Assembly Utilities And Energy Committee

Okay. Well, thank you, Madam Chair and member. I appreciate the opportunity to present my bill, and I'm really excited about the progress we've made on Senate Bill 804. And once again, I thank you. I'm pleased to present Senate Bill 804, the Hydrogen Pipeline Safety Act. I would like to start by thanking the chair and her staff for working with me on this bill, and I will be accepting the committee's suggested amendments. Members, you may recall that this bill was heard in this committee last year and passed with bipartisan support. Following that hearing, my office worked extensively with the governor's office and the office of the state fire marshal to incorporate a series of technical amendments. Those amendments are reflected in the bill before you today and ensure that the Office of the State Fire Marshal has clearly the authority to appropriate and enforce and has the tools of enforcement and a fee structure sufficient to administer the new program. Hydrogen is a key part of California climate strategy and we know there are certain sectors of our economy where hydrogen will be essential to achieving climate goals These include heavy transportation ports maritime shipping aviation fuels and other industrial manufacturing applications where electrification alone may not be sufficient To support these uses, hydrogen must be transported safely and efficiently from where it is produced to where it is needed. For large-scale deployment, pipelines are widely recognized as the most efficient, lowest emission, and most cost-effective method of transporting hydrogen. However, hydrogen presents unique safety challenges. Hydrogen is the smallest molecule in existence. It can permeate materials directly differently than natural gas, behaves differently under pressure, and requires specialized engineering and safety standards to minimize leakage and ensure safe operations. The Federal Pipeline and Hazardous Materials Safety Administration recognized these unique characteristics and began work on hydrogen-specific regulations. regulations. However, that effort has stalled, and today hydrogen pipelines remain subject largely to the regulations originally developed for other gases. At the same time, California is actively investing in hydrogen production, fueling, infrastructure, and industrial applications. In short, the deployment of hydrogen infrastructure is moving forward, but the development of hydrogen specific safety regulations is not. That creates uncertainty for communities, regulators, and project developers alike. Current California law does not clearly identify which state agency is responsible for regulating the safety of hydrogen pipelines. In fact, the California Public Utilities Commission has acknowledged that its authority over hydrogen pipelines has not been clearly established. Senate Bill 804 closes that gap. The bill designates the office of the state fire marshal as the safety regulator and enforcement authority for ultra-state hydrogen pipelines that directs the fire marshal to adopt hydrogen-specific safety standards that reflect the unique characteristics of hydrogen. Importantly, this bill does not mandate construction of any hydrogen pipelines. It does not approve any projects. It does not create a hydrogen deployment program, and it does not circumvent environmental review or local permitting requirements. What it does is ensure that if hydrogen pipelines are built in California, they will be built and operated under a clear, consistent, and accountable safety framework administered by the California State Fire Marshal, recognized as the pipeline safety experts. This is exactly the approach that California is taking in other emergency industries. Establish the safety rules first, then allow deployment and development to proceed within a practical and regulatory framework. That is essential. That is good for public safety, good for environmental protection, and good for responsible economic development. Most importantly, it is much easier and less expensive to establish strong safety standards before the infrastructure is built than it is to retrofit an entire system after deployment. If California intends to be a leader in hydrogen, then California should also be a leader in hydrogen safety. Senate Bill 804 ensures that California is the safety leader. For these reasons, I respectfully ask for your aye vote and here today for voice support. I've got Scott Witsch on behalf of the California State Pipeline Trades Council and Mike Monaghan on behalf of the state building and construction trades. And I will tell you that this is a giant leap forward for safety and hydrogen and its development. And this bill simply ensures that as California grows, its green economy, that it's done safely. For these reasons, I respectfully ask your aye vote.

Good afternoon, Chair members. Sorry to disappoint you. I'm not Scott Wetch. Martin Vindiola on behalf of the California State Pipe Trades Council in support of SB 804. We're supportive of the State Fire Marshal adopting regulations to regulate these hydrogen pipelines. Hydrogen, as the Senator has stated, is critical to our energy future in California. It's also critical to the skilled trades people that work in the pipe trades area and space. So it's important that we demonstrate that these pipelines are safe so that we can build out our hydrogen energy infrastructure. Thank you.

Thank you, Madam Chair. Hunter Stern with the Coalition of California Utility Employees and IBW 1245 in strong support.

Thank you. All right. Witnesses in opposition, if you'd like to testify in opposition.

