Assembly Standing Committee on Utilities and Energy

All right. Good afternoon. Good afternoon, and welcome to today's hearing of the Assembly's Committee on Utilities and Energy. Before we begin, we'll just dispense with our usual housekeeping announcements. As is customary, we will maintain decorum in today's hearing. Any conduct that disrupts the orderly proceeding of today's hearing will not be tolerated.

We will be allowing for tests for testimony, for opposition testimony, as well as for support testimony for each bill. Primary witnesses will receive two minutes each for a total of four minutes for both the primary, for both the support testimony and the opposition testimony. We will then open it up for additional testimony in the room.

I'll ask you to approach the microphone at the appropriate time. Okay, so with that, we are ready to jump into today's hearing. We do not have a quorum. We will go ahead and begin as a subcommittee. We do have our first author. Assemblywoman Davies, thank you so much for joining us.

Thank you very much. Appreciate it. I'm sure they'll be happy to get me in transportation very soon. Thank you, Madam Chair Members. Today I'm here to present AJR 18. I first want to thank Committee staff for working with my staff and stakeholders on this measure.

Back in 1998, the Federal Government was legally obligated to work with states who had nuclear facilities in their state to find safe and secure places to store excess nuclear fuel. California, as you know, has had facilities in Sacramento, San Luis Obispo, San Diego, and Hobo counties. After more than 25 years, we are still waiting.

Nothing has been done, and our communities are suffering for it. As noted by the supporters of AJR 18, since 2000, us taxpayers have had to pay $10.6 billion in damages to cover costs associated with on site nuclear storage that hasn't been moved yet. AJR 18 is quite simple.

It simply implores the Federal Government to enact policies outlined in the latest blue ribbon Commission on America's nuclear future and finally gets this fuel out of our state and to consented based sites approved by the Federal Department of Energy Members, this resolution is not here to debate the merits of nuclear energy.

It is simply a tool to show the Federal Government that the world's fifth largest economy is ready for them to start acting and do the job that they have been neglecting for over two decades. With me here today to testify in support and answer any questions you have is Patrick Batten and Manuel Camargo.

This resolution is supported by multiple Chambers of Congress, our State Parks Foundation, US, San Diego, a local Native American tribe, and many other organizations. I respectfully ask for an aye vote on AJR 18.

All right, thank you. I think you said you do have witnesses here in support if they want to go ahead and join you.

Well, let's see here. Pat and Batten or Emanuel Carmaco. That's right.

Well, it doesn't look like they're here right now, so move on. All right, so is there anyone in the room who would like to provide additional testimony in support? If you would like to provide testimony in support of AJR 18, you may please approach the microphone. Okay. Seeing. All right, here we go. We got one coming.

Good afternoon. Brandon Ebek, on behalf of Pacific Gas and Electric, in support. Thanks.

Thank you. And are there, there are not primary witnesses on opposition. I don't believe. All right, is there anyone in the room who would like to. oh, we do have a witness in opposition. Hello. Good afternoon. Welcome. Whenever you're ready.

I'm Bill Allayaud with the Environmental Working Group. I'm here representing EWG and 14 other environmental and public health groups in opposition to the resolution. AGR 18 deals with extraordinary difficult issue which has bedeviled our society since 1942, when the first nuclear waste was created and we've never established a permanent disposal site.

These radioactive waste are extraordinary, hazardous, dangerous for half a million years. The resolution has very good aspects which we support, urging prompt action by the Federal Government to develop a permanent geologic repository, but has troubling aspects, also urging creation of consolidated interim storage, or cIs, to temporarily store the wasteland.

The Environmental Committee generally has opposed CIS for a number of reasons. The analysis lists three of the bullets. There actually was a fourth. Quickly, waste would have to be moved twice, once to the CIS and then again to a permanent. It's often done in communities of color, these waste disposal sites.

It would take decades and reduce the pressure for establishing a permanent site. And lastly, it could become permanent rather than interim, and then be abandoned in above ground storage sites that never intended for long term disposal.

We also note that support of the resolution could come back to bite California if such CIS was allowed in this state and then established here and radioactive waste would be shipped to California. We can support. The main fest of the resolution was to push on the feds for a permanent repository.

If the resolution was amended to remove reference to consolidated interim storage. We urge the no vote on this policy for dealing with waste of such extraordinary hazard and longevity. Thank you.

Thank you. Are there additional witnesses in opposition? If you'd like to testify in opposition to AJR 18, you can please approach the microphone at this point. Let's see a few coming up.

Janet Cox for Climate Action California in opposition. Thank you.

All right, seeing and hearing no further witnesses in opposition, we'll open it up for questions or comments from Committee Members. All right, seeing none, Assembly Member.

Great. And I just want to make clear, obviously, public safety is number one, especially for not just my district, but all Californians. And we'll definitely work with opposition in regards to what we can move forward as that.

But we really need to put some pressure on the Federal Government to make sure that we can get this waste away and make sure that Californians are safe for an eye. Thank you.

Thank you. And we still need one additional Member before we can establish quorum.

Can I ask a question?

Oh, I'm sorry, we have a late. Yes, a late question. Come on.

And I'm sorry if I missed, if you already answered this, but I'm in two committees simultaneously today. Got it. So I understand that you want to move the waste into a temporary facility and then into a permanent facility, and I'm wondering why the interim, it seems, and I'm sorry if you've already answered this.

No, it's fine.

Actually, I have my way to see if I can add more risk. Why not just wait until you have a permanent repository as opposed to moving it twice?

Mister Benton?

Yeah. Hi. Manuel Camargon with Southern California Edison and work with the coalition here. What I would say is that the interim storage can be available literally decades earlier than a permanent deep geologic repository. The most optimistic timeframe right now for a permanent disposal is the 2070s. That's the optimistic.

The Department of Energy is working on interim storage, and that has a 10 to 15 year timeframe. So earlier, in terms of the moving it twice, if that's the spirit of the question as well, yes, you would need to move it twice.

I would tell you that we do have a track record both here in the US and across the world in moving spent nuclear fuel. It's in a hard ceramic format, the spent fuel, and we've been moving Navy nuclear fuel for, since the 1950s. And in places like France, they move spent fuel pretty much every day. So.

And then does having the interim storage, does that at all slow the timeline down? For instance, if we were to not. Do that, is there a way to accelerate the permanent storage facility?

Is there a way to accelerate the permanent storage facility?

It doesn't sort of give people an excuse to just kinda,

There's an argument that it may, I think right now what we are pushing for and what I think lawmakers in Washington DC are looking for is a joint solution, an integrated program that first clears sites like the four here in California, of the spent fuel, moves it to an interim location.

But at the same time that you're working on a permanent disposal, you really need both. And for interim to be successful. By the way, any type of host community is probably going to demand that you have some type of robust permanent disposal facility. Otherwise, interim would become, has the risk of becoming permanent by default.

Thank you.

Just respectfully ask for an aye vote. Thank you.

Okay, thank you. Any further comments in closing? Assembly Member,

Okay. And we'll be taking up this measure when we establish quorum. Okay, moving on to file item number two, SB 59. Senator Skinner.

All right, it has just been brought to my attention that apparently when I kicked off our proceedings, I neglected to bang the gavel. So please note, we are, we are here. Okay, thank you.

Thank you so much, Madam Chair Members.

Some of you may have recalled, well, you may have recalled my presenting this last year, but regardless, you may recall the Super Bowl ad from not this year's Super Bowl, the previous year, where the Ford F-150 truck comes pulling up to a mountain cabin, and then the guy jumps out of the truck, plugs the Ford into the mountain cabin and lights up the cabin.

Now, the Ford-150 is an EV. How that person did that is because the Ford-150 has what's called bi-directional capability. EVs, in effect, can be mini power plants on wheels. They're very powerful batteries can do more than just power the vehicle, and they could potentially be a grid asset at some point.

They could also be just a benefit to the person who owns the EV. When you might want to say, power your home during a period like now, where demand is going to be high with these high heat days might help avoid a power outage or just help you avoid the highest rates when demand is highest.

That's when rates are highest also. So, having that capability is a great asset for a vehicle. The Nissan Leaf, which is the most affordable EV on the market, has always had that bi-directional capability.

Now, the bill, when I presented last year, would have mandated all EV manufacturers to have bi-directional capability for any EV sold in California by a certain year. I've taken that out.

And what this bill does instead is just give our agencies a green light to analyze the potential for this, what benefits might accrue, and then let them determine whether it's appropriate to make some determination around the use of these vehicles for a purpose of beyond just the battery powering the vehicle.

I'm accepting the Committee's amendments that clarify the findings and definitions and allow for the Energy Commission to be able to set certain definitions. I'm also accepting the Committee amendment to allow CARB to look at duty cycles for essential service providers, which is stated and described in the Committee analysis.

But I would like now, as my main witness in support, Kendra Harris from the Climate Center.

Good afternoon, Madam Chair Members. My name is Kendra Harris, Government Affairs Manager with the Climate Center. We're sponsoring the measure. Thank you, Senator, for your leadership. Right now, in California, we have an electricity affordability problem and an energy resilience problem.

Acceleration of bi-directional EV deployment, as called for in SB 59, is an elegant solution to both these problems. Existing California policy already calls for all sales of new light-duty passenger vehicles and school buses to be zero emission by 2035.

SB 59 takes the next step and points toward a future in which our current once-in-generation, multibillion-dollar investments in electric vehicles also help to build a more resilient and reliable electrical grid. We cannot afford to continue relying on outdated, polluting fossil technologies to keep our lights on and keep our grid from failing.

Polluting gas peaker plants and dirty diesel backup generators disproportionately harm lower-income and working-class communities, exacerbating environmental injustices. Right now, California has almost 2 million EVs. The CEC estimates we'll have 8 million by 2030 and 15 million by 2035.

If they are bi-directional, just a tiny fraction of these vehicles could help cheaply provide a more resilient and reliable grid and help us achieve our climate goals of 100% renewable energy by 2045. So, for these reasons, we ask for your support. Thank you.

Thank you. Are there additional witnesses who would like to provide testimony and support? If you'd like to speak in support of SB 59, please.

Michele Canales with Union of Concerned Scientists proud co-sponsor in support.

Thank you.

Good afternoon. Larissa Mercado on behalf of the Clean Power Alliance in support. Thank you.

Hi. Ellen Brittingham, on behalf of San Diego Community Power in support. Thanks.

Carmen Guzman, on behalf of Environment California in support.

Janet Cox for Climate Action California, San Diego 350, and the Center for Biodiversity in strong support. Thank you.

Cynthia Shallett, on behalf of the Sacramento Electric Vehicle Association and also Indivisible California State strong.

Barry Vesser, on behalf of Civic Well and Clean Power Alliance.

Melissa Romero, California Environmental Voters, in support.

All right, thank you. Is there a primary witness in opposition to this measure? I don't believe so. All right. Seeing none, are there any witnesses in the room who would like to provide testimony in opposition.

Good afternoon. Michael Caprio with Republic Services. We appreciate the Senator accepting the Committee amendments, and with that, we'll remove our opposition. Thank you.

Thank you.

Hi, Kasha Hunt here with Nossaman. We are opposed unless amended to exclude motorcycles. So, I'm here on behalf of Motorcycle Industry Council.

Thank you. Okay, at this time, we'll bring it back to the Committee. Questions or comments from Committee Members? When we get a quorum, we'll take you up on that, Mister Hart. All right, well, thank you for bringing this measure forward. Really appreciate the creativity of the approach.

I think that there is a ton of potential and so really hopeful that this is one step in helping California and Californians realize that potential. Thank you, Senator. If you'd like to close.

Great. Thank you, Chair. And I look forward to your getting quorum, and with that, I would ask for the aye vote.

All right, thank you so much.

