Senate Standing Committee on Energy, Utilities and Communications

Senate Committee on Energy, Utilities and Communications will come to order. Good afternoon. Welcome to Committee's first hearing of the 20252026 legislative session. I welcome returning and new Committee Members and recognize who will be here a little later. Our Committee Vice Chair, Senator Rosalie C. Bogh.

Ochoa Bogue, it's an honor to serve as chair of this Committee at a time when the eyes are on California, the eyes of really the country and the world as we lead the way to the clean energy future. I'm really honored to be chairing the Committee at this important time.

My, my first job out of College over 30 years ago was to work with EPA and create the first Clean Air Marketplace conference. And though it was a long time ago, it was clear then and even much clearer since that we would have the necessary technology and actually better products to fully transition to a zero emission economy.

But what was also clear is we needed the right policies and I look forward to working with all of my colleagues to come up with those right policies to enable that clean energy future that we know is possible and is going to create and is creating millions of jobs for Americans across this country.

We know it's a busy year and it already has started as such. And our thoughts of course, are with all of our friends and colleagues from Southern California and their constituents and as they work to recover from the incredible, really incalculable damage done by the wildfires in Southern California.

And of course, we are monitoring those developments closely as it pertains to this Committee and issues that are likely to come up in the new year. Today's hearing is the annual update of the Public Utilities Commission and the Public Advocates Office with a focus on addressing electricity utility Bill affordability while advancing the state's clean energy goals.

And the topic of electricity affordability has been on the top of the agenda Legislature for a few years, but it was kind of left as unfinished business at the end of last year and I know my colleagues want to address it. I will have a Bill soon on energy accountability and affordability.

But the reality is electricity bills have been skyrocketing and we know that the inability to pay electricity and Fund, you know, as having already a deeply harmful impact on residents and also high electricity costs really have a very negative impact on our ability to attract and retain manufacturing in this state and on business.

And of course it's detrimental to achieving our clean energy goals. One important point is that we welcome our Vice Chair, Senator Rosellisi Pachoa Bogue. Thank you. Look forward to working with you. Just making A few opening remarks for our Committee. An important point is California has long experienced high energy rates compared to other states.

But our utility bills have generally been lower than many states. And that's largely because of our mild weather and the forward looking building codes and other energy efficiency technologies we put in place.

In one of the reports we got for today's meeting, it said that the statewide codes and standards program alone, which is funded about $57 million a year, has saved over $200 billion for Californians since its inception in the late 1970s.

But since 2021, electricity bills for all three of the state's investor owned utilities have outpaced the rate of inflation. And we can clearly no longer just count on mild weather and energy efficiency to keep rates down. My own constituents, including my immediate family. Is my wife here?

I'm not sure, but have been complaining and talking about the concerns about rising electricity bills that we've seen. It's clear that the reliance on fossil fuels is costing us greatly and billions of dollars in environmental impacts. The Wall Street Journal just had an article yesterday saying there will be a $1.47 trillion decline in U.S.

home values by 2055 because of climate change. That was in the Wall Street Journal and highlighted parts of California that will be deeply affected. So we know that we do need to continue in this clean energy transition, but we need affordable electricity utility bills to be able to do it. We'll talk today.

There are many factors about bills, obviously not just nem sort of sometimes is painted. There's many pieces of the rates increase that we'll talk about today. The Governor issued an Executive order directing the CPUC and CEC and related agencies to come up with a report about that. And that is partly what we will discuss today.

We look forward to hearing from the CPC and CEC about these recommendations. So the goal really of today's hearing is to help set the table in order to help inform policy proposals that may come up during the legislative session.

And as I mentioned, I'm working hard with our pro tem on a legislative Bill right now to address electricity utility Bill costs. Lastly, I want to say we can't just ignore the flurry of orders coming out every hour from Washington. On the other hand, our clean energy future is mostly in our hands.

And you know, Californians are looking for us to have those answers and to be able to keep moving forward with that. Do you have any opening comments, my Vice Chair?

No, I just look forward to working with you. This is a new Committee for me, a new spot Space, but it's not new as far as the impact that it has on my constituency base in my district.

So very, very excited to be in this community, serving with my colleagues and having robust conversations on how to address, most importantly, the affordability crisis that we're having in California. So thank you for allowing me to serve here.

Yeah, excellent. Well, with that we'd like to bring up the President of the CPUC, Alice Reynolds, and David Holtshield, the chair of the California Energy Commission. Please go ahead with your presentations when ready and then we will open it up for questions. We have a very full agenda and a lot to get through.

Really appreciate the Members who are on time here today for our hearing and so we can, we can get started. Thank you both.

Great. Good afternoon. Chair Becker, Vice Chair Ochoa Bogue and Committee Members. It's really wonderful to be here. I am Alice Reynolds, the President of the California Public Utilities Commission.

I do appreciate the opportunity to appear before the Committee and to provide a brief description of the CPUC's annual update as well as talk about the very important issue of energy affordability. So I'll start just a couple of background points for context. The CPUC is the economic regulator of investor owned utilities that operate within California.

These utilities, of course, provide essential services to residents including electricity and gas, water, telecommunications, transportation and rail services. In the electricity sector. Our jurisdiction covers about 75% of the load in California. We did have a busy year last year, so I won't go into too much detail, but I did want to provide a couple of highlights.

Overall, in 2024, the Commission adopted 649 decision decisions and issued almost 1400 rulings based on processing of 10,000 E filings. So quite a big volume of work. We achieved milestones for clean energy.

Our integrated resource planning process implemented by our energy division led to over 7,000 megawatts of new clean energy projects coming onto California's electric grid, including over 4,000 megawatts of new battery storage projects. This is really something to be proud of.

It's an all time record for California and it was reached using competitive solicitations carried out by all of the retail providers on behalf of their customers so that the lowest cost projects were selected. In 2024, we also reached and then surpassed the milestone of 10,000 megawatts of installed battery storage capacity.

And last year we also implemented legislation setting new statewide energization timelines and targets to connect new customers to the grid. The timelines, if met, can cut maximum energization times in half to accommodate future load growth.

We also issued a decision that requires utilities to use scenario planning to better anticipate grid needs and to improve the distribution system maps that customers use to plan where they will site new projects in other areas beyond energy to support Bright broadband for all.

In 2024 we issued over $1.0 billion in awards from the Federal funding account program to 51 California counties to deploy future proof broadband services. We also revamped our transit inspection program to implement a risk based approach for rail safety to identify hazards proactively and facilitated water system acquisitions to improve service quality of at risk based systems.

I did want to quickly go to electricity rates and customer bills, the main topic of discussion today. Just starting with a brief background on what we're seeing as the drivers of increases in bills and also some background, I just have two slides. One of them is already up and you should have copies with you as well.

California policy, as the Chair suggested, does have a long history and much of it has impacted rates. And recall that what we have today is our system where our utilities have been deregulated and utilities largely don't own generation. And utilities also are not the default provider of energy supply in many areas.

We have over 40 retail providers of electricity, including the IOUS, the Community Choice aggregators and energy service providers. We also have a large ecosystem of private industries such as energy generators in the electricity sector, which of course has benefits and great opportunity for economic development.

But remember that anything having to do with electricity services has only one source of funding, the ratepayers. We have visibility in two books, the accounting, the cost, expansion, expenses and investments of only part of the ecosystem. The utilities are the ones that are regulated through the public process at the CPUC.

And because we have decoupling in California, the investor owned utilities provide electricity supply as a straight pass through with no profit. Utility earnings come from investments when they put up capital for projects. A capped rate of return is allowed but not guaranteed. It is collected on an amortized portion of investment costs.

The benefits to investors or shareholders in utilities come from dividends if any are paid and from stock value if it increases. So going to the first slide, just to bring your attention to a couple of points, the graph on the screen shows categories of electric costs that go into the three large investor owned utilities combined revenue requirements.

So this is all three of the large utilities from 2016 through January 12025. The revenue requirement is the total cost of operating and investing in the electrical system each year.

That's the amount that is divided up among customers through the per unit cost of electricity or the rate it represents operations and maintenance costs as well as investments in capital infrastructure.

So the bar to the the furthest right represents from the data we have the total amount that we expect to be recovered from PGE, Southern California Edison and SDGE ratepayers starting January 1st of this year. So this is what will be collected over the course of this year.

You can see that the largest driver in recent cost increases is captured in red. This represents distribution costs including wildfire mitigation costs like vegetation management, installing covered conductor undergrounding and other measures. Wildfire costs in particular have been significantly increasing.

In the five years between 2019 and 2023, the investor owned utilities collected approximately 27 billion from ratepayers to pay for wildfire mitigation and insurance premiums. These costs are significant and the CPUC continues to evaluate and attempt to reduce requests for welfare mitigation costs in its proceedings.

But it's at the same time we know that these costs, the cost of addressing the impact of climate change, we know that we're seeing catastrophic wildfires create a, create unprecedented challenges. These challenges of course are impacting the state broadly. They're taxing even our world class wild firefighters, CAL FIRE and local fire departments.

And we also have a unique system in California which essentially makes the utilities serve similarly to an insurance company for private property damage from wildfires without showing a fault and without policy limits. This is unique to California under the inverse condemnation doctrine.

It's noteworthy also that over the past year the rate of growth and distribution, the distribution, distribution section of the revenue requirement and wildfire costs has slowed down, which is evident from the graph. This is partly due to some large wildfire related costs rolling out of the rate base.

So when investments started pursuant to legislative direction, they were ramped up. Around 2019, the utilities increased spending and they tracked those costs through memorandum accounts that were directed by the Legislature. And then they have been started to come into rates with some delay.

After the review of the costs of the cost memorandum accounts, the costs hit later than 2019, but now they're starting to drop out of rates.

They're collected over a short period of time and then when the collection is over, they drop out of rates, which is a rate increase, the rate decrease, so rates can trend up and down. Another thing to draw your attention to in the graph is the GHG revenue category at the bottom.

This represents a portion of the cap and trade allowance proceeds that are returned to residential customers twice a year, which effectively reduces the revenue requirement. So that's shown as a negative at the bottom. So overall, this represents the revenue requirement collected from all ratepayers.

And it's important to note that throughout the year, if one person pays costs, another customer pays less, another customer would pay more. This is the total amount that is divided up among customers customers. I will go to the next slide and this is our clean energy future.

As the Chair mentioned, this is a very important graph which shows where our planning is taking us in California. The slide shows how the most recently adopted Preferred System plan in the PUC's Integrated Resource Planning proceeding is on a path to meet the state's greenhouse gas emissions target by 2045.

The CPUC's Integrated Resource Planning process ensures that the California electric sector meets those ambitious greenhouse gas reduction goals while maintaining reliability and at the lowest possible cost. Recently we approved a comprehensive portfolio to reduce GHG emissions by 2.25 million metric tons and this does represent a Low end of the range of the California Resources Board.

But it is tied to the scoping plan, the state scoping plan, and it will achieve nearly 60% reduction compared to 2020 levels using this planning process. Our modeling also indicates that by 2040 natural gas units usage will decrease by 80% compared to model 2026 usage. I'll take these slides down.

All right. And then I did want to take a few minutes to talk about cost containment, a few examples of ways to limit costs and reduce bills. And as you know, this is a difficult issue, something that I know the Legislature has grappled with. The PUC has continually works on through its proceedings.

The primary way that we use to scrutinize costs is through each investor owned utilities General rate case proceeding. We call it a grc. In a GRC proceeding, parties analyze spending forecasts and present evidence in support of lower or higher amounts. And in addition, cost reductions have been achieved through approval of proposals to implement Wildfire self insurance.

So this avoids the very high cost and the rising cost of premiums for private party insurance. We have also eliminated ratepayer subsidies for the extension of gas lines and the extension of electric lines for new mixed fuel buildings using natural gas or propane in addition to electricity.

And then another example is that the CPUC's legal division works before appears before the Federal Energy Regulatory Commission. So the Federal Government regulates the transmission assets and conducts rate cases for each investor owned utility. So our legal division litigates there. And this has resulted in ongoing savings which are estimated to be about 5 billion since 2018.

In 2024, we also moved some existing fixed costs to a flat rate pursuant to legislative direction. And now the utilities will have a flat rate item on bills which will shrink the per unit cost price of electricity. That rate that we know is high in California for all customers, which encourages electrification.

But of course there's a lot more work to be done. I'm going to just briefly outline three categories of areas to opportunities to contain costs. And this is consistent with the report we provided in response to the Governor's Executive order.

One is to review existing programs to make sure they're achieving their goals at the lowest cost for all ratepayers who pay for these programs. The second is to consider how to improve the effectiveness of the climate credit. And the third category is to integrate wildfire mitigation plans into CPUC's General rate case process.

Just briefly on each one, we know that California and its energy agencies have really been a pioneer in so many different program areas. We piloted new programs. We've learned from successes and challenges.

But now given affordability and we're seeing the maturation of many of our programs, we're at a stage where it's possible to reexamine existing programs and see if there are opportunities to reduce costs.

Regarding the California Climate Credit, as I said, this credit is a twice per year Bill credit and it's provided to all residential and certain qualifying small businesses in California. These funds are generated from California's cap and trade program and this translates to currently an average credit of $120 per customer.

Every single customer receives the credit, whether Low or high income. And so one concept is to reallocate this credit to customers who need it most, representing an opportunity for equity. For example, if the Bill credit were given only to CARE and FARA customers, Low income customers on the system, it would rise from $100 to $454.

The third category is wildfire costs and integrating wildfire mitigation plan costs into the PUC's GRC process. Currently, the wildfire mitigation programs contained in the wildfire mitigation plans are not all subject to the coordinated review and evaluation the other utility programs and investments receive.

Pursuant to legislative direction, the IOUS are allowed to file applications to recover many of these costs. They're often filed when the work is completed and they involve lengthy contentious proceedings to evaluate and we have to evaluate potential overlap with GRC approvals and after the fact reasonableness of expenditures.

The time delay also increases debt carrying costs because expenditures have already been made and those costs must be paid by ratepayers. The Public Utilities Code could be amended to require utilities to integrate welfare mitigation costs into the normal planning and budgeting process like their GRC instead of treating it as a standalone activity.

I'll note though that also the wildfire mitigation process to date has driven electric utilities to rapidly improve how they understand and address wildfire risk. But we are now to the point where in the process where we could wrap those costs into the GRC cycle.

That concludes my opening comments for today and I did want to again thank you very much for the time of the Committee.

Thank you Chair Reynolds and thank you for highlighting positive work that has been done around battery storage, around new generation that you highlighted at the beginning of your talk. Thank you as well. With your recommendations we'll now move on to Chair Hochschild.

Thank you so much. Chair Becker, Vice Chair and Senators, good to be with you today. I'm David Hochschild, Chair of the California Energy Commission and I'll build on President Reynolds comments and be pretty brief so we can get to questions and discussions.

But just to locate California today, our energy policy really rests on three affordability, reliability and environmental concerns. Keeping it clean. I would say 15 years ago our grid was not very clean. Today we're almost 2/3 of our power coming from clean sources. You know, five years ago, we had a reliability incident, August 14th, 15th of 2020.

Now we've really addressed that. We're in a much better posture. We've added 27 gigawatts of new capacity and now we're dealing with affordability. And I want to talk a little bit about the source, the primary source of this issue.

If you look at the slide, you can see that for most of the last 25 years, our rates actually were relatively stable. And that includes even when we've introduced landmark new programs such as the Renewable Portfolio Standard, the EPIC program and so on.

And then there's a very steep upward tick beginning after the catastrophic wildfires that here are state hard. Those have required really costly upgrades, vegetation management, utility undergrounding, and have really exerted enormous pressure on rates. So just PGE territory alone, 40% increase since 2018.

