Assembly Standing Committee on Utilities and Energy

Good afternoon and welcome. As I said, we are working the late shift in Assembly, utilities and energy today. I would like to convene today's hearing. Before we move to the agenda, I need to go over a few housekeeping announcements.

First, I will maintain decorum during the hearing, as is customary, 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.

Welcome to the Members who are substituting today. Appreciate you joining us. Assemblymember Mike Fong will be substituting for Assemblymember Ash Kalra. And Assemblymember Jose Silache will be substituting for Assembly Member Nick Schultz. Thank you both for joining us today. We have 21 measures on the agenda. Nine are on consent.

As a reminder, testimony will be limited to four minutes in support and four minutes in opposition. All other support and opposition witnesses will welcome you to the microphone at 4, when we're ready to take testimony from the room. All right.

I think with that, we do not have a quorum, but we'll go ahead and begin as a Subcommitee. We are going to begin with Assembly Member Cecilia Aguiar Curry. I believe you're here. File item 7 AB706. Welcome.

Thank you, Madam Chair. Members, first, I'd like to thank the Chair and Committee staff for all the work you do on this Bill. This Bill addresses a growing progress problem I've been working on since I started in the Assembly in 2016 when I was a new Member. We had the worst years for wildfire I've ever seen. I represented six counties and at 1.0 all of them were or had a wildfire.

So many of us who know the feeling of trying to help our community stay safe during the wildfire crisis, then taking on the hard work of helping people rebuild their lives after wildfire. Mitigation work is important to helping prevent wildfires from threatening communities. And California State agencies have recommended that we take on these projects.

For example, California Air Resources Board 2022 Climate Change Scoping Plan calls for forest management on 2.3 million acres of forest a year to reduce wildfire risk and restore healthier and more resilient forests. We're not talking about healthy trees here.

We're talking about 150 million dead and dying trees and small underbrush that accelerates wildfire and leads to the much more catastrophic fires. Some of the wildfire Mitigation will be done with prescribed fire, but a lot will have to be done mechanically and will generate tens of millions of tons of forest biomass waste.

This work is critically, absolutely critical, but we must figure out sustainability, sustainable ways to use the forest biomass waste. Without the capacity to use this waste productively, it'll be piled and burned or left to decay. Either way, it releases greenhouse gases.

This Bill is about making sure we have the resources to use forest waste in ways that are beneficial to the environment and our communities trying to protect themselves from wildfires. This Bill does not mandate a specific amount of forest treatment or the technologies used to process the waste.

It creates a fund that supports projects that help us sustainably use forest biomass waste. Projects would still have to go through the normal environmental and other permitting processes and would need to apply for funding. Having this funding available will help support these projects without increasing energy costs for everyday Californians.

This Bill will help reduce future emissions related to open burning or natural decomposition. Decompositions. Gosh. Of forest waste. And it'll help increase energy reliability and resiliency. And communities at greatest risk of losing power when they could have repeat black. When they could have repeat blackout threats.

With me to testify in support of the Bill today is Julia Levin, Executive Director of the Bioenergy Association of California. And that's it.

Welcome.

Okay, so I think Christiana Darlington with the Placer County Air Pollution Control District was also supposed to be here, but is stuck in a security line or a crowd. Hopefully she will still arrive, but I might cover a moment of her testimony as well, just in case. Thank you.

So what she would say is Placer County Air Pollution Control District, like other air districts, have been long supportive of bioenergy when you're using purely organic waste like forest waste or agricultural waste that would otherwise be piled and burned.

According to Placer County Air Pollution Control District and the California Air Resources Board, the emissions from bioenergy of particulate matter, carbon monoxide and methane are 98% lower than pile and burning the waste that the author was referring to.

This Bill is focused entirely on that for those emissions benefits and for the energy that can be provided, which is firm renewable power that's available when solar and wind are not. The biomat and bio ram programs that would be supported by this Bill are required by state law.

They are limited to only forest waste or other organic waste in the case of the biomat, but they are limited to material that's removed for wildfire mitigation and forest restoration only and from high hazard zones for the large scale projects. So as the author said, this program would help to reduce wildfires.

It would help to reduce open burning. And for ratepayers, it provides firm renewable power. It provides more reliable water supplies. The Association of California Water Agencies supports the biomat program because they need reliable water and reliable energy to fight fires. And so there is very, very broad support for these programs.

The Bill will help to cover any above market costs so that ratepayers are not affected by these programs because they provide a lot of broad societal benefits. But as the author said, it doesn't mand any new procurement that's not already required by law. It doesn't weaken any environmental laws. It is meant to support programs that are already required. Thank you.

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

Yes. Madam Chair, Members. Scott Wetch on behalf of the Joint Labor Management Committee of the Forest Products Industry, representing about a coalition of 10 different labor unions, products industry, as well as the California Coalition of Utility Employees. Thank you.

Thank you, Madam Chair. Members. Ed Manning with KP Public affairs on behalf of the new California Coalition n support.

Madam Chair. Chris Micheli on behalf of Humboldt Redwood Company and Mendocino Redwood Company in support of the Bill. Thank you.

Good afternoon. Audra Hartman on behalf of the California Biomass Energy alliance in support of the Bill.

Good afternoon. Alfredo Redondo on behalf of Hcycle, a renewable hydrogen developer, in support.

Dylan Elliott on behalf of the Fresno County Board of Supervisors, in support. Thank you.

Good afternoon, Madam Chair and Members. Cassandra Mar on behalf of Pioneer Community Energy in support.

Craig Swaim on the behalf of Calforce. In support.

Mark Fenstermaker for the California Association of Resource Conservation Districts in support.

Hi, I'm Christiana Darlington from Placer Air Pollution Control District. That was supposed to be your other lead witness, and we're in support.

Wonderful. Thank you. You made it through security. All right, moving to opposition. Do we have anyone here to testify in opposition? I don't think so. All right, anyone in the room wishing to testify in opposition can approach the microphone at this point. Anyone in opposition to AB706 going once. All right. Seeing none.

Bringing it back to the dais. Any questions or comments from Committee Members? All right. Well, I just want to thank you for all the work that you have done on this issue in your time in the Legislature.

Like you, I'm a firm believer that we need to advance in all of the above approach and just thank you for Your leadership.

Thank you very much. If you don't mind me closing quick, Mike. With or without this Bill, California's taking on massive wildfire mitigation projects to protect our communities and reduce emissions from increasingly dangerous and costly wildflowers.

We're on track to create a lot of forest biomass waste, but the status quo creating more harmful greenhouse emissions, gas emissions with a much greater risk to people, the environment and the state's budget. Respectfully ask for your aye vote.

All right. Madam Secretary, we have a motion and a second. Please call the roll.

Don't have a quorum now, but we will still don't have a.

We will be voting on. We'll be voting on this measure at the appropriate time. I appreciate it. Thank you. Assembly Member. Okay, we are going to move to file item number one. Assemblymember Zbur.

Good afternoon, Madam Chair Members. In partnership with the building Decarbonization Coalition, CalStart and the Coalition for California Utility Employees, I'm proud to present AB39 which will require and empower local governments to engage in planning to develop strategies for a clean energy future.

California has committed to ambitious climate and energy goals that envision conversions to electric vehicles and electric appliances and equipment in homes and businesses in which which will necessitate critical infrastructure upgrades throughout our communities across the state.

We will need roughly 1 million vehicle chargers to support the 8 million passenger electric vehicles that are anticipated to be on the road by 2030. And even more will be necessary to meet the state's 2035 electric vehicle mandate. In the building sector, many jurisdictions have enacted ordinance to support electrification and new construction.

A greater effort must be made to help people convert to electric appliances and equipment in their existing homes and businesses. One of the barriers to convert electric vehicles is the lack of vehicle charging infrastructure in our communities.

Renters and those who live in multifamily housing do not always have the option or access to install charging and make necessary upgrades.

While more people who live in single family homes can afford to install electric vehicle chargers, we must plan ahead and assure that people who live in apartments and other multi unit housing who may park on the street are able to charge their vehicles.

In order for us to meet these targets, we must ensure our local partners are developing and implementing solutions that advance California and support our Most Vulnerable Communities. AB39 aims to address this by requiring cities and counties with populations of 75,000 or more to create and adopt a plan to meet their electrification goals.

This legislation recognizes the leadership that some of our local governments are undertaking in their planning processes and allows them to build on existing plans rather than develop new ones.

Additionally, AB39 provides guidelines to ensure that plans adopted as a result of this policy focus on the needs of a disadvantaged communities, low income households and small businesses for equitable and prioritized investments in zero emission technologies that directly benefit these groups.

These jurisdictions are essential partners in meeting California's climate goals because they are best positioned to assess the needs of their residents and businesses with proper planning and strategies across the state. We ensure that all community Members have the resources needed to participate in the state's transition.

Thank you and I respectfully ask for your aye vote at the appropriate time and with me today are Brandon Wong with CALSTART and Madison Vander Clay with the Building Decarbonization Coalition.

Good afternoon Madam Chair and Members, my name is Brandon Wong. Here today on behalf of CALSTART, we're pleased to be a co sponsor of AB39. CALSTART is a California Pasadena based, actually global nonprofit dedicated to the growth of the clean transportation industry.

AB 39, as the Assembly Member noted, is designed to help cities and counties set local goals for the decarbonization of our transportation and building sectors, which collectively represent about half of the state's green annual greenhouse gas emissions.

In addition to its impact on the climate, California's transportation sector in particular is also responsible for up to 80% of all NOx emissions, 90% of all diesel particulate matter pollution in California, making the transition to cars, trucks and buses to zero emissions critical not just for combating climate change, but but also for improving public health.

We know that one of the biggest barriers to EV adoption for both consumers and for fleet owners continues to be access to public charging infrastructure.

This barrier is especially acute for Californians who live in multifamily buildings, who are disproportionately low income and people of color, and who will need public charging infrastructure in order to viably transition to an ev.

While we've made a lot of progress, the Energy Commission continues to expect California will need to more than quadruple its existing charging network over just the next five years to support local government.

The support of local governments to identify and potential charging sites, and to resolve local permitting, planning and zoning barriers as called for under AB 39 will be critical in making that buildup possible. That's why we're grateful to the Assembly Member for introducing AB39 and we urge you for your support. Thank you.

