Assembly Standing Committee on Utilities and Energy

Good afternoon. Good afternoon, and welcome. I would like to convene today's hearing of the Assembly Committee on Utilities and Energy. Before we move to the agenda, I have a couple of housekeeping announcements to make. First, as is customary, I will maintain decorum throughout today's hearing.

In order to hear as much from the public within the limits of our time, we will not permit disruptions that impede the orderly conduct of legislative proceedings. Any individual who is disruptive may be removed from the room. Today, we have 21 measures on the agenda. 10 of those are on consent. For each measure, we will welcome two witnesses on both the support and opposition side, and each witness will have two minutes each.

As a reminder, primary witnesses in support must be those accompanying the author or who otherwise have registered a support position with the committee, and the primary witnesses in opposition must have their opposition registered with the committee. All other support and opposition can be state stated at the standing mic when called upon. And at that time, please simply state your name, affiliation, and position. With that, I think we do not have a quorum, so we will go ahead and proceed as a subcommittee.

And we've got a couple of authors on the committee, so I think we're gonna jump to file item number 11, assembly member Irwin.

Do you wanna get us started, kick off the proceedings?

Twenty one eighty two.

Twenty one eighty two.

Yeah. We've got a lot of we've got a lot of items from miss Irwin today. Excellent. We'll start with file item eleven AB 2182.

I I thought I was going last. So alright. Is it on? Hello? Can you yeah.

Okay. Well, good afternoon, colleagues. As you may know, reducing greenhouse gas emissions from industrial facilities is one of the greatest challenges we face in reaching our climate goals. One of the tools that we have available is to deploy industrial upgrades to cleaner technologies for industrial upgrades to cleaner technologies is the energy efficiency program overseen by the CPUC. However, the current program excludes many promising industrial upgrade projects.

As a result, large industrial facilities are struggling to effectively invest in cleaner technologies despite their potential to deliver- deliver, significant emission reductions. I will be accepting the committee's amendments to AB 2182, which will restructure the industrial energy efficiency program in the following ways.

Number one, shift the program administration from the CPUC to GoBiz, which has a strong record of efficiently implementing the energy focused incentive programs. Number two, assess project benefits based on the performance of existing equipment rather than a hypothetical baseline. Then only use funds paid in the program by industrial facilities themselves, ensuring that no incentives for the facilities are subsidized by other customers.

AB 2182 will realign the industrial energy efficiency program with the realities of the industrial decision making, reduce administration costs, encourage timely investments in decarbonization projects, and support industrial emissions reductions in California. With me today to testify is Bill Gerald, director of energy and sustainability for CalPortland.

Are you both speaking?

Yeah.

Okay. Alright.

Hi. Madam chair, members, thank you for allowing me to to testify today. I really appreciate it. Energy efficiency is a a big core component. I'm I'm the director of energy and sustainability for CalPortland.

We're a cement and concrete company here in California. We've been in California one hundred and thirty five years, and we operate cement and concrete plants here. And then and we're part of a an energy intense trade exposed group called CLECA. I'm I'm sure everybody knows California large energy consumers, and we're 500 megawatts of load with energy intense trade exposed load that can really utilize energy efficiency. CalPortland, we we have a culture of energy efficiency.

We reinvest in ourself. We're we're an Energy Star partner. We've, we've won the Energy Star Partner of the Year award twenty years in a row. I I just kinda wanna share that to show that we really do focus on energy efficiency, and we we really believe in it. The existing energy efficiency program, we've utilized it through the utilities.

And in the early two thousands, pretty successful, and it's it basically dried up. Right? The process doesn't work anymore, and we've we've we've attempted, and then just kind of our leadership is just we we the the the effort isn't sustainable anymore. And so we, you know, we want to work on energy efficiency. You know, you you need sometimes a little extra funding.

This is a capital intensive industry, and we're competing. Energy efficiency competes against other capital intense investments. And sometimes you need some additional funding to make an energy efficiency project meet those high hurdle standards. So, you know and and we're not this bill, I what I really like about it is it's not asking from other more money from somewhere else. We're already supplying the money, the financing.

This is this already going into our our our rates from the industrial program itself. So we we only wanna utilize what's existing and and and find a a path forward that that actually it works. Right? You know, we we're ready. We're ready to invest money in California, in projects in California.

We're a Western Coast company, Washington through through Arizona. And so I wanna thank you very much for allowing me time and ask for an aye on this.

Madam Chair and Members, Bruce Magnani on behalf of CLECA, California Large Energy Consumers. Respect the committee's time. I'm here to answer any technical questions you may have. Just to clarify that the money that you spend on energy efficiency through your through your bill goes into an escrow account, and you essentially apply for it back, for a grant with a one to one match. So you're not getting other rate payer money, and you do have to invest other capital.

So thank you.

Thank you. At this point, we will open it up for additional testimony in support. So if you would like to testify in support of AB 2182, you can approach the microphone at this time.

Chair and Members, Imola representing the Energy Efficiency and Demand Management Council. We have a support, if amended, position. Really appreciate the author's work on this and the importance of our business customers and actually providing this energy efficiency for the grid. So we'll continue working on that. Thank you.

Alright. Let's turn to opposition. Is there a primary witness in opposition to AB 2182? Alright. Going once.

Alright. Seeing none, any me too testimony in opposition to twenty one eighty two? If so, please approach the microphone at this time. Seeing none, bringing it back to committee. Questions, comments?

Assemblymember Papan.

When we get a quorum, I'd like to move the bill. I think it's a win win win for everybody, and I I'm delighted to see it.

I'll second.

Alright. Excellent. You've got a preemptive motion and second. Assembly member Erwin, would you like to close?

When the time is right, I respectfully ask for your aye vote.

Thank you. Okay. I think we'll move to file item number 12, which is your AB 2396.

Alright. I will now be presenting, AB 2396 will which would allow community choice aggregators or CCAs to develop, own, and operate electrical transmission lines. I'm accepting the committee's amendments to limit this authority to projects that are eligible for the transmission accelerator, which was created in last year's SP two fifty four. As we all have heard often in this committee, California's electric bills are among the highest in the nation, and transmission is one of the key drivers.

CCAs in partnership with the private sector can play an important role in delivering low cost financing for future transmission projects.

As noted in the committee analysis, several other states developed transmission lines with public financing, which offers a lower cost model to meet electricity needs. With me today to testify on behalf of the bill are Ted and David from Clean Power Alliance, allowance Alliance.

Yeah. I'll I'll Sorry about that.

It's been a while since I got an allowance. Good afternoon, Chair and Members of the committee, and thank you, assembly member, for, authoring this important legislation. My name is Ted Bardacke. I'm CEO of Clean Power Alliance, and I'm joined by David McNeil, who's our chief financial officer. We are California's largest community choice aggregator and the bill's sponsor, which focuses on a key challenge.

How can we tackle rising electricity bills while building out the infrastructure necessary to sustain reliable and clean energy system? This isn't a theoretical concern for us. We are a JPA made up of 38 communities across LA and Ventura Counties and are governed by a board of local elected officials whose constituents feel the affordability crunch every day. We've lowered our rates three times in the past fourteen months and are poised to lower them again this coming July.

But because we only control smallest portion of a customer's bill, those bills keep going up.

So at our board's urging, we've been seeking to lower transmission costs, which would benefit not just our customers, but all Californians served by IOUs. As the committee analysis noted, transmission investments are expected to double over the next twenty years. And just yesterday, the CAISO issued its draft 25, 26 transmission panel calling for another seven billion dollars in transmission construction, which rate payers will have to pay for.

Transmission is a natural fit for CCAs, particularly for the competitive projects that the accelerator is targeting because, one, the public sector has a long track record of developing transmission lines. It's already a competitive market, be a well established FERC 1,000 projects, and it is well set up for public private partnerships and the financing tools that enable them similar to what we do with private sector generators.

California is looking for partners in building new transmission lines at lower costs. Well, here we are putting our hands up. So to offer some additional insights on how we would partner, I'll turn it over to David who's responsible for our relationships with the capital markets and would be a key person in putting together our projects.

Good afternoon. Thank you for allowing me to speak today. Although the authorities we are requesting through this bill may seem expansive, they are necessary for us to use low cost tax exempt debt to finance transmission projects. The IRS requires that we establish what's called beneficial ownership, which it measures through a series of tests, which include possessing the authority to construct, operate, and maintain the asset. This is not a unique requirement for CCAs.

Any public entity that uses tax exempt debt to finance transmission will have to have the authority to construct, operate, and maintain it. As a beneficial owner of a transmission project, CPA would contract with private sector firms that are qualified to perform this work. Again, we would not be unique. Both private and public developers routinely partner and contract with firms possessing requisite expertise.

They do so because they operate in a competitive market in which the CAISO selects bidders based on their ability to deliver projects at a competitive price.

If a bidder proposes a project that includes unqualified service providers, the committee should be confident that the project would never be selected. In addition, I note that the proposed amendments to the budget trailer bill would require the accelerator to select projects that use experienced contractors for construction and maintenance in California.

Last year, the chair of this committee took a key step in creating private public financing opportunities with SB 254, with the amendments that the committee suggests this bill would take the next step and allow CCAs to support accelerator projects. With your permission, CCAs would be a new tool in the state's affordability toolbox. Thank you.

Thank you. Okay. Now we will move to additional witnesses in support. If you'd like to testify in support of AB 2396, you can approach the microphone at this time.

Hello. Doctor Adria Tinnin, Director of Race Equity and Legislative policy on behalf of TURN, The Utility Reform Network in support.

Sean McNeal with the California Community Choice Association in support.

Alright. Moving to witnesses in opposition.

Madam Chair, member Scott Wesh, on behalf of the California Coalition of Utility Employees and the State Association of Electrical Workers, regretfully in the position of oppose unless amended. While we appreciate the committee, amendment, it does not fix the fatal flaws in this proposal. First off, the sponsors have stated that this is all about doing partnerships with private corporations or utilities. That's not required in the bill. Under the bill, CCA alone could go and build and own and operate a transmission line.

What's the problem? No requirement in last year's law or this year's law to require that they fire that they file a fire mitigation plan. There's also no requirement that they obtain any sort or accept the financial liability of creating a wildfire. They would be subject to strict liability like any other transmission owner, But a JPA is an a- a CCA is an empty shell of a JPA without any assets.

And the cities that make up this JPA do not put the full credit of those cities or their general funds up to support the CCA.

If that was in the bill, we wouldn't have a problem with the bill. But for for representatives here from Los Angeles, where the hue and cry has been that Edison has not done enough for the victims of the Eaton fire to suggest that they should be able to own transmission without any backstop or safety net for potential fire victims. What happens if they burn down Burbank? LADWP owns transmission. You know what?

The city of Los Angeles, the full general fund of the city of Los Angeles, as well as the credit of the city of Los Angeles backs up the transmission known by LADWP. There's nothing in this bill to do that. It's reckless to pass this bill in this current form. We're not opposed to CCA's owning transmission. But for God's sakes, let's step back and take a a look at this from the perspective of what happens.

We've gone through enough of these fires. We know what happens.

Thank you.