We are being helped a lot by the fact that we're a very energy efficient state. So we rank number one in the United States on energy efficiency. That's done by the American Council of Energy for an Energy Efficient Economy, and we're proud of that. We saved ratepayers over $200 billion as a result of our energy efficiency codes.

And I want to highlight here sort of the difference between rates and bills. What customers care about is their Bill. How much are they paying every month in rates, we're about number two in the country after Hawaii. But because we're consuming less per capita, we're about 21st in the United States.

When you add natural gas and electricity together, if you add all fuels, we're 31st in the country. But we are very focused on sustaining energy efficiency. We see it as one of the core ways to save consumers money. And that includes existing standards that we do for new appliances as well as new construction.

And the codes we just adopted last September, which go into effect a year from now, will save $4.8 billion over the life of those buildings constructed during that cycle. One example is lighting. If you look In 2009, the Blue Pizza slice there was the fraction of California's energy Bill that was constituted by lighting, 23%.

Almost a quarter of your Bill was lighting. And as a result of the efficiency work, 10 years later, that went down to 10%. And that's an example. That alone customers a decade later in 2019 were paying $2.2 billion less money.

And again, this is over the course of that decade when our population grew 7% load only grew 2%. So that saves not just customers money, but saves the system money. It's reduced procurement that President Reynolds has to do is reduce transmission. That needs to be so that remains a very, very important way to protect consumers.

One of the other things that we're working on as just an example of how we can save money, something like the solar equipment list, that's the single largest source of new generation being added in California today.

And that equipment list, we ensure safe, reliable equipment is getting to market and keep the Low cost stuff, the Low quality stuff that has higher risk out of the market. You know, that program costs a million and a half 1,000,003 to operate and saves utilities about 64,000 hours. We're also doing a lot through the EPIC program.

This is really the best clean energy research and development program in the world. And just as an example of the types of things that are being supported by that, the Watt EV diesel, heavy duty truck depot to get clean trucking going. This is in Bakersfield.

They're doing this in a way that avoids expensive utility upgrades because it has on site storage delivering customer savings. We have a lot of improvements happening in battery technologies. One of the companies we funded Sepion as a better separ.

It makes the battery much more affordable and safer and that alone is a 10% savings for battery technologies by Regions is an open source modeling and forecasting software that uses that helps utilities kind of optimize their planning around fhir and building better and safer systems and creating savings.

And let me just close if I could with federal funding because one of the ways I think we can drive costs down is with further federal funding. There was a number of very important loan guarantees that happened. One of them is PGE, which is a $15 billion loan guarantee.

And that alone is expected to deliver about $1.0 billion of savings to ratepayers. So we're hopeful those funds will emerge and will help contribute to a downward force on rates. And I think I'll stop there.

Thank you Chair Holt Shield. Excellent. I'm going to start out with three questions myself and if it's okay with Members, we'll extend this maybe to 245 and a lot of Members will have questions and then we'll get onto other two panels. So three questions from me. I want to start with Wildfire.

Many of you mentioned Wildfire is a big such an increasing and large chunk of our rates and clearly we need to get the biggest bang for the buck in our spend on Wildfire. Comments on that. And you know, we're looking at picking up parts of a Bill from last year on that.

Thoughts on how we get the Biggest bang for the buck.

It's a good question. You're right. It's a significant amount of the Bill and that's what makes it very challenging because you can try to reduce it but only go so far without sacrificing safety investments. Right. And so I think continuing to look for ways to achieve efficiency.

So I mentioned one, wrapping the process of examining wildfire mitigation costs into the grc.

What that would mean is that the PUC and all of the parties who participate in our proceedings could come forward with evidence on what is the best risk spend metric, how do we get the greatest amount of risk reduction for the lowest amount of money. And there is a lot of interest in undergrounding.

Undergrounding, of course, is the most expensive measure and the most time consuming to implement. But there are benefits to it. And doing this in a process that is done consistently with all the other expenses of the utilities could provide a more comprehensive view and allow better results for reducing the amounts of expenditures.

There would still be a cost. And our General rate cases do have large costs which we try to keep stable year after year. But the wildfire costs, of course are driving those. There are utilities working together to try to find efficiency, new ways of undergrounding if you know, if you can do a shallower trench.

And so there are ways to over time improve the cost, the cost of the measures overall. So I think continuing to look for those opportunities, continuing to look for shared learnings and the lowest cost expenditures and make sure that there's no, you know, that the measures are targeted as well.

So if we're doing cover conductor, make sure it's in the right place. If we're doing vegetation management, make sure it's done cost effectively, all of that and oversight and of course involving the Office of Energy Infrastructure Safety to provide oversight of it as well.

Great, thank you. Look forward to working on that issue. My second question, we hear a lot about the peak when you talk about avoiding reliability and avoiding blackouts. We spend a lot of time and a lot of our funding is going to building towards that peak.

I know the CC had a report around demand flexibility, I think recommending say 7 gigawatts of demand flexibility so we can actually reduce that peak, reduce our reliance on on on peaker plants that are often most polluting and increase reliability. Thoughts on that? Chair Hochschild and that report?

Yeah. So the Legislature directed us to and the Governor to set a load flex goal for the state. And that was done a year and a half ago. And that is a 7 gigawatt goal.

I would say this is something we've been punching at below our weight class as a state and we have to do better on that. You're absolutely right. It's directly linked to affordability because the system is built to peak demand even though those super peaks are only a few hours a year.

When we talk about grid reliability, you know, we're really looking at 30 to 60 hours a year when we get to that sort of risk zone. But we have to build the whole system to accommodate that.

And so the ability to shift load, which now with more and more technologies coming on, you have that ability to do pre cooling of homes, to shift when electric vehicles are charging and other things. And of course the energy storage fleet itself. When do you charge that, when do you dispatch that?

And getting really smart about that is fundamental to a smart energy strategy. And we're fully committed to build that up.

Okay, thank you. My last question, you had a workshop recently on if a western wide market could help with reliability and this piece, do you think that also has a role in affordability or not? What is your analysis there?

Yeah, absolutely. So the current estimate of the savings if pathways were to proceed is on the order of three quarters of $1.0 billion a year. That is a decision, of course that is above our pay grade and that really is in the hands of the legislation, Legislature and the Governor. But there are very clearly savings estimates.

And I would point out that, you know, there's sort of a stair step approach, the EIM being the first one, the energy imbalance market. They're already seeing several $1.0 billion of savings from that then enhanced day ahead market and then you know, the full pathways being the final.

Okay, thank you for that. I'm going to turn it over to Nidia, our excellent consultant to help keep track of questions. We'll start on this side. Senator Stern.

Thank you Mr. Chair, and congratulations. It's assuring to have you at the helm here at a critical time in our history. And I would say the same thing to the President and the Chair. I appreciate all the effort we're putting into looking ourselves in the mirror and scrutinizing and digging deep and all these areas you've highlighted.

I agree we need to be doing work this year. Cost effectiveness of Wildfire, the regional efforts demand flexibility.

But you know, the world's changed in the last couple months and the big risk to me that I think I heard missing at least from this conversation so far and frankly from our state's analysis so far is given the federal change and that it Appears the President wants to cut a deal of some sort with Russia to divvy up at least the energy markets of the world.

In Davos, he announced earlier back in January, stating to European leaders, quote, I would make sure you get it. The it is our country's natural gas supply by guaranteeing sources in Europe to sort of have all of our American energy so that we can, of course, enrich oil and gas industries and LNG exporters.

But as the Biden Administration warned on their way out, the impact on American families of this deal with Russia is going to be very, very concrete and real.

The EIA announced on January 23 that they're projecting shortages in Western markets in the coming two years, in 25 and 26, as a result of this push to export American gas to foreign markets. As of last week, I believe the average prices have already jumped 75 cents per MMBtu. We're getting close to $4.

And what that translates to is essentially a doubling of gas bills throughout not just California, but through the Western United States.

The gas that we'd otherwise be using to heat our homes, to, to power our oil refineries, to fuel our factories, to make our cars and glass and jeans and everything else we make with gas would be sent abroad to some foreign country.

And so when we think about sort of how to get ahead of this affordability challenge, I'm wondering, is this a concern on the mind of our state agencies? I know this is a relatively new risk, but things are moving very quickly.

And I just wonder, yeah, at the outset, is this a concern that the administration's tracking at this point?

And is there, I guess, a way to start to get ahead of this and start to quantify potential downstream impacts of a, you know, what the EIA projects is a 2.1 billion cubic foot per day, year on year growth for LNG exports in this country. So how do you see that sort of indirectly impacting California consumers?

And is there a way to get ahead of this?

I mean, it's certainly something that we should be watching and I appreciate you highlighting it here. You're right that it's quickly evolving. California, the gas, natural gas market obviously is part of this global economy. Gas customers currently are protected by quite a bit of hedging by the gas companies.

But you know, you're saying, and I think this is appropriate, Senator, let's think ahead and let's think beyond the supply that we have locked up now and what are prices going to look like in the future.

So we do have a staff of experts in this area that have been working on gas issues for a very long time, CEC does as well. We work closely with them. And so at this point it is monitoring and being aware of the situation and thinking about whether there are protections that we need to put into place.

On the electric side we have requirements for long term contracts. So just for protection against price spikes and changes in the market, this means that we sometimes and we pay for capacity. So that means there's a cost to that.

And at times it could be cheaper to buy on the spot market and leave ourselves open to the market forces. But this. But in the electric side we look at it as protection and stability. On the gas side we also have hedging as well, but there's a little bit less control over the supply on the gas side.

And you know, I know we've been through this given the Eliso Canyon context and that that storage facility is seen in many ways in Southern California as the hedge or as the lone hedge. But it's over time not proven to be a particularly effective hedge, at least in other past shortages.

So the last time that Putin invaded Russia, we had gas spikes throughout the west. And we still don't have the results of an investigation on that gas spike that we saw. I think it was in the winter. You'll have to remind me. Is it 2018? 2017?

182122.

Sorry, 2122. Right. So those spikes. I know FERC never finished their investigation and the PUC still has an investigation into those spikes underway from the last gas shortage. Is there a timeline on wrapping that investigation up?

We did learn recently that FERC has published a report on the status of their investigations. And on this one we understand that they won't be taking further action. And in our process we do have an open proceeding. We issued a white paper, the first segment of a white paper. We expect a second part of that.

Part two coming soon. The first part was more of a informational examination of the current status of the system. But we expect to.

I appreciate. No, and I read the first part and we talked about this at the Aliso Canyon proceeding before. I just don't know how soon is soon.

The reason I'm pressing, and I think it deserves the full hearing before this Committee is until we understand how the wholesale gas market its work, we may be going in blind to a very different energy market than we've ever seen.

And I just, I don't want to repeat those mistakes again and have people have like $1000 gas bills in the middle of winter.

That they saw coming out of nowhere or all of it to flow down to electric or gasoline bills and suddenly, you know, the state's renewable energy goals are to blame or the Governor is to blame, or whomever it is, when meanwhile we're sending American families gas off to some strange foreign new world order that I did not, you know, I did not endorse.

So I just don't know how to get control back for California consumers. And I think what would help to me is if we can start to quantify what those potential impacts could be. Say based on the EIA modeling that's out there.

If they're saying a 30% increase across the west, like what does that actually mean for people, that kind of info? Maybe it's dpmo, I don't know.

So Senator, to your question1.0 I would make, you're absolutely right. The risk is high of volatility. I think it's really important to note decarbonization is De risking. Okay. There is no fuel cost for solar and wind and geothermal facilities. So we have about 100 gigs of capacity on our system.

Today it's 40 a gas, 60 clean. Those gas facilities are subject to the price volatility as you're talking about. Renewable facilities are not. So as we progress, our risk profile goes down.

And I guess to wrap, Mr. Chair, that slide you had to your point, the 80% reduction by 2040 will inherently reduce that volatility.

That's right. Because currently electricity generators are still reliant on natural gas at some times of the day and year. And as we reduce that reliance, we're also reducing reliance on natural gas, which we largely import, as you know.

Thank you. Okay, Senator McNerney. And then I've got McNerney, Achilletta, Wahab.

Well, I think the chair and I thank the witnesses for your testimony. Sorry I missed the PUC's early testimony, but my, my questions are going to be directed to the PUCC this morning or this afternoon. You know the wildfire risks. Wildfire mitigation costs are clearly one of the largest impacting rates today.

But much of that is a result of deferred maintenance forest thinning line management that should have been done over the last several decades, during which time large bonuses and salaries were paid to executives in the investor owned utility companies.

So given the increased burden on rates and the benefits shareholders have reaped over time, is it time to revise how much of the wildfire mitigation cost should be borne by taxpayers and how much should be borne by stockholders.

Thank you for your question. And you're right, some of this work could have been done earlier. And San Diego Gas and Electric did in fact start the journey of increased wildfire mitigation costs quite a bit, as much as 10 years before. The other utilities, they also saw their rates start to rise sooner.

And, you know, I think kind of in context, what we're asking for here is the ratepayers to pay for climate change impacts. This is a significant increase in the work that needs to be done because we're seeing different conditions on our planet. We're seeing wildfires act differently.

We're seeing winds that we haven't seen before and temperatures that we haven't seen before. The system is not ready for that type of. Is not stable enough for those types of conditions. When we think about the energy system, the best thing to do with affordability is very little change.

Use our existing assets, maximize our existing assets, place load and generation on the best place within the system and share the supply. And the costs are distributed to everyone. In that way, they can be controlled. What we're seeing now is a disruption in the current pattern of electricity services, largely fueled by climate change impacts.

I think that finding other sources of money to pay for climate change impacts that California households are bearing alone would be beneficial. And in any instance we can.

For instance, the Legislature worked in previous years in creating a strategic Reserve, which was a very thoughtful measure to deal with the extreme heat events that were seen seeing, that have never the spikes in demand, which, as the chair noted, that's what drives energy planning.

If we can cover those spikes with supply that is waiting and available for when we need it, and to not place that additional reliability burden on ratepayers, it's a very valuable shift and it's a very valuable protection of California households.

So I think to the extent that we look at services, basic services provided by utilities as cost effectively as possible, makes sense for households to bear that. And with that, there should not be large increases in rates.

But as we see these unusual conditions that the system has to address very quickly, the utilities have to make very fast investments, and they started ramping up a few years ago at the Legislature's direction. Very thoughtful. That's a strain on California households. Any support we can get from the Federal Government would also be.

I mean, I heard about climate change in 1969. These utilities should have been planning ahead. And I don't feel like you answered my question. Should we be shifting some of the burden to shareholders instead of putting it all on ratepayers and I mean, yeah, there's going to be some federal funds. Hopefully we're not sure of that anymore.

But I don't think you answered my question.

So certainly open to, you know, legislative if the Legislature has ideas on that. The rate payer, the control of investors that we have at the PUC is to determine their cost of cap, the utilities, cost of capital proceeding. And that's where we set the amount of of return on investment that the utilities achieve.

And that's the benefit is for shareholders. It's usually reinvested in the system, but that is the benefit to shareholders. So we decide the amount of the cost of capital. We've been decreasing that cost of capital over time. It's set pursuant to direction from the courts and we do it in a litigated process. We've done that recently.

We have another one coming up through our litigated process. We're trying to inch that down. It's set based on the lowest amount possible to allow for utilities to attract capital. So that's where the PC would control the kind of the benefit to shareholders.

I don't necessarily have the ability to say that ratepayers shouldn't pay for wildfire mitigation or I can't direct a shareholder to pay for wildfire mitigation.

Mr. Chairman, I have more questions, but can I ask the witnesses to respond in writing to questions that I could submit?

Yes, certainly. Absolutely. Absolutely.

That is a good thing we should take advantage of.

Thank you. Given that I'll yield my time back to this. Excellent. I appreciate that. Yeah. In the interest of time, especially actually when we get to the last panel, we have like seven amazing presenters.