Good Afternoon, Madam Chair and Members. Madison Vander Klay, Government Affairs Manager with the Building Decarbonization Coalition, also here today. As a proud co sponsor of AB39, I'd like to begin by first and foremost thanking the Assembly Member for introducing the Bill.

Today, BDC aligns a diverse coalition of environmental groups, environmental justice stakeholders, policymakers, utilities, manufacturers and others to advance equitable building decarbonization to create safer, healthier buildings and communities. According to the California Air Resources Board, the building sector and the generation it takes to power it is responsible for about 25% of the state's annual greenhouse gas emissions.

To that end, California has set emissions reductions targets for 2030 and 2045. Governor Newsom has also set a goal of creating 7 million climate ready homes by 2035.

The state is moving to encourage the adoption of zero emission electric space and water heating appliances such as heat pumps, including through establishing programs like the Equitable Building Decarbonization Program and TechClean California. Over 60 jurisdictions in the state have adopted ordinances to require or encourage electrification in new construction.

But as the Assembly Members said, much more needs to be done for existing homes and buildings. Meeting these goals requires that government at all levels partner in developing and implementing strategies that support Californians in retrofitting their homes to install electric appliances.

AB39 will direct local governments to identify and address local barriers to building electrification and support cities in meeting their communities needs, particularly for renters, low income and disadvantaged community Members. For these reasons, we are proud to be co sponsors of AB39 and respectfully ask for your aye vote.

Thank you. All right, additional testimony in support. Please approach the microphone

Chair and Member Scott Wetch on behalf of the State Association of Electrical Workers and the California Coalition of Utility Employees. Thank you.

Good afternoon, Chair and Members Rebecca Marcus representing the Union of Concerned Scientists and support. Thank you.

Kim Stone Stone advocacy on behalf of the California Solar and Storage Association in enthusiastic support.

Audra Hartmann on behalf of the California Electric Transportation Coalition in support.

Good afternoon. Sean Bellach with the California Association of Realtors. Previously we were a support if amended. We worked closely with Assemblyman Zbur, got the amendments in print and we're happy to give you full support today. Thank you.

Good afternoon, Madam Chair. Members Hunter Sturm, the IBEW 1245 and strong support.

Good afternoon, Chair. Members Reed Addis on behalf of the Electric Vehicle Charging Association as well as the Sierra Club in strong support.

Good afternoon, Madam Chair and Members. Rosanna Carvacho Elliott here on behalf of the California Hydrogen Coalition also in support. Thank you.

Hello, Chair and Members. Laura Dehan, State Director for Environment California, in strong support.

Keelin Fong representing the Cal Asian Chamber. In support. Thank you.

Allison Hilliard, lege manager for the Climate Center here in support. Thank you.

Joe Zanze with San Diego Gas and Electric. In support.

Meg Snyder on behalf of Rewiring America. In support.

Edson Perez with Advanced Energy United in support.

Santiago Rodriguez with California Environmental Voters in support.

Okay, moving to. We are going to pause a beat and establish a quorum. Madam Secretary, please call the roll.

[Roll Call]

Okay, moving to opposition. I don't think there's an opposition witness for AB39, but if there is, going once. All right. Anyone in the room wishing to testify in opposition to AB39 and approach the microphone at this point, or anyone in the hall. AB 39. Okay. Seen and hearing? None. Bringing it back to the Committee. Questions or comments?

Okay. All right. Assemblymember, you have a motion and a second. Would you like to close?

Respectfully ask for your aye vote.

Thank you. Madam Secretary. Will you please call the roll?

Petrie. Norris. Aye. Petri Norris. Aye. Patterson. Patterson. No, I didn't. I'm sorry. Item number one. AB39. The motion is do pass to Appropriations. Patterson. Not voting. Burner. Calderon. Aye. Calderon. Aye. Chen. Davies. Davies, I. Fong. Fong, I. Gonzalez. Herabidian. Harabidian, I. Hart. Irwin. Pappin. Aye. Papin, I. Rogers. Chiavo. Solace. Solace. I. Ta. Wallace. Aye. Wallace, I. Zabur. Aye. Zabur.

9-0. So we'll leave that Bill open for colleagues to add on. Thank you so much. Thank you. Okay, moving to. Okay, moving to File item number 14. AB 1167. Welcome, Mr. Berman.

Watch it. Thank you, Madam Chair and colleagues. I'm happy to present AB 1167, a bill that would establish greater transparency and common-sense guard rails for how investor-owned utilities spend ratepayer money.

I want to begin by thanking Committee Staff for their work on this Bill and accept the Committee Amendments, as outlined in the analysis on Pages 8, 9, and 10. At the start of this session, Speaker Rivas challenged all of us with the urgent and clear task of focusing on affordability.

AB 1167 furthers that charge by holding IOUs accountable and preventing customer rates from increasing to fund lobbying, promotional advertising, and activities that are for the primary benefit of shareholders.

While a patchwork of rules from both the PUC and the Federal Energy Regulatory Commission provide guidance in this area, recent investigations expose efforts by IOUs to charge customers for inappropriate expenses, showing that this Bill is needed.

A couple of examples of this are reporting from the Sacramento Bee revealed that SoCalGas tried to pass $36 million onto customers for its years long campaigns lobbying against environmental protections.

And just last year, PG&E was found attempting to spend—bless you—attempting to spend $6 million in wildfire funds, paid for by customers on TV ads, not for safety, but instead to bolster its corporate image. Moreover, with AB 1167, California would follow in the footsteps of a couple of other states such as Connecticut, Colorado, and Maine.

In Connecticut, residents have been spared from footing the bill for up to $10 million of their utilities' political spending on lobbying and advertising activities, since that state passed their law two years ago. So, there are two big issues.

First, we need to rein in energy costs for Californians and second, IOUs simply shouldn't be in the business of charging their customers for expenses that aren't providing safe, reliable energy. I respectfully ask for an "Aye" vote and with me today are Matt Vespa, on behalf of Earthjustice and Adria Tinnin, on behalf of the Utility Reform Network.

Thank you, Madam Chair. Thank you, Committee. Adria Tinnin, Director of Race Equity and Legislative Policy at TURN, the Utility Reform Network, here in proud support and sponsorship of AB 1167.

This Bill prohibits utilities from abusing ratepayer dollars to pay for lobbying, promotional advertising, and other extravagant expenses that only serve to boost the image and influence of for-profit investor-owned utilities. California residents are facing an affordability crisis like we've never seen before, while utilities rake in obscene profits.

Last year alone, PG&E raised their rates six times and every investor-owned utility in the state made record, or near record, profits. Meanwhile, thousands of households were disconnected because they could not afford to pay their monthly bills.

Despite the stark reality, utilities have been repeatedly caught inappropriately spending ratepayer funds on expensive promotional advertising to boost their reputations and to lobby against climate goals. We saw that when SoCalGas spent a lot of money lobbying against CARB and South Coast AQMD.

Lastly, for-profit utilities use ratepayer money to pay for expensive memberships in trade organizations to do the lobbying work for them. All of this adds up to the misspending of hundreds of millions of hard-earned ratepayer dollars. Currently, there are no consequences for the utility for doing this.

When they are caught doing this misspending—if they are caught—we are in a status quo situation, where we have to trust without verifying. AB 1167 offers a thoughtful remedy to this abusive dynamic by providing transparency, accountability, and meaningful consequences for such abuse. So, the utilities are actually incentivized to use the proper funds, in the first place.

We can no longer afford to just take their word for it, and on behalf of TURN and ratepayers across California, I respectfully urge an "Aye" vote for AB 1167.

Thank you, Chair, Members of the Committee. Matt Vespa, Senior Attorney with Earthjustice. Earthjustice is proud to co-sponsor AB 1167. There is a lot that needs to be done to reduce energy bills. Ensuring utilities do not charge customers for the cost of their political influence and promotional activities is a basic first step.

Utilities are not supposed to be doing this, but they've been caught doing it anyway. The problem is that under the way things currently work, utilities are incentivized to see what they can get away with. Uncovering misuse of customer money takes significant time and resources.

You often have to push back against utility obstruction and assuming you're able to do that, the utilities then just claim they made an inadvertent error, move the cost to a shareholder account, and face no other consequences. AB 1167 establishes a structure that motivates—motivates utilities to follow the rules. It clearly defines the activities utility shareholders must pay for.

It then increases transparency, so misuse of customer money is much easier to spot and after a grace period where utilities can correct any errors, applies penalties for mis-booking shareholder expenses to ratepayer accounts.

This is commonsense legislation that will give the people of California confidence that utilities are not slipping the costs of their political influence machines into their energy bills. Now, contrary to utility arguments in their opposition letters, there is nothing overly broad or vague about the activities AB 1167—requires Shareholders Fund.

Its definition of political influence activities pulls directly from existing regulatory standards utilities should already be following. Other provisions, like prohibiting utilities from charging customers for costly membership, dues to trade associations that lobby, follow utility accountability laws passed in other states.

In fact, in Maryland, the Legislature just passed a bill that would make it the fifth state to require utility shareholders pay these costs. These provisions of the Bill simply catch California up with the best practices adopted elsewhere. I urge your "Aye" vote. Thank you.

All right, we'll welcome additional testimony in support. If you'd like to testify in support of this measure, you can approach the microphone.

Put it at short person height, that's rare. Madam Chair, Members Beth Olhasso, on behalf of the Agricultural Energy Consumers Association, in support. Thank you.

Chair and Members, Rebecca Marcus, representing the Union of Concerned Scientists, in support.

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

David Azevedo, AARP California, in support.

Barbara Dubois, just a person, in support.

Yvette DeCarlo, ratepayer, in support. Thank you.

Lee Miller, in support.

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

Santiago, with California Environmental Voters, in support.

Charlene Woodcock, ratepayer, in support.

Tweener. Madam Chair and Members, Scott Wesson, on behalf of the California Coalition of Utility Employees. We have some—still some significant issues about some of the definitions and some of the parameters of some of the provisions, but we've been working productively with the author, and we look forward to continuing those discussions. Thank you.

Carla Benedicto, concerned citizen, in support.

