Assembly Standing Committee on Utilities and Energy

Good afternoon and welcome to today's hearing of the Assembly Committee on Utilities and Energy. Before we begin with today's business, I have a few housekeeping announcements to make. As is customary, I will maintain decorum throughout the hearing in order to hear as much from the public.

Within the limits of our time, we will not permit conduct that disrupts or otherwise impedes the orderly conduct of legislative proceedings. Any individual who is disruptive may be removed from the room. Today we have 12 measures on our agenda. Seven are on consent.

As a reminder for primary testimony, we'll have two primary witnesses on both the support and opposition side. They'll be given two minutes each for any additional witnesses on a measure. Please only state your name, position and affiliation. That's our housekeeping. We cannot commence with the business of the hearing until we get a Republican Member on the Committee.

I've been told that they are on their way, so we will take a brief intermission while we await their arrival. But we do it out of respect. I wasn't talking to you.

Okay, we are back. We are still awaiting a Republican Member, so we are going to proceed as a Subcommitee. Assemblymember Bauer Kahan. Thank you for your patience. The floor is yours.

Good afternoon, Madam Chair and Members. zero, and right through the door.

Perfect. Ms. Patterson.

The Vice Chair is here. I want to start by thanking the Committee and the staff for their hard work on this Bill. And as I said earlier, the really exceptional analysis coming out of your staff. I thought it was great and I'll be accepting the Committee amendments. I today I'm proud to present AB222.

The Bill is intended to do two things primarily. One is to ensure that we have accurate information about what data centers will need from our grid, which is critically important for a lot of reasons. But one is we need a reliable grid.

And we can only do that if we have accurate information about the demand that is being put on our grid by all things, including data centers. And secondarily, the Bill intends to protect rate payers from increased energy costs resulting from from the construction and operation of data centers in California.

Data centers are currently being constructed in an unprecedented rate in this state. Often people talk about how many data centers are going out of state. That is in part true. But to train models, you need to ensure that there is not lag time.

And so many data centers are also going in in our community, which the analysis did an excellent job of laying out. These buildings consume a tremendous amount of energy. The LA Times reported last August that data centers now consume 60% of the energy in the City of Santa Clara.

Over half of the energy Santa Clara is now data centers. The math is simple. When demand for energy increases and energy supply does not increase, energy rates go up. And so we have to ensure that our energy infrastructure stands up to these needs and protect ratepayers from bearing that cost.

AB222 is first and foremost a ratepayer protection measure, but it is also a measure that protects consumers from rolling blackouts. It makes sure that our grid is strong as we move forward in a world where AI becomes a larger part of our economy. I want to be clear.

Nothing in this Bill, which I consider to be a very light touch, is intended to stop data centers in our community. In fact, just the opposite. I believe that in order for data centers to come into our community, they need reliable energy to keep their data centers up and running.

So this Bill, which collects data and ensures that the costs are not being borne by residential ratepayers, is really meant to move us forward in an era where we need these in a way that is responsible and makes sense. And the Energy Commission is central to making sure that that is true.

This Bill was actually born after I, as privacy Chair, had a conversation and found out that it wasn't clear to me that there was good data going into our projections as it related to data centers. And so that is the Bill. I think it's simple.

I think it is a light touch, but I think it is an important one for California ratepayers and for our grid. With me today is Eric Masanit Mellen Champ Chair of Sustainability Science for Emerging Technologies at ucsb, one of our very own.

Thank you. And I'm going to pause for just a minute so that we can establish quorum before we turn it back to you. All right, Madam Secretary, please call the roll.

[Roll call]

All right, thank you. The floor is yours. Thank you very much to the Committee for inviting me here today. So, my name is Eric Massonetta and I'm a Professor at the University of California, Santa Barbara.

I've been studying the sustainability of data centers for more than 20 years now, and that includes co authorship of a recent report to the US Congress on US Data center energy use and trends in that Study, we estimated that the US Data center sector, its electricity use has been growing rapidly, up from around 2% of national energy use in 2020 to 4% by only 2023.

And we found that it's likely to continue in the near term, maybe up to around 6% or even more by 2028. And nearly all of that growth is being driven by the proliferation of computing technologies for artificial intelligence, both training models and model inferencing in data centers.

And many of those data centers are right here in the State of California. To better understand these trends, energy analysts like me need much better data on the actual energy use and characteristics of data centers. Most people don't know this, but currently most of the numbers you hear are estimates.

They come from the analyst community, and they're based on best guesses that analysts make by using a patchwork of scarce public data, expert assumptions, and sometimes even proprietary industry data that can't be shared.

In fact, you may have noticed if you read the news, there are a lot of numbers floating out there, and the difference between them is often very vast. And the reason for that is we lack data on the real energy use of the sector.

And in my view, these huge variations in estimates that are out there do a disservice to everyone because they preclude a common view of the data center sectors, current energy use, and where it may be headed. And they also don't give us any ground truthing into what the actual energy use of the sector may be.

But it's my opinion that this cloud of uncertainty could be substantially reduced if analysts had access to consistent, timely, and reliable data, whether in the public domain or at energy planning agencies. Data are really key.

And these data needs are so pressing for understanding the sector that my colleagues and I recently authored a paper titled, to better understand AI's growing energy use, Analysts Need a Data Revolution. So we were very strong in our recommendations for better data. So in closing, I'll just say you can't manage what you don't measure.

And I think the most important part of getting better data is making sure that all stakeholders have a common view that's based on empirical evidence, rather than cherry picking best guesses from the most appropriate source to form an opinion. And with that, I look forward to answering any questions you may have.

Thank you. All right, so at this point, we'll take additional testimony in support. If you'd like to testify in support of AB222, please approach the microphone. And as a reminder, just name, position, and affiliation, please.

Good afternoon, Madam Chair, Members. Jacob Evans with Seattle, California in support. Thank you.

Megan Shumway in support with Climate Action California, 350 Bay Area Action and 350 Sacramento.

Good afternoon, Madam Chair. Mari Lopez with the California Nurses Association in support.

Santiago Rodriguez with California Environmental Voters in support.

Thank you. Okay, we'll move now to any testimony in opposition. Is there a primary opposition witness? If so, approach the dais at this point.

Welcome. Thank you. Good afternoon, Madam Chair, Members of the Committee, thank you for the opportunity to speak today. My name is Kara Bunder in respectful opposition to AB222 on behalf of the Data Center Coalition. DCC is the National Membership Association for the data center industry.

Our Members include leading data center owners and operators, as well as companies at least large amounts of data center Capacity as written, AB222 raises concerns regarding privacy, security and technical feasibility for data centers, data center customers, and the many residents and businesses across California that depend on the digital services that data centers enable.

Businesses and residents across the state use many technologies supported by data centers, including smart thermostats, smart meters, managed electric vehicle charging and grid enhancing technologies. We appreciate the author's office for giving us a heads up about the amendments, and we look forward to reviewing those along with our membership once those are in print.

Data centers are large users of electricity, but they are also highly efficient facilities. There are also only one large end user driving increased demand, as noted by Lawrence Berkeley national laboratory in a 2024 report. This demand is being driven by electric vehicle adoption on shoring of manufacturing, hydrogen utilization and the electrification of industry and buildings.

The proposed energy reporting requirements risk disclosing trade secrets and creating safety and security vulnerabilities. Disclosures of detailed, proprietary and operational information such as energy consumption and changes can be used by competitors to deduce trade secrets and inform competitive strategies.

Or worse, adversaries can use such information to deduce what types of services are being served in a facility based on the energy use profile.

This leaves critical infrastructure more exposed to cyber threats, industrial espionage and exploitation, and consequences could be felt far and wide given that data centers serve a range of essential services including state and local government, law enforcement, fire and rescue services, cybersecurity, hospitals, among others.

Data centers are repositories of vast amounts of information such as financial data, personal information, intellectual property. We strongly urge the Committee to assist advancing AB222 and thank you for your consideration.

Thank you. Welcome. Good afternoon, Madam Chair and Members Ahmad Thomas, CEO of the Silicon Valley Leadership Group in respectful opposition to Assembly Bill 222 I'd like to start with a simple statement. It is impossible to overemphasize the value and necessity of data centers to our everyday lives, commerce and public safety.

Data centers are not a nice to have. They are required. Data centers are not a convenience. They are non negotiable critical infrastructure. Data centers are not something we can only have in Nevada or Arizona or Texas and still have the innovation economy that our state General Fund demands of us.

With respect, AB222 is not an innocuous Bill just asking for reports and information. The Bill would require the PUC to make a judgment call on whether the costs of a data center are just and reasonable.

The Bill would require the PUC to minimize the shifting of costs attributable to the construction or alteration of the data center to ratepayers who do not directly benefit from the data center. Legislation can send clear signals, particularly in the context of our innovation economy.