So we ask people to try to limit to one question for now, but if you stick around, you will get all your questions asked. Senator Anciletta, Next.

Thank you. Mr. Chair. My question is we all know it's very expensive to go underground, but because of the fires that were just mentioned and so on, is there a pathway to start doing that between now and you mentioned 2040 as being the end zone. Are we on that path?

Is that part of your project that you have lined up or are you totally walking away from that?

All of the utilities have undergrounding projects proposed and incorporated as part of their planning. We also expect to have a new process in place that was established by the Legislature SB877 to provide for the utilities have the option of presenting to the PUC 10 year plans for undergrounding. We haven't. That process is still undergoing.

We're still undergoing that process. I would expect to get plans from at least PGE for a longer term undergrounding plan.

And because of the new technology we have today versus 20 years ago, that the infrastructure that you're rebuilding in some of the areas, Palisades and so on, are they going to be part of the new, or are you going to just redo it the way they were rather than using new technologies?

I think that exactly what it's going to look like is still to be determined. Right. The utilities, I expect, will plan for new technologies, plan for new capacity, plan for electrification so that the system is able to take us into the future.

I don't know the answer to the question about whether those utilities would be undergrounded, if that's.

That's really what I've heard You're preparing with new technologies to. That's right, yeah.

And 11.0 just to add to what President Reynolds said, the thing with undergrounding, it is very costly, but once the wire is undergrounded, your maintenance costs go way down because you're not having to do vegetation management. And that line will last longer because it's not getting weathered as quickly.

So there are these long term operational cost reductions which are valuable.

Yeah, greater. Thanks for the buck, Senator Wahab.

Thank you. I appreciate you guys being here. I do have a couple questions. So it's kind of in the theme of what I'm trying to ask. So when infrastructure is built, the costs are passed on to the ratepayers. Additionally, the IOUS receive a rate of return. You referenced it earlier. What is that rate of return?

It varies. For the investor owned utilities, it's around, for the portion that is put into the rate base, it's around 10%. Yes.

When was this rate last evaluated?

We had a... Our last test cycle of the three year, I believe was in 2023.

Okay. And I want to highlight. So PG&E, you know, I live in a PG&E zone. More specifically, they have a significant chunk of the territory in California. I just want to ask, do you believe that PG&E is a monopoly?

For the wires, yes. For the distribution system, it is. For the transmission system, we have a process where there are private developers who can also build transmission. But for the, we only have one set of distribution wires.

Okay. And then you mentioned a 10 year plan for undergrounding wires, and you stated that you know, you expect supposedly a PG&E plan. We've had conversations with PG&E. We understand that they have submitted plans before and they haven't received responses. There's a delay. Can you elaborate a little bit about that?

It would be great to follow up on the specifics, and I'm happy to do that with your office if there is any delay that we could help with. We have received requests for approval of forecasts for undergrounding as part of PG&E's GRC. That has been decided, and they're pursuing those projects that were approved.

Okay. And clearly we haven't had the first wildfire being in LA. Right. We've had multiple wildfires as well as disasters in general for a number of years at this point. Correct? Okay. So with that in mind, I want to highlight that, you know, we have requirements that basically state that undergrounding needs to happen.

This is a priority. We've seen it multiple times as a request. We've talked about it for a number of years. My deepest concern in this is that, you know, and I don't want to constantly use PG&E as an example, but PG&E is in my area, so I will use them for now. They have about 10,000 critical miles that they are required to underground that they have identified, saying that this is critical to protect homes and residents and much more. In the past couple years, the first year they did 100 plus miles. The second year, 200 plus miles or 300 miles.

We're hitting roughly 400 miles, something like that. If we were to jack that number up to 1,000 miles a year, we would see in 10 years the 10,000 miles that they have identified as critical lines to underground. They have over 100,000 lines, miles of line that should be considered as well, not just the 10,000. Do you have any commentary on that?

We would consider a request for ratepayer funding for those types of projects. When we received their last request for the GRC, we provided funding to take them through the GRC period. We do expect them to come forward with another proposal and they could certainly increase the number of miles in the request.

So you talked about an increase to ratepayers. And I will say that PG&E in particular had six rate increases in 2024, all approved. And this particular hearing is about addressing electricity utility bill affordability while advancing the state's clean energy goals. Why did you guys approve 6 rate increases in a single 12 month period?

So we receive requests to recover costs. We never fully grant the request. So what we do is we look at the request for expenditures and we gather evidence from other parties. We litigate how much the request should be, much of it should be granted, and we make decisions based on the evidence.

As I mentioned, there were some decreases over the past year. Those don't come to us, they just fall off of rates. So what we look at is what are the expenditures. We don't want the utilities spending nothing because they have work to do throughout the year. They have to serve their customers. So everything we do is rate increase because we're approving the cost that they need to collect for customers.

One final question. We'll have PG&E and others up.

I think this is important for residents, and I want to be very clear about this. You know, I want to highlight that PG&E as well as several of the other companies that have been discussed here, has actually made billions in profits. Is that part of your analysis when you are doing six rate increases?

And I want to flag this because those on a fixed income, our senior population, those on Social Security, those with a even union job, a good paying union job, do not get 6 increases to their pay. And yet PG&E gets 6 increases to be able to toss onto ratepayers. Can you explain?

Those are... So we're approving work for the utility. The work that the utility is requesting to do. It is paid for by ratepayers.

But what is PG&E's pay into this or any of the other companies when you're saying you're analyzing what they're paying into versus what a ratepayer is? Ratepayers are not a bank. I'm just going to be very clear about that. And I've been hearing more and more in previous presentations.

I will say I'm deeply disappointed in the fact that ratepayers are being treated like a endless bucket of money because they are not. When I have residents in my district being charged $700 a month plus per month on their utility bills. Right. And the math doesn't matter to the average person. Right. And we serve the average Californian.

I want to highlight this because you talked about service. Right. We're seeing poor service. And I really want to highlight this because in the Bay Area this past week, it rained a little bit and energy got shut off. Right. They can't even keep the lights on in a metro area like the Bay Area. So where's the service to the customer? Where is the, you know, great affordable math behind these rate increases? 6 in 12 months. So I just want to understand the redundancy and where that math is when you guys are...

Thank you, Senator. We'll ask Chair Reynolds to go ahead and answer that, I'm sure. And we've all shared those frustrations. We share your frustrations. We certainly hear those from our constituents as well. But I'll ask her to answer them. We do have to move on.

I think it was well stated. I'd like to them do better, too. And we do make efforts to reduce the amount that they're seeking as much as possible and force them to be efficient and force them to do a better job.

But with six rate increases all approved.

Thank you. We've got Senators Rubio, Hurtado, and Allen.

Thank you, Mr. Chair. I don't want to belabor the point. I really want to commit my colleague from Hayward, which, you know, she stated some of the comments that I wanted to address. But I also want to bring it back to ratepayers because clearly our communities are struggling.

You know, I have families that are choosing to put food on the table and then eat in the dark because they think that's going to make the difference. Right. I heard you say earlier that ratepayers should pay for climate change impacts. That's what you believe, but it's just never equitable. If you go deep into our communities, you know, low income, and I believe my colleague just stated, you know, seniors, fixed income, these are people that are struggling.

And when we talk about what I see in terms of, you know, let's take Christmas, for example. We have homes that are covered from corner to corner and lights in the front in the backyard. And you have these little apartments, they can't even afford to turn on the light. Like it's just not equitable.

And as my colleague just stated, we have to figure out how to bring it to the ground level. Let's look at the people, let's look at who they are, what can they afford. We have just families crying out for help right now. A $500 bill right now breaks the bank. Everyone's one check away from being homeless. And so we're tackling so many issues at once, trying to keep them in their homes, but yet they're getting these $700 bills. This is just not sustainable.

So when we talk about climate change and things that we just need to do for the sake of doing. And I'm not disagreeing with you, that we have some conditions that are beyond our control, but we can't treat everyone the same. And so my hope is that we do look at what's happening in this regard.

I also understand we have to underground. Right? You know, I'm in the forefront of wildfires and trying to mitigate, you know, what's happening in California. But at the same time, it's so easy for someone like you and I to say, yeah, let's just do it, or, you know, the utilities.

But then for the average ordinary citizen that doesn't have that extra penny to give, that is breaking not only the bank, it's breaking their families, their spirit, and they're going to end up homeless. And so we need to figure out how to take this into consideration and just not make it as, you know, business as usual. It cannot be business as usual. We have to treat it like it is. Disparities in different communities with different incomes, and I just hope that you pay attention to that.

Thank you for that, Senator. And I didn't mean to suggest that I thought ratepayer should pay for climate change impacts. What I meant was, under the current system, they do. But I agree with you. This is... We need to look at how it's impacting ordinary people every day. A third of the customers in the IOU territories are on subsidized rates, CARE and FERA rates. A third. It's a large number of people.

Thank you, Senator Rubio. Vocal point for your district. And that's really our task for this year, really is. That's our task collectively is a fair way to lower that. We have five minutes. We have two more Members. Senator Hurtado.

I will try to make it quick. Thank you, Mr. Chair. I know we heard a lot of explanation and justification in terms of the details of how this all is, how we got here. But I really want us to focus, I want you all to focus a lot more on people because they're really hurting.

And it's not just lower income households. We're talking households of all incomes are struggling because of rising cost in energy, rising cost when it comes to food. And the agency that you guys, you know, oversee that are part of, it's, you have a lot of power. You have a lot of power to do good for people, but you also, the decisions that you make also have the ability to create a lot of damage. And I know that nowadays we talk a lot about democracy and our freedoms. Energy is a critical sector.

If we undermine energy and energy security, we're undermining our freedom, our democracy. And so I'm hoping that you guys take this a bit more seriously about how Californians are being impacted, how they're hurting at this moment. And I do have a couple of questions that I'd like answered.

You can answer them if you can today and if not, I'd like them in writing. The first one is, you know, what policies, if any, exist to prevent the CPUC or other officials that have major purchasing or procurement authority from investing in the same energy companies they regulate? That's the first one. The second one is like, where can I find information to some of these contracts that are being procured? And then caps on rates. Did we have it before and if so, why were they removed?

So if you want to pick maybe one or two of those and also can respond in writing as well.

I'm happy to follow up in writing because I want to make sure we get to your questions and provide an accurate answer. There are rules against conflicts of interest and certainly any financial interests, but we can provide you details on that. Maybe it would be best to respond to in writing. Would that work for you? All right.

Okay. Thank you. Senator Allen.

Well, we all have, I have a bunch of questions, and I know we don't have time, so I'm certainly going to be submitting a number in writing as well. So the 10% rate of return, different for every company, is that based on risk models? Is that the idea?

It's based on economic information about what the ability to attract capital. And it is based on risk to some extent. And California has a higher risk factor because of this wildfire reliability liability issue. So, yeah, we litigate that in a proceeding to look at what is a the lowest reasonable rate of return for the utility according to direction from the courts.

Okay. So given your role, how do you feel when you see these massive profits that have been described by some of the utilities on the backs of massive increases that we keep passing on to ratepayers? What does that... How do you square those in your own work?

So, I mean, I sometimes feel like we're the only ones trying to protect ratepayers. We're asked to do a lot of policy work, which is also important, and put it on ratepayers. The rate of return is, as I described, is something the utilities do collect, but is usually reinvested in the system.

So the utilities have not been paying out dividends, they're starting to now. And so that would be the, you know, the payment out of those amounts of return. But I, you know, I think for one you should ask the question to PG&E. But you know, if you're asking whether it's easy to see. No, it's whether it's easy to see rates going up...

They're a private company. It's their job to make a ton of money for their investment.

We're bound, or not bound. We are governed by the case law that requires us to allow them to have a reasonable rate of return to attract investment in the system. And so that is our role in that profit. We make those decisions as part of our process. And we have been... And something we try to do is to ratchet that amount down over time and get it as low...

Have PG&E and TURN coming up soon, so we can ask. I'm sure we'll have thoughts on this.

A couple, a couple, on those lines. What is your take on the current conversation right now about performance based profits? Obviously right now their profits are tied to certain capital expenditures, which then creates this perverse incentive to overspend on capital in order to increase the amount of profit generated.

What is happening? I know there's a lot of people that are bringing forward this idea of performance metrics instead, like outage reductions, GHG cuts, those kinds of things as a way to compensate them for good, for good performance, as opposed to the infrastructure build out, the expensive infrastructure build out.

Yeah, I think it's certainly an interesting area to explore, and I am open to any way to reduce that rate of return and get them to do things more cheaply. I guess the question is would we give them more than what we see as necessary to attract capital? So we're trying to give them the lowest possible. Would we give them more than that to incentivize them? And then would that cause them to only do those things.

... Real gains for the public, maybe people would feel better about it. Right? I mean, if it was actually tied to reliability and environmental benefits, wildfire mitigation in a way that people can actually see. One other final question. We sent a letter, just get your thoughts about post fire decarbonization. What are your...

There are folks out there that are that want us to look into the question of in a fire rebuild, going all electric in those neighborhoods. Obviously people could still bring in their own gas if they want to personally. But there's a massive cost associated with rebuilding all the gas lines.

There's some evidence to suggest that the gas infrastructure in both of the fire zones helped to exacerbate the ferocity of the fire in a couple of cases. And there was some safety issues involving having the massive effort of shutting off all the gas. Is that something that merits exploration? I'll ask that of both of you.

I'm hopeful that customers will choose to go to electrify as part of the rebuild. There's an opportunity here, right? The gas company still has a duty to serve, statutory duty to serve. My understanding from what the gas company has made public is that the mains are in relatively good shape, the underground lines, and it really is the connections to the homes that need to be rebuilt.

Just to build on it. So it's about $5,000 to run a gas pipe from the distribution line into a house. When you go electric, you avoid that cost. And what is happening in new construction in California, it is electrifying rapidly. So 82% of new line extensions in 2024 for new homes were all electric.

That's up from about 1% five years ago. So the builders are moving that way. And that has a lot to do with some of the technology advances for electric heat pump technology, for space heating and water heating that have made a lot of improvements as well.

Because it does seem as though the underground infrastructure, when we talk about the high cost of undergrounding, and I'm certainly, one of the things we've been interested in you pursuing also more as more cost efficient projects, like, you know, when it comes to covered conductors, fast trip settings, those kinds of things, as opposed to some of the more expensive infrastructure projects that have been asked.

But one of the major drivers it seems in an urban setting of undergrounding is the existing gas infrastructure that they have to avoid. So if it weren't there, if it weren't being utilized, then that could reduce the cost of the undergrounding process. Obviously there is this duty to serve, but it's based on this idea that there are all sorts of things that are necessary to modern home life that cannot be served any other way than by gas. But as we know, that's changing rapidly. And do you think that the statutory duty to serve needs to be revisited?

So maybe a final answer here and then we need to move on.

I think it would encourage electrification or it encouraged forced electrification. So it's... I think, you know, it would be helpful for some of the electrification projects because if you have one customer who wants gas, sometimes you end up having to invest in that infrastructure. Right. So you would get some efficiencies.

Do you want to have the final word, Chair Hochschild?

I just wanted to respond to Senator Hurtado's question on conflict. So I don't have any energy investments. I don't know that any of my colleagues do. And we have a strict conflict screen that our chief counsel's office runs for every vote. And if there's a conflict or even an appearance of a conflict, we were recuse. And we're really rigorous about that and will continue to be.

Well, thank you, Senator, for a lot of questioning about decarbonization in the rebuild. And you're obviously on top of that in your role. Maybe give our Vice Chair the chance for the final questions.

So I want to address the timelines in which you folks make decisions on the rate increases for the companies. It's my understanding that it takes quite a while to actually have these approved. So kind of curious, what causes the delays within the CPUC in order to have these decisions made? Is it staffing deadlines, administrative hurdles?

