Assembly Standing Committee on Utilities and Energy

Good afternoon, and welcome. I'm calling to order this hearing of the Assembly Committee on Utilities and Energy. We are here to discuss California's utility wildfire safety regime. Before we jump into the topic at hand, I have some brief housekeeping announcements. Public comment, comment will be welcome in person.

We'll have an opportunity for public comment at the end of our panel discussion. If you're unable to provide public comment here in person, you can submit your comments online via the committee website. And lastly, we will not accept disruptive behavior and will apply all Assembly rules in order to maintain order and run a fair hearing.

With that, last week, we were all reminded of why this work matters. As Santa Ana winds swept through Southern California and high winds hit the North, both SCE and PG&E cut power to more than 150,000 California customers. We saw fires break out in Malibu, Azusa, and Orange County where the Norte Fire damaged and destroyed homes near the city of San Clemente.

Our hots are getting hotter, our dries are getting drier, and our fire weather is getting harder and harder to manage. Following the devastating fires of 2017 and 2018, the Legislature constructed a new wildfire safety regime. Wildfire mitigation plans reviewed, reviewed by a new Office of Energy Infrastructure Safety, annual safety certificates, safety culture assessments, and a $21,000,000,000 wildfire fund, which SB 254 extended last year. The bargain was pretty simple.

Utilities that plan and carry out mitigation under state oversight earn a safety certificate, and that certificate gives them access to the wildfire fund and a presumption that they acted prudently.

And there has been real progress over the nearly decade since we enacted that construct. Reported utility ignitions in high fire threat districts fell by half in 2025. Utilities have hardened thousands of miles of lines and inspect far more frequently, finding hazards that they used to miss. But ratepayers have paid dearly for this progress. About $40,000,000,000 in authorized wildfire costs from 2019 to 2024 or roughly $250 to $490 a year for a typical California household.

In today's hearing, we're asking really three fundamental questions. First, has this safety regime sufficiently lowered the risk that utility equipment start a catastrophic fire here in California? Number two, are incentives appropriately aligned between California utilities and the customers that they, they serve as we are making and prioritizing these investments? And lastly, when a utility gets it wrong and a fire starts despite all of our best efforts, what accountability measures are in place and are these sufficient?

To answer these questions, we need a shared understanding of what success looks like so that regulators, utilities, and the public are all working toward the same goal. As a reminder, this hearing is a first in a series. Next Wednesday, this committee will examine the generational investments that California utilities are making today, how they're financed, and the financial strain that the state's climate risks are creating.

And on Thursday of next week, we will partner with our colleagues in the insurance committee to examine the fairest and lowest cost way to allocate wildfire segregation costs. That said, fast and fair victim compensation, statewide community wildfire mitigation efforts, and a statewide strategy, the wildfire fund's durability are also important topics and will also be examined in future discussions.

With that, I wanna thank our panelists for joining us today. Look forward to today's discussion, and would like to go ahead... Oh, before I welcome our panelists, I'll turn it over to my colleagues for any welcoming remarks. Alright. Alright.

Seeing and hearing none, we will go ahead and welcome our panelists, to the dais.

We are joined today by Forest Kaser, who is the director of the Office of Energy Infrastructure Safety, by Dr. Nathaniel Skinner, the deputy director of energy at the Public Advocates Office, Jill Anderson, the executive vice president and chief operating officer of Southern California Edison, Steve Poncelet, the public information officer and strategic affairs director at the Truckee Donner Public Utility District, and Dr. Ilkay Altintas, the chief data science officer and faculty fellow from the University of California at San Diego.

Once again, thank you all so much for joining us. This is a far reaching, complex, and challenging topic, and really look forward to your engagement and your perspectives as the committee digs into the questions before us. So I think we are going to begin with some opening comments from each of our panelists, and then we will open it up for questions and discussion with the committee.

I think we're beginning. Yes. Alright. So Mr. Kaser, welcome. Director Kaser, welcome.

Thank you.

Good afternoon, Chair Petrie-Norris and Assemblymember Harabedian. My name is Forest Kaser... of Energy Infrastructure Safety or Energy Safety, for short. I appreciate the opportunity to address you today. Energy Safety was created by the Legislature in 2019 in response to a series of catastrophic wildfires that took place in 2017 and 2018 following an extended multiyear drought, and science tells us that such droughts will likely become much more frequent occurrence in the future.

Energy Safety's primary objective is to ensure that electric utilities are reducing wildfire risk and adhering to their approved wildfire mitigation plans even as climate increases the risks. The statutory mechanisms we have to do that focus on continuous learning and changing behavior. Energy Safety reviews and can require changes in utilities' wildfire mitigation plans. We also evaluate how well utilities implement those plans, including sending inspectors into the field to assess the extent and the quality of utilities work, and we assess the safety culture of utility organizations.

As an incentive to participate in this approach, utilities that meet certain criteria, such as having an approved wildfire mitigation plan and having an executive compensation package that complies with certain statutory requirements, receive a certificate from Energy Safety.

This certificate requires the CPUC to presume an investor-owned utility acted reasonably when determining whether they have to repay the wildfire fund and caps what they have to repay. Where should I point this to make this work? There. Okay.

work? There. Okay.

Okay. Great. So if the fire agency having jurisdiction determines that a catastrophic wildfire was caused by investor-owned utility equipment, the utility faces a variety of potential consequences, including payment of damages due to the, due to California's strict liability standard for utilities, which would also apply to publicly-owned utilities, repayment of money received from the wildfire fund, payment of fines, compensation reductions, credit rating downgrades, which also applies to publicly-owned utilities, share price reductions, and criminal prosecution.

All of those consequences provide financial or criminal accountability and fall under the responsibility of other bodies.

Energy Safety has a different mission and a different approach. Energy Safety's primary objective is to drive behavioral change to reduce future wildfire risk. Potential consequences from Energy Safety include direct feedback to the utility on actions, to, to avoid starting another fire of the same type. If the utility does not take action to respond to their feedback, Energy Safety can and has denied utility's wildfire mitigation plan and could deny a certificate in future years. Okay.

So we have seen a lot of progress under the new framework as the Chair pointed out in her opening remarks. This slide shows the main categories of work that utilities do to reduce wildfire risk. As one example, all three large utilities have deployed weather dependent, sensitive protective device setting programs on 100% of the areas of highest utility wildfire risk in each utility's territory, which are called the High Fire Threat Districts. Ignitions of even the largest fires start very small.

Every inch covered by every mitigation installed is reducing some degree of risk.

In many cases, mitigations are layered so that if one mitigation fails, another mitigation is there to catch the problem and prevent a fire. Not shown in the slide are the less tangible but essential contributions to improve the quality and accuracy of fundamental utility work like inspections and maintenance, and culture change, which is the foundation for making everything else work. Together, these mitigations have and will continue to reduce the risk of utility caused catastrophic wildfires in California. But that risk is still not zero.

This slide shows utility ignitions from 2015 to 2025, which the Chair also mentioned in her remarks.

The lines show the trend of ignitions from each large IOU in the high fire threat districts. We see ignitions in the riskiest areas decreasing over time. The bump in 2024 coincided with historically high heat levels throughout the state, and ignitions outside the riskiest areas also went up. So the ultimate metric for success in utility wildfire mitigation is the number of catastrophic wildfires that have occurred. It is not economically possible to drive the number of wildfires to zero.

It is possible to drive catastrophic utility wildfires to zero, but utilities can't do that alone. There is too much risk embedded in the landscape outside the utility's control. Reducing catastrophic wildfires to zero requires the cooperation and collaborative participation of many entities and actors across the landscape outside the utility rights of way. The good news is that there is an overall downward trend in the number of catastrophic wildfires since the peak of nine in 2017.

The Eaton Fire in 2025 was a horrible, horrific exception to this trend, but 2023 and 2024 show us what is possible.

It is important to note that weather plays a major role in wildfire risk. Extended droughts, heat waves, abnormal precipitation, wind events, these factors all play outsized roles in affecting the risk. Weather related risks are increasing due to climate change, and the wildfire is front and center in that problem. We are essentially in a race with those risks. Wildfire risk will continue to increase for the foreseeable future, but if we act together collaboratively across the state and across sectors, we can stay ahead of that risk.

Thank you, and I look forward to your questions.

Thank you, Director. Dr. Skinner, thank you.

Good afternoon, Chairwoman Petrie-Norris and committee members. Thank you for the invitation to speak today. My name is Nathaniel Skinner, and I am here in my capacity as deputy director of energy for the Public Advocates Office. We represent ratepayers of investor-owned utilities and advocate for affordable, safe, and reliable service consistent with the state's environmental goals. Wildfire costs that are charged to rate payers include mitigation efforts such as undergrounding, covered conductor, and vegetation management; insurance, which is premiums or self-insurance.

Self-insurance, particularly for the larger utilities. As well as the wildfire fund, because the wildfire fund is a secondary source of insurance. And also, wildfire liability. So that is claims for damages after a wildfire, be it catastrophic or non-catastrophic, as well as the restoration cost to provide service again after a fire. Collectively, these charges comprise 14% or more of each large investor-owned utility's customer bill.

And those costs are growing. In 2019, wildfire related costs comprised about $500,000,000 of the costs and rates. Today, that number has increased to $9,000,000,000. That's an 18 fold increase in just five years. And that number is not expected to decrease.

In fact, by 2028, just two years from now, that 9,000,000,000 is expected to double yet again to 18,000,000,000. This unsustainable increase is now the single largest component impacting customers' bills. Regarding utility insurance, we've seen a similar scope of increases across all six investor-owned utilities. The ratepayer funding for insurance has increased over seven times from 200,000,000 in 2015 to 1,900,000,000 in 2025. Now, that is a mix of general insurance for everything from a car accident to a catastrophic wildfire.

About half of that is just for catastrophic wildfires. But we've gone from 200,000,000 in 2015 to 1,900,000,000 today. The pace of increase can be reduced if you choose, choose the right mitigations in the right locations. There are three primary sets of mitigations, each with their own costs and benefits. Undergrounding is the slowest and most expensive, but provides high risk reduction and high reliability.

However, costs around $3,000,000 per undergrounded mile, and it takes about one and a half or 1.2 times as much undergrounding mileage to remove an overhead mile. Covered conductor combined with fast trip still provides high risk reduction, sometimes even as high as undergrounding, and it costs about a million dollars per mile. And it can also improve reliability compared to bare overhead wire. And then lastly, there's public safety power shutoff or fast trip by itself. It's the default mitigation used today.

However, I do wanna note as Director Kaser did that, that has significant customer impacts. They can lose power for days at a time depending on the wind conditions and when power can start being restored. What does the $9,000,000,000 that ratepayers are paying for each year for wildfire mitigation? How does that show up in their bills? In residential rates, it's about $41 a month of every customer's bill for PG&E, $27 a month for Edison, and $21 a month for San Diego Gas and Electric.

Much of the focus has been around the three large utilities. However, for the smaller utilities, their ratepayers are almost entirely residential customers, and the impacts can be similarly catastrophic. And this we are seeing today for the smaller utilities as well. In conclusion, ratepayers can no longer afford to be the financial backstop for wildfires. And when a utility, a utility is linked to a wildfire, the ratepayers are the backstop.