What does this Bill say to those entrepreneurs who want to bring the next generation of technology to the world stage? Here in California, if we are poised to give the PUC more power with regards to data centers, what is the impact? The decline of data centers will have a direct impact on our state General Fund and economy.

...of the entire state's GDP According to the 2024 Silicon Valley Index by Joint Venture Silicon Valley. As the current regulatory regime is already rigorous and substantive, and therefore there is no need to add another layer to the siding of data centers, nor is there sufficient reason to expand the PUC's power over them, I respectfully ask for your no vote. Thank you.

Thank you. All right, if you will open it up for opposition testimony in the room. If you would like to testify in opposition to AB222, please approach the microphone.

Madam Chair. Members. Scott Wetch on behalf of the California Coalition of Utility Employees, State Association of Electrical Workers, and the California State Pipe Trades Council, and the Western States Council of Sheet Metal Workers who are opposed, but look forward to continuing to work with the author. Thank you.

Madam Chair. Members. Jose Torres with TechNet in respect for opposition.

Good afternoon. Andrea Deveau on behalf of the California Asian Chamber in opposition.

Jasmine Vaya on behalf of TechCA in opposition. Thank you.

Stephanie Jimenez on behalf of Bay Area Council in opposition.

Good afternoon Chair and Members. John Kendrick from the California Chamber of Commerce in opposition. Thank you.

Okay, bringing it back to the Committee. Questions or comments from Committee Members? Vice Chair Patterson.

Yeah, just a comment on this. And I think it's fair to consider potential ongoing what the need for data centers are in this state in terms of how that might impact retail electric rates for, for people in their homes. Because obviously we have a supply problem in this state that I think should be addressed.

But one thing I like to do in this Committee and every Committee is actually read the support and opposition letters because it tells you a lot about the motivations. So one of the opposition letters from the California environmental voters is, is very clear on why they support this Bill.

The increase in energy demand due to AI paired with grid infrastructure expansion necessitated by the construction and expansion of data centers. In other words, they support the Bill because they're concerned about the construction and expansion of infrastructure in California. I think we need more infrastructure in California.

And I, I'm not necessarily saying you even agree with that particular statement, but, but that's my concern with the Bill is it might ultimately limit the need for data centers in this state, which I think we need them close to home. We need a lot of them.

They are energy intensive and I'm open to conversations on how we don't increase everybody's electric rates as a result. But I do have some concerns with this Bill and just wanted to suggest that and appreciate the letter of support here on what I'm worried would happen if this Bill pass.

May I, Madam Chair? Okay. Thank you. Yes. No, I appreciate that. And I will say, obviously, you know, appreciate the support, but from my perspective, you know, we are in a clean energy revolution here in California.

And we, I agree with you, and I know that Madam Chair is carrying bills that will help us to move more clean energy infrastructure into the future here in California. And that is something we need to do. There's no question about that.

And that construction is happening based on these projections that the CEC has about our needs in the future. And that's critically important. That that's right, that what we are building matches the need in California. And that's why we're doing this data piece, because it might be right. I just don't know right now.

And I don't think the CEC knows because the data they're using is. Well, they're not. I don't know that they're using real data, I guess I should say. And so I agree we need to be building more infrastructure.

And I think for me, we can't cite data centers in a state where we can't guarantee that we can keep the lights on at the data centers. And so to be honest, in order to do what we need to do to build data centers, we have to have a grid that can sustain it.

And I think that, you know, I appreciate the comments of the opposition, but I will say that I don't think that these data centers should be funded on the backs of hardworking Californians. That if you want to start a business and you want to build a data center, I support that.

But I don't think that my, you know, I talked about it a lot when I was on this Committee. My 100-year-old constituent who called me, whose PG&E Bill had gone up three times what she had paid before her Bill should not go up because the business wants to build a data center.

Now, they should do that, and we should empower them to do that, and we need them to do that. But that should not be borne by our ratepayers. That feels like the wrong call. And that's what the Bill is intended to do. And I will note that in our conversations with the IOUS.

You know, they're not here, and they're not here for a reason, because it is clear that the customers that are demanding this should be the ones paying for it.

Assemblymember.

So, first of all, thank you. I had some conversations with Assemblymember last night. I think the first part of the Bill is very, very, very important. And As I mentioned, the second part of the Bill related to the rate making I also think is important, but I'm confused.

I do agree with some of the comments made by the electrical workers just about how a rate making would affect achieve the author's goals, which I share, frankly. And so I'd like to ask you to work with the electric workers on this going forward.

In my mind, I think our goals are the same, which is one, we don't want to inhibit data centers in California. They're employers here. We also don't want to inhibit transmission necessary for the data centers. Right.

And so we don't want to have the rate making result in, not in not enough money in the rate base so that transmission lines can be constructed and electric workers that are working on those lines can get paid fairly.

But on the other hand, we don't want the cost of the additional transmission to be borne by residential customers and maybe even other business customers. And so that's a very complicated set of objectives.

And so I'm hoping that, I'm going to vote for this as I mentioned last night, I'm going to vote for the Bill today, but hoping that you will work on trying to figure out how that can be refined so that those objectives can be met.

And I know you offered last night to continue to work with the electric workers on refining the Bill. So thank you.

Yes, no, and I appreciate that Mr. Wedge said he looks forward to working with me because we have in our time had differences. We've also found common ground.

And I think that in their letter, their focus is also on ensuring that residential repairs have the lowest cost, which is, I think, a shared goal of everybody in this room. And so to the extent that they think I've missed the mark on that, I'm absolutely happy to continue working with them.

All right, just a couple comments from me. So I think the opposition witness, I think you began by framing your remarks in terms of the value and necessity of data centers.

And I just want to make it really clear, I won't speak for the author, but I think that we all recognize that data centers are vital all across the State of California. I think we also recognize that they're a really important part of our innovation economy.

And I do not see the goal of this Bill being to deter the development of data centers across the State of California.

And so I think you mentioned, I think legislation sends a signal, I think we want to do everything we can to send a signal that we absolutely want people to start businesses in California to continue to grow their businesses in California to continue to create great jobs here in California.

But we do need to actually understand what that means for our grid in order, as the author said, to keep our lights on. So I think we can do both, and I hope we can do both. And with that, would you like to close?

Thank you, Madam Chair. I appreciate those comments. And I will say one thing that didn't come up, but I'd like to address is that in the amazing amendments, a lot of what I believe you said has been addressed by the data centers, just having to report their locations since the CEC already has their meter data.

And so a lot of that has been addressed thanks to the Committee. Just wanted to make sure we had that on the record. And with that, I respectfully ask for an aye vote.

All right, we have a motion from Assemblymember Rogers. Second from Assemblymember Harabedian. Madam Secretary, please call the roll.

Item number one. AB222. The motion is do pass as amended to privacy and consumer protection. Petri Norris.

Aye.

Petrie Norris. Aye. Joe Patterson.

No.

Joe Patterson. No. Boerner. Calderon.

Aye.

Calderon. Aye. Chen. Davies.

No.

Davies. No. Gonzalez.

Gonzalez. Aye. Harabedian.

Aye.

Aye.

Harabedian. Aye. Hart.

Aye.

Hart. Aye. Irwin.

Aye.

Irwin. Aye. Kalra.

Kalra, Aye. Papan.

Aye.

Papan, Aye. Rogers.

Aye.

Aye.

Rogers, Aye. Schiavo. Schultz.

Schultz, Aye. Ta. Wallis.

Aye.

No.

Wallis. No. Zber.

Aye.

Zber. Aye.

Thank you, Madam Chair.

113. That bill is out and we'll leave the roll open for absent Members to add on. All right, moving on to file item number 8. Assembly members of Burr. Because we don't. There's no one. No. All right. We will also dispense with the consent calendar as we are in transition. Moved by Vice Chair Patterson.

Seconded by Assemblymember Schultz. Madam Secretary, please call the roll.

Item number two. AB 368. The motion is due. Passes amended to natural resources item number three. AB 443. The motion is due. Pass to natural resources item number four, AB 472. The motion is due. Pass as amended to natural resources item number five. AB 526. The motion is due. Passes amended to natural resources item number six, AB 531.

The motion is due pass to natural resources item number seven. AB 737. The motion is due pass to Appropriations item number 11, AB 1273. The motion is due pass as amended to appropriations. Petrie Norris. Aye. Petrie Norris. Aye. Joe Patterson. Aye. Patterson. Aye. Berner. Calderon. Aye.

Calderon. Aye. Chen. Davies. Davies aye. Gonzalez. Gonzalez, aye. Herbidian. Herbidian aye Heart. Heart aye. Erwin. Erwin aye. Kalra aye Kalra aye pappin aye papin. aye Rogers. Rogers aye Schiavo schultz schultz aye taw Wallace Wallace aye zipper.

Aye okay 140 the consent calendar is dispatched with we'll leave that open for absent Members to add on Assembly Member Zbur.