Is it the workload? And is there something that the Legislature can do to actually facilitate that? Because it's my understanding that when these delays happen, the costs sit around. And so it's my understanding that there's cases where people do not, or people. The companies don't get reimbursed until about four years later.

So starting with there's, not to put it on off of the PUC, but there is some delay between when the costs are incurred and when the application comes to us. When the application comes to us, there is a process that we have to follow. Some of it is set in statute in terms of our, we have to have certain due process requirements that take time. Other delays can happen if parties ask for extensions. So parties may want more time to respond to something that the utility has submitted. Other delays are caused by staffing. As you said, the PUC has limited resources.

We have to assign administrative law judges to each proceeding. And we have a limited number of judges. We have a limited number of staff. And so there is allocation of resources within the PUC. Sometimes we ask for additional evidence if the application didn't include sufficient evidence to make a decision. So there are a number of reasons that can extend that time frame.

So just, so in your opinion, is there anything that the Legislature can do to actually facilitate your area of decision making and the logistics behind your decision making?

I mean, we could follow up on that, certainly. We're welcome for additional staff. We try to be very efficient at the PUC and not have staff who are not working very efficiently. But additional staff can always help. And we have seen with granting of additional staff requests that we have made in the past, we've seen faster timelines because of that in certain areas. So that's one thing that can help. There are some process streamlining that could be done that's set by the Legislature.

I would be reluctant to say here which ones of those make sense because, of course, you know, one person's process is another person's ability to participate and have due process in the proceeding. The parties that participate in our proceedings like to have the opportunity for hearings, like to have the opportunity to provide testimony. It helps us make decisions. But there is a time involved in that. But it's certainly open to a conversation on streamlining.

Great. Excellent. Well, I want to thank you both, thank my colleagues for some good, tough questions. I'm sure we'll be talking more throughout the course of the year. Thank you very much. I'd like to transition now to our Public Advocates Office for their annual update. Members have got a copy of that. Invite up Linda Serizawa, the Director of the Public Advocates Office and team.

All right. Can you hear me?

Okay, thank you. So good afternoon, Chair Becker and Members of the Committee. My name is Linda Serizawa. I am the Director of the Public Advocates Office and I was appointed Director in November of last year. With me here today is Mike Campbell.

He is the Deputy Director of Energy and also Chris Ungson, who is the Deputy Director of Communications and Water. Before we get into the presentation, I thought it might be useful for me to explain the Public Advocate's office: who we are and what we do.

So, first of all, we were established by a statute to advocate on behalf of customers of the investor owned utilities or the privately owned utilities. We focus on affordability, but also consistent with reliable and safe service as well as the state's environmental goals.

We primarily carry this out by scrutinizing every utility proposal that could increase cost to utility customers. And we also provide our own proposals, alternative proposals that are often lower cost. The Public Advocates Office is part of the Public Utilities Commission.

However, we are independent in that we establish, set our own priorities, we conduct our own research and analysis, and we develop our own policy positions.

And along with other parties that intervene at the CPUC, we also intervene and we have to follow the same rules that they follow, including how and when we communicate to decision decision makers at the PUC. So a common theme in our advocacy across the areas of electricity, natural gas, communications and water is affordability.

And today, while I will highlight our 2024 activities in these four areas, I will also focus on the challenge of increasing electricity rates and what can be done about them. So, moving to our next slide, I'll start by highlighting our 2024 activities with water. Access to safe and affordable water is essential,

but many customers face rising water bills due to costly infrastructure investments, many surcharges and system consolidation or mergers and acquisitions. We conduct rigorous reviews of the utility's proposed budgets to ensure utilities justify every dollar spent and that ratepayer money goes towards necessary cost effective investments.

In 2024, we successfully reduced the requested budgets of 4 water utilities by over half a billion dollars. We continue to push for rate making reform to eliminate unfair and unpredictable surcharges on customers bills. And the utilities use these. The water utilities use these surcharges to recover costs above their authorized budget.

We also challenge water utility mergers that could increase costs without clear benefits to customers. Our goal is to hold water utilities accountable so they operate efficiently while keeping rates reasonable for customers.

Moving on to Communications. Access to affordable and reliable phone and broadband service is critical, especially as more types of essential services move online, such as medical services and learning resources for students.

In 2024, we led efforts to modernize the framework for the provision of basic communication service, also known as a carrier of last resort, to ensure that every Californian, including those in rural and low income areas, have access to reliable phone and broadband service.

We also monitor state and federal broadband grants to ensure public funds are spent effectively and improve affordability and access. We advocate for affordability benchmarks to prevent excessive broadband pricing and ensure state subsidized providers offer lower cost broadband plans for Low income customers.

And Moving on to Energy. We work to ensure Californians have access to energy that is not only safe and reliable, but also affordable. We challenge unjustified cost increases and push utilities to prioritize spending on projects that provide benefits to ratepayers.

Our role is to make sure that ratepayers aren't overpaying for necessary investments and that utility spending allows aligns with affordability, safety and the state's energy goals. But even with all these efforts, electricity rates have risen significantly over the past decade, which is why it's more important than ever to address the cost drivers head on.

So now I'm going to move to talking a little bit about where electricity prices are today and the cost drivers for electric rate increases and what we can do about them. I just also want to note that we just published our fourth quarter rate tracker for the three large electric utilities and that's on our website.

So I'll start with where we are today. This chart shows that over time electric rates increase for the three largest electric utilities, expressed in percentages here. Particularly in the last half of this decade, those increases have far outpaced the rate of inflation. The rate of inflation, or cpi, is the lower bar, the lower gray bar.

And someone had mentioned earlier, I think it was Chair Becker had said that it used to be where we could say that, well okay, "in California our electricity rates may be high, but our bills are low". And at the time that was completely true because of our aggressive energy efficiency efforts and our mild weather.

But we can no longer say that now it's both electricity rates are high and bills are high and that is threatening affordability of electric service. So moving on to the next slide, this is virtually the same chart as I showed you in the previous slide, but it's translated into the rate per kilowatt hour.

And what this shows is the point at which electricity rates will be just as or more expensive to fuel an electric vehicle than a gas vehicle. The gray bounded area at the top, that reflects the price range for a gallon of gas. So $4.60 to $6.

The closer those lines that represent the electricity rates get to that gray bounded bar, it means that electric vehicles are going to be much more expensive to fuel. So you can see that in addition to threatening affordability, increasing electricity rates also threaten the state's electrification goals. Moving on to the next slide.

So President Reynolds went through some of this information already. This slide shows five major cost components that are embedded in the customers rates and bills. And so the question is, why are utility costs or rates increasing? That's because there are three right now.

Three primary cost drivers: wildfire related activities related to veg management, or tree trimming, undergrounding and the other system hardening measure called covered conductor, and costs related to restoring service, restoring infrastructure after a catastrophic event like a wildfire. The second cost driver is transmission and distribution costs.

Distribution costs are increasing due to expansion, the need to expand the system, upgrades, maintenance, et cetera. And then the third cost driver is incentives and subsidies to Fund certain programs. So moving on, the most important question is what can we do about this?

And what we have identified is that there are four policy levers that need to be pulled and they all need to be pulled. That's because some of them will provide immediate rate relief, such as reducing the utility's expenses on operations and maintenance.

And others will provide longer term benefits over time, such as reducing the financing costs for major infrastructure projects as those costs are collected over time, are recovered over time. I'm going to go a little bit more into the policy levers, do a little deeper dive. So the first lever is to reduce operations and maintenance costs.

This means the day to day costs that the utilities incur to run their systems. Savings here will be reflected in customer bills the same year those reductions are authorized. This is most effectively done by focusing on the CPUC's General rate case process.

And whenever you hear General rate case, just think primary budgeting process, because that is what it is. And you've heard President Reynolds say there are a lot of rate recovery requests from the utility or cost recovery requests from the utility that are falling outside of the GRC process. Currently there are seven pending proceedings outside of the GRC.

Five of them are requesting over $1 billion each. That's outside of the primary budgeting process. So we think pooling these types of requests back into the General rate case, again, Primary Budgeting Forum, allows for prioritizing ratepayer funding, requires the utilities to present comprehensive proposals on how they intend to operate safely, reliably and cost effectively.

All major corporations do this. The utilities should be no different. Moving on to the next lever, lever 2. Currently the utilities are financing their major infrastructure projects such as transmission and the most expensive way to ratepayers. In part because the utilities earn a return on equity for these investments, which puts their financing of projects at premium.

We should look to lowering costs of major infrastructure projects by lowering the borrowing costs of financing these projects. And I know that you have another panelist coming up, the Clean Air Task Force. The Clean Air Task Force, which is going to go into much more detail about this. So I won't go into the detail.

I would also actually recommend considering including undergrounding in this policy lever. It is so expensive at an average cost of over $3 million a mile to underground. Our conservative estimate is that using lower cost financing could save customers $41 million in 2025 with $310 million annually by 2026. That's conservative.

Now I would also caution not to think of lower cost financing like securitization in an overly broad way. Securitization would help with affordability for those projects that have a rate of return. Do not securitize routine costs such as those related to operations and maintenance. This would be akin to giving the utility a credit card.

And you all know what happens when you don't pay your credit card bill off completely. You end up paying more. So let's move on to lever three. And this has to do with phasing out repair funding of programs that do not provide benefits above and beyond what the programs cost. In other words, they're not cost effective.

Unfortunately, many energy efficiency programs fit into this category. And to be clear, energy efficiency is a very important measure and should continue to be pursued. But many energy efficiency programs currently funded by ratepayers do not directly relate to providing safe and reliable service, nor do they advance energy efficiency.

There are over 200 of these programs that are not cost effective or are not required to be cost effective. So at minimum, there should be a sunset date placed on the funding for these programs. And we certainly should avoid establishing new programs that are not cost effective or have no cost effective requirements.

We also suggest setting a budget cap for energy efficiency programs at 2020 levels. This would provide immediate reductions to customers of over $390 million in 2025. Moving on to the final fourth lever is to reevaluate subsidies and rate structures. One of the largest funded incentive programs is rooftop solar, otherwise called the Net Energy Metering Program.

Rooftop solar is beneficial and it is key to advancing our energy and climate goals. However, because of the way the incentives are designed, particularly for systems that were installed before April 2023, and April 2023 is an important benchmark because that is when the Commission, the PUC, adopted a revised program that lowered the incentives.

So those incentives right now that are being funded by households without solar, the subsidies are amounting to $8.5 billion annually and they will continue to increase again because of the way the subsidies are designed.

So that means that even if there were no solar installations today, the subsidies, no new installations, the subsidies would continue to increase because of the way the incentives are designed. For PG and E customers without rooftop solar, 27% of their bill is paying for this subsidy to rooftop solar customers.

That's $51 of $193 bill. For the Southern California Edison, 21% of their Bill is going to this incentive program. That's $33 of $155 bill. I don't have the figure yet for SDG and E. we're working on that.

But as you can see, we really need to address the situation and there are some things that can be done to improve the program. First is, upon sale of a house, require the system to be transferred to the revised program that was effective April 2023. Lower incentives, but still very good incentives.

It will still support the growth of rooftop solar. The other is cap compensation for excess energy at the retail rate in effect when the system was installed. Again, it still facilitates the growth of solar, but it reduces the cost to customers who do not have solar and that is the majority of the population in California.

So with that, that's the four policy levers. And I just want to say that there is not just one that needs to be pulled, it is all four.

Thank you. Thank you very much. Very clear presentation with lots of very concrete ideas advice. Vice Chair, before you go, do you want to quick question before you go?

No. A lot of good information today. I think a lot of food for thought. Really appreciate the comments that my colleagues have stated and I truly appreciated your presentation today and I look forward to seeing more information. We're going to be following up with a request for more information from your Department.

But thank you for being here.

Great. Again, I think that's very clear. We'll go to Questions, but I'll skip mine in hopes of getting to the next panel, too, because there's a lot of good folks coming up. We'll start with Senator Rubio.

Thank you, Mr. Chair. Well, thank you for that presentation and I appreciate, you know, some of the comments that you made.

And, and I guess it speaks to my earlier comment that when we talk about, you know, climate change and what we can do to meet our goals, a lot of the times we keep forgetting that group of people that cannot afford to participate.

And that's been my, my challenge, my argument, because as much as we, we want, want to meet our goals and we want to make sure that everyone has the ability to participate. I mean, you just highlighted the point for me. You're saying that 27%

I'm sorry, that, you know, those that have solar are getting the subsidy and those that cannot afford to participate and get solar, they're paying into, basically they're subsidizing those that can afford it. So this system is really not set up to deal with those in the lower income bracket.

They're not set up to help those that will never be able to afford the solar. It's just not set up to, you know, for those that can't afford the home to go that direction.

And so, you know, I want you to, I know that you said about the sale of the house, can you give me a little bit more? I mean, like I said, this is an issue that's been really, you know, present in my mind, especially because I, like I said, I come from a very low income community.

I mean, I have a long, a large community, but a lot of the communities that I service, they're just really falling behind to the point that, you know, it breaks my heart again, they're just not able to eat, they're not able to, you know, to do anything. We're really putting so much on them.

And every time we try to move forward with their goals, it seems like they take three steps backwards. So can you give me more ideas? You talked about the sale of the house and what we can do. Can you share a little bit more? Because that's the group that I'm trying to reach right now.

That's the group that can't afford the discussions we have on this dais. You know, we all understand it, we all get it, we all could afford it, but not that group of families who are in the verge of being homeless. So can you give me more ideas on how we can support that group of families?

Absolutely. Yeah, I completely understand. And in addition to burdens placed on low income customers, increasingly burdens are placed on middle income households as well. So we are expanding our focus on that group in addition to low income communities.

And this is why I say all four levers need to be pulled, because not everybody can have solar on the roof. A lot of customers don't own their homes. They live in, you know, apartment houses. So they don't have that control or you just can't afford it.

And so we need to look to lowering costs in every way possible. And we need to look to bringing the benefits of clean energy to all customers and make sure that they're not just focused on certain customers. And so that's why we developed this framework, frankly, of the four levers, because we think they all will.

If you pull on all those levers that I just walked through, we will at minimum stop the rate increases and we hope bend that cost curve down for everybody, but in particular the low income customers.

So that's, I'm saying, you know, we need to scrutinize the utilities budgets for every nickel and dime we can find in savings.

Okay, we'll take three more. So we get to some of the great presentations coming up. I got Senator Hurtado, McNerney and Wahab.

Thank you. I just really appreciate you bringing up also water and affordability. And I just, I know this is, we're kind of focused in on electricity, but if you can comment or speak to some of the rate increases that you've seen or users have to deal with this year over the years. Anything you can comment on?

Yes, and I'll do this so quickly. So one of the things we're most concerned about is what's called bill volatility, where customers are getting hit left and right with surcharges on their bill.

And it makes it very difficult for households to budget, you know, to figure out how much am I going to pay on a regular basis for my water. Those surcharges, they collect funds above the water utilities authorized budget. So when the PUC authorizes what's called a revenue requirement, this is basically what they can recover from utilities.

You'd think that would be enough, because it's based on forecasted costs of operating their system and forecasted investments. But what ends up happening is because of this adjustment mechanism that the utilities until recently have been allowed to use, they can come into the PUC and say, we're not, we're not collecting enough.

We need a surcharge on the bill over and above the revenue they were authorized to collect. And that is what's causing these ever increasing bills.

And just to kind of continue on that, so these surcharges are based on forecast. Is that accurate or not necessarily the surcharge?

Go ahead.

No, they're not based on a forecast. They're based on actual expenses at that point and then they see cost recovery afterwards.

So what ends up happening is the utility doesn't really have to forecast that accurately because if they know that if they don't, they can make it up through a surcharge and that shifts the risk of poor forecasting from the utility to the ratepayer. Thats not fair.