First, continuing to shift costs on the ratepayers worsens the affordability and undermines the state's climate goals. This may seem obvious, but it's a crucial and everyday part of our advocacy. Second, keep holding the investor-owned utilities accountable. Shareholders do need to be held responsible when their managers fail. On that note, I would like to thank Chairwoman Petrie Norris for your leadership and authoring legislation that helps promote that utility accountability that we need.

Third, lowering financing costs associated with utilities' wildfire-related capital expenditures will deliver meaningful bill impact and relief to customers. And then lastly, helping keep the focus on the general rate case, which is and needs to be the primary vehicle for funding utility budgets to make sure that those budgets are reasonable or in other words, that they are safe, prudent, prioritized, and in the ratepayers' best interest. Thank you, and I welcome your questions.

Thank you. Ms. Anderson.

Thank you. Good afternoon, Chair and members of the committee. I'm Jill Anderson. I'm the chief operating officer for Southern California Edison. So we're here to talk about safety and wildfire safety, and that's not just an abstract policy conversation for us at Edison.

It is very personal. It is part of our mission in protecting the communities that we serve, in reducing risk, and in making sure that we are building back trust with our customers and the work that we do every day. Now I wanna start with the Eaton Fire because I think it's in large part why we're all here today. So back in January 2025, we had historic drought conditions. We had low humidity.

We had high winds, and we saw fires break out across California. And several of those became catastrophic very quickly. In the Eaton Fire, nineteen people lost their lives, and thousands more lost everything. And those are people... Those are Edison employees included.

Those were my neighbors and friends as my family and I live in the Altadena area. Now a few months ago, the Los Angeles County Fire report came out in cooperation with CAL FIRE, which found that Edison's equipment was associated with the ignition of the Eaton Fire. And by that time, that was not news. For months prior, we had already been saying that it was likely that our equipment may have been involved in the ignition at Eaton.

Even before the investigation report came out, we had already started paying hundreds of millions of dollars to our customers who suffered that terrible tragedy.

And there will be many more payouts through our wildfire recovery compensation program. Now I'm not here to tell you that we learned some important lessons from Eaton, and now we're moving on because we are not moving on. We can't, and I don't think any of us who've been involved ever will. It will always be part of who we are. We carry that responsibility with us as we work alongside the community in rebuilding.

But it's also what reinforces our belief that our work on safety and public safety is something that's never done. And so as we work to be safest operator as possible, we have to make sure that we are constantly learning, that we're approaching issues with humility, and that we are taking action when we know things need to change. But I also would agree with what Director Kaser said, which is that the risk of ignition from an electric system will never be zero.

It's not technically or financially feasible. And so it's important that we all are working together, listening and learning and acting so that we can minimize that risk as much as possible.

And to that end, we welcome our oversight and guidance that we get from regulators, Energy Safety, who you've heard from already, who's responsible for our wildfire mitigation plan, and making sure that we're accountable and constantly improving. We have the California Public Utilities Commission who has cost and broad regulatory oversight. Together, they hold utilities accountable, make sure that we are learning and we're getting better, and that we're meeting the commitments that we make.

And so I wanna summarize quickly what some of those commitments have been that Edison has achieved in the last... Really, back to 2018.

And it's not just the activities of the wildfire mitigation plan, but real meaningful outcomes. We have hardened now more than 85% of our highest risk circuits with covered conductor. That's more than 7,000 miles that we've deployed. We've done 100 miles of targeted undergrounding. We've trimmed or removed over 2,000,000 trees.

We've completed 1,900,000 equipment inspections. I mean, I could keep going, but it's not just about the activity. It's about reducing the ignitions that are happening in our highest risk areas, and we are seeing that. We've also invested in situational awareness with more than 2,000 new weather stations and 200 high definition cameras, and those benefit Edison, but also our public and fire safety partners in all kinds of fires regardless of the start. Now that's meaningful progress, but we know we have more work to do.

And, also, we know that even hardening, if you finish all of the hardening that we have planned, you are still going to, at times of extreme weather, need to temporarily de-energize the system to completely remove the ignition risk. And as Chair Petrie Norris mentioned in the beginning here, we had to do that last week. More than 100,000 Edison customers temporarily lost power when we had strong Santa Ana winds and red flag warnings in our area.

And when that happens, I spend time out in our customer resource centers personally. I was out there on Thursday and Friday, and I'm listening directly to customers about their experience and their feedback so that we can listen and learn and make changes in our public safety power shutoff programs.

We are targeting which circuits we're hardening next so that the ones that have had a lot of fatigue with repeat outages are avoid, are avoided in the future. We're helping our customers prepare for outages because they shouldn't assume they will have unlimited access to electricity under all weather conditions. And we have programs for our most vulnerable customers.

We work every day to minimize the impact and the likelihood of PSPS, and we are seeing that it will have a downward trend in future years while also making sure that we are prioritizing public safety.

So last thing I wanna say about our safety, public safety, and it's also something that Director Kaser mentioned, really starts with culture. And at Edison, we are continuously learning and improving and working on our safety culture. We're building a culture where our employees not only feel comfortable but feel obligated to speak up when they see something that needs to be addressed. We're building a culture where we learn as much from a near miss as we do from an actual event.

And the Eaton Fire has absolutely influenced our culture.

It's one where we now look at not just learning from events of the past and what experiences that we or other utilities have had, but we have to be looking for that event that has never happened before, that risk that could possibly be in the tail end of our analysis. But we know, as Eaton has shown us, that even those tail risks need to get managed.

So with that, I'll close just by saying that maybe zooming out a little bit, because what we're talking about here is so much bigger than Southern California Edison or even bigger than any one fire. And wildfires are risking the lives and the homes and the businesses of, of every Californian, making it more expensive to live here, more difficult to work here.

And we've seen utilities who've made important investments in reducing the likelihood of ignitions from their systems, and we've seen the state invest in suppression and help with fuel and forest management, but we will never get that risk to zero.

And once an ignition happens, it, either is going to be a nonevent and put out quickly, or it could turn into a catastrophe. And at that point, the utility really has no control over whether an ignition is turning into a catastrophe. It's dependent on weather. It's dependent on the homes and where they were built and how they were built and many other factors.

Yet it's the utility, like Dr. Skinner just said, it's the utility's customers who are bearing that financial risk. And those rates, as we are seeing, are gonna continue to go up as those risks are, continue to be unpredictable, and there's unlimited on the liability. And so as you consider the input you're getting from this hearing on safety and the future hearings that you have planned. We hope that you will reconvene.

We hope you will reconvene in a special session so that we can work together on a long term, a durable, and a permanent solution to wildfire liability. We have SB 254, which was... Or 1054 first, which was an important foundation, 254 then, which provided that near term stability. But we heard from the California Earthquake Authority's report earlier this year that neither are sufficient.

We need meaningful reform so that we can all collectively deliver on that affordability promise that the constituents here are counting on us to and that we can have a safe and reliable electric system that every Californian requires.

Thank you.

Thank you. Mr. Poncelet? Do you have a PowerPoint that they're loading up, I believe?

Do you have a PowerPoint that they're loading up, I believe?

Do you have a PowerPoint that they're loading up, I believe?

There we go. Thank you for your support. So Steven Poncelet, public information and strategic affairs director, Truckee Donner Public Utility District. That's our agenda on the next slide up there.

I'll skip through that to keep moving. Talk a little bit about who we are. We were established in 1927. We turn a 100 years old next year. Very excited about that.

Electric and water utility serving the greater Truckee area, about 16,000 customers, largely residential. We are locally elected board of directors, not for profit, community owned, public owned electric utility. We are cost of service based. And while we have seen significant cost pressures and wildfire mitigation costs, our rates do remain very competitive and stable in California. And we do operate in a mountainous environment that we all love, 14,500 feet.

Our system's built for the winter. Wildfire mitigation plans. Next slide, please. You guys know what's in there. Our plan is tailored to the unique situation faced by the greater Truckee community, and so tailored to our local situation.

Next slide, please. We call this one the money slide. It's a great slide for just summarizing what a WMP is and what's in there. And prevention, you have edge management, inspections, patrol system hardening, detection is your situational awareness in your modeling, and then protection are your devices, your one shot, your fast trip, and then ultimately, shutting down for wildfire safety. We also call it the money slide because this stuff costs a lot of money.

But it's a great one to get it out there. Next slide, please. For the early revisions of our WMP, we focused on veg management. We live in a forest, and mountains, and we took our budget from 350 k to over 2,500,000.

And if you strip out capital and purchase power, we're a $25,000,000 a year operating utility. So that's a significant investment, and we've seen big benefits from that. We had to rely on others early on, and we're transmission dependent of NV Energy, and they had modeled our area because their facilities come in. And then our sister California investor owned utility, Liberty Utilities, had also done a lot of work, and we've worked very well together to share all that information. Next slide, please.

Today, investments in situational awareness, we have Cloud Fire now. It's a model that was built largely by NV Energy, but it does, real time wildfire risk modeling and forecasting. We're installing gridware and grid scope line sensors that are giving us real time information even when our system is down, and we are still relying on collaboration. Significant investments in overhead system hardening for us, it's granite we're going through. So underground is very expensive.

Metal poles, cover conductors, and fiberglass cross arms have shown to give almost the same risk reduction for 20¢ on the dollar. Preemptive power shutoff is our version of PS PS. And we are moving towards Fastrip, but we require some controls to be able to automate that. And then everything we do is viewed through a lens of risk reduction and costs. Next slide, please.

Cloud Fire has really been a great tool for us. We've had it for a couple years now. It does real time and forecast fire 1 week out, and it breaks our four by 10 mile system into 40 weather zones and circuit zones. And that allows us to really target where we prioritize our investments, where we do our veg management, where we put that first steel pole, and where we put our line sensors.

It also informs our preemptive power shutoff, and that model in the composite risk index that it uses is the same used by NV Energy and by Liberty and by PG and E over the summit.

So it allows us to talk in a common language when we're sharing information during events. Next slide, please. Preemptive power shutoff, it's a local and appropriate version of PSPS. And, like, you know, we're never gonna reduce the risk, and it's been shown there are situations where we just need to shut it off. We'll almost certainly be shut off at the transmission level first, but we have the ability to do it locally and sectionalize it.

Next slide, please. What I kinda really wanna talk about is the holistic approach. SB 258 was very clear. You have to deal with hardening. You have to deal with defensible space.

You have to deal with turning a $20,000,000,000 fire into a $10,000,000,000 fire fire because you dealt with fuels and you dealt with the built environment. We have partnerships. Our local community did a Measure t through Truckee Fire, funded measures. We had a 150 acre parcel next to a private property. We got together and did all 300 acres together in collaboration with Measure t.

You need that kind of work, and we're very tight with CAL FIRE, with Tahoe National Forest, Cal OES, and the local, fires, and then partnerships. NV Energy does a weekly briefing every Wednesday morning during fire season, and they lay out all the risks and the forecasts. Everybody talks about are we in fast trip or not? Are we potentially communicating for de energization? And then final slide, please.