Thank you Madam Chair Members, I'm proud today to present AB941 which will address the need for a more efficient and predictable regulatory process within the California Public Utilities Commission for high priority transmission projects. California has committed to economy wide carbon neutrality by 2045.

A critical component of this goal is the rapid build out of renewable energy generation and associated transmission infrastructure. This need has been made evident in recent forecasting by the California Independent System Operator CAISO where they've identified billions of dollars in new transmission that would be needed by 2040.

Unfortunately, while the CPUC has introduced reforms to streamline the permitting process for these projects, the absence of statutory timelines can result in vital transmission projects facing significant and unnecessary regulatory and environmental review delays, often taking a decade or more to complete and further hindering the state's energy transition.

Additionally, we heard last week in this Committee by the Public Advocates Office that accelerating the timelines of these regulatory processes could save consumers money in their rates. As California's witness the tragedy of climate related disasters, these events underscore the need to address the climate crisis immediately.

Efforts to expand the electric grid, particularly through transmission projects, are essential for integrating renewable energy, reducing greenhouse gas emissions and ensuring grid reliability.

AB941 is a simple and critical solution as it will establish a 270 day timeline for the CPUC to determine whether or not to certify the environmental impact report of completed permit applications for priority electrical infrastructure projects.

This Bill does not weaken environmental standards, would not weaken or change environmental standards or public review or comment requirements associated with the proposed projects. Under ceqa, with proper planning, it's possible to shorten the length of the EIR process and retain robust environmental review and public participation standards.

The CPUC under a recent General Order, required the front loading of much of the environmental review prior to the time a permit application is deemed complete. Additionally, AB941 establishes guidelines for project eligibility focusing on infrastructure essential for renewable energy integration, decarbonization efforts and grid resiliency.

By establishing these timelines, this reform ensures the agency and the applicant act with urgency in completing all necessary reviews and projects move at a pace required to meet California's clean energy future. And of course, these are for the priority projects I Ask for your I vote at the appropriate time today.

With me we have Aaron Martin, San Diego Gas and Electric, one of the sponsors of the Bill, v. John White, Center for Energy Efficiency and renewable technologies and Mr. Scott Wech, another one of the sponsors of the Bill, who's here to answer questions.

All right Good afternoon, Madam Chair, Members of the Committee. My name is Erica Martin. I'm the Director of Environmental Services for San Diego Gas and Electric Company. I'm happy to be here in support of AB941.

This Legislature and especially this Committee has spent a lot of time focusing on the issues involved in lengthy permitting delays for the infrastructure necessary for the clean energy transition. We are really grateful for that work and ask that you continue it with AB 941.

This Bill proposes a targeted, straightforward measure to reduce delays for projects that are essential to the clean energy transition. It would apply as Assembly Members Aber just stated a timeline, a 270 day timeline for certain priority projects.

Once those projects, the application for those projects has been deemed complete by the agency for the agency's review as well as their compliance with ceqa. It does not create an exemption from the need to obtain a permit. It does not create an exemption from the need to go through CEQA for the agency to comply with ceqa.

It simply establishes a timeline. It also provides some limitations on the agency's ability to identify deficiencies in the applicant's process project application so that it's not another part of the process that increases the delay of the application being deemed complete and therefore additional delay in the permitting process.

270 days is certainly an accelerated timeline for both the project applicant as well as the agency. But in light of the challenge in front of us, we need to take big steps to move forward.

All parties in the process, applicants and project proponents included, have to rethink how we do things so that we can be more efficient with our limited time and our limited resources.

I also think it's important to remember that the reason for the state's climate policies, SB100 included, is to protect us and the natural environment from a warming climate from the devastating impacts of climate change. And to do that, we cannot preserve the regulatory status quo. I urge you to vote yes on AB 941. Thank you.

Thank you, Madam Chair Members, John White with CERT and the Clean Power Campaign we were part of a group of eight parties at the PUC who jointly proposed several of these changes, some of which were considered, but the most important of which was the voiding of duplication in the existing process.

There's nobody in any state agency that I know of that does CEQA the way the PUC does. They have two documents required. The applicant submits a document, the normal process, environmental assessment, and then they hire a consultant to do it again. And that duplication isn't necessary.

If there are issues in the eir, then you identify them and mitigate them. And the whole point of this isn't to blame ceqa. CEQA isn't the problem. The problem is that the way it's being implemented.

I also think that it's important to recognize that these projects, as Erica said, are going to lower costs because they're going to enable us to reduce our dependence on gas and enable us to interconnect storage, batteries and solar and other technologies that will minimize our fossil fuel dependence. But without transmission, there is no transition.

Thank you. All right, we will open it up for. For additional support testimony. If you'd like to testify in support of AB941, please approach the microphone.

Thank you. Chair and Members. Marissa Hagerman with Trattan Price Consulting on behalf of American Clean Power Association in support.

Kara Martinson on behalf of the Large Scale Solar Association in support.

Melissa Cortese on behalf of the California Wind Energy Association in support.

Corey Bullis on behalf of Invenergy in support.

Brandon Ebak on behalf of Pacific Gas and Electric in support.

Delilah Clay on behalf of the Independent Energy Producers Association in support. Thank you.

Mike Monaghan on behalf of the State Building Trades. In support.

Chris Rose on behalf of Silicon Valley Leadership Group, in support. Thank you.

All right, we'll move to opposition testimony. Do we have anyone who's a lead witness in opposition? You can go ahead and approach the dais. All right, looks like you do not have a lead opposition witness.

Anyone wanting to provide testimony in the room, you can approach the microphone if you're in opposition to AB941.

Good afternoon, Monea. Thank you. Good afternoon. Monea Jennings, on behalf of the Anza Brago Foundation, in respectful opposition.

Okay, thank you. Bringing it back to the Committee. Questions or comments? Assemblymember Wallis, Just a quick question.

I want to thank the author for bringing this forward. Looking forward to supporting it. Mr. Wedge, just out of curiosity, can you explain why your clients have a different position on the CEQA Bill as opposed to other CEQA bills?

Thank you, Mr. Wallace. Scott Wech, on behalf of the California Coalition of Utility Employees and the State Association of Electrical Workers. Because this Bill, rather than taking a meat cleaver to CEQA and just eliminating or exempting these projects. It takes a very thoughtful approach to it as described by Mr. White.

And also because these right now we have probably about $40 billion of transmission projects in the CAISOS 20 year transmission plan, taking 12 to 15 years to get these transmission projects built. And the cost of those projects goes up by about 10% per year. And that's not even taking into consideration the impacts of tariffs.

So on Liberation Day, you could probably add another 15 to 20% on those as well. Thank you. Thank you.

Thank you. Any other Assemblymember? Irwin.

Yeah, I will be supporting the Bill. I think this is really important to meet our clean energy goals. And I'm sorry that there wasn't more opposition here because they certainly had a lot of things listed in their letters.

So if you could address first, I want to get clarity when you're talking about identifying deficiencies that is done before the 270 day period. And then the alternatives, looking at the alternatives is also done before the 270 days starts.

Yes. I mean basically the applicant has an ability, has a requirement to submit their environmental document in order to get the application deemed complete. So they should be. I know from one of the opposition letters they Talked about the 270 day period not being enough time to do alternative route analysis.

They should actually be doing alternative route analysis in the initial documentation that's submitted.

Now if, for example, Members of the public as part of the CEQA process come in and say you should have done a different route, just like that can happen in any alternatives analysis under CEQA and the lead agency determines that another route might have had fewer environmental impacts and should have been studied, well, then that would be one of the reasons under CEQA and under the Bill why the EIR would then have to redone and then that would start the 270 day clock again.

Okay. And then is there any enforcement mechanism on this?

So the enforcement mechanism for the applicant is if they don't comply with the 60 day periods on responding, obviously their application doesn't move forward for, for the agency. What it does is it gives the applicant an ability to actually go to the PUC itself and seek relief for them not following the deadlines.

Now that isn't actually in the Bill now, but that's been raised. A number of people have raised that and I think we're going to think about whether or not we need to spell that out in the Bill.

Okay. And then one last thing is it seems like almost any transmission project could be considered a priority project. So is there enough manpower to actually accomplish this 270 day deadline or period with that?

I think that's a fair question. The one thing I'll say is when Assemblymember Garcia had the Bill last year and of course this is not any criticism of him, he was doing an amazing job and of course much of his work was actually picked up in the General order that the PUCC happened.

But it really had a much more expansive view of what was what this applied to. This does apply to a subset of those which are the priority projects identified by Caiso and there's a couple other elements that get you into the priority bucket. So this.

Substations that have been identified as necessary based on the forecasted electric demand in an area. So just to make sure that the homes and cars that are electrified get the electricity coming in on the transmission. So that's the only other non transmission piece that was identified. Sorry I interrupted you. You were.

No, no, no, no, that's good. Thank you. I appreciate that. I didn't have the complete answer myself so. But I think what this would do is it would require that those that these priority projects actually be prioritized and it's a much smaller group of folks than last time.