Good afternoon. Brandon Ebeck on behalf of Pacific Gas and Electric, very much aligned with my colleague in labor, mister Scott. We do think that this bill lacks some very serious safeguards. It's pretty high level, and it doesn't really go into how these projects would ever get built, how they get financed, how the liability is shared. Ultimately, this bill should probably go through local government committee because the JPAs are not legally set up to take on this type of liability.

Ultimately, the IOU, as a provider last resort, is liable for whatever happens should a a CCA engage in an activity that causes it to go bankrupt. If that happens, the utility and all of our bundled customers are suddenly on the hook for not just potentially picking up their infrastructure that they might own and to continue to operate that, we also would have to pick up all the generation costs that we were not preparing to suddenly take on.

So we think that there's a lot of unintended consequences here. We don't think that the CCAs are probably the in the best position to get the cheapest financing according to the accelerator. The state is probably gonna have much better borrowing rates and better credit.

Ultimately, your cost of debt relates to the project you're investing in. And if you're gonna build a greenfield project across high fire threat districts, whoever's loaning you the money is going to look at that and give you cost of your debt. That's not gonna vary whether or not it's an IOU or the state or CCA going out to seek that money. So we even with the amendments, we are still opposed to this bill.

Alright. Opening it up for additional witnesses in opposition. If you'd like to testify in opposition to AB 2396.

Yeah. Thank you, madam chair. Hunter Stern with IBW 1245, also in an opposed and less amended position.

Good afternoon. Joe Zansi with San Diego Gas Electric in opposition. Thank you.

Good afternoon. Lynn Trujillo with Southern California Edison in opposition. Thank you.

Thank you. Alright. Turning it back to committee. Questions or comments? Assembly member Hart.

Well, the obvious question of the day is the liability one. So what is the proponents of the bill, author, and witnesses have to say about that?

And, you know, I I I do wanna make clear. This is just allowing the CCAs the ability to, to be eligible for the the, transmission accelerator. And then the, obviously, the liability issue would have to be dealt with. They wouldn't the the projects wouldn't be picked if they don't have, the appropriate liability, coverage. And so I would would you address that?

Yeah. I I I would point out that there is plenty of private insurance capacity available in the market at affordable rates for certain new build transmission projects. Where there is constraint in the private insurance markets is for legacy transmission portfolios that are owned by the IOUs. So we're really talking about two different things.

I think it was stated that CCAs have no assets. Clean Power Alliance has about $750,000,000 in assets, about 600,000,000 in cash, and an A credit rating. So we are deemed by financial markets to be a very credible counterparty in a financing transaction. We've issued over $7,000,000,000 of prepaid bonds in through seven different transactions in the last three years.

And I I I do wanna say there are going to be a a multitude of transmission projects that have to be built if the specific and and what we're hoping to do is lower cost for customers. So they would have to meet the specific requirements, including showing that they have insurance that would cover the project. And it's probably gonna be a very small subset, but at least to give them the ability to bid and potentially drive down cost for consumers is is to us important.

Mister Wetch, look ready to ask another question or answer that question.

The first thing is FERC when FERC does a competitive bid on a transmission project, they don't they don't it's not their job. They have a list of requirements that FERC mandates be the the bidding components, and liability coverage is not one of them. It's the job of this institution. Secondly, the the the the merchant transmission developers like the NextEra's of the world, LS Powers of the world that do projects in California,

they have a market cap of, like, almost $200,000,000,000. Right? If in fact insurance would be so easy to be to be obtained by the LACCA, why is that requirement not in the bill? If they're convinced that insurance will be available in that market, let's put a amendment in the bill that they accept liability and that there will be insurance.

And if the insurance doesn't cover it, then the cities that make up the CCA will back it up in case it's your constituents that are damaged by this.

The owners of the CCA, just like the you should have to put up and and cover any liability. And that's the cities that make up this. So let's put it in the bill. If it's not a problem, we should be able to hammer out some language.

If I may if I may just just clarify one point. So first, kind of taking a step back. So the the logic behind pursuing public financing for transmission infrastructure projects is really quite straightforward. We've talked about it a lot in this in this committee.

We are steering down the barrel, I think, as some of our witnesses said in their testimony of, you know, needing to build out more we need to increase our transmission capacity by some 350% in the next twenty years. It's going to cost everyone billions and billions of dollars. The way that we are building transmission today is literally the most expensive way we could possibly be building transmission infrastructure.

So we've got to think about this differently, and we've seen other states who've thought about this differently and been able to execute effectively. We established the transmission accelerator with SB 254 as a first step along this journey.

It's straightforward on paper. I think we all recognize you're not gonna wave the magic wand and have this happen overnight. I wanna make sure that everyone understands, including our opposition witnesses, that this Bill is now restricted to accelerator projects. So under SB 254, those transmission projects must be consistent with state policy as determined by the state agencies coordinating.

Accelerator projects must have the applicant or its affiliates or its affiliates have previously committed a transmission project in the state, which by definition means an existing electrical corporation that has wildfire mitigation plan and liability obligation.

So I think we did not feel that it was necessary to make that explicit in this Bill because it is explicit in SB 254. So that's, you know, to clarify. Assemblymember Zbur.

So I wanna wanna thank you for bringing the bill. I'll be supporting it today. But I do think the liability issues are important, and I'm hoping that you'll work with the opposition to try address those explicitly in the bill. And with that, I make that request, and we'll be supporting the bill today.

Thank you.

Alright. Thank you. Any other questions or comments from committee members? Okay.

Assembly member Irwin, would you like to close?

Well, appreciate the conversation today. And, obviously, parts of the opposition letter were based on, the text before we had the amendments. And I think the the amendment that makes it part of the the transmission accelerator really takes care of, a lot of the issues that were brought up, by the opposition. But we certainly intend, to your request, Assemblymember Zbur to, continue the conversation and, work with the opposition going forward.

Again, this is about one more tool in the toolbox to try to bring down high electricity rates.

And, with that, I respectfully ask for your aye vote.

Alright. Thank you. I think we're still waiting for a quorum, so we will pause that until we have one. And then we've got assembly member Irwin.

And then

Unless Third time's the charm. Okay. AB 2589.

Alright. So under, current California law, if the federal tax liability of an IOU is reduced in the middle of a general rate case, the IOU is not required to return the savings to the taxpayers. For instance, under HR 1, Trump's tax bill, if IOUs benefit from the tax cuts, they may be collecting more money than needed. AB 2589 would require the CPUC to evaluate how changes to federal law affect the federal tax liabilities for IOUs.

If the CPUC finds that changes in federal law result in the IOUs overcharging rate payers, AB 2589 requires the CPUC to adjust rates so that the difference is returned to taxpayers.

This bill builds on the success of SB 1028 authored by Senator Hill in 2018, which returned more than $1,000,000,000 from IOU federal tax liability to California ratepayers after the Trump won tax cut. This bill fits into this committee's continued focus on affordability. And, with that, I respectfully ask for an aye vote.

Thank you. Do you have a primary witness?

Nope. I haven't.

Alright. We'll go ahead and open it up for any testimony in the room in support. If you'd like to testify in support of AB 2589, you can approach the microphone. Alright. Seeing none, we've got our opposition witness coming on up.

Good afternoon, Members and Committee Member and Chair. I'm gonna keep it short. We've been talking with the author and the staff regarding the TAMA account that applies to Southern California Edison through our GRC where it was approved, then we wanna make sure that it's not duplicative of the work that we're currently doing. So we're gonna keep those conversation going to ensure that the intent of the bill and the current process that we currently are following is what the author is trying to do.

So we'll keep that going.

In the meantime, we do have an opposition on the Bill. Thank you.

Okay. Additional witnesses in opposition. If you'd like to testify in opposition to AB 2589, now is your time. Seeing none. Committee, bring it back to committee.

Questions or comments? Seeing none. Assembly member, would you like to close?

Again, this is just about returning money to rate payers, which is, really has been the focus of this committee for the last few years.

So with that, when the time is right, I respectfully ask for your aye vote.

Alright. We will move to file item number 10, AB 2508, Assemblymember Hoover. Welcome.

Hello, everyone. Thank you, Madam Chair, Members. Appreciate the opportunity to present AB 2508. First, I wanna thank the Chair and committee staff for working so closely with our office on this bill. Californians face the highest cost of living in the nation, and rising energy bills have become a major affordability concern among families across our state.

According to the Public Policy Institute of California, our electricity rates are the highest in the Contiguous United States and second only to Hawaii. As of late twenty twenty five, Californians California's rates are over 100% higher than the national average. These high electricity costs are driven partly by public purpose programs, paid for by customers of the state's investor owned utilities, which include low income assistance and energy efficiency programs that provide broad public benefit.

It's neither equitable nor sustainable for these programs to be funded by the customers of electric IOUs. If we're serious about affordability and bringing down rising costs, then we need to take action find ways to save Californians money.

This bill seeks to do just that. These program costs are regressive and hurt middle and low income Californians the most. And if they are important to this legislature, I think it's important that we fund them using other other pots of money. Furthermore, if full electrification is the goal of the state, then it's important that we bring electricity costs down to reach our climate targets. AB 2508 does not eliminate these programs.

I wanna be clear about that, but instead, we'll help reduce customers' energy bills by providing funding for these programs to more appropriate sources. With that, with me today is Lourdes Ayon with San Diego Gas and Electric and Scott Wetch with the Coalition of California Utility Employees to share their thoughts as well.

Madam Chair and Members Scott Wetch, on behalf of the California Coalition of Utility Employees is proudly in support of this bill. Our position is simple. Everybody's about affordability. Everyone's talking about reducing rates. There can't be any more sacred cows.

I mean, net metering is, I guess, a sacred cow now, so we can't touch that. But there's certain programs that that just their time have has come and gone. And many of these energy efficiency programs are not even means tested. I mean, a few years ago, I'm sure you'll be glad to hear, I built a very large swimming pool. And, that pool took four four, you know, motors.

And when I had the contractor, you know, hand me the keys to the new pool, he also handed me the the paperwork for rebates, $200 on each one of those on those on those four high efficiency motors. And, you know, I I didn't really need the subsidy. It didn't incentivize my use of those high efficiency pieces of equipment. These programs are inefficient, and many of them, perhaps not all of them, but many of them should not be borne by the ratepayers.

And so we would urge an aye vote.

Thank you.

Thank you.

Thank you. Chair and Members, Lourdes Ayon with San Diego Gas and Electric. I really agonized about how to, you know, speak to this bill just because public purpose programs serve a very important place within within rates or within California for Californians. But because they are public purpose, I do feel like they need to be paid through public funds and not hidden and being kind of we don't really know exactly what's in the public purpose programs and at at least it's not listed in the bills.

And I think that, as Scott had mentioned, there's some energy efficiency programs that are important and that are valuable and we need to keep. However, they're very expensive.

I also built a small, ADU in my backyard that required me to put solar on it. And, the solar system was a lot more than I could afford and that I wanted to afford. It made me get a smaller unit in order to get under or out from under the requirement of the net energy metering, system to put in my home. Long story short, the cost of it was you know, it's a worthy cause.

I would have done it if I could have had the money to do it.

