Assembly Standing Committee on Utilities and Energy

Good afternoon, everyone. We are just waiting for one of our colleagues, Republican colleagues, to join us so that we may commence our hearing. Any Republican Members of U&E, if you are listening, please join us. Good afternoon. Good afternoon and welcome. I would like to convene this afternoon's hearing of the Assembly Committee on utilities and energy.

Sergeant, if you can, please call the absent Members. Before we move to the agenda, I have a couple of housekeeping announcements to make. First, Assemblymember Berner will be substituting for Assembly Member Schiavo in today's hearing. Thank you, Assembly Member Boener.

Second, I will, as is customary, maintain decorum throughout today's hearing in order to hear as much from the public within the limits of our time. We will not permit conduct that disrupts or otherwise impedes the orderly conduct of legislative proceedings. Any individual who is disruptive may be removed from the room.

We have other Committee meetings that are happening concurrently, and Members may be stepping away to present their bills. We will work to keep the hearing moving as quickly as possible. Please note that testimony is limited to two witnesses on the support side and two witnesses on the opposition side, with a total of four minutes for each.

For any additional witnesses on a measure, please only state your name, position and affiliation, if any. Today we have eight measures on the agenda. One is on consent. We do not have a quorum, so we're going to begin as a Subcommitee, and we do not have any authors.

So to Senators with bills before the the Assembly Utilities and Energy Committee, please make your way to room 437 so that we can utilize our Members time effectively.

All right, we are actually going to get started. Excellent. Good afternoon. Senator Wahab, welcome. Yes, you get the prize for the first Senator to arrive at our hearing. Whenever you are ready.

I am going to say that this is my first Bill in this space, so I appreciate you guy's patience.

All right, Chair, Colleagues, and members of the public, my vision for SB 983, the Alternative Fuels Infrastructure Task Force, is to put but alternative fuel options and gas stations to ensure all Californians are able to use clean energy vehicles. The honest truth of this is that I live in a multifamily complex. I am a renter.

I live in the East Bay, and we constantly talk about vehicle miles traveled. We talk about the environment. We talk about a lot of different things and the fact that we are all having to now start to slowly move towards purchasing a clean vehicle. Now, I have a hybrid.

It's an electric, plug in hybrid, and I cannot charge my vehicle in my own home. There is no outlet. There's no option. There's nothing there for me. Right. And we are not doing more to build out that infrastructure for regular folks.

And even when we're seeing Ford F-150 pickup trucks become all electric, and a lot of these efforts moving in to consumers, the infrastructure is still not there. And the infrastructure we have today is basically gas stations.

And if we're trying to be cleaner and greener in the environment, we have to use our current infrastructure to move forward in a way that makes sense. Right. And I do believe that there's a lot of people that want to be at the table to make that happen.

And I think that there's a lot of discussion and disagreement of what that looks like. But I think that this is a clear path forward. So, honestly, this task force will determine the fastest and most cost effective path forward for zero emission fuel alternatives while using our existing gasoline infrastructure.

Without putting the finger on the scales regarding technology of the future, many people are debating which type of technology should be the technology that we use, but that's not a debate that we need to have. We need to have a debate regarding the infrastructure and how can we make this happen faster and cheaper.

Current investments into alternative fueling infrastructure are only half of what is needed to transition by 2050 or earlier.

And I want to be very clear, as an environmentalist, the actual date for a lot of the things that we need to do is actually 2027, when we're talking about making sure that we're going backwards and making sure our environment or air and much more is cleaner.

So even these dates are further out than needed compared to the science. So SB 983 is a crucial step to meet Governor Newsom's mandate to transition vehicles to zero emission sources by 2035. I would like to introduce my witnesses, Theresa Cook from California Hydrogen Coalition and Keith Dunn from the State Building and Construction Trades Council.

Thank you, Senator Theresa Cook, on behalf of the California Hydrogen Coalition, California Hydrogen Business Council. Very pleased to be here in support of this Bill. As many of you know, hydrogen fueling stations are located at existing gas stations. Their central refueling model is the same as our central refueling model.

And so I really want to say that we deeply appreciate the Senator for showing some leadership in the conversation that it's not about banning or dismantling or prohibiting the future build out of fueling stations, but how do we utilize this existing infrastructure, the private investment that has gone into running these businesses, and transition them into our clean tech, clean transportation future, as opposed to sort of doing away with them.

So for these reasons, cannot say enough how pleased we are to support this Bill and would appreciate your yes vote today.

Thank you, Madam Chair. Keith Dunn.

On behalf of the State Building Construction Trades Council, we'd also like to thank the author for moving forward and making a priority on the infrastructure and the workers that are going to deliver us as we confront our changing climate and the switch from a petroleum based economy into more of a friendly economy.

Moving forward with a workforce that is going to be skilled and trained and able to deliver the infrastructure that we need. Moving forward with that. Since we have no opposition, I'll just say thank you for your support, and we look forward to moving this Bill forward.

Thank you. All right. And we'll. oh, sorry. We. Thank you. We don't yet have quorum. If Members would like to join us, then we can move the bill. We'll go ahead and open it up for additional support testimony in the room. If you'd like to testify in support of SB 983, please approach the mic. Thank you.

Madam Chair. Jack Yanos, on behalf of the California Fuels and Convenience Alliance in support.

Thank you. All right, we'll now open it up for any opposition testimony. We don't have an opposition witness, anyone in the room wishing to testify in opposition? Seeing none, we'll come back to the Committee. Questions or comments from Committee Members. Assembly Member Patterson, thanks.

As the resident Republican need to say something? Support this Bill? I'm going to support it today. Just as a newer Member of this Committee, I do have some concerns over the funding source, but, you know, and if you want to address that, that's fine, but happy to support it.

Today we're building a bunch of gas stations in my own neighborhood, and someday, you know, we need to create an environment where those things, the business owners, continue to stay open in some other new environment. So thanks for bringing the Bill.

Definitely. I do want to say that the funding source, we are investing a significant amount of funds on what does going green look like? And there is existing funds that we have, like, suggested and identified as, like, a potential source.

Of course, we also have highlighted who would make up that task force, including, you know, Members from the governor's office. And, of course, the amendments that were suggested that we have accepted to ensure that it's the best approach that makes sense for the state as well as to the consumer, as well as to the business owner.

So I think across the board, oftentimes, I'm trying to look for a reasonable path forward that's not costly, that makes sense, and is in the middle of the road for everybody.

Well, and I'll just say, appreciate you bringing this measure forward and the work that you're doing with your sponsors. I think it's so important for us to continually think about how can we repurpose rather than have to recreate. So thank you. With that, would you like to close?

I respectfully ask for an aye vote.

All right. And we will take that measure up shortly. Thank you, Senator.

Thank you, guys.

Senator Dawley. Paging Senator Dawley. Your next step. He's on next on the list. All right.

[Background]

All right, good. Good afternoon. Good afternoon. Welcome.

I think, unlike what we like to think, sometimes the first time we pass a Bill is not perfect, and we need to go back and make sure that we get everything right so it can be implemented in the best possible way.

So last year we made some more updates on SOMA, which is the multifamily solar housing, so that the benefits goes directly to those Low income folks who are oftentimes renters. This expands it for tribal lands as well, and there's some deed restrictions that we're able to work through.

With me to testify today is Andrew Dawson from the California Housing Partnership.

Hello, I'm Andrew Dawson with the California Housing Partnership. The partnership is a state created private nonprofit whose mission it is to increase the supply of affordable and sustainable homes for Low income people living in California.

Part of this work is helping administer the SOMA program, the solar Multifamily Affordable housing program, which has helped over 450 properties for Low income residents obtain solar. This Bill opens the door for more tribal properties that meet the income restriction restrictions to participate in the program.

We thank Senator Eggman for their leadership with this Bill, and we request your aye vote.

Thank you. We'll go ahead and open it up for support testimony in the room. If you'd like to testify in support, go ahead and approach the microphone.

Chair Members Matt Kloppenstein, on behalf of the Center for Sustainable Energy in Support. Thank you.

Good afternoon. Raquel Mason with the California Environmental Justice Alliance in support. Thank you.

Thank you.

Good afternoon. Michelle Canales, Union of Concerned Scientists in Support.

All right. I don't think we have a primary witness in opposition. We'll open it up for any opposition testimony in the room. Seeing and hearing none questions or comments from Committee Members. All right. All right. We are awaiting one more Member to establish quorum, but with that, Senator, thank you for bringing this measure forward.

At that. Time when you have a full Committee? I'd love to ask for your aye vote and wish you all a lovely day.

Thank you, Senator. All right. Are we good? Wait, 1,2.3. ne more. One more. Okay. All right. Moving on to file item number three, SB 1062. Senator Dahle, welcome.

Good afternoon, Chair and Members. I'm here to present SB 1062. I want to start by thanking the Committee for working with us on this Bill, and I will be accepting the Committee amendments. California has experienced some of the most devastating wildfires in recent years.

One of the major contributions factors in these fires was years of forest management and buildup of excess woody biomass.

To reduce the threat of wildfire and properly utilize the valuable fuel source, SB 1062 would require the Department of Conservation to create a biomass technology transition program to facilitate in the conversion of biomass energy generation facilities that utilize forest biomass to newer advanced bioenergy technologies.

In December of 2022, CARB passed a resolution regarding the 2022 climate change scoping plan in which the board resolved that opportunities for non combustible biomass solutions need to be prioritized.

This Bill is consistent with the California's goal of prioritizing alternative biomass energy generation methods by creating a program that would assist participating biomass generation facilities and acquiring the often expensive alternative generation biotechnology or bioenergy technologies.

These technologies will enable these facilities to continue using biomass as a viable fuel source while reducing emissions and remaining consistent with California regulations. As part of the program, the Department of Conservation shall identify facilities that intend to convert to these new technologies.

The Department then shall work with the relevant local air districts to ensure that the facilities meet the applicable air standards which will be needed to be eligible for the grant program. Participating facilities must then develop business plans to incorporate the technologies once they become commercially available and viable, as estimated by the Department of Conservation.

The business plans provided these facilities with the flexible needed to properly onboard the new technologies and ensure that the relevant air quality standards of their pacific air basins are met.

This Bill would help keep biomass facilities open and in compliance with California's regulations and will ensure the forest health and resilience is ongoing priority and I respectfully ask for an aye vote with me. I have Christina Darlington of Placer County Air Pollution Control District as a witness.

Hi, good afternoon. I'm Christiana Darlington with the Placer County Air Pollution Control District and we're here in support of this Bill today. Our air district has been focusing on biomass to electricity issues and utilization of biomass in general as well as forest health for a number of years.

Again, this Bill is based on the resolution passed by CARB resolution 21-22 that asks for combustion facilities to transition away from those technologies. The program focuses on at first working with a handful of idled facilities and looking how those facilities can specifically transition to newer technologies over time.

The Department will go through a vetting process and identify the best candidates that are meaningfully entrusted and the transition. The Bill would then set up a grant program in future years that would help those businesses obtain new technologies after they're chosen.

The biomass that is defined in the Bill is limited to waste from byproduct residues from forest health. This is not using trees grown for power. Also, the grant program would focus on making sure that all air quality standards are met at the federal and the state level.

And it also restricts ratepayer funds from being used from the grant program. Those were amends that were accepted. Right, so the approach is a sound way to move current businesses to a new paradigm without losing essential services that they currently provide. Wood waste disposal is critical for the state.

We certainly don't want to see more open pile burning of wood waste. We also know that we need more prescribed fire and tribal use of fire on wild lands. And in order to do that, we need to reduce using fire as a wood waste disposal mechanism.

And also, of course, composting wood doesn't work well either, because it uses a lot of water and emits methane. The California Compost Coalition strongly urges wood waste to find alternative pathways from compost.

So, in summary, the air district encourages all of you to vote yes on this Bill to move towards the transition of idle biomass electricity facilities to new advanced emission controlled technologies in bioenergy space. Thank you very much.

Thank you. We'll go ahead and open it up for testimony of support from folks in the room. If you'd like to testify in support of SB 1062, please approach the microphone. All right. Seeing none. Do we have a witness? Is there a main witness in primary witness in opposition? I don't believe so. Okay.

Any witnesses in the room wishing to speak in opposition to SB 1062? You can go ahead and approach the microphone.

Hi, Justin Bowers with CleanEarthforKids.org dot. We strongly oppose. In addition, the NCCCA eco sustainability peeps and facts, also strongly opposed. Thank you.

Thank you. Okay. Questions or comments from community members? Yes.

First of all, wait, I thought the Center for Biological Diversity was. No, that was the only opposition. Am I mixing up my. I believe they are opposed. Yes. Okay. They are opposed. Did they pull off? They just didn't show. Do we know?

I believe they're still. I believe they are still listed officially as opposition.

That's helpful to understand. And then. So I guess I see what you're trying to do. And I actually think, and I've said in this Committee before that I think, you know, the purism around biomass doesn't make a ton of sense that we have these fuels and we should be using them.

And I appreciate what you're trying to do here to move us to even a cleaner technology than exists today, I guess, and I know we're not the fiscal Committee, but I think that it is imperative on us to decide where our limited resources are going to go.

And from an energy perspective, the grant program gives me a little bit of a pause because although I support these things, do I think that tax dollars should be going to. This is sort of a question that I'm grappling with.

So I guess if you could explain a little bit more, and I really do appreciate the Committee bands around ratepayers and protecting them from this. So I wanted to highlight that. But if you could talk a little bit more about the fiscal, where you think this money is going to come from. And.

Yeah, it's a great question. Thank you so. Well, to be honest with you, we've paired the Bill down. We've tried to, we've tried to thread a needle here. We have idle biomass plants throughout California, and we have, as of yesterday, you know, tens of thousands of acres burning up.

Now, I know that the opposition doesn't want to do any combustion, but there's a lot of combustion going on out right there right now, today, and it's putting carbon in the atmosphere. So what we try to do with this Bill was get it not to the CEC because electricity folks shouldn't be paying for it.

Everything goes to CEC. So we went to the Department of Conservation. We don't have a funding source. We're saying that if funding is available, that's why the Bill is still moving. If it was tied to funding, would have been dead. So we're just trying to get the policy in place.

I'm going to be honest with you, I'm just trying to get the policy in place that says, hey, if there are funds available through a grant program, hoping I won't be here, but hoping somebody will come back and maybe we could. I think GGRF funds would be appropriate for this, to do some grant money through GGRF.

We do it for other programs, and then it would be seed money to actually get these advanced technologies away from combustion because obviously the environmental community is winning right now on their policy. No combustion. We did SB 11. It was Caviero Bill, which they put took combustion out.

So that kills all my biomass plants that are already out there. So we've seen some one offs, I think Gallagher's doing a Bill. So at the end of the day, we're trying to use these tech new technologies. We don't have a funding source, but we're just trying to get the policy in place.

That hey, if there's some funding source available, we want to promote these new technologies of bioenergy, conversion to biogas, conversion to hydrogen or diesel or some other source using these plants that are there and all this fuel that's out there that still needs to be taken out of the forest.

So we don't have what we're happening today burning up.

Right. I appreciate that. So I guess then the question is, I mean, this as I read it, is it referred to appropriations? I would assume so. But it has some cost associated to it related to government setting up these programs? Yeah, for the Department of Conservation.

I'm just struggling with like, is this how our limited resources should be spent given we don't even have a funding source? But this isn't the fiscal Committee, so I will stop talking about the fiscal impacts of this. I appreciate what you're talking about on the biomass front.

You know, just maybe we'll go if there's more questions.

Go ahead and then, Assembly Member Wood.

Thank you. And Senator Dahle, I really appreciate what you're trying to do here. We live in the same world essentially, when it comes to woody biomass. That needs to have a place to have it be disposed of. Just a mic, literally a few miles from my house this week.

We have had evacuation orders nearby because once again, we're in fire season. And I appreciate that people might like to try to compost this, but I understand the chemistry, the biology as well, and recognize that that releases methane. That doesn't help us either. Leaving this in the forest doesn't help us either. That is another fuel source.

And so there is a cost. There's always a cost to everything. But I also think sometimes there's a bigger cost to doing nothing. And that's how I'm looking at it. I think that we need to do something. This is a challenge. We cannot put this in landfills or under diversion goals to not do that kind of stuff.

And even if you could, in the areas that we represent, good luck citing a landfill. You're not going to get a landfill built anywhere. So why not make this a beneficial use, even though it might be a more expensive energy source? Why not? The other option is to let it continue to be a fuel source for fires.

There was a recent study, and I appreciate that people are concerned about what comes out of the stack, so to speak, when these kinds of technologies. But there was a recent study about the number of premature deaths from wood smoke that just came out a couple of weeks ago is pretty shocking.

And for those of us who have lived through and live in these areas where there are fires. I'm very supportive of your Bill. I'd like to be added as a co author. I'd like to see money somewhere. I know it doesn't grow on trees, but if it did, you know, I don't know.

We wouldn't want to burn them, that's for sure. So I appreciate what you're trying to do and happy to support your Bill today.

All right? And we'll just pause for a moment and take a second to establish quorum. Madam Secretary, please call the roll.

Roll Call

Thank you.

Thank you for the questions. Obviously, it's not perfect, but we're trying to move something forward. Maybe one day when we get some resources, we can have some different type of outcome from what's happening out there, so respect passport aye vote.

Thank you. The motion is do pass as amended to natural resources. Madam Secretary, please call the roll.

Roll Call

Okay, 7-0. That bill's on call and we will revisit it. And we have a few more Members. Thank you, Senator. Okay, thank you, Assembly Member. Wood Okay, file item number one, moved by Assembly Member Wood. Second by Assembly Member Reyes. Madam Secretary, please call the roll.

Item number one, SB 983, the motion is do pass to transportation. [Roll Call] We're doing item number one, SB 983.

Okay, that is...that's nine.

We'll come back to her.

Okay, 9-0. That Bill is out. All right. Motion and second on the consent calendar. Madam Secretary, please call the roll.

I'm sorry. That was Wood and Reyes. Reyes. Okay, thank you. Item number two, SB 1006, the motion is do pass as Amended to appropriations recommended consent. [Roll Call]

Okay, 10-0 on the consent calendar. All right, we have a motion on file. Item number four from Assembly Member Reyes. Second from assemblymember Bauer-Cahan. Madam Secretary, please call the roll.

Item number four, SB 1118. The motion is do pass to appropriations. [Roll Call]

This is SB 1118 from Senator Eggman.

[Roll Call]

Okay, 9-0 that bill is out. We'll leave it open for absent members to add on. Okay. And with that, moving along to file, item number seven, SB 1298. Senator Cortese, welcome.

Good afternoon. Good afternoon, chair and Members. Yes, I'm here today to present SB 1298, a bill that increases the threshold for for data center eligibility for consideration under the small power plant exemption process from 100 MW to 50 MW.

This bill will create larger data center facilities that better meet the demands of California industries, and I will be accepting the Committee's amendments today. California law currently allows the California Energy Commission, the CEC, to have exclusive authority licensed thermal power plants that are 50 MW or larger.

The small power plant exemption allows CEC to exempt from its licensing authority. Thermal power plants do not exceed 100 MW. Currently, the CEC can grant an exemption if it finds that the proposed facility would not substantially impact the environment or energy resources.

If the exemption is approved, the project developer is responsible for securing all local, state, and federal permits to construct and safely operate the plant plant. This bill, at its core, is an economic infrastructure bill. Data centers and fiber networks underpin data centers, and the fiber networks that underpin them are necessary in critical infrastructure.

They're the backbone for the apps, platforms, and services integral to daily life connecting individuals and organizations worldwide. As most of us are aware.

However, despite the significant strides made in recent years to expand the data center capacity, the demand for digital services continues to surge, particularly in Silicon Valley, where the vacancy rate for data centers is a mere 1.6%.

Silicon Valley power forecasts that the data center load will double by 2035, and significant resource additions will be needed to support this increase. Data centers support businesses of all sizes, critical infrastructure and essential services such as 911 call centers, GPS navigation systems, and, of course, our state's tech industry.

An aye vote today will ensure that we're maintaining the state's economic vitality and building out capacity for future growth. With us today, we have Tim McCrae, the Vice President of sustainability at the Silicon Valley Leadership Group.

Additionally, we have Scott Wetch, represent the California State Association of Electrical Workers, California Pipe Trades Council, and the western states council of Sheet Metal Workers. Thank you chair and Members. At the appropriate time, I respectfully ask for your I vote.

Good afternoon, my name is Tim McCray. I'm with the Silicon Valley Leadership Group. We are sponsors of this bill. This bill allows for building larger data centers while not waiving or skipping any environmental review. For them, data centers are critical. Infrastructure necessity, emergency services, hospital records, online banking and cloud based services all rely on data centers.

Despite their high demand and crucial function for the economy and safety, Silicon Valley is the nation's tightest data center market with a vacancy rate of just 1.6%. Citing data centers near technology headquarters is important for computing latency needs. When you have to call 911, you want that response to be instant.

Building bigger data centers in Silicon Valley helps power the Silicon Valley economy, which is crucial for the California economy and a Healthy California budget.

Despite datacenters pivotal role in the California economy, the process for permitting centers above 99 MW requires asking CEC for permission every time a company needs a building permit or an operational improvement, such as changing out a server. Because this is so onerous, no one builds them over 99 MW.

Our bill would allow them to be permitted like smaller data centers are, through the small power plant exemption process, which now applies to data centers between 50 and 99 that we propose to allow for data centers up to the size of 150. Objection. That these data centers may sometimes run on diesel generators is overblown.

Data centers run on grid power and have to rely on their backup sources of power less than 0.07% of the time. That's 6 hours a year. All of the rest of the time they run on the power that the grid provides, just like any other home or business.

59% of California's power now comes from carbon free sources, and the state has goals of running on zero carbon generation of energy by 2045, all which the Silicon Valley Leadership Group supported. That won't change regardless of the allowable size of California data centers, nor will any environmental standards for permitting. These data centers have to be relaxed.

Madam Chair Member Scott Wetch, on behalf of the California State Association of Electrical Workers and the California Coalition of Utility Employees and the California State Pipe Trades Council, the Western States Council of Sheet Metal Workers, we've been involved in the program at the CEC since its inception.

The program was created during the energy crisis for those of us who are here, and it worked quite well in pulling us out of the energy crisis by being able to build peakers to meet our energy needs. Data centers represent a critical piece of infrastructure that my members work on.