I think it's still a question that we're going to have to work out with the CPUC staff as this moves towards appropriations about whether or not they have very staffing.

I know one of the other Members has raised concerns about whether or not we would actually take staffing away from other kinds of projects that are outside the energy space. Obviously that's not our intention to do that.

We think that there should be sufficient staff capacity to just prioritize the priority projects and sequence some of the others later without doing that. But I'm not going to tell you that we've had those conversations in a lot of detail yet. And I think that's one of the things we're going to be focusing on.

All right, thank you.

Assembly Member Patterson.

Thank you. This is a very well, first of all great Bill. I supported a similar Bill last year. It's very California esque to to fight over needing maybe more than nine months for a CEQA evaluation.

As you know, I also serve as Vice Chair of the Housing Committee and the development community has been asking for something like that. It literally takes years to put in a house and you know, it's a huge affordability issue for people in General. But I think, you know, like you said, this is a great as actually Mr.

Wech said is that this doesn't get rid of CEQA, it still allows it to go through the process. So I think it's a great Bill. And also I think it should be replicated throughout the state, something like that.

And regarding the PUC, the doubling of the size of that agency, hopefully they have the resources to do this within their big budget. That'd be great. So I will be supporting this. Thank you so much. Appreciate it. Assembly Member Boerner, s

Sorry for coming late. I missed the beginning of the presentation. So if I ask questions that have already been asked, my apologies. You know, I'm not a big fan of CEQA streamlining. I usually don't vote for it. I'm more concerned though about prioritizing these projects over other projects.

If you assume we're not increasing the CPUC budget, which I am unlikely to support increasing the CPUC's budget, I worry that we're prioritizing these projects and we're picking and choosing which projects should be prioritized over other projects. Can you comment to that?

I know we wanted to talk before today and we didn't get a chance and I'm sorry about that.

Normally and you, you gave me plenty of heads up. You're going to ask these questions. So thank you very much. I think what I would say is that we are relying on the prioritization of CAISO and the other experts as to what projects are actually are the most important ones as we prioritize them.

So I mean, if you want to go into the details of what the priority projects are.

Sure. I'll also note that for projects that are outside of the transmission or electric infrastructure area, there are separate staff dedicated to telecommunications projects or other areas.

Yes, I'm aware.

So that might be one way. There's also, I think the reforms that the CPUC just enacted in the GEO 131e reform set up a lot of good process efficiencies that they have set themselves up for success here.

One of them is what Assemblymember Zabur mentioned earlier about the burden being on the applicant to present a lot of the environmental review upfront, the data, the surveys for the agency's independent review. But that work is happening before it even comes to the CPU scene and application.

So that should alleviate burden on staff to be writing that document themselves or retaining their own consultant to write that document they're reviewing for consistency with ceqa. So things like that will help make the process already more efficient.

And then I think everybody, applicants included, have got to figure out a way to be more efficient and faster with when we present information as well as other stakeholders who are involved in the process. We have to take a hard look at it because otherwise the projects won't get done in the timeframe that we need them.

So we could prioritize these projects and reduce the CPUC budget. Is what I just heard.

No, a win, win. There you go.

Okay, I won't say that we've discussed that. I think I would need to see more data about that because everything you just said makes no sense to anything I've ever seen from the CPUC. I've never seen them do something faster and better and lighter. Sorry, CPUC. Sure, you're great, but I haven't seen them do that.

So when we're taking all the projects that are in with a certain area and we're going to elevate some up, and I agree that building of transmission lines is an issue for our grid capacity, that's not a question that I have.

But when you take the area that they're responsible for and you raise them up and you say these are going to be done, there's no way within a government agency. They're not. There's not a trade off within that staff.

If you keep the staff separate and thinking that they've done General, you know, housekeeping and made themselves more efficient, then we would have seen a reduction in the number of CPUC staff which I don't think anybody's ever seen. So those two things don't match with me personally.

So I'd like to see more of that before I can support this.

Yeah, the one thing I'll say is the General order was very recent. So you know, this is something that I like to describe it as giving the agency some deadlines and some deadlines to shoot for which we really have not done that. And I think we have to try some new things.

And the thing that I would say, the reason why I'm proud of this Bill is that it's a Bill that streamlines it. It's intended to speed these things up but without really harming CEQA and either the standards or the public participation requirements.

And if you look at the Bill, it's carefully crafted so that there's off ramps there that if for some reason, you know, we have actually the applicant that's actually doing the environmental document now they have an interest in actually doing a very sound environmental document because if it goes through, once you've gotten into that 102270 day period and you have people coming in through the public comment period and coming and saying you didn't analyze the right alternative route.

You were weak in this area. The agency has to make with findings. They've got to make findings under CEQA that you've met CEQA standards. And if they can't make those, then this process starts all over again. And that 270 day clock starts again. But that's a lot faster, obviously, than waiting 8910 years.

It's giving both the agency and the applicants deadlines that they're, that they're supposed to meet. And I would sort of say, I think it's, it's, you know, we've done our best to try to meet all of the various interests that are here, both protecting the environment and speeding this up.

And I think this is the, you know, a good way to do this.

Okay. Seeing no other Members wishing to ask a question, I'll just share a comment. I want to thank you for bringing this measure forward. I think it's an incredibly important piece of legislation. We all recognize we've got incredibly ambitious and incredibly important climate goals. The bad news is we are not on track to deliver on those.

And the status quo is absolutely not going to get us there. We've got to move faster. And I think we've got to be smarter about the way that we're doing this. And I'd say the good news is that we can do that without taking shortcuts. We can do that without cutting corners.

And I really just appreciate the thoughtful approach that you've taken with this Bill and please support it today. And with that, would you like to close?

I'd just like to thank the Bill sponsors and I want to thank so many of you who I had conversations with ahead of time on the Bill. I also want to point out that Environmental Defense Fund supports the Bill and obviously John White, who's a legend in this area, as one of our sponsors.

So I just want to say that and ask for your. I vote.

Thank you.

Thank you. Okay, Madam Secretary, please call the roll. Okay, we've got a motion from Assemblymember Rogers. We have a second. A second from Assemblymember Schultz. Okay, Madam Secretary, please call the roll.

[Roll call]

[Roll call]

Thank you.

15-0. That Bill is out and we'll leave the roll open for absent Members to add on. Moving to File item number 10, AB 1191. Assembly Member Tangipa.

A lot of important people in here. Making me nervous.

The floor is yours. Thank you.

Well, thank you all for letting me join you. And excited, especially as I've been listening in. So let me begin. Madam Chair and Members. First, I want to thank the Committee staff for their thoughtful and diligent work on the analysis. As this Committee is well aware, addressing the cost of living is a top priority this legislative session.

For many of my constituents, one of the most burdensome and unpredictable cost, often exceeding even their mortgage payments, is their monthly electric bill. Over the past decade, electric rates in my district have increased by more than 110%.

My office is inundated with calls from residents sharing heartbreaking stories, families forced to choose between putting food on the table or keeping the lights on. And what's become abundantly clear is this.

With 20% of households behind on their electric bill, regardless of whether someone is enrolled in the CARE program or not, Californians simply cannot afford to keep their homes powered. It's simple supply and demand economics. If we increase our eligible green power generation facilities by removing the artificial policy barriers, we can decrease people's costs through embracing abundance.

The best part about this Bill is that we can support current investments to grow the RPS while also lowering utility costs without adding a single carbon emission to achieve that goal. I'm willing to commit to amending this Bill to make it clear it's specific to only existing large scale hydro facilities.

However, without this Bill, unless every step of the current plan goes exactly as designed, which is unlikely, we will fall short of bringing enough RPS eligible resources online to meet the 2030 targets. That shortfall drives up near term compliance costs, creating artificial scarcity that disproportionately benefits developers at the expense of ratepayers.

Today, dozens of load serving entities, including IOUs, CCAs and others, are forced to comply for a shrinking pool of resources regardless of the provider. These rising costs are being passed directly to the consumer in the form of higher electric rates.

Forecasts indicate that by including the state's 21 large scale hydroelectric facilities capable of producing over 12,000 megawatts as eligible under the RPS, we could save hundreds of millions of dollars annually across the Casio territory between now and 2030, all while expanding access to clean affordable energy.

By doing so, we can reduce energy bills for millions of Californians while staying firmly committed to renewable energy goals. It's a common sense step that balances affordability with environmental responsibility. And it's urgently needed. Here to testify and support is Manny Peralez of owner of Yosemite Falls Cafe.

Hi. Am I ready? Yeah. My name is Manny Perales and I'm the owner of Yosemite Falls. I started in the restaurant business when I was 16 years old. The Santa Fe Mia family of dicicco's took me under their wings, taught me how to cook, taught me the industry, and I've been working in restaurants for 45 years.