safety jurisdiction for the state fire marshal, and we've supported previous versions of this bill. We have a few concerns with the amendments and have reluctantly shifted our position to oppose unless amended. Air Products operates the only hydrogen pipeline in California. We have been safely operating that pipeline for decades without incident under an existing effective federal regulatory regime. We are concerned with some of the specificity in the amended legislation, which primarily derives from approaches taken for other liquids and gases. We feel that a dedicated regulatory process that focuses on developing hydrogen rules would be more appropriate And that process should include specific consideration of the only pipeline operating in the state and consultation with the only hydrogen pipeline operator in the state. As the sole hydrogen operator, we are also concerned with the open-ended fee language in the bill, which would presumably have air products foot the bill for the entire development of these regulations. We very much appreciate the committee's recognition of this issue and other proposed clarifying amendments, and we look forward to reviewing those and continuing to work with the author on this bill. We're deeply grateful for the time and collaboration that the author's office has extended to us throughout this process, and we very much look forward to continuing that work. We hope to be able to get back to a supportive position on this, and we look forward to playing a central role in any future rulemaking process at the Office of the State Fire Marshal. Thank you. Thank you. All right, at this time, we'll open it up for additional witnesses in opposition. Anyone coming to the mic? Seeing none, bringing it back to the committee. Assemblymember Rogers. Thanks, Chair. Just as a point of clarification, because I understand the concern around the open fee structure. I believe didn't one of the committee amendments address that concern directly? Yeah, and here's the issue in all due respect to the opposition. Anytime a new industry starts, the cost is an issue, no doubt. But what is the cost of safety? This is the Safety Act. And again, that's why it's the Hydrogen Pipeline Safety Act to establish the ground rules of not just the one company that's in existence today that has taken that leadership role, but others will develop. California is a competitive state. And as we open up the doors for hydrogen, we're going to open up the doors for many other aspects of energy and everything else. And it will get competitive. But when it does, to that point, the rules have got to be set. Safety first. Fees, okay. Competitive, yes. But overlooked by who? The expert, the fire marshal. And for the last two years, we've been debating back and forth who is going to take the lead to oversee the safety of the pipelines and everything else, the production and the manufacturing and delivery and everything else. And it was negotiated that the fire marshal, the experts within that department, would be the right one. So fees shouldn't be an issue. It should be part of the process that will grow. And as time goes on, those fees will be adjusted and they'll be competitive. I appreciate the answer, Senator. and at the appropriate time, I'll be happy to move the bill. Thank you. Thank you. All right. I'll just also echo the comments of one of your witnesses, and thank you, Senator, for your commitment to and your leadership in this space. Like you, I'm a firm believer that as we work to achieve our clean energy goals, we need to advance in all of the above approach. And so you've really championed this. You've been a leader and grateful. Would you like to close? Well, thank you so very much. Once again, members and Madam Chair, I've said it once before a few years back that California has a treasure chest of energy and we open it up and it's got to include everything we can think of. And hydrogen must be one element because it's essential to our future. And I'm so proud and honored that this bill will become the umbrella of safety. And that's what we're going for. And I respectfully ask your aye vote. All right Thank you We are awaiting the establishment of a quorum but we will certainly take the measure up at the appropriate time Thank you We are also now awaiting some Senate authors senators with bills in Assembly Utilities and Energy Committee We have 14 remaining bills on today's calendar. We have a motion to adjourn from the vice chair. So staff members watching from your offices, track down your members and hustle them along to room 437. File item 2 is SB 886, file item 3 SB 887, both by Senator Padilla. File item 4, SB 905, and file item number 5, SB 913, both by Senator Becker. So, senators, we eagerly await your arrival in room 437. Thank you. Thank you. Thank you Thank you. Thank you. Good afternoon. Welcome, Senator Becker. All right. We've got two measures for the committee. Number four, SB 905, file item number five, SB 913. I'm not on the microphone. Welcome. Welcome, Senator Becker. All right. First up is file item number four, SB 905. The floor is yours. Well, thank you, Chair, members. SB 905 is about fixing some of the structural problems that have led to unaffordable electricity bills. As much as utilities say the right things about trying to reduce rates, there is a trust problem. Utilities earn bigger profits, and utility executives do earn bigger bonuses by spending more money. Given those incentives, it's hard for the public to trust them not to favor expensive investments like, say, 10,000 miles of undergrounding, rather than finding more cost effective solutions that earn less profit. So this bill makes several changes to improve those incentives. It will focus utilities on spending money better, not spending more money. As we know, and it was running a business all about aligning the incentives. That's what we're trying to do here. So this bill, first of all, aligns the personal incentives of utility executives with keeping rates affordable for our constituents. It requires 20% of annual compensation for anyone VP or higher to be tied to keeping rates from rising faster than inflation. If our bills keep going up, they won't earn those bonuses. It also includes other good government stuff, like tracking significant metrics and increasing transparency. It requires the PUC to establish clear performance metrics on things we should know, like reliability, system utilization, greenhouse gas reductions, how we're doing, preventing wildfires, et cetera. And that will make clear what our expectations are for good performance. In particular, utilization metrics, something we've talked a lot about, I know, in this committee and over in the Senate, will push utilities to get more value out of the infrastructure we've already built and paid for before proposing new spending. SB 9.5 also authorized a PC to give utilities a lower return on equity for certain categories of investments with lower risk, but where an investor gets other benefits. Underground is a good example of this. So that has benefits to shareholders because it helps prevent wildfires, which is the ultimate risk right now for utilities is bankruptcy risk. So there might be incentive to spend more money on that than, say, hey, another transformer that will serve more customers. And because again there are other benefits to say the undergrounding they may require a lower return on equity for that And this really came out of some hearings we had earlier this year Finally given the low growth we expecting from EVs and data centers sometime new infrastructure will be needed In that case we still want to continue to look for cheaper ways to pay for it. And SB 905 requires the POC and utilities to evaluate alternative financing options that would save taxpayer money, something that you, Chair, and I worked on last year in SB 254, the $6 billion to securitize debt, which is leading to $300 million a year in savings already. Recent polling from Bold Research, for example, shows what we've all heard from our constituents. 83% of voters across the political spectrum think utility profits are too high. The polling also asked about a couple other provisions in this bill. 86% supported tying executive compensation directly to affordability and requiring utilities to show they're using the grid more effectively. I want to thank the chair and committee staff for all the time they put into reviewing this bill. I am accepting all of the committee amendments. As I've said many times, and I think we'd agree, there's no one silver bullet to making electric bills more affordable. The utilities are saying a lot of the right things, and they're doing some of the right things as well. We need to make sure that we have the incentives aligned. This bill will do that. With me today, I have Matt Friedman from TURN and Michael Bocadoro from the Agriculture Energy Users Association. Thank you, Senator. Welcome, gentlemen. Thank you, Madam Chair and members of the committee. My name is Matt Friedman. I'm a senior attorney with the Utility Reform Network, and we're here to enthusiastically support SB905. As everyone on the committee knows, residential electricity rates have skyrocketed in recent years, creating a crisis of affordability for many families across the state. According to a recent poll of the governor's race, voters say that utilities are the second biggest strain after housing on household budgets. The top strain on household budgets was housing, but it was followed closely by utilities, which were seen as more significant than health care and groceries. In its 2025 report to the legislature, the Public Utilities Commission forecast average annual rate increases of 6% to 7% for each utility over the next few years. The primary driver of these increases is increases in utility spending, particularly on their distribution system due to wildfire mitigation. To get a handle on rates, the utilities have to have their incentives better aligned with the goal of minimizing spending, optimizing the use of existing grid infrastructure, and finding less expensive methods of financing grid investments. SB905 addresses the affordability crisis through a series of long-term accountability and cost reduction measures designed to improve the performance of investor-owned electric utilities and to lower customer rates. We appreciate the bold approach taken by this bill that addresses several of the root causes of the current affordability crisis, including out-of-control utility spending, the high cost of private capital, and the growing burden of wildfire mitigation and policy costs. And we ask for an aye vote on this bill. Thank you. Thank you. Welcome. Thank you, Michael Bocadoro, Madam Chair and members. They've stole a lot of my thunder on the poll after poll, survey after survey tells us that affordability and the cost of living are the number one issue. It's a well-documented fact that energy affordability crisis, we have over 2 million customers today who are behind on the utility bills. And the amount they owe is continuing to increase on an average basis It not just a residential issue I here to testify on behalf of the business community and the agricultural community It is an issue that is having broad implications for both food processing and agricultural businesses in the state, farms, dairy farms. We are losing food processing and often citing the high cost of doing business in the state. We've lost the Prino Foods. We've lost Del Monte Foods. And the list is continuing to grow. We can and have to do better. I've been working on general rate cases and utility issues for over 30 years here in California. And I've been in this committee, you know, at least for the last half a decade, complaining about rising utility costs. Unfortunately, they're continuing to escalate. PG&E has done an admirable job of telling the media and telling their customers that they are going to hold rates to inflation. Let's hold them to their word and hold them to inflation and tie their compensation to keeping rates down here in California. On behalf of the ag and business community, respectfully request your aye vote. Thank you. All right, we'll open it up for additional testimony in support. If you'd like to testify in support of SB 905, please approach the microphone. Allison Hillier with the Climate Center in support. Thank you. Good afternoon, Scott Cox on behalf of Ceres in strong support. John Hart with CalSA in support. Will Brueger with Climate Action California and 350 Humboldt in support. Thank you. Chair and members, Alicia Priego on behalf of San Jose Clean Energy in support. Good afternoon. Marissa Hagerman with Tratton Price Consulting, registering support on behalf of California environmental voters. Thank you. Rocky Rushing on behalf of Corporate Energy Buyers Association, aka SEBA, in support. Arnaud Powell, Deploy Action, registering support. Meredith Alexander with the Coalition of Large Energy Users in support. Michelle Canales with the Union of Concerned Scientists in support. Good afternoon. Dylan Hoffman on behalf of Advanced Energy United in support. Thank you. No, one more. Ignacio Hernandez, authorized to register support on behalf of the California Large Energy Consumers Association. Thank you. All right. Is there anyone here in opposition to SB 905? One last support. Ada Wilder with Earth Justice here in support. Good afternoon, Madam Chair, members, Brady Van England here on behalf of Southern California Edison and respectful opposition to SB 905. First, I want to thank the committee for their thoughtful analysis on the bill. The recommendations do address many of the concerns that we had raised in our opposition letter. However, we do still have some significant concerns with the bill. One of the first things I want to raise is that the reduced ROE on an application-specific basis is inappropriate. We look at this at an enterprise level on a triennial basis right now part of our cost of capital proceeding And doing so at an enterprise level allows you to assess from a broader perspective rather than that narrow perspective or one activity over the other. In the presentation that the author, Senator Becker, gave, he had mentioned undergrounding as an example. One thing to note with undergrounding is that the state may have a certain perspective on undergrounding, OEIS and the PUC have both taken steps to, I guess, encourage us to underground where necessary, but we're not done with that work yet. So until we're done with that work, the conversation about less risk being associated with our system is a little inappropriate because it's kind of taking it in a snapshot perspective rather than looking at it holistically. Moving on to some of the other provisions, we appreciate the committee analysis on the alternative financing section and the recognition that moving forward on a performance-based rate making without first understanding the potential impacts of that decision could prove detrimental to our customers. And we look forward to working with the author and other key stakeholders as that conversation continues. Additionally, we appreciate the committee's recognition that not one but several metrics will be needed to appropriately understand grid utilization at the system level. Um, it, it's, that's a complicated and it's been an ongoing, ongoing process we've had over. It's been a multi-year process conversation at this point in time. Um, but, you know, I just want to make clear that the movement of any of those metrics up or down, uh, I have a lot more here to say, but I'm just going to stop there and say that, you know, clearly there are a number of concerns that we have with this bill. Um, two minutes isn't going to capture that completely and, uh, we respectfully are opposed to the bill. Thank you. Good afternoon, Chair Petrie-Norris and members. John Kendrick from CalChamber. We oppose the version of SB905 in print. I think there's a lot that the support testimony I agree with. Everyone in the room shares the same goal, improving energy affordability. Electric rates shape real-world decisions, whether businesses expand in California, invest in new equipment, electrify operations, continue to hire, whether they can continue to absorb the costs that are rising faster than their ability to pass them on. Energy affordability is directly tied to competitiveness, jobs, tax base, and California's ability to attract electric load needed to put downward pressure on rates by spreading fixed system costs over increased usage. So we appreciate the work that the committee and the author have put into this bill. The amendments proposed in the committee analysis move in the right direction by stepping back from rigid legislative mandates that deprive the PUC of flexibility it needs in a quickly changing energy landscape. That flexibility is crucial to how California balances affordability, safety and reliability, wildfire risk, electrification and numerous other energy challenges. challenges. A decision that appears to reduce one category of cost on paper can increase costs elsewhere if it increases financing risk, delays needed investment, or constrains the commission's ability to evaluate facts in a full evidentiary record. And that's kind of our concern with SB 905. Even as amended, the bill still moves California towards statutory preferences around utility financing, returns, compensation, and grid utilization. Those statutory preferences may ultimately distort the decision-making needed to keep the system safe, reliable, and capable of serving new load. Now, I heard some testimony about tying executive compensation is about aligning incentives, but ultimately, if you are tying compensation to an arbitrary benchmark like CPI, you are actually creating a perverse incentive to under-invest in the grid. So, Actually seeing what the amendments look like in print. I do, again, really appreciate the efforts of the committee. Thank you. Thank you. Okay. Opening it up for additional witnesses here in opposition. If you'd like to testify in opposition to SB 905, come on up. Scott Wetch on behalf of the California Coalition of Utility Employees. We appreciate the amendments of the committee. It's moving in the right direction. but we still regret regretfully opposed. Valerie Torello with Pacific Gas and Electric Company also remain opposed. Align our comments with Southern California Edison. Thank you. Good afternoon. Hunter Stern with IBW 1245 aligning my comments with Mr. Wetsch, but we do appreciate the amendments that the committee offered. Thank you. Thank you. Okay. bringing it back to committee questions, comments, assembly member Rogers. Thank you so much. Uh, so Senator, one of the concerns that's expressed in some of the opposition letters was around this idea that in order to hit those benchmarks, the utilities could shortchange in other areas. One of which was a employee compensation, for instance, that it could harm the ability for employees to actually negotiate their contract. If what the utility is able to do is to keep their pay low in order to keep that metric lower. Can you talk a little bit about how you've accounted for that in the structure? Yeah, well, I'd say a couple things. There's nothing here saying that they can't use shareholder money, for example, to backfill. If they decide somebody does warrants an additional bonus, even though it's not accounted for in our bill because they haven't kept the rates low enough, they could still do that. They could choose to use shareholder money in that regard, apparently. As we've seen in recent campaigns, there's a lot of shareholder money going around, so they could use that to do that. And I just say, it's really exactly why we need to pair this with performance metrics so we can see that they're getting the work done on budget and without cutting corners on the priorities those metrics are tracking. So it's not one or the other. We're really doing both here. And the committee amendments exclude by the PPP charges from the inflation metric because they really are outside of the IUs control, so we've accounted for that, we think, as well. Amendments also point out that IUs can always, again, backfill any lost, ratepayer-funded comp by using their shareholder dollars. But having the performance metrics around safety and reliability being explicit in the bill will help pair with that, I think, very nicely. Yeah, I appreciate that. And that was exactly the concern is just that in order to meet the bonus, that the work would either cut corners, which is not good for the consumers, or harm the employees by keeping the employees paid artificially low. So I appreciate that you put in those performance metrics to be able to quantify that and evaluate that as well. Thank you. Assemblymember Patterson. Great. Thank you. Well, thanks, Senator Becker. I think your goals are definitely something that make a lot of sense which is trying to trying to get some metrics around you know delivery You know sometimes I introduced bills before that I like I swear are good ideas. And then once I go through the committee process, I'm like, okay, maybe, you know, maybe I'll scratch that one. But, and I feel like, you know, this one, I have some concerns, you know, and your witness had mentioned, you know, less expensive methods of infrastructure. Um, you know, I, I'm always interested to hear what those ideas would be, but, you know, these are companies with, for one reason or another, you know, very low bond ratings. Um, you know, we've had to do a lot of things around here to, um, you know, I think help out and, um, you know, especially when it comes to wildfire mitigation, but a lot of other things. Um, but you know, when, when you reduce equity, uh, that makes it even less likely for people to want to invest in the company and therefore the infrastructure itself. And so I have a lot of concerns on something that would reduce equity and make the company even less interesting from an investor standpoint to go in there. I'm also very concerned about comments from your witness about the growing burden of wildfire mitigation costs. I too am very concerned about wildfire mitigation costs. I don't consider it a burden. I consider it a necessity. I think there's questions about whether it should be part of the general fund or part of utility rates that are very interesting. And then lastly, I just want to say that, you know, we've made a lot of decisions in this building. I mean, utility rates are insane in this state. I mean, I don't think anybody disagrees with that. It's one of the, it is, I think the number two issue that I get from people in my district office, um, that they can't afford their utilities. Um, I'm personally, seriously concerned about it, but I'm also concerned about decisions that over time, over the last couple of decades, we've made in this building, uh, to drive up the cost of utilities. Um, you know, we don't count large scale hydro towards a new portfolio standard. We don't use nuclear. You know, we don't have nuclear is going offline in the state. I mean, we got some that we're trying to keep alive. We're moving away from combustible biomass, hydro nuclear, some of the cleanest energy sources in the state. And then we've also added wildfire mitigation to the bill, which has definitely driven up costs. But that has been a policy decision, not the fault of utilities on that. And I think we can always talk about how that's done. but um but i think a lot of the reasons for how expensive utilities are um you know some of it does come from decisions from this building a lot of it does but i do want to say that i'm the at the end of the day i'm very concerned about reducing equity and i understand the sort of that's trying to create some incentive there but i think the net effect and feel free to respond to this is going to actually make it more expensive to invest in infrastructure because there's going to be no capital coming in to want to invest in utilities to put in to the infrastructure. And feel free to respond to that. That was just a Joe tirade, but you're welcome to respond, obviously, as the author. Yeah, well, I'll start by agreeing with you on a couple of things. One is, as you mentioned, wildfire mitigation you know right now it estimated about 20 percent according to the 254 report about 20 of the PG bill and around 15 of say Edison bills And there was a part of this bill early on We had a power fund to create that infrastructure to start getting some of these things out of rates and into the general fund. And that I agree with you should be general fund. And I think probably agree with some of the opposition here on that. They probably like that part of the bill. And, you know, and I think we should look at if we do have a big surplus next year after certain IPOs, you know, we should look at putting some of that aside so we can take some of these costs off of rate periods, which is incredibly regressive, and have that in general fund because it really does benefit the whole state. So I'll agree with you on that. And, you know, we just had a bill looking at nuclear over in the Senate Energy that I voted for that is exploring. So other sources of clean, firm power, I'll agree with you on some of those as well. I just want to be clear on a couple of things. One thing about this return on equity piece, we're not touching overall return on equity. And I hear you about the investabilities of the utilities. It is kind of on edge because of the wildfire exposure right now. But we're not touching overall return on equity. We're just adjusting it to lower. They could consider lowering it for spending that is less risky than normal, right? So overall return of equity, we're still talking about a 10-plus percent guaranteed return, right? That's the thing. These are regulated monopolies. They get a guaranteed rate of return. And we're just saying that investors already have extra incentive to do things like undergrounding. And we're not saying underground is always wrong, but there's extra incentive to do it. And they'd be willing to do it even for a lower rate of return. Since are we supposed to be based on what the market requires, right? That's all point on return of equity is what the market requires. We're just saying it's financially correct to offer a lower rate of return for something that has other external benefits for them. So I hope that's clear and happy to discuss more on that. I see my minutes taking fierce notes. Maybe you want to comment on – is it okay? Oh, of course, please, yes. Thank you, Senator. Assemblymember, in response to your concern about equity, it's important to know that the utilities are currently on a massive capital spending spree. If you're concerned that maybe there'll be no equity left to invest and that we're going to be taking all of those opportunities away from the utilities through this bill, let me just assure you that's not a remote possibility, really not much of a possibility here. PG&E, for example, through 2030 is projecting $73 billion in capital expenditures, 9% annual increase in its rate base. This bill would do a couple of things, but one of them would be to direct the Public Utilities Commission to explore methods of alternative financing, which have come up in front of this committee before, including public financing, using public bonds, and securitization, with the idea being that we can find cheaper sources of capital for some portion of these future capital investments. Given the massive scale of capital investment that's being forecasted, I think it makes sense to look at less expensive options, and they simply would not crowd out the opportunities. Which I have supported, by the way. Sorry? I've supported those efforts, by the way. And it simply would not crowd out the appetite for PG&E to deploy investor capital, which I think was the core of your concern. Yeah, I think we have to – I mean, with our infrastructure – with our needs for power in this state, we're going to have huge infrastructure spend. And so this is, but this is kind of like what I'm getting at is that I think that the, the idea that we do kind of create this weird incentive on infrastructure and, you know, in this state. And I and I understand that in a way you know cause you know if you invest a certain way there there is a there is a rate of return you know and I think we have policymakers and the PUC look at that and take that very seriously And so that why I think you know the concept of the bill, you know, that, you know, sometimes when I have these bills, like ideas when I'm on a jog or something, I'm like, this is such a great idea, you know, and then I come up at this place, I'm like, okay, other people disagree with me. And I just feel like I'm kind of at that spot with this bill, where I kind of, you know, I know, I understand the intent of where you're trying to go on this. I'm just very concerned about shaking the investability of the utilities, which is why I can't support it today. But again, I don't think your idea and concept is a crazy one. You know, I just, I'm very concerned about the unintended consequences, largely because I'm not smart enough to understand what they all might be. But thank you for bringing the bill and answering my questions, by the way. I appreciate that. Thank you, Mr. Vice Chair. Assembly members of our... Thank you. I had sort of the same sort of areas of concern as our colleague in the areas of the bill that sort of reduce the return on equity for certain categories of investment. And, you know, I think, you know, generally one of the things that I think happens is that we are doing things to try to direct in some pretty specific ways to try to bring down cost, which is, of course, you know, a lot of a goal. but we end up, I think, injecting sort of instability in terms of the market, and then it results in increases in capital costs on borrowing. And so that is sort of, when I look at the bill on those aspects of it, I guess the question is what remains after the amendments about the ability to reduce the return on equity for certain categories of utility investment? because I'm nervous about that, you know, introducing these sort of preferences for reduced returns, the signals that it sends to the market and whether or not that's going to result in the capital markets increasing borrowing costs for the utilities, and we end up having a counter result from this. So I'd just like to see. I'd just want to understand what remains in the bill and then actually ask the question. I think I witnessed because I've been in a lot of discussion, but I'll say at a high level, it encourages the PUC to consider it, but to not require it. So that's just one thing, just so you know. But the other thing I just want to say before I turn over quickly is that I think we have to recognize, and in other areas that we'll also deal with coming here in the next, towards the end of session, is that the status quo is not good, right? Because, again, the point is the status quo is out of whack. The status quo encourages investment, say, in that next mile of undergrounding, as opposed to the transformers, the next transformer that we all want to serve our customers. So, again, we're not saying underground is always bad in every situation. As you said, we want it in cases where we need it. But we are trying to bring the incentives into alignment because right now they are misaligned because there's extra benefit. You get the same return on equity for everything, and there's extra benefit to shareholders for certain things. there's going to be a bias towards doing that. But in terms of where it is right now exactly, let me turn it over to Prince, if you could. Sure. Thank you, Selby Member. The bill in print directs the PUC to assign a reduced return on equity for the identified categories of costs. The committee amendments modify that so that now, The commission is required to consider whether to take that action, and the commission is directed to issue written findings for each of those categories based on a series of potential rationale. So there's an opportunity for all parties, including the utilities, to argue about whether it would be prudent for the commission to take this action. So I think the best way to understand the amended version of the bill is it tees up a conversation at the PUC where they are directed to take the hard look at this issue, and they're certainly free to consider some of the concerns that you've identified in your comments, but it does not require a particular outcome. If I could ask the representative for medicine, is it your sense that that sort of less mandatory approach, what do you gauge as the likely response of the capital markets to that? I mean, to me, it still seems like it's sort of signaling less predictability in regulatory treatment and that that is part of the issue. And what I was told last year, and I'm not sure if it's true, was that after we passed some of the bills last year, the result of when those were signed, it increased borrowing costs for all of the IOUs. So where we achieved some reductions on some of these bills, we paid for them in increases in borrowing costs at the tail end. And so we may have ended up in the effort to become more affordable, you know, have more affordable rates for folks. We may end up sort of running counter to that. So I'd just like to get your sense of that. Well, thank you, Mr. Zubair. That's a great question. Regulatory certainty informs a big portion of our credit ratings. So all the credit rating agencies do look at regulatory certainty or, in some cases, uncertainty, depending on, you know, where we are. And at the end of the day, you know, we're one of many, many, many investor-owned utilities across the country. So we're all competing against a variety of other people to, you know, access capital. There is not an unlimited amount of capital that can come to California. You know, there's at some point in time, you know, the tap gets turned off and there is just not enough investments that can be made. But what happens if, you know, to your question, though, more specifically, what happens is that if there is a signal that there is regulatory uncertainty within the state, our credit rating will go up, which in turn impacts our borrowing costs. When our borrowing costs go up, then it has a negative impact on our ability to, you know, on our rates effectively. So it's a cost of service. I appreciate the committee amendments and in part because I didn't have an opportunity to sort of get behind this bill until this morning. I'm going to support it today because I don't surprise anyone and I think the goals are good. And so I'm going to vote for it today, but I'd actually like you to continue looking at that piece of the bill. So thank you. Can I say one thing in response? Please do, Senator. Yeah, just that it's one thing is 100% clear. The primary driver of the market requirements and borrowing costs is wildfire risk. So when I'm just looking back on if you look at, say, the history here, when we did that bill, we did require some securitized debt, but we also did things to shore up the wildfire fund. It actually had a positive impact overall. So that's really the key driver of the wildfire risk. All right. Okay seeing no further questions from committee members I have a couple of comments So I just want to say thank you Senator for your I think very real focus on energy and electricity affordability in the state I think everyone, whether it's your proponents or the opponents, I think everyone acknowledges that our sky-high, sky-rocketing rates are simply unacceptable. and really, really not sustainable. So I know that all of us have been taking a very hard look to scrutinize our constituents' bills to understand where are their opportunities to drive down costs in both the short and the long term. And I think the conversation we've just had between committee members reflects why that's hard, right? I think sometimes we'd like, like the bumper sticker slogan would be easy. And I think if we could all wave a magic wand, we would do that. But your bill doesn't attempt to wave a magic wand. Your bill really is getting into the weeds and trying to understand some key drivers and where there's opportunities. And to the point, to the conversation around return on equity, that is certainly a topic that has consumed quite a bit of committee conversation over this session and in years past. And I think we all understand that we are in a moment of making truly generational investments to build out California's electricity grid. We need a 350% increase in transmission capacity over the next 20 years, a 300% increase in generation capacity. We need to make sure that we're doing these things cost effectively. We also recognize that utility health is important for California and important for California rate payers. Because as some of the members articulated, as the opposition witness articulated, if utility health is in question, then borrowing costs go up and rate payers are ultimately the ones who are then bearing those costs. So it's not as simple as just saying, oh, we should have an ROE of X. And that's why I think that the approach that now is being taken in this bill ensures that the CPUC does retain their kind of core rate making discretion. But I think the question being posed is a very important one. And I think a lot of us, while we recognize we want to make sure that utilities are earning a fair return, earning a return that is adequate to attract necessary capital, given that it is a guaranteed rate of return, does it make sense for it to, in fact, be uniform where some of these investments feel like perhaps it should be different? So I think it's an important question to ask the CPUC, an important question for all of us, both us as policymakers, frankly, us as utility customers, to really understand. And lastly, I think it's important that incentives continue to be aligned between our utilities and the customers who are foot in the belt. So we know that this is certainly not the last word, but certainly I think I look forward to continuing to work with you both on this bill and on future efforts to continue to bend the cost curve and deliver savings for Californians. So with that, would you like to close? Yeah, I want to thank you, Chair, and I want to thank the committee for your partnership. As we said, there's not one silver bullet here, and there's probably many things we do agree on, actually. and we do want the utilities to invest in necessary infrastructure we had transmission streamlining as part of 254 last year and I've supported streamlining getting things built faster as well a lot of this bill really is the wonky good government material and I do appreciate you diving into this And I guess I want to just also thank the business customers for weighing in on this as well. But at the end of the day, it's really about clear performance metrics, aligning the incentives. It's one piece of getting into that. It's going to help us get to where we need to be. So with that, respectfully, I ask for an aye vote. Thank you. We are still one member short of a quorum, but we will take the bell up at the appropriate time. And then you've got one more. Yes, I do. Thank you. All right. Next up is file item 5, SB 913. Well, while 905 was about aligning utility incentives, 913 is about using our existing grid more effectively. This bill creates a viable pathway for distributed energy resources to fairly compete to offer low-cost capacity reserves for the reliability of our electric grid. Electricity demand has remained fairly stable, but as we just discussed in the last bill, we project that to change. The CEC projects that energy demand will rise between 42% and 61% in the next two decades. And you're all aware that the grid only reaches its maximum capacity several hours on the hottest days of the year. But as demand on the grid grows overall, it also tends to make the highest peaks in demand higher. And we require utilities to maintain enough capacity to meet demand on these peak load days. That's the right thing to do is how we ensure reliability. But how we create that capacity is up to us. And I think you've probably heard me say before the Walmart parking lot analogy. You build the Walmart parking lot for, you don't build it for January 7th at 10 a.m. on Tuesday. You build it for the Saturday before Christmas. And the result is you have a lot of excess capacity most of the time. And that really is the status of our grid. So we have two choices. We could build more power plants and more transmission lines just to handle those few hours a year when we need to meet that higher demand. And of course, we will have to continue to invest, as we discussed. And, or we could make better use of the grid we've already built, using devices installed in our homes and businesses to shift demand away from those peaks and save a lot of money. And we're not trotting, you know, in some ways, California, in a lot of areas, we're leading. Actually, in this area, we've now seen other states start to leapfrog us about using this infrastructure more effectively. It's already in people's home. The CPC reports that about 3,000 megawatts of customer-cited batteries are already installed in the state, and 100 megawatts of new customer-cited batteries are installed every month. That's enough new capacity every month to replace a peaker plant. The problem is that most of these customer-cited resources are currently sitting on the sidelines. That's because the rules for entry and participation in the RA, the Resource Adequacy Program, and CAISO's energy markets have not evolved with the development of these new technologies. SB 913 asked the CBC to update these rules to align more closely to those that have enabled the CEC's highly successful demand side grid support program. And I'm going to want to thank Assemblymember Irwin and other members of this committee for leading on support, rallying support for the DSGS program, enabled that program to sign up more than 1,000 megawatts of those customer-cited resources. This bill levels the playing field by ensuring rules don create barriers to customer enrollment It allows customers to enroll multiple devices allows performance to be measured at device level and allows customers to export energy back to the grid These changes will allow these resources to compete on an even playing field with new utility-scale generation to see which resources can meet the grid's needs at the lowest cost. Not letting these resources compete would be a wasted opportunity to save ratepayers' money. I'm happy to accept the committee's amendments, And with me, I have Allison Hilliard from the Climate Center and Eric Leon from Renew Home. Wonderful. Good afternoon, Madam Chair and committee members. Thank you for the opportunity to provide testimony in support of SB 913. My name is Allison Hilliard, and I am the Government Affairs Director for the Climate Center. And we are very grateful for the committee amendment and work on this bill and grateful to Senator Becker for championing this. The Climate Center is a think tank, do tank, working to turn bold ideas into action for a climate safe future for all. We are co-sponsoring SB 913 because, as we all know, the state isn't experiencing an affordability crisis, and everyday Californians are paying the price. We believe that SB 913 can help address this crisis. Unlocking the value of customer-sided solar, storage, smart thermostats, and other flexible appliances and devices through SB 913 can help lower California's utility bills by allowing these resources to fairly compete and ensuring our grid is fully utilized. This would save money because these aggregated resources would only be selected if they are the least cost option in the resource adequacy market. We also know that the climate crisis is accelerating and along with the projected Super El Nuno, we are going to be experiencing the hottest year ever. Instead of firing up a polluting gas beaker plant in an overburdened community to meet the increased electricity demand, we can rely on clean local resources that are already available in homes, businesses, schools, and government buildings. Currently, these resources are limited from fully participating in the resource adequacy market, but SB 913 would level the playing field, like the Senator said, for these resources to meet the demand and maintain a reliable electricity grid when they are the lowest cost option. The California Demand Side Grid Support Program, the nation's largest virtual power plant, has demonstrated that these aggregated energy resources can and help avoid grid emergencies both reliably and cost effectively. SB 913 would give these clean, small-scale resources a long-term pathway to participate in the state's energy market, acting as a tool in the toolbox to address our affordability crisis. For these reasons, the Climate Center is in strong support, and thank you for the opportunity to provide comment and respectfully ask for an I vote. Thank you. All right. Good afternoon, Chair Petrie-Norris and committee members. Thank you for the opportunity to provide testimony today. My name is Eric Lyon, policy lead for California and the West at Renew Home. Renew Home is an aggregator of smart thermostats and other residential distributed energy resources with active participation in California's energy markets and utility programs. California has spent decades investing in customer located solar storage, smart thermostats and other flexible appliances and devices, but has not been able to fully unlock the value of these resources. When these distributed energy resources are aggregated, they can offset traditional power plants, just like Allison said, and hundreds of thousands of these resources have already been deployed at homes and businesses. Previously, I worked at the California Energy Commission, where I was a primary author and designer of the Demand-Side Grid Support Program. This program has successfully demonstrated that these small, aggregated resources can provide dependable capacity, but that program has always operated in a silo on the periphery of California's energy system. systems. SB 913 builds on the successes and lessons learned from DSGS, particularly the options for smart thermostats and batteries, and provides a pathway to better integrate more of them into California's core energy processes, or the resource adequacy program, as Senator Becker mentioned. This integration is critical. Allowing these resources to compete will help the state harness hundreds of megawatts of existing capacity without the need to build out expensive infrastructure. But DERs cannot compete and bring down resource adequacy costs from a silo. Nothing in this bill presupposes any outcome. It simply directs the CPUC to make changes that will create a more accessible market pathway. Aggregators like Renew Home would still be required to ensure that our capacity can deliver, that it is cost effective, and that it is clean. Our industry is confident that we can compete in the market with traditional generation, and this bill simply gives us a fair shot to do so. For these reasons, Renew Home is in strong support of SB 913. Thank you for your time. Thank you. All right, moving to additional witnesses in support. If you'd like to testify in support of SB 913, please approach the microphone. John Hart with the California Solar and Storage Association in support. Good afternoon. Christina Scringe with the Center for Biological Diversity in support. Thank you. Bill Brueger for Climate Action California and 350 Humboldt and 350 Sacramento in support. Thank you. Good afternoon. Scott Cox on behalf of Ceres in support. Leo Dale on behalf of Environment California, Affordable Energy Campaign and Voltus in support. Good afternoon. Kendra Begley on behalf of the City of Mountain View in support. Jim Lindbergh, Friends Committee on Legislation of California in support. Good afternoon, Chair and members. Tiffany Fan on behalf of the California Efficiency and Demand Management Council in support. Thank you. Chair and members, Alicia Priego on behalf of San Jose Clean Energy in support. Good afternoon, Gabriela Fosio with Sierra Club California in strong support. Good afternoon, Adam Hadifi on behalf of Generac Power Systems and DECOV Smart Thermostats in support. Arnaud Pal with Deploy Action, we support. Good afternoon, Meredith Alexander, the Coalition of Large Energy Users, in support. Good afternoon, Dylan Hoffman on behalf of Advanced Energy United, in support. Craig Schuller on behalf of Ava Community Energy, in support. Good afternoon, I am Mada Keatmayano of NextGen California, and we would like to clarify that NextGen's position is now support if amended to remove the NEM exclusion amendment. Thank you. Thank you. All right. Moving to any witnesses in opposition. Do we have any primary witness in opposition? Come on up. The floor is yours. Hello. Valerie Torello with Pacific Gas and Electric Company. our position on AB 913 is opposed unless amended. PG&E is very excited by the potential for explicit RA value for DERs as we agree with the author on that excitement and potential We appreciate the conversations we had with the author and his staff appreciate the work of the committee on the bill We are concerned that this use case that we're all excited about is not proven. It is also the subject of three open rulemakings. but again we do want to get to the same destination and we might disagree on the journey. We're going to continue to look at the amendments and continue to have conversations with the author. Thank you. Thank you. All right we are going to pause for one minute just to establish quorum. Madam Secretary please call the roll. Patriot Norris here. Patriot Norris here. Patterson. Patterson here. Berner. Calderon. Here. Calderon here. Chen. Davies. Gonzalez. Herbidion. Hart. Hart here. Irwin. Here. Irwin here. Kalra. Here. Kalra here. Pappin. Here. Pappin here. Rogers. Here. Rogers here. Chiavo. Here. Chiavo here. Schultz. Ta. Wallace. Zibber. Here. Zibber here. All right. Moving on with additional testimony in opposition. If you'd like to testify in opposition to SB 913, you can approach the microphone. Or come on up. Hello. Sarah Fitzsimons with the Independent Energy Producers Association. I wasn't sure if I should stand and do a me too and oppose or come up here. We have been opposed to this bill, but we're very appreciative of the committee's work on this bill and the author's work on this bill. And in light of the amendments being accepted, we actually would like to remove our opposition and go to neutral. So we're in support of the amendments, and we really appreciate the work on this bill. Wonderful. Thank you so much. All right. Is there anyone else who'd like to provide Me Too testimony in opposition? Brady Van England, SoCal Edison. And we are opposed on file, currently reviewing the proposed amendments and the committee analysis. Appreciate the thoughtful committee analysis. And hopefully we'll be able to remove our opposition after we've had a chance to look them over. Thank you. Thank you. All right. Bringing it back to committee. Questions, comments? Seeing none. Senator, would you like to close? Well, thank you for the work of the committee. This has been a long time in coming. And it's a complicated topic, but really it's about, again, using our existing grid more effectively. And then how do we get all these distributed resources that now we're recognizing that distributed resources can be part of our critical infrastructure? And how do we bring them into play? This bill is better for the work of this committee and respectfully ask for an aye vote. Thank you. All right. I think we need a motion. We need a motion and a second. Thank you. All right. Madam Secretary, please call the roll. Item number five, SB 913. The motion is due. Pass is amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? No. Patterson, not voting. Berner? Calderon? Aye. Calderon, aye. Chen? Davies? Gonzalez? Herabitian? Hart? Hart, aye. Irwin? Aye. Irwin, aye. Kalra? Pappen? Aye. Pappen, aye. Rogers? Aye. Rogers, aye. Chiavo? Aye. Chiavo, aye. Schultz? Ta? Wallace? Zabir? Zabir, aye. Okay 8 That bell on call and we leave the roll open for absent members to add on Thank you Senator Thank you Chair All right, let's go ahead and open the roll on the consent calendar. We need a motion and a second. Second. Right. Motion from Assemblymember Rogers, second from Assemblymember Zabur. Madam Secretary, please call the roll. Item number seven, SB 1008, the motion is due pass to appropriations. Item number 11, SB 1168, the motion is due pass to appropriations. Item number 15, SB 1337, the motion is due pass as amended to appropriations. Item number 17, SB 1366, the motion is due pass to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Aye. Patterson, aye. Berner? Calderon? Aye. Calderon, aye. Chen, Davies, Gonzalez? Harabitian. Hart. Hart. Aye. Irwin. Aye. Irwin. Aye. Kalra. Pappan. Aye. Pappan. Aye. Rogers. Aye. Rogers. Aye. Schiavo. Aye. Schiavo. Aye. Schultz. Ta. Wallace. Zabir. Aye. Zabir. Aye. 9-0. So they can set calendars on call and we'll leave it open for absent numbers to add on. Let's call the roll on file item number one, SB 804. Do we have a motion? We've got a motion from Rogers. Do we have a second? Second from Assemblymember Schiavo. Madam Secretary, please call the roll. Item number one, SB 804. The motion is due pass to emergency management with commitment to take amends in emergency management. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Aye. Patterson, aye. Berner, Calderon? Aye. Calderon, aye. Chen, Davies, Gonzalez, Herabitian, Hart? Aye. Hart, aye. Irwin? Aye. Irwin, aye. Kalra? Pappin? Aye. Pappin, aye. Rogers? Aye. Rogers, aye. Chiavo? Aye. Chiavo, aye. Schultz, Ta, Wallace, Zabir? Aye. Zabir, aye. All right, 9-0, that is on call. We'll leave the roll open for absent members to add on, and then file item number 4, SB905. And we need a motion and a second for that. SB 905. Okay, we've got a motion from Assemblymember Hart. Second from Assemblymember Irwin. Madam Secretary, please call the roll. Item number four, SB 905. The motion is do pass as amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? No. Patterson, no. Berner? Calderon? Not voting. Calderon, not voting. Chen, Davies, Gonzalez, Harabitian, Hart? Aye. Hart, aye. Irwin? Aye. Irwin, aye. Kalra? Pappan? Aye. Pappan, aye. Rogers? Aye. Rogers, aye. Chiavo? Aye. Chiavo, aye. