Senate Standing Committee on Energy, Utilities and Communications

Alright. Alright. Let's get started. We'll we'll call this committee to order in sixty seconds as a subcommittee, but if Senator Grayson wants to approach the dais, we will have him present item four, which is SB 919. Okay.

Great. Yeah. Okay. You may proceed, Senator.

Good morning, Mr. Chair and Members of the committee. Thank you to the committee for your incredible work and collaboration with me on this bill, and I will be accepting the committee's suggested amendments.

I am pleased to present SB 919 as amended and would extend the bio this, bill would extend the biomethane monetary incentive program through 2030 and authorize additional funding.

For many years, California has been a national leader in reducing methane emissions by developing policies that capture methane from organic waste sources and convert it into renewable natural gas or what we know as RNG.

Ten years ago, the legislature passed ambitious methane reduction targets outlining a 40% reduction by 2030.

The legislature also passed SB 1440, which authorized the California Public Utilities Commission to develop a procurement program for RNG.

It is evident it is evidently clear that the state recognizes the importance of RNG, its potential as a renewable and sustainable energy source, and effective methane reduction tool.

But while the state has outlined steps to procure RNG, there are still financial barriers that exist for biomethane infrastructure development in the state. One of those major barriers for RNG project development is simply the high cost of interconnection into the gas grid.

Since RNG interconnection is funded by RNG developers, these are considered as contributions in aid of construction and thus subject to a 24% tax under the income tax component of contributions and advances to cover the tax liabilities owed by the utility to federal and state collection agencies.

You can easily imagine how that 24% tax can add significant cost to projects. For instance, a an RNG project that costs 4,000,000, this tax effectively adds an extra $1,000,000 on top of the projected cost.

This has effectively limited and burdened the development of new projects throughout the state, making it difficult for utilities to cost effectively transition to clean energy sources and increasing our state's reliance on conventional natural gas.

But this tax markup of 24% does not apply when RNG interconnection is treated as rate based assets. It is imperative to remove financial burdens to RNG development and support our climate goals by reducing interconnection cost for RNG projects.

That is why back in 2018, I authored a bill that directed the CPUC to assess allowing utilities to include interconnection cost in their rate base to lower upfront cost for RNG projects.

Early this year, the CPUC finally issued a proposed decision to adopt changes to the biomethane standards and requirements, the pipeline open access rules, and related enforcement provisions.

While I'm relieved to see that the CPUC finally acted after eight years to help our state attain its twenty thirty methane reduction goals, they must act expeditiously to approve rate basing for RNG interconnection. SB 919 is amended.

We urge, and it will urge the CPUC to act diligently given the potential for rate payer savings.

And additionally, the bill recognizes the successful biomethane monetary incentive program and extends it through 2030 and authorizes additional funds encouraging the development of biomethane projects throughout the state.

Ultimately, SB 919 ensures that the state continues to support our important climate goals through promoting RNG. And with that, through the Chair, I will have my, witnesses self introduce.

Good morning, Chair Allen and Members of the committee. Thank you for the opportunity to be with you today. I'm Sam Wade, Vice President of Public Policy with the Renewable Natural Gas Coalition.

We represent hundreds of member companies developing, building, and operating renewable natural gas facilities here in California.

This bill will accelerate momentum around investment in methane reduction from organic waste and help achieve critical circular economy benefits associated with RNG projects.

A key cost barrier for California RNG is often the high price of interconnecting projects. On average, the interconnection cost is almost three times more in California than in other states.

Simply put, it will be difficult to reach our twenty, thirty goals for methane reduction without finding ways to lower that portion of that project's cost and increase affordability for customers.

With the proposed committee amendments, we believe extending and refunding the successful biomethane monetary incentive program is a big step forward to helping reduce the cost of RNG interconnection.

We also continue to believe that allowing utilities to be more directly involved in construction and financing of RNG interconnection would offer tax preferred treatment and result in savings that can be passed on to RNG customers.

However, we understand that we, need to let the CPUC do further work on that topic. SB 919 provides a strong signal to the green tech community that California remains committed to reaching its greenhouse gas and organic waste diversion goals.

To explain that opportunity in more detail, I have with me today Doctor. Yaniv Shurshan, who serves as chief operating officer for Energia, one of our leading member companies. Thank you.

Hello. My name is Yaniv Shurson, and I am Energia's Chief Operating Officer. It's a pleasure to be here today, and thank you so much for the time.

Energia is a global pioneering technology company in the RNG sector, with hundreds of projects that we've built across the world dedicated to converting methane emitting organic waste into carbon negative renewable natural gas, fertilizer, and water.

As one of the few companies worldwide offering an integrated portfolio of end to end solutions, we effectively combine solid waste processing, wastewater treatment, organics recovery, and high efficiency anaerobic digestion and RNG production.

We operate renewable natural gas facilities that we own, we finance, and also for other third parties or through joint ventures.

We're proud that our asset, the SoCal Biomethane Facility, located at the Victor Valley Water Reclamation Authority in the city of Victorville, was the first 1440 contract to be approved that will be producing renewable natural gas under the program.

We're honored to be the first project to be supplying into the fourteen forty program, and this plant demonstrates how existing wastewater infrastructure can be leveraged to rapidly scale RNG supply from organic waste as mandated by California law under SB 1383.

Moreover, under over a 150 wastewater plants in the state of California today have existing anaerobic digesters that can be readily retrofitted to receive organic waste and convert into RNG. It hasn't been easy developing and operating these projects in California.

We had an asset enter bankruptcy, which was the largest organic waste recycling facility in the nation, a couple years ago as we waited for the city of Los Angeles and organic waste streams to mature and enforcement to, accelerate with 1383 in the wake of Covid.

Another facility came near bankruptcy as the PUC took extensive time before approving the contract this year to allow us to procure renewable natural gas with Southwest Gas.

Despite these commercial challenges and growth plans, Energia continues to support California organic waste climate goals and has long been the leader at the forefront of this effort. SB 919 will allow us to take another important step forward and continue to invest and build in the State.

For the concept of diverted organic waste to RNG to scale, interconnection costs remain a significant barrier that must be tackled. In many projects, it is the largest cost for construction.

By addressing infrastructure financing constraints, SB 919 provides a structural solution to unlock additional RNG supply.

More importantly, reduce methane emissions across the state from over 20,000,000 tons of organic waste that must be diverted from landfills, and support long term market stability. Thank you very much.

Thank you. Yes, sir. So just additional folks who wanna weigh on the support?

Yes. Michael Boccadoro. I want to be very clear. We've been working with the author. We remain fully supportive of what he's trying to accomplish but we're coming up as a tweener today because we are concerned about the committee amendments that are being proposed.

Livestock accounts for 55% of methane in California. Arbitrarily limiting livestock projects and being able to participate in this program will put the state backwards in terms of being able to achieve its methane reduction goals.

As the committee analysis suggests, the dairy sector is on track to achieve the targeted methane reductions the state's looking for. But this limitation will prevent the projects we need to be able to achieve that goal.

And my understanding, not my understanding, the CPUC has established a reservation list or queue.

The $10,000,000 limitation will result in dairy projects being disadvantaged by projects behind them in that queue.

They played by the rules and now we are pulling the rug out from under them. And the whole reason we need these incentives is to level the playing field for in state projects.

Now we are putting in state dairy projects at a distinct disadvantage to out of state projects who can continue to saturate the LCFS market and preclude local methane reductions and local jobs.

A better solution would be to fully fund all the projects in the queue that played by the rules and got in the queue, and then put a limit if we have to on future funding. Thank you.

Thank you.

Good morning, Mr. Chair. Members, Israel Salas with Southern California Gas Company in support. Thank you.

Thank you.

Mr. Chairman and Member, Scott Wetch, on behalf of the California State Pipe Trades Council, in support. However, we do share many of mister Boccadoro's concerns and we'll be looking at the amendments. Thank you.

Thank you. Alright. Anyone who wants to come out in opposition to the bill or speak to concerns?

Thank you, Mr. Chair, Members of the committee. Matt Freedman on behalf of the Utility Reform Network. Our letter expresses opposition to this bill on two grounds.

We have reviewed the committee analysis, but we're still not clear exactly what the amendments would do to address our concerns.