I started my own business almost 20 years ago. I got up to six restaurants, 300 employees. I was very proud of that. Living the American dream in beautiful California. But just over this last decade, you know, higher costs and doing business in California, now I'm down to two restaurants and 100 employees.

And my biggest problem right now, and my biggest cost line is PG&E. Last summer, in June, $21,300 for one month, one restaurant, double what my rent is. And for the summer months, June, July and August, $60,000. It's just not sustainable for a restaurant, you know, that seats 160 people.

And I'm looking at my rates on that $21,000 Bill, and it was 14 cents for normal rates. And during demand times, 50-plus dollars per kilowatt, you know, just doing the math, and I had to ask a couple math experts. That's 35,000% increase from the normal rate to the demand rates.

Who can, you know, what business can increase that much anywhere in America or in California other than probably PG&E. Something has to be done differently. When we're having those summer months, My thermostat has to be set at 72 to 74 degrees because if it was any hotter, nobody in this room would stay in that restaurant.

Nobody's going to sit in the dining room when it's hot. So I have to maintain those temperatures for the consumer. I have to keep my refrigeration at 38 to 40 degrees or the Health Department is going to shut me down. I have to keep the consumer safe. So during those hot times, those kilowatts, they got to run.

And restaurants can't go and adjust the walk-in cold box. It's impossible, you know, so I think, you know, I'm down to two restaurants. But if something doesn't happen this summer, there may be another hundred employees unemployed because we just can't sustain these, these rates, it's just crazy.

If you just give me 10 more seconds, PG&E expert called me up and said, hey, I want to help. So the specialist was wonderful on the phone, sent me a company that was going to do an evaluation. So they did.

They came in and said, for $25,000, we're gonna convert your lights to LEDs, put some fancy motors in the CO box, and PGA will front that Bill. You pay us back monthly for the next four to five years. Wow. After 18 months, any savings was gone because of the continual increases of the rates. And guess what?

I still owe PG&E money. And I'm paying those monthly rates right now for no savings. So something, please, you know...

Thank you.

...help us out in California, not only small businesses and restaurants, but I have servers that are crying begging for loans because they can't pay their PG&E Bill. Something has to happen. Thank you for your time.

Thank you, sir. Okay, let's go ahead and open it up for additional support testimony in the room. If you'd like to testify in support of, support of AB 1191, please approach the microphone.

It's Jamie Minor on behalf of Turlock Irrigation District, please support the Bill. District Bill. So, thank you.

Thank you. Turning to opposition testimony. Do we have a lead opposition witness? You can come approach the dais at this time.

Thank you, Madam Chair, and thank you Committee. My name is Adria Tinnin, Director of Race Equity and Legislative Policy at TURN, The Utility Reform Network, here in opposition. AB 1191 would allow large hydroelectric generation located anywhere in the western grid, including Canada to count towards compliance with the California Renewable Portfolio Standard program, RPS.

Large hydroelectric resources have been excluded from the RPS program since its beginning in 2002. This exclusion should be preserved. The RPS program is intended to stimulate the construction of new renewable resources. AB 1191 would undermine this goal.

Including existing large hydroelectric output as RPS eligible would effectively reduce the RPS target by allowing existing resources to substitute for the development of new renewable energy facilities. If AB 1191 is enacted, no additional renewable energy procurement would be needed to meet the RRPS targets in 2030.

This change would effectively sunset new procurement under the program and reduce the total amount of renewable and carbon free electricity used to serve California. Since no new large hydroelectric generation is being developed in the Western interconnect, the only impact of AB 1191 would be increasing prices for existing supplies.

Making large hydro RPS eligible would increase the premium placed on existing hydroelectric resources and drive up prices in the wholesale market. Sellers would be able to charge more to California buyers due to additional value associated with RPS compliance. Those higher prices would be passed on to California consumers who are already burdened by skyrocketing rates.

The Legislature should not take any action that would drive up the price for hydropower and raise costs for California consumers. Fluctuations in large hydropower production create challenges under the RPS program. Annual changes in hydroelectric production are driven by the amount of water available at each facility.

As we all know, the amount of water we have each year is inconsistent not only in California, but all across the entire western grid region.

Just. Can I have a few seconds? Thank you. Greater reliance on large hydro to meet our clean energy goals would frustrate RPS compliance due to this variability of output which cannot be forecast in advance.

This could result in load serving entities seeking compliance waivers during periods of drought, increased use of natural gas fired electric generation which typically makes up the difference in those low output years and higher average wholesale electricity prices. Large hydro already counts as a zero carbon resource under SB100.

There is no need to additionally include it in the RPS program. The bottom line turn believes that AB 1191 would severely undermine the RPS program and would only prove economically and environmentally counterproductive. We urge a no vote on this Bill. Thank you.

All right, we'll open it up for additional testimony in opposition. If you'd like to testify in opposition to AB 1191. Please approach the microphone. Thank you.

Yeah. Madam Chair. Member. Julee Malinowski-Ball on behalf of the California Biomass Energy Alliance, respectfully in opposition.

Thank you. Melissa Cortez, on behalf of the California Wind Energy Association, in opposition. Also been asked to register opposition for the Large Scale Solar Association and the American Clean Power California. Thank you.

Good afternoon. Delilah Clay on behalf of the Independent Energy Producers Association, in opposition.

Good afternoon. Jacob Evans with Sierra Club California, in opposition. Thank you.

Steve Euler, California rate payer, in opposition.

Thank you. Okay, bringing it back to. Oh, we got one more.

Sorry, Madam Chair. Valerie Turella-Vlahos, Pacific Gas and Electric Company. We do not have a position, but want to thank the author for the work on this particular subject matter that we do feel warrants further and further discussion and a deeper dive. Thank you. Thank you.

Okay, bringing it back to the Committee. Questions or comments from Committee Members?

No, Vice Chair. Yeah, thank you. I was hoping somebody else would say something, but I got actually a question for the opposition. I was going to go back on the legislative history of the renewable portfolio standard. I happened to be around at that time and understand the purpose of it, but assume that it's about new generation. So would you support applying this to new hydro facilities then?

Then we would take a look at that language and consider that amendment.

What we would suggest for now is if the Legislature wishes to provide RPS eligibility for large hydroelectric power, it should at minimum raise the RPS requirement for from 60% by 2030 to 70% to account for the already existing infrastructure or the already existing and additional supplies.

I think that's a fair debate to have a fair conversation. I think there might be some concern about whether California can meet this existing standard in the first place with how long it takes to build infrastructure, which is like every conversation, and this. So your answer to my question surprised me and I appreciate it. Thank you.

All right. So it's unusual for us to present a Bill when I've recommended a no vote, so I'll just acknowledge that. But I know in my conversations with the author, you wanted to draw attention to the issue and to your proposal.

I think that the opposition witness did a really excellent job articulating why this Bill is deeply problematic and why I will not be supporting the measure today. I do want to thank you for your focus on affordability and for your concern about that.

I think that's a concern that is shared by certainly by me and by every single Member of this Committee. But the proposal as it is, completely blows up and upends rps kind of without really acknowledging that that's what's happening.

And so, as the opposition witness explained, the entire intent and design of the RPS program was to incentivize new renewable development. Like that is the point of that program.

If we want to look at that program and we want to interrogate whether or not that's designed, delivering good value for money for Californians, when they're asking, we're asking them to make investments in building our clean energy future, those are very much the conversations I think that we're all up for having.

But that's not going to happen within the construct of this Bill. And it's certainly not going to happen if we just say, all right, never mind, we're going to blow that up now.

So like I said, I think we have a shared goal, the mechanism and the solution is not one that I can support, which is why I will not be supporting the Bill today. But would you like to close?

Well, can I address that first?

Please do so. Yeah.

So when I look at, especially when we go back to the origination of the RPS, the standard was 20% by 2017. We've now shifted that standard all the way to 60% by 2030 and then 100% by 2045. So the original RPS has changed every single time.

And this is one area that we actually haven't looked at at trying to get and help us meet our goals. I don't think this is an OR Bill. It's an OR RPS or large scale hydroelectrical. I think it's and, and we can reach our goals.

And what I want to address too, especially in the opposition as well, in their stated opposition, and I hope everybody hears this, it says adding large hydro to the RPS would flood the market with cheap compliance credits. And I think every single one of us was reelected or elected into this office to prioritize the ratepayers.

When I say one in five homes, that also include my family six months ago, after I lost my father, it included the people I grew up with in low income housing.

And do we have to wait for that number to hit 25% or 50% or 60% when we have a cost of living crisis with higher insurance rates, higher housing costs, higher grocery costs? Every single one of us was asked to solve this.

So how much longer do we have to wait, especially if we have five years to make 60% when we're not even meeting that standard right now? So with that in closing, this is not just about Policy. This is about people. We have an opportunity and a responsibility to act.

