own electricity produced on site in compliance with federal and state law.

Senator Grove.

Thank you, Mr. Chair. I'm just a tad bit confused and I'm just going to ask a couple of questions and I apologize. I thought the whole purpose of the transition again was to get people on what is considered green energy, solar, wind. And your bill addresses solar?

But I'm listening to the arguments and I'm not understanding because the way I hear the arguments and again, I can't get into somebody's head, but the way I hear the arguments is that if you put up community solar and we're not talking large scale solar or utility scale solar, we do that in Kern too, 6000 acres, 2 million solar plant. We're not talking about that. We're talking about local community solar.

If we do that and we self generate to help the cause and get off the grid, it's almost like there's a punishment whether-- I mean, our schools do it. I just checked with our Planning Director. She's approved a ton of these community solar plants and she says they're schools, they're multifamily housing units. They're local farmers and they are facilities keeping agricultural land and family hands. And then they are also, like I said, schools and multifamily units.

So they're generating, she just tried to explain it to me in a text. They're generating, they're self generating-- They paid for this installation, built the projects, got all that. And then they use the power and they generate the power that they use. And one school does operate a community center which generates-- that little project takes care of the community center as well. So they're not using traditional electricity, I guess, they're generating their own power.

And number one, I thought that was the purpose of all of this transition and green energy and all that stuff. But now I'm getting the hint that we're gonna punish those people or that we, they're not entitled to do that. What's, I don't understand the argument. If you can explain the argument to me.

The argument on the other side or?

The argument on the other side. I thought we were generating electricity via solar or wind. That was the purpose of all of the legislation that goes through building, but now these people in these community solars are generating this, but yet they can't self generate?

So I'm asking that-- I guess that's my question. What's the argument on the other side? If we're requiring a transition and we're going to transition and people are transitioning, but yet we're not going to allow them to transition because number one, they're not schools or they're just farmers or they're just multifamily units. I mean, I guess my question is that, what's the argument? I don't understand it. Can you explain it?

I don't understand it very well myself. So I'd say again, I think you and I are in agreement. I think the argument is that if some folks are self generating, self consuming, you're somehow going to hurt other people. And I think the point of this debate, and our witness is saying we're not hurting other people. In fact, actually, we're helping other people.

But eventually we want everybody to do this self generate or eventually we want people to have-- I mean, I have rooftop solar. You do. I'm assuming everybody here on the dais does rooftop solar, so, or whatever. But I'm assuming that eventually, at some time, not by 2045, realistically that's never going to happen. But sometime, maybe in the next hundred years, everybody will have some type of solar. Are we going to be punished for having solar? Because that's where I think this conversation is going.

I don't think we should be punishing people for having solar-- And again, I don't think everyone will have it. There's still playing role for-- I mean, again, there's massive demand right now and lots of role for utility generation, too, in your district. Thank you. But, you know, and I'm very supportive of that and streamlining that and permitting that, but we still have to build lots of transmission. It's still difficult.

So I think we do want to encourage self generation, and that's what I'm trying to do with this bill. We're just basically trying to say, yeah, we shouldn't punish, or conversely, we want that generation.

Well, that's what I understood. And I understood that your bill coincided with the letter that I wrote to the, the CPUC just recently, that we passed SB 2316 and 2022 in a place of community solar and storage programs that would actually work and scale. And then there was a CPU administrative law judge decision that overturned that. And so I believe that vote has been held off to address some of the concerns that your proponents of your bill have.

I think it's being held off till next time, right? Is that true? Somebody's nodding yes. So I appreciate the fact that the CPUC is at least going to listen to your arguments in support of this, your witnesses in support of their arguments, that they didn't even consider all the factions.

I think whether you're a school, a multifamily, I mean, you could be a community center, you could be-- You know, whoever gets together and says, hey, let's pull our resources, get solar, and we'll self generate. That will help. I think that's what we've, what's been advocated for in this building, so--

And I think that your bill today aligns with my letter that I sent to the CPUC to address some of the concerns that I had about eliminating this small scale solar or this community solar. So thank you for bringing your bill forward.

Yeah, thank you. I do agree that it does align. Community solar is also, you know, aligned. This is focused on the more the single meter or single property, but that aligns very well.

Thank you.

Vice Chair Dahle.

Thank you, Mr. Chairman. So first, I'm just going to make some general comments. There's a whole lot of folks that I really like that are supporting this, obviously Ag, but I want to just maybe lay the table for how we got here.

First of all, we have been so aggressive with solar, and we've given them tax credits, which everybody that pays taxes paid for, we've given them local taxes. We don't charge them. Counties don't get the accessory tax. So at the end of the day, these folks, why do we have net energy meeting? Because we are over producing power when the sun is shining, period. And somebody that's not in the program is paying for the power.