Thank you. I know you've been a big protector of our water supply. Unfortunately, the climate bond we put money in for additional clean drinking water, other things, but again we have to make it affordable. Okay, I've got a quick one. McNerney, Wahab and we'll let Archuleta wrap up.

Well, thank you Madam Director, for your work here today. At one point you mentioned that efficiency programs aren't that cost effective. A lot of them ought to be eliminated. But the thing is that a lot of these programs are really aimed at the people that are really the least able to afford these high utility rates.

And as pointed out by my colleague Hurtado and Wahab, that these people are hurting. I mean they're not able to afford food because they have these high utility bills. So how can we consider social benefits in how we decide whether or not we're going to eliminate programs like efficiency improvements for some of these ratepayers?

Yeah. And I should say we are not advocating for the elimination of the programs, although I understand that saying that pooling ratepayer funding could end in that. And we absolutely do see public benefit in some of these programs.

Our point is that the energy efficiency, a lot of the energy efficiency programs are refunded by ratepayers have nothing to do with energy efficiency. So those are the programs that I think they need to be,

there needs to be a closer look at and see is this really where electric ratepayer funding should be applied, especially when we're in electric rates crises. Are there alternative sources of funding for programs that do provide public benefit?

And we actually have identified some of those sources.

Thanks for the clarification.

Good look for following up. There'll be some, as you said, alternative funding and also making sure we are picking the ones that really are the best bang for the buck for folks. Senator Wahab.

Thank you. You know, we heard from the CPUC, and the CUC, and I just wanted to understand what your thoughts were on the rate of return that they discussed and then also the six increases that we saw in twelve months. Any commentary on that?

Yeah, we absolutely should be looking at the ROE, the actual ROE. We intend to do that with the general rate cases. Again, the primary budgeting process at the PUC, as well as the cost of capital proceeding that President Reynolds referred to earlier.

So looking at what they're authorized versus what their actual is, we intend to drill down into that.

I would say, though, the most important thing in terms of providing immediate rate relief and long term rate relief as looking at the utility proposed spend, we've got to push that down as much as possible without jeopardizing safety and reliability and advancing our environmental goals.

But there could be a lot of fat there and we need to cut some of that out.

So on the six rate increases, what is your commentary specifically on those?

Well, we have advocated in all six of those rate increases and more. Those proceedings, by the way. And those are the proceedings, I'm pretty sure what you're referring to are the proceedings that fall outside of the general rate case or the primary budgeting process. And we are opposed to having those proceedings continue as standalone proceedings.

I think President Reynolds mentioned that, you know, most of those proceedings are tied to recovering costs related to wildfire. Wildfire related costs like tree trimming, undergrounding, et cetera.

There might have been a time when the utilities, there was a valid reason for them to come in one at a time and ask for cost recovery, which would lead to six rate increases in a year. Because they're trying to get their arms around how to forecast those kinds of costs,

you know, they're playing catch up on wildfire mitigation. It's been three or four years now. They should know how to forecast those costs by now, and they should do it.

And just for the record, for the last six increases that, you know, we're chatting about, you said you advocated advocated in opposition.

Absolutely.

Okay, and what has been the feedback as to, okay, so you guys are advocating for opposition. You know, our goal is to protect regular Californians and this ridiculous bill that they get every month. What has been the feedback as to why it has successfully been approved each time?

Well, there are costs that are incurred for activities that need to be done like wildfire mitigation. We don't, we're not opposed to wildfire mitigation. What we're saying is let's stop with the constant bill increases, like water for water customers, where they're seeing all those surcharges, it's the same.

It's very difficult for a household to budget for their electricity or their energy bills. And so let's go back to the primary budgeting process. Let's look at all these costs together. Let's require the utility to prioritize their spend.

You think that for the wildfire mitigation effort that they can dip into their billions of dollars of profit to potentially levy some of this?

Well, that's why I said let's consider undergrounding as part of lower cost financing. Why should the utility earn a full ROE on that investment when they're playing catch up? They should have been doing this work a long time ago.And this is all falling on rate peers today. Thank you.

Thank you.

Thank you. All important things for us to consider this year. You want to finish up with Senator Rubio, you could follow up. Maybe you can take the answer offline if you just ask the question.

Yes, I could ask later.

Thank you. Okay.

Okay, good. Thank you for being here. You're certainly enlightened. I'm so excited because of the fact that you put something on the table with teeth. Because of the fact that we've heard from the Committee that the income, the profit margins are so great six times a year, and they keep going up and up.

And you've put something on the table that answers why.

But it also brings up light that the Governor, his Executive order on N524 indicates that everybody should be working together, as you know, because of the fires, because of everything else you talk about underground and when you're talking about billions of dollars in profit, they should be able to start working on this underground projects and construction a lot sooner.

And it shouldn't be over ten years, maybe it should be over five. But I'm so glad you put this on the table for us because it does spell out how and why they're doing it and what we need to do to slow it down, I guess, if not stop it.

Yeah. And I think what's going to be important for all of us is we need, because a lot of this is short and, you know, medium and longer term costs, which, which is important, but we have to find some ways for shorter term as well. And that's what's going to be hard,

and look forward and we hear from, including from the utilities, you know, their ideas as well. But we're going to have to find ways on the, on the shorter term, which is going to be the hardest part, but if we want to get real, real rate relief for folks.

So thank you for these concrete ideas and I would now invite up our next panelists. I really appreciate it. We're going to hear from a lot of experts in the field with also have a lot of concrete ideas. We have seven of those. I hope my colleagues can stay around to listen to as many as possible.

We do have an order invite them all up here. I know our last panelist is online. I believe Michael Ward, the last two. Okay. But we're going to start with Carla Peterman. Carla is Executive Vice President of Corporate affairs and Chief Sustainability Officer at PG&E. Carla, go ahead.

Thank you, Chair Pecker. Thank you Members of the Committee. I appreciate the opportunity to come talk to you about rates, because there is a lot of misinformation about rates and so I hope I can help clarify a few things and looking forward to our conversation.

So at PG&E, we are committed to stabilizing customer bills and achieving our state's climate and safety goals. PG&E has significantly improved safety for our customers. However, we know that the past few years of rate increases have been challenging. Electric rates are expected to be more stable in 2025 compared to 2024.

This year, PG&E's residential electric bills are 5% lower today compared to January 2024. That's right. They are lower today compared to this time last year. And last year our electric customers did experience six rate changes. It was not six rate increases, it was six changes.

Some of these were increases, some of these were decreases, and some of these were years old request for cost recovery for spend we did on behalf of customers for safety. In all of these cases, we did not receive our full ask, including we never received full recovery

for spend we did in good faith on wildfire pursuant to state direction. That being said, six rate changes is not the customer experience that we want. We would like to get it down to two rate changes a year. But to do that, to reduce the number of changes, we need to have timely PUC decisions consistent with your statutory requirements.

And that is simply not the current case. Now let me briefly explain to you some of the actions we've taken to stabilize bills over the last year. First, we looked inside. We worked on addressing our own operating and capital costs. These savings allowed us to do more work without increasing bills.

We also worked to reduce our financing costs. We worked really hard to apply for first of its kind Department of Energy grants and loans. In January, DOE awarded us a low interest $15 billion loan guarantee for PG&E's grid modernization work, which could save customers up to $1 billion net present value over the life of the financing.

Furthermore, in 2024 we took additional voluntary actions to reduce bills by nearly $800 million this year than otherwise might have been. This included returning $500 million to electric customers for programs in which we spent less than the CPUC approved while maintaining the program's goals and activities.

We also sold excess renewable energy credits and other greenhouse gas free attributes that we don't need to meet our compliance obligations. So what more can be done? To best address affordability, it is useful to focus on costs not directly tied to providing energy.

These are costs with programs that may be good, but some of these costs should be going down or perhaps should be funded off the bill. That's about 30% of our bill that we're talking about. First, let me talk about wildfire mitigation costs. Some of these costs can be lower or financed differently.

And first, Senator McNerney, I appreciate your concern around customers paying for deferred maintenance. I will tell you that PG&E shareholders have paid billions of dollars for maintenance and issues that arose out of past fires. Shareholders paid through this, through disallowances, through fines and ultimately through bankruptcy.

The cost drivers on wildfire you're seeing in the bill now are what it costs to maintain the level of risk reduction our customers and our legislature currently expect. The biggest cost driver on wildfire is tree trimming. That's 10% of the bill, $1.8 billion we spend year over year. And this has broader societal benefits.

This could be an area where we could really have state funding. You compare that 10% to what we spend on undergrounding, which is 0.5% and it provides permanent risk reduction.

On undergrounding, this Legislature three years ago passed SB 884 which would have allowed us to file a 10 year plan and get economies of scale to do undergrounding more cheaply. We are still awaiting final rules from our regulator to submit that plan. Meanwhile, we have taken action to reduce the cost of wildfire.

But we continue to see additional pressure to spend more. Just for example, multiple state agencies- Border Forestry, the Water Board, Caltrans - are making requests that will increase wildfire spend. We need to rationalize this. A second area to focus on reducing expense or transferring off the bill are our public purpose programs.

Again, these provide broad societal benefits but can be funded in other means. Third, let's eliminate costly technology procurement carve outs such as the ReMAT program, the BioMAT and BioRAM. These programs have run their course. Fourth, consolidate RPS and procurement oversight under the Integrated Resources Program.

Fifth, more broadly, as we're trying to get to our decarbonization goals in 2045, let's allow load serving entities to really focus on the least cost best fit to reach those carbon goals in 2045 and have appropriate milestones. This will reduce some of the interim costs while keeping us on track for the state's goal.

Six - Update the Net Energy Metering, consistent with the CPUC's recommendations. As of December 2024, the estimated annual NEM cost shift for PG&E customers is $3.8 billion. This is approximately 18% of a PG&E rate.

That's $384 that customers who do not have solar are paying extra on their PG&E bill for this subsidy and the cost continues to grow. That was 15% a year ago. Now we're at 18%.

And then finally, number seven, update the California Climate Credit to be aligned with high usage months and to better distribute those costs to those customers who bear the greenhouse gas compliance cost. Now, Chair, if I may, can I take one minute to respond to some of the questions around earnings more broadly?

Sure. One minute.

One minute. You can time me on this one. So first I really want to dispel this myth that is utility earnings has been driving up the bill. We've heard again we heard that from CalPA that it is really this wildfire spend. We've not seen earnings be a higher proportion of the bill.

These earnings are going up year over year and that is because we are making more investments. California's economy is growing. Demand is growing. Demand for more infrastructure, demand for interconnections. We're hearing that from our customers and we're hearing that from you.

We need to go out to investors to borrow money, debt and equity in order to finance this infrastructure. We're having an in relation return increase related to that infrastructure investment. And who are our investors? Our investors are the firemen, the teachers, it's CalSTRS, it's CalPERS, it's your pension and you're expecting a reasonable return.

They are not rocket profits. The last point I'll make is, I'll make two more points. We're actually not earning our authorized rate of return. That's come up a few times. PG&E has consistently under earned that. And the last point is that our investors are not profit maximizing. We made $2.47 billion in earnings last year.

Only 86 million actually went back to investors. The dividend was less than 3.5%. The remainder of that, we reinvested back in the business to do work on behalf of customers. You have a good story to tell about how investors are supporting customers in this state, and I'd like to help you tell it. Thank you.

Thank you. We're going to move right ahead to our next presenter and then we'll take questions on all of them. I'd like to next turn to Ashley Arax, Senior California Policy Manager, Clean Air Task Force.

Yeah. You have to be by the computer. Maybe you can. Richard, do you mind if she swaps with you?

We don't have her slides up yet.

Zero, they're on the computer. It's just. She just has to. The computer. Yeah. There it is.

Good afternoon Chair Becker and Members of the Committee. My name is Ashley Ericks and I'm the Senior California Policy Manager at Clean Air Task Force, also known as CATF.

CATF is a global nonprofit working to safeguard against the worst impacts of climate change by catalyzing the rapid development and deployment of Low carbon energy and other climate protecting technologies.

I'm here to present research that CATF conducted along with our California partners that looks at the potential of cost savings from alternative financing and ownership models from transmission infrastructure. An unprecedented expansion in transmission will be required in California by mid century to support our clean energy targets and grid reliability.

In its 20 year transmission outlook, CAISO expects that the state will need up to $63 billion in new transmission investments. With electricity rates having increased nearly 50% in the last three years for many IOU customers, proactive actions are needed to bring down costs and keep rates as Low as possible before all of these lines are built.

We built off of the great work of the Public Advocates Office which concluded that California ratepayers could realize significant savings if transmission infrastructure were financed with public investment as opposed to traditional utility financing.

Our partners were Net Zero California, UC Berkeley, Centers for Law, Energy and the Environment AS CLI and a team of economists from DH Infrastructure and EE Analysis who conducted a full scale analysis of the potential cost savings.

Central questions our analysis addressed were can alternative financing models reduce the cost of the transmission build out, which scenarios would achieve the greatest savings and what are the potential institutional options? In California we use CISO's 20 year outlook which analyzes the longer term grid requirements for meeting the state's energy objectives reliably and cost effectively.

To identify which projects could use alternative financing models in this 20 year outlook, our analysis only looked at lines that would be eligible under CAISO's competitive solicitation process. Under this existing process, developers may be IOUs or third party companies specializing in building and operating transmission.

We excluded projects within this outlook that would not be eligible for competitive solicitation and an important point is that the 20 year outlook is a subset of the total amount of transmission California is building and will need to continue to build.

Outside of the 20 year outlook, there is a large tranche of transmission projects that are not subject to the competitive solicitation process. This includes projects like expansions in lower voltage transmission or IOU self approved transmission projects.

CAISO's 2024, 20 Year Outlook estimated that anywhere from 45 to $63 billion of new transmission development would be needed over the next 20 years of that portfolio, we found that about 39 to 54 billion would be competition eligible. We looked at three different alternative scenarios relative to a scenario of an IOU developing, financing and operating the lines.

The first was a wholly government owned entity developing, financing and operating the lines.

The second was a lease type public private partnership or P3 in which a government owned holding company or special purpose vehicle provides financing for the transmission line but hires a private company to develop and operate the assets and a concession type P3 in which the government owned asset is designed, built, operated and financed by a private company.

The financial analysis shows that both the wholly public model and the lease type P3 model have the potential for greatest savings with up to 57% savings or up to $123 billion over a 40 year period for all eligible lines compared to the IOU model.

The key drivers of cost savings under these two models include public financing in the form of lower cost public debit that replaces higher cost equity in the capital structure, public ownership which reduces tax obligations and ensuring competition in procurement which lowers overall capital costs.

Accompanying policies that reduce the length and risk of the pre investment development process phase, such as clear and predictable siting and permitting processes could generate additional reductions to complement the models. We commissioned CLII to conduct a legal and policy analysis that identifies potential options to implement alternative transmission financing models in California.

Their study identified the benefits and challenges of creating new wholly public authorities. It drew from examples from states like New Mexico and Colorado which have created transmission authorities that have the ability to finance and own transmission infrastructure.

The analysis also evaluated the benefits and challenges of expanding authorities of existing agencies, for example I Bank and Department of Water Resources, all of which have some existing bonding authority or ability to procure energy resources.

Importantly, the least P3 model, that is the model that generated the most savings, could be applied both within a new authority or within existing institutions or structures that have expanded authorities.

The study concluded that some form of public financing and streamlining for a portion of new transmission could provide savings, but the exact form and extent of the reform will be needed to be evaluated further by policymakers.

Future study could focus on priority transmission lines and assessments, the most optimal financing options and the policies needed to enable them outside of the CLI report.

It's great that we're already seeing leadership from the Legislature, both with Assembly Member Petrie-Norris' Bill AB3264, which in part directs the energy agencies to look at the potential for alternative financing and with Senator Padilla's Bill that was recently introduced, SB330 which would authorize the Governor to designate pilot projects that could be eligible under CAISO's process.