By recognizing Large Scale Hydro as RPS eligible, we can immediately ease the financial burden on Californians while continuing to lead the nation in clean energy. And I am open to talk to everybody and anybody to find a solution and to make the amendments necessary so that way we all can work together. And I respectfully ask for your aye vote.

All right. Thank you. Do we have a motion? We have a motion from Assembly Member Patterson. Second from Assembly Member Wallace. Madam Secretary, please call the roll item number 10.

AB 1191. The motion is do pass to Natural Resources. Petrie-Norris.

No.

Petrie-Norris. No. Patterson.

Aye.

Patterson. Aye. Boerner.

Boerner. No, no. Calderon.

No.

Not voting.

Calderon. Not voting. Chen.

Aye.

Chen. Aye. Davies.

Aye.

Davies. Aye. Gonzalez.

No.

Gonzalez. No. Harabedian.

No.

Herbidian. No. Hart.

No.

Hart. No. Irwin.

No.

Irwin. No. Kalra. Papan.

No.

Papan. No. Rogers.

No.

Rogers. No. Schultz.

No.

Schultz. No. Ta. Wallis.

Aye.

Wallis. Aye. Zbur.

No.

Zbur. No.

Schiavo.

No.

Schiavo. No.

Okay, so that Bill fails. So 4-11 is the vote. Does the author want to ask for reconsideration?

Would love to.

Okay. All right. Thank you.

Thank you.

Okay, next up, file item 12. AB 1280. Assemblymember Garcia. Welcome. Assembly Member, when you're ready.

Good afternoon, everyone. Thank you. Madam Chair and Members of the Committee, thank you for allowing me to present AB 1280 today. AB 1280 will expand state grant programs to include thermal energy storage projects, incentivizing industries to decarbonize their operations. These industries produce the goods we rely upon each and every day.

They generate 12% of our state's economic output, employ 1.2 million workers across the state. They are responsible for nearly a quarter of the state's greenhouse emissions. And many of these facilities are located in California's historically disadvantaged and environmentally burdened communities such as the Inland Empire, which I call home.

My district has the worst air quality in the country, particularly in ozone and particulate matter. Long term exposure is responsible for high rates of respiratory illnesses, nervous system issues, reproductive issues and cancer. AB 1280 offers a solution by encouraging the adoption of zero emission clean energy technologies for use in traditionally pollutant heavy industrial processes.

Specifically, AB 1280 will expand the California Energy Commission's already existing Indigo Program, Long Duration Energy storage program and Ibank's climate catalyst program to make thermal energy storage projects eligible for public funding. By modernizing our manufacturing sector with clean energy, this Bill will help achieve California's climate goals. Improving air quality and preserve and create good jobs.

And so, with me to testify today are Mr. Brandon Wong on behalf of Industrious Labs and Ms. Ada Wagner on behalf of Earth Justice.

Thank you.

Good afternoon, Madam Chair and Members. Brandon Wong, on behalf of Industrious Labs, a nationwide organization dedicated to transforming our industrial sector to benefit our communities, our workers and the climate. And a proud co-sponsor of AB 1280.

As December noted, California's industrial sector plays a huge role in fueling the state's rise as the fifth largest economy in the world. At the same time, however, these industrial facilities are also responsible for producing a substantial share of the state's greenhouse gas emissions, second only to the transportation sector.

Data from the California Air Resources Board shows that over the last three years, emissions reductions from California's industrial sector have actually stalled despite the more aggressive reductions required under the 2022 scoping plan. Unlike the electric grid, residential buildings and transportation, California has not yet made the clean energy investments needed to clean up our industrial facilities. Facilities.

If California is To meet the 2045 carbon neutrality goal this Legislature has set under AB 1279, we need to be investing in these clean industrial technologies now. That's why we're grateful to the Assembly Member for introducing the Bill today which we hope will enable wide scale industrial decarbonization over the coming years.

Much of this equipment is already commercially available and especially so for the manufacturing sector. And so the goal is just to help these industries scale and get this stuff out there. Investing in the modernization of our manufacturing sector is a win for jobs, helping to maintain more than 1.2 million in state manufacturing jobs.

A win for creating new high road jobs and keeping our California's manufacturing sector competitive. A win for replacing fossil fuel fired equipment with reduced and reducing emissions. And a win for driving down electric rates and keeping costs low for the consumers who depend upon these end products each and every day.

These industrial facilities really are the backbone of our economy and we're hoping to ask for your support today. Thank you.

Good afternoon, Chair and Members. My name is Ada Welder. I'm a policy advocate with Earthjustice, a non-profit public interest law environmental law firm and we are proud co sponsors of AB 1280. My team works to advance zero emission solutions that improve air quality.

We're also part of the California Clean Manufacturing Coalition which is a statewide group of environmental and community organizations working to clean up and modernize our industrial sector. As has been stated, California is the number one state in the country for manufacturing output. But unfortunately, the majority of our current manufacturing industry is powered by antiquated polluting industrial equipment.

With many of These facilities located in environmental justice communities already overburdened by harmful air. For example, about 60% of all nitrogen oxide, sulfur dioxide and particulate matter emissions in California were from industrial facilities located within 1 mile of environmental justice community communities.

Incentivizing the modernization of our manufacturing sector will not only help increase energy efficiency, but also facilitate the deployment of necessary technology to improve production methods, create good paying jobs and reduce air pollution. A modernized manufacturing sector is critical for the health and safety of California's low income communities and communities of color, particularly AB617 communities.

We are proud to support Assemblymember Garcia's introduction of AB 1280 as a step forward in advancing California's leadership in in manufacturing. Thank you so much.

Thank you. Okay, we'll go ahead and take additional testimony. If you'd like to testify in support of AB 1280, please approach the microphone.

Good afternoon. Abigail Smith, on behalf of a list of organizations, if you'll bear with me for a moment, including 350 Humboldt, Brightline Defense, Californians for Disability Rights, The Center for Community Action and Environmental Justice, Clean Coalition, Clean Power Campaign, Climate Ready Project, Silicon Valley Coalition for Clean Air, Northern California and Southern California Chapters of the Elders, Climate Action, People's Collective for Environmental Justice, San Francisco Bay Area Chapter of the Physicians for Social Responsibility, San Francisco, bakeeper, Santa Cruz Climate Action Network, Sunflower Alliance, Sustainable Mill Valley and Vote Solar all in support.

Thank you so much. Thank you.

Megan Shumway representing Call On Action California and Sacramento 350 in support.

Hi. Jacob Evans with Sierra Club California in support. Thank you.

David Martinez with Climate Action Campaign in support.

Tomas Castro authorized to speak for Sunrise Movement Orange County in support.

Santiago with California Environmental voters in support.

All right, turning to opposition testimony. Is there anyone who's a primary opposition witness? Seeing none. We'll open it up for any additional opposition testimony. If you'd like to testify in opposition to AB 1280, please approach the microphone. Okay. Seeing none. Bringing it back to the Committee. Questions or comments? Assembly Members of our.

Thank you for bringing the bill. It's a great bill. I'd love to be at as a co author. You're welcome.

Thank you. Would love to have you as co author. Ms. Burr. Assembly Member Schiavo,

I just want to thank you for the Bill too and love to hear the impact it has on high road jobs as well. So I think this is a really important, important Bill. Thank you.

Thank you.

All right, well, thank you. Assembly Member. Would you like to close?

I just thank you for the opportunity for. Let me present my first Bill and Energy Committee. And I respectfully ask for your I vote.

Do we have a motion? In a second. Yes. Okay. Motion From Assemblymember Pappin. 2nd Assembly Members of her Madam Secretary, please call the roll item number 12, AB 1280.

[Roll call]

15-0. That bill's out and we'll leave it open for absent Members to add on.

Thank you, Madam Chair.

Thank you, Assemblymember. All right, last but not least, we've got File item number 9, AB 1117 from Assembly Member Schultz.

And before we jump into that, I just need to read something related to File item number 10, AB 1191, before we can officially consider that measure for reconsideration. I have to say, without objection. All right. See? No objection. AB 1191 is now eligible for reconsideration. Okay. Assemblymember Schultz.

Hi. Assemblymember, the floor is yours.

All right. Good afternoon, Madam Chair and Members. Thank you all for having me. I'm pleased to present Assembly Bill 1117 today. I'd like to begin by thanking Committee staff for all of their hard work on the Bill.

I will be accepting all of the proposed Committee amendments as further described on page 7 in comments 4, 5 and 6 of the analyses.

Assembly Bill 1117, if approved, would provide all ratepayers the option to elect a dynamic rate tariff, thereby encouraging them to shift consumption away from high priced periods when the electricity grid is its most expensive to operate and thereby shift energy consumption to low price periods when renewable and carbon free energy is at low cost and abundant.

AB 1117, in short, rewards customers who can be flexible with their electricity usage to reduce consumption during times of peak demand by shifting their usage times to times when renewable and low carbon resources again are abundant.