Okay, let's move on to opposition. Our opposition witnesses can approach the dais.

I think it's just me. Good afternoon. Brandon Ebeck, Pacific Gas and Electric. We have an opposed position on the Bill. This whole policy area is very complicated. There's a lot of nuance. There's a lot of breaking down the difference between rate making and accounting and how all this whole cost recovery works.

At a high level, we kind of support the intent of the Bill. A lot of the things that are political in nature are already prohibited. It's very complicated. So, a lot of the things that were stated in the supporter's testimony are simply kind of not true. There is a lot of fines and penalties associated with mis-action.

We—I think the Committee amendments move the Bill in the right direction. There's a lot to work through. I know there's a long session—lot to deal with. I think we can probably find a landing spot on this one, but it's very complicated. So, we oppose.

All right. Moving on to additional testimony in opposition. You can approach the microphone at this point.

Thanks. Chair and Members. Hi, oh...with the San Diego Gas and Electric and SoCal Gas, in opposition. Sorry.

Good afternoon, Madam Chair and Members. Rod Brewer with Southern California Edison. We align our comments with PG&E and with San Diego Gas and Electric. Our rates, everything we do, is covered by the shareholders and we'll continue to work with the author on this Bill as it continues through.

Thank you. Okay, bringing it back to Members. Questions or comments? All right. Assemblymember Calderon.

Yes. To the author, we briefly had a chance to talk this—like two minutes, maybe in passing. Yes, in the elevator. But you told me you're going to keep working on this. Because I do have some questions. And so, I know that you'll find time we can talk about this.

I'll support the Bill today and look forward to you continuing to work on this.

Absolutely. And let's get something on the calendar and chat more. That'd be great.

Okay, thank you. Because I have some thoughts.

Thanks.

For sure.

Thank you.

Assemblymember Patterson.

Great, thank you. Assemblymember Berman, thanks, thanks for this Bill. You know, I do think some of the—I think there could potentially be some value in some of the communications from the utility, about things that happen here or locally.

You know, in fact, we're going to be hearing something, maybe today, that there's sort of two sides of the story, and I think that maybe one, maybe both sides benefit some, you know, some people, another side benefits the other, right.

So, I mean, it's just, but there's only one avenue that's able to communicate with, with the public on that particular issue, and so, I think that's where I get a little caught off guard here. I have a question for your witness, if that's okay.

For TURN. How is, how is TURN funded?

How is TURN funded? Partially through intervenor compensation, partially through grants.

And I appreciate the question, but I'd love to focus on the details of this Bill, as opposed to extraneous issues that don't have to do with this Bill.

Well, no, I think it's important because, you know, there are ads that were placed by, by TURN, on this measure, actually, advocating for it, that are paid for by ratepayer funds through their intervener status.

So, just like, just like the IOUs, TURN gets money from different sources, and they use money from different sources for different purposes, which is actually exactly what we're trying to accomplish with this Bill.

So, I guess what I'm saying is, you know, this Bill, what I'm saying is if it applies to one party, it might be a fair conversation to apply to the other, is all I'm saying.

Sure.

You know what I mean?

And so maybe that's what—maybe they're doing the right thing, just like some of the utilities have said they're doing the right thing, as well.

Yeah.

I just offer that as a suggestion to think about. You know, that's, that's why I was making it applicable to this Bill.

Understood.

Thank you.

Thank you.

All right. Assemblymember Zbur.

This is mine.

I want to align my comments with Assemblymember Calderon.

I was just looking at the language, and a lot of it is really broad and includes things that I would want the utilities to be engaged in, because it helps us understand the full array of what's happening and in the energy space and it looks like, you know, and also, I think even just the regulatory process that occurs before the PUC.

So, when I look at this, it's much broader than I would hope it to be. I know that your goal of not having political, you know, funds is an appropriate one, and I support that. But I hope that you'll continue working with the opponents, because I do think it needs to be tightened up.

Absolutely.

All right. Well, thank you for bringing this measure forward. I think that it's just incredibly important that ratepayers feel like they're not, you know, kind of getting duped and paying for things that they shouldn't be, so.

And I'm also pleased to hear that it sounds like even the opposition appreciates the spirit of the Bill, so feel very confident that we're going to be able to come to an even better place than we are today, but happy to support the Bill today. Thank you.

Thank you.

And would you like to close?

Respectfully ask for your "Aye" vote.

Okay. Oh, do we have a motion and a second? We've got a motion. Second. All right. Thank you, Mr. Fong.

[Roll Call]

That's 7 - 0, so that bill's on call. We'll leave the roll open for absent Members to add on.

Good luck.

Thank you. Okay, moving to—all right, all right, well, we are going to go a little bit out of file order. Thank you, Mr. Bennett, for your willingness. Let's see, we're going to go to File Item Number 19 from Assemblymember Stefani, AB 1417.

At the witnesses. Okay, I'll go without them. I'll just get started.

Can we just ask the sergeants to see if Ms. Stefani's witnesses are. They might be approaching the dias as we speak. All right. Excellent. Okay, great. No problem.

Okay, thank you. All right, ready? Thank you, Madam Chair. Members, I'm proud to present AB 1417, which ensures that as California leads the nation in offshore wind, we also lead in transparency and equity. I want to begin by thanking the Committee and the chair for their thoughtful engagement with our office. I'll be accepting the Committee's amendments today.

And this Bill requires offshore wind developers to report to the California Energy Commission any funding they provide directly to local and tribal communities, specifically for the purposes of capacity building.

In addition, AB1417 expands the scope of the existing voluntary Offshore Wind and Coastal Resources Protection Program, allowing capacity building activities and grants in local and tribal communities to be eligible uses of any voluntary donations to that program.

This approach reflects the realities of today's political climate, including new federal uncertainty by removing new fees on development that were included in the original Bill while still taking a meaningful step towards transparency, accountability and community empowerment.

Offshore wind is a cornerstone of California's clean energy future, but we can't build that future without including the voices of the communities who live close to the impacts. The CEC's own strategic plan makes it clear community participation, especially from tribes and frontline communities, is not optional. It's essential.

Right now, too many of those communities are shut off and out of the process not because they lack interest, but because they lack resources. They need support to attend workshops, respond to technical documents and engage with developers and agencies.

Without that capacity, we risk repeating past mistakes where large scale development move forward without community voice or buy in. This Bill is about fixing that. AB 1417 moves us toward a cleaner grid and a more just one. It helps ensure that California's offshore wind rollout is not just fast, it's also fair. We appreciate the dialogue with industry.

They've been great and have landed on a consensus with the amendments which will narrow the reporting requirements to simply report on where the money is going in the state and how much money is being allocated per region. Additionally, we will keep the donors and recipient information anonymous.

With me today, I have Alexis Sutterman with Brightline Defense and Dan Jacobson with Environment California who will be testifying in support of the Bill.

Great. Thank you. Chair Petrie Norris and Members of the Assembly Utilities and Energy Committee. I'm Alexis Sutterman speaking on behalf of Brightline Defense. We are an Environmental justice organization advocating for policies that support empowered communities and sustainable environments.

We view AB 1417 as an important step toward equitable offshore wind in California by helping to ensure communities and tribes most impacted by the new industry have a seat at the planning table.

We want to thank the opposition for working with us on a path forward that will ensure greater transparency and awareness about financial support that is going to these local and tribal communities. As amended, the Bill will now require public disclosure on financial support that offshore wind developers provide to local communities and tribes to engage on offshore wind.

This will help advocates and the state better plan for offshore wind, such as making more strategic decisions about where additional investments are needed. We are glad to have aligned on a solution that can drive progress on California's clean energy goals with frontline communities and tribes at the forefront. We respectfully request your aye vote.

Thank you, Madam Chair and Members of the Committee. My name is Dan Jacobson with Environment California. Special thanks to the Member for bringing this forward and for bringing us all together. I'm happy to say that while we were not together in the last Committee, we are back together as a full team again on offshore wind.

And I think that's really good. And especially, I think, as Alexis has said, this is really important for the state because it gives us the information about where the funds are going. And as this comes time for the budget, that's going to be really important for the state to know that. Respectfully, Aspirin. I vote.

Thank you. Okay, moving to additional testimony in the room, if you'd like to testify in support.

Thank you, Madam Chair. Eduardo Martinez. I was asked to convey the support of the NRDC, Elected Officials Protecting America and Sierra Club California.

Thank you. Okay, anyone else here to. All right, excellent. Yes. Anyone here in support of AB1417? You can go ahead and come on into the hearing room at this time.

Thank you, Madam Chair and Members. Jennifer Fearing on behalf of the Monterey Bay Aquarium and Ocean Conservancy in support.

Santiago with California Environmental Voters in support.

Okay, moving to opposition. Do we. I don't think we have an opposition witness. All right, if you would like to testify in opposition to AB 1417, approach the microphone.

Not an opposition. Very happy to be here to removing our opposition. Jordan Curley here on behalf of American Clean Power. Just big thanks to the author and to the Committee for all the hard work. We're really excited, excited to be pulling off our opposition today. So thank you so much. Thank you.

Madam Chair. Members Brian White on behalf of Offshore Wind California. We had concerns with the previous version of the Bill with the amendments, we are now going to be neutral. So appreciate it.

Right, right. That's a new category. That was our former opposition category. Wonderful. Okay. Seeing no one else in opposition to AB 1417, we'll move it back to the Committee. Questions? Comments? Assembly Member Zbur

So, first of all, I'd like to move the Bill and want to thank the author for working with the opposition. It's always great when we actually have bills where folks are aligned completely on such.

Such an important goal in the state, making sure that we're achieving the offshore wind that we need and also assuring equity in our communities. So thank you.

All right, well, and I, too, would like to thank the author for her just really thoughtful engagement and the way that you approach this measure.

And I want to thank the industry as well, both for your engagement on this Bill, but also for, I think, the very genuine way that you have been investing in communities and ensuring that you're bringing everyone along.

And I think, as I'm listening to the discussion, reminded of there's a quote that if you want to go fast, go alone. If you want to go far, go together. And I think that very much is the spirit of this Bill. So thank you. Assemblymember, would you like to close?