Thank you. We do need to wrap up. Those are big numbers. Thank you very much. We now move on to Richard McCann, partner at M. Cubed on behalf of the California Solar and Storage Association. While you're pulling up your slides, I just wanted to mention something I was thinking of earlier during the presentations.

At a time when at the federal level our government employees are under attack, I'm reminded of the wonderful government employees we have here.

And it reminded me of my days of sharing budget sub budget sub 2 in the Senate where we had many of the same people come and testify about the work being done at our state level. I just wanted to state that for the record. Thank you. Go ahead. If you're ready.

Good afternoon Senators. Pleasure to be here. I am Dr. Richard McCann. I'm a partner in M. Cubed. I've got doctorate in agricultural and resource economics from UC Berkeley. Been consulting about 40 years. Testifying before the PUC about 30 years. I testified on behalf of the California parties before the FERC Energy crisis.

I consulted to the PUC on the three plant divestiture waves. And I developed the CEC's cost of generation model and managed that for about a dozen years. Today I'm going to discuss how customer investment in rooftop Solar has saved 20% off of peak load growth over the last two decades.

But yet we have utilities continuing to increase spending uncontrollably. The evidence shows that the spending is the key source of escalating rates. The Legislature should focus on how to rein in that kind of spending going forward. My first slide shows illustrates this point. The utilities are spending ratepayer money on in the face of flat load growth.

What should be a sole conversation about energy affordability. So this top line shows the red line shows how peak electricity demand has been flat for the last 20 years. 20 years. Yet residential retail rates related to transmission and distribution have risen over 300%. That's four times the rate of inflation over this time period.

And this growth has been occurring since 2002. It's not a recent phenomenon. These elements, I focus on them because they're the profit centers for the utilities since 2002. Because utilities don't build generation anymore, they don't make profits off of that. This next slide shows how rates have been increasing in tandem with spending over the last 10 years.

It is the fact is that rates have gone up in parallel with spending on transmission and distribution rates over this time period. If there was load departure. If customers were shirking their loads, the rates would be going up much faster than the spending.

We're really looking at the spending as being the source of this increase over this time. So if we want to control rates, we need to control utility spending. And with regards to wildfire risk, wildfire risk is or expenses are only about 11 to 13% of the total spending by the utilities.

And so they are an element of this increase, but they are not necessarily the primary source of that increase over this time. So we still haven't seen the big increase that's going to come with wildfire spending with increased undergrounding both in PG&E and SDG&E service territory. So we need to get a handle on that ahead of time.

This next slide shows how rooftop solar has kept peak demand flat over the past 20 years. The CEC forecasted in 2005 that the CAISO, the California ISO peak load would go to over 60,000 megawatts by 2023. It's still only 50,000. It's less than 50,000 megawatts over this time, which is what it was back in 2005.

And we look at rooftop SOL capacity additions over that time, it matches up very closely with that, with that offset load growth. What we're talking about is not load departure. We're talking about deferred load growth that has been created by having customers invest their own money in rooftop solar.

And we can see this in the next slide which shows a peak load day for the California, the one on September 5th when it was 110 in Sacramento. The CAISO metered peak, that's what they see at CAISO, was 48,000 megawatts. Yet the customer site load, what customers were actually using, was over 9,000 megawatts higher. It was 20%.

Again, that matches the graph that I just showed in terms of the deferred load growth. These customers have offset billions of dollars in utility spending over this time period. And this is still actually the same overall load shape that customers had in 2005.

We're still seeing the peak happening around 3 o'clock in the afternoon when we account for this usage. So with that, I want to conclude that the cost shift isn't the explanation for high rates. It's utility spending.

And we should not be going after customers who have invested their own money in rooftop solar and energy efficiency as trying to offset these rates. Maybe we should be looking at shutting down Diablo Canyon for three months in order to offset the solar that we're selling for.

Or we're actually paying Arizona to take, that's one potential cost reduction that we could look at. But that's just one piece of this whole thing. Why are we trying to punish customers who we asked to do a good deed? Why are we going back after them?

The most important question that we have to ask going forward is how do we control this spending effectively? Thank you.

Okay. Thank you. I'd like to now bring up Nora Sheriff, the Council of the California Large Energy Consumers Association.

Do you mind, Richard? Thank you. Good seeing you. Good seeing you, too, Richard. Okay, Let me just see if I can pull up my.

Here we go. Good afternoon. I'm Nora Sheriff. I'm counsel to the California Large Energy Consumers Association, or CLECA. I really appreciate this opportunity to speak to you on behalf of industrial customers. CLECA members produce goods that are necessary for everyday life. Think critical infrastructure, oxygen for hospitals, food distribution.

So they're in the cement, steel, industrial gas, medical gases, beverage, pipeline, transportation, minerals processing, and cold storage industries. And these California manufacturers use a lot of electricity. They have over 500 megawatts of aggregate electrical demand per year. And so keeping electricity affordable for industrial customers is critical for ensuring their global competitiveness.

Most CLECA members are emissions intensive, trade exposed. That means that the state wants to keep them producing their goods, offering their services in the State of California to avoid emissions leakage and help meet our climate goals. And for many CLECA members, the cost of electricity is their single largest cost component.

And yet when we look at the average industrial rates across the west, California is the bar in red. We're nearly triple that of our neighboring states' rates. For CLECA members for all high load factor customers, high load factor industrial customers that use electricity almost 24 hours a day, seven days a week.

That means that those high rates are high bills, and they're inherently energy intensive processes. So they are as efficient as they possibly can be with their energy use because those rates are so high. Despite their efforts in energy efficiency, despite their engagement in demand response to mitigate these high costs, many industries simply can't make it and are leaving the state.

Industrial load is going down, and California is going to continue to have to import the critical goods essential for daily life with a higher carbon intensity from other states because of this price differential between the rates for industrial customers. And the next few slides showed a breakdown for Edison's rates since 2010 for the average industrial customer, PG&E's rates since 2010, and they're going up and getting worse.

So electricity is increasingly unaffordable. What do we need to do? We need to improve affordability, accountability, transparency, as well as opportunities for industrial customers. So improving affordability, eliminate programs that are not cost effective. Full stop. NEM 1.0 NEM 2.0. If there are energy efficiency programs that aren't cost effective, eliminate them.

Remove social program costs from rates while ensuring that they are funded from other sources, from non-ratepayer sources. Consider alternative financing for capital investments. That's the transmission projects that my colleague was speaking about. And direct the CPUC to ensure that there's effective dynamic pricing rates for new electrification loads that would better utilize existing distribution assets before approving significant new spending on distribution, good assets to integrate new loads, as well as timing that utility distribution investment with load growth. Don't build it before they come.

And also the availability of transmission as well as clean generation capacity. We need to make sure that those are matched up and aligned. Improving accountability. Require the commission to start each voting meeting with a report on rates and affordability. What are they doing that day, where are they going, and what have they done?

This will help ensure a focus on affordability as well as informing the public about what is being balanced between the goal of affordability and other goals. And it should also help focus the commission and all the parties, focus them on the general rate cases. That's the bread and butter.

The GRCs should be where we spend our time and where we determine what the utilities revenue requirements are going to be. Not all of these significant other one off proceedings where they come in and ask for additional funding. They get opportunities for second bites at the apple, third bites at the apple.

Limit the number of proceedings, limit the number of rulemakings, limit memorandum accounts and balancing accounts. So that would help improve accountability. Improve transparency. The CPUC has developed affordability metrics for residential customers, and that's an important thing to do. They need to have affordability metrics for all other customer classes including industrial customers.

So those customer classes can also measure the cumulative effect of utility rate requests. And Senator Wahab, this is for you. Direct the CPUC to limit the rate changes to at most 3 per year, the January 1st rate change and then the seasonal rate change between summer and winter. That will help improve transparency, promote rate stability.

It is not good to whipsaw customers. Even if some of the rate changes are decreases. It is not good to whipsaw customers. Okay. And then also direct the CPUC... Okay. Direct the CPUC to show cumulative rate impacts for all customer classes as well as a 10 year review.

And on industrial customer opportunities, we think the CPUC should implement AB 2109, which would encourage private capital investment in zero emission industrial process heat recovery technologies by exempting departing load charges similar to energy efficiency, as well as direct them to implement price responsive demand response and dynamic large power rates.

Senator Becker, those dynamic large power rates would help manage the system peak when you have large customers that can react quickly to a significant price signal and a dynamic pricing rate. That will help us manage the peak. And then I think we should also look at streamlining, permitting, interconnection, and study processes for customer cited resources. Thank you so much.

Thank you. Remember working on the BIP program back at the Sub 2, but thank you again. Very concrete ideas. We'll now turn to Matthew Freedman. Matt is the staff attorney at The Utility Reform Network.

Thank you, Mr. Chairman, Members of the Committee. My name is Matt Freedman. I'm a staff attorney at TURN, The Utility Reform Network. We represent the interests of residential customers of utility services in California, electricity, gas, and telecommunications, and we've been around for over 50 years.

I don't have slides, although I can certainly provide some later if you'd like them. I just want to review some of the issues that have come up and identify some strategies going forward for dealing with the crisis of affordability. You've heard from other speakers today about how much residential rates have increased in California since 2020.

PG&E rates have increased by 75%. Southern California Edison rates 79% for residential customers. It's true there's been a leveling out in the last year or two for PG&E and for San Diego Gas and Electric, but we think it's a temporary pause. We see more rate increases on the horizon. PG&E is about to file their new general rate case. And right now PG&E and San Diego Gas and Electric rates are higher for residential customers than the rates that are charged in most of the island of Hawaii.

The islands of Hawaii, which have always been held out to be the benchmark for the most expensive place to buy electricity in the United States. It's important in understanding the impacts of these rates to look at the disparities between customers living in cool climates on the coast and those living in hot inland areas.

Customers living in hot inland areas can see summer bills that are three to four times the bill that a customer sees on the coast. On an annual basis, inland customers can pay bills that are about twice as much. These disparities suggest new strategies are needed, perhaps for the allocation of the climate credit and really paying attention to the impact of high rates on customers that are facing the brunt of the pain. How do we know what the pain looks like? Well, a lot of customers are behind on paying their bills.

The latest data shows that about a quarter to a third of low income customers are behind, and 15 to 20% of residential customers not on discount programs are behind. Total amounts owed by the end of last year, about $1.8 billion. The drivers of rate increases have been covered, wildfire spending, distribution spending, which is way up.

We're not even looking now at the impact of the recent fires. If Southern California Edison is found to be liable for the Eaton Fire, that could drain the wildfire fund. It could force that fund to be recapitalized, which would put a huge hit on ratepayers, even if Edison shareholders are found to have been negligent.

So these wildfire costs are the ongoing wild card that makes it really challenging to think about how to control rates under the current structure. Net metering is an issue. We agree with some of the other speakers. Total behind the meter solar in utility service territories has increased by 80% in the last five years.

The annual cost shift, we believe, is in the billions per year. And it's a very hard thing to get control of over time because customers are getting compensated based on ever escalating retail rates. There's also legislatively authorized spending. Members of this Committee are always hearing about bills, pushing bills.

One problem is that there's no estimates provided of the costs of these programs for ratepayers. You get indications as to how many staffing positions an agency might require to implement a bill, but not what the impact's going to be on customers. That may need to change.

And one piece of evidence for that was the Legislature was told that the extension of operations at Diablo Canyon, authorized by SB 846, would essentially be free. The federal government would pay all the costs the plant would pay for itself in operations. Turns out not to be true.

This year, the cost of operating Diablo Canyon is adding $723 million to customer bills across the state. And about two thirds of those costs are special incentives that were provided to PG&E in that bill. Another wildcard on the horizon is federal grants and tax credits.

The state is really counting on billions of dollars of grants for Diablo Canyon, for PG&E's loan guarantee, Solar for All, hydrogen hubs. Will the Trump Administration honor those agreements? Obviously, none of us know. Waiting for the next tweet to tell us what's going to happen.

But this is real money that would have significant impacts on California if the money is withheld. And then the clean energy tax credits that support all the clean energy technologies that the utilities are contracting for and CCAs are contracting for. If those go away, it will have serious negative impacts on the system costs and system reliability.

So what can we do? Well, at the PUC level, we think that the PUC needs to apply tougher scrutiny to utility spending requests. Utilities want to build rate base. They want to maximize their profits. The PUC needs to look at ways to minimize new rate base additions. And I agree with other speakers that the first step to controlling rates is controlling utility spending. We may need a new paradigm on wildfire costs. How do we socialize these costs? Do we include the publicly owned utilities in the wildfire fund?

Do you reform inverse condemnation, which essentially places all of the costs of utility caused wildfires whether there's negligence or not on ratepayers? This is a real problem. In terms of utility spending going forward, alternative ways to finance utility investments in capital. Ashley Arax talked about using alternative sources of financing for transmission.

There's also securitization that the Legislature has authorized. Utilities issuing bonds to pay for the cost of capital investments in their system, for wildfire mitigation, for customer energization. You can save 40% for every capital dollar you spend if you do it through securitization.

And on the transmission side, we agree that you can save over 50% on alternative financing for transmission. External sources of funding to lower rates. Right now, the cap and trade program last fiscal year spun off about $8 billion. 3 billion of that went to utilities for providing rate credits.

We think that as part of a reauthorization of cap and trade, those numbers need to turn around. We need a lot more of that money coming provide credits to utility bills. This is an important way to provide downward pressure. Inflation constrained spending plans.

TURN has been a big advocate for having utilities be required to show what their rates would look like if they were constrained by inflation every time they present a spending plan. And for the PUC to use inflation as a benchmark for assessing the reasonableness, not just of a single spending proposal, but of all the spending proposals under consideration.

We also think with net metering, there's a way to transition existing customers to the new, more cost effective tariffs. Right now, a customer gets 20 years on their old tariffs. So customers that signed up in 23 right before the new tariffs came in, they won't... They'll have those tariffs until 2043.

We think that there's a way to shorten that timeline. Like when a customer sells their home, should the new owner be entitled to the old tariff treatment? Are there ways to provide incentives for customers to switch? Rebates, other types of financial support?

And then the final thing I'll point out is I'd mentioned the cost of the Diablo Canyon proposal, something that I've spent a lot of time working on. The Legislature could modify the law to remove some or many of those incentives to reduce those costs to customers, which would have no impact on the operation of the plan. It would just determine how much money PG&E gets to keep associated with its management role. So lots of ideas. Happy to work with the Legislature and appreciate the opportunity to be here today. Thank you.

Thank you very much. All right, we have two presentations online. And looks like we are ready here with Mohit Chhabra, the senior analyst, Regulatory, Economic Policy, Climate Energy at the Natural Resource Defense Council. Go ahead and see if this works.

Good afternoon, Chair. Can you hear me? Okay. Thank you for giving me the opportunity to present. I'm Mohit. I work with NRDC. The premise of our work here is that taking care of electric rates is essential for decarbonization. Customers should want to adopt electric cars and heat pumps.

And in our decarbonization journey, a customer's electric bill and their energy bill will be one and the same. So we need to get to a place where we're in a decarbonized economy and customers have lower electric bills than what their energy bills are today. To understand what's been happening with rates in California, we undertook a study on PG&E's rates. We looked at PG&E spending from 2010 through 2024, the sales, and figured out what were the drivers of increased rates.

To understand increases in rates, we need to keep in mind that rates are calculated as utility revenue requirement divided by sales. Up until 2018, utility revenue requirement was increasing a little faster than inflation, but only a little. After 2018. that's when the wildfires happened. Utility spending increased at a much faster clip.