In terms of opportunities and risks, you know, we're a small utility. Public power collaborates through NCPA and CMUA and other groups. We gotta do that. We need to address the costs and the risks that are out there. We are funding out of rates.

Our sort... Our access to state funds is very limited. Unfunded state mandates really hit us in what we can do. The law making us pay apprentice lineman wages for a veg management took 20% out of what we could do every year, and that's just a fact. And then we are demonstrating effective and responsible mitigation.

We're doing it community wide because we live in these communities. Strict liability must be addressed if you wanna address affordability. You're never gonna get there without it, and we're here to help. And, you know, local decision making and collaboration has worked very well, and we appreciate your support. Thank you.

Thank you. And last, doctor Altennis. Welcome.

Hello. Good afternoon, Chair and the members of the committee. I can probably do this. Thank you. I'll have some slides.

My remarks today will be about the interoperability layer that we can build around our solutions and our investments in this space and how that can enable an innovation infrastructure going forward. I'm Ilkay Altuntas. I lead a lab called societal computing and innovation lab at UC San Diego. And somehow it's not moving. Maybe I'll give this one to you.

That was a good idea. Thank you. Yes. The societal computer... Competing and innovation lab advances scalable solutions for complex societal challenges, which wildfire is one.

And I want to talk about the wildfire program and especially a success story in the Wi Fi program to make a point of what's possible when we actually collectively work together cross sector innovations and solutions and what can enable this. Wi Fi program had in the past an investment that was actually legislated by Chair called FIRIS. And it was wrapped in as a scientific solution and a usable tool infrastructure into a statewide program for aircraft intelligence integration with these models.

And first, since 2018, forwards from a Southern California pilot to a state program. And my team at the UC San Diego works with Cal OES to model every fire, every ignition, in California.

And, these models which was, for instance, in two thousand... Twenty twenty five, we had 15,000 ignitions alert that were evaluated through the fusion center and about 1,200 of these were communicated through Hell OES with everyone. So we were able to, through this program, democratize access to these models and aircraft intelligence together with a communication structure, a governance structure around this for trustworthy dissemination of information. So what did we learn here?

We learned that we need to enable collective capacity and we also enable a digital infrastructure that enables that collective capacity to innovate together.

So Wildfire Science and Technology Commons was a congressional redirect funded through the support of Senator Padilla and a few of our representatives in D. C. It was funded through NEST. It started... It revamped the platform.

Again, in a couple of years' time, it's become a program that now we have a concept called California Wildfire Commons that integrates the state investments into this interoperability layer so we can actually make sure these investments can actually be useful in innovations and solutions going forward. What would this mean for the utility and energy safety? This means actually we can bring many of the state's investments in wildfire safety onto one platform to federate, not integrate. And we need...

We can then make them interoperable with each other and we can make them discoverable and accessible.

So many solutions can be built to actually increase the value and capacity of these investments. And downstream, the opportunity is by making them shared, we create innovations that enable us in the resilience, affordability, and science and AI readiness of the utility safety infrastructure and the collective learning. So this approach also is rooted in economical theory of award like the Nobel Prize winning theory of the commons of doctor Ostrom on communities to sustainably manage common pool resources.

So this actually goes from this compliance to collective learning and collective capacity building. And so what we have today is can we measure what utilities are doing?

For the most part, yes. Largely, we are able to measure what the utilities are doing. Can we independently determine what works, where, and at what cost? I think we have parts of this in place, but this needs comparable evidence. This needs transparency, and this needs also documented assumptions, reproducible methods which call out for these more open platforms that we can actually transparently share.

Not maybe everything in there, but the methods and also the products that come out of these methods in ways we can provide that evidence. And what the gap is is can we then learn from these big investments especially with larger utilities and make sure those investments actually can be a learning opportunity for the smaller public utilities and help with their affordability crisis. And make sure we can actually bring these learnings into a platform that others can learn from.

So this is where a commons extends today's regime which would be absolutely useful to carry the ball forward. What is not a commons, let's start with that.

It's not a centralized repository. It's federated. It's also not a mandate to push sensitive data. It's actually way to steward data by the owners by... While they retain ownership and control of those operational systems, but be able to share what can be shared in a way they govern and steward how that's being shared.

And it's also not another proprietary pro... Platform. We are talking about a public platform here that could be actually maintained through the collective and stewarded through the collective, extending the existing California Wildfire Commons by everyone's investments. And if anyone can actually add to it and, you know, leave it one step further than they found it, that's where the commons become... This model becomes really important.

So we are talking about tiered access, public approved controlled assets and how this could be governed. And we are really talking about the type of technical capacity we know how to build, both in the state, in research space and also in private platforms. This federated digital assets and capabilities govern through a trust and governance fabric and making sure everyone who wants to and can contribute can contribute in a safe, secure and well stewarded way is what we are talking about here.

So the five principles here in that sense would be the public interest stewardship, interoperability over centralization, governance as an enabler not as a blocker, measured effectiveness, and also scientific accountability. We can have all of these in one platform if we collectively work towards it and put our heads together.

Lastly, I think there is a phase path towards a commons built on the existing Wildfire Science and Technology Commons and the California Wildfire Commons concept. We can start with picking inventory of what exists and create again pilots of what this would look like in a stakeholder, governance fashion and define access tier standards and evaluate that progress and launch a version of a federated commons that we can learn from and expand over time, which is exactly what happened in the virus program. We are still learning.

We are still expanding, but that underlying infrastructure and that democratization approach of everyone having access to technology and models holds. Thank you very much.

Thank you. Alright. We'll go ahead and open it up for some some questions now. I'm just gonna start with one and then open it up for my colleague. So I think I just wanna...

Before we dive into any more questions, just make sure that we walk away, I think, with a shared understanding of what success looks like. You know, what goals are we shooting for and how do we know if we're getting there? I think a couple of you, you know, pulling on a thread from a couple of comments that were made in your opening remarks.

I know Mister Kaiser or director Kaiser, you said that it's not a realistic goal for us to get, wildfire to zero, but it is a realistic and it should be the goal of California to get catastrophic utility wildfires to zero. Miss Anderson, I think I heard you, echo that.

So is what I just said, is that is that our goal? Is that our North Star? And does everyone agree? Got it. Okay.

So then follow-up question, and I'll start, Mister Kayser, with you, is how do we how do we measure if we're actually starting to get there beyond ignitions? You know, is there any other metric that you at the Office of Energy Infrastructure Safety are tracking as part of how you are evaluating whether or not these investments and these safety plans are actually delivering.

Yeah. Thank you very much for that question. And, you know, I think this continues to be something that we are actively working on. What is the right metric short of the fire itself? So we do have detailed tracking that we perform currently.

So utilities submit wildfire mitigation plans to us. They make commitments in those plans for what their targets are that are customized to their specific territories and their specific strategic goals. We track each one of those, and we send inspectors out into the field, and we measure whether or not they are meeting those commitments that they put forward in their wildfire mitigation plan. So that is that is a current practice, and that's when we plan to continue.

But I think that there is room for, you know, growth and improvement in that area as well to better relate the effectiveness of those individual actions to the overall amount of risk reduction.

You know, I think there's there's maybe an underappreciated factor here, which is that there's still a lot we don't understand about wildfire risk. Risk modeling, you know, is is is still a a nascent sort of practice in science. And so, we have to be a little bit humble as we move forward about, you know, how certain are the signals we get from our risk models, you know, how sure are we that something that we think reduced risk, really did.

And so I think that's an area of ongoing, I think, hopefully, collaborative research across utilities and with academia to try to figure out. And one thing that, you know, I think really proud of from our organization is that we have tried to sponsor those kinds of collaborative, activities.

We've asked utilities on numerous occasions to get together and do joint white papers on things like, the effectiveness of enhanced clearances in vegetation management, the effectiveness of covered conductors in reducing fire risk. So, definitely, encourage that sort of collaborative approach to coming up with shared understandings about how to measure these things.

I have a follow-up question. But before I ask you, any other... Any comments on that from any of of our panelists? Mister... Or doctor Skinner.

Thank you. I think, really, as we're looking at leading indicators Versus the lagging. Because the lagging is either an ignition that could have been or ended up in an ignition. One of the things that we look at is how good is the weather forecasting accuracy down to the circuit. Because if the better the forecasting accuracy, and I know sometimes our utilities have even done more accurate longer term forecasting than the weather service has been able to.

Then we know, okay, is it built now to be able to withstand that wind? Do we turn on fast trip as a protective measure just in case? Or do we do public safety power shutoff because we're seeing winds that are well exceeding, how well the system has been designed to handle those winds? I think also is where do things seem to peak? Where are things moving slowly versus where are they getting sticky when we look at, you know, public safety power shutoffs?

I know as part of the background, our report was cited last year. And one of the things that unfortunately has still stayed stuck for Edison a little bit is that public safety power shut off, forecast accuracy. We've looked specifically at the notification time frame so that the most vulnerable customers have a chance to get somewhere with electricity. That just seems to have been an issue that sometimes we're stuck. PG and E was stuck there for years and finally has gotten better.

Trying to understand why. Do we not have enough weather sensors in the right locations? Do we not have the right computer models? Things that can help understand because certainly, the coastal geography of California is incredibly hard to model and figure out what the wind speeds are gonna be in those areas. And that's where we've tend to have some of the most catastrophic fires ignite.

And then, I think lastly throughout all of this is, are we seeing rates starting to at least flatten? I'm not so optimistic at this point to say decrease. We'd love to get there. But if we can at least see ourselves going from 9,000,000,000 this year on investment, not to 18,000,000,000 in two years because we figured out the right mitigations at the right pace and the right places. So maybe it's only 12,000,000 and 2...

12,000,000,000 in two years, and then maybe we start slowly coming down once the infrastructure is hard.

And I would just add picking up on the kind of affordability part of the answer there. We got reviewed by S and P after the LA fires. We were one of seven PAUs in a high fire threat area that got to go through that. And while their response was, wow, you're doing a great job and this is great, we had x miles in the high fire threat and it was x years to get rid of it, and they downgraded us.

Because we did such a good job, they moved us from negative outlook to stable, but everything we do in the future now costs more money.

So what's one measure of success that the rating agencies believe that the risk reduction is real and they're willing to then give the corresponding rating and the financial benefit that needs to come with these investments? Insurance is the exact same thing. Another benefit of success is we could actually get insurance that's not, you know, a million bucks for a million bucks. And if we saw those markets actually engage, you would try to see it.

So the comment that the models need to get better, I agree, but they're ten years into them.

They're pretty sophisticated. And at some point, we need to say, I spent this many million dollars. I got this much risk reduction, and please adjust my bonding and insurance rates effectively to reflect that. If that started to happen, then we could bond against that future cost reduction, and we could raise money. And all kinds of markets could come in and serve us, but that doesn't exist in California today.

Alright. Thank you. I'm gonna have a couple follow ups based on that. But just coming back to Mister... Or sorry, Director Kayser.

So I think one thing that is incredibly important for us as policy makers and for the constituents that we represent is that these wildfire mitigation plans and the entire process that we've designed around this is real and that it's meaningful. And so... And not just, you know, some spectacular exercise in bureaucracy. Right? So I I have a couple of questions along that vein.

So let's see. Alright. You approved... Okay. Energy safety.

You approved SE's 2026 and to 2028 wildfire mitigation plan while noting that said plan did not include any lessons learned from the January 2025 fires. That struck all of us as a little odd. Should a plan be approvable after a catastrophic ignition in the absence of lessons learned and an after action analysis?

Yeah. Thank you very much for that question. So one of the challenge... One of the logistical challenges that we face with... When there's an actual catastrophic wildfire event and what Energy Safety's response to that event might be is that there can be significant timing lag.

So normally, we are approving a plan, and then a fire happens, you know, after that approval, and and we don't necessarily know what the cause of that fire was before we have another plan before us to approve. Now that could change. The 254... SB 254 changes the frequency that utilities file plans. So it used to be, you know, every year, and now it's gonna be every four years coincident with the filing of the general rate case at the CPUC.

So that could change things, but, historically, has been very challenging to get accurate information about exactly what caused a fire in a timely fashion. So that really affects our ability to incorporate information into the next year's consideration of a WMP. Even when we have that information, it... There is kind of a a question for us. You know, when when you deny a plan, now the utility is no...

You no longer have traction on that utility in terms of when you... When you... When they've approved when you've approved a plan, you're following up on that plan. You're sending inspectors out into the field. You're checking to see whether they're making progress against the commitments that they made.

If there's no plan to approve, you have nothing to check. So in some ways, not approving a plan doesn't necessarily, lead to improving behavior and improving performance, and that is our North Star. That is what we are focused on. So I hope that provides some context into the considerations that go into that decision. I guess one thing I would add is that it's it's also, you know, a fact specific decision.

Like, we wouldn't by categorically make a denial or approval decision just based on one particular event. So we're looking at the totality of everything that the utility is doing, both, you know, going forward and not not looking back. We're looking at what are they planning to do to make the system more safe in the future, and we look at the totality of the facts in that plan approval year.

So so just a couple of reactions, and I would... I'll I'll first say that, yes, that is, I think, useful context for helping me understand, I guess, why we would have an approved wildfire mitigation plan while at the same time, you know, comment noting that there was not lessons learned incorporated. I think, again, sort of just big picture context.

I think we've got to make sure that the, you know, the constructs that we design as part of the legislative process and the regulatory process that they still pass the common sense test. Right?

And if we let those... These things out into the wild and you kinda look at how how they're unfolding and they don't, there's an opportunity for us to refine that and make it make sense. Right? And make it make sense for normal people.

So I'll sort of put that out there, I think, as both a follow-up, you know, for for my team and Aye, but also as an offer for us to to make sure that if there's timing issues or, oh, gosh, we we have to approve all of these plans because otherwise, we're worried that, you know, that denying them is worse.

Like, let's figure out some interim state or something where you'd still have oversight, but perhaps it's a... You're in a revision process or something. I think we can can solve for some of that. Because in a similar in a similar thing that sort of at least on its face, doesn't pass, like, the common sense question is... And maybe Aye...

I'm not sure that we understood this correctly, so please provide context on this as well. So SCE's 2024 safety culture store... Scores rose to their highest level, Yet, energy safety questioned in in your energy safety 2024 safety culture assessment for SCE. Energy safety questioned SCE seriousness about the assessment. And so once again, like, what what should an assessment have to show before a sort of certificate is issued?

Yeah. The certificate process is a very particular and specific process that is unlike the wildfire mitigation plan review. So wildfire mitigation plan review and implementation performance assessment, we have, significantly greater degrees of freedom to go in and and really dive into the details and look at the quality of the submittal, the quality of the implementation in the field.

With the certificate process, there is a very specific list of, requirements and the utility that provides documentation of compliance with those requirements, the statutory language requires energy safety to approve that certificate.

Okay. So Aye... There again, it feels like perhaps there's an opportunity for us to work together to strengthen that process and make that make that more robust. So that's why we're here, to identify opportunities to keep making progress. So thank you.

I will have a couple other questions. But before I jump into those, Assembly member.

Thank you. Madam Chair, thank you for doing this. I just wanna, applaud your efforts as always to, talk about these big issues and have these oversight hearings. We've been doing them since I joined this committee, less than two years ago. Certainly not the first time we're talking about these issues.

Certainly not the last time. But I just wanna thank you for your leadership. I wanna thank the staff for, an incredibly robust, thoughtful, and detailed background paper leading up to this hearing. And I think anyone who actually read it, hopefully everyone here, learned a lot and also learned at just how imperfect the system that we are working within is. And I can say that because I didn't create it.

So I'm very lucky enough to come to this as a new member, having lived through my district, you know, having lived through the Eaton Fire. And now with that experience saying, we are obviously still in a work in progress moment from 2017 to today. And today is really about trying to figure out what is working as the Chair said, what isn't working, and where do we go from here.

So let me start with one, I think, very apparent, inherent conflict within the system that we have set up through 1054 and a number of different bills, and that is the role that energy safety has with the WMP versus the CPUC with the ramp. And I find it startling that it seems as though energy safety has much less of a role to play in what is getting done on the wildfire mitigation side than the PUC via the WMP and the CPUC ramp process.

It seems as though if you look at the outcomes and not the inputs, a lot of the work that is getting done is being driven by the ramp, and it's being driven by the rate case. And that makes sense. I mean, it makes sense to me because, obviously, a lot of the financial incentives to do the work are going to drive what work is being done. And so, Mister Kayser, let me start with you.

Have we set up a system here where your office and the WMP and the safety certificate process is effectively taking a back seat to the PUC's rate case process and the ramp?

Yeah. Thank you very much for that question. I I would just directly say no. I I don't think that's the case. I think I can, definitely understand where you're coming from on that.

I think, especially if you look at the higher capital cost projects, undergrounding and cover conductors, you can point to past GRC decisions where you saw a change from what was in the WMP, the energy safety approved, and then what ultimately got approved for funding in the GRC. So if you zero in on those specific types of investments, you know, I can I can see what you're saying? I will...

So I do think, though, that there's a whole range of other activities that are happening that don't involve those specific capital investments that are very meaningful and very important for reducing risk. And, doctor Skinner referred to some of them.

I mentioned some of them in my comments as well. So operational activities like PSPS, EPSS, sensors, cameras, changes to procedures, better, inspections, quality control, quality assurance activities, all of those sort of blocking and tackling fundamentals of running an electrical system are extremely important for keeping risk low and especially affordably. So, all of those activities, I would say, energy safety is at the front line of, and our inspectors out in the field are looking at very directly. Vegetation management is another example.

We have a whole team within energy safety that is specifically looking at, excuse me, vegetation management practices of utilities.

We recently issued some findings on a study that shows that enhanced clearances really do make a difference. And so I think in in numerous ways, energy safety is taking the lead across the entire range of of WMP activities, and it it is very much, meant to be a collaborative process with the CPUC. And I think, again, going back to 254, that set up a process that has the potential to be much more streamlined and much more coherent.

So instead of having two processes that are running in parallel at different... With different timing, now you have the WMP feeding directly into the GRC so that everything can be considered together.

And I'll note that the the California Public Utilities Commission does have an open rate case plan proceeding where this issue of coordination and alignment between the two organizations is explicitly called out as a scoping issue. So we're really looking forward to working closely and collaboratively with the commission and stakeholders to figure out a way to make sure that that is working as well as possible.

I appreciate that. And I I wanna open it up, especially for miss Anderson from Edison to to address that. And I think that the utilities are are in a sort of precarious situation with energy safety, with the PUC, with the rate case. And I do think that the...

There have been statements and evidence from each of the IUs that have said a lot of times their investments are being driven, oftentimes not by the highest risk areas that they need to address, but but rather by the rate case.

And I and I think that that is an issue. And I think that it is actually affecting the WMP, and it's affecting the mitigation plans because of kind of this dual agency action and really three pieces that are trying to put this puzzle together. So miss Anderson, do you wanna comment on that?

I would say we also welcome the opportunity to streamline the process and make sure the timing is more aligned as director Kayser was talking earlier. We we also don't wait for these processes or these these rate... Whether it's the rate case or the WMP, if we know something needs to get done, then we'll do it. And so when we were talking earlier, Chair Petrie Norris asked about Edison not including lessons learned from the Eaton Fire in the plan.

A lot of that plan was was written before the Eaton Fire happened, and so just that's the nature of the timing.

But once we realized that we had an unmitigated risk or a risk that we needed to to learn from the potential that the ignition had happened from a grounded transmission line, which had never happened before, we started putting on additional grounds. We changed our inspection practices so that we could reduce that risk. We didn't wait for a plan or a rate case to do that.

So while I do agree there's opportunity for us to be more efficient in the process and maybe evaluate something once where we're looking at both the risk spend efficiency and, ultimately, the affordability impacts to the customer, we also are gonna need those degrees of freedom to be able to do things in year once we learn something so that we're not waiting for that process.

And I I think that's a great point. And I I think that there is obviously a huge difference from the POUs and the IOUs in how they approach this. And I think that on one side, you really have more freedom with the POUs and how they're approaching this and a lot less freedom by the IOUs. And I think it does call into question the safety regime that we have set up. And so I will...

I'm just gonna throw it to the panel and anyone can weigh in. Does what we're doing make any sense? I have a wildfire, you know, a energy safety that is issuing certificates that have rated certain IOUs the highest that they've ever been rated the same year that they're starting catastrophic fires. That's one data point that just says, I think that what we're doing probably can be improved.

And you also have other data showing that we're tracking things like inputs and other things while we're really not getting to, the question of are we safer.

And, and so, you know, to take a step back, what what needs to be improved? And I wanna hear from all voices here. I think that there is a shocking lack of innovation that we are deploying... That can be deployed in a must... Much more cost effective way.

You know, if one of the inputs is how many billions of dollars we're spending, we're not measuring this correctly. Because, obviously, we can spend billions and billions of dollars in not a very efficient way, and that doesn't mean we're safer. So with all that, what do we need to do to actually not only streamline the process, but make it actually work so that we have objective safety and not just kind of an input based system which we sort of have now?

Yeah. No. I I greatly appreciate that question. And, you know, I think I will go back to actually some of the comments of, my fellow panelist and also that I mentioned and and talk about the need for shared data. So that's one of the challenges, I think, again, an underappreciated aspect of of the system is that there's a lot that we still don't know.

I mean, there are so many different individual components in an electric system. There there are just hundreds or thousands, and we don't know how each of the... Each one of them can fail and how that failure could then lead to ignition. There... There's actually a lot that's unknown.

So having a system for being able to share data, that is standardized and and shared across as broad, number of utilities as possible, gives us more data to be able to do better analytics, make better inferences, and be able to be predictive about what's gonna fail and when it's gonna fail. In in terms of innovation, I mean, what...

That's actually one of the areas I'm most excited about right now is you are seeing innovation in sensing and taking advantage of equipment that's already installed on systems to identify patterns, electromagnetic signatures for potential future failures. And and that's the kind of thing that could potentially allow us to... Or allow utilities to go in and, fix problems, before they become ignitions and before they become fires.