First, the bill would authorize gas utilities to include biomethane project interconnection costs in rate base and recover those costs along with an authorized rate of return from rate payers over the course of several decades.

We have significant concerns about this. The treatment that would be required would impose significant costs on rate payers over time. On a nominal basis, the cost of rate basing are nearly double the cost of financing interconnections using an upfront incentive payment.

And as noted in the committee analysis, this issue is being addressed in a proposed decision at the PUC, which rejects proposals to require rate basing.

So given the PUC's ongoing review of this issue, we think it's inappropriate for the legislature to provide any direction to the PUC, and we look forward to seeing the committee amendments to see how they address it.

Secondly, we are concerned about the directive to authorize up to $50,000,000 for incentives that under the current version of the bill would be funded through the gas climate credit. This is not free money.

Under current practice, this money is used to provide straight up bill credits to customers. In 2026, customers are getting a bill credit of between $32 and $46 So taking this money away from that program simply would increase bills for those customers.

Taking 50,000,000 away from the credit would increase a customer bill by $3 to $5 So we look forward to seeing the amendments, but those are the concerns that we've raised in our letter. Thank you.

Yeah. Okay. Thank you.

Mr. Chair, Mark Fenstermaker on behalf of Earthjustice. We are opposed to the bill in print. Appreciate the work of the committee. Look forward to reviewing the amendments.

Would just echo many of the concerns from Tern and would also state that, the the part of the amendments that allow for more incentives into the Fund, likely, we would continue to oppose, whether that's coming from ratepayers or from other some from some other source.

We don't believe the fund, should receive any more public funding. Thank you.

Alex Leroux on behalf of Sierra Club in opposition. Thank you.

Mariela Rocha with Leadership Council for Justice and Accountabilities, echoing the same, opposition and remain concerned that the rate based payers, will subsidize ongoing combustion fuels.

Particularly when it comes to dairy digesters, we have concerns on the cost, to Californians enough, maybe lead to further environmental degradation and

We're just asking folks to Sorry. Thank you. Yeah. Just to associate. Yeah.

Thank you. Just name and affiliation.

Good morning. Christina Mohabir with California Environmental Voters in opposition. Thank you.

Good morning. Christina Scrinch with the Center for Biological Diversity in opposition. Thank you.

Thank you. Okay. Alright. I did give a good perception of the various perspectives on this bill. Questions, thoughts, concerns, issues from the committee?

You have a question? Yeah. Senator Becker.

Thanks. I'm trying to understand the cost piece. It sounds like consumers pay either way. Is that right? The utility bills it and collects dollars to the rates or the project pays for it then has to charge higher prices.

So how does the cost work? And does this affect the the sort of cost to rate payers really?

Thank you so much for that question because that'll allow us to address some of the concerns

Thank you.

Of opposition. If you don't mind, through the Chair, I'll let one of my witnesses answer.

Yeah. Sure. Happy to. Again, Sam Wade with the RNG Coalition. That's correct, Senator Becker, that either way, the the cost of decarbonizing the gas system will likely fall on on gas rate payers.

And there is already, mandates in in statute, to to basically, buy RNG. So we believe that the the framework we've laid out would lower the cost in total and, therefore, reduce the cost that rate payers have to pay, but there would be still some cost that would eventually fall on rate payers.

And the cost savings of that would come by going through the rate payer would eliminate the 24% tax that right now would be given over to Federal Government.

Correct.

I guess one more and I'll turn over. I probably may have few more later. The I mean, we do wanna collect rather than dent the biomethane.

I'm sorry?

We do wanna collect rather than dent the biomethane. Right? That this

Yeah. According to the method of.

Right. I believe that's that's the state strategy as articulated by CARB scoping plan and and other straight state planning documents. It's better to to use the gas rather than to let it vent as a a short lived climate pollutant.

Senator McNerney.

Hey, I thank the author for your work here. Couple of questions. Your first witness mentioned that the interconnection cost is three times what it cost in many other states or most other states. Could you explain that or break that down a little bit?

Yeah. Yeah.

Yeah. And there's an extensive process that's sort of been set up by the Public Utilities Commission and the utilities that is more rigorous than in other states, and I think that that has the cost. So it's labor.

It's just the issues of, making sure that the safety and other things are fully being covered. So some of those costs are unavoidable.

But in reality, we think there could be just further reductions in that process as well as as overseen by the CPUC, and we're advocating in front of that body for those costs to come down and for the process to be streamlined.

So the the environs are, by and large, opposed. Can someone explain why the virus environs are opposed to this?

Well, we do have a mandate in the state to reduce, biomethane, and we have a goal of 2030. So, obviously, it's clear that the state has interest and is vested because of the incentives that we have put in place in the beginning to be able to reduce that.

So I guess you would have to ask one of the environmental groups if you would want to hear from them.

Come on. Come on.

Why they are opposed.

Thank you for the question, Senator McNerney. So to begin with, we echo the concerns coming from Tern about rate basing these costs. We believe that the cost really should be borne by the developer.

And then in addition, we find that, you know, if we're gonna be putting more costs onto our onto our rate payers for more energy production, it can come it should come from more assured clean energy sources.

And in this case, a lot of the times what we find particularly with dairy biomethane is that it comes with a lot of extra impacts to the environment and to our local communities, whether that be in air quality or water quality.

We do, by and large, think that we should be getting more of this bioenergy out of our landfill diversions.

We understand that that's a little bit slower, but what we think a lot of, the energy sources are gonna come from are not as environmentally beneficial that's gonna come out of this bill.

Okay. Thank you. The cost impact is is not in my mind something the virus are generally worried about. So that's a little bit of a contradiction. Anyway, I'll I'll yield back.

Well, that's turn. Turn's been bringing up those issues. But, yeah, this has more to do with emissions associated with and and and there is a whole slew of environmental justice challenges.

I'm gonna yield back to the chair.

Yeah. Okay. Thank you. Alright. Other questions?

No? Appreciate you working with us, Senator, and I'm happy to let you close, and we'll we'll entertain a motion when we have a quorum.

Thank you so much. I recognize that there are concerns about rate payer cost burdens. And as such, the bill, as it is amended, removes those provisions and instead urges the CPUC to act swiftly following their proposed decision.

So it's solely my intent with SB 919 to find creative solutions to remove cost barriers to RNG development and thus support our ambitious climate goals. You so very much.

When the time's appropriate, ask for an Aye vote.

Thank you, Senator. I appreciate you. Thank you very much. We'll we'll next call up Senator Laird who's here. Appreciate your patience, Senator.

Senator Laird is gonna present SB 931, which is item five in your agenda packets.

Thank you very much, Mr. Chair and Members. I'd like to begin by accepting the committee amendments and thanking, the Chair and the staff for working with me on this bill.

Senate Bill 931 reauthorizes the Community Impact Mitigation Program or the CIMP, related to the Diablo Canyon Power Plant in San Luis Obispo County. And the CIMP was authorized in 2018 with bipartisan support through Senate Bill 1020 by then Senator, Bill Monning.

Under that bill, the community program funding was scheduled to end with the Diablo Canyon's, plant's closure in 2025.

However, the plant's operations have been extended through 2030, and this funding was not included in the bill. At the time, it was stated that this could be done administratively, but now it is clear that it can't, and that's why I am in front of you.

Communities in San Luis Obispo County have relied on this funding to support essential public services, including emergency preparedness, fire protection, and public safety. Emergency preparedness, fire protection, and public safety.

A continued operation of Diablo without restoration of this fund places a disproportionate burden on those services.

The local school district is particularly impacted by this. These are operating costs that have existed for decades, either in the unitary tax or, with this mitigation program. For forty years, it has existed. In both times, it does come from the rate payers.

So this bill extends the fund through 2030, which is all the state has acted on in extending the life of Diablo Canyon.

There have been a couple of stakeholders in the last few days that have suggested we should be considering a fifteen year extension past 2030 for Diablo Canyon. That will be a separate, initiative from somewhere, but it is not part of this bill.

All this bill does is address the five years that were not included in, the Senate Bill by Senator Dodd in 2022 that extended the plant for five years. At the appropriate time, I would request an Aye vote, and I do not have a primary witness today.