And we have forged a relationship that a decade ago would have perhaps seemed impossible with folks in the data center business and folks at the Silicon Valley Leadership Group. And this is a critical piece of continuing that relationship.

I think one of the key things for the Committee to take into account is not only is there no degradation of the environmental process here at all, but the technology of peaker plants has improved like most other technologies. And so the footprint of what a 99 megawatt unit looks like, and today, 150 megawatt unit is quite smaller.

If you looked at what, when we originally established this program, technology, the peakers were much larger. They took a much bigger space than they do today. And this is just absolutely essential to continuing to be able to build out these data center infrastructure that, that my members rely upon.

And so we would urge an aye vote, thank you.

Thank you. I will open it up for support testimony in the room. If you'd like to testify in support of SB 1298, please approach the microphone.

Hi, Robyn Hines with Microsoft in support,

Tiffany Phan on behalf of the Ecolab, in support.

Charles Wright on behalf of the Data Center coalition, in support.

All right, opposition witnesses, if you'd like to come approach the dais.

All right, you each have two minutes. Welcome.

Thank you, Madam Chair Members. Brendan Twohig, on behalf of the California Air Pollution Control Officers Association, representing the air pollution control officers from all 35 local air districts. To give you a sense of just how big 100 diesel generator power is, it's the equivalent of approximately 453,000 hp trained locomotive engines, all operating at the same time.

Lifting the exemption to 150 would get you to about 67 train locomotive engines. Much of the discussion around this Bill has centered on the number of hours these diesel generators operate, with estimates from the CEC that assume best case scenarios.

But we believe the focus should be on health risk using CEC's best case scenarios and looking only at testing and maintenance operation of diesel generators for these projects, air district health risk thresholds are often exceeded.

The good news is that much of the risk can be avoided by requiring technologically feasible cleaner alternatives like natural gas fuel cells or battery backup. And I will point out the Bill was heading in that direction until the Senate appropriation amendments were taken out.

The other thing is, and so the result is that the net effect of that change is we're likely to continue to see mostly diesel projects.

Furthermore, the new language in print appears to shift best available control technology determinations to the CEC rather than the local air districts, which is in conflict with the federal and California Clean Air Acts. It's the local air districts that make back determinations as part of the federally mandated new source review process.

And while we appreciate today's amendment that it acknowledges the issue, we may still have concern with the back provisions. We'll be taking a close look at the language. And lastly, Members, this is being framed as a data centers or no data centers choice, and that's simply not the case.

This is a choice between providing opportunity for community input and cleaner alternatives through CEC's certification process or short circuiting that process to facilitate the installation of dirty diesel. Respectfully opposed. Thank you.

Thank you very much. I'm Will Barrett with the American Lung Association. The American Lung Association, the Coalition for Clean Air, the Union of Concerned Scientists and others are respectfully opposing this legislation because of the potential for the increased deployment of diesel power plants under the proposed expanded permitting exemptions.

This is a clear concern from a public health perspective. Diesel engines produce significant smog forming emissions, fine particles and toxic diesel exhaust containing dozens and dozens of carcinogens. Breathing these emissions can cause asthma attacks, heart attacks and stroke, lung cancer and premature death.

There's not a question here about the need for backup power, but there is certainly an open question about why the state would exempt ever larger diesel power plants from public discussion, from community Member input or a thorough vetting process for alternative technologies. Ultimately, there's no safe level of exposure to diesel exhaust.

So we are very concerned about the existing exemption process at 100 believe that this expansion, as the air district's noted, to 150 mw, will lock in additional diesel exposures through testing and maintenance, but also through the use of these pieces of equipment during public safety power shutoffs or other outer outages that really risk inviting increased exposure to toxic air through diesel exposures.

So with that, we respectfully urge your no vote.

Thank you.

Madam Chair Members, John White with the Clean Power campaign. It's important to recognize the opposition to this Bill.

Opposition witnesses in the room, please approach the microphone.

At this point, we're just doing name, affiliation and position. Thank you.

Thank you, chair Members. Ross Buckley, on behalf of South Coast Air Quality Management District, we're opposed to. Bill in print, but look forward to looking at the amendments.

Thank you.

Michelle Canales, Union of Concerned Scientists. In respectful opposition.

Alan Abbs with the Bay Area Air Quality Management District, opposed unless amended to remove the exemption for diesel power projects. Thank you.

Richard Markuson for the Western Electrical Contractors Association. In opposition.

Hi, Justin Bowers, cleanerthforkids.org. We oppose in addition, NCCA.

We're just doing. oh, I'm sorry. Go ahead, carry on.

In addition, NCCA, North County equity injustice eco sustainability peeps and activist, San Diego, opposed. Thank you.

Thank you. Appreciate it. Okay, bringing it back to Committee Members. Questions or comments? Assembly Member Bauer - Kahan and then Assembly Member Reyes.

I think I may have. Heard partial answer to my question that I came here today with, which was some drop of some appropriations change. So that may be the answer.

But I think the analysis does a really good job of laying out that what is happening today with data centers pales in comparison to what the future looks like given where AI is and its energy consumption. And that's the reality.

So I actually think that's part of why I think you're doing this Bill is we will need more data centers. And so it's hard to look at the data of what those centers are doing today and understand what this means in the future, which is why I actually really appreciate the sunset.

Cause I don't think we have a full grasp of where the world is going as it relates to data centers. We do know that diesel generators are not the only option these days, which I think was the comments that were made.

Solar with batteries are an incredibly clean source of backup that I think some companies are choosing to use because they're taking on their own promise to be clean stewards. But I guess I'm just a little bit confused why we're doing this for the dirty generators.

I mean, if you wanted to do a Bill that streamlined and help people put solar and battery back up, you'd have me there. But that's not what this Bill does. So I'm just, I'm struggling. But maybe I caught something that was dropped that explains my problem.

Thank you. So many assemblymember.

So first of all, for this particular use, we believe, despite all of our efforts, and I include myself in that, to phase out diesel as quickly as we possibly can in California for a variety of uses, including long haul trucking and all kinds of things that for the continuous operation of a data center, especially in, in the event of a catastrophe that's lasting beyond what battery storage power could, could keep up with, you're going to have to have diesel generators there.

We don't know what the State of the art is going to be five years from now, the sunset, this Bill, as you've indicated, or three and a half years from now, what developers will choose and what the CEC will, you know, will require in terms of mitigation going forward.

But we know right now we've got a 1.6% vacancy. We've got data centers that are concentrated in particular areas because they first went where they could get cheap electrical power in places like Santa Clara, California, which has its own power company. And now we're seeing them expand to places elsewhere in California, including here, or wanting to.

And what we're trying to do is create perhaps what may be viewed better by the Committee as a last window for getting this small power plant exemption extended in a way that's going to allow for a little bit more rapid growth to keep up with the pace that you were just referring to.

Let me ask if it's all right with the chair for Mister McCrae to respond to how we handled the amendments, because I don't want that to be a matter of confusion. Yes, please.

And if I could just ask as we turn it over, the contention is that solar with battery backup is not sufficient. I guess that's what I heard you say. That's a surprising contention. I don't know if somebody else wants to address that, but I wanted to just touch on that as well.

I would just point out that in 2018, in the saddleback fire in Los Angeles, large parts of Los Angeles were without power for more than seven days. So you could have many instances earthquakes in the Bay Area, wildfires and others that would render solar with battery perhaps not adequate enough.

I think the short answer is we don't know of any battery storage that would last six or seven days. In the example that Mister West was just giving to supply 150 megawatt or even 100 megawatt small power plant. And if the power plant goes down, then you have a whole series of other problems. as someone who has the data center.

Yeah. As someone who has solar and storage and has been in a PSPS for almost a week, your batteries fill back up. That's the beauty of solar and storage. They actually. Nature takes care of that problem.

But you can't, if I may, you can't have in this particular industry the way this is set up. The data center can't go down and then come back up again.

If you were a hospital, for example, you could at least focus the power that you do have as your power supply is undulating in emergency rooms or in robotic surgery that requires AI to help drive it. The data centers has to stay up to continue to provide the support for all of those other people.

I'm just trying to say it can't undulate. I can't think of a better word for that. And clearly, while solar is charging back up, emptying back out based on battery capacity, now there's. At what point does that become a problem is the issue.

And I think until that's resolved, maybe fairly quickly, I don't know how many years that's going to take or when that's going to happen for us to have backup power. Now it's diesel, so I take issue.

I mean, I don't think that's. I actually think you don't need a battery to empty entirely for it to fill back up. Weird way of framing it. But I will say I really appreciate it. I think our staff did an incredible analysis here.

And actually, one of the things that the analysis highlighted was that some companies are on their own choosing to segregate data centers. So it sounds like that's. And that was one of the amendments that was made that I appreciate you taking, which did say that that demand response needs to be considered first.

So, you know, I think there's a lot going on here that could, could be used before diesel, some of which now is required by the Bill as amended. And so I guess I just. I would like us to be pushing California in a cleaner direction. And this Bill doesn't seem to be taking us there.

But I know others wanted to weigh in.

My answer on that is that it's a question of reliability and it's a question of scale. You can't rely on backing up 150 or several 10050 megawatt, small power plant exempted facilities by claiming that they're all going to be doing solar and battery backup, that we don't have the scale to do that right now.

The other thing I wanted to make a point in contention. This gentleman's point was he said that the Bay Area Air Quality Management District or the air districts wouldn't be able to make the determination for what is best available control technology.

And the amendment that has been taken is that the Committee recommended providing clarifying language that provides the determination of best available control technology by the air districts, requiring the air districts to report their determination to the CEC to review the SPP application.

So we added for this Committee, best available control technology as the environmental standard that these now have to meet. And the air districts would be the one who have to determine that.

Do you want to weigh in? Yeah, I would say, but, Madam Chair, the best available control technology that's part of new source review has a very technical area of the law.

There's a lot of back and forth with the project proponents, and it could be a circumstance where it's a cart before the horse issue, where now we're making this determination as part of the SPPE process, and so there could be problems with that.

So the other thing I wanted to say is it's my understanding, and we need to see the language to see how it's actually crafted. And it's my understanding, though, that there is at least one project using natural gas right now.

So the language that was taken out, that was put in by Senate Appropriations Committee said the clean is technologically feasible. So if it's not feasible, then it wouldn't have to be a part of it. And also keep in mind that that would just be a requirement to get the exemption.

So if you don't want to do that, then, yeah, you can still do it. Just go through the full process.

If I may. There's one. There's a reason.

Yes, go ahead.

Thanks. The reason that the one technology, the one data center which is going to use natural desk technology is doing so is because there are two lines. They need to have redundant lines.

There are two lines for natural gas that they have been able to cite near, and they can do reliability using that natural gas microgrid that with those two lines.

And if you were to require that, all of these data centers have to be back up with something that is not diesel, then that would require the build out of natural gas infrastructure to all of these sites, which California is never going to do. And that is infeasible in terms of scaling data centers.

And that gets back to the need. The data centers are critical infrastructure, 911 call centers. We need to have more of these things in Silicon Valley.

And I will say that I think the point is really important that the reason I say incentivizing is nothing stops that right now. What this Bill do is I feel like it's incentivizing a certain technology and one that I think is moving us in the wrong direction.