I think $20,000 for a system was a lot more than I could afford at the at the moment. But, also, at the time by the time I was done paying for it and getting my money back for it, then I would have had to, you know, redo it and set it up and do it all over again. So there's no real savings. At least, I didn't see that there would be a real savings for me.

It wasn't cost efficient for me, and I think it's probably the same for a lot of Californians.

That said, 37% of, costs in energy bills are due to public purpose programs. There's a lot of bills that want the cost to reduce reduce the cost of bills by 25% that I think that if we can if we can do that, looking at the public purpose programs more closely will be really helpful. Oh, perfect. Thank you.

Thank you.

Okay. We'll open it up for additional testimony in support. If you'd like to testify in support of AB 2508, please approach the microphone at this time.

Good afternoon. Hunter Stern with IBW 1245, also in support. And I would note that if we put these items on people's bills, there would be no sacred cows. Thank you.

Thank you.

Hello, Valerie Turella, Pacific Gas and Electric Company in support.

Thank you.

Good afternoon, Madam Chair and Members. Rod Brewer for Southern California Edison here in support.

Thank you. Okay. Turning to testimony in opposition. We can approach the dias at this time. So we have three people wanting to speak in opposition.

Yeah. We we can only hear from two, so I don't I'm gonna ask my consultant how we do this. Rochambeau? I'm not sure.

So we're gonna hear from whoever had the straight opposition position first, and then one of, you guys need to decide between the two of you, who which of the opposed unless amended witnesses is going to speak. Okay. So TURN and The Wildfire Survivor Network. You need to figure that out. Well, in the meantime, we'll hear from

We have two straight opposition.

Oh, you have two straight opposition?

Yes. Oh, okay. I so then I think the policy is that we're we will hear from the opposed position. If you can just when we turn to the testimony in the room, you can give us, like, the ten second version of what amendment you're looking for.

Okay. Thank you. Alright. So we are hearing now from TURN in opposition and no. No.

Anyway Yeah.

Good afternoon, Chair and Members. Thanks for your time today. I'm Stephanie Chen with MCE, California's first community choice aggregator. At MCE, we are acutely aware of the affordability crisis, and we are committed to mitigating its impact. Unfortunately, members, this bill will have unintended consequences.

Several of the programs in it function as energy safety nets, including for local governments and food banks that are also impacted by, by the affordability crisis. Our focus today, however, is on energy efficiency. MCE is a portfolio administrator operating pro offering programs for every customer class across our four county footprint. Cutting these cost effective programs will cost more than it will save. Every dollar invested in energy efficiency generates more than $4 in grid benefits, including energy savings, reliability support, and emissions reductions.

The PUC noted in its AB 3264 report last year that energy efficiencies, quote, low impact on rates provides a low cost path to equitably achieve cost savings for customers and reduce total energy consumption and peak demand, which in turn reduces retail rates through lower energy prices and avoided capacity transmission and distribution costs. Energy efficiency portfolios are rigorously analyzed by independent evaluators and the PUC in public proceedings and continuously found to be cost effective statewide.

What this means is that it would cost more to replace the power that California is currently saving through energy efficiency programs than it would cost to fund them. And, you know, we heard, from from witnesses in support that there may be some question about what is the best use of these funds. Should they be going to pool pumps?

Should they be going to different kinds of customers? Those are all challenges that can be, addressed in the existing program structure. If if the PUC and the legislature would like it to be focused more on means tested programs, if they would like it to be focused more on, different kinds of measures or delivering different kinds of benefits as a priority over others, those changes can certainly be made. Respectfully, we must ask for your no vote.

Good afternoon, chair members. I'm I'm Ryan Wilson. I'm here on behalf of the California Energy Efficiency and Demand Management Council. We're an industry association of businesses involved in the design and delivery of energy efficiency and demand response technologies and programs throughout the state. The council respectfully opposes AB 2508.

Energy efficiency provides more jobs than any other energy related sector in California with over 300,000 jobs and 53,000 businesses across California in every county of the state. These businesses work with energy efficiency programs to provide customers around the state with energy efficient technologies that integrate with the grid. They provide real value, not just to the customer, but to California as a whole. But these energy efficiency and demand response programs, in order to work, they need to be stable and reliable.

And that's why E programs are run on at least three year cycles.

Manufacturers, distributors, contractors that are essential to to helping these programs run. They wouldn't invest in changing their business practices and supporting these technologies if they can't rely on consistent program funding. Funding stability is, is absolutely foundational to the success of these programs, and and shifting energy efficiency funding to the the Greenhouse Gas Reduction Fund puts these programs, and all of the benefits that we gain from these investments in these programs at risk.

The GGRF is already sort of overextended and unpredictable, and relying on it undermines long term planning. It disrupts the energy efficiency market, and it ultimately drives higher costs, for power in California.

The GGRF just simply can't provide the stability it takes to run well designed cost effective programs. You know, to execute, these energy efficiency programs well, requires reliable multiyear funding. And and without it, we lose our our fastest and office often our cheapest way to match energy demand with supply, which is precisely what California needs right now. It needs these programs to work at scale to mitigate the current energy affordability crisis.

So on behalf of the California Efficiency and Demand Management Council, we respectfully urge your no vote on AB 2508.

Thank you. Alright. We will, perfect timing. We will turn to additional, testimony in the room and we first if you can just give us the twenty second version of the amendment.

Absolutely. Thank you, Chair and Committee Members. Will Abrams on behalf of the Utility Wildfire Survivor Coalition. We are taking a position opposed unless amended on this bill. Specifically want a preallocation determination whether fire victims have been paid by that utility.

And if they have not been paid by that utility, these funds need to be directed first and foremost to their victims. We cannot be bypassing the victims and putting these funds in other places. We need to be looking as a committee, as a legislature, as every opportunity to right those wrongs and make sure we're driving full payment to fire victims. This is an opportunity to do that. We appreciate the intent of the legislation, but we also have to remember taxpayers, ratepayers, that's us.

Right? And so we need to I know there's other legislation to tie this to utility incentives and hold them responsible for these types of payments, and we should go there as well. But, again, we can put in a simple language where we've had discussions with the author, which is a pre allocation determination. And first and foremost, make sure victims of these utilities are paid in full.

Thank you.

Thank you.

Okay. We will turn to additional, additional testimony in opposition. If you'd like to testify in opposition, you you to AB 2508, you can approach the microphone. And as a reminder, just name, position, and affiliation.

Thank you very much, madam chair, members of the committee. Casey Daley, I serve as the Director of Energy and Environmental programs for the Western Riverside Council of Governments or WRCOG, and we are a straight opposed. Thank you.

Thank you.

Hello, Doctor Adria Tinnin, Director of Race Equity and Legislative Policy at TURN. Oppose unless amended. We laid out our amendments in the letter. Thank you.

Thank you. Alright. Bringing it back to committee. Questions, comments? Assemblymember Rogers.

Thank you, chair.

First of all, I wanna thank the assemblymember for our our back and forth yesterday on this. I think as I shared with you, I support the overall intent of this. My biggest concern with the bill is the lack of prioritization in how these public purpose programs are going to be pushed onto GGRF. And, specifically, last year when the legislature redid our GGRF plan, we actually bumped vegetation management and fire programs from a tier one to a tier three.

We were in budget earlier this morning discussing this very thing that by 2030, 2031, you'll have both one time allocations from the legislature that have expired for that vegetation management work.

You'll have Prop four that will have been expended for that same work. And so when we talk about wildfire projects, the one remaining source of funding is that GGRF. But as a tier three, with additional things being pushed on and no clear direction, I'm concerned that it'll push that off. I I personally think the legislature should be funding the wildfire work through the general fund, not GGRF to begin with.

But your bill, from my perspective, would exacerbate the existing problem that the legislature already needs to fix, but happy to hear your response.

No. I appreciate that. I appreciate the comments and the back and forth. You know, to be honest with you, first and foremost, obviously, we're trying to solve a lot of different challenges here. Right?

And and and the biggest one right now is affordability for rate payers specifically. And so that's why we believe in the policy. That being said, I think on the details, we would absolutely be willing to continue to work with you as well as the opposition on, where that money comes from. I think the important part is, you know, we we obviously are not eliminating any of these programs with this legislation.

But if there's a more appropriate source of funding for these programs that are not rate payers and are not GGRF, I'm more than happy to have that conversation.

I but but I do think that that's something we need to work on in appropriations. In the meantime, though, you definitely have my commitment that we'll we'll continue to look at at other options. And, you know, if we obviously, we'd love to earn your support on the bill. But but I think right now, I think the fundamental urgent need is to get these off of the rate payers.

And there's a number of studies, and I'll go over some of those in my close too, that that the analysis sites that this can be a savings for rate payers and actually will help us further, right, reaching our climate goals and further our electrification by, reducing burdens on those rate payers as we do that.

And I think that that that's an important priority.

No. Absolutely. And I'm I'm happy to keep working with you on it. I think just in general, having a program with no identified funding source on it, means that you end up not having a program. And so that's my biggest concern, not just for what we're pushing off of the bill.

Again, I agree with that intent, but also with the other existing things within GGRF. I don't I I would like us to have a clear understanding of what gets supplanted, what doesn't, especially as I mentioned that wildfire, wildfire work that's being done around the state that I think is pretty critical.

Thank you.

Mister Hart.

Yeah. I share my colleagues' concerns about, you know, just putting this off on the GGRF and having there for so much competition in that program that the public purpose programs, that are valuable and provide efficiency benefits and save ratepayers' monies will be lost in that process too.

So I'd I'd prefer a more surgical approach that had made choices about those programs and then, you know, made those kind of decisions rather than just lumping them all into that fund and expecting them just the good ones to survive. So I'm I have a hard time voting for the Bill in that form today.

Alright. I have a couple of I sort of got more comments than questions. Oh, Assemblymember Gonzales.

I'm sorry. I got in late to everything. But, Mister Hoover, I just wanted to thank you so much for this bill. You and I have had extensive conversations on this. I just wanna make sure, I did I was told that that my predecessor had a bill very similar to this in the past. We just wanna make sure I represent the fifth poorest district of the state.

We just wanna make sure that these programs are gonna continue to be maintained, for low income individuals who depend on this as a lifeline to be able to pay their utilities and so forth. And so I know that you and I have had quick conversations about this, and you've committed to that. So I'll continue engaging with you in that conversation, as we, continue this dialogue on this bill. And thank you, Madam Chair.

I appreciate that. And and if I may just briefly respond, I think, a 100% agree with that. And we certainly do not want to eliminate any assistance, right, for low income Californians. In fact, what we're trying to do here is lower the cost for low income Californians and all Californians, right, with this bill. The LAO, you know, one of the reasons we picked GGRF in this legislation is because the LAO has recommended that.

Number of other studies are recommended that. But at the end of the day, I think the key is, you know, moving those out of the rates. So that's, yeah, happy to continue those conversations.

It's a Lindbergh one.

Oh, thank you. I I agree with, the the comments of my, colleagues, Rogers and Hart. These I I would like to see a surgical, approach to which program should be removed from the utility bills. But I think relying on GGRF, there's no money in there. And, we are already seeing a billion dollars come out of GGRF to pay for CalFire, which is something that should definitely be paid for with the general fund.