And I think that the ability of large and small POU and IOU operations could be greatly improved with greater data sharing. This is one of the recommendations that we made and submitted aSBart of the SB 254 report process, so you can read more detail there. But definitely, that would be something that would need to be developed, collaboratively across multiple entities. There's there's a second aspect of of this.

So there's data sharing on just a regular sort of near miss basis, like what what information are you seeing right before some piece of equipment fails, or what do you see associated with an outage or ignition.

So that sort of normal course data sharing that I think can be extremely helpful and lead to cost effective solutions. There's also post incident data sharing. So when there's been a fire, you know, other agencies, not Energy Safety, take the lead on finding out, you know, what happened in that fire. And it can take, you know, quite some time before the information, finds its way to us or to the the general public or to other utilities.

So, you know, you have other models out there like NTSB investigates, accidents involving, you know, aircraft or gas pipelines.

We don't have a similar system where you have an independent body that goes in and just collects facts that can then be used by whatever party for whatever purpose, whether that's enforcement, which is not us, or finding the root cause and identifying ways to encourage utilities to change their behavior to prevent that fire from happening again. So bottom line, I think the data sharing piece on both a normal course and an incident basis, could be very helpful.

Thank you, Assemblymember. I wanna start first with, I'm glad to see that Energy Safety and the Public Utilities Commission, as part of the SB 254 process launched a joint workshop earlier this year. We expect that collaboration to continue because there has been disalignment between particularly the timing of the wildfire mitigation plans and the risk assessment mitigation phase going into the GRC.

Regarding your question about waiting between the two, part of what we've seen on our end of the public advocate's office is that the wildfire mitigation plan is really truly more of a plan. We can go in there.

Energy safety is required. What circuits is the utility working on, planning to work on over the next couple of years? You will never get that level of detail in the general rate case or through the risk assessment mitigation phase. Because really, those are programmatic areas. Really, we don't want the commission dictating every last piece of work that the utility does.

Wouldn't be appropriate for the commission. It doesn't have the resources and it takes away the agency from the utility to do the right thing. And really, it gets down to some of this just takes a long time. I was one of the first people working on the risk assessment mitigation phase. I hate to say it.

It was twelve years ago. I think, I'm the last one still standing who worked on the original one. And at the time, I told everybody who was working on it, it will take us at least a decade to get this right. And the public advocates office was nobody agreed with us at that point in time. It really took about a decade to get that right.

The wildfire mitigation plans are moving a lot more quickly. The ways that they're starting and will hopefully continue to interact with the risk assessment mitigation phase will hopefully go a lot more smoothly. But it really comes down to that difference of one of them is a plan. So it will be more specific, more measurable. We saw some of that interaction in PG and E's previous general rate case where PG and E wanted a lot more mileage.

We looked at the risk data. We criticized it as being done exactly as you said, not in the riskiest areas. We've looked at the more recent models. The good news is a lot more of it is indeed being targeted in the higher risk areas exactly where it does make sense to target undergrounding. Other utilities such as Edison, went with a different approach, which was covered conductor almost everywhere first, which isn't quite as good as undergrounding.

But on the other hand, when we look at the numbers, Edison, thousands of miles have been done with covered conductor. Now, their targeted undergrounding is hitting some of the riskiest areas. PG and E, we've still got 17,000 miles without a plan to Harden. And so, it's gonna be stuck with public safety power shut off or fast trip until they get through the undergrounding side. They are doing some covered conductor as well.

But we're seeing different approaches work out. Both utilities have had catastrophic fires. And I really just want to agree with Director Forrest that... Or Director Kayser that it can take a long time to get the results of fire investigations. And even having a summary a lot quicker of the proximal cause can really help those of us on the safety side try to figure out what's going on.

We have definitely seen transmission failures that ignited the wildfires, the Kincade Fire, certainly, the Camp Fire. But having a circuit that was de energized, especially a transmission circuit ignite a wildfire is a fairly new one. There's not a lot of literature or other things out there. And so, that can then take a bit longer to try to find out what was the cause exactly the point of so that money doesn't get spent in areas.

If this really is one specific circuit configured in a certain way, if we spend tens, hundreds, billions of rate payer dollars fixing something, if it ends up being just that one circuit happened to be done in just the right way under just the right conditions, we fix mitigate that one circuit.

On the other hand, this issue as we get through it could be a lot larger. And then maybe we do need to look at putting rate payer resources towards addressing it if it is a bigger threat. Just unfortunately, that can take a while to really understand on a utility system because they're measured in hundreds of thousands of miles of wire. And that's just a lot of hooks, towers, poles, and conductor that has to be worked on and assessed.

I agree with the comments of the panelists so far. So let me add something that hasn't been brought up yet. And I think an opportunity that we have is really on permitting. So I think the Assembly member, you talked about what's... You know, the opportunity here between energy safety and CPUC and the utilities.

And we certainly can better streamline, and we are encouraged by SB 254 that gets us pointed in that direction. But our plans are only as good as what can be executed. And so we still have a lot of opportunity with other agencies, both state and federal, to get in... Get aligned and support these plans because there are trees that aren't getting trimmed, cover conductor that's not getting strong, or undergrounding that's not being dug because we have challenges getting the permitting.

I have a lot more...

I'm gonna do one more thing, and then we can... Yeah. Let's go back and forth here. The... Kind of following up on a few of the comments that were just made.

I do think that it it seems as though we were focused heavily from a dollar standpoint and a time standpoint on distribution for forever, really. And that's where most of the resources for the IOUs were going. I'm not sure about the POUs because they obviously probably have much less transmission versus distribution. But I guess what happened and how did it catch us?

So, I mean, it it caught up to us that there very quickly where we're spending a couple million dollars a year on mitigation for transmission and billions of dollars a year on distribution, and we have Kinkade, Camp, and Eaton all being started by transmission.

And one sort of the common sense theory or test that the Chair was talking about, that just doesn't make a lot of sense to me that we're putting literally, like, one one hundredth of the investment into transmission when we've had three catastrophic fires now started by transmission. And so, you know, what what am I missing? Why are the fire experts within the IOUs and within the agencies not... Why didn't they flag this earlier?

And why weren't we investing more or forcing the investments more on the transmission side so that maybe we would have not had these fires started by transmission.

And Mister Skinner, you just, I think, answered part of it, which is maybe it's just this one off sort of black swan moment that really had nothing to do with the inherent risk of the transmission. But as we get more and more transmission fires, that seems less likely to me. So why did this catch us flat footed?

Part of it as you mentioned Assemblymember is when we look at those three wildfires, there's three different causes. Two of them, I should say one of them, very well known with the Kinkade ignition, piece of equipment came loose, touched another wire, ignited a wildfire. You can see that across any kind of infrastructure similar to the kind of ignitions that we had back in San Diego in 2007.

When we look at the Camp Fire, that was a piece of equipment that frankly needed somebody climbing towers to look at. How is our equipment up there?

Looking at it from the ground, wouldn't have caught it. Same problem with the Kincaid fire is that the piece of equipment that failed was hidden behind a steel span. No way for anybody short of climbing that tower to look behind it. So it's really those two fires when we look at it. It was a matter of inspections not having enough diligence.

These things could have been seen, could have been prevented. You know, both of those two fires, I'm calling out in particular because the conditions existed for well over a decade that could have and should have been remediated. I have tried looking at the literature for the kind of ignition that resulted in the Eaton fire based on what we've been able to see. And we won't start our analysis as the public advocate's office for another couple of years in full until the cost recovery application comes in.

We find out what the commission's fire report alongside, the Los Angeles fire report looks like.

I have not been able to find much of any literature around this particular kind of ignition. So two of them were just simple flat out routine maintenance and inspection failure. The Eaton fire, I don't quite know enough. Our office won't know till we really dig in. When we compare that to what we see igniting typically distribution fires, those poles in this conductor are a lot lower.

A lot of times, it's tree strike. It's that kind of mechanical failure. And so, some of it could very well be that it's bias. We understand exactly how this happened. We know why it happens.

We've seen it happen time and time again. So, you put focus on it particularly given the impacts of climate change and the rate of spread. Because we've had these distribution circuits throughout California for decades. And we have typically seen very few catastrophic fires. Only in the last decade, two decades, if we go back to San Diego, have we seen it be this level of catastrophic fire.

And it's being fueled in part by climate change. We have seen transmission ignitions. Those have been some of the most single devastating fires we've had. But in terms of overall frequency, it's a much lower proportion. Not to say that we don't need to all collectively sharpen our pencils.

Try to see, are these really just things that we're missing seeing? Have we just black swan events, too much attention focused on other areas? Or is there some underlying pattern to this that we're missing? That I certainly know we're all gonna be looking at through the wildfire mitigation plans. Because to my mind, especially in the high threat fire areas and next to it, that's really the advantage that it provides over the risk assessment mitigation phase.

Is that it is focused on one thing and one thing only, which is how do we reduce and get to zero or as close to zero as we can for catastrophic wildfires? When we look at the broader risk assessment mitigation phase, there's 30 risks on there. You've got... And if, in my slide deck, if you have a copy appendix page two, there's a layout, pulls out an example from San Diego. They're looking at earthquakes, dam failures, electrical distribution, wildfires, certainly the top of the list.

But there's everything on there including release of nuclear fuel at a nuclear power plant. And so just to close the loop on that piece is it's really making sure is the utility looking holistically at risk? Do they have mitigations that make sense? And then that funnels into their GRC planting. The WMP is much more directive, looks at transmission distribution, kind of the whole nine yards, but much more specifically.

But certainly, would agree that looking more into transmission is something because we've had three fires now linked to transmission equipment.

Yeah. I mean, I guess, I think, I definitely agree with many of the statements that Doctor Skinner made. I think, you know, there is a challenge of the unknown unknowns. Right? There is the challenge of what don't we know on the system that could pose a problem in the future, and how do we get at that?

And again, not to be too repetitive here, but you know, collaboration with academia and thinking through, like how how do we think about those unknown factors? It you know, it can be a challenge. I mean, I just point back to 2012 when as a state, it was not commonly thought that wildfire risk was a major problem for Northern California. We thought it was a Southern California specific challenge, and that was commonly shared.

I mean, you can look at public record on this, CPC docket, and that was commonly understood kind of State of Affairs. And we just didn't know at that time just how bad that risk actually was. It was lying there waiting for us, and we just didn't see it. Is there a way to kinda pierce that veil for other types of risks? I don't know.

But I think it's a question very much, I think, worth asking and trying to see if we can make any progress on. I will note that after the Eden Fire, we have issued requests to the utilities in their next WMP to document the transmission assets and the risks of the transmission assets. So I'll also agree with the notion that, Hey. Maybe this is something we weren't paying as much attention to, but let's make sure we're not missing it in the future.

I think the third thing and last thing I'll say is, you know, Doctor Skinner mentioned that distribution fires are much more frequent.

That is true. That's data. You know, I've seen that data, and it is much more frequently seeing fires come from distribution. And I think that can maybe lead you to think that that's where you need to put your focus. And it relates to this concept of prioritization and, like, how do you prioritize?