Okay, moving on in, the agenda item number three, SB 284 by Senator Wiener has been pulled from today's agenda and will not be heard at today's hearing. So that brings us to file item number five, SB 1255. Senator Durazo, welcome. Oh, and we are going to pause for one moment and establish a quorum.

[Roll Call]

We do have a quorum. Senator, over to you.

Thank you. Thank you, Madam Chair and colleagues. I want to thank the Committee staff very much for working with us on this Bill and to you, Madam Chair. So before going on with the actual crux of the.

Of the bill, I want to just tell you a little bit that the bill before you is really the result of a lot of discussions and research on the idea of a rate assistance program that can be applied and taking lessons. Over the several years of previous efforts.

We have engaged with a number of key stakeholders over this year to get technical assistance, to get feedback with extended discussions on the mechanics, how to really be able to implement this kind of legislation. We made clear we want an agreement on a path forward and feel confident that we are close. We can be.

We are close to remove a lot of the opposition to this Bill. We've worked with stakeholders in a good faith effort. We've made numerous amendments and changes so that this program is feasible and we can actually apply it at the local level. And my office and sponsors remain committed to continue to have these discussions.

Hopefully, as we move to appropriations, the issue that this Bill is trying to address, I believe most, if not all of us agree the issue is just too significant and the need for this Bill is desperately needed. We must do something to make rate assistance program a reality.

The need is great, and there's a commitment from so many involved to see it happen. SB 1255 would require water suppliers with over 3300 connections to provide low income ratepayer assistance to low income eligible rate payers through a voluntary ratepayer contribution fund.

It would also require the State Water Board to identify the cost of addressing affordability in systems smaller than the 3300 connections. Although ensuring access to clean and affordable water has been a focal point of several legislative initiatives, California is at the epicenter of water affordability, especially for communities of color.

More than 1.6 million households have an average $500 water and or sewer utility debt. More than 150,000 households have a dangerously higher debt of $1,000 or more. While AB 401 from 2015 required the state board to prepare a low income water rate assistance program, no program has been created to date in 2022.

And the water Supply strategy Governor Newsom called on the water utilities sector to address the cost burdens on low income Members of our community. This Bill is taking the governor's lead to establish a water rate affordable program for Californians that are being priced out of this vital life resource.

This Bill will not require the use of assessments or fees consistent with Prop. 218 and provides local governments with flexibility in communications requirements to all of their customers, beneficiaries and contributors to be made aware of the program and have the clear ability to opt out if they choose.

The state based program will direct voluntarily collected funds to help qualified households, those with an annual household income that is no greater than 200% of the federal poverty guideline. Level with me. I have Michael Rincon, research and policy manager for physicians for social responsibility.

I also have Michael Clayborn, directing attorney for leadership counsel, to testify and support and help with technical questions. Thank you, Madam Chair.

Good afternoon to the chair and the Committee. My name is Michael Clayborn. I'm a directing attorney with leadership council for justice and accountability. It's going to be 105 degrees in Sacramento today. It'll be 113 on Wednesday. It'll be 119 degrees in Coachella, where we work with communities on Friday.

This Bill is about maintaining access to safe drinking water, water for cooking, water for cooling, and for basic sanitation. You'd be hard pressed to find a more urgent and impactful issue than water access and affordability. When families can't pay their water Bill, they are at risk of having their water shut off altogether.

In fact, research during the Covid-19 pandemic indicates that jurisdictions with water shut off moratoria had measurably lower infection and death rates than jurisdictions without those shut off moratoria. As water systems move beyond the COVID shut off moratorium in California, Low income households urgently need assistance.

Water code 106.3 declares that every human being has the right to safe, clean and affordable drinking water, but the reality is that water remains unaffordable for the majority of Low income households throughout the state, and most do not have access to any social safety net for water.

An aye vote today is a vote in favor of realizing the promise of the codified human rights water and protecting access to this life saving service.

I'll close by noting how much we appreciate the constructive and ongoing and dedicated engagement from the water sector, some of which are in support now because of the conversations that have happened to date, and some of whom we're still working with to try to build consensus.

We've worked on these issues for years, first with the AB 401 process, which included many workshops on this issue from 2016 to 2018 at the State Water Board and which resulted in recommendations to the Legislature in 2021.

Then with SB 222, which was authored by Senator Dodd in 2022, which made it through the Legislature but was vetoed for lack of a funding source. We reached out to we reached out to CMUA in March with this concept. CMUA quickly formed a workgroup and we've been working with them ever since.

We really appreciate the time today and ask for an aye vote.

Good afternoon, Madam Chair and Members of the Committee. As mentioned, my name is Michael Rincon. I am here on behalf of Physicians For Social Responsibility Los Angeles. Low income Angelenos are struggling to pay their water bills. According to the 2020 report, community water systems in La County.

Low income households in the county face higher water costs relative to their income, highlighting the need for comprehensive rate assistance programs.

The state recently reported that the statewide infrastructure costs to provide Californians with safe tap water will in significant part be borne by local water systems due to the overwhelming need and lack of state and federal grant funding. Similarly, the Metropolitan Water District's new budget will increase rates in 2025 and 2026, both adding to Southern California's financial burdens.

Water unaffordability will continue to be a widespread problem that is getting worse. We work alongside residents in the Greater Los Angeles region, residents served by LAWDP had a low income rate assistance program which was recently struck down for violation of Prop 218.

However, most of the residents I work with are serviced by water systems that are smaller than LADWP in the region, which also do not have Low income rate assistance programs, meaning that these Low income households in the region and throughout the state are on their own if they're struggling to afford their bills.

Low income rate assistance programs make a difference for all communities. Southeast LA, for example, had some of the highest rearages from residents unable to pay their bills during the pandemic. However, we did see that zip codes served by water systems that did offer a Low income rate assistance program had relatively lower rearage totals.

It is for this reason we ask you to support SB 1255. Not only will it make it tap water affordable, but it will keep customer funding local to aid local residents helping to rebuild trust with customers as well.

The safer dashboard shows that about 42% of water purveyors in the state are at risk of failing to meet the human right to water, which is exacerbated by high water bills and customer socio economic burdens. On behalf of the LA communities we work with, we ask that you please support SB 1255. Thank you.

Thank you. We'll go ahead and open it up for additional testimony of support in the room. If you'd like to speak in support of SB 1255.

Madam Chair Members Leanne Tratton with Tratton Price representing Water Foundation in strong support. Thank you.

Good afternoon. Jennifer Cleary of Clean Water Action. We're sponsors of the Bill. Also speaking on behalf of Central California Environmental Justice Alliance and the LA Alliance for a New Economy, both in support. Thank you.

Hi, MJ Kushner with Community Water Center on behalf of California Environmental Justice Alliance and Coalition for Human Immigrant Rights in Support.

Abraham Mendoza, also on behalf of Community Water Center and the Agua Coalition in support. Thank you.

Hi Megan Cleveland with the Nature Conservancy in support.

Michelle Canales on behalf of Union of Concerned Scientists in support.

Savannah Jorgensen on behalf of the Lutheran Office of Public Policy in Strong Support.

Melissa Yu, on behalf of Sierra Club California in support

Keely O'Brien with Western Center on Law and Poverty in strong support.

Kyle Jones, on behalf of Environmental Defense Fund, Defenders of Wildlife and California Coast Keeper Alliance in strong support. Thank you.

Melissa Romero, California Environmental Voters in support.

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

Natalie Brown, the Planning Conservation League in support. Thank you.

Hi, Debbie Michel, East Bay Municipal Utility District. We have a support, if amended position. Want to thank the author and the sponsors for their continued engagement. Thank you.

Thank you. Okay, we'll go ahead and turn to witnesses in opposition and go ahead and come on up.

Should we scoot down? Yeah.

Do you want to come over here, Mike? Yeah, that'd be weird. I think it'd be great.

Good afternoon. Thank you. Madam Chair and Members, Cindy Tuck with the Association of California Water Agencies. We have an opposed, unless amended, position on the Bill. We are not against having a low income rate assistance program in California, but we have many concerns with this bill as it's proposed.

We have offered a detailed mock up with suggested amendments. Those haven't been. Some early were accepted, but a lot of them were not accepted. And without those, we remain opposed. I'd like to highlight two issues for the Committee's consideration. One is the opt out approach that the Bill takes. It would mandate an opt out.

We're concerned that water customers wouldn't see the notice for the opt out, and maybe they're, you know, on auto pay or they don't look online and those kinds of things. They would then be charged a mandated voluntary contribution, and unless they opted out, they would be paying, you know, that charge. That's one concern.

We think that that creates distrust, but more importantly, it makes it such that it's really not voluntary and that runs against Prop 218. A second issue is the cap in the Bill that would say that the reasonable administrative costs have to be less than 10% of the voluntary contributions that come in. You may say, well, that sounds.

But when water agencies are implementing this, let's say a water agency created one position and that had a salary like $70,000, plus the benefits, $100,000. The voluntary contributions would have to be over $1.0 million for those costs to be covered. And we're very concerned that the voluntary contributions wouldn't cover that.

A big concern on this Bill is there's no certainty on the funding for it. With that, there's other issues, but I'll defer to miss Danielle Blacet-Hyden and we, as ACWA, respectfully urge a no vote.

My name is Danielle Blacet Hyden with the California Municipal Utilities Association. We represent over 60 agencies that provide water and wastewater to 75% of Californians. We also have an opposed and less amended position on SB 1255. We, too, support an effective and implementable Low income water rate assistance program.

But we appreciate the Committee's thoughtful analysis and the fact they have highlighted some of our fundamental concerns with the Bill, which include the opt in. Opt out versus opt out approach and the current cap on administrative costs.

These central issues remain, along with a significant number of implementation issues, which highlights the fact that constructing this type of program is a challenging one.

In the analysis, the Committee opined that the goal is laudable, but encourages the author's office, sponsors and stakeholders to work together to try and figure this all out before instituting a statewide mandated program, as the Bill stipulates. We agree with this assessment.

We have been working with the sponsors in the author's office for several months and really appreciate that work. Several issues have been addressed, but our fundamental concerns remain, as do a number of practical concerns related to actually making the program effective for all participating systems.

We know this is an issue that's been on the table for a long time. We really want to solve it and come to consensus. But right now we are opposed unless amended, unless our concerns are addressed. Thank you.

Thank you. We'll open it up for additional opposition testimony in the room.

Madam Chair and Members, thanks for the time. Kirk Kimmelshue on behalf of the Regional Water Authority, also in an opposing, less amended position.

Madam Chair Members Beth Olhasso, on behalf of Cucamonga Valley Water District and Inland Empire Utilities Agency. Also opposed unless amended. Echo the concerns of my colleagues at the table.

Hello Keeley Morris with Edelstein, Gilbert, Robeson and Smith on behalf of Rancho California Water District. Opposed unless amended.

Hello, Madam Chair Members Elsinore Valley Municipal Water District here representing them today. They have a robust ratepayer assistance program and are opposed unless amended for the reasons previously articulated.

Pilar Onata Quintana here for the Irvine Ranch Water District, also opposed, unless amended.

Emily Pappas on behalf of Eastern Municipal Water District for the same reasons ACWA mentioned.

Cyrus Stevers, the Municipal Water District of Orange County, opposed unless amended.

Raquel Ayala with Reef Government Relations on behalf of Desert Water Agency, Palmdale Water District, Rowland Water District, and Walnut Valley Water District, with opposed unless amended, thank you.

Ethan Nagler on behalf of the City of Roseville, echoing the comments of ACWA and CMUA with, opposing unless amended, thank you.

Kasha Hunt here with Nossaman, Padre Dam Municipal Water District as well as Olivenhain Water district, oppose.

Annalee Augustine here, on behalf of Mesa Water District, respectfully opposed unless amended.

Thank you, thank you bringing it back to the Committee. Assemblymember Bauer Cahan

I want to thank the Senator for bringing this Bill. I want to start there because I think obviously it's incredibly important that we make sure everybody has the necessities in life and water is top of that list. And not every californian currently has that. Not being able to pay your water Bill isn't fun.