So at the risk of ticking off all my friends that are on here that got a subsidy, got a tax credit, and have cost shifted to all the poor people that don't have solar or a business that doesn't have solar or isn't net metering, they're going to pay. So if you're not in the program, you're going to pay for the people that are in the program. That's the easiest way I can put it. This bill doesn't solve our problem.

We have created this problem by too much of a good thing, is too much of a good thing. And quite frankly, when the sun's not shining and the wind's not blowing, you have to turn on the gas plants, and they're expensive, and you have to have distribution. You have to get it somewhere. And we don't have a giant battery.

We have some small batteries around, but we don't have a giant battery to be able to store all this energy so we can use it at other times. So I can't support this bill, even though a lot of my friends want this bill. But at the end of the day, the people who are not in the program, and that's typically the poor people or the small business that can't afford it, is going to pay.

We have to come up with a different way to do this, and this is not the right way. The CPUC is trying to get there, and that's why they come out with this, because we cannot-- We're over producing during the time of the sun's shining and the wind's blowing. That's the problem. And until we figure out a way to do that, we're going to continue to just push it off on people that can't afford to pay it who are not in the program.

Thank you. Senator Dodd.

Yeah, it's getting late, so I just aligned my comments. I came in here not knowing which way I was going to vote. I've listened to the conversation here today, and I align my comments 100% with Senator Dahle.

Senator Rubio.

Thank you. You know, and I keep hearing these comments like, everyone's going to have solar and all this. We're just talking among ourselves. You know, not everyone has on-the-rooftop solar like everyone else. I don't. And my argument continues to be, as I was stating, as I was trying to pass that bill that specifically helps, you know, low income families, is that not everyone's gonna benefit. And there is the non-participating customers that will.

And I know, you know, I respectfully disagree that it's not gonna impact them. I just keep thinking that the low income families are always being left behind. They just don't have that ability to move forward with these new technologies. And so I'm always trying to find that middle ground where we don't disadvantage anyone. But, you know, I did talk to the author. I know that, you know, it's very important for me as a teacher that schools get the benefit.

We're discussing the possibility just, you know, concerning schools. But I also want to hear from the-- If you don't mind. I know that a lot of the utility employees are opposed. I just want to hear from them. Just, you know, give me a statement of where you see this headed? And I think someone from-- Where was it? The electrical workers was here expressing opposition. Are they still here?

Yes, hi. Rachael Koss on behalf of the Coalition of California Utility Employees, and we are quite opposed because of the cost shift. This will raise rates for every non-participating customer.

Okay, thank you for that. But, you know, I will vote for it today. And I said I will vote for it, but I do have the same concerns. And I openly, I keep saying, I just feel everyone just keeps saying generally everyone will go that direction. Not in some of my communities.

I always share, 15 years ago, 20 years ago, when I was a Council Member, we built these EV parking spaces, because it was coming in the future. And so we have 15 parking spaces, you know, 15 years later, we had to convert them just to regular parking spaces because they were always empty. Our community didn't go, you know, getting the EV cars and charging them.

And so some communities are not there yet, and there is, I think, disparities as it pertains to how we address things here. But, you know, I'm going to be supportive, but I still have concerns. And, you know, the schools are very important to me, and I know that some of the unions, you know, oppose these types of bills, but I will be supportive. But let's give it some thought in terms of the schools. Thank you.

Yeah. Thank you. Any further discussions or questions on this issue? I want to thank the Senator for his attempt to fix a problem, but I'm adamantly opposed to this bill and for many of the reasons that are stated. There's no free lunch in America, and I am not opposed at all to self consumption. But this is more than self consumption. This is about NEM as well.

And I would just encourage you to read just today's article in the Washington Post, which clearly states, "in California 2022, California wasted 2.4 million megawatt of hours of electricity". 95% of that was solar and the majority of that were NEM customers. So we're paying for a wasted electron that nobody uses. And this is all this is going to generate. No one's opposed to the schools or multi billions using, but the over-generation, they will be compensated for it and someone will pay for it.

Again, there's no free lunch, and you might not get what you pay for, but you're going to pay for what you get. And poor people are subsidizing this. And this is my 14th year in the Legislature. I chair at Utilities in the Assembly and I'm chairing it now in the Senate. And my biggest frustration is we constantly move the marker before we prove something works.

The PUC took a position just November of last year dealing with this issue, and we haven't let dealing with self consumption on non-residential customers. Why don't we let this PUC prove that it works or it doesn't work before changing the goal posts. And this is our biggest frustration. And almost 20 years of moving toward a renewable energy that's supposed to be cheaper for residents. We all pay more. We all pay more today and that's the reality.

And all these projects are adding additional costs no matter how we want to frame them in the panacea of oh, it's free. I challenge all of you who say that you're independent of the system to detach from your investor-owned utility or your public-owned utility. As soon as your power is not working at first place, and when the sun's not shining, the wind's not blowing, you're going to be calling your local utility saying, why is my lights not working? And that's the reality.

And so again, I get self consumption, but it's more to this bill than self consumption. And that's where I have a problem with, and that's why I won't be supporting it today.