But if there's nothing to say you couldn't do, I mean, again, you have to get your approvals, but this Bill doesn't change that other than for this one piece. But I appreciate that. Maybe I liked the prior version better and I'll turn it back over to the chair.

Assemblymember Reyes, thank you.

As I was looking at the support and opposition, the one phrase that just stuck out was from the California Air Pollution Control Officers Association, and you shared it in a different way. Your letter said just 100 MW backup power is equivalent to approximately 670 automobiles operating at full throttle at once.

I do have great concerns providing an exemption for backup power generators that are incredibly dirty. I think my colleague has talked about that. I know they're meant to be backup. They're not supposed to be used regularly, but we're likely to have more extreme heat, more extreme heat days in the future.

And we know we're going to be having to use more of these energy intensive industries. Draw from this backup power to avoid the blackouts or the stoppages the air quality issues clearly cause. Give me pause in moving forward with this and the analysis. I agree.

Great analysis notes that data centers have proliferated within small, densely urban geographic areas, primarily in Silicon Valley. As a result, this Bill may disproportionately impact certain communities near large population centers, increasing local air pollution concerns. I appreciate the American Lung Association being here and providing testimony too.

So having these large sources of pollution near communities has always been of great concern for me for different reasons, but very clearly in my area. One question that I have for you is are there any, are there currently any buffer zones for data centers that have this dirty diesel use when they are near population centers?

And if there is not, that's clearly a major deficiency that I think should be addressed.

Not that I am aware of at this point. As I indicated into my first hand knowledge being representing Silicon Valley is that in areas where we had lower priced energy, the data centers went there. First City of Santa Clara, for example, is built out. Now, there's no question about that.

You talk to anybody on the developer side of the industry, and they'll tell you that they need to start moving out. You're not going to get that kind of concentration that you got in Santa Clara in a lot of places, because the power source of choice is electricity.

And to have that, much like the discussion that we just had about natural gas, you've got to locate that data center in a place where you've got grid access. And you've got not just grid access, for example, you're doing one here.

You'd have to arrange or either pre locate in a location where smud was already providing that power or pay for smud to try to bring it in. So the economies of scale around bringing power in are going to spread out, necessarily, are going to spread out the data centers. Now, remember, please, I'm just asking. We have data.

We have data from the very folks, you know, who have been weighing in on the Bill on the opposition side, that on average, over time, the look back is 0.07% of the time the diesel generators come on. We have committed. I have committed.

I did it when I was chair of the Metropolitan Transportation Commission and side by side with the air district, with the air district, we committed to being diesel free by 33. I think if we could have been diesel three by 24, we would have made that commitment. At the time, we haven't been able to do that.

And I just think this is a lot about the advancements that we're making, not always lining up perfectly well with what's going on, on the ground, as you well know, talked about it in other contexts. We're seeing that problem with long haul freight. I don't want to change the subject. I'm going to stick to the topic here.

In a perfect world, I think legislatively those conversions to EV would have happened already, or we would know that they're going to happen.

We're now facing the same kind of problem that I'm trying to describe here is that today we don't want to stop the stream of commerce with data centers, just like we don't want to stop the chain of commerce, the stream of commerce with long haul trucking, for example, to collapse the California economy.

That's why we're calling it a critical need. I don't think opposition has addressed that or responded to our, all the way through this process, to our assertion that if we don't do this, we fundamentally risk collapsing the California economy. The economy is fundamentally tied to data center capacity.

Now, whether we like it or not, diesel is an unfortunate backup generation fuel. I'll stipulate to that. I think we probably all would. It's what we have right now. And it's sort of become, it's not a red herring, but it's certainly become, you know, the issue discussed about on a Bill that's really an economic development Bill.

At this point, I don't know what the alternative is. And I didn't mean to. I didn't mean earlier to disregard the potential for solar.

But as we're trying to say, at what point battery capacity goes down, solar doesn't take that battery capacity up instantaneously, you're going to have periods of undulation, which then creates a problem in terms of your data center having to shut down, at least temporarily. And that means everything down, the stream of commerce shuts down with it.

All the things that we've been talking about that are dependent on the data centers. So I would love it. It would make the Bill a lot easier if we could just come forward and say we already have the alternative backup generation energy, and that makes things a lot better, but we don't.

And of course, grid capacity is going to be the other big issue that we're facing here. I'll stipulate to that as well. We didn't extend Diablo Canyon for no reason. It was done because the capacity needs of the state are outstripping our present ability to provide adequate alternative energy by other means.

So we're trying to get there, though. We're all trying to get there. This is just sort of an in between issue right now. And it's not because anybody is either abusing, taking advantage of, or trying to advance diesel power. This is. These plants are fundamentally electrically powered.

Thank you.

And thank you for your concerns. I appreciate it. All right.

oh, sorry. Go ahead.

Thank you. Did the opposition want to respond to.

oh, I was only respectfully, I needed to correct the record. That .07 number that's being attributed to the local air district. That's actually not the local air district's number that was included in an Energy Commission response to the Bay Area Air Quality Management District's comment letter. And so that's a CEC calculation.

I just wanted to mention that those aren't our numbers. And also in that response, they failed to address concerns that were raised by the Bay Area Air District related to health risk and also cleaner technology. So I just wanted to point that out. Thank you.

The alternative sources also that were talked about, I think that's something that needs to be, to be looked at and responded to at some point. I noted also that although the exemptions have been available since 1987, this is for the 100 megawatt. It's only been used 36 times. Is that correct?

I don't know if that exact number is the case, but like I said, up till now, the development of the data centers has been really driven by cheap electricity in certain areas of the states, particularly in and around my district. And that capacity is used up from a land use standpoint.

It's not that Santa Clara can't generate any more power. There's no more sites. It's a dense city by suburban standards.

One last question, Madam Chair. The analysis notes that all authority to grant land use entitlements, issuance of building permits, and compliance monitoring and enforcement for the life of the project changes hands to the local jurisdictions after it goes through the CEC.

Quoting from the analysis, it says, therefore, the construction labor provision within this Bill is unlikely, is likely unenforceable by the CEC. I know you're a labor champion, so I want to know how you intend to address this potential loophole for lack of another word.

We don't believe that that's the case, but let me ask Mister Wech to respond if that's all right, since he's a witness here that's expert on labor issues.

Well, thank you for looking after that issue. So we have counsel looking at it, and we're talking alleged counsel, and we do believe that that is something that could be, with an amendment to the Bill, could be made to, to transfer to the local agency at that point. So we're working on that. We don't see it as an insurmountable problem.

Okay, thank you. Thank you.

Thank you. All right, Assembly Member Boerner.

Thank you. I spent like an hour trying to figure out why we're doing this Bill. Normally in my Committee, CNC, we talk about backup to power generation, and it's usually related to cell services or in health. We used to talk about it related to hospitals, but now we're talking about data centers.

And I understand they use a lot of energy. But I do share the concern from my colleagues from the Inland Empire, having grown up there, that how are we going to guarantee that we're not going to get an overpopulation of these exempted diesel powered generators and we're not going to further destroy the air quality?

Where can we expect these in the state. And what provisions do you have to ensure that we're not going to over pollute already vulnerable neighborhoods who are already over polluted?

You're going to find them in the state first and foremost, as I was saying, where you have 150 electrical power available to the site, and that limits dramatically from a land use standpoint. I'm just talking about from a site location standpoint which applications are going to come in and where they're going to come into local governments.

So the local governments aren't in a position to, for example, say, we're going to zone a General plan aggressively in a particular area of their city. Absent a city like Santa Clara that has its own power, its own power facilities, those applications are going to come in the other way around.

They're going to come in where developers say, look, we've got that electrical capacity here. It's one of the rare sites or few sites where we have that, and that's where we want to be. That's first and foremost what's going to drive it. The air districts have metrics to, to prevent the over usage of data centers.

And again, as was stated earlier, these projects have to go through the environmental review process on the front end. So I don't know what more we could do absent having some additional environmental review process to, you know, to be concerned about or to apply government regulation on, you know, on these, on these situations.

So you must have some idea where all those parameters are set in the state. So where are the parameters in the state? Is it only in Santa Clara? And if so, why don't you just limit to this, to one county?

No, no. The CEC approves the exemption in this case based on how this, this Bill is set up. Environmental review has to occur, then the land use process, whether that started concurrently or not, the land use entitlement process, like we would see for housing or commercial property or anything else has to take place.

That's not done by the Cec. Well, you're asking me.

So I'm saying where in the state are you going to do it? And what are the safeguards to make sure that you don't have an over concentration of these large diesel power backup generators that are going to further disadvantage people in the Inland Empire or people in the central valley?

Well, it's a combination of local land use decisions in CEQA.

Okay, so that's not a sufficient answer for me because we're being asked to do something where this can be done right now. All the data centers can go in right now and they went through the normal CEC process. They could get this, they could get the 150.

You're asking us to do something that streamlines these at a larger size. Right. And if you grew up in the Inland Empire. When I grew up in the Inland Empire and you had friends die of asthma attacks because of our air quality, I think you would be concerned.

I have a very, very close friend that died of an asthma attack. I'll stipulate to that. And I don't want it to be set on the record that I'm insensitive to that. I was just saying, one of my closest friends growing up in my life died of an asthma attack.

So did mine out on mouse landing on a boat, which is considered a fairly clean air location in California. So I don't want to, if you don't mind, some Member, get into emotional arguments about fatalities that occurred or who's closer to the people who suffered those things. I understand that certain parts of the state have.

Have worse air quality currently than other parts of the state. I don't have an immediate answer other than CEQA and local control in terms of, and as I said, the inability in but a few locations in California to provide that kind of power in any concentrated way.

So I didn't want to go into an emotional argument. What I think the Bill is missing is a further safeguard about over concentration of diesel generators. Right. That if you have a place that does have sufficient power. And we know sometimes local land use decisions are great, and sometimes they don't make wise decisions.

I think my colleague from the Inland Empire has been battling a lot of unintended consequences in her district. And so you could see how what we think is a kind of a benign thing. We want to make sure we have data centers. We know this is the next thing coming. Totally see why you want to do this.

They obviously will have some labor standards, so we want to have good jobs. I can see all that. But if you have a bunch, go into a neighborhood that's already polluted, there isn't a safeguard in the Bill. There is. There is. Where is the safeguard?

The safeguard, Madam Chair? The safeguard is the singular biggest issue that's looked at in a CEQA document is cumulative impacts.

So the first thing that's going to happen when you go through CEQA is, and the lead agency, which is going to be the local, most likely the local siting agency, is, they're going to look at the cumulative impacts.

What are the impacts of this proposed projects to all the other ones that have been placed here as well as other emitters in other industries. That is the core of the CEQA document.

And so, and so that's what you're using for this provision so that you wouldn't get over concentration. That's how you're, that's how you. And I'm just trying, I'm subbing in today. I don't usually look at this much detail.

We're not, this Bill doesn't, what we're trying to say is this Bill doesn't change that. The Bill didn't come in and say, let's streamline the CEQA process. It's not doing that. That's not what, we didn't go and try to write a Bill to advance data centers in General by modifying or weakening the CEQA process. I don't know.

It's technologically neutral. We're not requiring data. DSo, please speak on the record. The Bill is not requiring diesel. It sounds like folks are trying to say, like, zero, you're trying to give a special exemption for diesel. The Bill is technologically neutral. The small power plant exemption is technologically neutral.