And I just wanna clarify, Senator. So the amendment that you're taking is you're clarifying the dates by which the SIMP would be funded. So the date of the enactment through 2030 operations when the last unit is to decommission and there's a couple of technical changes that Correct.

Reference that the C Correct. You're proceeding.

Okay. Great. Thank you, Mr. Yoder. Yeah. Oh, you're coming to support.

Okay.

Thank you, Mr Chairman and Members. Paul Yoder on behalf of the County Of San Luis Obispo. This in a lot of ways is really the ultimate district bill.

As the Senator mentioned, there are a lot of things that are involved in in emergency preparedness that San Luis Obispo County, our client, has to think about every single day.

And then, obviously, there's the exporting of what a lot of people still believe is clean energy to the rest of California as far as ratepayers are concerned. And I just wanna thank the center personally for doing this. It's vitally important to the county. Thank you.

Yeah. I mean, you know, a lot of people are paying for the district bill, but okay.

Mr. Chairman and Member Scott Wetch on behalf of California Coalition of Utility Employees and the State Association of Electrical Workers in support.

Alright. Anyone in opposition? Yes. Okay. We got a couple of folks.

Doctor Gene Nelson, California Institute for Green Nuclear Power. While we support the idea of adding SIMP, we are unaware of any legislative effort to extend the life of the plant. There is none, period. And this is our our concern is that we really need to not kill the goose that lays the golden eggs.

The NRC has said go to 2045. The state of California, zip, Nada. And that needs to to be corrected, and I believe that this bill would be an excellent vehicle to actually correct that important missing piece.

Again, there is nothing out there. Now if we choose to close this plant down, we're basically following the path of Spain on 04/28/2025. There was a massive blackout because they tried the experiment of running a modern industrial society on breezes and the sun.

It did not work. 11 people paid with their lives. The law Appreciate that.

We're thank you. Okay. Alright. That's This bill has to do with the tax exemption issue.

Again. We need we need to keep the plant running. Thank you.

I hear you very much and appreciate your comments.

Thank you, Mr. Chair and Members of the Committee. Matt Freedman on behalf of The Utility Reform Network. We are opposed unless amended to this bill. As explained, this bill would increase the electric rates paid by customers of community impacts mitigation program through 2030.

Extending the subsidy through 2030 would raise customer rates by about $47,000,000 and that would be paid by customers across the state to provide a specific subsidy to one local entity. We oppose raising rates further to pay for the subsidy.

As you all know, in 2022, the governor made a deal with PG and E to extend the operation of the Diablo Canyon plant until 2030.

And this deal allows PG and E to collect significant excess revenues that can be used to pay for the extension of the community impacts mitigation program. There's no need to raise rates further to cover this new expenditure.

Under the current law, PG&E collects a series of excess rate payer fees that are unrelated to the costs of operating the plant safely. In 2026, these fees alone amount to $500,000,000.

SB 931 should be modified to redirect less than 2% of this amount to fund the additional payments to local governments. And we think there are two sources of fees that could be tapped for this.

First, there's the fixed management fee, which provides PG&E with $114,000,000 this year alone to compensate its shareholders.

This is outsized compensation given the almost complete liability protections for its operation of Diablo Canyon and the small amount of expenditures that would normally be treated as rate base.

Secondly, the volumetric performance fees, which are expected to amount to $267,000,000 this year. These fees constitute an effective slush fund that PG&E uses for a variety of purposes unrelated to the plant.

PG&E's own forecast show these excess fees constitute more than a third of its overall revenue requirement and a recent study that was released by the University of California at Santa Barbara highlights the extent to which these fees unreasonably drive up the cost of Diablo Canyon

operations to customers around the state. The debate about these excess fees has generated extensive media coverage, raised serious concerns about the fairness of the current approach and placed a spotlight on the outsized rewards for PG&E given the unprecedented

shareholder liability protections that they receive under the current arrangement. And since SB 931 would change the terms of the current deal by adding a new cost obligation, paying for these new costs out of

the existing fees would hold rate payers harmless and prevent additional rate increases. Thank you.

Thank you. Alright. Other folks who wanna raise concerns with the bill or express opposition? Alright. We'll bring it to the committee for questions and thoughts and comments.

Go to Senator Stern.

Thank you, Mr. Chair. I appreciate the the author's advocacy for several years. This is not a new issue for him, and I know a difficult one back home.

You know, I getting some as we've discussed, we've been getting some some FOMO, I guess, from lack for lack of a better word from constituents of mine about some of our community challenges, property valuation decreases,

loss revenue to our school districts after the Aliso Canyon blowout. And I guess we didn't have the presence of mine at the time to try to negotiate a deal with the extension of Aliso Canyon to assess a ratepayer charge just to mitigate some of those impacts.

I appreciate this bill is sort of trying to restore the contours of that previous deal and that you thought administrative discretion could satisfy it. I am sympathetic to turns issues raised.

I realize that that might not be palatable for PG&E, that kind of, non rate based approach, either we, lean on the management fees or some of these other available funds. So I'm struggling with the measure.

I guess, I look at Diablo as a potential source of statewide benefit that would justify this kind of mitigation. I think there are other projects of statewide concern where we do have local mitigation involved because they're of such value.

So when I look at this measure, even though, in your opening, this isn't this isn't the Diablo extension bill, I am comfortable with an extension of Diablo Canyon in the long term. I actually think it could make good sense for ratepayers in the state of California.

The challenge is to sort of vote here today on this sort of precursor to an extension, which is just to through 2030 without sort of knowing what the contours of that bigger deal are is a difficult challenge.

If I were, say, voting on a full extension where I knew it was gonna be cost effective for rate payers throughout the state and some of the issues that Tern raised about the previous deal were not in this long term extension and

that it wasn't such a generous allocation where we had to basically pay PG&E to operate it because we thought no one wants to operate this asset. Now it turns out it actually is cost effective and a useful asset.

So I don't think we need to subsidize it the same way going forward. I think I would be much more comfortable with this. I recognize there is no vehicle before us.

I'm hoping that you can shed some light. Maybe it's too hypothetical for you, but were such an extension proposed, is that something that you'd be comfortable with? And I could see why this SIMP could make sense in that context.

Without that, it's just a harder pill to swallow. I still wanna get your I'm still gonna give you the vote today. I'm and I appreciate your shrewd negotiator on this, and you've been in the trenches.

So I really do trust that you're gonna not just look out for for your folks, but all of us. But I just wanted to get your your sense of the future here and whether you whether we if I'm taking this vote today, I should have some confidence that that'll be in the context of a broader extension conversation.

Okay. I'll take that as an inflection at the end of your last sentence since.

Yeah. It's a question. Question. Are you or.

Let me frame it for you a slightly different way that answers your question. And that is is when this came in front of us in 2022, It was my strategy at the time to not take a position on the extension, but to list everything that we needed in a package.

The workers there got a pay differential so they wouldn't leave before the last day. There's 12,000 acres of lands that need to be protected around it. We got a billion dollars in that deal for additional renewable energy that we haven't been able to to quite realize yet.

There were many things that were there. The and right now in the five year extension, we're still waiting to see if PG&E can make good on the last $600,000,000 of the loan. The Coastal Commission acted on the lands.

There's still an embrittlement test result that has to come in with regard to seismic safety, and there's this because this was left out. Those are all issues related to the five years.

If there is a bill and there's discussions about it informally, from people to extend the additional fifteen years, there will be a similar package. And it will be my strategy once again to not take a position on the extension until I see whether things are wrapped in.

The last 4,000 acres of land will need to be wrapped in. This will be something that will need to be wrapped in for the fifteen years and be done in conjunction with that, and there will be other issues.

So what we're really doing is trying to hold PG&E's feet to the fire for what was agreed to in 2022 on the remaining issues, this being one. And then if there is a bill for an extension, all those different issues would be wrapped into the bill for the extension.

Thanks for that. And the lack of a clear inflection, I guess, is that I didn't I recognize your previous position, and I didn't wanna sort of try to authoritatively put you on the spot whether you support an extension or not at this present moment.

I appreciate appreciate your preconditions. I guess, my preconditions on that deal are that this this is a good deal for everyone throughout the state of California.