Thank you. I'd like to obviously close, but could I have my witness make a quick comment or number one-- Which is a quick input from the solar folks on schools, how much, how this, the PUC decision has affected solar on schools?

And if you have a quick comment on that and then super quick, I know it's very late, we got to wrap up, but--

So it was already very hard to get solar projects to pencil out. We were counting on downstream on future energy cost savings as part of the financing mechanism to implement these projects at the outset. Since there is no savings, now we have difficulty just coming up with the money to install the technologies in the first place. So there's an immediate impact.

Then there is an ongoing hit to our operational funds in the form of these energy costs that we're now going to pay four times more than we had anticipated and again, for a school district general fund, that comes directly out of the classroom.

Thank you.

Yes, super quick. One, these projects under the net billing tariff are not just solar and wind, by the way, there's biomass, there's all different kinds of renewables. So I do want to just note that really quickly. And as well again, we're talking about all different customer types and in terms of, you know, discriminating against different customer types, again we are talking about all these customers, they do have the ability to self generate. We're not talking about exports.

Under the NBT, there is no real value for exports anymore. So we are not talking about export anymore. Thank you.

Then why export then if it's no value there? But anyway.

Well first of all, thank you everyone. I know hours late but I do want to address a few of the points. First of all, Chair, I respect your passion on this. You know I would just suggest, I think it's misplaced because I know there's a lot of, and you're very passionate about the cost shift and I feel like certainly the PUC tried to address that with residential.

That's where like the vast lion share, all the numbers that were cited today were from you know, NEM 1.0 or NEM 2.0. You mentioned PUC, I think we already seen the impact, we've seen the solar industry be decimated already. So I think we already have seen the impact. To Senator Dahle's point, what did it do? Well we did incent solar and it brought down the costs for everyone and for the world and people are benefiting from that.

And we have good, these are all about non-residential so these are good union jobs because we already passed a thing, a law two years ago that said everything over 15 kilowatts are union jobs. So these are-- these will be good union jobs. And last week it was reported that with three Diablo Canyons worth of storage on the grid one night last week, so we are building the storage and that is the goal.

I mean to Senator Dahle, my point, my very first bill I introduced in this was around 24/7 clean energy. So I want 24/7 clean energy. I'm not all about just building stuff during the day, but again this is real cost savings for schools because they're building it to fund their own self consumption. So I just respect the passion.

I just think that as my witnesses said, this actually is a cost saving, this is not a cost shift, this is not about exporting to the grid and making a lot of money. This is, I'm using, consuming my own power that I generate and you know, to the point of return I'll just say happy to, you know, look at other rates to bring down rates. And I think as a body, we have opportunities to do that.

We had the Senate Climate and Equity Trust, we had and Al Muratsuchi trying to resurrect that. So I think we'll have opportunities to take stuff out of rates. All the wildfire costs, everything we put into rates, take those out of rates so we can encourage electricity generation. This is not the way to do it. The way to dig rates is not to say we're going to kill distributed generation. That is not the way to do it. There's lots of other ways.

We can have an infrastructure authority, we can have a climate equity trust. We can have other ways to take stuff out of rates. But the way to do it is not to say, hey, we're going to kill all distributed generation. And one school can save $3 million. And that's why we have the Oakland School District and the Clovis School District together on this, because one school can save $3 million a year by putting in solar. That's significant. This bill will restore that.

We think it's a common sense measure. And I respectfully asked your aye vote.

All right. Do we have a motion on this? Min made the motion, yes.

Mr. Chair, just one insert prior to this next vote. I would like Theo Pahos sent out of this room. He finally arrived two and a half hours late. I would like you to ask him to leave the room for me, please.

All right. All right. Secretary, please call the roll on SB 1374. Senator Skinner?

This debate has been fascinating. I appreciate the analysis by the Committee indicating that there's a number of the aspects of the bill that the PUC did consider in their decision. However, I also know they've opened up some proceedings on some aspects of this. I feel our schools really do need the benefit of what you're describing. And I feel like the characterization that the opposition has made, though I do appreciate they indicated that they would not oppose if it was narrow to schools.

But I think the characterization that this is the equivalent of NEM under the full retail rate is not accurate. And because this has limited, though, I feel it-- I want to give this to the schools, but I am not comfortable with the breadth of how the bill is constructed. However, if it doesn't move now, there's not the ability to, you know, to address those. And I don't know whether the chair-- Yes, that's true. We could give it reconsideration. So I think I will vote now.

However, I would retain my right in voting later because I do think it should be narrowed. And again, whether there's appropriate other, whether Ag or some level of Ag is also appropriate because Ag was under very different rules, so they never were getting compensated under any full retail rate, so I just wanted to give that-- I think it's too broad, though. I think there's some categories, especially schools, that do need this.

Thank you. Secretary, you may call the roll.

Due pass to Appropriations. [Roll call]