By making these adjustments, customers on dynamic rates can reduce their own electricity bill and it will help all customers save money collectively by avoiding the high costs associated with meeting peak demand needs and help avert grid reliability events. Now, dynamic pricing is not a new concept.

It has been implemented in the states of Illinois, Georgia, Pennsylvania and Alabama as well as the European Union. If we look at the State of Illinois, dynamic pricing has been shown to reduce electricity bills even for low income customers.

In the Netherlands, price informed customers have been able to charge their electric vehicles for free, as noted in the Wall Street Journal. Now under Assembly Bill 1117, no one would be forced to be put on a dynamic rate. It would be an option that a customer, either residential or commercial, could elect.

AB 1117 provides a very, very high level guidance to the CPUC to ensure fair implementation of dynamic rates and many of the details of the tariff would be developed by the CPUC in the rate design process.

I'll just close in saying that I hope that the Committee amendments that we have agreed to today address at least some of the concerns posed by the IOUs.

However, if measure passes out of Committee, you have my commitment that we will continue to work with the opposition as the Bill moves forward with the hopes of resolving any remaining concerns that they have.

With me today to speak in support of 1117 is Nora Sheriff, Counsel for the California Large Energy Consumers Association and Rebecca Lee, Director of Western U.S. Energy Market Policy with NRG Energy. Both who can provide technical assistance.

Thank you. Good afternoon Chair Petrie-Norris, Vice Chair Patterson and Committee Members. Thank you for the opportunity to speak in strong support of AB 1117. I'm Nora Sheriff for the California Large Energy Consumers Association, or CLECA. The CLECA Members produce goods essential for daily life, critical infrastructure, oxygen for hospitals, food distribution.

The members are in the cement, steel, industrial gases, medical gas, beverage energy infrastructure and minerals processing and cold storage industries. The CLECA Members are all energy intensive. Most of them are trade exposed, which means the state wants to keep these facilities in the State of California to avoid emissions leakage and help meet our climate goals.

CLECA has long supported dynamic pricing rates as a way for large customers to help manage the increasingly high energy cost burden in California. All customers, all customer classes deserve this opportunity. The deadlines in this Bill would help provide needed pressure to develop dynamic pricing rates. Some history may help explain this perspective.

In 2006 and 2009, the CPUC authorized PGE to spend $2.5 billion on smart meters. In 2007, the CPUC gave SDGE about half $1.0 billion to spend on smart meters. In 2008, Southern California Edison was authorized to spend $1.6 billion on smart meters.

The smart meters were installed over the course of the next five to six years and then the vast majority of customers had smart meters but dumb rates for over a decade. It wasn't until 2022 that all customers had been transferred over to time of use rates.

And time of use rates are different than the optional dynamic pricing rates that are addressed in AB 1117. Oh, okay. Dynamic pricing rates will provide a needed price signal to inform economically efficient decision making by customers who opt onto these rates. This will help the customer save money and it will help optimize the grid.

I have more to say, but I will end there and say CLECA strongly supports this measure and asks for your aye vote, respectfully. Thank you.

Thank you.

Chair Vice, Chair, Members of the Committee. Rebecca Lee on behalf of NRG Energy and as a retail provider that operates in the State of California today, we offer dynamic rates on the generation components of the customer spill for the eligible commercial industrial customers that participate in the state's limited Direct Access program.

And the reason why we offer this rate is to precisely help us manage our RPS, IRP Resource Adequacy Procurement cost and so we can translate some of these cost savings to our customers as a virtuous cycle for win-win and as the state is combating the affordability crisis.

We see this as an integral strategy to mitigate customer cost impact. And as laid out by this Bill, the ability for customers to take advantage of dynamic distribution and transmission rates will further help companies like ours provide cost saving solutions to customers.

And while we do not currently serve the residential sector in California, we do have experience offering smart rates in other states. So very happy to answer questions regarding the mechanics and the feasibility of these rate offerings, which we see as very feasible today and actually feasible many years ago based on the history lesson from Ms. Sheriff.

Thank you. With that urge an aye vote. Thank you.

Moving to additional support testimony. If you'd like to testify in support of AB 1117.

Thank you. Kim Stone of Stone Advocacy on behalf of the California Solar and Storage Association. We have a support if amended position. Explained that in the letter. Thank you so much.

Thank you.

Good afternoon. Jacob Evans with Sierra Club California and support. Thank you.

Will Abrams, rate payer and support.

Thank you. Moving to opposition testimony.

Good afternoon. Hello. Hello. Good afternoon again. Valerie Torella Vlahos with Pacific Gas and Electric Company. Yes, we have an opposed position on this Bill. And I want to first start off by saying the opposition is not on the policy. We are concerned about process.

We are in a process to determine the complexities of these programs and policies, technology, which customer segments, the analysis, and there's some suggested amendments regarding cost shifting. Who wins, who loses, what are the benefits to the rest of the customers that don't participate on the grid?

Lots of questions that we believe should be and when we hope are carefully considered at the Commission. Yes, to the author, that the amendments do address some of the concerns that were raised in our opposition letter. But again, I'll use the word complex.

Flexibility is needed and appreciate the note about it taking 10 years for the smart meters to become smart. I'm not sure if that's a statistic for residential or non residential. I'm not sure it took that long for peak day pricing for non residential customers.

But I will just say that we do want to continue working with the author and we will continue working with him because again, it's not about the policy, it's about the complexities. Thank you.

Thank you. Additional witnesses in opposition, please approach the microphone.

Good afternoon, Chair Members, Lourdes Ayon with San Diego Gas and Electric in opposition to the Bill. But we will be working with the. Author to see if we can find some common ground. Thank you.

Good afternoon, Madam Chair Members, Brady Van Engelen here on behalf of Southern California, align our comments with our colleague from Pacific Gas and Electric. And we do intend on working with the author as well. Appreciate the amendments from Committee staff and look forward to working this Bill through the process. Thank you.

Thank you. Okay, bringing it back to the Committee, Assembly Member Rogers.

Thank you so much Chair, I understand the comments from the opposition about the complexity of it, but what I do like about the piece of legislation is it forces the conversation. And I think what we've heard from the history is that these are conversations that could have been taking place over the last few years at a minimum that haven't been.

And I think that this is going to drive us in a direction of people figuring it out. But also on the infrastructure piece, opening up additional investments in infrastructure to be able to meet this need.

Just as a really simple example, most folks who are renters don't have solar to charge their cars on or don't have charge stations. And having dynamic pricing like this could lead to additional investment in charging infrastructure at places of business.

So that People who are renters can then still see the savings, see the greenhouse gas emission benefits of it because they have a dynamic priced in economic reason for them to change their behavior and to change behavior overall. So I want to thank the author for bringing this forward.

I think it hits a couple of notes on what we've talked about in this this Committee. I'm happy to support it.

Thank you, Assembly Member Irwin.

Thank you very much, Assembly Member Schultz. I really, really like this Bill and believe that price signals need to be expanded. There are currently very few signals at IOUs for when the optimal time is to use electricity and I think that's a big mistake and a missed opportunity.

We need to expand the use of dynamic pricing or time of use policies. And this is, as was mentioned, a big part of the affordability conversation. So this is always a nice report that I like to point out.

This was the Public Advocates Office 2023 annual report and it states that encouraging electric vehicle charging at optimal times can dramatically reduce necessary distribution grid upgrades and associate- [for all of you that would like like to see it here] -and associated costs. And according to the report we are talking about tens of billions of dollars.

So I think it is critical that we move forward with this. Yes, it is complicated, especially if you look at areas like the Central Valley. But we really need to address this and we need to do it in a... We really don't have time to wait anymore. These smart meters have been used for a long time.

We have the capability to do this and I think we need to move forward. Thank you. And I would like to be added as a co author if you'll have me.

We'd be honored to have you.

Assembly Member Zbur.

So thank you for bringing the Bill. I'll be supporting it today. We didn't have a chance to chat about it because I think we were both pretty busy on some other things. I will say that I appreciate your offer to work with the IOUs on the regulatory process.

I tend to be one of the Members of this Committee that has somewhat more faith and I don't know why that's the case because I practiced before the PUC for a bunch of years.

But I do have some amount of faith of what happens in the regulatory process. And so I also have faith in your commitment to dynamic pricing that you'll get into the weeds and work with the IOUs and make sure that what comes out on the Bill is going to be something that is aligned and actually moves this forward and doesn't delay the regulatory process, to the extent that that could result in a good outcome.

So with all of that, I'll be supporting the Bill today.

Assembly Member Patterson.

Yeah, I think there's some concerns with the Bill in terms of, you know, brackets that are put on that could have unintended consequences. But I think the concept moving forward is important to consider rates that, you know, I'm willing to consider anything that lowers the costs for certain people. Anybody. But yeah. So except for legislators.

But I do, I do have some questions just because, and what I say about the brackets is, you know, we remember those times where electricity was very expensive. California couldn't procure enough and sort of who pays, you know, who would pay for that? Obviously, when it's a really expensive rate.