Thank you. Yes. I'm very happy that we achieved consensus and there were so many people involved with that. So thank you to everyone who was willing to really work on this Bill. I respectfully ask for an aye vote.

Thank you. Okay, we have a motion and a second. Madam Secretary, please call the roll item 19.

[Roll Call]

9-0. That bill's on call. We'll leave it open for absent Members to add on. Thank you. All right, moving to file item 3, AB367. Assembly Member Bennett, welcome.

Thank you very much, Madam Chair. Members, I want to start by accepting the Committee's amendments with my understanding that there are some details that we still need to work out that we've agreed upon in the last few days. In December of 2017, the Thomas Fire hit in Ventura County.

It hit specifically in my county supervisorial district that I represented, and it hit the street that I live on, burning down five of the houses across from my street. That Thomas Fire was the largest fire in the history of California in 2017, December of 2017.

Today, the Thomas Fire, only eight years later, is the ninth largest fire in California's history, topped off by what we saw in Los Angeles and Palisades and Eaton. We have clearly passed a tipping point when it comes to wildfires in California and their destructiveness. We have, in the last eight years, lost three whole communities.

Paradise, Palisades and Eaton. I talked to firefighters and they said, we don't lose whole communities. We shouldn't lose whole communities. And so we really need a combination of the Marshall Plan and a moonshot, or else, literally, our homeowners insurance rates will become unsustainable for California's economy.

And so with that, there are a series of things that many of us are talking about doing. And I appreciate all the support of lots of Members with regard to this, because I think we recognize how critical this sort of tipping point is that we've passed.

But the first and simplest and most basic thing is fire hydrants ought to work like they're designed to work. They should operate to their maximum capacity during these critical moments. I'm not suggesting that hydrants can be designed so that they can put out hundreds of fires at the same time, but they should operate to their maximum capacity.

And unfortunately, in Ventura County, it seems like regularly that does not happen during our wildfire. So with the Thomas fire, we had, the tanks were not topped off. In fact, they let the tanks drop down because at midnight, they start filling the tanks when the electricity rates are the cheapest.

Well, the fire hit Ventura at 10:30pm at night when the tanks were almost empty. So consequently, the tanks ran out right away. Then they didn't have backup generators that were. Had ever been tested. So then they tried to plug them in. They had different receptacles for the backup generator and the power.

And then you would think that everybody would learn their lesson from that in Ventura County at least. But we have 170. I'm sorry, 168 water districts in Ventura County, lots of small ones. And In November of 2024, we had another fire destroy 250 homes. And they didn't have backup generators, even that.

And the water pump burned down because it was in a shed with a wooden roof, and the wooden roof caught on fire and. And the water pump then was. Was out of service. So this Bill is just a common sense Bill, and we need it for Ventura County in particular. We. We burn a lot.

We have more Santa Ana, Santa Ana fires than any other district. So this Bill is really just a common sense Bill. It says when the power goes out, water districts in the high and very high fire risk areas, not the whole district, but in the areas most likely to burn, should have backup generating capacity.

They should also, besides having backup generating capacity, they should top their tanks off as soon as the red flag warning is issued. And the third thing that they should do is they should harden those facilities that are likely to burn down. And we have earned incredible cooperation in Ventura County for this county only, Bill.

And the fire district is very supportive. The operation of emergency services is very supportive. I wouldn't say the water districts are very supportive, but they recognize that the public, their service, their clients definitely want this to happen, and so they're willing to go along.

We're doing everything we can to try to address the cost issues that they would incur. But. But we're not talking about tens of millions of dollars here.

We're talking about costs that I believe are absorbable by water districts, particularly given the fact that in Ventura County, FEMA will be able, as a result of the LA and the Eaton fires, the Palisades and the Eastern fires be able to help with the hardening cost.

And we are doing some other things to try to help with the cost of the generators. Final thing I would tell you is before we wrote this Bill, we wrote to all of the water districts and asked them, what's their situation with generators. We're planning on doing this Bill. Give us your input. This was last November.

We did not get any input from anybody that said this is not doable. We couldn't do this. But we've worked very collaboratively with the water districts in terms of trying to make this a doable Bill and appreciate this opportunity to present it to you. Thank you very much. Thank you, Assembly Member.

And you do not have a witness in.

No, I don't. It's such a compelling Bill.

We will. We'll open it up for anyone in the room wishing to provide testimony in support of AB367. Come in the room. We started doing like a musical chairs. There's people outside that were filing in. Great. If you're here in support of AB367, you can approach the microphone. Okay. Seeing none. Is anyone in opposition to AB367.

Go ahead and come on up. She's going to come sit here.

Thank you. Good afternoon, Chair and Members. My name is Kylie Wright. I'm with the Association of California Water Agencies. We represent approximately 470 public water agencies across California, including in Ventura County. We appreciate the conversations that we've been having with the author and his staff, but we respectfully maintain an opposed unless amended position on AB367.

We have concerns on the high cost to water suppliers, the lack of consideration of the challenges and predict unpredictability agencies face when responding to emergency events, and the President this Bill would set for future statewide efforts. ACWA is supportive of the goals of emergency preparedness and resilience of this Bill.

But each water supplier's system is unique and each emergency situation comes with its own challenges. This Bill would impose significant costs and lack sufficient funding. Backup power sources, such as stationary or mobile generators are costly.

Several agencies have estimated that upgrades to a facility in their system would have costs in the millions, which is exacerbated for agencies with multiple facilities. One agency estimating total costs of around $10 million. Without sufficient state fundings, the burden of these costs would fall onto ratepayers undermining water affordability.

And this is an important consideration as agencies are faced with a multitude of climate adaptation investments. A budget allocation is needed for this Bill. Additionally, water systems face unpredictability when responding to emergency events, preventing them from meeting the requirements in the Bill.

This could include inaccurate information on power shutoffs or wildfires, preventing access to or damaging critical infrastructure. Without appropriate liability protections, agencies could be penalized for circumstances they cannot prevent. Amendments are needed to address this concern and consider operational realities. And this and the requirement to provide power within 30 minutes of a power shutoff should be removed.

For these reasons, ACWA respectfully asks for Members of the Committee to vote no on this Bill. Thank you.

Thank you. Additional witnesses here in opposition to AB367. You can approach the microphone at this point.

Good afternoon. Lily Mckay on behalf of the United Water Conservation District. Currently opposed unless amended, but look forward to working with the author to hopefully come to a consensus.

Thank you, Sharon Gonzalez, on behalf of the City of Thousand Oaks. Regretfully, we did not get our letter in, but opposed for the same reasons outlined by ACWA. Thank you.

Thank you bringing it back to Committee. Any questions or comments? Assemblymember Harbadian.

Thank you, Madam Chair. Thank you to the author. We've had lengthy discussions over the last few months since the Eaton Palisades fire. And I just want to say how impressed I am at your commitment to this issue. And I think it is going to Help more districts avoid what my district just went through.

And I think it's going to save lives. And I think it's a smart, common sense piece of legislation. I do think it should be statewide. And we've talked about this and I know that something that we all would benefit from is having this in every county.

And I do think to the opposition, I do think that these costs are minimal and could be absorbed very easily in rate increases that are going to happen as they always do. And I don't think this provision would be a material increase to that.

And we need, we need more smart legislation like this when we're in this new era of constantly fighting wildfires. So please add me as a co author again. My only concern is it's not big enough, it's not expansive enough, and I have moved the Bill proudly. So thank you.

Thank you, Vice Chair Patterson.

Great. Thank you. I represent an area that unfortunately has fires almost on an annual basis.

And as the Vice Chair of the Housing Committee, some of the policies that we're putting in, which kind of require counties where nobody lives to put housing kind of create this sprawl, artificial sprawl, you know, through some housing policies, rather than intensifying density within urban cores.

But long way to say is that, you know, this really should be part of the planning as we're going into high fire severity zones, really statewide. You know, obviously I don't know what the benefit's going to be, so I kind of like it being a pilot project, to be honest, because we can see if it'll be successful.

But, you know, we might not have the time. Right. So hopefully, hopefully we get a quick turnaround on that. And I look forward to you reporting back how that works out. So thanks.

All right, well, thank you. And I just want to thank you for bringing this measure forward and for the just thoughtful and detailed way that you've approached this legislation. We all recognize that we're living in a new and frankly, I think pretty horrific normal where wildfire season is all year long.

And we know that wildfires have touched every corner of the state and just appreciate the work that you're doing to ensure that communities are prepared. Would you like to close?

Thank you very much. Normally I'd just say I'd ask for an aye vote after those nice comments, but I do want to compliment your staff. They've been wonderful to work with in terms of trying to work this out. And in terms of my colleague, I appreciate your interest in making sure this goes statewide. I look forward to working with you in the future to make that happen.

But it felt like it was critical enough for us to get going in Ventura County because of this, and I also think because of the nuances of going statewide versus countywide, there is some value in us seeing how this rolls out in a county and then starting to have healthy, robust conversations with everybody. So with that, I respectfully ask for an aye vote. Thank you.

Thank you. We have a motion from Assemblymember Harbadian. Do we have a second? All right, we have a lot of seconds, so, Madam Secretary, will you please call the roll?

[Roll Call]

All right, Mr. Bennett, that is 100. So that bill's out, and we'll leave the roll open for absent Members to add. Thank you very much. All right, why don't we go ahead and dispense with the consent calendar? Do we have a motion and a second? All right, Madam Secretary, please call the roll.

Sorry, just a moment. Item number two, AB 286, the motion is due past appropriations. Item number five, AB 532, the motion is due. Passes amended to appropriations. Item number 6, AB615, do passes amended to appropriations. Item number 8, AB716, do pass to appropriations. Item number 11, AB915, due past appropriations. Item number 13 above. AB1104, due. Pass is amended to appropriations.

Item number 16, AB1295, do pass to appropriations. Item Number 17, AB1342, do pass to appropriations. And item number 18, AB1408, do passes amended to appropriations. [Roll Call]

That's 11110. The consent calendar is out, and we'll leave the roll open for absent Members. Assemblymember Irwin, you have a couple of bills up. Would you like to begin with file item nine, AB745? Certainly. Okay.