So my concern is that if you move these programs over to GGRF, they are all all going to disappear. And there's a lot of very important, programs there. So I won't be able to support today, but I look forward to seeing the work that you do with the opposition.

So I have a couple of oh, I'm I'm gonna Assemblymember or Vice Chair has arrived. Mister Patterson, welcome.

I haven't arrived yet. Actually, that's presumptuous. Well, thank you, Madam Chair. Appreciate it. And I was listening to this in the in my in my office during a meeting, and, you know, this is a issue I think I actually didn't know you were doing this bill until it started coming up for committee, but this is an issue we've been talking about for a long time.

I mean and I've introduced bills that are much more extreme than this. But I think the intent, which is great, which is, like, customer you you know, the numb- the number one reason why people reach out to my office is because of the cost utility bills. That is the number one thing. And, you know, right now, there's you know, those costs are being put on to the onto the utility bills. And, you know, a lot of them, we've had these debates too.

But, like, you know, there there could be important programs. Some of them we need to look at. I think we all have mentioned that. But, but we have to help our customers or, sorry, our, constituents pay pay for these programs. And I think this is a way to do it.

I, I actually understand, what, Assemblymember Irwin was, Irwin was saying, you know, and and I get that. I understand that concern, but we do need an avenue to help help the, customers pay for the pay for the bills. And so I really appreciate you bringing this this bill forward. I think it's a very small step for a much broader conversation. I'm sure our chair I'm not gonna commit her to anything because, you know, nobody listens to me around this place anyways.

But but it's, you know, it's legitimately like a hearing we should have on on this topic about what kind of charges, you know, where the where they go and what program should we maintain as a state, you know, and bring all the stakeholders together for that in a very public way. So thank you very much for bringing this Bill, I look forward to supporting it.

Alright. Well, building on that, I think there are there's really kind of two questions related to public purpose programs. It's actually the first, Mister Hoover, you're not contemplating, but I do think we need to contemplate it. The first is which of these programs are indeed good value for money, period? Which of these programs are indeed worthwhile?

You know, one of the opposition witnesses said that for every dollar invested in these these programs, delivers $4 in savings. We've had many hearings on this topic. And time and again, the public advocate's office has said to us, of the 300 programs that we are all paying for, each and every one of us on our bill every month, a little bit of our bill is paying for these programs.

The public advocate has come before this committee time and again and said of those 300 programs, one of them is cost effective. One of them is a good deal for ratepayers.

So that's the are these worth you know, there's a work are these worthwhile conversation that I think is very important. That is, of course, not the conversation that mister Hoover is asking us to have today. But the the other question is, even if these things are the best thing since sliced bread, should they be embedded in our electricity bill? Should they be embedded in rates? And I am supporting this bill because I believe definitively that the answer is no.

And I believe that for a number of reasons. One, because we are doing everything in our power to take a hard look at people's bills and pull things off the bills in the short and the long term. And that is important both because of the affordability crisis that Californians are facing today. It's also important because putting stuff on utility bills is an incredibly regressive way to raise funds for programs. And thirdly, we are in a race here in California to electrify our economy.

Electrification is the centerpiece of our climate strategy. Every single thing that we layer on a utility bill that makes electricity more expensive is a disincentive to electrification and is actually sabotaging our climate goals in the name of efficiency.

So that is why I believe that the time is now for us to take these things off of bills and for us to have a very honest conversation and interrogate it is 2026, which of these programs are a good deal for California ratepayers, which of these programs are a good deal for California taxpayers, and move forward with that spirit. So with that, mister Hoover, would you like to close?

Yes. Thank you, for those comments, Madam Chair. I'll just close, you know, by highlighting a couple of things in the analysis, where this, you know, bill really comes from. Energy Institute at UC Berkeley, saying this would increase equity and improve efficiency. As I mentioned, the LAO has identified reducing retail electricity rates as an appropriate use of GGRF discretionary spending.

The Little Hoover Commission has highlighted the importance of moving these out of rates. And as was mentioned by the chair, the the public advocate's office stated that relying solely on funding through surcharges on utility bills would be both regressive and inequitable. I think a larger conversation does need to be had.

And and while we're not having it in this bill specifically, I do think it would be important to look at the programs more specifically and identify which ones are actually helping Californians and helping us move towards our goals and which ones are not. That's a conversation I think that's outside of this legislation.

But I do think that's important. But on the points that have been raised by the opposition, I am fully committed to looking at this as we move to appropriations on is GGRF the most appropriate funding source for this? You know, TURN has some interesting suggestions as well in their letter, that they presented to the committee.

And so we're gonna be looking at all those options because I do want to make sure we're addressing some of the concerns that have been raised here by committee members and the opposition. So with that, we respectfully ask for an aye vote.

Thank you. I think we're still waiting for one more to get to a quorum, but we will take up measure at the appropriate time. Thank you, mister Hoover.

Thank you.

Alright. Thank you, Assembly member. Alright. We are gonna now turn to file item number one, which is AB1577 by Assemblymember Bauer-Kahan, presented today by Mister Zbur.

Good afternoon, Madam Chair, Members. Today, I'm proud to present AB1577, the data center energy accountability act on behalf of assembly member Bauer Kehan. AB1577 requires data centers to report various energy usage, water usage, and noise statistics to the energy commission on a monthly basis and to report estimates of the same information to local planning agencies before beginning construction.

The assembly member will be accepting the committee's amendments, which updates the definition of data center, makes various technical changes throughout the bill, and ensures that information sent to the energy commission and local planning agencies is scoped appropriately for their modeling and permitting work. The assembly member asked me to thank the committee staff for their hard work on this bill.

Energy intensive data centers are being built at an unprecedented rate. The Public Utilities Commission, public advocates office recently wrote, quote, interconnecting data centers to the grid poses risk for rate payers because of the enormous infrastructure cost required to serve them. These costs may ultimately be passed on to all rate payers, especially if the facilities use less energy than projected or shut down before the utility has recovered its associated interconnection costs. We in the legislature are no strangers to the promise and potential of AI.

We know that we need to build low latency data centers here in California to support the AI Revolution.

But we need to be able to account for this new load and what we're planning for the future of our grid. Powering data centers can't come at the cost of powering homes. Furthermore, recent reporting from states with more advanced data center development has revealed that the effects of data centers on communities can sometimes be hyperlocal. California cities and counties should be empowered to make informed decisions when approving permits for new data centers.

AB1577 gives the energy commission and local planning agencies critical information for protecting communities and strengthening California's grid.

With me today in support of this bill is Ethan Rarick, executive director of the Little Hoover Commission.

Thank you, Madam Chair and Members. The commission is an independent bipartisan oversight agency charged in statute with investigating state operations and making recommendations that foster economy efficiency and improve service in state government. As part of our work and in recognition of the growth of of data centers that the assembly member mentioned, We began a a study of the growth of data centers and their potential impact on electricity rates several months ago.

Earlier this month, we released a report that examined how the rapid growth of data centers may impact electricity, rates and the electric and the electricity grid. Our report identified four key principles.

First of all, that any financial burden that data centers impose on the system be covered by the data centers, not by rate payers. Second, that data centers are integrated into the grid in a way that ensures the reliability of the system and does not add needless costs. Third, maintain the state's commitment to clean energy goals. And

finally, ensure that California regulators have access to relevant information such as how much power is used. This bill addresses the fourth of these principles, transparency and data access. Regulators currently rely largely on aggregated electricity consumption data, which can make it difficult to understand how individual facilities interact with the grid or may impact communities. Better data, more data would allow the state to plan responsibly for the rapid expansion of data centers, would allow local governments to do the same as the assembly member mentioned.

Our report recommended that California allow regulators to confidentially access facility level electricity use data from large data centers.

AB1577 implements this recommendation, and accordingly, we would respectfully request your aye vote.

Alright. We are gonna take one minute to establish quorum before we hear from additional witnesses. Madam secretary, please call the roll.

[Roll call]

Alright. We'll now move to additional testimony in support. If you'd like to testify in support of AB1577, please approach the microphone at this time.

Jack Wurston on behalf of the Santa Clara Valley Water District in support.

Will Brieger for Climate Action California support.

Melissa Sparks-Kranz with the League of California Cities in support.

Mariela Rocha with Leadership Council for Justice and Accountability, support if amended. Thank you.

Michael Chen on behalf of Audubon California in support.

Jacob Evans with Sierra California in support if amended. Thank you.

Thank you. Okay. Turning to opposition witnesses. Is there a witness in opposition? K.

Come on up.

Good afternoon, Madam Chair and Members of the Committee. My name is Kara Bunder, and I serve as a director of state policy at the Data Center Coalition. Here today in respectful opposition to AB 1577. DCC is a national trade association serving as the voice of the data center industry, and our members are leading data center owners and operators and companies that leaves least large amounts of data center capacity.

We appreciate the committee's work on this bill and look forward to, seeing the amendments in print and also appreciate our communication that we've had with Assemblymember Bauer-Kahan office.

This bill requires a disclosure of granular operational data, which would create a thermal fingerprint of data center facilities. Data centers aren't just about AI. They are the underlying facilities that support the cloud, streaming, ecommerce, e banking, telehealth, and emergency and government services. In an era of increasing cyber physical threats such a road map for bad actors endangers the sensitive government medical and financial data housed within these facilities.

Furthermore, disclosing energy fluctuations during tasks like AI training can reveal proprietary trade secrets, putting California companies at a competitive disadvantage.

This bill singles out data centers for monthly reporting, a frequency that is administratively burdensome and with unclear benefits. We are part of a larger burdensome and with unclear benefits. We are part of a larger portfolio of increased electric load drivers, including EV adoption and manufacturing reshoring. Singling out one industry fails to provide a holistic view of California's energy needs and load coming online. Data centers are the backbone of California's digital economy, supporting millions of jobs nationwide and driving billions in tax revenue.

Adding a heavy handed burdensome reporting mandate will stifle innovation and discourage the very infrastructure that EV charging and advanced manufacturing depend on from locating here in the state. We are committed to being a partner in California's energy future, and the data center industry is committed to paying for its full cost of service for the electricity it uses. We believe responsible planning is best achieved through collaboration with utilities and regulators, not through a reporting regime that compromises security and creates regulatory uncertainty. Uncertainty.

Thank you for your consideration.

Thank you.

Thank you, Chair and Members. Dan Kostenbauder here on behalf of the Silicon Valley Leadership Group representing the region's most innovative employers, and we are in respectful opposition, AB 1577. We share the author's interest in making sure California has the data it needs to plan for growing energy demand. Our concern is that this bill creates a reporting regime that is disproportionate to that goal, duplicative of work already underway and uniquely punitive to a single industry.

SB57 signed into law last year directs the CPUC to assess the extent to which data center loads result in cost shifts to other rate payers.

That assessment is due 01/01/2027. AB1577 layers an entirely separate reporting framework on top of that pending work before we have the results of SB57. The scope of what this bill requires is extraordinary. Data center operators would required be required to report monthly across dozens of categories. No other energy intensive industry in California faces anything comparable.