And if anyone in this room knows what it's like to face every single water district, I'm your girl, Senator. And it's hard. And so I think that I'm gonna support the Bill today. But I do have a concern.

Cause my water district, East Bay Mud, which I think leads in a lot of ways and isn't a support unless amended position, unlike many of the water agencies today, has been able to do this without hitting ratepayers.

And I think that's actually the ideal scenario, is that you provide sort of a floor that they have to provide in these assistance programs.

And that if a water district can find a way to do that by, you know, they do it in part by lease money they make off leasing lands and things like that, that's, I think, great.

And we should not be setting up a program that makes us hit ratepayers where we don't need to in communities that have such assets.

And so I want to make sure that the Bill is amended to address that because I don't want the ratepayers in my community to have to pay where we're already providing this and they're not having to pay. So I was hoping you guys could address that.

Okay. Yeah, sure.

I can add that we've been working with East Bay Municipal Utility Association for months and I think that they amend, they proposed that would help kind of this their specific scenario. Make sense to us and we're working with them on that amendment. Makes sense.

Great. Yeah. Very open and we're committed to what you asked. Absolutely.

Thank you, Senator. Because I do think this is important for Californians. So I appreciate the work. Thank you.

Assemblymember Schiavo.

I wanted to thank the author for bringing this forward. I know this is complicated and there's not any easy solutions, but we know people are suffering, especially when it comes to their water bills and utility bills right now. And we have to figure out solutions that are going to help people who are struggling the most.

So I'm going to support it today. I'd like to see where conversations continue to go. I know with the opt in and opt out, there's a lot of discussions that are happening there and, you know, but I think that we have to figure out how to give relief to folks who are really struggling.

And obviously, you know, having access to water is not a choice. It's a life sustaining thing that everybody needs. And we have to bring forward solutions that are going to help people. So thank you.

Assemblymember Hart yeah, I just want.

Yeah, I just want to echo the comments of my colleagues. I want to thank, Senator, for bringing this important Bill forward. This is a real issue that needs an answer, but it is complicated and there's many issues raised in the Committee analysis that need a lot of collaboration and work and look forward to seeing the product of that.

All right. And as I've shared with you, Senator, I too am really grateful for the work that you're doing in this area. I think that it's incredibly important. As I've shared with you, I do have significant concerns about the mechanism that the Bill proposes. So as the opposition articulated, it's framed as a voluntary program.

But because people are automatically opted in and then have to opt out, I worry that it's not really voluntary and doesn't really meet the spirit of Prop 218. So as we've discussed and as I think, you know, there are significant discussions that need to continue and I think significant work that's needed.

So while I, as I've shared with you, won't be supporting the Bill in Committee today, I know that it was very important to you for the Bill to have a hearing.

And I look forward to whatever the outcome from today, continuing to work with you and with advocates both on the support as well as opposition side so that we can find a solution and really provide real relief and support to Californians who desperately need it. So with that, would you like to close?

Thank you. I think the part of this little campaign to get this Bill passed has really been what I'm most impressed with is the advocates reaching out and having conversations with the water districts and organizations. I'm really impressed. I think usually that's sort of at the last minute and trying to just look at everybody as opposition.

And so, you know, I'm going to move forward. They started out exactly the opposite, started out saying we have to from the very beginning have these conversations. And that's been the most impressive and wherever we can. And I think they've also, they're also building on the efforts of the past. So it's not the first, you know, idea.

It's what ideas have been proposed, what has been learned from those proposals. And, you know, so far, it's the best with everybody's involvement we've been able to come up with.

We're always, we remain very committed to other ideas, but we've got to do something about the fact that over a million people cannot afford to pay for the water that they need that's just a human right issue. So, again, appreciate you, Madam Chair, and everyone else, all the conversations we've been having and respectfully ask for an aye vote.

Thank you. All right, Madam Secretary, we've got a motion and a second. Madam Secretary, please call the roll.

Item number five, SB 1255. The motion is do pass to appropriations. [Roll Call]

That's fine. Okay, so that Bill has five votes. That bill's on call, and we'll go ahead and reopen it when additional members join us. Thank you, Senator. All right, we've got a motion and a second on the consent calendar. Madam Secretary, please call the roll.

These items are do pass as amended to Appropriations. Item number four, SB 20. Item number six, SB 778. Item 14, SB 1292. Again, that's do pass as amended to Appropriations. These items are do pass. I'm sorry, I did say do pass as amended, right?

Yes.

These items are do pass to appropriations. Item number seven, SB 934. Item number eight, SB 1003. Item number 11, SB 1054. Item number 17, SB 1301. Item number 18, SB 1508. Item number 19, SB 1413. Again, that's do pass to Appropriations.

8-0. All right, so the consent calendar is on call. Yes, we may. All right. Item number one, AJR 18, motion from Assembly Member Wood. Second from Assembly Member Wallis. Madam Secretary, please call the roll.

Item number one, AJR 18, the motion is do pass. Oh. AJR 18, the motion is be adopted to the Floor. [Roll call]

Okay, item number one, AJR 18, that is also on call. All right. And we need a motion, SB 59. We have a motion from Assembly Member Wood. Second from Assembly Member Ting. Madam Secretary, please call the roll.

Item number two, SB 59. The motion is do pass as amended to Appropriations. [Roll call]

Okay, that measure is also on call. With that, we will move to file item 9 and 10. Senator Becker? We will go ahead and move to file item 16. Senator Stern, welcome.

Right, but I promised them a lightning round presentation here, so. Yeah. Get the motion.

All right, Senator, you have a motion and a second.

I hate mosquitoes. I love having my lights on and workers protected. I think this bill is going to do both. Respectfully ask for your aye vote.

All right. Thank you, Senator.

Thank you. Madam Chair and Members, Vanessa Cajina with KP Public Affairs on behalf of the Mosquito and Vector Control Association. I could not have put it better than the Senator myself. We've done significant work on this bill. Please vote aye on SB 1251.

Thank you, Madam Chair and Members. Jodi Holeman with the consolidated Mosquito Abatement District in Fresno County, also respectfully asked for your aye vote.

All right. Moving it to.

Members and Committee, thank you. Catherine Borg with Southern California Edison. We appreciate all the work from the author's office and the Committee getting us to a neutral point and vote for the bill. Thanks.

Thank you. Okay, witnesses in opposition. Any witnesses in opposition?

In support. Joe Signs with County Health Executives Association in support. Thank you.

All right. Okay. Seeing no witnesses in opposition to SB 1251. Questions, comments from Committee Members. All right, everyone appreciates you and your team for the lightning round. And, Senator, confirming that you will be accepting committee amendments.

Happy to accept the Committee amendments. Thank you for your work on that.

Okay. Would you like to close?

Respectfully ask for your aye vote.

All right, thank you. We have a motion and a second. Madam Secretary, please call the roll.

Item number 16, SB 1251. The motion is do pass as amended to the Floor. Assembly Floor. [Roll call]

10-0 that bill is out, and we'll leave the roll open for absent members to add on. Now, Senators, did I understand that? Oh, we are now going back to. There we go. Senator Becker, welcome. When you're ready.

Thank you. And to be clear, we'll be starting with SB 1018, correct? Okay, excellent. First of all, Thank you, chair. We will be accepting the Committee amendments on this Bill.

SB 1018 is focused on enabling green hydrogen and electrifying industrial heat using behind the meter renewable energy, accomplishing, again a goal that we all want with good, clean hydrogen behind the meter, renewables are cheap, helping to make hydrogen cheap enough to be cost competitive.

We also know the power is clean and it won't put any new stress on the grid. In fact, using behind the meter renewables to produce hydrogen like this is part of the official state plan. The 2022 scoping plan anticipates 10 gigawatts of hydrogen production directly connected to renewable generation.

The problem is that is not possible today because of something called the over the fence rule. Those of you who've been around a long time know a lot about that renewable energy can be supplied directly behind the meter only if it falls within one of the exceptions within PUC 218.

Otherwise, renewable generator is treated as utility with a very heavy regulatory burden. Today, the exceptions to over fence rule are restricted to generation that is on the same parcel of land or an adjacent partial, which is where the over the fence will name comes from.

That works fine for rooftop solar in a home or for cogeneration plant at a factory, but is not sufficient for the megawatts of solar spread across acres necessary for a modest hydrogen facility or factory.

This Bill solves this problem by creating a narrow new exemption that would allow large solar or wind generator to sell their output directly to a single customer who will use that power for producing hydrogen or providing industrial heat. People have raised concerns of whether this changing this rule opens the door to widespread microgrids or unregulated utilities.

This Bill will not do that. We're very careful to keep it very narrow and targeted. Now, unfortunately, we can fix the state law blocking this, but large projects may still be ensnared by a similar federal law that could cause large solar and hydrogen projects to be regulated as a public utility holding company.

Public utility holding companies since they are not exclusively selling their power into wholesale markets. So the second part of this Bill is creating a workaround to this federal law. It's supporting exactly the same type of projects with behind the meter renewables used for hydrogen or industrial heat.

But to get around the federal law, it creates a pass through tariff in which the generator sells their electricity to the utility. Then the utility sells it back to the end customer, say the hydrogen facility with a small markup to cover administrative costs. The electricity is never going to pass through utilities grid.

Remember, this is still behind the meter project and the project is paying all the costs. There's no special treatment and no cost shift. The utilities just acting as a financial intermediary. In this case.

This Bill is will support the growth of green hydrogen and industrial electrification in a way that makes ensure it makes use of clean energy and does not impact electricity rates or grid reliability.

At a time when renewable energy projects are waiting in multi year queues to get connected to the grid, this will also create an option for us to get more clean energy built sooner and start using it unconnected to the grid to reduce our pollution. With that, I respectfully ask for your aye vote.

And I have two witnesses here with me today, starting with Janice Lin, representing the Green Hydrogen Coalition.

Good afternoon, Chair Petrie-Norris and Committee Members, thank you so much for allowing me to be here today. My name is Janice Lin. I'm the founder and President of the Green Hydrogen Coalition. We're an independent, educational nonprofit, and our mission is to accelerate a clean and just energy transition economy wide.

And that's really hard to do because we use a lot of fossil fuels and we love this Bill. Thank you, Senator Becker, for your leadership. If there's one thing that California has a lot of, that's solar, solar resources everywhere. You just have to walk outside and it's shining down. I mean, we are blessed with so much solar.

This abundant solar and wind can make a lot of renewable hydrogen, which is the key to displacing fossil fuels in every sector. Think molecules in ships and airplanes and trucks. In industry. The issue is that that solar resource isn't accessible by electrolytic hydrogen producers because the grid is constrained.

Or you can make a really tiny solar system right on site. But we know that for renewable hydrogen to be adopted as an alternative fuel to fossil fuels, it has to be available at scale and it has to be cost competitive. And so that cost competitiveness is achieved by making bigger projects.

Bigger electrolytic projects need bigger wind and solar resources, and this Bill will enable us to unlock much larger scale production, again protecting consumers only for new loads that will drive down costs and truly help us to deeply decarbonize many, many sectors. It's critical path.

It's so important that we think of this Bill as model legislation that, once enacted here in California, will likely be followed by the rest of the country and other regulated markets. So with that, I would like to ask for your aye vote this is a game changer and it'll help us deeply decarbonize a lot of sectors. Thank you.

Good afternoon, Chair Petrie Norris and Committee Members.

My name is Lauren Kubiak and I'm a senior scientist at the Natural Resources Defense Council speaking as a supporter of SB 1018. One of California's biggest untapped carbon emission reduction opportunities is in its industrial sector, which largely still relies on fossil fuel combustion to generate heat despite the availability of cleaner electric technologies.

One barrier to industrial heat electrification is that producing heat with grid electricity is more expensive than burning gas or coal. Off grid renewables present one of the most cost effective ways to both electrify industrial heat and produce green hydrogen. Unfortunately, current law limits facilities that can take advantage of this option.

SB 1018 would amend Section 218 of the Public Utilities Code to allow generators to sell directly to new industrial heat or hydrogen loads to unlock this economic emission reduction opportunity. Even with this change, though, federal law will prevent projects over 80 mw from utilizing this model unless they sell exclusively into wholesale markets.

Section two of SB 1018 provides a workaround to this issue, which was described by the Senator. SB 1018 would contribute to meeting California's climate goals by providing an option for new industrial technologies to be powered entirely by renewable energy while minimizing emissions and avoiding impacts on the grid.

Further, it could bring renewables online more quickly by having them match directly with loads, allowing them to bypass rather than bog down the lengthy interconnection process. We appreciate Senator Becker's targeted approach to making progress on hydrogen and industrial heat electrification, and we urge your aye vote on SB 10. Thank you.

Thank you. Open it up for additional testimony in support. If you'd like to speak in support of SB 1018, approach the microphone.

Good afternoon, Mark Joseph on behalf of the Coalition of California Utility employees in support, and I want to thank the Senator and his staff for reaching out to us early on to help craft the Bill.

Hunter Stern with IBW 1245 and strong support.

Edson Perez with Advanced Energy United in support.

Janet Cox for Climate Action California the 350 Sacramento, 350 Humboldt, and the Santa Cruz Climate Action Network. Thank you.

Kendra Harris to the Climate Center in support

Hi. Emily Pappas on behalf of Intersect Power in support.

Hi there, Mckinley, Thompson-Morley, on behalf of the Solar Energy Industry's Association and Intora in support.

Thank you. We'll move on to witnesses in opposition. Go ahead and come on up.

All right. Good afternoon, Chair Members. Andrew Kosydar with Southern California Edison. I want to thank the Committee, the author, and the supporters of this legislation for their time and for taking the consideration of our concerns. I thought my PhD was complicated, and then I read this Bill.

This Bill, in essence, SB 1018, attempts to circumvent long established regulatory processes on two fronts. So the first is in section one. I'm going to focus my comments on private transmission because this is the most problematic part of the Bill.

We forecast that there needs to be a doubling of transmission in order to meet our goals here in the State of California by 2045. One of the challenges with this Bill is that if you have private transmission that's crisscrossing the state, we're competing with them for limited resources. For example, right away, who's going to get right away?

Is it going to be the IOUS or the private company that's trying to connect these two different entities? So why not use the grid? We can talk about interconnection, but this Bill envisions selling back to the market. So you're still subject to WDAT interconnection process.

We can talk about costs, but private lines are likely more expensive than new or upgraded lines that are incorporated in the CAISO or IOU planning process. It's more efficient to build one large line than two smaller lines. It's also more efficient to upgrade an existing line than to build a new one.

We could talk about reliability, but these industrial facilities under this Bill would be isolated from the grid. So, in other words, there's no backup generation for the customer. Load grid upgrades are also beneficial.

So, in other words, when you bring new loading generation on, you're benefiting all the customers on the grid, and you're making the entire grid stronger and more reliable. Individual private lines do not do that. Grid connected resources can also provide services back to the grid.

For example, when the customer does not require full generation capacity, those grid connected resources can use that extra excess capacity to support the grid. So a better solution in our minds is to just have both the generation and load grid connected, less costly, more reliable grid benefits for all customers.

So there's no need for duplicative transmission across crossroads state, and no need for section one, apparently I'm out of time. Is that two minutes or four minutes?

Can I cede my time to the Southern California Edison witness? Yes, you may.

Thank you. Thank you, Val. Appreciate that. PG&E. So since I'm in the hot seat, so I'll talk a little bit about Section two, the so called sleeve. According to the author's fact sheet, this is designed in order to circumvent federal regulations in order to get a small generator exemption for really large generation.

SCE is not comfortable with being party to an attempt to circumvent federal law. There's also a scenario wherein we can envision a cost shift where a tariff is created in order to subsidize clean hydrogen. And we really appreciate the Committee and also this author recognition of this concern and willingness to add an amendment to address it.

Thank you, SCE fully and full, full heartedly, excuse me, embraces and works hard for a clean energy future. And the promotion of onsite hydrogen production is a welcome part of that future. However, these can already be accomplished through existing pathways. There's no need to dramatically alter energy policy, reduce grid reliability, and negatively impact affordability for all customers.

And so therefore, SCE respectfully asks for your no vote on SB 1018. Thank you.

Okay. All right. Additional witnesses. In opposition,

Valerie Turella Blahos, Pacific Gas and Electric Company associate our comments with Southern California Edison. In opposition. Thank you.

Madam Chair, Israel Solis with San Diego Gas and Electric. Also in opposition.

Tara Dias Andress, representing the Public Advocates office. We are opposed to the Bill currently is in print, but we are reviewing the proposed amendments. Thank you.

Thank you. Bringing it back to the Committee. Questions or comments from Committee Members? Yes, the Senator will be accepting the Committee amendments. Well, let me, I guess just start with a big picture question. So, Senator, can you respond to some of the areas of concern that the opposition articulated?

Yeah, I think I respond to, I think are the main two. Maybe we'll pick up some other pieces as well. This is basically saying, why not let a private company build their own lines if they want to? We're talking about very, very short lines.

The projects can grid connect if they want, but this has given them an option not to. And with the whole goal of meeting our goals of the 10 gigawatts and speeding things up. Regarding the second thing, we're certainly not going to, you know, we're not going to do anything that breaks federal law in any way, clearly.

And we do appreciate the concern. Those are legitimate concerns raised. We're certainly talking to the IOU's about that last piece we want to make sure we believe this is a legitimate workaround, but certainly we commit to making sure it is a legitimate workaround.

Those are sort of the two that big ones or other ones you want to address, or should we?

I'd love to build on that, Senator. So thank you for raising those very legitimate concerns. I want to comment on the expensive nature of the private lines and the reliability question. So first of all, I think that these lines are not really intended to enhance grid reliability for all customers.

They are there solely to create an opening to leverage our abundant renewable resources that are all over the state. And right now we know it takes a really long time to interconnect those resources to the grid.

And so this is a way to leapfrog and take advantage of these resources where we can for the sole purpose of building scaled electrolytic hydrogen that can be available and cost effective to displace fossil fuels. And that is a worthy goal.

Secondly, on the reliability, I don't think that backup is needed because electrolytic hydrogen, it's a very flexible resource. If for some reason there wasn't any production, like, let's say it was a cloudy day or the wind stopped blowing, that's fine. They just would stop producing electrolytic hydrogen. It only affects that industrial user.

And this is new load that otherwise probably wouldn't have existed at all. It wouldn't be able to get the capacity and the energy from the grid as we know it because there's a lot of demand. We've got data centers, we've got electric vehicles.

So this would really open the opportunity for California to leverage its renewables to make a fuel that's totally carbon free and get rid of fossil fuels.

And I think the other thing I wanted to mention is there's some concern about circumventing federal regulation, and it seems that the federal regulation is real, and it seems that there may be ways that could address those.

You know, I don't think anyone's suggesting that any regulation be circumvented at all, but there are ways to do this so that it can comply. Working closely with the utilities, of course.

Yeah, I can quickly address the cost shift point as well. In our view, there won't be a cost shift because departing load is not eligible for this model.

And also the point about on grid versus off grid, currently, the Energy Commission is not assuming that there's any load growth of grid connected hydrogen, which, and that then feeds into the IRP process at the Public Utilities Commission. So it's assumed that there's no hydrogen connected to the grid.

And this would provide a way for that 10 gigawatts of hydrogen that the CARB scoping plan is projecting that we'll need to meet our climate goals. This would provide a model to actually get that hydrogen produced.

Thank you, Assemblymember Calderon.

Thank you, Madam Chair. To what scale is green hydrogen and industrial heat being produced currently? I have no idea.Just curious.

There are green hydrogen projects. Some of them are. They're all proposed. I believe the largest ones are in like hundreds of megawatts. Not in California yet, we're hoping, but it's coming. And certainly, you know, it wasn't. First of all, electrolytic production has been commercially viable for many, many decades.

And historically it was made in very small scale, like maybe a megawatt. Now, the module at some of these projects, some OEMs equipment manufacturers, like the standard module, can be as large as 50 mw. So you think of a 50 megawatt building block as very big.

And when you think about the opportunity before us and the sheer volume of fossil fuels that we're trying to displace, we need that scale.

On the, what's deployed on the industrial heat side, one of the best candidate technologies for this particular model is thermal storage. And the way that this works is you can use renewables to charge basically a rock, and then it can fully charge in a matter of hours. So it's perfect for intermittent renewables.

And then that heat can discharge to provide either industrial heat or some technologies can discharge and provide electricity over the next 24 hours, depending on how the technology in particular is designed to. And this over the fence rule barrier has prevented these systems from being deployed widely.

There are a couple pilot scale projects, but there's a lot of potential in providing this technology to electrify California's industrial facilities.

So, seeing no other questions from Committee Members, I'll just share my perspective on this. And I think, as our opposition witness, you open your comments by saying this is an incredibly dense and complicated issue. And I appreciate the concerns that have been raised. I really do appreciate the targeted approach, Senator, that you have taken with this Bill.

I think the one thing that we all recognize is that in order for California to deliver on our climate goals and our clean energy goals, we need to increase transmission capacity by 350%, by 2045.

And I would argue that in order for us to actually achieve that goal, we are going to need to take some new creative approaches and deploy some new and emerging technologies as part of that.

And certainly as we're doing that, we want to ensure that there's a appropriate guardrails and safeguards so we don't create the wild west of the energy world here in California.

But I do think that this Bill does that, and I think that fundamentally we recognize that in a responsible way, we're going to have to have behind the meter resources as part of delivering on those incredibly ambitious goals. So thank you for all of your work in digging in and your leadership on this issue.

With that, would you like to close?

Thank you. I appreciate the comments. I think you kind of just really kind of nailed it. Appreciate the concerns as well, and we look forward to continue to working on them and without stretching asked when aye vote.

All right, Madam Secretary, please call the roll.

We need a motion.

Do we have a motion? All right, motion from Assembly Member Wallace, second from Assembly Member Hart.

Roll Call

[Roll call]

Okay, 11-0. That bill is out, and we will leave the roll open for absent members to add on. Moving right along with SB 1374. When you're ready, Senator.

Thank you, Chair. I'll get started while my witnesses come up. I do want to thank, and I really mean very deeply, deeply thank the Chair and the Committee staff for working on this bill as well. A lot of complicated issues. And as for the last one, I think, all about finding the right balance.

So, I really appreciate you and working with us, and I will accept the proposed committee amendments. And if there's any questions what those are, we'll try to address some of them. But if those come up, we'll address those as well. Thank you. So, this measure, we believe, arrives at the middle ground we're all trying to find.

What is that middle ground? That considers a world where CAISO is projecting that California's peak demand is going to increase 30% to 50% in the next decade. And the CEC and the PUC say we will need at least 100 gigawatts of solar resources.

At the same time, we're working hard to bring down ratepayer costs, and we're all rightly concerned about ratepayer costs and ensuring that we're not creating policies that disadvantage any particular populations. We used to have very generous incentives under early NEM tariffs, as everybody knows.

And since then, we've cut, with the recent rulings, we've cut the export value of solar, the value that you get for selling excess solar back to the grid. We've cut that by 75% since the early NEM tariffs. And I want to be clear, this bill is not proposing to go back to that.

We're accepting the new value of exporting out to the grid. This bill simply ensures that the PUC is providing the same benefit to schools, apartment buildings, and hopefully ultimately places of faith in others as it does to homeowners.

When the PUC changed the net energy metering rules for rooftop solar, they said that it was fair for those homeowners to consume the energy that they generate on-site.

Again, not going to give you a lot to export back to the grid if it's not valuable that time of the day, but we let you consume your own energy. However, without any real explanation, they denied that same right to non-residential accounts, whether it be schools, apartment buildings, farms, places of faith, nonprofits, and more.

Self-consumption occurs when a utility customer uses the energy they generate through solar to power their own property. Any excess energy is then getting sold at the avoided cost rate, and that PUC took away that ability to self-consume from all properties that rely on this, what we call virtual net energy metering.

This is a problem because if you have a school that is generating power on a solar canopy over the parking lot behind one meter, and the school buildings are consuming power behind separate meters, then 100% of that solar power is sold to the grid.

And then simultaneously you have to buy it back to the grid at four times the price. We believe that is unfair. The same is true for churches, commercial building farms, anywhere that solar is not behind the same meter as the appliances that are realizing that energy.

Realizing how unfair these rules are, the PUC made a last-minute change to give residential accounts at apartment buildings the same ability to self-consume within 15 minutes intervals as for single family homes. That sounds fair, right? But the new rules are still a problem because apartment buildings apartment.

There's still a problem for apartment tenants because building owners aren't getting the incentive for self-consumption for any of their common areas, for their lights, for their pools, for their EV chargers, so they won't see any value for installing solar. So, the apartment tenants are not going to get that.

SB 1374 is telling PUC to give everyone the same deal. Amendments to the bill that we're taking allow self-consumption for schools and apartment buildings, and then direct the PUC to establish criteria for self-consumption that encompasses a set of meters within a reasonable proximity.

If you generate power in your own property, you can self-consume it and avoid paying the utilities for it. If your generation exceeds consumption, the utility only has to pay you for its avoided costs for that excess. That's the middle ground, the PUC you've reached for homeowners. We believe it should be fair for others.

Opponents will claim this bill will shift costs from participating customers to non-participating customers. As the Legislature equally concerned with rising electricity rates, this narrative is important for me to address, and I know there's a long statement, there's a lot going on, so I do want to address this quickly.

First, again, we feel this bill is not creating a cost shift for one, fixing one where again we forced people who would generate energy to sell it back to the grid and buy for four times the price. But again, this narrative overall just assumes that electricity use is not increasing and that's not the world we're in.

I would understand if we were in a flat to decrease the energy use. You take someone off the grid and then maybe someone else has to pay for it. But we are in this world of increasing energy use. I saw a stat the other day around generative AI.

It said generative AI alone was going to add over the next decade the equivalent of the electricity consumption of Japan to our grid.

So, this is not a dueling set of demand, just a slower increase and that solar is going to help us while we're figuring out all the transmission issues that the Chair mentioned for the last bill that I'm certainly working very, very hard on.

Reduced demand from self-consumed solar is actually similar, if you think about it, from energy efficiency, right? And we wouldn't call it a cost shift if customer put an energy efficiency, improve their efficiency. So, why would we treat self-consume solar differently? With that, I'm sure we'll get into discussion later.

So, I just will turn it over to my witnesses and say I respectfully ask for your aye vote at the appropriate time. Thank you.

Madam Chair, members, Nancy Chaires Espinoza on behalf of the School Energy Coalition, one of the co-sponsors of the bill, today you have the opportunity to rectify a fundamental unfairness that was inflicted on multimeter utility customers by the PUC in its December 2023 VNBT NBTA ruling.

Not only is this ruling fundamentally unfair, it makes it economically infeasible for schools, community colleges, universities, apartment buildings, and many others to install photovoltaic systems and battery storage. California can't meet its renewal energy goals without properly supporting its over 10,000 K12 school sites. Schools are now mandated to install photovoltaic systems on all new buildings.

If we are not allowed to self-consume the energy from these systems, the Legislature would be forcing us to take ongoing losses on a technology the state-mandated us to install. Energy expenditures are already the second largest component of school district budgets.

Schools, particularly in the Central Valley and the Inland Empire, are seeing more and more hundred-degree or greater days. We need self-consumption to preserve education funds for students instead of transferring them to investor-owned utilities. We're not businesses. We can't charge fees to pass higher energy costs on to our customers. This ruling directly takes money out of the classroom.

Reliable solar and storage is the only way to prevent disruptions in education, nutrition, and payroll caused by frequent public safety, power shutoffs, wildfires, and other conditions that are becoming the new normal as our climate changes, it ensures that we can operate as emergency shelters and staging grounds for emergency personnel.

But this PUC ruling punishes us for that self-reliance, and the timing couldn't be worse. Just when the federal Inflation Reduction Act makes unprecedented resources available to aid in the transition to clean self-generation, the PUC makes it no longer financially feasible to adopt these technologies.

If the Legislature doesn't remedy this soon, California will leave billions of dollars on the table. The Legislature created NEMA and VEMA programs for good reasons, and today we are asking you to make right the wrong that the PUC made, and we respectfully urge your aye vote.

Good afternoon, Madam Chair and Committee Members. I am Aaron Nitskin, Executive Vice President of Solar at Citadel Roofing and Solar. We are proud to say that one of our specialties is installing solar on multifamily housing, which means we get to help renters participate in the clean energy transition.

Over the years, we've installed over 25,000 panels, solar panels on approximately 300 buildings, multifamily buildings specifically. However, the PUC's recent decision reverted us to a policy that creates a split incentive problem for renters and energy upgrades of all types.

Title 24 requires that solar is installed on all new construction projects, but these installations make up only a small portion of the installations occurring across the state. To ensure that renters are receiving the benefits of solar for existing buildings, the state must ensure that there is value add for those property owners.

The non-residential accounts at apartment complexes are for things like hallway lighting, outdoor lighting, laundry rooms and rec rooms. These things are there for the tenants. When they consume power that is generated on site, it should be billed accurately.

Using less energy from the utilities should mean buying less energy from the utilities, not pretending you are sending them the energy and then they are sending it back. Finally, we all want more energy storage.

Batteries allow customers to store some of the energy they generate during the day and use it in the evening when the grid is more strained. If the PUC's decision stands, customers would receive no benefit from battery installation since they would be forced to send that energy to the utility instead of consuming it themselves.

We ask landlords to make investments that lead to cost savings for tenants, but solar is a major investment of both time and money. If a property owner can't reduce their electric bill along with the tenants, they are far less likely to install solar and storage at all. If there is no solar, there is no tenant benefit.

Thank you for considering my testimony and I urge your support of this bill.

Thank you. We'll open it up for additional testimony of support. If you'd like to testify in support of SB 1374, go ahead and come on up.

Good afternoon. Patti Herrera on behalf of San Diego Unified School District and the California School Board Association in support.

Good afternoon. Ella Connolly on behalf of Oakland Unified in support.

Good afternoon. Brad Heavner with the California Solar and Storage Association in support.

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

McKinley Thompson-Morley, on behalf of the Solar Energy Industries Association and the Center for Sustainable Energy in support. Thank you.

Carmen Guzman with Environment California in support.

Kendra Harris with the Climate Center in support.

Allison Hilliard with IV Energy and 40 other affordable housing and tenant rights organizations all in support. Thank you.

Hi, Meg Snyder, Axiom Advisors, on behalf of Rewiring America and Prolex in support. Sunpower and the California Building Industry Association are still reviewing amendments. Thank you.

Janet Cox for Climate Action California, the Climate Reality Project California Coalition, Santa Cruz Climate Action Network, 350 Sacramento, Glendale Environmental Coalition, 350 Humboldt and San Diego 350. Thank you.

Melissa Yu, on behalf of Sierra Club California in support.

Cynthia Shallet on behalf of the 60 groups under California State Strong and also the 45 groups in the coalition with Indivisible Green Team and strongly in support of 1374. Thank you.

Andrew Dawson with the California Housing Partnership in support.

Sasha Horwitz with Los Angeles Unified School District in support.

Charles Watson on behalf of Engie North America in support. Thank you.

Nickolaus Sackett, on behalf of the Social Compassion in Legislation in support.

Edson Perez of Advanced Energy United in support.

Ed Manning for Western Growers. We support the bill but oppose removing agriculture from the bill.

Kevin Johnston, California Farm Bureau Federation. We also support the bill in print, but not the amendments for excluding agriculture unfairly.

Beth Alasso with the Agricultural Energy Consumers Association also support the bill in print. Really thank Senator Becker for his strong support of AG, but oppose the amendments that are proposed. Thank you.

Taylor Roschen on behalf of Western Agricultural Process Association. We'd like to echo the comments of our colleagues. Thank you.

Marge Lie on behalf of the California League of Food Producers, echoing the agriculture comments. Thank you.

Sorry. Anna Ferrera on behalf of Wine Institute, also in support of the bill, but feel AG is being treated differently. We're not really sure why. Thank you.

Thank you. All right. Moving to witnesses in opposition. Go ahead and come on up.

Hi. You've got two minutes.

Thank you. Madam Chair, members of the Committee, Matt Freedman, on behalf of the Utility Reform Network, I'm here to testify in opposition to SB 1374 unless amended. We have had constructive conversations with the author. Do appreciate that and appreciate the narrowing of the scope of this bill with the committee amendments that are being accepted today.

As has been discussed, this bill would essentially overturn a decision of the Public Utilities Commission that was adopted for virtual net energy metering and net energy metering aggregation. And we oppose this treatment.

We oppose the overturning of this decision because this bill, as drafted today, is guaranteed to accelerate the pace of rate increases for residential customers in the future. The use of retail rates to compensate any customer for behind-the-meter generation is extremely costly.

It's inequitable, it's unnecessary, and it produces substantial cost shifts that raise rates for all other customers. Extending this treatment to multiple customers on a single parcel or a customer with operations extending across multiple properties would dramatically raise the cost of these programs.

Now, the amendments today appear to limit the beneficiaries to apartment buildings and schools, but it also opens the possibility, with the direction to the Commission, for the Commission to dramatically expand that. It's not clear from us, looking at the amendments, how that plays out. Providing bill credits at retail rates is very expensive.

Retail rates are between 5 and 10 times the value of solar exports to the grid. The excess compensation that's provided under this treatment would be collected from all other customers in the form of rate increases. If the Legislature believes that greater compensation is appropriate for non-residential customers, we see two options on the table.

One, find other money to pay for it besides ratepayer money. I know that's easy to say and hard to do, but that is the choice. There might be money from the GGRF. I know the General Fund is tapped, but that is the strategy for dealing with this.

And second, the other option is to ensure that residential customers are protected against any rate increases to keep the cost of this program within the customer classes that are benefiting those non-residential classes. Those would be our recommendations. Thank you.

Good afternoon. Brandon Ebek, PG&E. Align everything with what TURN just said. We appreciate the significant attention and the efforts by the Committee and the author to mitigate the impacts of this bill on non-participating customers. We also recognize that this is indeed a very complex bill.

Speaking broadly about the policy, it's worth being clear about a few things. Within the VNAM and the NEMA programs, self-consumption is essentially a myth. The entire point of the programs is to set up a mechanism in which they're compensated as if they were self-consuming.

We don't challenge that rooftop solar on your typical home is self-consumption. It's behind the meter. All of these arrangements are the other side of the meter. You are using the grid, and there is a cost to that, regardless of how far the electrons travel. There's a lot of physics behind this.

The PUC spent four years looking at property-wide netting the value of the generation, the ACC, and made a decision just eight months ago that we're back here overturning before we've even had a chance to implement it. This is the equivalent of using a highway without paying any gas taxes.

With the amendments, this now requires two more tariff changes, one in 2025 to update with apartments and schools, and then potentially another tariff update after that to. Based upon the study determination that the PUC has already completed over the last four years. And then it's with some of the schools that are supporting.

I know LAUSD is supporting this bill. It's worth noting that public utilities, LADWP, do not offer this type of program. It's not offered broadly across most of the rest of the US. They compensate it differently if they have it. So, this is another program that's specific to IOUS.

So, it will continue to make IOU bills more expensive under a legislative mandate. So ultimately, this comes down to system affordability and what we should be compensating.

Before the reform that the PUC just passed eight months ago, this was costing nonparticipating PG&E customers more than $220 million annually, providing a subsidy of more than $15,000 to each participant each year. Again, as Matt mentioned, that's roughly five times the value of the actual generation. We ask for a no vote. Thank you.

All right, thank you. Additional witnesses in opposition.

Thank you, Madam Chair Israel Salas with San Diego Gas and Electric in opposition. Thank you.

Good afternoon. Andrew Kosydar with Southern California Edison. We're opposed to the bill in print. Appreciate the author and Committee hearing our concerns. The amendments improve the bill, but we still need to see the language. Thank you.

Marc Joseph, on behalf of the Coalition of California Utility Employees, in very respectful opposition.

Melissa Cortez, on behalf of the California Wind Energy Association, opposed to the bill in print. Look forward to seeing the amendments and reevaluating at that time.

Hunter Stern with IBW 1245 in opposition.

Tara Dias Andress, representing the Public Advocates Office. We're opposed to the bill currently as in print, but we are reviewing the proposed amendments. Thank you.

Okay. Bringing it back to Committee Members for questions, comments? Assembly Member Bauer-Kahan.

I want to thank the author for this, because I think that month after month, year over year, what we're seeing is that we're being told that ratepayers have to bear the burden and shareholders continue to pocket the profits.

And I think that my schools did this, and they did this in part because we needed, there was PSPSs happening for extended periods of time. And our schools basically became our community centers where people could go to stay cool, to charge things. And they are now self-sustaining with solar and storage, which is phenomenal.

But they don't get the benefits of that as they should. And our schools need every break they can get. And when they invest in solar, they should bear the benefits of that produced energy, which we all know if you're a solar owner, you don't get if it goes on the grid, and it's brought back by the IOU.

And so, I just think this is really, and I want to commend the Chair as well, because I think she was very thoughtful in trying to meet both the author and the opposition here. And I know that's not what I've heard a ton of, but I really want to say that that's what happened.

And so, I want to give her credit, even if the opposition's not going to Madam Chair, because I think it was thoughtful to really say apartments and schools are particular entities where you really are, in a lot of ways mirroring the behind the meter experience of a home.

But especially in an apartment, you're living there most likely because you don't have the income to live in a single-family home, and you should get the same benefits that those in a single-family home should. And so, I think that was a really good addition. And obviously, our schools benefit in that same way.

So, I'm excited to support it. I think it is a thoughtful step in the right direction of moving us to continue to be in a place where we're both moving to energy Independence. These are basically microgrids that I think are very exciting in our communities, and this will help them proliferate more.

Thank you. Assembly Member Zbur.

So first of all, thank you for bringing the bill. This is one that, and I had some conversations with the Chair that, you know, I'm going to support the bill today, and I, but I have conflicting, there's sort of conflicting principles that I think that this bill raises for me.

One is I've thought for a while that I've seen sort of the data that shows that there has been a cost shift to ratepayers related to solar installations where I think we've to a certain extent, over-subsidized solar to the detriment of other ratepayers.

So, I'm convinced by the information that's being provided that the bill, to a certain extent, is sort of furthering that cost shift and will result in some increase to ratepayers.

On the other hand, it's hard for me to not to basically say that there should be a distinction between what we're doing for single-family homeowners that actually have solar and folks that are in apartment buildings who are lower income and so on that principle. That's the reason why I think I'm supporting this bill today.

And I think following the Chair's lead on this, and I respected really sort of the thought that went into that. I think I have a question, actually, which. So, to one of the questions, the way I understand it, maybe I'm sort of thinking it in an over simplistic way.

One of the problems is that what is happening under the PUC decision is that generators are basically, are selling their energy into the grid for an amount that's what? 20 or 25% of what they would actually they're actually paying for it. Is that. Is that correct? Can I. Yeah, yeah.

Well, we would say, well, that is the facts, right? You are selling it and you are buying back at at four times the price. They would probably couch it differently.

And so why is that? Why is there such a big differential? Because it seems like if you're generating on your own house, right, you shouldn't have to actually pay some additional amount. But then on the other hand, it's sort of, if you are generating, why is it that there's like a. That there's a whatever it is. A 20% to 100% differential on that?

I think we can have a long conversation about it and we can if we want. I'd say this gets into the weeds of the avoided cost calculator and how the PUC calculated avoided cost. Right? So, the question is versus, say, utility scare generation or individual generation.

And we believe that they calculated it incorrectly and it was an unfair calculation. And that's why we think this is an appropriate time before it goes into effect, to say, hey, we let them go through the process and now we Legislature think that was the wrong decision. We're going to. We're going to fix it.

Yeah. And I think it's worth noting that the program has always mechanically worked the same. It's always been some compensation netting on the back end to figure out what you pay. Previously it was you to get compensated at the retail rate. Then it was retail rate minus, not by fast charges. Then it was avoided cost calculator.

And then the PUC came in and said that certain projects are exempt from that and they're going to be compensated retail rates still. That was not even our position.

We said that we should continue to compensate at ACC, the avoided cost calculator, and then provide an adder wherever the state finds it prudent to subsidize certain types of homes. So, what the PUC came up with wasn't even our proposal. It was a middle ground.

And now we're kind of changing the definition of self-consumption rather than changing the whole thing. It's complicated.

Yeah. I mean, it's just, I mean, to me, one of the things that I don't understand, and obviously this is the time for, I think hopefully informational hearings that we'll actually have at the end of the year or beginning of next year, is really understanding why, you know, if you were sort of, you know, industrial-scale generator, you would actually be selling into the grid at some amount.

But then the rates that a consumer is paying is four times that amount. You know, that's to me sort of the quandary that I have.

So, you know, I'm going to support this today because I, because I do think that, you know, if I look at the principle of, you know, should we have apartment dwellers not having the same, being treated differently than suburban, single-family homeowners who actually in some sense have, you know, are more likely to be higher income?

I think there's an inequity if we don't do that. And of course, I think we always want to treat our schools well. But to me, I'm supporting it because it's limited to those two items. And I think would love to understand more because we have to pay attention to the ratepayers. Right.

And I do believe that what the opponents are saying, that some of this is shifting cost to ratepayers. So, I think for those two, those two buckets, I'm comfortable doing it. But, but I'd like to understand in some other venues why those cost differences are so big.

Thank you. Assembly Member Calderon.

Thank you, Madam Chair. And I also ally my comments to my colleague, Assemblyman Zabur. But I have a question for the gentleman from TURN. What would the potential impacts be to non-solar customers?

Thank you for the question. The impacts on non-solar customers would be rate increases. And the reason that we would see rate increases, perhaps this is a little more less awkward, is because most of the costs that the utilities are collecting in rates are unaffected by the amount of solar generation that happens behind the meter.

So much of the spending that's been discussed in this Committee and some of the informational hearings and the policy committee hearings around wildfire mitigation, distribution system upgrades, all of that is, much of that is really unaffected. And utilities get a fixed revenue requirement, they get a lock-in on how much money they can collect.

And when you see customer load drop off, what happens is that the amount of money the utility collects doesn't change, but everybody has to kick in more on a usage basis to make to solve for that number.

Essentially, if you're giving people larger credits on their bills for solar, the money comes from other customers, it doesn't come from the utility shareholders. If it did, we would have a different position on this bill and we'd be happy to support that amendment, but that's currently not how it operates.

So, the problem is it's a zero-sum game. And right now when we see an explosive growth in rooftop solar with compensation at retail rates, which is the proposal here for non-residential virtual net energy metering, those costs end up coming out of the basically driving up rates for everybody else.

There is a way to contain that if you want to keep those costs within the non residential classes and not have them spill over into the residential classes, that's not currently in the bill today.

Thank you.

Could I respond to that as well?

Yes, please.

And we appreciate the suggestions, and we'll look at both of those, including the second one because my understanding is they're not supposed to shift between rate classes as it is today, but so we'll look at that.

I just did want to say, I think where we have a bit of fundamental disagreement with is that is it a zero-sum game. I've talked to my school district; they're doing a $120 million bond and school bond. Hopefully, our bond will pass. They're just going ahead and doing this.

And most of that is going to the fact that classrooms that never needed air conditioning before now need air conditioning. So, they're going to put in heat pumps and they're going to electrify all the schools and it's 3-4,000 students and also put in EV chargers which they never had before.

So, they're going to be dramatically increasing the load. Now they were going to put on solar, but because the recent rolling, they're going to really scale down the solar that they're going to put on and so it's really a question of where that. And I think that's an example.

I have solar on my roof, but I pay a lot of money because I put it at a heat pump. I have an electric hot water heater. We've got a couple of EVs, and we're still paying a lot of money to the utility.

So, this is where we think, I mean, no one, you know, I had a transmission streamlining bill that the Governor vetoed. I've supported or co-authored, I think every transmission streamlining bill. I will continue to work on that and make sure that we do this much as possible.

But we still, I believe in this increasing load scenario, do need that solar. Actually, this solar is beneficial to shave off the load. Do you want to take something quickly?

Yeah, I just want to address a couple of the points that have been made. So first off, solar in the future is offsetting load increases, not taking away from existing consumption. And even in a good scenario in the future, solar is only going to cover a little more than half of the increased load from electrification.

And utility spending is going to continue to skyrocket as long as we are powering EVs and heat pumps entirely from faraway plants. And I also want to address a little bit of the cost shift argument. Nonresidential VNAM and NEMA customers already pay both fixed charge and demand charges to cover their use of the grid.

And non-residential customers always pay fixed monthly charges and all, but the smallest commercial customers also pay demand charges. So, we are more than paying our way. The CPUC zone look-back study found that not only are we not producing a cost shift, but we are in fact subsidizing in the other direction.

Okay, next, I think we have Assembly Member Friedman.

Yeah. So, from what I've been hearing and what I've been told, a lot of utility costs, the increases are coming from our.

Offsetting the need for some of this more expensive produced electricity? I mean, it seems to me that if the cost driver is bringing on new renewables and putting more resources into the grid to be able to move that electricity around, there's an offset to whatever is being produced.

So there is a value to this rooftop solar in terms of what you have to do to meet your growing demand. So it's a little hard for me to understand why this is not, in the end, a net benefit for ratepayers.

So I just wanted to know if you could speak to that a little bit and how you calculate that.

Yeah, I would just say I think we need all of it, right? We need more utility scale generation. We need solar generation as well. We need green hydrogen, which is why we had the previous Bill. So I would just say I think that we need all of it.

And again, just important to make distinction between we're talking about energy used on the same property. And I think that's sort of the distinction here that you also kind of get to. And that's certainly our position is we believe it is helpful to the grid and there's a bit of a disagreement around that.

But, you know, we could cite lots of studies as well. But to your point is this is helpful to the grid because we are growing demand.

Right? And we also have goals around renewable generation that go beyond any impact, any immediate impact on electrical rates. And of course, we, of course, keeping rates Low and lowering rates is a huge imperative. But one of the reasons that need is climbing is because of climate change.

The fact that right now it's supposed to be 111 degrees this week. We've got parts of the state where people traditionally didn't have to have air conditioning, and they do now. And that's all because of climate.

And so the, there is a value to renewable energy beyond whatever the cost of electricity is because it keeps us from having to burn fossil fuels.

I mean, I represent, I live in a city that's about to build a gas plant because of a lack of renewable generation within our city or renewables that we can access because of transmission constraints.

So if we can prevent cities like mine from having to bring new fossil fuel generation online, if we can phase out fossil fuel faster. There's another value here that's not captured in any of this discussion or any analysis that we're seeing or any analysis that's being made.

And, you know, it's really a shame that that's not somehow quantified. It wasn't quantified with PUC. It's not quantified in any of this. But that's going to hit every ratepayer even harder as climate change continues to drive up the heat and as we continue to see those impacts.

And I don't see that anywhere in any of this conversation with this Bill and with other bills that we've had about renewables and certainly about rooftop solar. And it's a shame that we haven't been able to move legislation or find ways of capturing what that value is and putting that within the rate structure, within our incentives.

And that was the original reason that we gave incentives to people. They knew there were going to be impacts. But the goal was about increasing renewable generation. And I haven't seen that kind of brought to the table in any of this conversation.

And I want to thank the author because I think that you have centered this that, and that's really a big part of what you're trying to do here. So it's not really a question.

I guess my question is just how much, if this doesn't pass and we don't continue to find ways of incentivizing and bringing back incentives to rooftop solar, how do we quantify that loss as we continue to burn fossil fuels and continue to not meet our renewable goals?

Yeah, I think it's a good question, and I think we should keep in mind that all the folks we're talking about who may benefit if my Bill passes, these are all people who chose not to build solar when we had the old nem two export rates.

The old nem one export rates, they didn't build solar then I don't think there's going to be a huge flood. But I think more specifically to your point, you have the perfect example when you said that your city is considering building a new gas plant because they just can't, you know, there's just not enough generation.

And again, you know, I think that speaks to what we're doing here today. So I appreciate it.

And then, I'll just say for the record that I'm sorry to see farms and agriculture taken out of this Bill. I don't think that's necessary. I think it should be included. And I hope that that's something that can be reconsidered, if not if, when the Bill moves forward in the future.

Well, thank you. And the Bill does, you know, with the work that the Committee put in, does kick it back to the PUC to relook at some of that. So there is, we're still certainly hoping, I'm still hoping some of these other use cases.

I mean, one of the last big arguments in the Ira, if you talk to people who worked in the federal Ira, was direct pay for nonprofits and religious institutions who don't have, can't benefit from tax credits.

So that was like the last big fight was direct pay, and they put direct pay in, and so we ultimately want those folks to benefit as well.

Great. I think Mister Patterson is next.

Great. Thank you. Sometimes with some of these things, I prefer if the analysis was written in a picture book so I can understand exactly how it's working. But there. Yes, true. Can you help me understand, on a multifamily project, exactly how this would work?

You know, you have the apartment owner or whatnot generating power, it goes out to the grid, and then how would that be implemented internally with the IOUS? Or how does, how do we know that the power being bought back is substantially the same? Just wondering how this would work.

Maybe we could have our housing developers.

So when you have one owner, they are going to want to put the biggest system possible. That often will represent a lot more than what they need for just the common area loads.

And that's where the mechanism to allocate those charges to all the residents, and I think that's mentioned in the Bill comes into effect, where right now the costs have actually increased within this new legislation, is that if you have, if you're a building, if you own a building that has a common area and let's just say 50 units, and then you have a recreation building nearby, you cannot generate electricity on your main building and use any of it on that other building.

So you have to now, unless you trench from that building where that solar is, to the other building, and you have to now run extra wire, and it's going to significantly increase all the costs on the project, too.

Again, the old net metering rules and this new Legislature is going to be able to keep the cost more affordable and incentivize that building owner to maximize the amount of solar they put on their building, that will then help all the residents equally.

So I kind of understand it from, you know, if the building owner wants to bring down the price of maybe another meter that they have on another building, but, you know, let's say 100 kilowatt hours is generated in XDev a day and there's 100 tenants in an apartment.

What do they get like credit for 1 each or how. I don't understand how it's going to be work on, but just so you know, I mean, just an example, I mean, one of my family Members lives in an apartment complex that does have solar on it, presumably for they all have their individual meters.

So I'm wondering how would it be implemented? Because the meetings that I've had on this say how great this would be for housing and how it would make apartments cheaper for the tenants, and I'm asking for that to be demonstrated. How is that the case?

So I don't have the nuanced details of that, but I do know that in most cases the building, you cannot, the common area loads are not the significant load. So they're going to want to cover their common area loads of, thereby potentially reducing any rental amounts that might go towards that.

And then they allocate the rest of the tenants because ultimately they're not going to be utilizing solar to make more money, they're going to anything that reduces their costs they can pass through to the consumer, the tenants.

But I think what you mean, and I'd actually love to hear from PG and E on this, is that when allocate to the residents is that the utility would allocate it to the residents in some, some kind of calculation because there's no control with the business owner to say, hey, let's allocate 1 this person, two to this person.

You know, I'm very concerned about implementation on multifamily units and how that would be implemented. I would love to hear from PG and E. You know what?

Yeah, I mean, it's part of the agreement that all the tenants split up the portion of the resource. The biggest change here is it instead of compensating the landlord, the owner of the building that devoid of cost calculator, they would be compensated at the retail rate.

So that's really the only incentive here is for the owner of the building. All the tenants are still going to get the same compensation that they would with or without this Bill. That's kind of the mina

Say that one more time. Picture form please.

Because of this really is only impacting the common area spaces. The only real winners here are going to be the landlord and not the tenants. The tenants are still going to get compensated retail rate regardless, because that's how the BDM program is set up.

The difference is this incentivizes the apartment owner to build solar because they are then going to get more money from the grid to do so to offset their costs and therefore make a profit from the other customers. That's the incentive here and that's why we oppose it. And I think, yeah

I want to, if you want to ask a question about the schools, by the way, before. We move on.

And I do want to allow the Senator to respond.

You say the tenants only benefit if the apartment owner actually has incentive to do it. So that's, you know, I think we're agreeing in some sense. We're just saying, you know, they're not going to do it unless there's incentive for them to do it, and then the tenants don't benefit unless they actually put it on.

So that's why we're. And this helps fix that equation.

Yeah, I think there would have to be some kind of. Okay. I mean, some kind of, I don't know, why are we trying to incentivize lower rates to the tenants or are we trying to build solar systems? I think, you know, two different questions.

Because if we wanted to go back to the tenants, which, you know, some, honestly, just the meetings that I've had and I've been kind of jumping around this, hey, if this, it's been pitched as saving tenants and helping to build affordable housing, and some of those advocates have been here today to testify and support.

And so that as the Vice Chair of the housing, that's a very interesting concept to me. I just don't see how that this Bill doesn't necessarily go that direction. But I am very interested in the schools as well because do schools have multiple meters or something? Is that why?

Yeah. So with your indulgence, before I go to the school's question, I'd like to piggyback on your previous question. So the billing system that you're inquiring about already exists for VMBT. So we're not asking to reinvent anything, really, just parity.

And the building says you're referring to. Is one that says that tenants. The benefit is allocated to the tenants. That's in Vnam.

Exactly. Exactly. So that is existing. And I love this question about why schools have multiple meters. So really by design and by design of a couple of things, the building code and the funding system for schools.

So now, for example, when the new building code is requiring us to add solar to new buildings, the modernization funding that we need to carry out those projects, we only qualify every 25 years, literally on the 25th birthday of the site or the building.

So when we are spacing those projects apart 25 years, it's obviously going to be a different generation of technology. And, you know, our utilities would not like us. They don't let us, for good reason, plug in that new technology into the old meter. So we end up having multiple meters.

And then there are some additional things like, you know, your, your sprinkler system or whatever have to be on their own meter. So it's driven by building code and it's driven by the way we fund schools, which is why so many of us, most of us end up being multiple meter.

So just two more cents on this. I kind of understand it from, from the school perspective in the sense of, you know, we're mandating this on schools and other government buildings, frankly, you know, to build large scale systems and they're generating and keeping it really within really one customer too.

And I think that's a key, key point there that is different from the apartment situation, multifamily housing.

But so that, and then also in the same vein, the agriculture actually made kind of similar sense to me personally because if we're talking one customer that might have multiple meters for whatever reason, it just made more sense that the multifamily, which I'm very interested in incentivizing multifamily solar scale systems, we're talking about multiple, not only meters but multiple customers.

And I'm just, so I do have some concerns over that, but I'm interested in more of the discussion. And obviously, if you want to respond to that, Senator, you're happy to, but appreciate, appreciate. I'm always in favor of solar being built out in General and people benefiting from that. I just, you know, it's complex.

Thank you. That sums it up. But yes, I think we'll stick with your last two comments. Yeah.

All right. Thank you, Assembly Member. Assembly Member Schiavo.

I wanted to thank the author for bringing this forward. And, you know, this is actually, my district is a big fan of solar. A lot of people in my district invest in solar and have solar and we've gotten support for this Bill maybe more than any other Bill this whole session this year.

And, you know, I want to just echo my colleague, Assembly Member Friedman's points about kind of taking a larger view at this because, you know, that's the whole, one of the big points. Number one is to move us away from fossil fuel right when we're talking about solar.

But number two is to help us build out the, you know, the generation that we need. And certainly, you know, when individuals, homeowners, churches and farms, unfortunately not, no longer included, but schools and apartments are investing in this because they're still investing in this infrastructure that other, you know, that the utilities don't have to pay for.

And so, you know, these are huge investments. If you add it up statewide that are going to increase the generation. And if you talk about the cost of the utilities building out on their own the generation that's needed, it's a huge, huge cost and all of the ratepayers pay for that.

And so I feel like we really need to get a handle on this larger conversation about the cost benefit of solar and how that is benefiting rate payers in the end because everyone's investing a little bit in the infrastructure and the generation that we need statewide.

And you hear about just the upgrades that are needed at schools by building ev chargers and building air conditioning where they didn't have it, which a lot of our schools don't have air conditioning still, who even needed it already, let alone the new ones who need it. So, you know, so there's so much more demand.

And, you know, this is, I think should be seen as a benefit that this is an investment that is helping us get there.

And so, you know, I think that this is, this is something that we have to kind of grapple with and get a better handle on because it's, there is so much benefit from this and it is something that when there is that investment that they should benefit from.

And so making that investment and not being able to benefit from it, it's hard for me as a homeowner to think about investing tens of thousands of dollars in solar and then being told that's not going to benefit you in any way. And I think that schools and apartment multifamily housing are kind of feeling the same way.

We're investing all of this money and it's not really going to benefit us and it's actually going to hurt us to make this huge investment. So we don't want to be moving in that direction where we're disincentivizing it.

And I know how important it is for us to bring down rates and to address these increases in these costs around generation. I know we've been doing a lot as a Committee to try to move forward anything that can increase generation as quickly as possible to help us meet our goals and our needs for electrification.

And, you know, I see this as an important part of that. And so, you know, going to support it today and hopeful that the PUC will see the light and include others who were excluded today as well.

Certainly.

I think it's just, it's worth noting that the avoided cost calculator is, as it's called, it's avoiding the cost that the customer is not taking from the system. That is the entire point of the ACC. It's been 20 years of development. It's updated every two years. It includes transmission, distribution.

Societal costs is about to be included into it. That's the entire purpose. So we agree that there's a benefit. The question is, what does that calculation come out to? And it's always a work in progress. So that's, we agree there. And then.

I think it's also worth noting that one of the largest pots of money that is going to upgrade schools H Vac and EV systems is ratepayer funded. And under this Bill, the solar customers, solar participants would not pay into that Fund. So it's kind of cutting both ways there.

Thank you, Assembly Member Reyes.

Thank you. I absolutely appreciated the comments from my colleague Assembly Member Zbur earlier. And I think that sometimes there is, even with Committee Members, there is a confusion as to how we're talking about a benefit, and yet there is no benefit.

I also appreciated my colleagues comments from Glendale Assembly Member Friedman that we do need to evaluate the other value having to do with rooftop solar and renewable energy. There has to be a greater study done. I keep hearing that in the end, the ratepayers are paying for this.

The ratepayers are paying for this, but not every ratepayer, because some are benefiting because they have the solar, but the other ratepayers are having to pay to basically subsidize that. A comment that was made was we should find other sources to pay for this besides the ratepayers.