Good afternoon, Madam Chair and Members. I'm pleased to present AB745. This Bill pulls this Bill pulls directly. No. Are we starting? Yes. This Bill pulls directly from the report by the Public Advocate's Office on how to lower costs to ratepayers.

AB745 allows investor owned utilities to finance undergrounding costs through securitization and disallows a return on equity for undergrounding projects. To clarify, this Bill is permissive. An IOU can apply for a financing order from the PUC to securitize funds. I'm looking at ways to appropriately incentivize securitization in the future.

Just as background I've been sitting in on Assemblymember Petrie Norris's conversations on affordability and one of the issues that we thought we should look at is securitization because it was recommended by the Public Advocates office. And so I think we put the language in about a week ago so not quite there.

Undergrounding is one of the most expensive methods of utility fire mitigation at quadruple the cost per mile of fast trip settings and covered conductors. Remarkably, $1 billion in capital expenses turns into $3.05 billion collected by the ratepayers.

As noted in the Consumer Cost Impact section of the Committee analysis, the PUC has estimated that costs of 92 to $224 billion to underground every IOU distribution line in high fire risk areas.

According to the Public Advocate's Office, adopting securitized funding for undergrounding projects could provide significant long term relief for customers by replacing high return on equity costs with lower financing costs. Securitization allows for reduced cost to taxpayers because it provides a bond financing mechanism rather than the traditional financing method of corporate equity or debt.

Instead of asking ratepayers to pay for utility undergrounding all at once and including a 10% return on equity, this spreads lower costs out along a longer period of time. These costs are recovered by a non passable surcharge which allows for consolidation of securitization debt from the utility's balance sheet.

We must use every tool in the toolbox to keep ratepayer bills down during efforts to mitigate fire risk. And again, since the language was introduced not that long ago, we've had our first meeting with the other stakeholders.

I think the day before yesterday and we will continue to work with the stakeholders on this issue that really could address some of our affordability concerns. And with that I respectfully ask for an aye vote and I have nobody sitting here with me.

Okay, we will open it up for any testimony in support from folks in the room. If you'd like to testify in support of AB745 please approach the microphone.

Kim Stone of Stone Advocacy on behalf of the California Solar and Storage Association in support and had I known I would have talked more but.

Good afternoon. Cassandra Mar on behalf of the California Efficiency and Demand Management Council in support.

Thanks.

Ignacio Hernandez on behalf of turn in support, thank you.

All right, moving to opposition witnesses can go ahead and come up.

Good afternoon again. Brandon Eck, Civic Gas Electric it's we have very very very significant concerns with this Bill that was gotten amendment from last week. I think look at it two ways. First part of the Bill says there's no return on equity on undergrounding at all. That basically implies that we should do no undergrounding at all.

It'd be cleaner to just ban underground and as a Bill we would be There would be no way to raise capital through the projects that are required for under we do not suggest that we should underground every mile as the I think the $200 billion estimate was thrown out there. There are unique situations where undergrounding makes sense.

It is cost effective. We have are still going to have 70 or 80,000 miles of overhead line. The second part of the Bill is permissive to securitization. Securitization is a tool like a lien on your house or a second mortgage. It's a different type of financing that can be cheaper.

It is best used for one time significant costs like storm damages, hurricane damages to spread those costs out over a long time. The cost savings compared to capital financing are extremely minimal. We're talking a couple dollars a month maybe in 10 years.

Additionally, the net impact of securitization raises all other costs because if you have too high of a securitized portfolio within our broader things that we have to finance, our credit rated agencies will downgrade our credit. They will make all other borrowing more expensive. So you might save money on securitized debt. Your whole portfolio will become more expensive.

And additionally the approach securitizing wildfire expenses is already allowed today. The new approach of the Bill says that care and fair customers should not pay for undergrounding expenses. The high fire threat zones of our service territory disproportionately have more care and fair customers.

So you are disconnecting the customers that are benefiting from undergrounding from paying for the costs. Additionally, this Bill will raise every other non residential customer type agricultural, industrial because securitized costs are disproportionately paid for by non residential customers. So most customers will see a rate increase from this Bill.

Thank you. Thank you. Joe Zanzi of San Diego Gas and Electric, also in opposition. My colleague kind of went over all of our points. In the interest of time and not being redundant, I just want to leave you all with a little some numbers that we, that we kind of came up with.

Our team crunched some numbers and we went under the assumption that we weren't able to earn a return on 15 or as utilities, $15 billion of capital investments with our portion being 1.3 billion. Our customers would save $1 per year in the first year and by year seven, it would be $1.50 per year.

So just thinking about that and then in terms of if our credit rating goes down, how much increased costs that is going to. That's going to have on customers bills, I just wanted to kind of leave you all with that. And. Yeah. Thank you.

All right, thank you. Any other witnesses in opposition? You can approach the microphone at this time.

Good afternoon. Laura Para, on behalf of Southern California Edison and opposition. Thank you. Thank you.

Good afternoon. Hunter Stern, on behalf of Q Coalition of California Utility Employees. We align our comments with the testimony of PG&E. And we are concerned that any issues around financing will then squeeze our Members work. Thank you.

Thank you. Okay. Seeing and hearing no one else, let's bring it back to the Committee for comments or questions. Assemblymember Harabedian.

Thank you, Madam Chair, and thank you to the author for the Bill. I think it's an important conversation to have and we did have a number of presentations on this and you used the word very three times when you said how concerned you were. So I know just how concerned you are. But walk me through this.

You say that if we try to securitize the cost, we therefore are saying we would not want to underground at all, which that's a huge jump. I'm just, I'm confused. Maybe you can explain that.

Yeah, I mean, there's two portions of it. We can either finance undergrounding through our regular model. This Bill says no undergrounding whatsoever. Whether it is Rule 20 for urban beautification or whether it's all of our new construction of housing for new subdivisions that's all undergrounded. Whether it's modifier hardening, no undergrounding whatsoever shall earn return on equity.

That's simply our model. So there's no way for us to raise money to finance these capital projects without a return on equity. And furthermore, the Bill is actually essentially unconstitutional because it says that the Commission, even if it says that this activity that we are proposing is just and reasonable. It's something that we should do.

We should not be allowed to earn a return on equity. That's something that the courts have upheld, is not constitutional. So. So that's portion one. Portion two is there's not enough securitization capacity in the market or within our balance sheet to do the level of work that's required.

We could probably securitize a small amount of our undergrounding work, but we have already securitized. I think the analysis says $10 billion. I need to run the numbers. Between SB901 and AB 1054, we've securitized billions of dollars already. That takes up a portion of our revenue from customers for the next 30 years.

Because these are spread over 30 years. Every time you add new securitization, you're taking a larger chunk of a customer revenue towards that debt. So how many liens on your house can you have while still getting a preferential borrowing rate? So there's not enough capacity. We can't securitize the volumes of capital that were required.

So it's an effective ban on undergrounding.

Yeah. It seems like you could use the future rates to securitize it to a very large extent. But I appreciate that this Bill has only been in print for about a week and that the conversation are going to continue to happen. I know the author is going to continue to have them.

You know, I will note that every independent group that's come before this body to present on securitization has data showing that it actually reduces costs, it reduces rates for ratepayers. And so it is confusing to hear your testimony saying that it would increase rates.

And I think that this, I think, begs a larger, longer conversation, which is why I'm going to support the Bill out of Committee today so that that conversation can be had.

Because there are diametrically opposed data and evidence and testimony that we've heard as a body on this specific point, which this Bill tries to address, and I'm not sure who to believe. So I will support it now.

But I think that the groups and all parties should be having serious conversations about who's right on this pretty big issue on the economics. So thank you, if I may. Absolutely. Go ahead.

On specifically the securitized debt, yes, it does save customers. But when you try to balance our entire portfolio of everything we're doing, you will likely add costs that will outweigh the benefits. That's the issue.

All right, thank you, Assemblymember Rogers.

Yeah, thank you so much. So I'm going to try to figure out how to artfully ask this question because I know this type of legislation has been contemplated.

Last year, part of the driver of that was concerns from the public that decisions on how best to address wildfire were being driven at least largely, if not mostly, on which one was going to give a greater rate of return. And what I hear from you is only economic arguments about why the system shouldn't change.

I have not heard an argument about this is the way to make sure that we are the safest, but rather that if you don't allow us to do it the way that we've been doing, our credit rating is going to go down.

So try to align those two things for me when I talk to constituents and they feel like undergrounding, while yes, makes them safer, is also driving an increase in their rates because of the rate of return that you get on the capital projects. Whereas things like specialized wraps on the lines make them safer.

Though perhaps not as safe as undergrounding, but also doesn't contribute to the rate increase.

Yeah, I mean part of the issue is we have two minutes and it's hard to get through all the issues.

That's why we have Q and A.

Yes, yes, Cover conductors is still a capital project. We still get a rate of return and return on equity, but about 900,000amile.

Versus 4 million a mile. Lower rate of return overall for you?

The same, yes. If you're comparing the straight apples to apples, cover conductor per mile is cheaper. We know that. That's why we are not ever going to say that we need to underground every all of our high fire threat zones.

We are proposing a suite of options that includes epss, the fast strip that was discussed, cover conductor undergrounding and any other new technology that we come up with. There are certain areas of our district, and in particular, sorry, particularly your service area, would that have a lot of fast trip outages?

There's a lot of reliability concerns, there's a lot of storm damage, there's a lot of rebuild costs that are associated with maintaining our system. And in the storms in 2023, we had nearly $1 billion of storm damage from the back to back atmospheric storms.

So when you start to factor in outages that are repetitive because you have lines that are constantly having interference, you have the wildfire risk, you have spoiled food, you have all these costs built into it. Yes. There are certain parts of our service territory where undergrounding does make sense and you outweigh that cost per mile.

And part of our strategy has been that we want to file a 10 year underground plan later this year to bring the unit costs down. We think we can get it much lower than $3 million a mile. But there's a whole regulatory process that's part of that.

But if I could. I think part of the challenge is that the regulatory process looks at your wildfire plan and says, does this make us safer? Okay, yes. Then you go to the CPUC for the rates.

There isn't that filter of does it make us safer at the affordable rate that our constituents are paying and also at a faster delivery of service? That filter does not exist currently in the system.