And so if this is sort of a prelude to that or maybe sort of a restoration of an unrealized portion of the past, I would just ask, should the conditions change and this body determines that holding PG&E's feet to the fire shouldn't be done at sort of all rate payers expense,

but that there is another path. I get that they're resistant to the other fees, but I wanna get a sense from you. Have you been open and are you open to other potential funding sources for this kind of mitigation program? I get that the bill is sort of is what I used to say.

I am open to the others, and I've been working on this since last October. Yeah. And if I could have done from the existing funds, it would have been a simple majority vote, and it would have been a lot easier. But the opposition was a a lot lot stronger,

and it was going to be hard to do. And and to answer the first part of your statement, for forty years, the rate payers paid for this.

For forty years. This is five more years of the same rate payers, although in 2022, others were added, to do it. This is not a new charge. Technically, it's a new charge if we add 3¢a month or whatever it is to do this for the five years, but it's something the rate payers have been paying for forty years.

Listen. I appreciate that openness. Just as a bias Southern Californian, I would like to see another funding source. I'll vote for the measure today. Appreciate your, again, your your shrewd negotiating abilities and I think you've been practical throughout this process.

I just I want to see this be a statewide benefit and I want to see that the long term math actually pencils here to get us there. So I'm happy to support us today, but I would say I'm willing to push PG&E to pay for this out of their own funds and further limit rate payer impact.

So I'll defer to you, Mr. Chair and the author for trying to find that window. I get it's difficult, but I would love to see a majority vote here and and align with TURN's comments. Yeah. I mean, I'll leave it at that.

Yeah. I appreciate those comments. And I say to my good friend, Mr. Yoder, what doesn't make this a district bill is the fact that there's a socialization of cost around the state to address this problem that the state has bears a lot of responsibility for given the whip sawing of this

property and the valuation issues at the board of equalization, etcetera. So I'm sympathetic to the broader goal of making sure that the school district and other entities there are being made whole in spite when they don't have any direct responsibility associated with, the macro policy,

for this plan. So that's why I'm, willing to support the bill, but I really appreciate your line of questioning, Senator, because I think you're not wrong on any of those points.

Anyhow, I'd love to give the author the chance to close and and we'll entertain a motion when the when the time comes.

I feel like this has been a very good discussion that has actually gotten to complex issues in a brief amount of time. And I have done my best to fashion something that would work and something that could get approved, and that is the difficult thing here.

Of course, I am willing to continue to work if there are other options that are realistic that could help us land the plane. But in particular, the local school district goes over a cliff.

I mean, they lose a substantial amount of money to their budget, and it's the school district that the plant is in.

And and I think only because that's San Luis Obispo and this is Sacramento, there are not a busload of parents here from that district because they have organized. And the CEO of PG&E got a few 100 emails from parents in that district to her personal email account.

They are organized and they are active. And in many ways, it is for that that we are doing this to make sure that they don't and that's why it's limited to the five years. The amendments are really specific.

I think this is the best we can do at this point. And at the appropriate time, I would respectfully ask for an Aye vote.

Thank you. Alright.

you. Thank you, Senator. Let's now go to Senator Cortesi who's here to present item eight. That's s p twelve fifteen.

Thank you.

Good morning, Chair and Members. I wanna start by thanking the Chair and committee staff for their time and engagement on the bill. There's been a lot of that. We've had ongoing conversations with committee staff and in that spirit,

I'll be accepting the committee amendments today with the understanding that this bill remains a work in progress and we'll we will continue refining it moving forward.

SB 1215 focuses on expanding access to EV charging for Californians who live in multifamily housing where access is is currently very limited and stalled, frankly.

Today, about 80% of EV charging happens at home, but less than 5% happens in multifamily housing. Meanwhile, roughly 30% of Californians live in multifamily housing and often have no access to overnight charging.

This means that renters are locked out. At best, they're forced to rely on public fast charging that can cost two to three times more conservatively. Two to three times more than what residential rates would be if they had it.

Put simply, if you don't own a home and you don't get the same you you just don't get the same opportunity to participate in the clean energy transition, what that means is that we're conceding somewhere between 40, 50% of the 2035 mandate that we're committed to.

Talking about four to 6,000,000 vehicles that don't come into play, and that process has started to happen.

My perspective on this bill, of course, perhaps obviously came from the transportation side, spending last interim recess, visiting manufacturers, including Ford and GM, visiting with retailers up and down the state.

I think it's fairly common knowledge in the legislature at this point, that EV sales, light duty sales, have flattened out essentially have stalled. And it's it's because of the inability to access existing, not new construction, but existing multifamily.

So we need to get in a hurry up offense if we wanna take seriously the 2035 mandate. SB 1215 essentially says that it's not acceptable to do otherwise. We need to move quickly. Multifamily housing is one of the most underserved markets for for private charging companies.

Existing utility programs have helped, but they're oversubscribed and or ending this year.

Without action, this gap will persist and widen. And I wanna say as successful or oversubscribed as the pilots have been and successful in the sense that five figures, you know, a few thousand EV chargers have been installed, that's good.

But against the need of 7 figures worth of EV chargers being installed, we're not on pace. With the amendments, SB 1215 directs the CPUC to establish deployment targets for EV charging infrastructure at multifamily housing and evaluate progress toward meeting those targets.

The amendments also provide CPUC with additional time and flexibility to review proposals and make adjustments as needed. We understand the committee's focus on affordability and rate payer impacts. Absolutely important.

The amendments reflect that including direction to consider rate payer benefits, to leverage non rate payer funding where available, and limit deployment to locations that can be served without major system upgrades.

That said, we do think there are still policy questions to continue working through as the bill moves forward, particularly around how to best balance scale, cost, and access, and, of course, the ultimate climate crisis hanging in the balance. We're committed to continuing that work with the committee and stakeholders.

At its core, this bill is about making sure that access to EV charging is not limited to single family homes. Renters should have a pathway to participate in the transition as well. In fact, they must for us to achieve the the goal set forth for the state of California.

Here with us to testify today in support of the bill, sponsor Scott Wetch on behalf of the California State Association of Electrical Workers. Thank you, and at the appropriate time, I'd respectfully ask for an Aye vote.

Mr. Chairman and member, Scott Wetch, on behalf of the California State Association of Electrical Workers and the California Coalition of Utility Employees.

SB1215 was based on a very successful program approved by this legislature that led to the investor owned utilities building more than 20,000 EV charging stations. And those were installed at multifamily residences as well as workplaces. A study by Synapse Energy Economics Inc.

Found that the revenues from the EV load from that program consistently outpaced their associated costs, resulting in a net benefit to rate payers.

So what we found was because we capped what utilities could recoup, they could only charge the wholesale rate, the retail rate of the power, nothing higher.

And they had returned everything back to ratepayers after they built the charging stations and they were paid for that, that program of building 20,000 EV charging stations was a net benefit to ratepayers. It made money for ratepayers.

It was a positive on the books for ratepayers.

Clearly, the private EV charging station industry is not meeting the market needs, as the Senator pointed out.

And this model has been proven to be cost effective for rate payers and successful in building out over 20,000 EV charging units. We think it should be extended. We look forward to working with the author to accomplish that. Thank you.

Other folks who wanna weigh in support?

Mr. Chair and Members, I'm Curt Augustine with the Alliance for Automotive Innovation. We support the bill for the reasons that the senators so, are well articulated.

Being the representative of the automakers of many EV battery companies, the challenges that we have to try to get more vehicles, on the road is partly due to multifamily, lack of access of charging. We see this as a great step to help achieve both the state's goals and the automaker's goals. Thank you, Senator.

Mr. Chair, Members, Mike Monaghan on behalf of the State Building and Construction Trades Council in support.

Good morning. Will Brieger for Climate Action California, we support. Thank you.

Good morning. Anthony Sampson on behalf of the California New Car Dealers Association in support.

Good morning. Scott Cox on behalf of the Electric Vehicle Charging Association in support if amended as outlined in our letter. Thank you.

Okay. Alright. Opposition, folks who wanna raise concerns about the bill. No? Okay. Seeing none, let's bring it back to the committee.

Thoughts, concerns? Yes. Question from Senator Stern.

Thank you, to the author for trying to solve this problem. I think this is a constructive approach. I appreciate what the committee is trying to do from a just a rate payer perspective with some of the amendments. So I think I like where the bill is heading.