The requirement to submit duplicative data to local agencies at the permitting stage based on estimates before a facility is even built adds delay to an already lengthy entitlement process without a clear planning benefit. California is already a high cost environment for data center development. Our member companies are investing billions of dollars in this state in capital, in construction jobs, in clean energy procurement, and in grid reliability.

This bill stacked on top of numerous others proposing similar provisions sends a signal that California tends to single out this industry for regulation that exists nowhere else in the country. Thank you, and we respectfully urge a no vote.

Thank you. Alright. Additional witnesses in opposition. If you'd like to testify in opposition of AB1577, come on up.

Good afternoon, Chair PetrieNorris and members. Jon Kendrick on behalf of the California Chamber of Commerce in opposition.

Good afternoon, Chair and Members. Catherine Charles on behalf of the Bay Area Council in respectful opposition. Thank you.

Good afternoon, Chair Members. Jose Torres with TechNet in opposition.

Thank you. Okay. Bringing it back to Committee. Questions, comments? Assemblymember Papan.

So, more of a comment, Madam Chair. Thank you so much. I don't see this bill or bills requiring reporting as something that is an inhibition to data centers or their abilities. I think we have a shared goal of making sure that local agencies give you what you need to succeed.

And so I just wanna say that as a broad there are different bills out here, but I just wanna say from a broad perspective, we all have buy in, and I would welcome the data center buy in to this because it's extremely important.

You may not be the only big user out there, but you are certainly a big one and getting bigger every day on the horizon. And it is not these bills are not an attempt to squash your biggest model. They really are allowing, whether it's a big utility or a small water agency, the ability to provide for you to succeed.

So I hope that at some point, we can get on the same page that the reporting gets you what you need and ultimately the public what it needs. And that's a lot of what we do.

I don't wanna be too holier than thou, but that's a lot of what government and local government in particular is is trying to do, and I think that's that's all we're trying to do. So, hopefully, we can get on the same page as it relates either to the the grid demands. And I thank the chair for for the hearing that that you conducted just on this very topic and also the water demands and the finite resource that that is out there as it relates to water.

So thank you.

Assemblymember Rogers.

Thank you, Chair. I actually wanted to ask about one of the letters of opposition unless amended did bring up with respect to the concern about only regulating data centers that the definition of data centers in the bill might be so broad that it takes in some telecom facilities that otherwise traditionally are not considered data centers.

I've and I I know it's hard when you're presenting another member's bill, but just wondering if there has been any further discussion about refining that to make it clear that unintended consequences don't result from this.

The one thing I do know that was in the notes that the assembly member gave me is that they are focused on the definition of what constitutes a data center, and that's something they're gonna continue working with the opposition on. Great. Thank you.

And if I can also add somewhat building on Assemblymember Papan's comments because I one of the concerns raised by the opposition is that we are kind of targeting the data center and center industry. And I would reiterate Assemblymember Pepin's sentiment that that is certainly not the goal of this committee. Can't speak for the author, but I don't think that's the goal of the author either. I think that we are really grappling as the state of California with some very big challenges.

So even without data centers, in order to achieve our electrification goals, we need to I said this earlier.

Like, in the next twenty years, we need to increase generation in the state by 300%. We need to increase transmission by 350%. We are trying to get our arms around what is the real demand of this data center load growth added on top of those so that we can adequately forecast and plan for that. And so while and, you know, we had some conversations with the with the author about this. Like, should it just be data centers?

Like, that's the place where it feels like right now we have the most uncertainty and the least visibility. And so I think that's why it was tailored for that industry. It is not the desire certainly is not to position California as antagonistic, but rather to position us in a position that we can actually plan for this growth, welcome this growth, and ensure that our economy is able to continue to grow and thrive. Assembly member Hart.

Madam Chair, you said that perfectly. I couldn't agree more. And I wanna thank the Little Hoover Commission for doing such great work to highlight this issue. This is really fundamentally the problem is things are changing so rapidly that we are gonna have a very difficult time getting ahead of that and properly planning. And having the transparency of this information is essential and critical to that work.

So thank you for the bill in in her stead, mister Zbur.

Seeing no additional questions or comments from Committee Members, Assemblymember Zbur, would you like to close?

Just on behalf of, Assemblymember Bauer-Kahan, I know that this is a, she's been doing some important work on this area to really address the, the the needs of our community around data centers. I know her goal is to make sure the data centers can move forward in the state of California because they're needed here. And with that, I ask respectfully ask for a, a yes vote.

Thank you. Alright. So do we have a motion? No. Okay.

No. Alright. We have a motion and a second. Madam secretary, please call the roll.

Item number 1, AB1577. The motion is do pass as amended to natural resources. [Roll call]

Alright. Ten one. So that bill is out, and we'll leave the roll open for absent numbers to add on.

Yeah. Would you mind? Yeah.

And so we'll now move to Assembly Member Zbur's actual bill, file item 21, AB 2383.

Thank you. Wanted to not have our witness from the Hoover Commission have to come up twice. We've got... Thank you. Thank you, Madam Chair, Members. I wanna start by thanking the committee staff for working with my office on sharpening this policy and improving this bill.

And I will be accepting the committee's amendments. Today, I'm proud to present AB 2383, which at its, which at its core is a step to advance affordability and electricity reliability for all Californians. This bill will help will ensure that large energy use facilities such as data centers pay their fair share for electricity, preventing costs from being shifted onto everyday taxpayers.

And it advances key recommendations of the Little Hoover Commission. Over the next few years, the state expects a significant amount of load growth as the California Energy Commission has projected the peak demand of the California Independent System Operator to increase by over 20 gigawatts through 2040.

Notably, California being recognized globally for its leading footprint in the digital sector, technologies and demand have rapidly grown for greater cloud services, AI models, and computing power. This growth will require a substantial increase in energy usage by their associated data centers, demanding approximately 6.7 gigawatts of the new 20 gigawatts forecasted throughout the grid.

The power equivalent to almost 4 million households. While the state has begun some planning for this new growth, there remains a need to develop statewide long term planning to ensure protections for ratepayers as new large, as new large load customers interconnect with the electric grid.

Without proper guardrails, the cost of service to new large energy use facilities can create significant risks and burdens for existing residential and commercial customers. Furthermore, California has committed to ambitious climate and energy goals. In order for us to successfully meet our targets, we must ensure that electricity is affordable and that, and that will be fundamental to the state's transition.

AB 2383 aims to address this by directing the CPUC to create a new electricity rate structure for large energy use facilities that will properly assign cost. Specifically, it must be designed in a way that appropriately attributes cost of services.

Avoids cost shifts to other rate payers, and promotes equitable contributions to the grid efficiency and state programs. Additionally, this bill provides guidelines to further mitigate against cost shifts by requiring service contracts between large energy use facilities and the load serving entity.

These are intended to avoid stranded assets such as unused procurement of large load or infrastructure investments in the electric grid. AB 2383 will ensure timely and efficient planning as the state prepares for the emergence of unprecedented demand on the electric grid and will be critical in protecting rate payers and advancing system wide reliability.

With proper planning and strategies underway, we can move forward with an equity based transition in California. Thank you, and I respectfully ask for your aye vote at the appropriate time. And with me today is McKenna Beck with the Natural Resources Defense Council and Ethan Rarick with the Little Hoover Commission.

Hello, Madam Chair and Members of the Committee. My name is McKenna Beck, an advocate at NRDC, testifying in support. Across the country, the data center boom is proliferating, and California is certainly no exception. The California Energy Commission projects that data centers will add roughly five gigawatts of electricity demand over the next decade to California.

That's the energy equivalent of around 7 million Californian households. Without strong guardrails, data centers and other kinds of large energy users can impose significant costs and burdens on Californians, including air and water quality, water availability, and our reliance on fossil fuels.

At the same time, large loads can create serious financial risks for the broader rate base. Large loads require costly infrastructure investments that assume decades of continued use. And if those customers downsize or shut down, rate payers can be left stranded with these costs. The bill addresses these risks.

It creates a dedicated rate class that shields other customers from cross subsidies and ensures that some of the largest infrastructure costs are paid for by customers they're built for. If these developments are done right, there is a potential upside.

If large loads and data centers can use underutilized infrastructure without driving significant new investments, they can put a downward pressure on rates. But those benefits aren't automatic. They require very specific conditions, and they absolutely depend on guardrails that will ensure long term financial commitments from these customers.

Without those protections, the risks overwhelm the potential rewards. These are common sense guardrails that align with actions taken in over a dozen jurisdictions, including similar legislation enacted in Oregon and Minnesota and large load tariff proceedings at over 30 state utility commissions. Data centers are coming online now, and failure to act will risk hurting Californians. For those reasons, I urge your support. Thank you.

Thank you, Madam Chair and Members. Ethan Rarick with the Little Hoover Commission. I will be brief, respectful of the committee's time. I already outlined the four principles that we identified in our report on data centers and the electricity grid.

This bill addresses the first of those principles, ensuring that rate payers are not burdened with costs the data centers impose on the system. I would echo the comments of Ms. Beck. I will additionally add that our report recommended requiring the large load facilities enter into long term contracts with provisions for minimum payment obligations.

This bill does exactly that. We also recommended a requirement that such facilities contribute to broader system costs such as wildfire mitigation. Again, something embodied in this bill. We view this bill as implementing some of our key recommendations and therefore respectfully request your aye vote.

Thank you. Alright. Let's open it up for additional testimony in support. If you'd like to testify in support of AB 2383, come to the mic.

Good afternoon. Brandon Ebeck on behalf of Pacific Gas and Electric in strong support. Thank you.

Good afternoon again, Chair and Members. Catherine Charles on behalf of the Bay Area Council in support.

Thank you. Turning to opposition testimony, to our opposition witnesses. Come on up.

We're actually OUA, so I don't know if you wanna go first as...

Please. By all means, go ahead.

Alright. Good afternoon, Chair and Members. Sean MacNeil with California Community Choice Association. We're the trade association for the CCAs, serving more than 15 million Californians and over 200 communities across the state, a lot of them in your districts.

CalCCA is opposed unless amended on 2383 because it undermines the founding legislation for CCAs. We don't have an issue with the intent of the bill, which was described by Mr. Zbur perfectly. But we don't issue with the intent of the bill, which is to protect rate payers from cost related to data centers.

In fact, we strongly support that principle. But protecting and serving CCA rate payers is our responsibility, not the PUCs. And we've proven that we can do that. First, CCA governing boards oversee contracts and rates for our customers.

This bill reverses that long standing policy established in 2002 in response to the energy crisis. It makes sense to have the PUC regulate the IOUs, as outlined in this bill. IOUs serve the shareholders. CCAs were designed to be an alternative to the IOUs. We serve our communities. This is what separates us.

It's why we exist, and we do it well. 21,000 megawatts of new build clean energy, 48.4 billion in investments, 48,000 high paying construction jobs. Hopefully, Scott Wetch took notice of that. And we know what we're doing. Second, as an alternative to IOUs, CCAs drive competition, competition lowers cost, competition creates creativity.