I think we would argue it does. It's just extremely so. Who does that then? It's a very complicated balance between Oais and the CPUC. And I know there's a lot of bills that have been introduced on this.

I think we definitely agree and as our Executive Vice President testified in this Committee a couple months ago, we agree that that process can have fixes. Getting it right is complicated. There's a lot of trade offs. Several years ago, the Legislature and the Commission and oais before OAS was created was very focused on cost first.

Then we created oais to move that entire responsibility out of the Commission because there was a belief that they were too focused on cost and not enough on safety. Now that bills are going up, I think that there's. We have concerns that we're going to pivot back too far.

We know that there's some alignment that needs to happen, but it's getting it right has a lot of pitfalls and we need to make sure we do it appropriately.

Understood. But just as feedback. Like I said, your entire presentation was about the economic side of it, which when you're trying to convince us and when we have conversations with our constituents that the decisions that you're making to make us safer are not being driven by economics.

That perhaps having that perspective about finding balance between making us safer and folks are legitimately upset about their rates doesn't give us much to work with. So I know that the conversation will continue. But that's my feedback is.

That's the question that I think many of us are asking is who in this chain is advocating for ratepayers to make sure that the decisions being made on capital projects are a balance between making us safer and holding costs down?

Yeah. And certainly we've talked about the financing of undergrounding, but if you hurt our credit rating, as we. I think also another thing we discussed in a couple months ago was just the LA fires alone increased our borrowing cost this year by $500 million. That isn't just underground.

That is every time we build new clean towers for clean generation, for connecting new customers. For all the things that we are trying to do, it's not just hardening. The vast majority of our capital budget is not related to undergrounding. Almost all of it goes to the clean energy goals and connecting customers. So you are this Bill would likely raise the cost of all of those activities.

Thank you. Additional Questions Comments I guess I would, I would just say a couple of things. So I do think that the opposition has raised some concerns that are salient and that I am sympathetic to. However, there are also things that you're saying and arguments that you're making that are actually not true.

And so for you both raised the concern about, zero, we're going to run up against the securitization ceiling. You guys are nowhere near the securitization ceiling. We had this conversation at the end of last year that's just illustrative. So I think it would be more productive as we're moving this conversation forward.

Don't throw everything up against the wall and see what sticks. Like talk to us about the real things that are the real concern. Because, you know, certainly we all recognize that utility health is important to the State of California and to our ratepayers.

We recognize that part of that is you having a good credit rating and being able to borrow money so that projects get built as cost effectively as possible.

So I think, you know, I won't speak for the author, but having worked with her, she is very open to hearing from all sides and I think is very effective at bringing folks together and forging a policy that is the best answer for California.

But as we're having all of these conversations, you have to just focus on the salient points for this piece of the conversation is what I would say. All right, that's just my comment. With that, would you like to close Assembly?

I appreciate your comments and I really would urge anybody to look at the excellent staff report by the Committee consultant and there is a section there on credit downgrades. And I think the other thing that was pointed out when you talk about constitutionality, this is not the first time we're looking at this.

The Holden Bill basically did the same thing for I think it was 10, 5 billion or 10 billion under 10, 50, 5 billion under 1054. So we, we have been down this path before. But as the chair said, we will continue to have conversations and I'm hoping this becomes part of an overall affordability package. So with that, I respectfully ask for your aye vote.

All right, thank you. We have a motion and a second. No. All right, thank you. All right, we have got a motion and a second. Madam Secretary, please call the roll.

Item number nine. AB745. The motion is due past Appropriations. [Roll Call]

7-4. So that bill's on call, and we'll leave the roll open for absent Members to add on.

Thank you.

Oh, and we'll go ahead and also vote on the first measure that we heard, which is AB706. So AB 706 from Assemblymember Aguiar Curry. That was file item number seven.

[Roll Call]

Okay 13-0 that bills out, and we'll leave the roll open for absent Members to add on. Assemblymember, would you like to continue with your next item?

Yes. Thank you. I'm pleased to present AB 1423, a Bill to improve the charging experience for EV drivers in California. As an EV driver myself, I'm frustrated with the all too common experience of trying and failing to find a functioning public charger.

As a Legislator, I'm forced to frustrated to see our tax dollars being wasted rather than funding working more accessible public chargers. A recent study by J.D. Power showed that one fifth of attempts to use a public charger were unsuccessful. According to the CEC, 41% of our public EV chargers are installed with state grants and taxpayer money.

This amounts to roughly 40,000 chargers across the state. This Bill requires chargers that were installed with state grants prior to 2024 be subject to the CEC's forthcoming reliability standards, and most importantly, allows for robust enforcement of the reliability standards when they're released. The requirements in AB 1423 are intended to benefit drivers since taxpayers helped Fund this infrastructure.

California has spent over $1.7 billion on EV charging infrastructure. Without accountability and enforcement mechanisms, these chargers are at risk of becoming stranded assets. And with that, I respectfully ask for your aye vote. Thank you.

All right. And do you have any witnesses? Okay. Flyin solo.

Sitting by myself. All right.

Is there anyone in the room wishing to testify in support? You can approach the microphone at this point. Anyone here in support of AB 1423?

Good evening, Chair and Members. Rebecca Marcus, representing the Union of Concerned Scientists and Support. Thank you.

Good afternoon. Greg Spooner, Concerned Citizen EV driver, strong support.

Thank you. Okay, is there anyone here in opposition to AB 1423? Come on down.

Good evening chair Members. Reed Addis, on behalf of the Electric Vehicle Charging Association, unfortunately in opposition today not because of the goal, but the approach to the measure. We know the Assembly Members well as many of you are leaders when it comes to EV policy.

Creating excellent policy and funding programs that allow our industry to scale up, allows us to build brand new technologies each and every year trying to get as many chargers out there as possible and get as many chargers out there in the right places.

For many years the state did not have guidelines for our various companies on how to build, how to communicate and we didn't have standards. We supported and actually promoted legislation commonly referred to or led by Assemblymember Ting several years ago.

It was passed, it was signed by the Governor and an established rules for the CEC to actually set those standards that would then help our industry understand how we all need to work to create even standards across California. The CEC is about to issue those standards.

Our concern with this approach in this legislation is it's actually asking the CEC to set up a whole new regulatory scheme and to look backwards. It will ask questions about how to change grant agreements, contracts. They need to find out who owns these stations, which we don't think the CEC even knows.

That it creates what we would argue an affordability issue and obligations on people who didn't know they were going to have those obligations back when they originally purchased the chargers. So our hope would be that the Legislature would focus on the forward looking, help the CEC get these regulations in place going forward. For those reasons, we're in opposition. Thank you.

Hello Chair and. Hello Chair and Members. Ryan Mccarthy here on behalf of Electrify America. Electrify America is the nation's largest fully open hyper fast charging network with over 1200 chargers across more than 265 locations open to the public in California.

We're proud that over half of our investments to date in the state have been made in designated low income and disadvantaged communities. Agree with the sentiments and concerns expressed by my colleague, also supported AB 2061, but feel that retroactive standards are neither helpful nor appropriate for advancing California's transportation electrification goals.

We also want to express our appreciation for the Committee analysis which correctly points out the provisions of the Bill that would single out Electrify America conflict with the consent decree.

This also aligns with recent recommendations from the Assembly Transportation Committee which encouraged the author to exempt chargers installed pursuant to the consent decree so as to not interfere with or override legally binding agreements between CARB and Electrify America. Furthermore, Electrify America and CARB already have in place uptime reporting requirements for Electrify America's network.

This makes references to the consent decree in this Bill not just legally concerning, but also redundant and unnecessary. We are aligned in our commitment to expanding charging access and enhancing the consumer experience in California, but we must respectfully oppose this Bill. Thank you.

Thank you. Is there anyone in the room in opposition to this measure? You can approach the microphone at this point if anyone is opposed to AB 1423.

Hello. Audra Hartmann, on behalf of the California Electric Transportation Coalition, we have an opposed unless amended position on the Bill. Thank you.

And I apologize. It was tough getting in the room here. Rocky Fernandez, Center for Sustainable Energy, actually in support. Thank you.

Thank you. Okay, bringing it back to the Committee. Questions or comments? Assemblymember Zbur.

First, I want to thank the author for bringing this Bill. I think it's really important. I drive an EV, and there's been times when I've been driving around and can't find a charger that's working.

I know that there are probably some legal constraints in sort of looking back retroactively, but this is a Bill that only applies to chargers that have had some kind of public subsidy. Is that right?

This is all with chargers that have taxpayer funding, but we also have currently, when we're talking about the consent degree, that is the result of the lawsuit where VW was basically lying about its emissions.

And so Electrify America has put those chargers into place, and we think that those should be included also because we were all negatively affected. And you really could consider that taxpayers being taxpayers being affected. So. And we understand what the analysis, what's in the analysis, and we just don't agree with it with that portion.

I mean, I just think taxpayer money was used on these things. I think one of the problems is the existing chargers. So I trust the author is going to navigate the legal issues on this, and I think it's appropriate that we look back at the existing chargers. I mean, we want those to be working.

Taxpayer money was used for those things. A lot of the chargers that are out there are not. Are not working. And so I'm hoping that you'll actually try to continue focusing on the chargers that are on the road.

And we've been really happy with the legislation that's passed so far and the regulations that the CEC is putting out. But there has been $1.8 billion spent already. And as I said, we don't want them to be stranded assets. I think it's very important to get those working and really have a good definition for uptime.

Also, I know that Assemblymember Schiavo and Petrie Norris had a hearing, and we know that the definition of uptime is sometimes does not consist of actually being able to charge your car. As long as there's electricity going to the charger, it's considered, it is considered to be up.

So I think we really, you know, if we want to make our climate goals, we need to make sure that the transition is as easy as possible.

And I know that people that are driving EVs besides Tesla are often, they might be leasing a car or if they've purchased the car, the next car goes back to being maybe a hybrid.

So we really are losing a lot of time and a lot of our audience if we don't allow a good charging experience or require, I should say, demand.

All right. Assemblymember Calderon.

Yes. I just want to thank the author for bringing this Bill forward. I think you've been, this is something you've been concerned about since I got in the Legislature four years ago. And I've actually been in the car with you on a long drive and this subject came up and we happen to be in an ev.