I would just ask for the for a few of the supporters, especially my friends in the car dealers and the the automakers.

You know, there's a there's a what I would consider competing measure in the assembly right now to go after this issue from the building codes and essentially exempt multifamily charging and sort of just leave all those renters behind. I do not see you in opposition to that legislation.

I see the Electric Vehicle Association, but I see no automakers, and no, car dealers. I see a lot of environmental support.

But I would just hope that from an advocacy perspective that we embrace your measure as the measure to solve this and, don't send a signal that the State Of California is in any way open to leaving those multifamily renters behind.

So I have concerns about that. I recognize that bill is not before the committee today, but I would like to get a perspective if we're here from our friends in the automakers with their should if this bill doesn't pass,

do you support exempting these multi to no longer having a building code requirement? I wanna I wanna put you on the spot. Shouldn't shouldn't say I don't wanna put you on the spot, mister Augustine, but I feel like you you can take it.

Yeah. Yeah. Mr. Chair If

you would indulge me, Mr. Chair.

Mr. Chair, Senator

Yeah.

Stern, thank you. Yeah. We we are aware of that bill. We've not yet taken a position on it. But certainly, as you have described, that that's not something that is generally our policy.

So I commit to you that we will take a harder look at the assembly bill and get back to you and and the assembly to to make sure our views are heard on that.

I appreciate that. Thank you. Thanks for putting your effort into this one. I'll move the bill at the appropriate time. Thank you, Senator.

Alright. Thank you. Alright. We'll let you give you an opportunity to close. We don't have a quorum yet, but we'll

Yeah. I understand. Again, obviously, we're trying to balance, you know, moving quickly with the rate payer issue that, mister chair, that your committee, you know, has brought additional expertise to us on, and we'll continue doing that going forward.

And, you know, hopefully, we can move fast enough to to get where we need to go because I do think despite all the other crises that are going on, we need to remember that humanity is is in the balance here ultimately in terms of this climate crisis and this is a big piece of it.

So with that, I respectfully ask for your aye vote when you have an opportunity to take it up.

And thank you for working with us, Senator. Thank you. The committee. Okay. Great.

Thank you. Alright. Let's now do you want Senator Stern, do you wanna present SB 1295?

Alright. Thank you, Mr. Chair. SB 1295 is really about saving money and getting more out of the grid without a huge new costs and capital expenditures. This however is not a bill about net metering or behind the meter technology.

In fact, it's about using our distribution grid more wisely and trying to find a unique new approach to battery deployment where these assets aren't just treated as something for, say, one single household to enjoy the benefits of, but to be shared much more broadly.

There are some experiments going on in other parts of the country like Minnesota where utilities, ratepayers, battery deployers have all joined together to use these assets differently. And we know the battery storage is dropping in costs at astronomical rates.

Batteries will soon be seen, I believe not as some premium product just for people who can afford a Powerwall, but as ubiquitous part of our energy system.

We've seen storage capacity grow from approximately 500 megawatts, if you can imagine that in 2018 to over 16 gigawatts projected to be about 52 gigawatts by 2045. So think about 52 Diablo Canyons in a system of distributed batteries and large scale and small scale batteries.

The costs have dropped about 70% from about over $1,000 per kilowatt hour in 2016 to under $400 a kilowatt hour and probably less as of now. But deployment is not always targeted to locations where it provides the greatest grid value.

In areas like mine that I the part of the grid that I share with the Pro Tem is probably the softest part of the Southern California grid, Moore Park Sub area two in the Goleta Substation. These are the furthest reaches of where songs used to feed power to the northern parts of Southern California.

And since songs went down, we are now relying on things like an old gas peaker to back up our system. Moremont Beach is costing us about a billion dollars and is literally not running. We're just paying for an asset that even Edison doesn't wanna run just to sit there.

Why don't we install more batteries? Let Edison actually use some of that value and not restricted from them.

And let's back up some of these circuits, and look at where the locational net benefits are to be maximized. We know there was a distribution infrastructure deferral framework, and these these capacity maps did emerge out of that work, in 2016, but, that effort really didn't go anywhere.

So this bill really is designed to jump start that process yet again and create a least cost test, where we can look at load constrained areas, and flip the paradigm to say, where we can look at rather than saying build first and justify it later to compare first and then build.

And we think we can actually go faster in that way. If a targeted distributed solution can solve a local grid problem cheaper and faster than pouring concrete and steel or say bringing in giant new transmission lines from far away through, say,

sensitive lands and instead can be be done right back in our homes at a at a substation yard like the ones that sit right in our farm country in Ventura County that during PSP events are desperate for battery backup, and yet we still can't get seem to get any of that in place.

Some of the work done by GridLab has shown that rigorous distribution planning and grid investments actually can be deferred. And if we do these sort of targeted distribution investments, we can actually save, lots and lots of money. And so for that reason, not just for my area,

but for everywhere where we're looking to maximize grid utilization in a fast cost effective manner, we think it's a practical approach to controlling rising electricity rates and meet electrification goals as well as maintain system reliability.

With that, I respectfully ask for your Aye vote. Happy to turn any witnesses for lead testimony.

Oh, and I, hold on. Am I accepting committee amendments? Yes. I am accepting amendments on page sorry. Page five of the analysis.

I'm looking at Nydia and trying not to get in trouble here. So, yes. Thank you for the for the efforts on this and really simplifying and and and cleaning up this bill. So we'll accept those and turn it up support.

Okay. I know one of your witnesses unfortunately is, I think, stuck in the secured line. But we'll give him the I know we we took this out of order because we didn't have other authors here, but we'll give him the opportunity to come.

Hopefully, he's gonna be here soon. So other folks who want to weigh in and support, wanna come to the microphone?

Good morning. Christina Scrinch with the Center for Biological Diversity in support. Thank you.

Thank you, Mr. Chair. Environment California in support. Okay.

Opposition, concerns. Don't don't rush. He's in line, so you can vamp. There you go. Love that.

Love that. There you go.

It's one of my favorite little videos. God, that Kitty's so funny.

It's going viral.

Yeah. Valerie Tarella Lahos, Pacific Gas and Electric Company. Thank you, the author, for bringing forward this discussion. And thanks you to the committee for the work on the bill. We have a lot in common.

Appreciate the author, common goals that we want to achieve. I appreciate the author bringing up the past attempt of something similar, but maybe we need to have a go at it again. Other folks are doing something slightly different across the country.

One of the things that we do we have talked to the author and sponsors about is looking at a very customer centered approach, looking at demand flexibility and seeing how we can, at the end of the day, grow the load to put downward pressure on rates.

So with that, we look forward to looking at this revised bill and continuing our discussions with the author. Thank you.

Thank you.

Good morning. Catherine Borg with Southern California Edison. We're referred to a lot in, his testimony. We're going to continue our discussions on this. It's, it's complex but, very interesting. So thank you.

I'll take it.

Love that. Okay.

Good morning, Chair, Members. Lourdes Sallon with San Diego Gas and Electric. Also echo, sentiment of our colleagues here. We'll continue working with the Senator on this bill and hopefully we can, reach a place that we're all happy. Thank you.

Great. Okay. Other thoughts, questions? Do you have any idea what the status of your witness is? Just I know we took you out of order, so I feel a little sensitive about this and we don't have another author.

And we don't have maybe the vice chair has wants to put me through my paces here and kick the tires on this legislation.

But is he is he actually closer? Is this

I'm not aware, but I think he'll be fine if we have to proceed.

Okay. Is he also speaking on your next bill too? Do you know? No. Probably not. Yeah. Different bill.

But it's okay. We can do a nice video outside the hill.

Okay. Great.

We'll find a way to do that.

Well, I appreciate your work on this. I know there's a lot of work to to Yeah. Going ahead, but happy to support the bill and encourage members to do so as well. And Oh. Oh, here he is.

Alright.

Great. Excellent. Come on up to the microphone.

It's your deliberate

There you go. Excellent. Here. Yeah. All deliberate, sweet.

Thank you. We we we welcome you.

Thank you. And I apologies for the delay. Hello. My name is Arnab Powell, and I'm with Deploy Action. We are working with Senator Stern on this bill because we are seeing a gap in deployment of these smaller scale solutions.