And obviously if you want to answer that at any time is great. But just for the supporters and opposition for energy and then also PG&E, I just, you offer, you mentioned you offer dynamic pricing. How are you able to do that and what would the difference be with IOUs?

But I think I heard you don't necessarily oppose dynamic pricing. Just it's complex and shouldn't be prescriptive in the Bill. I think that's what I heard. But I'd be interested to know if you could offer it also. You know, but I want to hear how, whoever wants to go first.

Sure. It's actually a fairly simple process for us to offer a dynamic rate on the generation component of the Bill and what we call an index rate, because the California Independent System Operator has a day ahead market. And so there is a pricing index that's available every day, that's possible, publicly available.

And since every customer, including commercial industrial customers, have a smart meter, so we just look at the index rate and we looked at what is the hourly meter usage on the customer's meter data from the utility. And it's a straightforward calculation.

And the customers know because they know day ahead, on a day ahead basis if they need to make any adjustments, if the next day was to be a high price, low price, if price going to the negative, they want to use that time to charge up their EVs.

And that's how it is currently done right now in the direct access market. And it's our knowledge that all direct access providers have some kind of offerings like this.

So have you seen it impact consumer behaviors already?

Absolutely. And there's no because we are an option, because we compete against the utilities as a competitive provider. So if we offer a higher rate, then customers can fire us. So we have to offer rates that are competitive and dynamic rate is part of those options.

Okay.

And yeah, sure, Mr. Vice Chair. Maybe we took a page out of their playbook. So we've launched, I think all of us have launched pilots, and for the different customer segments, of all the customer segments.

And it's based on the day ahead market and just as was being described. And we are collecting information and data on that and maybe, I guess I would say, practicing using that muscle and all of the data is not just on the participating customers experience but you know, what could be the benefits and what are the downsides to it.

So that's, that just happens to be where we are in our process which.

Would, I mean, I mean in fairness would be picked up in the regulatory process. Right?

Like through the-, you're running a pilot, you're going to have data for the regulatory process to provide, but presumably the regulatory process, you're going to be able to raise concerns you have with dynamic pricing or the way they're proposing for it to be implemented. Correct?

I mean, I guess that's why I'm kind of a little bit confused on the opposition, because... Because there, there will be- We're not like saying 'this is what it needs to look like'.

We're saying, 'this should be a tool available out there and you'll be able to opine through that process to make sure, hopefully limit risk to power in California or you know, the feasibility to provide this'. So I think there, I do think there are some issues with the Bill.

But I mean all we're saying is can you create this potential option out there? And I guess I just don't understand why we wouldn't allow that at all. Just turn that off. So you can't do it. You know?

I'll respond that yes, there is a current regulatory process, and the Bill even acknowledges that if the Bill were to become law, you would continue on in the open regulatory process that exists. And the statutes offer hard deadlines.

And also I'm not trying to be here saying PG&E opposes dynamic rates for this certain customer segment. I'm just saying what if it doesn't work for that segment of customers, as in a customer class? And so there's a flexibility allowed in the regulatory process.

Very iterative, try something for a while, report back, have another proceeding, possibly change, you know where you are. And so the CEC has kind of come up with some guidelines. It applies to all of the utilities and load serving entities and customers-, or I'm sorry, -and entities that serve our customers.

And this Bill is saying, but for the IOUs, you're going to have hard deadlines that you must meet for every customer segment. And so we're saying that doesn't allow a lot of flexibility and maybe, should the Legislature then place that non flexibility on hard deadlines, to all of the load serving entities and all retail sellers.

Well, thank you for that. I mean it's- I hope the author, it sounds like, continues to work on this. It's complex. Obviously. I don't think the Legislature necessarily wants to be overly prescriptive in this both ways that, you know, would harm the customers at the end of the day.

But I would like to see this Bill move forward and hope the conversations continue that it's not overly prescriptive to where we make bad decisions on the [p?]. I will say rush into it, right? I mean in terms of they, you know, we don't have enough data, we don't have things like that.

So sounds like we'll continue to work on it, but I'm supportive of the concept moving forward. I would hate to see this Bill die and not even consider it, you know, something that would be that important.

So thank you, Mr. Vice Chair. Assembly Member Schiavo.

I mean, so I guess you're assuming because I feel like in some ways it sounds like you're doing it already, which is great. But in some ways it's a little bit unknown how this is gonna work. And so you think that's gonna be worked out through the regulatory process?

Because in my mind, I imagine people trying to... Is my mom gonna be tracking when is the best time to be using electricity or not?

I would hate for it to be something that's so complicated for folks that they just throw up their hands and can't, really feel like it's accessible for them. And then they just end up doing the same old, same old anyway, so it doesn't really have the intended consequence. Can you address that a little bit?

Yeah, I'm happy to offer a brief response. And then it seems like my two witnesses may have more that they want to add. But I would just say, you know, your point is well taken and I do understand the concern from the opposition.

I guess the answer would be, I think a lot of what Assembly Members Roger and Irwin had to say is very much the truth. This is a tool that has been proven to exist throughout the world, many other jurisdictions, to reduce cost.

It is a new way of thinking about how we use our energy when we choose to plug in our EV or when we choose to run the ac. Whatever this Bill really is trying to, I think Assembly Member Rogers really put it well.

It's trying to bring the conversation front and center in this affordability crisis when we are hearing from ratepayers about the impacts that they are feeling. Yes, these deadlines are ambitious, but they also force the issue now. It's a proven tool that is at our disposal that can deliver right now to offer rate relief.

And it is something that the IOUs are already piloting. So we know the technology exists. We know that it can be done efficiently. We think the time to act is now. With that, I'll just quickly pass it over to my witnesses if they have anything to add.

Thank you very much. Nora Sheriff for CLECA. I wanted to reiterate that the utilities are doing these pilot programs, which are available to a limited subset. And Edison actually has a pending large power dynamic rate application that CLECA strongly supports.

We don't see any conflict between those pilots and the Edison application and the Energy Commission's load management standard and this measure. And the thing that I find very encouraging about AB 1117 is those deadlines. And we can do hard things. We have proven that we can do hard things. And the time to do hard things is now.

If I might add the deadline specified in this Bill is actually more generous than what is specified by the California Public Utilities Commission in their demand flexibility rule making. And in terms of concerns regarding responsiveness, customers, generally speaking, what we understand to be default functionalities in smart charging devices is that these are programmable.

So it would actually more likely, your mom's EV, that is pre programmed to receive such signals. And that's one of the advantages of the utilities having deployed smart meters. Thank you.

Thank you. So I too just want to thank you for bringing this Bill forward. I think it is incredibly important. I think the timelines, Ms. Sheriff, is that correct? The timelines that you outlined, in terms of how long it's taken us to get to this point, I think are actually pretty horrifying. I would actually say.

I think the timeline specified in this Bill are not at all aggressive. I mean, it's 2028 for commercial and industrial customers and 2030 for residential customers. So I'm really not clear why we can't like do it tomorrow for commercial and industrial folks.

So I think you've been more than accommodating, I think of both the agency's and the opposition's concerns in setting a goal in terms of the implementation. So incredibly important. Thank you. Would you like to close?

Just want to thank the Committee staff again for their work on this and respectfully ask for your. I vote.

Thank you. Thank you. My God. All right. Thank you. We've got a motion from Assembly Member Boerner, second from Assembly Member Rogers. Madam Secretary, please call the roll.

Item number nine. AB 1117. The motion is due passes. Amended to appropriations. Petrie- Norris? Aye. Petrie-Norris, aye. Patterson? Aye. Patterson, aye. Boerner? Aye. Boerner, aye. Calderon? Aye. Caldero, aye. Chen? Chen, not voting. Davies. Davies, not voting. Gonzalez?

Aye. Gonzalez, aye. Harabedian? Harabedian, aye. Hart?Hart, aye. Irwin? Irwin, aye. Kalra? Kalra, aye. Papan?Papan, aye. Rogers? Rogers, aye. Shiavo? Schiavo, aye. Schultz? Schultz, aye. Ta? Ta, Not voting. Wallice? Zbur? Zbur, aye.

Thank you all very much.

14. That Bill is out. We'll leave the roll open in case there's absent Members you want to add on. Okay, we'll go ahead and reopen the rolls so that absent Members can add on. We'll start with the consent calendar.

[Roll call]

17-0. That bill is out. All right, that concludes the business. We haven't closed. Oh, thank you. I am reminded by Laura that five seconds ago, I said we will be leaving. They're all open for five minutes should absent Members like to add on.

All right. We have been informed that we can indeed conclude the business of today's hearing. AB 1117. By Assemblymember Schultz, the final tally is 14-0 and that Bill is out. That does indeed conclude the business of today's hearing of the Assembly Committee on Utilities and Energy. We are adjourned.