And so I appreciate that you're, you know, being so thoughtful and continuing to work on this, not just for your constituents, but for all Californians. And I don't know an author that digs into a subject more than you, and I know that you'll continue to work through this. So I'll be supporting the Bill. Thank you.

Thank you, Assemblymember Schiavo.

Thank you. As Chair of the Electric Vehicles and Infrastructure Select Committee, I appreciate you bringing this Bill forward. Obviously, I've been in touch and talked a lot with the opposition about this challenge around uptime.

And I think that everyone recognizes obviously how important it is because it is really driving or a hindrance to the demand for us to really make the transition we need to, to electric vehicles. And I know a lot of people know my story of driving from LA to Sacramento.

And it took me four extra hours with a crying kid in the mall parking lot at 10:00 at night. And that is not, it's just not sustainable. And part of it is showing up and chargers are not working right.

And then you don't have a charge and you can't get to another one, so you have to go to a level 2 charger. And get enough of a charge to get to the next fast charger. So, you know, this is, I think, a really important issue for us to tackle and figure out.

And the challenge is we've already made such huge investments in infrastructure, billions of dollars of taxpayer dollars, both state and federal. And I know this just focuses really on state investments, but, you know, we're not.

It's not sustainable if these, you know, chargers are just kind of limping along and not really keeping up with the needs of folks, you know, who need to make sure that they can get a charge and get to where they're going when they're, you know, when they need to get there.

So I know, you know, there's some conversations that continue to need to happen, but happy to support it today.

Thank you. All right, Assemblymember, would you like to close?

What I would really like to see, a lot of us have experienced Teslas and the row of chargers where you can see exactly how many are working when you look at your app and how long it's going to take.

And we want to make sure that every charging experience is like that, that, that people are able to look at apps while they're driving, figure out where the closest working charger is and get a charge. That's really what we need again in California to meet our renewable goals, our climate goals.

And so with that, I will respectfully ask for your aye vote and we will continue to work on the Bill to see what we can do to deal with the concerns of the opposition.

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

[Roll Call]

13-0. That bill's out. And we'll leave the roll open for absent Members to add on. Okay, I think I am next. Oh, sorry. Assembly Member Rogers is next. File item four, AB388. All right. Assembly Member, the floor is yours.

All right, thank you so much. Chair Members, I'm here to present AB 388. I really wanted to start off by just thanking the Committee staff for all the work on the Bill. Laura, I know this is a highly complicated and complex issue and I think your analysis was really good and helped make this digestible for folks.

So I wanted to start with that because I think that it's really important. This Bill is easiest to understand if you think about it in three different buckets. The first is a promise of green hydrogen. The second is the regulatory changes that we need to achieve that promise.

And then the third is the potential for job growth in this emerging sector. Hydrogen has enormous potential as an energy source as well as its ubiquitous use in many chemical and industrial processes.

Hydrogen can be used in fuel cells as a source of electricity, but it can also replace molecules like natural gas and diesel in a liquefied form. Exciting new technologies are being developed that are accelerating this enormous potential. Most hydrogen today is developed using natural gas, 90% of it in fact, with most of it coming from steam, methane.

Green hydrogen as defined in the Bill must be derived from wind and solar energy sources. Full disclosure. I also would love to amend in geothermal into that as well. The potential is huge. Hydrogen is the most abundant element in the universe, which is why green hydrogen is a central part of the state's renewable energy goals.

Unfortunately, right now we are falling very far short of those goals. As noted in the analysis, hydrogen is the only decarbonization option currently available for many industries and until technology catches up, this is it.

We've made tremendous progress on developing wind and solar so much that in the middle of the sunny day like today, we have excess electrons. With the right regulatory tweaks, we can harness that cheaper power to create green hydrogen. That promise can't be realized with current antiquated regulations.

And specifically the over the fence rule makes it difficult for a solar or wind generator to sell that excess energy to a green hydrogen producer. This Bill takes a very surgical approach to that change, allowing these energy sources to be linked through private power lines to a green hydrogen facility.

Those power lines will have the same robust wildfire and safety regulations as utility owned lines. Union labor will be building and maintaining those lines in order to comply with uncertain federal regulations. Investor owned utilities will be assigned as an intermediary in this transaction. I understand these changes alter long standing PUC regulations.

These regulations help investor owned utilities continue their business model, so the skepticism is absolutely understandable. But this is the only viable path to achieving California's goals on green hydrogen development. The Last Bucket the potential for a high paying clean energy job is also exciting the workers who currently build power lines will be central to this effort.

Other workers who are in the natural gas sector will have transferable skills because hydrogen is handled like many other molecules, like natural gas. That's why we have strong labor support on the Bill, which I'm immensely proud of. We always need to center workers in any conversation about the clean energy transition.

And I know we talk about that a lot in this Committee. This is a Bill that does both. It allows us to decarbonize sectors that otherwise don't have a solution without leaving people behind. We have two expert witnesses here today. We have Janice Lynn, the founder and President of the Green Hydrogen Coalition.

And we have an expert who is able to talk about the technical aspects from IBEW about the over the fence rule in 218 if folks need that as well.

Good morning Chair Petrie Norris and thank you Committee Members. My name is Janice Lin. I'm the founder of the Green Hydrogen Coalition. We are an independent educational nonprofit and our mission is to accelerate the realization of needed green hydrogen projects and infrastructure to achieve economy wide decarbonization and really displace fossil fuel use as fast as possible.

California is truly blessed with tremendous renewable energy resource, wind and solar in particular. And that means we have the ability to produce a lot of low cost renewable hydrogen. California can be globally relevant in terms of hydrogen production.

The issue is this resource is not available to electrolytic hydrogen producers unless it is on site or supplied through the grid, which we know is constrained. Getting rid of fossil fuels requires an abundant alternative fuel and that fuel is renewable hydrogen.

The only way we can speed adoption is by reducing its cost and producing it in large quantities. That requires bigger projects. Bigger electrolytic hydrogen projects will mean that we need bigger new large scale renewable electricity generation projects.

AB388 would unlock California's ability to to electrolytically and cost effectively produce renewable hydrogen at scale without shifting costs to non participating customers. Super important.

That'll help us not only achieve our energy transition goals, but it'll also help us leverage our abundant wind and solar resources to deeply decarbonize all sectors and position ourselves for future international trade of this valuable renewable fuel. So renewable hydrogen could thus become a very, very significant economic and job creation engine for the state.

I'm wrapping up now. If we want to scale our renewable hydrogen production, we need to scale our off grid renewable energy resources. And that requires fixing the over the fence rule. So we consider AB388. Thank you for your leadership Assemblymember Rogers to be critical model legislation that once Passed will be replicated in many places around the country.

Thank you. Thank you.

And are you going to provide testimony or just respond to questions?

Rachel Kass for the Coalition of California Utility Employees. You've heard all of the benefits of the Bill. I'm not going to repeat those. I just wanted to specifically testify on the section 218 change. And just mention that it is a very narrow exception to 218 and to solve a very specific problem. And that's what.

What makes this different from other attempts in the past to change section 218. This is specifically to make green hydrogen production economic. And I'm happy to answer additional questions for you on that topic.

Thank you. All right, additional witnesses in support. If you'd like to testify in support of this measure, you can approach the microphone.

Good evening, Madam Chair and Members of the Committee. Alfredo Redondo on behalf of HCycle. In support.

Madam Chair Member Scott Wetch on behalf of the California State Pipe Trades Council and the State Association of Electrical Workers and the Western States Council of Sheet Metal Workers. In support.

Madam Chair and Members. Erin Niemela on behalf of Intersect Power also in support. Thank you.

Hunter Stern with IBEW 1245 and the California Coalition of Utility Workers in support.

Mark Vendetti from Fairfax Concerned Citizen in support.

Thank you. All right, anyone here in opposition? We've got lead opposition witness. You can come on up. Welcome.

Madam Chair Members Brady Van Engelen here on behalf of Southern California Edison and respectful opposition to AB388. So Cal Edison agrees that hydrogen can play a critical role in decarbonizing our economy and contribute towards achieving our ambitious climate goals.

However, we do have concerns that the Bill seeks to erode the definition of electrical corporation and unnecessarily complicates grid planning for existing electrical corporations. As written, 388 seeks to carve out certain technologies from the current legal definition of electric corporation.

While technology itself might have merit, or the technologies I should say might have merit, removing it from regulatory oversight is a little disconcerting to us. It may longer be subject to certain customer protections. Edison and all the electrical corporations operate under a highly regulated environment with multiple layers of customer protections in place.

Many of those protections are not contemplated as part of this Bill and would likely be foregone by technology providers benefiting from this measure. And as a provider of last resort, we still have to build to accommodate their service so customers elsewhere may end up covering costs anyways to ensure that there is electricity in the time of need.

AB388 will not lead to a more energy efficient energy system either that the larger goal in place has.

Historically, the construct behind Public Utilities Code 218 really is to ensure that there is an efficient grid and this will effectively diminish the efficiency by allowing specific technology providers to run private power lines through and across existing electrical corporations service territory. When we aren't able to plan and forecast for demand, we are effectively flying blind.

This Bill will only further compound the time it takes to interconnect and energize infrastructure elsewhere as the study process will become more tedious. Lastly, AB388 lacks the restrictions and limitations necessary to appropriately protect rate pairs. As written, there's no limitation on length, distance and amount of new private lines that can run on a parcel.

These parcels could be a few acres or a few hundred miles. That part is unclear. And more specific to the tariff arrangement. There are no limitations on the amount of electrolytic hydrogen that can be produced under the tariff. And just stop there and you know, for these reasons just ask for your no vote.

Thank you.

Good evening. Valerie Turella Pacific Gas and Electric company Associate Our comments in opposition with my colleague from Southern California Edison and just also wanted to be to say that especially as a dual commodity utility we do see the value in getting to clean hydrogen solutions. This is a part of our decarbonization pathway as a state.

For the reasons my colleague stated, we do not agree with this particular arrangement. So we are in opposition. Thank you.

Thank you. Any additional witnesses in opposition to this measure? You can approach the microphone. Anyone here in opposition to above? 388. Anyone here or outside? Okay. Seen and hearing none. Bringing it back to the Committee. Questions or comments? All right.