This is not about whether distributed resources work. It's about whether our system actually uses them when they are the lowest cost option.

Across the country, we are seeing a gap between what planners know as cost effective and what utilities want to deploy. SB1295 closes that execution gap. Batteries have fundamentally changed the investment calculus.

Over the past decade, batteries costs have fallen 70%, completely changing the economics of grid planning. But what's often missed is that installed costs for distribution scale batteries continue to decline further due to modular deployment and shorter timelines.

In many cases today, a targeted battery can be deployed in twelve to twenty four months, compared to five to ten years for traditional infrastructure. Other states are already operationalizing what SB1295 does.

This is particularly important because we are seeing massive amounts of demand on the grid and we need to find new innovative cheaper solutions.

So instead of traditional upgrades, this is a way to save ratepayers money to meet the demand that's out there and we are working on this and we are happy to work with all parties to come to solution to bring down cost for Californians. Thank you.

Thank you, Mr. Paul. Appreciate it. Thank you for your energy leadership. All right.

Let's give you an opportunity to close.

Great. Thank you. The this isn't just about looking at the substation, say, on Los Angeles Avenue that I drive by every time I'm going through Ventura County and especially when the lights are off from a PSPS event and I think to myself, where are the batteries?

Even if those batteries are, say, co owned by Edison, this isn't to me about who owns the the asset or controls the asset or even who gets the the profit from this.

This is much more about how do we more rapidly address reliability, but without having to switch on super costly things like old gas pickers that just aren't gonna work. I believe batteries of the future for California.

I think this is a unique new middle ground where small is the new big and and we no longer have to have these fights over behind the meter versus in front of the meter that we can do things on the distribution grid that are gonna enhance reliability for everybody.

So I look forward to working with the the IOUs on this one as well as some of the developers and project plurs in the environmental community to make sure we can land something here and would respectfully ask for Aye vote.

Thank you. Thank you very much. We will entertain a motion when when appropriate, and I'm certainly will be supporting. Okay. Let's go to item 12, if you don't mind.

Is that okay? Yep. This is, SB 1359.

Yeah. Thank you. This bill is also about rate payer savings, especially on the gas side of our system. We know that the default is often to build new infrastructure that can often be costly as sort of just the default mechanism for expanding and meeting new demands for, say, heat, for water heating, for different appliances.

We also know that given the lower cost of electrification that are emerging, that it can often be much also often be much cheaper to meet new demand without having to build big new trunk lines and trenches.

So we this bill is really not about going after the existing system, but instead taking a much more deliberative approach about transition planning and looking at cost effectiveness before we sort of default to expanding the gas system and all the costs required to maintain that.

We're looking here to assess that the transition risk, the cost opportunities to save dollars and further further enhance our scoping plan goals.

We know we've done some work around pilot projects and planning, so this doesn't seek to sort of expand or or or, amend the 12/21 deal from a few years ago.

But, we do wanna make sure the long term gas proceeding at the PUC isn't just sitting there, and that especially for workers, we're we're ensuring that the, the safety of our existing gas system is attended to and that we're not sort of diverting our attention to expanding capacity when we should really be

working on making sure the existing system is safe and well maintained. With that turn to our witnesses and ask for an Aye vote.

Sure.

Welcome.

Good morning, Mr. Chair and Members. Will Brieger for Climate Action California. In my legal career, I've worked for California's courts, a governor, three attorneys general, and I've spent the last twenty years focused just on climate.

Turns out our biggest challenge is inertia. It's not the president, it's not utilities. Our problem is the shot clock. The world's on a twenty year clock to get to net zero carbon emissions by 2045. Now this body didn't just make that deadline up. That's just science. We decided to stop burning things.

We've picked a plan for 85% emissions reduction while we're finding some negative emissions. So we've got twenty years to get there. Actually, nineteen.

I was hoping those SB1221 pilot projects would help, the PUC and the utilities working together to try with the whole 1% of the customers to electrify. Unfortunately, none of those pilots has even begun.

You know, this is hard work, because Californians have invested so much in a system that allows us to import, store, and distribute gas. In the past decade, our utilities have doubled their asset base, our gas utilities, to $57,000,000,000.

That's a big hole for ratepayers to pay their way out of at a time we're actually using less gas every year. So here's SB 1359. It just requires the PUC to think hard before allowing more big investments in that system.

So there's a saying, when you find yourself in a hole, the first thing you do is stop digging.

The bill doesn't even go that far. I think Senator Stern has borrowed a line from the utilities. Call the PUC before you dig. That's all it is. Thank you.

Dear Chair and Members of the committee, my name is Marquis King Mason. I'll be speaking on behalf of Natural Resource Defense Council. Across the country, we're seeing states take meaningful steps to align their energy systems with climate and affordability goals.

In New York, policymakers repealed a decades old subsidy that required utility customers to fund new gas lines. Saving ratepayers $600,000,000 annually in correcting a structural bias towards fossil fuels.

SB 1359 is about making smarter, more responsible investments. We spend billions in long lived gas infrastructure without a comprehensive mechanism to fully consider whether those investments will become near term stranded assets.

As demand for gas declines, those costs don't disappear. They get shifted on the rate payers. Majority of gas customers' bills now goes towards maintaining the gas system rather than purchasing gas itself, meaning that even as gas prices come down, costs remain elevated.

California can be a national leader, and SB 1359 aligns with the state's climate commitments, the carb scoping plan, ongoing long term gas proceedings at the CPC, and recent legislation like SB 1221.

This bill establishes a critical guardrail that before major investments are made, utilities must show that projects are consistent with our climate goals and that more cost effective alternatives like electrification have already been evaluated.

It ensures electrification and non pipeline alternatives are treated as a default, not a nice to have, which is critical to align utility planning with where the market is already heading towards renewables.

In a moment of rising gas prices and global volatility, continuing to double down on fossil fuel infrastructure is not just environmentally unsound. It is financially risky.

We know that low income households cannot afford a poorly managed transition if we misalign critical investments towards fossil fuels. SB 1359 provides a framework to protect ratepayers, prioritize lease cost solutions, and guide California through a managed equitable transition of fossil gas.

For these rec reasons, we recommend an Aye vote. Thanks.

Yes. You wanna weigh in support?

Allison Hilliard with the Climate Center in support. Thank you.

Christina Scrinch with the Center for Biological Diversity in support.

Niko Molina on behalf of the Building Decarbonization Coalition Action Fund in support. Thank you.

Christina Mohabir, California Environmental Voters in support. Thank you.

Thank you.

Dave Shukla, Long Beach Alliance for Clean Energy in support.

Jacob Evans with Sierra California in support. Thank you.

Alright. Folks who wanna raise concerns about the bill are opposition.

Thank Thank you, Mr. Chair and Members. Kent Kauss on behalf of San Diego Gas and Electric and SoCal Gas in opposition. We oppose the bill because it raises serious concerns about safety, affordability, access to basic utility services, and changing the rules after the fact.

We agree with the concerns noted on page 10 of the analysis that the Legislature should proceed with caution on this bill as it could jeopardize safety and reliability. The first concern we have on the bill is the elimination of the obligation to serve.

The bill rewrites the gas utilities duty to serve customers by eliminating it as a legislative protection and delegating the authority to the PUC. For the first time, that obligation would be conditioned on state climate objectives. This is not a minor technical change.

It is a fundamental shift that could be used to justify denying service to customers who have no viable alternative today or in the future. The second concern is safety.

We believe that this bill compromises safety. SB 1359 puts safety driven and other necessary investments at risk by imposing new approval hurdles on projects over $10,000,000 a threshold so low that it captures routine distribution work that keeps communities safe and the system reliable.

The CPUC addressed this issue in general order one seventy seven. The CPUC carefully set a $75,000,000 threshold for heightened review and explicitly found that every additional layer of review creates direct costs, indirect costs, and delays for all customers.

We also believe the $50,000,000 proposed change is arbitrary. Finally, on the takings concern, SB 1359 changes the rules after the fact. Investments already approved by the PUC made under prior requirements would face retroactive cost shifting to shareholders.

This will erode confidence in California's regulatory compact and then ultimately increase costs for customers. Finally, I would note that as the analysis points out, AB1221 is in implementation phase. The PUC recently adopted priority maps, and with these concerns we ask for your no vote.