This is partly why the POUs are so successful, and this was acknowledged in an informational hearing earlier this year. No one raises concerns with the POUs protecting the rate payers. We are no different, and we have a proven track record of that. Third, there are already protections in place.

CCAs are required to protect their customers consistent with cost of service. PUC Section 366.2C4 requires that CCAs offer service that is reliable and provides equitable treatment of all classes of customers, meaning no class of customers can be privileged to the detriment of others.

The PUC also agrees that laws protect CCA customers. In closing, we understand the desire for more protections, but this can be done by building those protections into statute without CPUC oversight. For these, those reasons, we are opposed unless amended.

Good afternoon, Chair Petrie-Norris and Members. Jon Kendrick from the California Chamber of Commerce. I'd like to acknowledge and appreciate the author's office for engaging on this issue and also commend the committee staff for a very thoughtful analysis here.

I think, ultimately, we all share the same goal, making sure that costs are appropriately assigned based on causation and that rates are ultimately just and reasonable. As currently drafted, we have a few concerns. We're concerned that some of the concepts in here may unintentionally create barriers to load growth that can improve affordability for rate payers.

We also believe that when we're looking at doing these, there's this fundamental tension where the legislature tries to tell the PUC to do something. The PUC reacts. And then later on, the legislature has to come and revisit that issue again.

And so when we're looking at how to design rates in this specific instance, anything that's locking in a static framework in this era that we have substantial changes in how we're serving electricity, right, in terms of what our goals are, in terms of the load growth that we expect to see from transportation electrification, from building decarbonization.

And then also what we want the future of economic growth to be in California. So anything that's locking in a static framework and and mandate in that the PUC take a particular path, we think that they need the flexibility to respond in this era of load growth. And so, ultimately, looking at the committee analysis and the amendments that your office is looking at taking, I think it's moving in the right direction.

Obviously, we need to see the amendments and figure out whether that strikes the right balance and right path. But, you know, again, I feel comfortable with the direction this is moving, but we do have concerns with the bill in print. Thank you.

Thank you. Alright. Moving to additional witnesses in opposition. If you'd like to testify in opposition to AB 2383.

Thank you, Madam Chair. Mark Fenstermaker for Valley Clean Energy. Opposed unless amended for the reason stated by Mr. MacNeil.

Hi, Chair and Members. Daniela Garcia-Hernandez with the Western States Petroleum Association. We also do not have an issue with the intent of the bill. However, the definition of a large energy use facility captures refineries, so therefore, we're opposed unless amended. Thank you.

Good afternoon. Audra Hartmann on behalf of the California Large Energy Consumers Association, also known as CLECA. We're the large manufacturers in California. We're opposed unless amended also because of the definition, and we'd prefer to have the bill restricted to data centers. Thank you.

Sarah Bridges on behalf of the Manufacturers and Technology Association. Much of our comments are aligned with both the Chamber and CLECA. Because of the definition, we are concerned about some of our energy users that are large energy consumers.

And also the decarbonization elements. We appreciate the committee analysis and the amendments that were proposed, and we look forward to working with the author's office, as we have before. Thank you.

Right. Bringing it back to the committee. Questions, comments? Assembly Member Boerner.

Yes. Thank you to the author for bringing this forward. I do represent two CCAs inSan Diego, and I'll support this measure today, but I hope you continue working with CCAs to make sure that they are not captured in this bill. Thank you.

Can I respond? So the CCAs are not as captured in the bill, I think, as a lot of people might believe. The first thing I'll say is with respect to a fear that the that the PUC will now start regulating their rates, their generation rates, their ability to procure generation assets.

This bill is not intended to do any of that, and to the extent that there's anything in the bill that implies that, we are gonna clean that up. What the bill does do with respect to CCAs is it basically requires that the CCAs enter into these long term contracts.

Now the contracts themselves are not gonna be approved and subject to regulatory oversight by the PUC specifically, but there will be a proceeding that will determine the broad contours of what needs to be in these long term contracts.

The reason why it's important that those long term contracts apply to both the IOUs and all load serving entities is because you have data centers who can basically shop around parts of the state. And, basically, the contracts are meant to make sure that the...

That there are assets that are not stranded so that you actually have a load serving entity that doesn't have a long term contract with a data center. The data center has no obligation to purchase power over the period of time that they need to finance the cost of the service.

And so, essentially, if the CCA, if the data center went away, the there could be obligations to purchase significant amounts of power that needs to be uploaded to other customers. And so this protects both rate payers of the CCA, plus it protects rate payers outside the CCA when people are sort of shopping around.

So it is intentional that the long term contract provision apply to the CCAs. That's not different from what already happens with PUC oversight. PUC does a lot of things that set up the regulatory framework within which CCAs operate.

But I'll tell you that this is not gonna, they're not gonna have oversight over the rates. They're not gonna, they're not, they're not gonna have oversight over their, the contracts to purchase generation.

They will actually set up sort of the contours of what's expected in these long term contracts. And we will continue to work with the CCAs to make sure that, to the extent that it applies to the CCAs, that we're not actually eliminating that competition that we agree is really important that they retain.

Through the Chair, if I can ask the CCAs to respond.

Yeah. I mean, I think what we would say is because the provisions are under CPUC jurisdiction, it pulls us under their jurisdiction. If it was a separate statute that says CCAs have to have, you know, exit fees or long term contracts to prevent stranded assets or, you know, unnecessary cost to non participating customers.

That's something that we would welcome and something that we're already designing. So, and on the issue of venue shopping, I mean, I think to the Assembly Member's point, you have to be careful with that for sure.

But venue shopping also promotes competition if you have guardrails. And if the guardrails are, you know, you have exit fees in place and you're protecting your customers just the same way as the PUC is requiring the IOUs to do it.

They're just not telling us what those terms might be because every contract is gonna be different, and you can't lump them all together. If there is a requirement on CCAs to follow those kind of rules, we'd be open to that.

Assembly Member Rogers.

Thank you so much. And I wanna thank the author for taking the time to talk with me about the bill. As I shared with you, I do also have two CCAs in my territory. The vast majority of my constituents are represented by them.

And one of the things that I consistently hear from the general public is that they appreciate that they have some level of accountability for the CCA because the people who serve on the board of directors are directly elected by the communities that the CCA serve.

The same does not go for the CPUC. And so there is always concern about unaccountable, unelected folks who are, have different motives than perhaps the board of directors that is directly embedded into those local communities.

I heard the response from CalCCA. It seems like a reasonable ask that, even if you were designing these safeguards, make those safeguards apply to them, but make it apply to them within their own statutes rather than rolling them into CPUC jurisdiction. So I'm wondering if you've contemplated that at all.

I'm not quite sure how we'd make it apply to them through their own statutes because I think that would have to be done at the local level. But I do think it's an important principle that there be protections for against these stranded assets which apply whether the load serving entity is an IOU or a POU or a CCA.

I mean, that's just it's an important thing that we do to make sure that there's adequate planning in the state. And so, you know, we're open to continuing to talk to the CCAs on this to make sure that we're not intruding on sort of the local authority that's important that we retain and the competition.

I think that we can do that without that. I will say again, the PUC, this doesn't make them subject to PUC, quote, regulation per se. There's lots of things that the PUC does to set the framework within which the CCAs operate. This would be one in terms of the broad contours of what needs to be in these long term contracts, but not the specific terms, not the generation rates, any of that stuff.

Yeah. I think I did share with you from my experience being on a board of directors for a CCA. There was legislation that Sacramento did that did open the door to telling CCAs where and how they had to procure their energy, which is contrary to what their charge was.

So I think that there is always going to be sensitivity even to the extent that there is that, that this is impeding on one of the few authorities that they do have, which is over the contracts.

And I do know, you know, members who serve on the boards would would find it insulting that they, to think that they'd have to be told that they should be putting in protections for their communities when it should be assumed that those who are serving their community are, in fact, doing that.

I think it's perfectly happy for us to do that. We build frameworks within which the CCAs have to operate all the time, and could be done without involving the CPUC. But happy to hear other perspectives from folks.

Yeah. I think all I what I can say is that we're happy to continue work with the CCAs to make sure that the long term contracts are not intruding on sort of the local authority that folks have and, you know, willing to continue dialogue with you and the CCAs.

Alright. Assembly Member Patterson.

Great. Thank you. You know, with the amendments, I'm not sure if this was taken out. But there is apparently one section in there that says, you know, quote, any other conditions the commission may require that are in the public interest. You know that provision?

I don't remember whether that was part of the committee amendments or not, but happy to hear your concerns and obviously consider them as we're gonna be making more changes to this bill.

I think my, you know, whether the amendments include that or not, I think my concern is that seems to be very broad in terms of, like, how, you know, the PUC can interpret that and kinda go run away, you know, with whatever they deem, you know, to be a cost. I mean, I agree with the intention of the bill.

And I think, you know, in terms of CCAs, you know, I was actually involved in the creation of one, you know, in my community. And it was, you know, pretty small, intended just for Placer County at the time. And then it ended up, you know, expanding, and that was by a vote, you know.

And we're gonna increase rates 28%. And, you know, I got in, and I was able to you know, we were able to stop that from happening at the time, which is good. Which I think gets to, you know, what Mr. Rogers is was talking about.

But now it has expanded so much that the dilution of the shares of the vote of the members of that board is so small that no individual community can really stop and, you know, stop whatever is being proposed.

And actually, in my view, you know, it's such a huge local government agency now that I do have concerns about the inability for the people, you know, to actually be able to control, you know, the direction of where the rates are gonna go in the community.

And that doesn't mean that I think the intention of the CCA's are ever to, you know, the whole purpose is to save people money. But there are other purposes that other CCAs see fit, you know. Green energy, you know, that might be more expensive, things like that.

So I actually, I actually think that, you know, this does kinda open the door to regulation a little bit more on the CCAs. I don't know if I'm totally comfortable with that, but I do think giving the PUC kinda too much authority could be problematic.

All of that said, I think the require... I think CMTA's letter actually was sort of the most interesting one to me because I don't wanna put us at a disadvantage on manufacturing. But also on the flip side, and maybe I need to conversations with them more.

Is I look at it as, can a manufacturer actually negotiate, you know, what their costs are gonna be and know those in advance and enter into those contracts in advance to actually create that level of stability, you know, ongoing, which might actually be a good thing. So I'm interested in that conversation as well.

But I think with the intent of stopping costs from being pushed on to everybody else, I think, you know, is is a laudable goal. And we've heard that discussion in the solar discussion, by the way, every hearing. So, you know, it's important discussion.

I think this bill is kinda meeting what, you know, those discussions have been all about. So I think I'm gonna support it today. Because I, you know, I'm guilty of what everybody gets mad at us about, like, supporting a bill that maybe needs some changes.

But I do support the intent of the bill. And I trust you to, you know, make the changes that I think, you know, would make some comfort up here. So I look forward to supporting it today. Thank you.

Happy to look at that provision and other provisions around the contracting provision. I mean, our goal is really not to, you know, fundamentally change the authority that the CCA boards have. It's really to have some broad guardrails to make sure that there's contracts in place that address the stranded cost issue.