What do you spend your time and your resources on? And so you you look at distribution, you look at that high frequency, and there are many catastrophic fire. I mean, there are many more catastrophic fires started from distribution, infrastructure than from transmission. So there. Those.

That risk is real. But sometimes there's a trade off in figuring out how to allocate resources between a pure risk prioritization perspective and one that ensures sort of uniform or blanket or universal coverage over a wide range of assets or geographic areas. And so I think that's maybe a concept also to keep in mind is that you can't just.

You can't forget about the basic blocking and tackling of maintaining an electric system and having some kind of uniform coverage for all your assets, regardless of risk prioritization, is probably an essential piece of how to run the system as well.

Alright. Thank you. I wanna pivot a little bit, but I am gonna pull on a thread that, Assembly member Harabedian raised. But I wanna dig into what for me is always a central question, which is how are we getting the biggest bang for our buck? We do not have unlimited dollars, you know, for the weather we're saying that California rate payers are paying for the.

For this California home insurance policy holders are paying for this or California taxpayers are paying for this. Surprise. We're all the same people, and we do not have unlimited resources to throw at what is phenomenally hard problem. So how are we ensuring that we're getting the biggest ping for our buck? And I wanna, I guess, start with.

I like, Mister Poncelet's. I think you called it your money slide. So let's bring us back here to the money slide. So, this lays out kind of three buckets of activities, and I'm sure I see, you know, thinks of things. Similarly, we've got prevention, detection, protection, and bunch of strategies and activities that you are engaging in.

How do you prioritize these, and how do you evaluate what's giving you and your rate payers the biggest bang for your buck? And then, Miss Anderson, I have the same question for you.

Sure. Thank you. The first answer is every utility is different, and I know people hate that. But what works for Truckee Donner PUD, we're built to a heavy loading district standard because of, you know, blizzards and ice and stuff. So we're different in how we're built.

We're different in our environment. So I think the answer is gonna vary by utility, and we're gonna continue to argue for local control. And please let us make those decisions because we live it every day, and we kinda know what works for us. So I'll only speak for us, Truckee PUD from this point.

There's a trade off between affordability rates and risk reduction, And our board and our staff are forced to struggle with that every day because we'd like to do more, but how can we do more?

I think one thing to point out is the CPUC high fire threat maps are pretty blunt. So as an example, Donner Lake in Truckee is entirely red in tier 3 high fire threat. But when you look at it in the cloud fire maps, only about 20% of it's really high risk. If a fire starts on the South Shore of Donner Lake with a west southwest wind, it blows right into Donner Lake. And so that's not the circuit you have to hit first.

But if a fire starts at the west end, it'll blow right up into Tahoe, Donner, and the Town of Truckee and take everything out. And so I think some granularity in that kind of, Hey, it's CPUC tier 3. How come you're not doing it? Or why are you doing it when we all know that part of that? So I think that granularity is an issue.

And we're struggling with. We have this great information, but if I put it on my website, it's an arsonist map to burning down the community. There's Homeland Security Issues. If the private property owners will complain that their value went down because we put them in a purple or a red or a blue or whatever that is.

So how do you work and collaborate and share in a way that doesn't expose the utility to nefarious players? And so for us, you know, we've looked at all of that and what's going on. The other thing I would add is SB 254 and the earthquake study had it right. You know, you can't just look at the spark. You have to address the fuels.

You have to address the home hardening and everything. And then you have to acknowledge that in the event of a fire, I've heard numbers up to 50¢ on the dollar doesn't go to making the victim's hole. It goes to all the transaction costs out there. As a public owned utility, no shareholder behind us. If you put it all on me, you're putting it on the community because you and me are all the same thing and then it goes state, federal.

I mean, it just goes right out the chain. So how can we protect victims, make them whole, but, you know, with strict liability today where it's just shooting fish in a barrel, and our community pays for it. There is no shareholder. There's no one else behind there. So my answer is let us do our work and support us, but then look at what's happening in society with climate change.

And again, in Truckee, we're dealing with the fuels, we're home hardening, we're doing everything we can. If we can tighten up that whole system, you have half the problem financially you would before when you have to make these decisions on who's gonna pay that 10,000,000,000. But you know, at least you're talking about 10 instead of 20, and hopefully, one day is 0.

Thank you. Miss Anderson, same question.

I completely agree that each utility is gonna have different answers to which measures are gonna be best for their communities, whether how their system is designed or what their service area is, the terrain that they're working in, the height of the trees, all of those other things are factors. What we look at, and I think all the utilities do in partnership here with our regulators, is we look at the risk spend efficiency of these measures.

And so how much risk am I buying down for every dollar that we're spending? And that's a, that's a pretty universal approach that that is used in the analysis that we do and that we share ,share with the regulators. That's how you saw Edison coming to the conclusion that we wanted to move as fast as possible and get the most buy down for the lowest cost, which is why we have over 7,200 miles of cover conductor deployed in the last six to seven years.

Now we know, and Doctor Skinner mentioned it, it's not as much risk that you remove when you do targeted undergrounding, but we have only been able to do about a 100 miles of targeted undergrounding in the same time frame we've done 7,200 miles. And that goes back to permitting and all of those other challenges too that I mentioned.

But also, as we look at the biggest bang for the buck, as you said, Chair, we have to think about what those other trade offs are beyond the ignition reduction. So PSPS is going to be your biggest bang for the buck. It's the cheapest tool that does the most to eliminate the risk of ignition, but there are real risks that are created when we temporarily turn off power.

And our communities remind us of that every time, not even just when the power goes off. Just leading up to the power going off is an incredible hardship for our communities. And so it has to be not just a what's the lowest common denominator, but what is gonna make sense in this scenario.

So there are cases where in our, in our situation, we are doing cover conductor, but we find it still necessary to go all the way to do target undergrounding when it's a highly critical area, maybe with difficult ingress, egress, and you wouldn't be able to evacuate the community. So all those other factors have to play into.

That might not show up so neatly in the bottom line of an equation. But when you factor all of those different pieces in, then I think you do get a portfolio that is achieving the most value for the low income. Lowest cost, but it's gonna be using a number of tools and not any one solution.

I have a follow-up. But before I ask, I'm going to ask Doctor Skinner. Miss Anderson mentioned the risk spend analysis that all of our utilities do and submit to regulatory bodies for approval. Is that. Is it good enough?

Are those assessments good enough from your perspective as the public advocate?

I'll pick on an example from the SB 884 rounding plans. There have been furious back and forth between us and the utilities, over the last several months over kind of what goes in which part of the equation. Commission recently issued a proposed decision that ultimately agreed with the Safety Policy Division staff proposal, which we had supported through our own independent analysis. All of it is a step in the right direction.

We still don't know what we don't know, to the Assembly members point around transmission issues.

And. But it's all a step towards quantification. And as we get to quantification, we can agree, we can disagree. But more often than not, I found that we're moving closer and closer to really understanding where the areas of risk to the point from Truckee Donner District, almost got it backwards.

We absolutely agree that there's different solutions for different areas. And I think that is was highlighted, you know, the use of stronger pulls out of certain materials is finding effectiveness up there. Basically, equivalent to undergrounding, but lower price, quicker to deploy. Always love hearing solutions like that. But I think one of the key things that I always want us to be able to do is we're quantifying is agree.

Is this an area of high risk, medium risk? So the point about, you know, if the wind blows from what direction, are we gonna more, be more likely to have a catastrophic fire? We're gonna be less likely. We're moving towards that.

There's still areas of disagreement. But the agreement is some, similar in some ways to the notion kind of having a commons around this, where all of us pulling our minds together will hopefully get to the right solution till we realize there's some other variable that we can't quantify. And I believe the example from Edison around egress roots is a critical one. One of my concerns is always around the telephone poles that are left up.

Most people, let alone people trying to evacuate are not gonna know the difference between electric line that's active or deactive versus a telecommunications line. And so, the more in those areas that we can get undergrounded, that's certainly a qualitative factor that I know we look at in our analyses around what are the mitigation tools.

And it really gets down to every last piece of mitigation done is location and project specific. Your overall programmatic assessment, it's an assessment. It can help you do overall arching ranking.

But you can have a 10 mile span of conductor. Half of it in the middle of a nice open field, very easy to put out. If you underground that, you're not really reducing a lot of risk. On the other hand, if you sectionalize that and the other half is located, you know, in the midst of a canyon with a bunch of pine trees, everything else. Hardening that, you might go all the way to undergrounding.

And so, it's really in a sense, we have to be program wise and understand the program, set a budget for it, act towards that. But then, really at the end of the day, we need to be ensuring that the utilities are hardening in those riskiest places and not just to do a whole span absent a good reason.

Because then, we're putting good money after bad money in a project that could have been $5,000,000, half undergrounded, half covered conductor is now a $20,000,000,00 or $20,000,000 program, and we've reduced just as much risk as only spending 5.

Okay. So, Miss Anderson, my follow-up question is actually, I think, when I've asked other folks in hearings like this. And I think Assembly member Harabedian was alluding to this as well. I think a lot of folks look at the IOU construct and really have a lot of questions about whether incentives are properly aligned between IOU customers and IOU shareholders.

And I think particularly when we're talking about these wildfire mitigation investments, because there's some of these things on this slide that are considered capital expenses and you therefore earn a rate of return.

There's also some things on this slide that are not considered capital expenses and you don't earn a rate of return. So how. As you're navigating this, how do you ensure that incentives are aligned?

So I might. I'm not sure what other people have said when you've asked them this question, but the way I think about it is there's actually very little disagreement between what is good for the shareholder and what's good for the customer. The shareholder wants to see that the utility is healthy, that the customers are happy, that we have a productive and constructive relationship with our regulator, that we're proposing things that are the right things to do, and that we're getting them improved.

We are in a time of growth with almost an unlimited need to do investment in hardening and upgrading and modernizing the system all across the country. There is no shortage of opportunity for capital.

The most important thing then becomes that we are doing the absolute right capital that we need to do, and we're doing it as efficiently as possible. And we're managing those O&M costs not because it has anything to do with it not being capital, but because those are all recovered from the customer in the year we incur them, and they have the biggest impact on the bill.

And so it is good for the customer when we're being very strict and efficient with O&M, and it's good for the customer when we're doing the right capital. And that's also good for the shareholder because they want to see that our customers are happy and that we have the right relationship and that we're achieving the goals that the state has laid out for us.

Yes. But you're also an investor owned company, and you have a fiduciary duty to deliver a shareholder return. And that, I don't say that is a criticism. That is, that is the construct.

And so I understand, kind of, I guess, the ethos of what, of what you just said. But it sort of breaks down at either extreme. So obviously, if all yours. All you're doing is, you know, under grounding, then that in delivering a maximum shareholder return, that's obviously going to fall apart and not work.

But equally, if you were to realize, oh, it turns out that our most cost effective strategies are vegetation management and inspections and patrols, we're gonna deploy all of our resources there.

And by the way, that's not gonna earn any rate of return. You're also. That is just, it's actually completely impossible for you as an IOU to pursue that as a strategy. So I guess my question is kind of as you're navigating this balance, how do you make the case to your board, and how do you make the case to your shareholders that you would ever do something that, you know, you would ever do vegetation management and inspection and patrols versus a capital expense?