Thank you, Ken. Thank you. Other folks want to raise concerns?

Good morning. Valerie Turella La Joz with Pacific Gas and Electric Company, also in opposition. And PG&E agrees with the author that a thoughtful and well planned transition is an orderly is needed.

We are very involved in the long term gas planning, OIR and sorry process at the CPUC of the long term gas planning proceeding. And we have concerns that there are predetermined outcomes being proposed in this bill.

And we also have similar concerns raised by my colleague from Sunpro Utilities and are respectfully opposed today. Thank you.

Thank you. Other folks who wanna raise concerns?

Morning, Mr. Chair. Chris McCauly on behalf of the California Renewable Transportation Alliance. Respectfully opposed. Thank you.

Mr. Chair, Members, Paul Yoder on behalf of the Fresno County Board of Supervisors in respectful opposition.

Good morning, Mr. Chair. Ryan Kenny on behalf of Clean Energy, respectfully in opposition. Thank you.

Good morning, Chair and Members. Connor Gusman on behalf of the Utility Workers Union of America in respectful opposition.

Morning, Chair, Members. Matt Clobenstein on behalf of the Bioenergy Association of California, respectfully opposed.

Thank you. Okay. Senator, do you wanna do you wanna sort of address any of the concerns that were just raised by the opposition?

Yeah. I appreciate the especially, I mean, I said a little bit in my opening remarks, but safety is is nonnegotiable. Our thesis is that this will actually enhance the ability to invest in the gap the existing gas system safety and not sort of arbitrarily force transitions.

This is not about taking people's gas stoves away. This bill is not about, I'll make an admission here in public. My wife likes our gas stove. I complain, and I say, what about the benzene? I have to turn on the hood.

I set those issues aside, both for my domestic politics, but also for my broader ambitions for this state to be a safer and and cleaner place. I think right now, we're we're debating about both the the ratepayer issue and the safety questions.

And I think we're hoping to make the case to members here that by not expending capital and looking for sort of blind expansions of the system, that are just gonna default to gas, say, take, the Palisades area where, a lot of that gas system, was burned down,

and yet a lot of folks are just defaulting to say, hey. We'll take it. This is free.

The trunk line comes in or the new distribution lines just automatically come in and it's magic because it doesn't cost us anything. And SoCalGas fronts all the cost and it feels free, but it's actually not free because the rate payers are paying for that.

Exactly. So where whereas things may be perceived as free and where that electrification option is sort of seen as not free because we we're not we don't have the same sort of upfront subsidy in the same sort of back end rate base that's allowed,

then you have to take a much bigger chance to to go electric than if you say just want a a new extension off the the old gas system.

We just want the PUC to take a harder look at that, and and we don't want to necessarily, upend or, undercut the deliberation of that proceeding, but we want to make sure it proceeds and that it doesn't just pause. One other point I wanna make in my close here or or Yeah. Sure.

I'm having to take questions for members. I do think there's a little clarification that's required on page 14 of the analysis. It noted that there was, op arguments in opposition from Southern California Edison.

I'm happy to turn to Edison if they're in the room, but I they are not opposed to the bill. There is no opposition from Southern California Edison on this measure. I it may have been it may be Southern California gas.

Okay. I'm getting a nod. So I would assume Southern California gas is opposed, but just to be clear, Edison does not oppose this measure. Speak now or forever.

Hold your piece. Okay. Yeah. So I just wanted to clarify that and happy to keep doing the homework on this bill. I don't I don't think this is an easy process.

I don't think there's some magic solution that we can suddenly flip from gas to electric overnight. So this is really not about that. It's about just thinking about new builds and how to be more deliberate about that. Hopefully, we're gonna save folks money, but I am truly committed.

I hope the gas company and Sempra as well as folks at PG&E will take me in my word over the years of working through some of these issues that are extremely sensitive back home given that I'm the home of Liso Canyon.

People want that shutdown. We are now in a place where it is not shutdown, and we continue to have a system that does rely on gas.

And so we are not trying to punch a hole through that. We're just trying to think about the future here so we don't obligate ourselves to a system of stranded assets that we have to pay.

Exactly. Yeah.

That respectfully or I'll I'll wait for a question if there is one, but that'd be my reply.

Well, I think we'll take that as you close. Thank you.

We see Senator Perez here.

I'm certainly recommending an Aye vote on this bill, and I appreciate your leadership on this important issue. So thank you, Senator.

Okay. Let's hear from you, Senator Perez. Senator Perez is here to present item six. That's SB 1098. Or or we can have do you want us to have Senator Gonzales present Menjivar bill first?

Okay.

Okay. Lena, would you mind oh, sorry. Are you okay presenting Senator Menjivar's? Thank you so much. Thank you.

Sorry to change course here. Okay. So Senator Gonzales is present is here presenting Senator Menjivar bill. That's SB 1125. That's item seven in your pockets, the water rate assistance program bill.

I feel like I was just here twelve hours ago because I was. Yeah.

I know. Long history.

Thank you, Mr. Chair and Members. I'm here today to present SB 1125 on behalf of Senator Menjivar. It establishes upon appropriation the foundation for the first ever statewide water rate assistance program for low income residents in California.

Approximately 1,600,000 households or one in eight Californians have household water debt, unfortunately, and water rates have increased faster than inflation over the past few years.

Unlike in the energy space, there is no statewide assistance for families who are falling behind on their water bills, and investor owned water utilities provide some financial relief to their low income rate payers,

but public water systems are limited to the in their ability to offer any rate assistance to their customers, largely because of limitations imposed on a publicly owned water systems by Proposition two eighteen from 1996.

Here to testify in support, I believe, we do have Jennifer Clary from the Clean Water Action and Jennifer Capitolo from the California Water Association, who I believe are here today, I hope. There they are.

Oh, I guess we don't we only have tall people today. Good morning. My name is Jennifer Clary. I'm the California Director of Clean Water Action and one of the cosponsors is of SB 1125. Thank you very much for hearing this bill today.

I you've seen it before many times. We keep working on it. And that's because the human right right to water isn't just about clean and safe water, it's also about affordable water.

And one of our big barriers in achieving the human right to water is affordability because you can have the best solution ever, but if you can't afford the water bill, you can't afford the solution. But even more than that, affordability affects every water system in the state.

It's not just the small disadvantaged communities, it's your community. And what we found during Covid was about one in six one in eight households had water debt. And what we've seen since Covid is that that water debt continues to increase.

And so this bill once more seeks to address that by creating a statewide low income rate assistance program. Some of the key items are data sharing so that we can access the care information to fully enroll all eligible rate payers.

We look at flexibility. So if we have different amounts of funding or different water systems, we can adjust the program for them. And speaking of funding, that's always the big barrier.

We're working with the water agencies on Assembly Bill 2,739 to identify and support a funding program. What I would say is affordability is a big issue for this committee and it's a big issue for the water community.

That's why I have no opposition on this bill. That's why all the water associations are in support because we know this is an issue we have to solve. Thank you.

Thank you. Thank you so much. Yes.

Good morning, Chair and Members. Jennifer Capitolo, Executive Director of California Water Association. We're the statewide association representing all of the water utilities that are regulated by the California Public Utilities Commission, 84 of us,

which represents about 15 of the state. Across California, you've heard from Jennifer, water utilities are definitely facing this balancing act of needing to invest in aging infrastructure, and balancing that with how we manage the costs for that infrastructure through customer rates.

We are fortunate enough at California Water Association to have low income rate assistance programs.

We have for many years, but they're not perfect. There's definitely flaws. We have parts of California that are significantly low income, that don't have any high income people to subsidize and provide that rate assistance to low income people.

We also have very high income areas that don't have any low income people in that service territory to be able to provide the subsidies. So the solution there really is figuring out a statewide program where everyone in the state can benefit from this type of assistance.

We are very much in support of this bill and hope that it passes today. Thanks so much. Bye.

Thank you, Trevor. Thank you. Other folks who wanna weigh in support, give us your name and affiliation.

Mr. Chair, Anthony Molina on behalf of Rancho California Water District in support. Thank you.

Mariela Rocho with Justice for with Leadership for Justice and Accountability, also co authors and in support.

Thank you. Good morning, Chair Ryan Ojakian in with the Regional Water Authority in support.