Adjusting for inflation, the total utility revenue requirement in 2024 for PG&E was 40% higher than what it was in 2018. Sales, on the other hand, stayed flat even though customer consumption increased. And the reason why they stayed flat was because of rooftop solar. Now, rooftop solar reduces sales that the utility sees, but it doesn't commensurately reduce costs.

The fixed cost of the system, all the money spent on wildfires. So if utility spending and revenue requirement increases but sales stay flat, rates increase. And that's the story of why PG&E rates have increased so far, so much in the last five years. We also looked at a whole suite of solutions, from funding things from outside the rate base, to regulating utilities more effectively, to public ownership of transmission, and redesigning rates. And our conclusion, what our study shows is that there are two things that materially impact rates in the near term.

A lot of the other solutions are important and are good to look at, but they don't have a near term impact. The two solutions are, to the extent we can fund costs of wildfire mitigation, which is really adapting to a changing climate to harden our grid and make it more wildfire resilient from outside electric rates, that reduces rates.

Rule of thumb numbers to think about are for PG&E residential customers, each billion dollars that we can get from outside of rates would reduce rates by 10%. Approximately for all IOUs residential customers that number would be around $2.5 billion. And that number would scale up for all customers across all sectors.

The second thing that can be done is sticking to and expanding the fixed charges that were established. An $18 average fixed charge that the CPUC established puts downward pressure on usage rates by around 4 cents a kilowatt hour on average for PG&E.

So keeping that and expanding on that would reduce volumetric rates more and would also reduce some of the cost pressures by net energy metering. It's important to remember that net energy metering cost pressures really occur because of the difference between average utility rates that include all spending and what it actually costs to serve an extra kilowatt hour.

Right now. As a grid gets cleaner, greener, the cost to for an extra kilowatt hour to deliver it, it's around 5 to 10 cents depending on time of day. But our rates are on 40 cents. And it's that difference that causes a lot of the net metering distortion. So better rate design can help with that.

Our report will talk through a lot of the longer term solutions and the trade offs inherent in one, including public ownership, challenges with effective regulation. We looked at things like what reducing ROE could, return on equity for utilities, could do, how much it could reduce rates, looked at alternate types of regulation like performance based regulation. And we do find that there aren't great alternatives to our current paradigm.

There really is no silver bullet substitute for regulating utilities, and we just need to do it diligently. Some of the recommendations, like approving most utilities spending through general rate cases, not having too many proceedings help. Finally, we've been funding our clean energy goals and our decarbonization transition basically by making electricity more expensive and funding more things from electricity. It would be better to use levies and polluting fuels like revenues from cap and trade to fund the clean energy transition. We think California is and should continue to be a leader in this clean energy transition. But to do so, we we need to fund it appropriately. Thank you.

Thank you very much. Now we will have Michael Wara. Michael's director of Climate Energy Policy Program and senior research scholar at the Woods Institute for the Environment at Stanford. Michael, go ahead.

Good afternoon, Senator Becker and Members of the Committee. Thank you very much for the opportunity to speak today. I'll just say at the beginning that the views I expressed today are my own and not those of Stanford University or the Woods Institute for the Environment where I work.

I'll begin by noting that electric power affordability, the issue we're here to discuss today, is one part, but not the biggest part, of the broader affordability challenge in California. We need to succeed on housing to make California affordable. Electricity is still a small fraction of most household budgets at most times even, low income budgets.

With that being said, I'm going to move on to discussing solutions. I think we've heard a lot today about the challenges and where they come from, and I'm going to sort of focus on ideas for solutions in my time. So at the high level, conceptually, I think there's been a distinction made today, and I make it as well, between short and long term solutions. We need to be clear about what policies are going to provide short term bill relief and which will bend the curve in the long run to create electric affordability.

I think it's also very important to focus on the distinction between big versus small improvements and to compare the size of the potential bill savings to the political or regulatory challenge of making the change. As has been noted, there are multiple reasons for the large increases we've seen over the last several years.

Wildfire is certainly a part of it. Investments needed to update our aging system to be ready for the energy transition are another. Net metering is also another important driver. At the highest level, my recommendations are that we need to California needs to be looking for options to either bring new sources of capital into the electric utility space or to accomplish objectives that we currently pay for in electricity rates via other mechanisms.

I'll discuss some some specific examples, starting with short term ideas and moving to the long term at the end. One short term idea that we have proposed, the Climate Energy Policy Program. We have a white paper out on this. You can look at it on our website. Is to refashion the California Climate Credit to make it more effective in helping low income rate payers in hot climate zones.

We estimate that reallocation of the credit has the potential to reduce costs right away for CARE and FERA customers by about 25%, with much larger impacts than that in summer months when air conditioning loads make bills extremely high. You can look at our report, the lead author is Lane Smith, to learn more about that analysis.

I think another option, and this was mentioned I believe by Matt Freedman who just presented, was to increase the size of the allowance allocation dedicated to electric utilities from cap and trade and to focus that allowance allocation on reducing overall rates.

This is essentially moving capital from cap and trade into electricity space with the idea of buying down rates right away. This has the potential to help all customers cut their costs and in particular to help moderate income Californians who don't qualify for CARE or FERA. And that's a potentially quite large group. A third idea to improve short term affordability would be to coordinate wildfire mitigation. And I should say this was mentioned by President Reynolds in her testimony.

I think it's an excellent idea. And that is to coordinate wildfire mitigation plan work administered by the Office of Electric Infrastructure Safety more closely with the general rate case administered by the PUC. Coordination of these two very time intensive and therefore expensive processes to be kind of aligned with each other in time I think is quite valuable.

We've learned a lot over the last five years on how to help and at the utilities and the regulators about how to do the WMPs. And at this point we have maturity enough in that process I would argue to think about doing a multi-year WMP that is coordinated with the GRC.

I'll just add one kind of point of caution here. We need to be careful to keep the distinction between safety regulation, which is conducted by OEIS, and economic regulation which is connected by PUC separate. I think there's been a ton of value in separating those considerations.

Not that money doesn't matter in terms of wildfire cost, obviously it does. But the OEIS and separating the economic from the safety is a good thing to do, and I think it's important that we maintain that separation. I'll just mention a few ideas that will have long term impact on rates.

One which has already been mentioned is the Pathways Initiative. The idea of moving toward a regional electricity market in the western US in which California is a participant. I think this is likely to have a small but a positive long term impact on rates, and more than that, and we've done a study related to this, it's likely to improve reliability of the California electric system as we transition to renewables.

Another sort of important considerate or idea to consider by the Legislature I think at this point is to consider extending the non-bypassable charge to the wildfire fund. I would not have recommended this prior to the events this January and the impact those have had on share prices for the investor owned utilities in California.

But I think we are facing a real crisis of confidence on the part of investors and we're going to need to do something to stabilize credit ratings for Edison and PG&E, whoever ends up being at fault for the Eaton Fire. A third long term idea, and this is getting into the sort of big structural change type of ideas, is to fund needed capital investments in the electric system with a significant subsidy from cap and trade. This is really bringing new sources of revenue, new capital into the electric system.

It's related in some ways to the presentation from Clean Air Task Force. But is different in the sense that this isn't about sort of saving a few percentage, few basis points on debt. It's about actually funding infrastructure using public resources, using public subsidy. I think that's something to consider in the cap and trade reauthorization. We are working on a proposal that focuses on reconductoring as a potential sort of focus area for such public support. And I think it's something we should be thinking about as we as we consider cap and trade reauthorization either this year or next. Finally...

Okay, yeah, we do need to wrap up. Go ahead, Michael.

Okay, very quickly I would just say I think that the fires that occurred in Los Angeles raise real questions about the strategy the state has taken to reduce wildfire risk since 2017. We spend something like $6 billion per year on wildfires and rates, while we spend 2 to $500 million per year on non-utility wildfire resilience. And a teeny fraction of that 2 to 500 million goes to home hardening. Do we have focused in utility in the utility space on avoiding every last ignition rather than creating communities that are tolerant of all ignitions no matter their source.

And I think at this point we really may need to consider how we support the governor's recent executive order on implementing Zone 0. That is going to take real money, but it will save money, potentially large amounts of money, in the long run if the consequences of all types of wildfires are lowered as a result. Thank you very much for the time, and I look forward to working with you to develop solutions.

Thank you, Michael. I did have a host home hardening town hall from my district yesterday talked about Zone 0. Appreciate that. By the way, we did in Sub 2, we increase the hazardous fuel reduction from 200 million a year. We did a $2.7 billion for that was, I believe that I know that was outside of the utility for that forest management. But generally your port's well taken. Also of course the federal government has to do its share of the 57% of California forests owned by the federal government when they lay off employees doing that work.

Obviously very unhelpful here in California. Excellent. Well, wonderful substantive presentations. I'm sure we got lots of stuff here. I appreciate the Senators sticking around for these presentations. And I'll look for questions. All right, Senator Archuleta.

Thank you. Great presentations all the way around. Real quick. I appreciate your passion, and it seems like you're in the hot seat. But some of the things we talked about and we heard. 10% right off the top with the tree trimming an expense that it's enormous. 10% is quite a bit when you're talking in the millions and millions of dollars. Well, how do we get around that? Do we let you know the neighbors cut their own trees or how do we reduce that? And yet it's so necessary to do it professionally.

Right. So thank you. And I am passionate about this because we want to make sure we're providing reliable, safe, affordable energy. And so I appreciate your partnership in making that happen. So a couple of things. One of the things that we have done is just improve our processes, aligning our programs to take out some of the cost of doing the tree trimming. And that allowed us to take about 300 million out of those costs.

But we continue to see cost increases, as there are more requirements about how much you need to cut a tree back as a part of the service area that has more exposure increases. So some of the opportunities that we can have we can look at how do we use, for example, new technologies to help with inspections, other ways in which to monitor forest health. Because we're seeing that although tree trimming has benefits, that you can actually, it doesn't address all ignitions.

And so as Mr. Wara, Dr. Wara said, you know, we're really focused on trimming trees, but could we be doing a better job of protecting communities themselves? That's where we're really seeing the impact. But you know, one of the things that we are focused on is undergrounding. We do believe that in the highest risk miles, undergrounding is the most cost effective. And when we have the opportunity to submit a plan that will be reviewed and litigated at the agencies to say where is the most cost effective work to do.

And I mentioned that. Let me just another follow up. It mentioned that 1/4 to 1/3 people are behind on their bills, their electric bills. I think one of you said that. And if that's the case, then obviously it shows people need help. No doubt. And you mentioned 75% rate increase from PG&E, and what was for the Edison? 70%?

79% since 2020, residential.

79%. That's enormous. But we also heard about solar. An apartment building. Is there any way that the solar industry, with all of you, can subsidize one way so they can put a solar on top of a building so the tenants would pay less? Because that seems like we heard that the small homeowner can't afford solar, but maybe the property owner who has a, you know, a 5-6 unit building can go ahead and subsidize their expenditures by having solar. Is that a possibility?

Unfortunately, not so much. Because of a couple of decisions at the Public Utilities Commission that basically gutted those options. They took out the option to do virtual net metering in a way that is cost effective and they've reduced the access to the low income, multifamily rooftop solar programs. So both of those decisions have made it very difficult to finance those kinds of projects and make them actually viable.

And Senator, I would say, if we did something like that, although that could lower the cost for those customers, all the rest of customers would be bearing the extra cost of the subsidy. So it ends up helping a few, but not the majority.

And we dispute that question about whether there's actually a subsidiary flowing. And I just want to point out that we have a report that's on your...

Yeah, but it's the tenants who need the help. So again, if they're living in a duplex or triplex, single family, and we're able to somehow subsidize that homeowner to put on solar, again to help the tenants lower their, their rates. We got to find a solution.

Yes. Excuse me. So this is actually like energy efficiency. Energy efficiency does the same thing. It basically reduces people's usage, customers' usage, which means reduced sales for utilities. And if you apply the same simplistic methodology that was used to do the cost shift analysis, you would show there's a $17 billion cost shift from building and appliance standards that the Energy Commission has approved.

So why are we having this discussion about cost shifts when we know that energy efficiency is highly effective and a great way for customers to save money on their utility bills? Rooftop solar is the same thing. It's a way of avoiding having to purchase high cost power from the utility. And we've asked people to put these panels on the tops of their roofs in order to save everybody money for having not purchased power from the utilities. So why are we putting them in this position?

I will say. Sorry, we got to move on. We'll go to later. But I will say, yeah, I did have a bill last year focusing on multifamily and schools who would pay for themselves, put the solar up. And even under NEM 3.0, which I understand the move, but at least NEM 3.0 for residential side did encourage storage, whereas with the schools and multifamily, it does not at all, actually.

And, and I think it's really going to inhibit owners of multifamily from moving forward if they don't get if they can't even net out their common use space. So I was sorry that bill didn't ultimately make it all the way, but great. I'm going to go ahead and open up. Stern, McNerney.

Yeah. Thanks, Mr. Chair, I'm just going to reiterate the line of question I had for CEC and PUC. We talked a lot about electricity today, which is good, and we're drilling down. It's useful. But I think especially for Ms. Sheriff and Ms. Peterman, I'm wondering how... And perhaps for TURN. Let's say EIA is correct and there's a 30% increase in wholesale gas prices in year 25 and 26 in natural gas markets. Would that negatively impact your members?

For the industrial customers that use a lot of gas as a feedstock and then the price of gas goes up, yes. That would be a negative impact. I will say, there was a mention of Aliso Canyon, the storage facility. The maximum storage allowed at Aliso Canyon has gone up, has been allowed to go up by the Utilities Commission, so that should help increase the ability of that storage facility to serve as a price hedge in a way that it wasn't able to do in 2021 and 2022. So I don't know if that--I know there's pluses and minuses around that, but--

Yeah, and I'm sort of saying regardless of that, if 30--if at the citygate in Southern California we're already seeing--it was 75 cents last week uptick. So I just don't--I want to just get clear. A wholesale gas spike, however it's mitigated or if it hits, it's going to impact your folks' ability to do business here in California and more broadly across the country, I would imagine, no? I mean it's not just a California thing, it's a federal--

Yeah, the Southern California Citygate impacts the businesses there, but it--feedstock prices go up, the cost to business goes up.

And for you too, Ms. Peterman, just in terms of anticipating gas price spikes from this new LNG export plan that the Trump Administration is pushing, I mean, how do you get ahead of that for your ratepayers and ensure that we don't sort of get blindsided by something here?

Right. So I mean, as you pointed out, we're looking at all the signposts for all the activity at the federal level because we're seeing potential impacts on gas but also different parts of supply chain, etcetera, and so we will do what we can to mitigate that increase for our customers, but we do pass on the commodity price of gas and electricity to our customers, and so that would have an expected impact.

TURN, do you agree wholesale gas prices go up--no fault of this state, right, just because the federal policy says we want to ship two billion cubic feet more to Europe or wherever else. Does that have a negative price impact, do you think, on California consumers?

Well, absolutely. Any change in the spot market price of natural gas, especially spikes like that flow through to customers in a number of ways, not just through their gas bills but also through their electric bills because it sets the price in the electricity markets. Typically the prices in many hours are set by gas plants.

So we've seen this before, we've seen market manipulation of gas prices, we've seen pipeline outages in parts of the West, so there are many things that can drive this. One thing that maybe looks more like a band-aid than a solution would be to look at increasing the low-income discount for residential gas customers.

Residential gas customers today who are on low-income discounts get a 20% reduction in their bill. On the electric side, it's 30 to 35%. Maybe we should bring up the gas discount to minimize the impact of these spikes on those who can least afford it.

Excellent. Senator McNerney.

Well, I thank the Chairman and I want to thank the witnesses. I mean, you all came in here with some really good ideas. A lot of them are really concrete that we can try to act on and I understand the challenges that the IOUs are facing. It's clearly a difficult situation, and I think everybody in this room wants to find a way to get lower prices for electricity. Everybody here wants that and everybody that's listening out there too.