So I would start with we. We're never gonna operate in the extremes, right? in either one. And wildfire investment is only one component of the investment that all of the utilities, POU or IOU are making. We have load growth. We have electric transportation.

We have infrastructure replacement. There is, if all of a sudden there was a solution that could eliminate wildfire ignition, it was a 100% O&M, I will sign up right away. I don't have to ask anybody's permission. Like, we are gonna do the right thing for reducing the risk.

That's the right long term decision for all of us as owners, as customers, as employees. And so I don't, I don't, I know there's a lot of discussion about this tension in an investor owned model, but I will tell you inside the walls, there is not tension. We are making the right investments, and there is certainly in. A desire to grow the company.

But we are growing because the whole society is increasing its reliance on electricity. And so we need to make sure that we are deploying capital in a place that is maximizing the value to the customer. And when we do that, it will be maximizing the value to the shareholder. And the shareholder is receiving, when we manage the business right, an authorized return. Right?

There is a ceiling in this business. And so it's not that. I'm not even, on paper, incentivized to maximize a return. There's an authorized ceiling of which we generally are returning lower than that authorized year over year. And our goal is to make sure that customers can afford our bills, that we're achieving the state's objectives and the objectives that our regulators put on us, and that this is all working together.

The more there is tension or perception of tension, the bad it is for every player.

Right. And that's helpful. And actually, if I can sort of play back what I, what I heard you say is, right now, given this just pivotal and transformational moment that California is in, we are making historic and generational investments. We need to increase transmission by something like 350% over the next 20 years, generation by 300% over the next 20 years.

That in order to actually, have a stable utility and be able to do that work and effectively capitalize on those investments, you need to do the wildfire work at the lowest possible cost.

We need to do all of it at the lowest possible cost. So when list of customers that are looking to connect to the system and they wanna connect tomorrow and I need to do a $300,000,000 transmission investment to do that, the very first thing we look at is what can we do to increase the utilization of the grid that currently exists so I can connect them faster? Because if I have to do a transmission investment, I'm talking about ten years before I'm gonna get them connected.

So we have to do every aspect of the work at the lowest possible cost.

Thank you. Mister Harabedian?

I mean, I think that this conversation really is getting to the heart of, I think, the most critical way of addressing this going forward, which is aligning incentives. And I do think that the Chair's question, I think, gets at reality, not just perception.

I mean, I think we're all pushed back a bit on the answer from Miss Anderson is the data that we see shows that the IUs are not ordering their investments in a way that you would think that they should be. Highest risk being addressed first. The IUs are not doing that.

And that's what the reports say. That's what other experts have said. And I think to the Chair's question, a lot of the data points to the way in which financial incentives work in a rate case, and it's what I was getting to earlier. And so I don't think that what we're talking about is a perception. I think it is a reality of the way in which IOUs are doing their mitigation.

And I think that one would argue that based on that, we should give you a rate of return on all of this important stuff. And we've talked about in committee before, a lot of the reforms that didn't allow you to get a a rate of return on the first 5,000,000,000 of mitigation work, that could be argued to be doing exactly the opposite of what we want you to do.

And we can have a debate all day long on what the rate may be and how the rate case may work, but I just wanna make clear that what the question is getting at and I think what the answer sort of deflected is perception versus reality. The reality is the IOUs are not ordering the highest risk projects first. And I think it is because of the business model and the way that the rate case works.

And so I do think that we should have an honest conversation going forward and that's why we're here. We're all on the same team. We are trying to help you get this right. And if the answer is, sure, we want the lowest cost way of doing this, but in reality, you also need to run the business. Does it make sense?

And I'm just gonna ask a point of follow-up. Does it make sense to not allow you to get a rate of return on all of this O&M that has to do with very important wildfire mitigation? Because you're not getting a rate of return on a lot of it. And I think because of that, some of the work isn't getting done.

So we don't get a rate of return on O&M broadly. On any O&M. That doesn't stop us from doing O&M that needs to get done. So we spend over 500,000,000.

But do you think that makes sense? Does it make sense that you don't get a rate of return on O&M?

So if, I think you would have to rebalance the whole equation. Because the objective is not to to increase earnings. The objective is to make sure that we are able to be attractive to investors who have other options for where they can put the money. O&M Capital and rates of return are one factor, but I think the broader question that I'm hoping that the committee and then broader the legislature is focusing on is addressing the liability issues.

And I think that my colleague here from, Truckee Donner has also articulated a lot of those issues very well about how not having a cap on liability, not having certainty long term on how this is gonna be managed, that is a much bigger impact on the health of all of our companies, investor or non investor owned, than the O&M capital splits. We welcome conversations if you would like to revisit looking at O&M and capital and rates of return.

I don't think ultimately the objective is to maximize rates of return. I think what we wanna do is make sure that we continue to be an attractive option for the lowest cost capital. And as we base downgrades, we are going to be more expensive, and those costs in that year will be passed directly on to customers.

And so that's the solution that I hope we're focusing on first.

Yep. And let me be clear. I don't think anyone up here would ever be advocating for maximizing investor return. That's not why we're here, and that's not the point of the question. The point is to incentivize better outcomes.

And I think that the. Where we are now is we don't have great outcomes. And I think that the way that you incentivize great outcomes or better outcomes is the way that you structure financial incentives. And I don't think that we've structured it the right way. I just don't.

And I don't understand why we couldn't, to your point, recalibrate the whole system so that you're just as incentivized to do x, which is gonna keep us safe, as you are y, which may keep us safe as well, but probably should be going after x.

And so I think that's the point. No one up here is saying, we are trying to construct a system where we're just maximizing investor return. I mean, I think that's exactly the problem that we're trying to address, actually.

So I'm glad though, that we're having this conversation because I think going forward and for future hearings and reforms, this is at the heart of what we're gonna be talking about.

I do not think that you can address wildfire mitigation properly without talking about precisely what the Chair was asking, which is this inherent tension in the rate case that every expert across the country has talked about on podcast after podcast, has written papers about. Many of the experts up here would agree that it's not a perfect rate case, and the way it incentivizes IOUs to do wildfire mitigation can be improved.

So I just think that this is something we're gonna be continuing to talk about.

Yes. 100%. And just to to respond to, I think the very important point that you made regarding wildfire liability and the impact that that has on your ability to both raise and borrow capital and the impact that then that has on California rate payers is foundationally important. And certainly, we're not gonna dig into that here, but that is exactly the topic of our hearing next Wednesday. So Yes.

Stay tuned. Did you have any other. Okay. Alright.

I'm gonna just pivot to to one last topic, which Miss or Doctor Altintas had raised in her comments, which is really around innovation. And I feel like I, you know between, you know, myself and our incredibly credible committee consultant, Laura. By the way, just celebrated her birthday on Saturday. So.

Right. Yeah. Writing probably the backgrounder for this hearing. I think we get a phone call almost every week from, you know, somebody who's got like, the next hot wildfire technology thing that's gonna transform everything and, you know, save California. So I guess, how do you.

And I'd love to hear from both Miss Anderson as well as from Mister Poncelet. How do you evaluate emerging technologies? How do you test them? How do you ensure you're deploying them effectively? How do you.

And how do you compare them to the other offerings on the market? Because I also think technology and innovation and getting smarter about how we're tackling these problems is also a incredibly important part of ensuring that we're getting the biggest bang for our buck. Because we absolutely cannot just keep doing the same thing that we have been doing because it's not working well enough. So, Mister Poncelet, we'll start with you.

Thank you, Chair. We're not a big utility. We try not to be the tip of the spear or, as we say, too far over your skis. And part of the answer is collaboration. You know, we don't get Cloud Fire working the way it is if NV Energy and Liberty don't put millions into it in the last five years, and then don't share it with us so we look at it and go, wow, I need that too.

Public Power through APPA and their deed program does joint research. That is, the results are shared with everyone. Edison does similar stuff, and I think the Edisons and the APPA are doing better at putting that all together and sharing the information. So from a science point of view, you know, I think it's critical that we not jump too fast at new technologies, but that we pick the ones that work.

So as a small utility, we have the luxury of doing that. You're, I'll give you an example of innovation that's going through my brain and you know, our brain is we have this liability problem. Okay? And we're.

We look the same when it comes to poles and wires and physics and economics. Pretty much, you know, it applies to all of us, but there's this issue of shareholders. And philosophically, what is the right risk and what is the right return? And just like insurance and trial lawyers, you can't just take all the profit away or they'll just leave.

And I don't know the answers to those questions, but I'm counting on you and some smart people to figure those things out. But we know the strict liability is a problem. We provide a public service and an act of God can take us out. And right now, we pay societal's cost of climate change, essentially, and it's killing rates and killing everything else.

So while I'm sensitive to the IOU problem and what are the right business incentives and what is the right shareholder return and how much risk and, you know, liability should shareholders assume in the event of a fire, those questions don't apply to the POUs. It's.

We're much more simple. It's cost of service, and if you put it on us, it goes on to the community. And so how could we work within that if we could get a solution to strict liability that applies to POUs, because maybe that's a problem that the legislature can bite off and actually handle, then that would allow us to tie that risk reduction that we're doing in the community wide risk to overall insurability and bondability.

And then we could get a little POU captive going in the insurance market, and we could demonstrate that with limits of liability, proper management, and oversight, we can actually reduce risk and then get the financial benefits that come with that. To me, that'd be innovation, and we're looking for help to get there.

Thank you. Miss Anderson.

So we are, as you said, always being pitched new ideas, but we're also always testing out and trying new things. We do a lot of learning between the utilities in the state and then around the world even. Cover conductor, in fact, is something that the utilities in Japan and Korea had advanced long before anyone in The US had used it. So when we started deploying it, we did a lot of benchmarking, continue to with utilities in Japan.

And so what we can learn from what other people are starting to deploy, but then also what can we learn and deploy from technology we're using in other parts of the business.

So drones is a central part to wildfire risk management now. We would not have said that five years ago, But we use drones now to inspect transmission. Like, Doctor Skinner was talking about things that you can't get up without climbing and you can't take outages on necessarily to climb on a regular basis, we can see now with drones. And then we're also using drones for being able to restore faster after a PSPS event.

Because I have to do a patrol from end to end of whatever was de energized, I can do that much faster with drones.

So how do we use these technologies that customers are already paying for us using drones for inspections? How do we get more value out of them? Things like using lidar attached to the drones. So you're not just relying on the human eye to see is that 18 inches. You can actually measure it with technology.

Even learning from other utilities that have done more undergrounding than we have, learning about, you know, the directional boring they do or some of the distribution lines that they're putting right on the ground level. So I think there's a real opportunity within the utility business. We have groups like, you know, we talked about APPA, LPPC. You have for us, the Electric Power Research Institute.

We work with universities like UC San Diego and others so that we can all benefit and share from the same investments that we're doing.

And Doctor, any follow-up comments? I think you teed this up very nicely in your opening, but if there was one thing that you would like to see utilities across the State of California, and, you know, talking broadly, so IOUs and POUs do differently to more rapidly incorporate innovation, what's the one thing that you would like to see?