And the amendment that we included in this version of the Bill coming to this Committee is that it has to meet a best available control technology standard, which the air districts will determine.

All right, Assembly Member Friedman, thanks.

I have a few questions. So I understand it doesn't require diesel, but just to be clear, how many. Right now are non diesel of the backup generators?

Most, yeah. So they're going to be diesel, at least for the foreseeable future. I just want to be sure that we're all talking about the same thing. But as technology, as technology advances, then that will.

As there are more reliable technologies, then they will use those more reliable technologies, depending on what is determined to be best available control technology by the air district.

Right. But for the foreseeable future, what we have right now is if in the next five years, these are going to be diesels. So let's just be clear about that. We're talking about diesel.

That's fine.

I have a few questions. This is maybe a small point, but I am curious. You've referred to these data centers many times as critical infrastructure, but is there a definition? Isn't it all data centers under this Bill qualify? So a lot of data centers are critical. Certainly. I would say what Microsoft does.

I'm sure you have within your data centers a lot of functions that are completely critical. But this also would capture a crypto data center. Right? Cryptocurrency would capture a gaming dentist data center. I don't know if Sega has data centers, but let's say Sega, they would also be considered under this. I just want to be.

Just get on the record that these aren't really all critical. A lot of them are critical, but I don't think. I would not say that we need to waive environmental review, maybe for crypto, a new crypto facility or gaming data center facility.

It's not really, if I may, it's not really how the business model works with data centers. And data centers, as we talked about in the proliferation, early proliferation of them in my county, are oftentimes least out space by space. Right.

I understand that many of you.

So what's critical to the economy and the State of California, as far as I'm concerned, in terms of tax revenue, is that as venture capital is invested in startup operations that are not yet at the point of being able to scale into their own data center, that they're able to lease data center space so that they can move forward, do the IPOs that provide the capital gains that provide the dollars for us in this budget to do things like the climate plan that we did two years ago?

Everybody up here is talking about the projections, the revenue projections being overstated last year in the state budget because there was an expectation that that kind of investment was going to be much higher, much more prolific than it was over the last year and a half. It is the lifeblood of the economy in the state of California.

Those capital gains are produced by, primarily by technology IPOs that are producing apps, that are startups that are new, that are in need of this space. And when they go to try to find the space right now so that they can move like that economically, they're running into a 1.6% vacancy factor. And I'm just saying that's.

I feel like that's not what the opposition is addressing. What's their answer to running out to having zero vacancy? What is the answer to that? Just let's just let the economy start. So that I understand cooling down.

You can build the larger backup facilities and build the larger data centers, but you have to go through a more rigorous process. So just so that I understand, how much time does that actually add?

And you know, something that the gentleman from Microsoft said is that no one's going to build over the 99 megawatt data center right now. Are we talking five years, 10 years, one year?

It seems like a pretty big assertion to say that this process is so rigorous that it actually is stopping any of the new larger data centers from being built.

So if you go through the process, which is not the small power plan extension process, then you have to ask the CEC for permission every time you want to change out a server. These are rooms with thousands of servers. And every time that you want to make maintenance changes to the facility.

And so as a result, people don't build them larger than 99 mw, you can look at all of the small power plant exemptions. Nobody's doing them bigger than 99 megawatts.

Guess. So how much time if you were to build a new one today and.

You were going to build, the reason is, well, it takes a couple of years to build these things, but the reason that it's not done now is that you have to ongoingly ask the CEC every time that something changes.

You mean if you're.

Every time that after the thing is built, after it's operational, and then, whoops, a server went down, we need to change out that server, then you have to go ask the CEC, can we go in there and change the server?

You mean because what? Why would you have to? I don't understand.

That is the current law. Without this exemption, that's the current process that data centers would need to go. Through for a data center of 100 mw.

If you are going to go above that, if you are using 75, you want to change a server and you're under the 100 you don't have to go to. Correct?

Because that would have gone through the small power plant exemption process which qualifies for the CEC review. That's correct.

So what you're saying is that you have these plants right now, you have these facilities that are kind of maxed out and they don't want to go through the process. They want to add a little bit more power. They want to go above that hundred and they don't want to go through the process.

I mean you've got, I mean it seems, it's a little bit hard, I mean it's a little hard to imagine that you've got all of these facilities that are right at that 99, 98 level. I mean maybe that's the case. There's, you know, one company you're representing, Microsoft.

I represent the Silicon Valley Leadership Group.

Okay.

So they have a lot of member companies who are interested in this, just to be honest.

So how many facilities right now are we talking about that are ready to just use the exemption and go to 150? Do you think? How many facilities?

I do not know. I mean I know that there are several projects that people have in the pipeline, but I don't have a number for that.

So how long? I understand that you would, you have to go to the CEC to make sure you don't go over that hundred. But let's say you say, look, I'm going to go bigger. How long would that process take you under the current process to replace your, to replace your plant?

Maybe I can help from Mister McRae. She's, I'm trying to understand. There was a 400 megawatt data set data center being developed. What is the difference in critical path in the time of that duration of that project relative to the smaller power plant exemption?

My best understanding is it would take longer if you have to build something bigger, but the reason that people are not doing the larger than 100 megawatt is because of the ongoing need for review by the CEC.

Well, only ongoing if you're trying to retrofit an existing.

No. If you are making any operational changes within the data center. If the data center was not part of the small power plant exemption process and the small power plant exemption process now only applies to 50 to 99 mw.

Right, but if you're going to build something new and you want to do something bigger, right. You're going to, you can go up to. Yeah, you can go up to 100. Right. But let's say that you wanted to not be exempt and you want to go through the regular process.

Which no one wants to do because of the onerous nature of that review nobody wants to do that.

Okay.

I apologize.

If I may. If I may. Perhaps you can just clarify that I'm understanding this correctly and then maybe I can explain it. So, it's not that there's a one off moment where.

So, if I'm trying to build out a data center, it's not that I have one single point in time where I need to get a special approval. If I,

regardless, regardless of the diesel generator, non diesel generator, any of it, if I am not part of this small power plant exemption for any reason, it means that every time I change out a server and that is like one little thing in my data center which happens, I don't know, once a week, almost daily. Almost daily.

Every single time I want to do that, I have to go to the CEC to get an approval for that, irrespective of It's not anything to do with the diesel stuff.

but all these data centers right now that are under 100 would think are part. Aren't they already part of the exemption?

Correct. They've all gotten this small power plant exemption.

Yes. Right. So if, but they only have to go through this if they're going to be going above 100 mega watts with what they do.

The bill proposes to allow the small power plant exemption to extend to data centers of up to 150 megawatts. Right.

So if you're a data center and you have a 50 and you're using 50 megawatts, you're within the parameters of the exemption and you want to add and you want to do it, you know, swap out a server and you're going to 60 mw.

You don't have to go through a CEC process for that because you're already under 100 mw. What they're saying is they want to have the larger facility. They want to be able to add on to their facility. I understand that. I'm just, I was just simply asking about what the difference is in terms of process between these.

What would it take? Let's say they decide, hey, I'm at 99, want to add another 20 mega watts now to upgrade what that if they go through the process now, as opposed to the streamlining, what it adds in terms of time. That's very germane because that's the whole purpose for the Bill.

But it's not part of the Bill is they're saying it's so incredibly onerous. That no one wants to do it. I'm just asking what it actually takes,

Because it's not a one time thing or a one time window. It means that every single day you would be submitting an application to the CEC to change a server, because you're not just changing servers when you're adding capacity. That's part of the regular operation of the facility.

So that is the current process under law without this exemption. So that's why it's such a big difference.

Only if they're adding their backup power.

No it's for any operational change. So it's not sort of like, oh, we're at 50, we want to go to 60. Thus we'll have to go to the CEC for more permission. It's, we're at 50 and a server just went down. Okay, someone called CEC.

We're at 50 and we need to do some maintenance on, oops, somebody's got to call the CEC.

So how would going to 150 change that?

So the small power plant exemption process means that those, the ability to not have to call the CEC applies. If you go through that small power plant exemption process for data centers of 50 to 99, we want to allow that process to be applied to data centers of 50 to 150 mw.

Right. So the process would be the same. You can just do add more. You can add more power if you increase it. You're not changing that. Okay, I'm complete. I thought I understood this and now I feel a little bit lost.

I apologize if there's been lack of clarity, but basically the Bill is a fairly simple Bill. It says that there's this small power plant exemption process now that applies to data centers between 50 and 99 mw. We want to allow the data centers up to 150 take advantage of that process.

And when you go through the small power plant exemption process, where there's no skipping environmental review, that you would have to apply best available control technology. We have to consider all the environmental impacts, including cumulative impacts, whether or not you can put a data center in a particular place. And this Bill would allow that.

And allow that for data centers of up to 150 help support critical infrastructure throughout California.

And thus they then get the flexibility to make modifications without the onerous process that would apply to what would then be data centers that are over 150 at that point. So for the large flexibility.

Yeah, I.

The larger facilities are.

I thought we were agreed and then I said, so if they're already within the parameter of having that approval, if they were only 50, they added something in it and everybody said, no, right.

Now under 100 gets the flexibility. Right. Over 100 doesn't. Over. We're saying, let's make it to 150 mw gets that flexibility. That's all. We're really saying, but because all these facilities currently are backed up by diesel that has entered into the discussion today.

I know you're not raising that at this moment, but that's been part of the discussion that we've had to have today because that's the backup source that's most commonly used today. But what we're trying to create is not the advancement of that.

We're trying to create the flexibility that has worked so well at 100 or less for the folks in Silicon Valley are testifying.

I got it. Okay, so just two other questions. You didn't take all of the suggested amendments. I haven't gotten a list of which ones were accepted and which ones were not.

I have those here, and I can either read those.

I don't think that came up in any of the testimonies, because there's a lot of suggested amendments, and it might be good for the Committee to know which ones were actually accepted.

Yes. Thank you.

So these are the Committee amendments, number one, since determination of back or BACT requirements is under the jurisdiction of air districts and not the CEC, clarifying that the CEC will obtain this determination from the arid districts and requiring the arid districts to provide this determination during the small power plant exemption process.

Air districts currently do this after an SPPE is granted. Two, to be considered for the expanded small power plant exemption. Also asking for applicant to show the Commission that they have considered energy efficiency and demand response tools, but not require them to implement.

These are the ones you're taking?

Yes. And b, to provide a report on the expected energy use of the facility, such as energy intensities, peak factors, and load profiles. And three, sunsetting the expansion. I'm sorry. That's correct. And sunsetting this expansion in five years from date of enactment. So.

And which ones are you not accepting?

The head. Let me get that.

It was the one about power utilization effectiveness.

Yeah. There was a suggested amendment of reporting power load usage effectiveness, and I had a long conversation with the Chair yesterday in terms of the usefulness of that, and we agreed, I believe that was not a necessary amendment to take.

I appreciate. I do appreciate the discussion. I really do.

Okay. And just my very last question. I promise. I'm just trying to, you know.

Thank you. I'm glad you do. So, in terms of the fact that this still will go through a sequel review, the same SQL review, but it's a less onerous CEC review. What, in terms of community input, timeline changes, in terms from the community's perspective, their ability to impact whether or not the facility would be allowed the placement.

I mean, they're already there, most of them. So what would this change in terms of community process?

Any of this should trigger a land use process, a review process, even if it was just the plan development permit that was on the property, as we know from our backgrounds. And then that whole entire. For obviously the CEQA has, it has public input process and then the land use process would also have public input.

And is it the pollution control boards with their process then be, what would be their role in this?

I'd have to defer to them. I would have to, I can't say I'm expert on.

I guess I'm just wondering, all of their reviews, streamlining, what are we losing?

But there's a public aspect. Yeah.

Maybe I could ask the opposition again.

The streamlining is less on the front end there. There's no undercutting of public review or change to public review or CEQA here. The flexibility, the streamlining comes in once you have the small power plant exemption in that you can make changes with allowable changes within that power plant without having to keep going back to the CEC continuously.

Maybe if I hear from them, maybe it'll make me more comfortable. I feel like we're not losing a whole lot, so.

Well, thank you. We are concerned about that. You're not doing the full public process as part of the certification process. But once the project gets to, if it gets the exemption and comes to the local air districts, then we're still going to have permitting authority over these, the generators and things like that.

But we'll be, the net effect is though, we'll be mostly working within that, that if we get a project that's diesel, most likely then we'll remain diesel. Whereas if you, at the CEC level before the exemption is granted, if you could have a cleaner technology, that's just going to mean you're going to have a better outcome.

So, you know, we'll still have our permit authority at the local level. But this does kind of can muddy the waters too with how BACT would work. And they're making BACT determinations at CEC.

And that's really something that now happening at CEC, making those determinations with our input is that sort of complicates it because that happens at CEC when really that should be happening at the district level.

And the amendment taken was that the BACT is done by the, it's a timing issue.

Okay. All right. Thank you, Assembly Member Hart.

Well, the news that replacing a server at a data center requires the CEC approval is astonishing, and I think that that probably should be fixed all by itself. But the question I did have to do is the one amendment that you didn't accept, and I'd just like to understand more about that.

The staff report, which is really excellent, goes into a lot of description about how we're trying to predict power usage in the future, that data centers are increasingly using a lot of power, and that we need to understand, you know, the demand that artificial intelligence systems is going to have on future electricity demand.

And the idea that we would have an annual report to the CEC on the power usage effectiveness would be a good tool, I think, to help to understand the demand from data centers in the future, and just wondered why that amendment wasn't accepted.

I'm going to defer again to Mister McRae in a moment and just say that load usage, we don't believe is a good indicator of what you're looking for projecting power usage and power load on the entire state. As. As I understand, I think we probably have a shared concern about that.

The resiliency of the grid is your concern. My concern, that particular amendment wasn't going to provide us help in understanding the resiliency of the grid or the future demand on the grid.

It would have shown the efficiency of the load usage at that data center, and I suppose cumulatively it would have given us some aggregate number, but we just didn't feel it was, it was a report that just wasn't going to create the outcome that was intended.

And if there were, you know, something that, that really would help us in this process, you know, project long term grid resiliency, or at least what this is impacting long term grid resiliency, that would be great. It was just, the language didn't seem to get us there, and we talked about. I made that point yesterday.

The Chair listened to me. I'm not sure we know exactly right or wrong on that, but we agreed to leave that out.

Well, I appreciate that. And I think with the point of the staff analysis was, is that demand usage flexibility and the incentive pricing of that is a tool that could be used to offset demand in the future, too, and that's something that needs to be explored.

There are other data centers that do that, and that I think that's a tool that ought to be in the toolbox. Having more information about that helps us in California. So I hope you considered looking at that again as the first. I'm happy to.

Happy to keep looking at it to get to the, you know, the actual information that I think people are interested in. We have a hell of a problem in the state overall that subsumes this particular issue. But admittedly, this issue will be part of it.

We're trying to rapidly expand ev infrastructure by 2035 so we don't crash that market. Right. We're trying to do this. This is not a try. This is what we believe is, is additional critical infrastructure that's needed going forward based on the shifting of the economy.

All that's putting pressure on the grid that we have not figured out collectively here in Sacramento how to resolve. And if there's something about data centers that can help provide information into that process, be it this Bill or be it in another Bill that requires some kind of reporting, aggregate reporting, I'm very interested in helping with that.

And if I may, 2 things. One is we took the amendment saying that you have to look at demand response. So if you're worried about looking at demand response long term, we're taking that amendment. And the second thing is that the worry is how much energy is it using?

And that is going to be determined by the application's size. Is it, you know, can it be capable of 125 mw? Can it be capable of 150? That's what the CEC can use to determine whether or not there's impact to the grid.

Thank you, Assembly Member Reyes.

Thank you. This conversation has been very good. One of the questions that I asked myself is, is there no alternative to this dirty power, to the diesel? And I think the answer, reading further, and I think from the testimony, some use natural gas. I know at least one that was mentioned.

It may not be better to my colleague from. She mentioned my colleague from Contra Costa. But nonetheless, I do believe other technologies should be able to scale. When we think of tech companies, we think of tech companies sitting at the table, too.

They have billions of dollars that they can afford to spend so they can spend more on, specifically on clean energy. And finding that clean energy. If we are absolutely stuck on diesel, we know that is one of the dirtiest. I'm just concerned that we are not looking at other technologies.

I hear you when you say it's technology neutral, but it seems like all of the emphasis here is on that. Another comment that was made by my colleague from Encinitas about CEQA, I think the response was, well, it's local control.

And CEQA, if the only thing that is going to prevent the dirty diesel is local control, we have serious problems.

Because I can tell you that it is very easy, and I see it in my community that we get a CEQA report and the local control allows them to override that CEQA report and say the economic benefit outweighs the, whatever problems CEQA says are health issues and they will override it and it's approved and we're done with it.

Do you have any response specifically to that regarding CEQA?

I would just say that CEQA has to determine that there's no significant negative environmental impact. They have to make that determination, and no significant environmental impact is no significant environmental impact.

I can share with you that CEQA will say there is significant impact and the local entity, the local government entity will simply override it and say the economic benefit to the community is greater and we're going to override whatever CEQA says is wrong with this project.

We're going to override those requirements because it's going to help our economy. So what if it's going to harm the health of the community? The economic benefit is too great.

But that override would have to, in this case, would have to happen at the CEC, not at the local land use side. They're not dealing with that issue. I've been right there with you.

Assembly Member, I've seen overrides I voted against overrides that my colleagues voted for in the local government, overriding cumulative impact and basically the mitigation that the CEQA document said that we should be requiring because of some urgency. But here there are still emission caps that the air districts can require or do require.

On the diesel side of this, obviously, is where that would be focused. And the environmental process at the local level is, I suppose there's always the possibility that there could be an override there. I don't want to, like I said, I've been in those rooms myself.

Whether they will, whether that will happen or not, I think is separate and apart from this Bill in a sense.

But I assure you they do happen. And for someone like myself, it is the saddest thing to see because in the end, it's the mighty dollar that's being accepted over the health of the community. And I see it over and over and it's such a problem.

I don't disagree.

My last comment question is, when we're talking about the review for, there was a comment that they seem onerous, but that's because the exemption wasn't crafted for data centers. It was designed for small power plants. So it seems that something more specific to data centers might be warranted rather than increasing the exemption. Just something to consider.

It will be considered. Thank you. Very much. Thank you.

Thank you. All right, well, I just want to say thank you to Members for your questions and for that robust discussion. I know a lot of our conversation did focus around the backup generation element of this, and certainly none of us like diesel power.

I think everyone in this room is working overtime to try to ensure that we can continue to transition California to a clean energy economy and phase out diesel generation. And I know in our conversations, I raised some of the questions that were asked in Committee today.

And I know as we dug into this Bill was persuaded that we did not waive environmental review, we did not waive CEQA, and that this does strike an appropriate balance to ensure that over the course of the next five years, as we continue to push for available technologies to get better and better, that we do include the safeguard that air districts are making the determination for the best available control technology requirements.

As part of this, we've instituted a sunset review at five years time. And I know you, Mister Cortese, will certainly be championing more environmentally friendly backup solutions as part of this. But we also need to ensure that we can continue to build the world's fourth largest economy as part of that.

So with that, would you like to close?

Thank you very much. And I failed at the outset during my presentation to thank you and the Committee for the hard work. And I know we hear that a lot, but that was really the case, very literally the case here with this Bill.

And I think the conversation that we heard today was reflected in a lot of hard work that was done going back and forth.

And also with just the Committee analysis itself, we also hear a lot the words, I appreciate the robust discussion, but I appreciate it, especially coming from Silicon Valley, because the way I've always come to learn, representing the area to define innovation, is innovation is technological workarounds.

It's when people hear a robust conversation like this and understand what the implications are of not figuring out a better way. And I think, as Assembly Member alluded to, the industry will figure out a clean energy solution to backup. And part of the motivation for that will have will be, you know, this conversation itself.

This is clearly a conversation that's going to be, that's going to have tremendous gravitas with everyone involved because the stakes are so high.

And I have great confidence in the processes that are in place in terms of our environmental review, but also great confidence in Silicon Valley innovation, figuring out, you know, how to, whether it's solar or whether it's a combination of things, how to help us get diesel out of this particular sector of the industry as quickly as possible.

I think they've heard loud and clear from this Committee and prior committees. That needs to happen. And with that, I would respectfully ask for your aye vote. So we can continue on. Thank you.

Thank you, Madam Secretary. Please call the roll. Okay. Motion from Assembly Member Wallace. Second from Assembly Member Patterson.

Roll Call

11-0 that bill is out. We'll leave the roll open for absent Members to add on. Thank you, Senator. All right, moving along to file item number five, SB 1130. Senator Bradford, when you're ready, move the Bill.

Ask for an aye vote. I'm just here to present 1130, which simply expands the fair program, the Fair Family Electric rate assistance program. It's woefully undertaken right now. We just want to improve families having access to discount rates.

We know about the care program, which has improved take rate over the last five to 10 years, but fairer still, about 18% take rate right now. And it's going to deal with those folks that are 200 larger families to afford them a more reasonable rate.

And as noted, the Committee's analysis is estimated in 2022, participation rate for eligible enrollees for PG&E, Southern California Edison and San Diego gas and electric was 22%, 12%, and 28%, respectively. And California energy bills that we know are trending higher and higher, and this is just a way to combat those rates.

And testifying in support today is Katie Morsoni, representing a turn network, and I respectfully ask for your aye vote.

Thank you. Welcome.

Good afternoon. My name is Katie Morsoni. I'm an attorney with the Utility Reform Network, or TURN. For over 50 years, Tern has been holding utilities accountable to deliver California's clean energy at affordable rates. I'm here today to testify in support of SB 1130, Senator Bradford's Bill to remove the household size requirement for eligibility for the FHIR program.

In recent years, the rates for the California IOUs have skyrocketed to over the last decade, almost doubling or close to doubling. Energy and security is increasing across California, and more utility customers are facing a very real question of whether to turn turn on their ac on a hot day or to pay for food or prescriptions.

TURN has a number of proposals for delivering affordable rates but in the meantime, the CPUC does maintain rate discount programs that help low income customers.

Individuals and families whose household incomes are at or below 200% of the federal poverty line are eligible for the California alternate rates for energy program or CARE, and households with income levels between 200 and 250% of the federal poverty level are eligible to participate in FIRA and receive an 18% discount on their monthly electric bill.

While care is either fully or close to fully enrolled for each of the IOUs, the FARA program remains well under subscribed and as noted by the Committee analysis, SCE is at 11% enrollment with PG&E and SDG&E about a quarter enrolled, and currently there is a household size requirement of three members of the household.

This bill would remove that size requirement and would expand the base of people that are able to meet the income eligibility requirements of the FARA program and would certainly benefit from the reduced electricity rates that the program offers. Expanding FIRA protects people, their health and their dignity.

It provides people struggling with their energy bills, more affordable rates, and keeps that customer paying their bills and keeps their unpaid amounts from being socialized across other utility customers. Turn is proud to support SB 1130 and urges your aye vote thank you.

All right, we'll open it up for support testimony in the room. If you'd like to testify in support of SB 1130, please come on up.

Good afternoon, Madam Chair Members. Catherine Charles, on behalf of San Jose clean energy in support.

Good afternoon. Charlie Donnell with stone advocacy on behalf of the California Solar and Storage Association, in support.

Victoria Rome with NRDC, in support.

Dan Chauffeur, Ava Community energy, formerly East Bay Community Energy, in support.

Rebecca Marcus with CalPERG in support.

Jamie Miner, on behalf of the California Community Choice Association and MCE, serving constituents in Marin, Contra Costa, Solano, and Napa counties. Thank you.

Thank you. Mark Fenstermaker for Peninsula clean energy and support.

Thank you. Keely O'Brien with Western center on law and poverty and strong support.

Thank you. I don't believe we have a witness in opposition. Seeing none. We'll open it up for any opposition testimony in the room. If you'd like to testify in opposition, please approach the mic. Seeing none, bringing it back to the Committee. Questions? Comments? All right.

Thank you for an easy bill.

That's what I'm here for. I'm here to serve.

Assemblymember Wood, did you want to. No, no. Just, you were given a thumbs up. Okay, good. All right. With that, Senator, would you like to close?

I respectfully ask your aye vote.

Thank you. Madam, we have a motion in a second. Yes. Great.

All right, before I sit down.

All right. Item number five, SB 1130. The motion is do pass to appropriations. [Roll Call].

That bill is out and we'll leave the roll open.

Members, Madam Chair and Committee Members, thank you.

Thank you so much for your patience and welcome. Whenever you're ready, move the Bill.

Thank you very much. I'll open with the amendments. I will be accepting the Committee amendments in the analysis to strike capacity and other point of connection charges and to add estimates to the schedule of fees with the agreement that the Committee will work with the Committee on Guardrails for that language so that we.

So that the information is reasonably accurate and we can talk later about why we need that. And I've agreed to the hardship exemption being defined as for utilities having under 4000 connections, but with work still to be done to clarify the procedure for how utilities would establish, establish a hardship.

So with that, if you're okay, I will now just quickly wide the Bill. Whether you're a homeowner who's building an ADU, somebody, a small property owner building a fourplex, or a large multifamily developer, of course you want to be. You're trying to figure out what the cost of your project is going to be in advance.

And while you can get bids on everything, most everything, the one thing that you don't know in advance in many cases, is what the cost of your utility hookup is going to be and what the timeline for that completion will be. Now, some of our public water utilities have posted, you can go online right away. I mean, for example, I am building an ADU in my backyard right now. I don't intend to rent it. It's for a family Member, but let's say I wanted to rent it. That might argue for me to have a separate water meter.

However, I was able to go online to my local utility, water utility, and find out what the cost of a separate water meter would be to me versus what the cost of just an upgrade to my meter would be. Right. Which is, you know, and you might not want to know just exactly what that cost was.

Mine has a particularly high. I knew meter would have cost me in the order over 30,000. The upgrade cost me 17. So of course I made the decision to do the upgrade versus the new one. However many, many other utilities, sewer, electric, you name it, don't give you, you don't have that information.

You can't make that in advance. So given that we're trying to deal with making progress on our housing crisis and time is money, hookup fees are money. The more clarity we can have in advance, the better. So this Bill is purely transparency.

Doesn't force anything other than our utilities to post online their estimated hookup fees and by housing type and their estimated timeline for the completion of those hookup. So that's what it does. And as I indicated, the Committee amendments, and with that, let me have my witnesses in support. We have Corey Smith from the Housing Action Coalition and Courtney Pal from Resources for Community Development.

Thank you, Senator. Good afternoon, Assembly Members, and happy Juneteenth to everybody. My name is Corey Smith. I'm the Executive Director of the Housing Action Coalition. We're a home building industry funded nonprofit that advocates for building more homes for residents at all income levels and a proud sponsor of SB 1210 because we've heard consistently about the challenges utility companies present in the home building process.

And while SB 1210 will not be a panacea, few things make it harder and more expensive to build housing than introducing unforeseen costs and unpredictability. And that's why this good government proposal will help solve a problem that home builders face.

By requiring the transparency and timelines at the beginning of the process, home builders will be able to better predict the costs and timelines associated with building new housing and in an environment where it is financially infeasible. If we're being honest to build housing here today, we need to be doing everything we can to make it easier.

To be clear, this Bill is not going to solve every single problem. But for anybody that's looking to propose or build new homes, this is a step in the right direction. Thank you.

Good afternoon. My name is Courtney Pal, and I'm the policy manager at Resources for Community Development, or RCD as we're known in the field. We are a nonprofit affordable housing developer providing over 2600 rental homes throughout the Bay Area with an additional 1000 apartments in pre development and construction.

RCD is a proud supporter of SB 1210 because it provides much needed transparency into utility hookup fees and connection timelines. These are two major costs that are currently obscured for much of the development process.

For example, water and sewer connection fees among our recent developments average $1.1 million, but we typically don't receive an official fee estimate until right before payment is due. Requiring utility agencies to list these fees on their website provides earlier clarity regarding these large costs.

Similarly, we don't receive a utility connection scheduling estimate until after a development is ready to be connected to the grid. Delays at this juncture are particularly impactful, as we have learned from recent experience at our newest affordable housing development, the Modell Miller Chirac community in South Berkeley.

This development is currently being affected by a delayed energization timeline on the part of PG&E. This delayed timeline was not known to us at the outset, and as a result, it's creating increased costs and disruption for the many low income families who will call this building home and they're waiting to move in.

Under SB 1210, PG&E and other utility companies would be required to post their connection timelines publicly online, giving us advance notice of these types of workload delays and allowing us to mitigate their financial harm. So we urge you to support this Bill. Thank you.

Where's the chair?

Thank you so much. We'll go ahead and open it up for additional support in the room. Please approach the microphone if you'd like to testify to support SB 1210.

Rebecca Marcus, representing Leading Age California in support.

Dan Chauffeur, Ava Community Energy in support.

Thank you. Opposition witnesses, go ahead and come on up.

Good afternoon, Members. I know it's been a long hearing so far. Brandon Ebeck, Pacific Gas and Electric we are opposed to the Bill. We've been opposed to the four different versions it's taken so far. Our outstanding issues are largely technical, so we look forward to seeing what amendments come out. We're open to being part of the conversation.

Ultimately, the Bill comingles a lot of types of utilities into one Bill and treats them all the same and then treats IOUS the same as POUs. That's really the issue here. We don't have scheduled fees. We have a whole different process. We just want that to be acknowledged in the Bill.

We are engaging with PUC on timelines. We're open to transparency. We just need to have a concrete discussion to make sure that the Bill works on a technical basis. And that's so we look forward to looking at whatever amendments are and if we can be part of the conversation, that'd be helpful. Thank you.

Andrew Kosydar with Southern California Edison. Just want to outline my comments with my colleague from PG&E. We're a little bit confused about the transparency piece because of the allowances that are associated with any of these interconnections. They can effectively make an interconnection for a single family home free or it doesn't really cost anything.

So the actual amount that the customer pays is not necessarily reflective of what's being disclosed. But with that being said, we really appreciate the Senator being willing to accept the amendments and look forward to seeing those in print and taking this conversation forward. Thank you.

Thank you. Additional witnesses in opposition

Ken Kauss with SDG&E also in opposition.

Okay. Bringing it back to Committee Members. Questions or comments?Assembly Member Wood

Thank you, Senator. I appreciate what you're trying to accomplish here. I guess, I guess one of the concerns I have, and maybe, unless I'm misunderstanding the Bill, is that you want transparency. You want to know what it's going to cost up front, and you're looking at what a typical home is.

Well, I would say in the community. Community I live in, the typical home might, there is no definition for that. We have a house that might have been built in the fifties next to a house that's built in the seventies and they're on different sized lots.

So how does a utility or give an estimate on something like that when they could be completely dissimilar?

I can see in a neighborhood where the homes were all built around the same time and they're all roughly the same size, but that isn't reflective, certainly isn't reflective of a lot of my district and is certainly not reflective of the community that I live in.

So how the amount of work that was going to be required to do that, typical isn't going to necessarily be typical, and one size isn't going to fit all. And so how do you, how do you propose that they address that? Because I don't see how you do it and accomplish what I believe.

I understand what you want to do. I really do appreciate that because I, as a customer, would want to know that, too. But I don't see, I don't know.

The language didn't state typical per se. It's stated type of. And it also is using estimated.

And certainly we are working with the Committee on how to define that, to add some guardrails to that estimated, so that clearly the different factors that might go into what the hookup cost is for X or Y would be able to be include part of this.

In other words, the disclosure would that estimate might indicate, what are these factors that would affect estimate X or estimate Y?

I'm sorry if I missed the word type of typical. Type of still doesn't change my question, because 2-3 bedroom, 2 bath houses that are different generations on different sized lots with different runs and different ages of infrastructure, all of those things can be factored in. So that's where I'm struggling with.

I mean, I'm glad that it's an estimate because there is no way that you could get someone to pin that down and be fair to anybody, quite frankly.

Well, and as I've indicated that, I am taking that amendment of the estimated and certainly willing to continue the conversation, because the point, point is to get that transparency. And I'm sure there's a way to. Achieve it.

Actually, to the Chair, all.

I'm going to say is over a month ago, we provided amendments to the author's office to just say that you can provide a schedule, fees, or a description of how the costs might be created so you can put in all those factors online and have better transparency.

I know transparency is a big thing of what we're doing with AB 50 and SB 410, and we're trying to rebuild our website, trying to rebuild the whole process. So we're open to listing a description of how the fees are created, but just acknowledge that we don't have a schedule of fees.

We don't want to create a schedule of fees that's not going to be relevant to what we're ultimately going to charge customer.

Assembly Members Zbur.

So first, I want to thank you. I always believe in more transparency than less, but I do share some of the concerns. I think that, that my colleague from Northern California has expressed.

The thing that is hard for me is to sort of understand whether you're doing sort of more harm than good by giving an estimate where you actually have outliers that are going to be a lot higher.

So say that, you know, say, you know, so one way thing might be to do a range, I guess, which I'd ask you to think about. Another thing would be to give an estimate.

But then what about those cases where you actually have a cost that is much, much higher, and then you have a consumer who's gotten that estimate that is $1,000 and it turns out to be 10,000. It seems like that's almost more harmful.

I do think that I don't want this to move in a direction where it becomes something where the estimate becomes hard and fast and is the fee, because I don't think that people should be sharing that we should be averaging this all out.

I don't think, I mean, if you're doing it based on economic factors through some kind of program, that would be a different thing. And I also don't want it to be something that becomes borne by the rate payer.