Perhaps my question is very naive, but why can't the shareholders pay a share of this?

Well, first of all, I appreciate all your comments. I'll just say a couple quick points and then get your last question, number one. Again, to be clear, as was, I think the point was made, all these folks already pay fixed charge and demand charge. So now with recent rulings, all residences are going to pay fixed charge too.

Because the point is, hey, we're all paying towards upkeep of the grip, but this already happens with this customer class. They already pay fixed charges and demand charges. So I think that's an important point to make.

And I think your question is really, I guess you're trying to say so there's only a cost if I put up solar on my lane. There's only a cost. My school. There's only cost to the extent you're still using the grid. And that's really the argument that we're having.

We're saying, hey, if there's a single meter, you're not using the grid at all. And our question is, well, if you're really a school and on the same property, are you really using the grid? We're saying, no, this is really stuff you're generating, but this is not a strain on the grid.

And they're saying, well, you're still using the grid in some way. So that's kind of really the fundamental.

I think, sort of somebody has to construct.

Yeah, disconnect. But I think your point is, I think we're all paying for it. I mean, these. Because we're already paying a fixed charge and demand charge. And again, I think we're actually going to be increasing consumption, as we say, for heat pumps and all those things.

Once I got a heat pump with air conditioning, I took my big mobile unit, I gave it to a school during a heat wave that we had two years ago, and they were glad to have it, but a different parent in a different school tried to put air conditioning unit in their kids school and they said, no, you can't do it unless everybody is gonna.

Unless everybody has them. Right? And now they're doing the. That's why they're doing the bond and doing everything. So I think we're gonna be increasing use. But I think, you know, to your, I guess your broader point, you know, ultimately it's trying to find the balance for, you know, what is right.

And you know, we think this helps everybody. And I don't know what that means for utility prophets, exactly, but we think this helps everyone.

All right, thank you, Assembly Member Bauer Kahan.

Yeah, I had a couple questions, because I think that some has been said, and I know you two both opposed, but maybe for different reasons. That's my interpretation of what's going on about why PG and E and other IOUS. I assume other IOUS are aligned with PG and E.

Yes, and I think that what hasn't been said here today is that when this infrastructure, as our colleague from Glendale was saying, is built in other ways, and especially by the IOUS, there's a guaranteed rate of return. And so we are taking away their guaranteed rate of return when we build it ourselves.

And that needs to continue to be said in this Committee over and over again, because I think the guaranteed rate of return on infrastructure is driving actions by the IOUS, and it is driving up cost on our customers.

And so I'm wondering if turn took that into consideration when looking at this, because it's incredibly important that this does not have that rate of return of energy going onto the grid and would therefore have a positive impact. As the colleague from Glendale said.

Yes, thank you for the question. We do think about that a lot, and we are interested in alternatives that would reduce utility profits and change their incentives around overbuilding infrastructure. We have the system that we have today.

Unless that changes, we're stuck with the rules that are in place as of now and the avoided cost calculator that's used to value exports. That's the basis for this whole debate. Do we use avoided costs or do we use retail rates?

That calculator does take into account not only the price of electricity, but avoided investments in transmission and distribution, and avoided greenhouse gas emissions, and avoided investments in new gas fired power plants. So it takes into account all of this stuff in constructing a value. And I think we believe that that value represents the benefits to all customers.

So if you want to pay that value, then we think the rest of the customers are neutral. If you overpay relative to that value, and retail rates are maybe five or 10 times higher than that, there's a big gap. So who's paying for it? Are the utilities paying for it? No.

So is your position that we should be giving these folks, the schools and apartments, the avoided cost calculator benefit?

Our proposal is to keep the current PUC decision in place and to find additional money to support adoption by schools and other beneficial host customers with other sources of funding, rather than taking it from other ratepayers. The greenhouse gas reduction Fund, the General Fund.

There's a lot of ways to deploy money to make this stuff much more cost effective. I know it sounds funny because there's no money in the General Fund, because our budget is.

There's no money in the General Fund, I get it.

But there's also no money left for ratepayers to pay. We have a crisis of affordability. And how many hearings have this Committee had where people are talking about how high rates are? We got to find ways to get a handle on that and bring down rates. And there's no single solution.

There's many different strategies, and rate of return is a great one that we'd love to talk more about.

Happy to.

But when you're massively overpaying for rooftop solar and tagging that Bill to all other customers, that's an upward driver of rates for everybody.

But when you talked about how rates are charged, you talked about, I think if I understood your. When you were turned around, I didn't hear you talking about the new flat rate proposal that should go into effect sometime. I don't exactly know when it goes into effect.

It didn't seem you were anticipating that in your comments, unless I misunderstood you.

zero, I am. And unfortunately, I've spent too much time on that issue. The fixed charge is only designed to cover two categories of costs for serving customers. It's the actual physical cost of connecting the customer to the system, meaning the wires that connect you to the grid and public purpose programs, non bypassable charges.

There's a whole other universe of costs that are fixed, essentially, that aren't included in the fixed charge. Most notably all the wildfire costs that don't vary based on a customer's usage. None of that is included in the fixed charge.

So we're not in a situation where you can say, well, the remaining rates that customers are being charged, we can credit them with that full value and everybody else is indifferent.

The PUC adopted a compromise proposal for a variety of reasons, but it does not even begin to collect all of the costs that really don't vary with usage. And that's why the avoid a cost calculator is what has been aligned on.

And actually, we were very supportive of using that to compensate customers for community solar investments, which the PUC recently rejected over our objections.

So we're trying. I appreciate that. I know that PG and E recently was denied all the wildfire costs they wanted, especially the undergrounding, because it didn't look like they could actually build it all even if they wanted to by an administrative judge.

The PUC then overruled that and granted it all to them, driving massive costs for pg and e consumers.

And so, I mean, I think we just have such problems with this infrastructure that is being driven by the IOUS to get that guaranteed rate of return for their shareholders, that I think it's a conversation we need to continue to have.

All right, well, thank you, Members. I think as our robust Committee discussion has certainly highlighted, there is, I think, an ongoing and kind of raging debate about California's solar policy.

And I do think, as others, I think, have pointed out, I think it's driven by the fact that there is just fundamental and really profound disagreement about the value of solar exports to the grid. And I don't think that this Bill is going to be the last word on that.

And I think, as other Members have highlighted, it's really important. I think that Weschiavo used the phrase that we get a handle on the cost benefit.

I think that despite where the PUC has landed, I think as you're hearing, and I think the PUC is hearing, there are many legislators that are uncomfortable with that and certainly many stakeholders that are uncomfortable with that.

And until we can arrive at a shared understanding of what the avoided cost calculator should be, the drivers of that are we are going to continue to have these fights and these debates.

And so that certainly is going to be a piece of work that whilst in the Bill, you know, we certainly have asked the PUC to do some more work.

I know the Senator and I have talked about the fact that certainly this Committee and certainly other legislators on the Senate side really want to dig into some of these questions as part of the work that we are doing in the fall. So certainly more to come on that. And with that, Senator, would you like to close?

Sure. Thank you. I do appreciate the discussion. I think I'm in some of my largest Bill presentations in this Committee because we have very engaged people struggling with difficult issues. And I think ultimately the word is balance. Right? We're trying to find that right balance.

Yes, we know we overly compensated people early on and that was for reasoning. And we wanted to bring down the cost of solar, which we did 90% over 10 years, 300% over 30 years. We brought down the cost and now we're trying to find that equilibrium. And I think the right answer is solar plus storage.

Again, the PUC decided that for residential, they said, great, we're not going to give you a lot of value for exports, but if you're going to do solar, we're going to send storage. And they said that is valuable. I think we do agree about avoided costs ultimately for things that are really exports.

I think the disagreement is we don't think it's fair to call something exports when you use it on the same property. And I think that's the fundamental disagreement that you've sort of seen here before. But I do appreciate all the larger issues that we've touched on.

Again, I do very, very much appreciate the chairs and the Committee's efforts. And I know you spent, you spent almost as much time as I spent on this Bill meeting with all the different stakeholders and all sides. So I'm really appreciative of that.

I do think this strikes the right balance and I respectfully ask for an aye vote.

Thank you. All right, we need a motion and a second motion from Assembly Member Bauer Kahan. Second from assemblymember Schiavo. Madam Secretary, please call the roll item.

Number 10, SB 1374. The motion is do pass as amended to appropriations. [Roll Call]

All right, 70. That Bell's on cough. Moving on to file item number 12, SB 1142, Assembly Member Senator Benjamin.

You'll provide us a little, you know, move the Bill.

Here we go. I'm just gonna go really quick. I didn't say, Madam Chair, this is my first time in your Committee.

Welcome, Senator.

I will be accepting the committee amendments. Thank you so much for working with my team on this. And I'll go really quickly. As your beautiful Committee analysis pointed out, even with the recent utility saving programs, a recent survey found roughly a quarter of Californians report being unable to pay energy bills.

And you've already discussed that enough in the previous bill, so don't need to dive more into that.

But given the various considerations that must be taken prior to addressing this matter, SB 1142 would direct the CPUC to consider the following regarding avoiding a shutoff, whether to direct electrical and gas corporations to take into account a customer's ability to pay before terminating or reconnecting services, and whether to limit the amount of electrical and electrical corporation can collect for reconnection, up to 20% of the customer's outstanding balance.

Lastly, SB 1142 would require electrical or gas corporations to restore service to a residential customer upon the customer paying their creed upon amount decided in the amortization agreement not to exceed 24 hours. But with the Committee amendments, we have adjusted for safety reasons and field reconnections, for extreme weather and so forth.

There are no current guides for utilities on how much they can or should request from a customer to avoid a shut-off or get reconnected after a shut-off. And this bill will help change that and get on the right path with me.

Madam Chair, I'd like to now turn over to my one witness who will speak on this, Constance Pierre Slider, the organizing Director at Utility Reform Network, Turn.

Thank you, chair Petrie-Norris and Members of the Committee, thank you for your time today. I'm here and I represent Turn and ratepayers united. The rate of energy increase is the number one driving force for energy insecurity and energy shutoffs.

In California, a customer's inability to afford their utility bill means facing the decisions about which bill to pay. Reasonable disconnections and reconnection protections can ensure that vulnerable customers have fair treatment and every opportunity to pay their debt and remain connected to service without impacting other customer's bills.

In 2017, this Committee passed SB 598, the Shutoffs Reduction act, directing the CPUC to implement disconnection protections for utility customers. The CPUC peak rules have helped customers, however, with the exorbitant rise in rates, additional protections are necessary. Currently, when customers are facing a disconnection or attempting to reconnect to service.

They are at the mercy of the utility company's customer service representative to negotiate a reasonable payment amount to keep or reinstate service. This means one customer may be asked to pay 80% of the past due bill, while another customer may be able to negotiate 10 to 20% payment to remain on service.

This practice creates uncertainty for customers and deep in equity, you can basically get a reasonable payment plan only if you are connected with the right customer service representative and are able to effectively advocate for yourself.

This Bill redirects the CPUC to consider protections for customers facing disconnection or seeking reconnection, which would include limiting the amount that a customer must pay to avoid disconnection or be reconnected.

By establishing these requirements, the Legislature and the Commission can ensure that all customers are treated equitably, regardless of income, language barriers, or the customer service representative they are connected with on this day. And this bill reflects how urgent these protections are needed by requiring the CPUC to act quickly within six months of passage.

Turn respectfully requests your support.

Thank you. Opening it up for additional testimony from folks in the room. Go ahead and approach the mic if you'd like to testify in support of this measure.

Chair Members, Alicia Priego, on behalf of San Jose Clean Energy and also Housing Action Coalition in support.

Emily Pappas, Niemela Pappas, and associates and support on behalf of MCE.

All right, witnesses in opposition. Come on up. Do we have a primary witness in opposition? Yes.

Removing.

zero, okay. Wonderful.