So, I'm sure that PG&E would like to have wildfire mitigation costs paid for from outside sources and would also like to have the cap-and-trade funds pay for or at least partly mitigate the net metering cost that is affecting the whole system. So I'm clear about that.

But Ms. Peter, when we have a disagreement on deferred maintenance, President Reynolds indicated that San Diego Gas and Electric started their maintenance program before the other state IOUs and they paid a little extra in the process, but you know, I heard about climate change in military science class in 1969. This is not a surprise. This is something we saw coming.

Anyone that believes in science saw climate change on the horizon and that it would be affecting things like wildfires. I mean, so I feel that the shareholders do have some responsibility to pay for the maintenance that's now required. I mean, that's debatable how much, but I feel that that's something that the shareholders should share in. I'm also sure that PG&E may not be as much in a hurry to find securitization as now proposed by Mr. Freedman, but you can address that if you'd like.

So we do see benefits to securitization and we have securitized significant amount of cost post-bankruptcy in order to help customers have a rate-neutral bankruptcy. When we focus on what's actually going to lower bills in the near term, we have been supportive of securitizing expense because that can provide immediate bill savings.

This Legislature passed a bill last year that would support securitization of expense. That bill ultimately was not signed by the Governor, but we've had an application in front of the CPUC this past year that would have lowered bills this year. You know, Mr. Freedman's comment is around securitizing capital.

I think, again, we need to look at what is the affordability benefit of that? When you securitize capital, you are not reducing customer rates in the near term. You're getting much more bang for your buck about expense. And so again, we have securitized capital, but it is not a one-size-fits-all solution.

Mr. TURN? It's your turn.

Thank you. We have the opposite view of PG&E on this. They would like to use securitization one-time infusions of money to give you a one-year rate reduction. But remember, these bonds get paid back over time.

So you get a one-year rate reduction and you pay the bonds back over ten, 15, 20 years. California did this when it deregulated the electric industry--very few people remember. They were called the rate reduction bonds. Everybody gets a 10% reduction on their bills. Hallelujah. But it's a bond you got to pay back.

So the utilities would like to use securitization to provide a series of one-year expense reductions. It's because it doesn't hit their bottom line. Expenses are a pass-through for the utilities. Offsetting capital gives you long-term benefits, and in fact, the benefits are front-loaded. Not so much as with expense.

You don't get all your benefit in one year, but they actually are front-loaded and you get huge present value savings over time. And if you're playing the long game and you're trying to figure out how to bend rate increases, the curve of rate increases over time, you want to look at ways to offset these capital costs. We think that gives you much better results and that's what rate payers are going to want to see over time.

Thank you. Yes.

Thank--

Yes, go ahead.

I would briefly add when you're talking about securitizing expenses, which is something that CLECA has traditionally opposed, you get into issues with intergenerational equity because you have a set of customers that is paying in year seven, nine, eleven, twelve depending on how long those bonds are for for something that occurred in year one. So there's a mismatch between the customers paying for it and the customers who got the benefit from it.

I'll just say on this particular topic, one of the things that the Legislature has been asking us to do in our PUC is come forward with creative ways to lower bills now while we're in this period where we're seeing a pancaking of cost. As President Reynolds said, there are certain costs that are in the bills right now that will move out.

We do see the reality of having bills grow in line with inflation or below, but we are in a very specific time where we're seeing high costs, so we don't gain any money or our economics do not change when we securitize expense. But we brought it forward as a proposal for the state to consider if it was really looking at how do you reduce bills in the near term.

We do see trimming trees having intergenerational benefits, and the reality is, back to your original comment, Senator, right now customers are paying for things that are long-term issues, and so we're looking at how do we help the current customers today. So my view on this is that's just one proposal, we've put out a lot of proposals, and we'd like to see more support for them.

All right. Let's make sure the conversation goes through the Chair so I can keep track of the conversation and keep us on track. But I do appreciate that obviously we'll have a lot of time this year to follow up. Thank you, Senator McNerney. Senator Wahab, who I should mention is also a Co-Chair of our Affordability Working Group. Go ahead, Senator Wahab.

Thank you. I know that we are strapped for time so I just wanted to highlight that I am more than happy to work with all of you guys on any recommendations you guys have. The whole goal of this committee is to reduce the cost to the average Californian, right?

So understand that you guys have a lot of details to talk about, you know, historic changes, current changes, modeling, and much more. The average person is not paying attention to any of that except for what comes in their mail, right?

So I really want to reprioritize that, highlight--and I've had some conversations with some of you guys personally. If you guys have suggestions, please send them over to our office. We would very much like to look at what you guys have as well as, you know, some of the material and concepts that you guys have.

My goal in all of this is, again, to reduce the cost to the average person on their utility bill. I really don't care about the excuses or 'hey, this took long' or 'the CPUC did this.' At the end of the day, my job is safeguarding the residents and making sure that they are prioritized in this. So I say that. I appreciate all of you guys' time, I appreciate the Chair's time, and thank you.

Thank you, Senator Wahab. As you mentioned what comes in the mail, I do think we should look at simplifying the bill too. How can we simplify the bill? Because I know myself, and talking to my wife, we get very confused at the bill right now. So--

That's mandated by the PUC, I have to say, but we support that as well because we would like customers to know what they're paying for.

It's something that can be looked at. I know a company many years ago that I was involved in that basically worked on turning the bill into a marketing document for energy efficiency and proved they could reduce energy use, you know, two to five percent just doing that. So I think there are bill opportunities to look and simplify. I want to turn to Senator Arreguín who's been diligently listening. Go ahead.

Well, good afternoon. This has been a really informative hearing and I think I learned a lot about the cost drivers of rate increases. But just two questions: one, understanding those drivers, are there short-term solutions from any of the people here on the panel that you would recommend--sort of following up on Senator Wahab's comments--to provide immediate relief for ratepayers and understanding, you know, some of what's driving it, wildfire mitigation, infrastructure upgrades?

Also want to pose the question around how the GGRF--you know, we're engaged in a discussion right now around the authorization of cap-and-trade--how could GGRF be leveraged most effectively? Should it be used to prioritize wildfire mitigation, infrastructure upgrades, or other incentives to maximize cost savings for ratepayers while advancing the state's climate objectives? Whoever would like to answer that.

Go ahead.

I think one short-term solution that you heard, something that could be done sooner rather than later that is shared by several disparate stakeholders, is removing social program costs from rates while funding them, making sure that they're funded--they're valuable programs--but looking for non-rate payer sources of funding for the Public Purpose Program charge funding costs that are currently burdening rates, moving those out of rates, and looking at other sources of funding for some of the wildfire grid hardening work.

Senator, I think I'll join in the chorus. External money, cap-and-trade money, will make a difference. It can make a difference soon if the Legislature decides to reprioritize where those funds are going.

On a different front, I did mention during my statement the importance of federal support, which is rapidly disappearing, but anything that this Legislature can do to influence some of your colleagues who sit in the U.S. House of Representatives to hold onto those federal tax credits that are essential to California will be critical to ensuring that we do not see a spiral of new rate increases in the near term because those credits go away and we're looking over the cliff at something that's pretty ugly.

I'll also add, one thing that can be done immediately is to do that cost effectiveness review of the hundreds of programs that are funded in customer bills and decide if they're not cost-effective, just sunset them. So you don't have to find an external source of funding. You just have to stop doing those programs. That could be an immediate opportunity and a review that's well overdue.

Yeah. And to Mr. Freedman's point, the--I hope the Administration recognizes--the New Administration--that 94% of all new generation in the country installed last year was clean and we need to support those, those forms of generation and not try to do uneconomic things with old fossil generation.

I'll note also that Senator Allen is back who chairs, now chairs Budget Sub Two and I know looking at the, that use of proceeds question. Senator Arreguín, do you have another question? Okay. We have final point from Senator--and we'll move to public comments. Excited to hear what the public has to say.

We limit that to one minute so you can start lining up for public comment right now and we'll go ahead to--unless you have something, Senator Allen? First of all--sorry, Senator Archuleta and then we'll let Senator Allen have the final word.

And I'd like to thank you all for being here and everybody that's been listening to this. Even if we have these little solutions, it's not going to drop your bill from 500 to 200. It's going to be small, and if we all work together--but these small steps will add up as we go along because we're looking at people that are getting 400 and $500 bills and they're not going to be down that quick. It's just too much of a drop. So everything we talked about today does help, but it's just, be cautious. Don't be looking for a humongous drop, but any step forward is progress, and I thank you.

Senator Allen. You're good? Okay. Excellent. Wonderful discussion. Thank you, all. We will now turn to a public comment. You have one minute, and go ahead.

Thanks, Senator and the members. My name is Rocky Fernandez. I'm with the Center for Sustainable Energy. Our mission is to decarbonize. We believe this can be done very affordably. That said, a few things we wanted to clarify from the committee analysis and that is probably in the report you haven't got to.

The Solar and Multifamily Affordable Housing Program, SOMAH, is not ratepayer funded. It's funded through cap-and-trade revenues similar to where the climate credit money comes from. Furthermore, this climate credit for SOMAH is monthly and takes 39 to 61% of people's bills off. Senator Archuleta, we can talk about this program.

It also shifts costs away from the CARE Program, which is ratepayer funded, so we wanted to clarify those things. One other thing that was not mentioned was on the climate credit, taking away eligibility for second, third vacation homes could open up more money to be able to fund everybody else's climate credit. Thank you.

Good points. Thank you.

Good afternoon, Chair and members, and so good to see all of you here. I'm Igor Tregub with Reimagine Power, a women-owned boutique consultancy working with over 300 community-based organizations up and down the State of California on local renewable energy solutions. Just wanted to note--and this is in reference to a report provided by Dr. McCann--it does present a different outlook on the benefit of distributed energy resources inclusive of NIM I and II than was represented by some of our speakers today.

After incorporating a more accurate accounting of benefits than the PAO did, the data shows that rooftop solar customers in fact save other ratepayers approximately $1.5B, and that's for 2024 alone. And that's not even including virtual net energy metering, net energy metering aggregation for multi-schools, renters, all of the programs that Chair Becker and many of you worked on this past year.

So, it's going to take courage, but I think addressing affordability by looking at the out-of-control, investor-owned utility profits and spending, number one, and working to have more rather than fewer distributed energy resources, rooftop solar, batteries, community microgrids. You will find that you have a lot of support from the people of California. Thank you.

Hello, Chair Becker and committee members. My name is Allison Hilliard, and I am the Legislative Manager for the Climate Center. There is an opportunity to lower electricity costs by utilizing distributed energy assets that millions of Californians already have in their homes and in their driveways, like smart thermostats, home batteries, and electric vehicles.

Multiple studies and reports from the Brattle Group, the U.S. Department of Energy, and the Climate Center have highlighted this opportunity. Together these resources can shift, store, and deliver energy during times of peak demand, reducing stress on the grid. Proper integration of these DER assets can help reduce the need for additional infrastructure such as poles and wires, leading to cost savings for all ratepayers.

Establishing functional markets for distributed energy resources could also generate new revenue for asset owners, offering an alternative to the current approach of relying on polluter--or sorry--on relying polluting power plants which are often located in low-income communities.

As this committee considers affordability this legislative session, we strongly encourage, encourage prioritizing the vast currently untapped opportunity to utilize customer-owned distributed clean energy assets such as bidirectional electric vehicles to build a more affordable and reliable grid. All people, regardless of income level, will benefit from the use of DERs. Thank you so much for your time.

Thank you very much. Good points.

Good afternoon, Chair Becker and members of the committee. My name is Lillian Mirviss with the Large-Scale Solar Association. Thank you for your leadership on energy affordability and bringing this conversation to the forefront of this legislative session. Large-scale solar developers strive to keep project costs low, and these efforts in turn help lower rates for Californians.

There are two tools being discussed in the Legislature this session that would directly impact affordability. First, tax conformity would enable the state to take advantage of cost-saving credits provided in the federal Inflation Reduction Act. Current law does not take full advantage of federal clean energy tax incentives that reduce the cost of projects significantly.

Making projects cheaper has a direct impact on ratepayers. We agree with the Chair that we can't leave any federal incentives off the table. Second, permitting reform efforts to facilitate renewable energy buildout could decrease unnecessary costs in renewable energy development.

Ashley Ericks pointed out earlier that the financial benefits of clear and predictable siting and permitting to reduce infrastructure costs is extremely important. The same can be done for utility-scale renewable energy development. Permitting reform efforts can catalyze utility-scale solar and it can help California meet our 100% goals while simultaneously decreasing cost to ratepayers. Thank you.

Thank you. Yes, we have heard a lot about siting and permitting this hearing, but yes, big important topics. Thank you.

Good afternoon, Chair and members. Gracyna Mohabir with California Environmental Voters. While we're discussing how to make bills more affordable, it's key that we remember that we're doing so in a way that makes energy clean, safe, and reliable.

Lowering costs must come with comprehensive fixes that prioritize climate resilience and protecting consumers. A bunch of solutions were brought up today, and among what we heard, I would really like to emphasize pursuing major costs like wildfire mitigation in a cost-effective way and looking at funding sources other than ratepayers to make these happen.

And we also really need to protect programs, climate programs, efficiency programs, and those that are geared towards ratepayer assistance. It's just in the best interest of ratepayers that policies ensure public health outcomes, environmental outcomes, and affordable energy in the long-term and the short-term. Thank you so much.

Thank you.

Good afternoon. My name is Will Abrams. I'm a wildfire survivor from the 2017 PG&E Tubbs Fire. I've been engaging in these issues since that time at the Public Utilities Commission, looking to collaborate and work towards solutions. I appreciate the committee's time. There's a few things that I'd like to add to the comments that came before.

This has been a constant struggle to really tie the return on equity for the utilities to a return on safety metric for our public and also return on affordability. If we start to tie those top-line metrics together, the bottom-line metrics will flow, and we need to measure this.

We need to--there's an adage that says you cannot manage what you don't measure, and these are things, these are measurements that should be coming before the committee and making sure that those things are tied together that should be included in legislation. I also would be neglect if I did not mention that wildfire survivors from those fires from 2015 to 2018 are still suffering and not getting paid. They are 30% short.

I'm hoping that whatever legislation that you are looking to put forward to advance the cause for LA wildfire survivors, you also consider the plight of North Bay wildfire survivors who are left short. This is something that should have been solved. This was the promise of AB 1054, and now we really need to move that forward and address that solution now.

There are ways to get this done. There are bill credits, there's resiliency bonds, there's other vehicles to get that done. I'd encourage you to reach out to me for those types of solutions, and lastly, I just would like to say that for the wildfire survivors in LA, we have to really be cognizant and learn from the lessons that happened in the North Bay. Right now, we have utility investors trying to leverage these systems to their advantage. We have predatory attorneys swooping in on these areas trying to make a profit.

We have to learn from the mistakes that occurred in the North Bay fires--a lot of good things came out of that--but we really need to make sure that we're using this as a learning opportunity and making sure we're putting safeguards in place so that the vulnerable folks in LA are supported. Thank you for your time.

Thank you. I had not heard that, you know, in that way, wildfire survivor. You're right, but you are a wildfire survivor and I appreciate you, you know, advocating for the other survivors and for sharing the lessons. Thank you. Okay. Having heard all the public testimony, I want to thank everyone who participated, and any final comments? No.

I want to thank everyone who participated. If you're not able to testify, you may submit your comments or suggestions in writing to the Senate Committee on Energy, Utilities and Communications or visit our website. And members, I'm sure we'll be submitting some follow-up questions too to some of our panelists here today.

I'm committed to ensuring we take the steps necessary on energy accountability and doing whatever we can in short-term, medium-term and long-term affordability as well. Thank everyone for your participation. This meeting of the Senate Committee on Energy, Utilities and Communications is adjourned. Thank you.