So I'm going to support the Bill today because I know you've been working very hard, and I think the Chair has been working hard with the staff on this Bill with these estimates.

But I do think it needs some work to make sure that we don't have consumers that are relying on an estimate that is just really off and that we don't go in a direction where we're sort of averaging these things and that becomes the charge.

And certainly estimate does not preclude range.

Assembly Member Patterson. Oh, sorry. Patterson

Well, thank you. Thank you for that. One of the irrigation, one of the opponent letters is a district in my district, El Dorado irrigation district. And one of the reasons for the opposition was that they think it's duplicative in terms of reporting that existing law already says they have to put this on their website.

And so I was just looking interested in your thoughts on that. I have a comment afterwards. But interested in your thoughts on that.

The language for those utilities that already have that requirement under the law, it states that they just comply with the existing law that has that requirement.

Okay. That's great. Yeah. I think on the housing space, I'm working on some bills pertaining to actually fee deferrals and it's got out of this house and we'll see what happens in the Senate.

I think this is really important generally to have transparency on what those fees are going to be because we have, my concern is mostly for agencies that already seems to be covered by law.

But I think when a person's putting in a house or doing an ADU or there's a multifamily unit, a lot of people don't realize when they're going from one jurisdiction to another jurisdiction if it's not easy to find just how much different those fees could actually be.

I mean, I use this opportunity every time that there's a sewer district in my district that charges $15,000 connection fee, whether you're a 1000 square foot apartment or 100,000 square foot mansion that I hope to live in one day, but it's the same fee.

And so if you're doing so, I actually love the idea of transparency so people can see that that's crazy. And this Legislature for one reason or another has allowed that exemption for those types of connections fees, for them to not base it on square footage or whatever, I never really truly understood that.

But I am concerned about what the investor owned utilities are saying, and I hope you continue to work on that because I could see it actually making people more concerned as they're putting in housing and they're getting, they don't really know what the estimates are going to be, but I do, I want to see them be transparent in that process.

Thank you, Assembly Member Bauer-Kahan.

And especially the timelines. I do get a lot of phone calls on that. The timelines I think is good. But in terms of how they exactly put that on their website, I just hope you continue to work on that. But I'm going to support it today as well.

I just want to thank the Senator for her work on this.

Last year we heard a Bill by Senator Becker that gave, that was sponsored by the IOUs, related to or maybe not sponsored, supported by, I guess I don't remember if you sponsored or not that dealt with balancing accounts, a balancing account for this to give them more money to do these interconnections, which I had serious concerns continue to have serious concerns will increase the ratepayer costs.

And so I really appreciate this because I think it's really important that, especially since we already passed law, that I think could raise the rates of consumers, that was intended to bring these timelines down, that there's transparency on whether or not that's actually happening. And I think that's part of what this does.

And so I really appreciate it and look forward to supporting it.

Thank you. Okay, Senator, would you like to close?

Definitely open to making sure that. Look, the point of the purpose of the Bill is to get information and to have it as accurate as possible and not to mislead anyone. So we'll continue to do that work. I think we have, working with the Committee, we've hit some good spots to achieve that.

And with that, I ask your aye vote.

Thank you. The motion is do pass is amended to local government. Did we already get. Yeah, we already had a motion in a second. Madam Secretary, please call the roll.

Roll Call

11-1, that Bill is out, and we'll leave the roll open for absent members to add on. Okay, moving to our final item of the hearing. Item file item eight, SB 1420. Welcome, Senator Caballero.

Good afternoon. Good afternoon, Madam Chair and Members of the Committee, thank you for the opportunity to present SB 1420, which provides a pathway for a sustainable transition to a clean energy economy, coupled with the co benefits of better air quality and lower energy costs for all consumers, along with the ability to create high road green energy jobs.

First, I'd like to express my gratitude to the chair and the Committee staff. We've been working really hard on this bill and the. It was a very thorough and thoughtful analysis, and so I really appreciate. The analysis contains some suggested amendments which we will not be discussing today because we have our own amendments that.

And that's what's in the analysis, because the analysis was prepared before the chair and I spoke. So there's a one pager that has the changes. In any case, instead, the chair and I have agreed to retain section one of the bill.

However, this section will be significantly amended pursuant to technical advice proposed by the California Air Resources Board.

And I'm sorry for interrupting. Just to clarify, for members purposes, we did include the actual amendments so that if Members want to refer to those.

That's great. Is that an addendum to the. Yes. Okay.

And that's what you're about to say. Okay. Thank you. Sorry. Carry on.

Thank you for clarity. Yeah, no, it's. We're surprised. Thank you for doing an amendment, because I didn't end up seeing that, actually.

So what it will do is retain the carbon intensity standard of hydrogen, which would be the highest in the world and reserves the authority to CARB to do a regulatory framework to ensure that hydrogen produced is made with the highest standards in the world.

It deletes the definition of qualified clean hydrogen and limits hydrogen production facilities and associated storage and processing facilities that would be eligible for an expedited CEQA judicial review and building permit streamlining for those projects that have received funds from the federal or state government by January 1, 2032.

This is where SB 1420 comes in, a hydrogen bill that would establish, as I said, the highest emission standards for hydrogen in the world. It expressly prohibits resource shuffling during production and requires the annual carbon intensity of the produced hydrogen fuel to be equal to or below that of our energy grid.

Collectively, the bill ensures the continued decarbonation of hydrogen fuel while maintaining protection against emission impacts. California has invested billions of taxpayer dollars in industries in support of our climate change goals. However, we still require a diverse set of solutions to ensure California can achieve our carbon reduction goals by 2045.

Despite robust public investment, some hard to decarbonize industries will need to continue to operate and decarbonize in time without necessary policy changes and support. The shipping industry, including the ports, operations, heavy trucking, aviation and heavy industry all need additional pathways to meet our state's goal.

Additionally, as we transition to a zero carbon economy, we have an obligation to include high road employment opportunities and economic development for our state's workforce. Let's be clear.

The California Air Resources Board, after much research and analysis, determined in their 2022 scoping plan that California could not attain its climate goals to decarbonize without utilizing hydrogen as a fuel source. CARB quite clearly states that California cannot reach its emission goals without expanding hydrogen production by 1700 times the present rate of production. 1700 times.

I just want to be very clear and emphasize that the bill does not allow any projects to proceed outside of CEQA or to have any impacts on the public's ability to provide comment and input on each individual project.

SB 1420 would enable California to meet its goals and allow a transition in the aviation, heavy duty trucking and maritime industries, away from diesel and jet fuel to a cleaner, locally produced product that would not only decarbonize the fuel but eliminate the production of air pollution contaminants such as sulfur oxides, the SOx and nitric oxide, the NOx.

And in my district, the SOx and the NOx are what are creating the air pollution that has led to the incredible increase of breathing issues and asthma in our local community. It's the socks and the nocs that create the problems. In discussions with the Scripps Institute, they will be changing.

Their maritime fuel will be hydrogen, and they're in the process of changing that out.

And that fuel will create the ability for the South Coast Air pollution control district to be able to measurably or to measure the incredible reduction in the use of diesel fuel if they make this transition, and we expect that that will translate into the San Joaquin Air district having the same opportunity.

SB 1420 would also enable California to leverage $1.2 billion in federal funds from the Inflation Reduction Act awarded to the Arches Coalition for a hydrogen hub by unlock unlocking private sector investment estimated to bring $10 billion into our state, creating jobs, economic development in underserved communities and new energy resources.

Hydrogen is a critical part of California's transition to a zero emission transportation and energy system.

I agree with the California Air Resources Board and the California Energy Commission that by expanding hydrogen production, we can better decarbonize industries, make our grid more reliable, stabilize costs for consumers and create high road jobs to transition workers to the new green economy.

In conclusion, SB 1420 would establish the highest emission standards for hydrogen in the world, would support California's transition to a cleaner, more sustainable energy future by promoting the development and use of clean hydrogen as a key component of the state's renewable energy portfolio, but also create those high road jobs, create a community benefit plan which is required by the Arches framework, and bring new investments into the state.

With me to testify today and answer any questions is Keith Dunn, advocate from the state Building and Construction Trades Council of California, and Theresa Cook from California Hydrogen Coalition.

Good afternoon, chair and Members Theresa Cook, on behalf of the California Hydrogen Coalition, I want to second that. Thank you to the chair and staff for all the work put into the amendment set that is before you today. We are pleased to support 1420 as proposed to be amended.

The need to expedite hydrogen production facilities is not less than the need to expedite the build out of wind and solar projects. All are critical for our climate goals and the time to act on hydrogen is now. Arches is a once in a generation transformative opportunity to make massive decarbonization gains in transportation and energy.

This Legislature has agreed to permit streamlining from arenas and sports stadiums. Surely it can see value in offering this clean technology the same benefits.

While my environmental brothers and sisters will make the argument that hydrogen is just an extension of fossil, let's remember we're trying to expedite the build out of clean hydrogen projects and efforts to block that perpetuate what they're most concerned about.

Speaking to objections raised by the environmental community, we proudly support all renewable hydrogen production pathways, and that includes the use of biomethane from landfills, livestock facilities and wastewater treatment facilities. The simple fact is they omit immense amounts of methane and if we all agree, those emissions have devastating climate consequences.

There is no sound policy reason to object to its use as a fuel for zero emission fuel cell. Cars, trucks, buses, ships, trains and planes look to bills like AB 2514 by Assemblywoman Aguiar Curry on how to responsibly use waste to make renewable hydrogen.

Don't block the use altogether, which does nothing but block our methane reduction efforts.

We also support the use of biomethane outside the state, injected into our pipeline system and claimed here in California, like our grid depends on renewable electrons from Wyoming on our shared electric infrastructure to meet our RP's, whether that electron makes it to California or not.

We too depend on out of state sources for renewable hydrogen and would ask this Committee to insist that we treat electrons and molecules fairly. And last but not least, the ever present discussion around the three pillars. We want to be done with my testimony, so thank you. More on that later. Take it away, Keith.

I know.

Thank you, Madam Chair. Keith Dunn here. On behalf of the State Building Construction Trades Council of California, I want to thank the chair and your staff for working with our author to come to some solutions here. This transition to a new economy needs to include the workers of California.

All of our workers deserve to have an opportunity to earn a living, remain here, to raise their children here and have a life here. We're very pleased that we're going to be in a position to continue to attract federal dollars like the Arches program.

It's a critically important program, as mentioned by Senator Caballero, that's going to multiply effect as they start investing here in California in this clean energy. Again, we appreciate the work of staff and the author and the chair, and would ask for your support. Thank you.

We will open it up for additional testimony in the room if you'd like to testify in support of SB 1420. Thank you.

Michelle Rubalcava with Nielsen Ricksmer on behalf of the City of Visalia, in support.

Madam Chair. Chris McKaley on behalf of the California Renewable Transportation Alliance and the Los Angeles Area Chamber of Commerce, in support. Thank you.

Mitchell Bechtel on behalf of the District Council of Ironworkers, in support.

Kent Kauss on behalf of SDG and E and SoCal Gas, in support.

My name is Bo Mazetti, Tribal Chairman from Rincon, and our tribe totally supports this bill and your efforts. Thank you.

Chris Kahn, representing the Building Industry Association of Southern California, in support.

Dan Chia, representing the California Chamber of Commerce in support.