Innovation can have different definitions. Tech innovation, definitely, but there's also process innovations, procurement innovations that could be done, and this all points to the fact that, are we creating an innovation ecosystem that's outcome-focused? And what's the outcome? Can we agree on those outcomes?

And can we build the interoperability and collaboration infrastructure that we can all trust and govern so we can actually share things? One example to this is our collaboration with San Diego Gas and Electric. For the last six years, SDG&E has been sharing 17 datasets daily in the fire weather, and they evaluated confidentialities and they noticed this could actually be used not just for utility mitigation, but utilities are not in isolation.

They're a part of a system that increases our wildfire resilience. So they decided to share this with the public, the scientists, and we created a better intelligence platform. So there's the understanding of the public of the situation and, you know, making sure these type of utility-driven innovations are actually helpful. And you said one thing to add to that is I think we need to go from utility-by-utility mitigation to these shared collective capacity.

And that would benefit the public utilities, that would benefit the IOUs, and more importantly, it would benefit all of us, right? I'm not touched myself by a fire in my house, but my lungs are touched. My pocket is touched. I'm a ratepayer. You know? That's actually a problem that we need to solve collectively, and wildfire problem is very complex, and energy itself is complex. When you add wildfire, it becomes more complex. I think we need to really think through this as a-- what's the digital infrastructure in addition to physical and capital investments that we can build?

Well, thank you, and yes, we are indeed all in this together, and I think I'm gonna let that be the last word. I wanna say, once again, thank you to all of our panelists for being here, for sharing your insights, for what I thought was a very robust and productive conversation with certainly much more to come. So thank you so much.

We'll go ahead and open it up for public comment. If you'd like to provide public comment, you can go ahead and approach the microphone at this point, and we'll give everyone a minute for public comment. Please. Thank you.

Madam Chair, members, Scott Wetch, on behalf of the California Coalition of Utility Employees and the State Association of Electrical Workers. We appreciate the importance of these hearings and that you're taking a holistic look at all of the wildfire issues, but frankly, my members find it paramount that in this time that we are sitting in today, that the legislature trying to assess the progress of the IOUs in mitigating wildfire is sort of like a mechanic trying to do a 100-point inspection of an automobile that's on blocks with no battery and no gas in the tank.

If you look at PG&E having to pull back $2 billion worth of financing, I can tell you right now from boots on the ground that this work has come to a grinding halt, at least in the north. I think it's important if you just give me a moment to tell the committee that PG&E has just this week sent out notification to 25,000 applicants for interconnections telling them that they're gonna be delayed.

Sixty-eight large renewable energy projects have been put on ice, they don't know when they're gonna be interconnected, and over 200 large capacity projects for universities and large, mixed-use housing projects have all been notified that they're on indefinite delay. And my members are not out doing the work, and that's really what I hope the committee will focus on before these hearings are concluded. Thank you.

Thank you.

I'm Jan Smutny-Jones with the Independent Energy Producers and IRAC. We represent a number of the 68 renewable companies that got notice from PG&E that they will not be-- whether in risk of not being interconnected in 2027. This has the impact of not meeting their 2030 deadlines in order to get access to the federal credits that are associated with that, and I promise Scott did not set this up for me.

But the fact of the matter is is that this is a very obvious important issue, and I think this hearing-- I wanna thank you for not-- for keeping the pressure up on, like, let's fix this because this affects all of us on various levels. I just wanna point out the reality that the simple fact of the matter is one of the big concerns we have. We have contracts with the utilities, both investor-owned and publicly owned, and when they go bankrupt--and this has happened twice--we spent all of our time basically trying to protect those contracts.

Governor Newsom was in power for about five days when PG&E declared their last bankruptcy. That was a big problem. The second issue, which Scott just referred to, was PG&E has removed $2 billion from their credit plans for next-- for 2027, and that means those issues will be delayed.

And they do-- they're doing that based on the idea that because they got downgraded, the credit cost associated with those interconnections goes up, and that's reflected in rates. So it's an affordability issue. So please keep up the-- this activity is very important, and hopefully, the various committees that are looking at different things here can coordinate because I think the California Energy Authority did a good job of laying out some pathways that don't fit all into this committee. But thank you very much for your efforts.

Thank you.

Thank you, Chair and members. Alex Torres, here on behalf of Vibrant Planet, a wildfire analytics company. Your point is well-taken. We need to be able to find solutions that have a proven track record and work. We started with multi-year relationship with CAL FIRE beginning with pilots that we've since expanded statewide.

We also contract with investor-owned utilities like PG&E. The platform uses parcel-specific data, landscape conditions, and wildfire modeling to assess risk and compare mitigation options, essentially allowing all the users across the CAL FIRE units to see where those dollars would go furthest.

That provides a really good foundation for-- in partnership with the CAL FIRE units, in partnership with investor-owned utilities to determine what they can do with limited mitigation dollars, but that work is underway now, and that is a-- earlier this year was announced as a multi-year relationship with CAL FIRE. And so, we thank you for the hearing today; welcome the opportunity to share these experiences, serve as a resource for these hearings going forward. Thank you.

Thank you.

Good afternoon. My name is Brooke Rose, and I represent the Wildfire Solutions Coalition, a multi-sector alliance of over 95 organizations all across California working to scale funding for wildfire mitigation from state, local, federal, and private sources. We would like to thank the legislature for your continued attention to this very important topic.

As the legislature continues discussion of wildfire risk and liability, we urge you to remember that the only way to reduce the overall cost of wildfire disasters is by reducing risk on the landscapes where fires start and in the communities the fires burn into. Stable and proactive investments scaled to the financial risk is ultimately the only way to reduce the cost of wildfire damage and disaster. Thank you.

Thank you.

Good afternoon, Chair and members. Vanessa Chavez with the California Building Industry Association. Just wanted to thank you for today's dialogue. We wanna highlight the symbiotic relationship with insurance and our utility partners and just adding to, you know, the fact that if there are additional delays in the process of interconnection, that ultimately means that homebuyers pay the price on that with interest rates increasing, you know, every day.

It just is really important that we ensure that property owners and homebuyers are able to get into their homes without any delays in that process. We welcome more conversations in this space and happy to be a partner and resource. Thank you.

Thank you.

Good afternoon, Chair and member of the committee. Lillian Mirviss with the Environmental Defense Fund. First off, I wanna thank the chair for convening this series of hearings. We definitely ran out of time at the end of last session to focus on this conversation, so it's really great to have this time to dig into these issues. We at EDF believe that mitigation is the number one thing we need to focus on for wild-- reducing wildfire risk, and we appreciate the comments in today's hearing on how the rate of return is not necessarily in alignment with this goal.

In that vein, we also appreciate the chair's leadership on AB 2463, looking at return on equity and increasing transparency there. It's all part of the same conversation on how we can make sure that we can focus on reducing wildfire risk without having to worry about affordability. So thank you again, thank you for your leadership, Chair Petrie-Norris, and we look forward to future hearings on this topic.

Thank you.

Good afternoon. John Kennedy with the Rural Counties. Appreciate the opportunity to provide a few public comments and the hearing. Wildfire risk reduction is of tremendous importance to our communities and other communities across the state. And I wanna start with the premise that we have made significant strides towards reducing wildfire risk in our communities.

PG&E is the biggest service provider in our counties but SoCal Edison provides service to a number of our counties, and we've got POUs as well. PG&E has substantially reduced the risk. They had a long way to go, right, and from, you know, decades where maybe they needed to be a little more proactive in terms of vegetation management, in terms of inspections, all of those things.

So there have been growing pains as we've spent a lot of state resources to catch up on those things, but they've done a world of good in our communities in terms of reducing fuel load, reducing the risk of things falling into lines in our communities, and we've had PSPS events, which we've grown with over the last several years. They're no longer the events that we had when we started to experience PSPS events.

PG&E has substantially reduced the scope, size, and frequency of those events, but we have had a sharp increase in fast trip outages in our communities where we're seeing about 2,000 outages in a given year in our communities. Some circuits hit up to 25, 30 times per year, and these are different types of events, so I think there's an opportunity to also look at when we're calling for a PSPS, how many of those residents are experiencing fast trips or have fast trips enabled on their systems?

Does that derisk and-- you know, mean that we don't need to do as much of a PSPS event, as large of a PSPS event, or can we expand fast trip in some of those areas so that we reduce the risk for PSPS? And I'll try to wrap up. Appreciate the comments on the cost and benefits of different mitigation strategies. I think the presentations knocked it out of the park. Undergrounding is the most expensive by far, but it does provide significant reliability. Covered conductor plus EPSS is something we've been strongly advocating for as well.

PSPS is just turning the power off in those communities, and we've-- we're at a place now where we've derisked. Now we need to start building backend reliability, at least in PG&E's risk territory. And then finally, to--

Thank you.

All right. Thank you.

Thank you. Thank you.

Thank you so much, Chair and committee members. Melissa Sparks-Kranz with the League of California Cities. Just here today to express thanks for hosting this hearing. Also, thank you for just allowing the dialogue to continue on this topic. It's a very complex topic that we've been dealing with in the last year with the 254 Report.

I think for us, at the center of this discussion is prevention and safety. That has always been sort of the core for our cities, to protect our cities, make sure we have safe communities that can withstand fire. So, we just appreciate the focus on safety and accountability, especially safety from the regard to the utility operational perspective. So thank you so much.

Thank you.

Good afternoon, Madam Chair, Assembly Member Harabedian. Thank you all for having this hearing and your ongoing diligence to trying to solve this problem. Also, thank you to the committee consultants for, as yet again, just a very robust, very great write-up on the problems that we have. As discussed today-- I'm here on behalf of NRDC Action Fund. Forgot that part.

As was discussed today, we know the electricity rates, they're not going down associated with wildfire prevention, liability, and lending continues to hit Californians, particularly those who are in the lower income bracket, who are disproportionately hit. We hope the legislature and the commission may consider a wider range of options to reduce who pays and how. First, the legislature may consider limits on subrogation for utilities and new liability revenue sources like surcharges on insurance premiums.

Second, California policymakers may want to consider structural changes to which electricity customers pay, such as through wildfire safety charge that could lower volumetric costs. Thank you for your consideration and your ongoing work in this.

And thank you. And just in closing, as the climate crisis has and continues to intensify, we have seen communities in every corner of the State of California ravaged by catastrophic wildfires and we know that these risks are going to intensify. We are going to continue to see-- as I said at the beginning, the hot's getting hotter, the dry is getting drier, and wildfire risk getting harder and harder for us to manage.

Tackling this challenge is something that I really truly believe is foundationally important for the State of California, but to protect communities, to ensure the stability of California's utility and insurance sectors, ensure that we are able to continue to build the clean energy future that Californians want, need, and deserve, and also really to ensure the stability and the investability of California's economy as a whole.

And so, the stakes in this conversation could not be greater, and I think the scope and scale of the challenges we recognize are enormous. So, as I said at the beginning of the hearing, this is the first in a series of hearings that we will be having over the next several weeks digging into the myriad challenges, and look forward to continued conversation and continued problem-solving with all of you. In closing, just once again, thank you to our panelists, thank you for everyone who came to provide public comment, and with that, for today, we are adjourned.