And I think you may have been referring to a provision that was struck by the committee amendment. So there was a provision there. We struck the position the provision that CPUC could require anything in public interest for contract requirements. This is partnership with my Vice Chair right here. Done.

But thank you, madam principal co-author.

Assembly Member Irwin.

I just want to reiterate what my colleagues have said. I think it's really important that we protect from stranded assets and cost shifts, but I really don't wanna see contracts and rate making under the PUC. I think we've heard that loud and clear tonight, but I just wanted to or this maybe it's afternoon. Maybe it's evening. I have no idea. But I did wanna add my voice to theirs.

Assembly Member Hart.

I just wanna fourth that point that the CCA and the CCAs have raised and your commitment to working with them is important to my future support for the bill too. But I'll also be supporting it today.

Okay. Seeing no additional questions or comments, Assembly Member Zbur, would you like to close?

So I also have CCAs in my district. They're important components and committed to continue to work with CCAs and the Chamber and others, to address, to address the continuing issues related to the bill. And with that, I respectfully ask for your aye vote.

Alright. We need a motion. Second. Alright. We've got a motion and a second. Madam Secretary, please call the roll.

Item number 21, AB 2383. The motion is do pass as amended to Appropriations. [Roll Call]

Alright. 13-0. So that measure is out, and we'll leave the role open for absent Members to add on. We are going to go, we are moving to file item number four, Assembly Member Boerner.

Good afternoon, Madam Chairs and Members. First, I wanna thank the chair and her committee staff for working with me on this bill. I will be accepting the committee amendments. AB1774 is a bipartisan bill that is about accountability. Californians have some of the highest utility prices in the nation, paying close to double what other residential users do in The United States.

Despite these already high rates, California rates have continued to grow exponentially. Many factors contribute to rising rates. However, one of the largest contributors is wildfire expenses. After the deadly utility wild caused wildfires, the state through AB1054 implemented a program where the IOUs are responsible for wildfire mitigation plans or WMPs. The IOUs are allowed to recover expenditures for the WMPs from ratepayers.

Despite large fixture of everyone's electric bill, much of the WMP spending cannot even be accounted for. In fact, a 02/2021 CPUC commissioned independent audit of the IOU's wildfire spending found that the IOUs could not account for 2,500,000,000.0 of the 6,000,000,000 of the two year twenty nineteen to twenty twenty wildfire mitigation plan spending that was authorized. Despite these condition con conclusions from the CPUC commissioned independent audit, the CPUC allowed the IOUs to keep the entirety of the 6,000,000,000 authorized.

I passed an audit that same year to examine the IOUs rate of return, and the state auditor found that there was an immense potential for double recovery from the IOU's wildfire spinning. This is frankly unacceptable.

The IOUs are charging rate payers for work that may or may not have been even done. Any other goods or services that we're paying for but don't receive, you'd expect a refund. Why would we treat the IOUs, a monopoly, any differently? This bill, simply put, would ensure that the things that ratepayers are paying for are actually being done. It's critical for affordability, and it's critical for safety.

We shouldn't be paying for wildfire expenditures and not knowing whether the work is even being done or not, especially when there are numerous recent deadly wildfires. Fire survivors deserve accountability, and Californians deserve accountability. I respectfully ask for your aye vote today. I have here with me Joy Chen from the Eaton Fire Survivors Network and Jamie Court with the consumer watchdog, the sponsors of the bill.

Thank you. Hi, everyone. I'm Joy Chen, Eaton Fire survivor and executive director of the Every Fire Survivors Network. The EFSN is now the nation's largest survivor recovery hub, connecting more than 10,000 Eaton And Palisades fire survivors and allies. Our survivors paid the ultimate price for the failure of utility wildfire mitigation.

We lost our homes, our health, our stability, and in some cases, our lives. And today, most of us are still not home. As our great Assembly Member, Harabedian, is painfully aware, eight out of 10 Eaton Fire survivors remain displaced fifteen months after the fire. More than half of us are expected to lose housing coverage in the coming months. Families are draining retirement savings, maxed out credit cards, and have taken on crushing debt just to stay housed.

Yet, we are still paying some of the nation's highest recover electricity bills to the for profit utility whose equipment started the Eaton Fire. Evidence shows that Edison collected hundreds of millions of dollars from Californians for transmission maintenance and upgrades that were meant to reduce wildfire risk, but that work was never completed. The LA Times has reported that Edison continued telling billing customers for this work while failing to spend those hundreds of millions of dollars authorized for transmission system upgrades before the fires.

Californians funded wildfire prevention, and we survivors paid the price when that work was not done. Because utilities operate as regulated monopolies, Californians have no alternative provider.

That makes accountability essential. AB 1774 simply requires independent audits of wildfire mitigation spending and requires a commission to consider those funding findings before approving future rate increases. Wildfires and all Californians deserve that basic accountability. I respectfully ask for your aye vote. Thank you so much.

Thank you.

Jamie Court, from Consumer Watchdog. The three investor owned utilities, the for profit utilities in the state spend approximately $9,000,000,000, $9,000,000,000 every year on wildfire mitigation spending. That's a and it's accelerating. And it's a huge amount of money. And we don't know how, where, or if it's ever spent.

Because there are going to be three audits in modern history of that spending. And those audits found, as the assembly member said, that we can only they can only account for $2,500,000,000.0 of $6,000,000,000 in wildfire mitigation spending. Almost half of spending is unaccounted for. Nonetheless, the PUC let the utilities keep the money they didn't spend and authorize more for the 2123 wildfire spending year. Maybe 1774 is a real simple bill.

It says utilities have to show how they spend wildfire mitigation money before they get more. And the public utility commission has to address the audit results in the decision. It's not binding on them, but they have to address it. And that's only fair. If utilities know they're being watched, they're more likely to spend wildfire mitigation funds in effective ways rather than holding on to that money in investment accounts because that's what they do.

Because they make money on investments. That's why Edison did not spend hundreds of millions of dollars on on on on money. It was appropriated for wildfire mitigation funds to remove transmission lines and to maintain transmission lines. And it was an old transmission line that started the Eaton Fire, we believe. Had Edison known that it was gonna be accountable for those funds, the Eaton Fire might not have started.

This bill is the most important bill that I can see on the table today because it guarantees the wildfire mitigation funds are spent. And it creates accountability for that spending, So maybe we won't have another Eaton Fire. I urge your aye vote. Thanks.

Thank you. We'll now open it up for additional testimony in support. If you'd like to testify in support of AB1774, please approach the microphone at this time.

Will Abrams in the Utility Wildfire Survivor Coalition in strong support.

Adria Tinnan, Turin, Utility Reform Network, also in support.

Afternoon, Chair Members. Marie Lopez with the California Nurses Association in support.

Good afternoon, madam chair and members. Leanne Tratton, registering support for Consumer Attorneys of California. Thank you.

Madam chair, members, Michael Bocadoro on behalf of the Ag Energy Consumers Association in support.

My name is Amy McBain. I'm a camp fire victim, and I'm representing utility fire victims in support.

My name is Ken Klassen. I'm from Paradise, California, survivor of the campfire, and very, very strong support for all the survivors that I represent. I'm not I'm here as an individual. Thank you.

I am Doreen Zimmerman from the Paradise Fire. And for the Utility Wildfire Survivor Coalition, I am in strong support not only for the survivors, but those for those who have passed. Thank you.

Sydney Robinson, and I am with the Utility Wildfire Survivors Coalition, and I am in strong support of this bill for those who cannot be here and for those who have lost their lives due to utility wildfire negligence.

Good afternoon, chair and members. Kim Stone of Stone Advocacy for Consumer Watchdog, and I've been asked to relay the support of some of the coalition groups who couldn't be here in person.

The Lona Wetlands Institute, the Bay Area System Change, Not Climate Change, California Environmental Voters, Center for Biological Diversity, Center for Community Action and Environmental Justice, Climate Hawks VOC, VOTE, Coastal Lands Action Network, Courage California, Defend Bologna Wetlands, Environmental Working Group, Extreme Weather Survivors Action Fund, Food and Water Watch, Long Beach Gray Panthers, Public Citizen, Santa Cruz Climate Action Network, Sierra Club California, SoCal three fifty Climate Action, Sunflower Alliance, the Protect Our Communities Foundation, Transition Sebastopol, and three fifty Bay Area Action. Thank you.

Thank you. Oh, some of them might be here. I'm so sorry. Yeah.

Hi. My name is Jeanette Phelps, and I'm representing the Camp Fire and for the victims in support of AB 1774, and also that I feel like the utility company should be

at at this transparent. Okay. Thank you.

Mark Nelson, PG and E Campfire Survivor, here representing my family, my friends, and all the people at of Paradise and The Ridge, and also the Utility Wildfire Coalition in support.

Thank you. Turning now to opposition testimony. Our witnesses can approach the dais.

Good afternoon, madam chair, members. Joe Zanze with San Diego Gas Electric. I wanted to start by, you know, saying that we appreciate the committee's work and the amendments to the bill to address several significant concerns we had related to retroactive rate making and helping ensure, the bill won't wouldn't disrupt ongoing wildfire mitigation work. However, the core issue still remains, and SDG and US still oppose, AB 1774.

The bill would create new mandatory look back review of wildfire wildfire mitigation spending that has already been reviewed and approved through the current CPUC process.

That shift from a forward looking approval to a backward looking is a shift from forward looking approval to a backward looking reevaluation. And it also replaces targeted risk based oversight with broad multiyear audits and continues to evaluate prudence outside of the CPUC's existing process. And, in fact, it it creates a second layer of review of decisions that have already been made and reviewed by and and approved by the PUC. And that has real implications. It introduces uncertainty into how decisions are evaluated over time.

It shifts resources away from implementation of wildfire mitigation work and moves that towards additional review and compliance. And it adds cost to ultimately show up on customers' bills. Additionally, these audits are being layered on top of recent changes made with SB 254, which was passed last year to align the GRC and wildfire mitigation plans. I think a lot of what talked about with the the audit, that has been, somewhat resolved with the the new alignment of the two, cycles.

So while the new ones are helpful, we we think it still creates a duplicate process, and without a clear improvement in safety or rate payer benefits.

So those reasons, we still oppose seventeen seventy four. Thank you.

Thank you, Valerie Tarell of all hosts with Pacific Gas and Electric Company, also in in opposition today, respectfully. PG and E does support strong accountability, transparency, and effective reduction of wildfire risk. Our opposition letter, lays out, the many accomplishments of the legislature in this space. And one of those my colleague just mentioned, we just passed last year SB 254, which is a policy adopted as a direct result of the March 22, audit that, is focused much on, while IOU wildfire mitigation spending.

But I I also wanted to mention that, meantime, 2022, the legislature, passed and adopted AB 209. My colleague referenced, risk based approach to CPUC auditing. That was a budget trailer bill, one of our, many, back in 2022. And, that bill that is mentioned in the analysis, under current law. I'm mentioning this because we just went to this risk based based approach.

We completed, an audit. It provided us findings of which a major one was implemented in SB 254, and, we have accomplished a lot. We can also zoom out even more and, dare I say, a major report was just submitted to the legislature, and we're going to have some discussions about wildfire mitigation and a statewide approach, we hope. And we and we get, very in-depth in that. So, PG and E, we support affordable, affordability, but at this time, we're not in alignment with the author.