Good morning. Kyle Jones on behalf of Irvine Ranch Water District and the San Joaquin Valley Water Collaborative Action Program in strong support. Thank you.

Thank you.

Good morning. Claire Sullivan on behalf of the City of Roseville in strong support. Thank you.

Good morning. Brian Sanders at the City of Sacramento in support. Thanks.

Alex Loomer on behalf of the Environmental Defense Fund in support. Thank you.

Christina Mohabir, California Environmental Voters in support. Thank you.

Mateo Kushner with Community Water Center on behalf of Central California Environmental Justice Network, Water Foundation, Asian Pacific Environmental Network Action, Mono Lake Committee, and Los Angeles Alliance for New Economy in support.

David Lamores, with on behalf of Center for Environmental Health, the Nature Conservancy, Courage California, California Environmental Justice Alliance Action, in strong support.

Jacob Evans with Sierra Leone in support. Thank you.

Good morning. Soren Nelson with the Association of California Water Agencies. I was here last year on this bill in opposition. I'm pleased to be here this year in, support if amended position.

Those amendments have been shared with the sponsors and offers, and, pleased to say that we have a tentative agreement in place. Thank you. Okay.

Opposition, concerns, anyone else? Okay. We'll bring it back to committee. Questions, thoughts? Senator, Madam Vice Chair.

Thank you. And it's challenging when you're presenting somebody else's bill. So I think this is just kind of matter of a statement since I don't I'm not sure that you may have a response.

But some of the concerns that we have with this particular bill is, first of all, when we're looking at the cost of water or any any of our utilities in in California, Much of those costs are due to mandates placed on these entities by the state.

I'll give you an example that's personal in my district, which is Chromium six, which the standards are much stringent here in California than even, national or worldwide standards by the UN.

And so now these water agencies that are in many in rural communities, have to pay for infrastructure to treat this chromium six, which is naturally occurring, has been there for decades and but they don't have the funding.

So they would have to literally pass that that cost on to the local rate payers, many of whom live in low social economic communities in our area. It's one of the reasons and I'm gonna put a plug up there.

We're we're asking a budget request for for these rural companies or rural water agencies. But the point I'm trying to say is that it's not the bill incredibly well intended.

I completely understand because we do have a lot of rate payers in our area, in our district who are either in debt or can't afford the water utilities. Affordability is number one key concern in our area. Yeah.

But I don't think this particular bill is actually addressing the issue. It's more like a a band aid that it's actually trying to make us feel good about putting a a measure forward that's gonna create an account,

which according to my understanding of the bill does not have a resource for funding. So we don't have anything that would that says, okay, this is where we're gonna get the funding to be able to to put in this account.

So what I call and what I would refer reference in my district, it's warm and fuzzy.

It makes us feel good, but it's not actually resolving the issue of the state placing so many additional burdens on local water agencies that make it very expensive to provide water to our to our residents in our in our districts.

So we need to start addressing and talking about those issues, which is why I often call out many of the of the requirements for the water districts or any entity in our state as far as, like, okay, can we can we give them some time to actually get ahead of what is being

asked of them by the state? Or if we're gonna put mandates on our local water agencies, we must fund them.

We must actually help with that. And so that's why I'm gonna be abstaining from the bill today, but I just wanted to make just a point that this bill, once again, makes us feel good about moving it forward, but there's no funding resource on it.

And it's my understanding that according to Prop 218, we're not allowed to charge other rate payers additional funding in order to fund those that can afford money.

So that is my understanding under Prop 218. So we're in a pickle with this particular bill that doesn't actually address several of the issues in the sense that the root problem of why we're here. And number two, the fact that that there's no funding source for this particular effort.

And actually, number three, the Prop 218 condition that we have.

So And through the Chair if I may.

Well, can I just stop the quorum quickly? I so I really apologize. Yes. Secretary, please call the roll.

[Roll Call] We'll have Here. We'll have here.

Thank you so much. You may you may proceed.

Thank you.

And if I may, Mr. Chair, on behalf of Senator Menjivar, and then I'd like to, send it over to, our witness here. So the bill, of course, upon appropriation, and I understand there's our funds for safe drinking water, which I think we'll discuss.

But it also establishes a cap of 10% on administrative spending to ensure maximum consumer benefits are provided. That's important, especially when you want to rectify a lot of the issues of environmental justice concerns or Chromium six, like in your district.

But it also offers transparency and annual report on the State Water Board's website related to programs, performance metrics, and needs, which I never think is a bad idea.

It's not simply a feel good. It's really adding that transparency and then adding the cap. But I'd also like to, present our our witness, if I may, through the chair, on additional information.

I just wanna say oops. I just want to say

the Senator is correct. Prop two eighteen limits the ability of water systems to provide assistance to their customers and that's one of the reasons why we're here. Chromium six is a good example of how drinking water standards are created.

In fact, we went through two rounds of regulatory process to establish the drinking water standard for hexavalent chromium. And if you remember, this legislature actually required the state board to actually the Division of Drinking Water at the time to do that back in 2004.

So yes, it costs money for the state to run the drinking water program as required by the Safe Drinking Water Act. And part of the Safe Drinking Water Act is establishing health protective standards. And I know hex chrome is tough. We do everything.

I've been working on funding for safe drinking water for twenty five years and it's really hard, especially for small systems. That's one of the reasons why we worked with Senator Manning, our three cosponsors.

We're the cosponsors of the SAFER program, SB 200, back in 2019. And that program is really an important safety net for the smallest system. But, yes, there is a cost to providing safe drinking water and there is a cost to water systems.

But the main cost is that it costs a lot to maintain a system. It costs a lot to treat water that isn't perfectly clean. And it costs it's gonna cost more as we have to seek more water sources as climate change makes it more difficult to do both of those things.

I would also say we have our Chair here who is intimately involved as I was with proposition four a couple of years ago. $10 billion that the voters approved in 2024 to be able to provide upgrades for infrastructure for safe drinking water.

That was the whole premise of proposition four, which I think was really important and he worked extraordinarily on and we're grateful for. So but as been mentioned, so much more money needed. We all have failing infrastructure, but this needs to be prioritized.

So this provides the the administrative infrastructure for that as well.

And I actually appreciate through the Chair. I appreciate the transparency, connotes on it and the capping. But once again, the funding source. Right? And with with Chromium six, the standards much stricter than UN standards as far as the state of California goes.

So all of that, once again, well intended, but we have to understand that so many of our our water agencies are limited as to their funding especially locally. And I'm thinking of my rural areas on their end. So I would like to see if we're gonna do that.

My biggest concern is we don't have a funding source for this particular bill.

And moving forward, if we're going to require our water district to implement any standard per se, the state should pony up and actually provide the funding to to build that that infrastructure to be able to do that.

That's my biggest thing especially in our rural communities. That's that's all I'm saying. So but I do appreciate the components of the transferability and accountability

Component of the bill that I think we have to.

Yeah.

I think we say we are there are funds for this. The water districts would have to apply and there are funds to be able to apply for these water needs. So, you know, there's work we can do absolutely, but we'd love to continue working on that on behalf of Senator Menjivar.

And just to say that one of the part of the discussion we're having with the water agencies who are now in support is how we can look at affordability at both the individual household level and the system level because those are both two pieces of the puzzle.

And I appreciate what you're saying about standards, but maybe what we need to do is do more work on preventing contamination.

A big part of what the SAFER program is paying for is one two three TCP, which was an inert ingredient in pesticides that was banned twenty years ago, and now we're having to treat it because it's in people's wells.

So I think one problem is how do we prevent pollution that we then have to pay for? And I think that I agree with you that low income communities need help with their infrastructure and again, that's something that our sponsors have been working on for decades.

Alright. Let's entertain a motion, for the bill, moved by Senator Reyes. Any final thought closing thoughts?

I quickly ask for an Aye vote, Mr. Chair.

Okay. Thank you.

Thank you. Let's let's hold, let's have the vote on this measure, SB 1125 by Menjivar, moved by Senator Reyes. Secretary, please call the roll.

Due pass to appropriations committee. [Roll Call]

Okay. We will leave the role open for other folks to add on. Let's now go to Senator Padilla who's here. But unless you guys worked on me up? No?