I'll just say that as I said when I think Assembly Member Cecilia Aguiar Curry was presenting her Bill, someone who advances and advocates in all of the above approach. I think it's absolutely critical if we're going to achieve our clean energy ambitions, particularly if we're going to decarbonize the hardest to abate sectors.

And I think as we're thinking about that journey, it actually is going to be necessary to modernize our regulatory structures. Alongside that, I think that we're not inventors and creators, we're policymakers and our role is to set the foundation to let innovations take root and new technologies flourish.

And I do think part of that is going to involve a conversation. We want the opposition at the table as we're having those conversations about how do we modernize the regulatory piece of that framework as we're moving down this path. So I think that's a much larger conversation and to be continued. But thank you, Assemblymember Rogers.

And would you like to close?

No, Absolutely. And I want to thank the chair on our leadership on this type of an issue. We're perfectly happy to work with the opposition on it, but I think you hit it on the head.

What we're doing right now is, does not produce a viable economy for green hydrogen, and our renewable portfolio relies on it to hit our climate goals. So we either have to do something different or we have to change those standards and just be okay with that.

We're choosing to do the hard thing and the complex thing and trying to look at a new approach to be able to deliver for our constituents. And with that, I ask for an aye vote.

Thank you. Do we have a motion? No, we have first or second motion. Does anyone want to move this measure? All right. All right, motion and second. Madam Secretary, will you please call the roll item number 4 AB 388

[Roll Call]

Okay120. That Bill is out. We'll leave the roll open for absent Members to add on. And we are now going to move to file item 10, AB 825, which is mine.

All right, I'm passing this off

just so. Yeah, let's have a more conversation. Okay, thanks, but look forward to it.

Logan? Yeah, let's talk. There was, you know, this last year, we did do a lot of thinking on it, and sometimes the deadlines of this process don't allow.

Hi, thank you so much for being here. I'll sit here. One of you guys can sit here. Are you going to go first?

Okay, so then. Are you going first turn and then. Yeah, perfect. All right.

All right, Madam Chair, I think we're ready with item 10, AB825, whenever you're ready.

Thank you, Mr. Vice Chair, and thank you, Members. I'm very excited to present AB825 today. We all recognize that this is a pivotal moment for California. We have incredibly ambitious and incredibly important climate goals, and we've got a real monumental challenge on our hands to actually deliver on that goal.

On that goal over the next 20 years, we need to increase generation capacity by some 300%. We need to increase transmission capacity by almost 350%. And it is absolutely critical that as we're making those investments that we're doing that in the most cost effective way possible. The bad news is right now we're not.

We are financing these projects in one of the most expensive ways possible. We talked a little bit about that as we were talking about some of the other bills. But all of these projects are being financed by IOU'S off of their balance sheets and they have some of the highest borrowing costs of any industry anywhere.

So we've got to think about a different way to get this done. Studies have found that public financing of transmission assets could save California as much as 57% of project costs. And so this Bill, AB 825, creates a public finance program to Fund transmission infrastructure.

And I've got two experts with me who are going to go into the details of the program. I'm just going to share the high level overview. What we will do with this Bill is establish a Fund that is seeded with $325 million of the Proposition for money that we set aside for this purpose.

Those funds could then be increased with additional allocations from numerous sources including potentially GGRF, the General Fund or even revenue bonds. The program then authorizes public private partnerships for transmission projects and the savings will be returned to ratepayers.

So with me, I am pleased to be joined by Adriana, sorry, Adria Tynan from TURN and Dan Adler from Net Zero California who are going to do a deeper dive into AB825's financing model. Thank you for being here.

Thank you, thank you Vice Chair and thank you Committee. Adria Tynan, Utility Reform Network here in proud support. As was said, the Bill contains several important elements to support public financing of transmission projects. So it creates the Public Transmission Fund that will utilize 325 million of Prop 4 funds authorized just last year.

Establishes a new public transmission financing program administered by the I Bank to support the financing of public partnerships for transmission projects developed and primarily owned by IOU'S. Makes the Fund and financing program available to a range of public sponsors including state agencies, local public agencies, tribal organizations or joint power authorities.

It also authorizes California Power Authority, which was Originally created in 2001, to serve as a potential state agency public transmission financing partner. The ratepayer benefits for public transmission financing are significant. By relying on low cost debt, including tax exempt debt, public entities can achieve long term savings in excess of 50% compared to private ownership.

Ratepayers are forced to pay not only for shareholder return currently, but the taxes the IOU'S owe on those returns, which means that ratepayers effectively pay 14% for shareholder equity. In comparison, long term 30 year AA rated municipal bonds are currently yielding under 5%.

Applying this difference to financing a portion of new transmission investment would produce massive long term ratepayer savings. These savings would accrue for any portion of an IOU transmission project owned by a public entity and under AB.

Excuse me, under AB825, retail customers would benefit from these savings through either low transmission, excuse me, lower transmission access charges or direct Bill credits. AB 825 is focused on support for partnerships between utilities and public entities for transmission projects where the public entity would own and finance a minority share.

Both PG&E and SDG&E have sought approval for transmission partnerships with nonprofit entities like Citizens Energy, for example, San Diego Gas and Electric partner AB825 would build on this approach that the utilities are already interested in by empowering public entities backed by lower cost public financing to serve as a partner for new IOU driven transmission.

These partnerships would be voluntary for the IOU'S. TURN strongly supports allowing California Power Authority to serve as a public transmission financing partner. Revitalizing the authority would ensure the existence of a state agency sponsor for transmission project financing and ownership, thereby avoiding the need to establish an entirely new agency.

Given the affordability challenges caused by rapidly rising electricity rates, the Legislature should prioritize strategies that can lower the cost of future transmission development that are passed through to customers. For those reasons, we urge the Legislature to seize this opportunity and pass AB825. We respectfully encourage an aye vote and thank you.

Great thanks. I don't cut off the Chair's witnesses, so thank you. Bad form.

Good evening Members of the Committee. My name is Dan Adler representing Net Zero California. We are a nonprofit policy analysis organization focused on the critical issues impacting our ability to deliver on our world leading climate ambitions. Thank you for the opportunity to comment in support of AB825.

These comments are informed by the research developed by Net Zero California which my colleague from TURN just referenced, and by my time leading the Climate finance unit at I Bank Funding policy strategies nationally to develop the clean grid of modern future and as a Senior Analyst in Strategic Planning at the CPUC.

I will skip over some of my comments that were addressed efficiently just a moment ago, but I want to highlight that the Bill clearly identifies both return on Equity and capital structure as variables that policymakers should and can adjust. These issues merit much greater attention than they have traditionally received in policy circles.

In setting out a structure whereby funding from Prop 4 and elsewhere can be allocated, the Bill enables a deeper discussion of how that capital can best be invested. I will highlight two important options for this investment.

The first is to focus public capital on early stage project development challenges which must be addressed before full capital expenditures are authorized, including White's Way acquisition, environmental assessments and early permitting. Because these activities currently typically happen when the project's status is uncertain, private capital costs are very high.

A State Fund that addresses these early costs is repaid at the next stage of project development and can then be redeployed into subsequent projects would be a highly impactful public investment strategy over many years.

As the Bill also contemplates, the Fund could be used to potentially support the issuance of a revenue bond to Fund the transmission activities of a development authority, a state or local government agency, a JPA, or even a private party.

One approach here would be to utilize Prop 4 capital as an equity cushion, essentially a Reserve that bond buyers would view as a form of insurance should project revenues be insufficient to repay bondholders. An insurance product like this could leverage perhaps three times additional capital from private markets and potentially be deployed over time if market conditions allow.

Briefly, let me highlight one critical element which will enable these revenue bonds to be successfully issued. The most important factor is the certainty of repayment. That may be obvious, but there really is not a close second. That is where the financing structure of this Bill and the development authority sit hand in glove.

All the efforts that can be put into play, picking the optimal projects, streamlining early project development, coordinating public and private capital, selecting the right development partners, ensuring timely recovery of fairly incurred costs.

All of that together is the coordinated approach that we need and which will enable the successful allocation of both public capital and mobilized revenue bonds with greater certainty and at a cost of capital that the state and its ratepayers can afford. Thank you very much.

Great. Thank you. Are there additional support witnesses? Name and affiliation, please.

Mr. Chair, Member Edison Perez with Advanced Energy United in support.

left

Any witnesses?

zero, Mr. Chairman and Member Scott Wetch, on behalf of the California Coalition of Utility Employees. The Bill was just came out on the 21st, the language, so we haven't been able to take a formal position, but we've been working with the author productively on this concept.

We think there's some refinements that are needed to address some certain issues, but we're close and we thank the chair for bringing the Bill. Thank you.

Great. Thank you.

Brandon Avex Pacific Gas, Electric, just echo the comments of Scott. Thank you.

Great, thanks. Any witnesses in opposition? All right, seeing none. We'll bring it back to the Committee. Any comments or questions from up here? Okay.Assembly member Irwin,

I think it's. I really appreciate all the work that you've been doing on affordability and those presentations about public financing potentially saving 55% are very hard to believe and it would make a huge difference.

And so you running this Bill so quickly after hearing what is going on is very impressive and hopefully we can take some of that Prop 4 money and really use it to help lower the costs of new transmission and lower our constituents bills. So thank you very much. Thank you.

Any others? Right. Seeing no others. Just comment from me. I obviously will be interested to see what the comments are from the folks who spoke afterwards. You know, I've said publicly that I think the state ought to look at some public ownership of transmission. You know, I mean utilities are so heavily regulated anyways.

You know, I mean very government oversight over what they do. I do think that there might be some benefit to in a separate piece of legislation not to make changes here per se, but you know, looking at expediting. So if it's publicly funded, you know what we can do to make sure litigation doesn't bog it down forever.

Right. So. But that's probably a separate discussion for another time. But you know, I'm looking forward to support the Bill. Is there. Was there a motion? In a second. There was. Perfect. All right. Well, the motion is do pass through appropriations and Madam Secretary, please call the roll.

Petrie Norris Aye. Patterson.

Aye.

That was item number 10 AB825 do pass to Appropriations. Petrie Norris.