And, for these reasons, we cannot support this bill.

Thank you. Alright. We'll open it up for additional witnesses in opposition. You're here to testify in opposition to this measure. Approach the microphone.

Lynn Trujillo with Southern California Edison in opposition.

Okay. Bringing it back to committee. Questions, comments? Assembly member Harabedian.

Thank you, madam chair. Thank you to the author for bringing the bill. I am a proud joint author of the bill and will be moving it formally. Thank you to miss Chen for being here and everything you're doing for the community and and the Eaton Fire Survivors Network. I do think that this is in line with the report that we just got last night.

Everyone's still digesting it, but SB 254 did call for, additional tracking and assessment of our wildfire risk mitigation. So I think this is in line with s p two fifty four, and I think that this will be a step forward in that regard. So thank you again, and happy to support.

Alright. Assemblymember Rogers.

Thanks so much, chair. I just wanna point out that some of the folks who earlier on a different bill were saying that we needed accountability and transparency on whether or not, the public purpose programs on the bill were doing what was achieved are now also saying that we shouldn't have transparency and accountability on whether or not that portion of the CPUC rate is being done appropriately. And I think it's a good bill.

I think it's something that our constituents deserve and should have, and I'd love to be added as a coauthor.

Assembly member Schiavo.

Thank you. Thank you so much, for this bill. And, you know, losing over $2,200,000,000 is very concerning, obviously. And it certainly, I think, makes a case for why there definitely needs to be more oversight and accountability and transparency. I wondered if you or maybe your witness could talk a little bit about the CA report that came out yesterday and how the bill plays into the recommendations, around yeah.

Yeah. I think that I did read the CA report. It took a while. It, I mean, it plays in in the sense that we do talk about tracking money, but, unfortunately, the CA report didn't call for independent audits. And the CAO report, though, if you look at the proportions of it, did call for wildfire survivors to give up their rights to sue for, pain and suffering, for emotional distress, for wrongful death, for punitive damages.

And yet it didn't mention the $9,000,000,000 that is there every year, and we need to make sure it's spent because pain and suffering is a billion dollars in the wildfires, in '17 '18. A total of billion dollars. Punitive damages were not very much. So they're asking a lot of survivors, and they're not asking enough in the CA report, I think, of the utilities.

But I think this bill tracks in spirit what's in there, but there needs to be an audit of this money because $9,000,000,000 is an inordinate amount of money.

The campfire cost $1,718,000,000,000. We're spending money to protect against that. We need to make sure it's absolutely spent. The other thing in the CA report is it doesn't real it really talks about the aiding of the utilities and not so much about how to balance that against the needs of the, of the rate payers and of the wildfire survivors. And this bill goes a long way towards balancing that out.

Thank you. Assembly member Calderon.

Thank you, madam chair. And thank you for you always have good bills.

Yes.

But I

have a question. Who who pays for these audits? Are the rate payers financially responsible for audits? Because I think the opposition mentioned that there have been several measures passed Ultimately. Including s p two fifty four last year that kind of Okay.

You know. Yeah.

It's coming out of PUC funds, but it also comes to the right there.

It would come out my understanding is it comes out of the, CPUC funds, but that would ultimately go to the rate payers.

I'm sorry. Can you speak a little louder?

Sorry. No one's ever said that to me before. We have we

have soft voice Tasha today.

It's never soft voice Tasha. My understanding is it comes from c p CPUC would have to pay for those independent audits. I did have a bill last year to create an inspector general, an independent inspector general of CPUC. It was held in a probe in the Senate. Unfortunately, had that been passed, they would have been already accounted for.

And I still support an independent inspector general for the for the CPUC who could have done this work, but it'd be independent audits that would be paid for by the CPUC that ultimately could be passed on to rate payers. But if you look at the argument of making sure that the wildfire spending that the IOUs say they're doing is being done and the mitigated impact on communities, that it probably is a huge savings at the end of the day.

Okay. So it's not the rate payers?

Ulta ultimately, the rate payers pay for the CPUC. So it ultimately is the rate payers, but we're talking about millions of dollars on an audit to save billions of dollars in averted spending.

Yeah.

Okay. Is opposition have any response to that?

I mean Backer. Backer? Okay.

That's accurate.

could just say that the CPUC can already perform target audits if they if they see fit, and they also have the ability to disallow wildfire fire spend. Recently for, SDG and E. They a portion of what we applied for was disallowed. So, there is already oversight, and they they have the ability to, go back and and not allow, cost that we've held.

Yes. I think, yes, there is always the very important distinction between can and shall. Yeah. And I think that the entirety of this bill is moving from pan to shell. May I ask a question?

So the author in her opening comments referred to, was it a twenty twenty one, twenty two audit that could not account for $2,500,000,000 in spending. Would the wit opposition witnesses like to respond to that? Do you is that true?

Is that the the co audit? Is that what you're talking about? I just wanna make sure.

I don't I don't I'm not familiar with those. I I know about the the crow audit that was mentioned in, I think, the analysis and some of the conversations.

There there were three OEIS audits done, and I think published in '21. They're linked in our in our in our in our support letter. They found that San Diego San Diego Gas and Electric couldn't account for 250,000,000 out of 759,000,000. Southern California couldn't account for 700,000,000 out of 2,800,000, and PG and E couldn't show it. It spent 1,500,000,000.0 out of 2,400,000,000.0, and they're there.

So the o a a OAIS audits were published by OEIS.

Yes. Thank you for clarifying. And do you have any reactions to that?

I can follow-up with you on that. I don't have I don't wanna speak without seeing those specifically, but I I know that there were there were audits done on wildfire spending and the way they the spend was looked at was at a a point in time when the when the wildfire mitigation plan and the GRC did not line up, and so there were gaps there.

And the audit that Aye, I'm pointing out, this the crow audit from, 2021 talks about how it recommended to align those those two processes and which is what s p two fifty four did, which would help with those those gaps, that the audit found. So I'll look into the the OAIS audit that that was recharges re audit.

Yeah. Because I think that statistic gives the members of this committee and the public much pause. I think when I hear that number, my jaw kind of drops. To the ground, and so I would agree that while I think we have taken. Some very important steps over the course of the last several years to increase transparency and ensure that what rate payers are being charged is accurate, I think that there's there's more to do.

And so I just wanna thank you for bringing this measure forward. Happy to support it today. Would you like to close?

Respectfully ask for your aye vote. Sorry. Was that loud enough? Respectfully ask for your aye vote.

Alright. So we have a motion and a second. Madam secretary, please call the roll. Motion from assembly member Harabedian.

I believe it was a second from From Assembly member Schiavo.

Oh.

[Roll Call]

Eleven, zero. Eleven, zero. So that measure is out, and we'll leave the role open for absent members to add on. And now before we turn to assembly member Burner's last next bill, we're gonna pause for a minute and just do some votes on bills that were prevent presented previously. Okay.

[Roll Call]

So the consent calendar is out. We will leave that open. And with that, I think thank you, Assemblymember Boerner, for the brief intermission. We are now coming back to file item number five, AB2289.

Thank you, Madam Chair and Members. Today, I'm here to present AB2289 related to the California Public Utilities Commission. As you can see, there are no witnesses because this is a Tasha B special. This bill is All Rogers needs to hear.

The bill is also double referred to CNC committee, which is my committee. So I'll keep my presentation to the items in this bill related to this committee's jurisdiction, the organization of the CPUC. As proposed, AB2289 would require the governor to ensure a diverse composition of commissioners by considering, not requiring, but considering factors to contribute to the diversity of California. This includes geographic diversity in terms of urban and rural, gender, professional experience, and community and labor activism.

The CPUC is powerful and influential state agency that's responsible control for for controlling the rates of cons that constituents pay for energy.

The CPUC also has a role in how our constituents access other critical services like broadband and telecommunications. It's a big task for five commissioners, and we know they don't always get it right, especially on items outside of energy and climate. This bill is part of a larger initiative of mine to implement structural reforms to CPC, including a constitutional amendment to add more commissioners and focus CPC on their core duties.

For an agency that regulates the breadth of industries, not just electric and gas, it's important that members who are appointed to this board also have the qualifications necessary to do the job. What we've seen in recent past is very few commissioners have a range of experience outside of energy and climate policy, and this hurts the agency's operations in general.

So as this mill bill moves forward, I expect to have continuing important conversations with stakeholders across the spectrum. Structural reform at the CPUC is an important conversation we need to be having, and I believe this bill is part of that discussion. I respectfully ask for your aye vote.

Thank you. Alright. Do we have any me too support in the room for the Tasha b special? Okay. Then bringing it back to, or transitioning to opposition.

Is there an opposition witness? Anyone wanting to provide opposition testimony? No? Okay. Bring it back to the committee.

Questions or comments? Seeing none, Assemblymember, would you like to close?

Respectfully ask for your aye vote.

Alright. I'll move the bill.

We I think we, you've, Mister Harabedian, beat you to it. Okay. So we've got a motion and a second. Madam Secretary, please call the roll.

Item number five, AB2289. The motion is do passed to communications and conveyance. [Roll call]

Okay. Eight zeros. So that bill's on call, and we will wait for absent members to add on. I think that brings us to, let's see.

I think that is going to be me. Alright. We'll we'll go ahead and open the roll on file item 21.

[Roll call]

Alright. Fourteen zero, that bill is out, and we'll leave it open for absent members to add on. And then that brings us to file item 15. Assemblymember Papan, the floor is yours.

Move the bill. Yep.

Thank you for the confidence. Good afternoon, Madam chair and members. I am delighted to be here today to present AB 2111. I will be taking the, committee minutes. Thank you so much.

A B 211 reforms our transmission planning process to require a more comprehensive and risk prudent assessment of future demand and resource needs, helping advance our climate goals while at the same time protecting rate payers. Right now, transmission planning follows a sequential process. You go before the California Energy Commission. They produce a demand forecast. The CPUC then develops a preferred system plan, and the California independent system operator builds transmission to match that specific portfolio.

That portfolio is highly prescriptive. It assumes a specific level of load growth, electrification, and where new resources will be built. But that demand has been evolving faster and more unpredictably than those assumptions capture. And when planning falls behind reality, the grid becomes constrained. So in the most recent interconnection cycle, more than 10 gigawatts of proposed capacity did not advance in part due to transmission limitations and upgrade costs.

When transmission is constrained, as we all know, fewer projects can interconnect, competition is reduced, costs go up for ratepayers, and, unreliability risks increase during periods of high demand. AB 2011 reforms the process by requiring the CPUC to incorporate a range of plausible futures into transmission planning decisions. By not relying on a single scenario, we can better identify where upgrades are needed across likely outcomes, reducing bottlenecks, and supporting a more reliable and cost effective system.

In short, AB 2011 updates transmission planning to reflect a more uncertain future or to address a more uncertain virtue, I future, I should say. With me to testify in support of this fantastic bill is Miles Horton of Sonoma Clean Power and Graciela Castillo Kringes with Abundance Network.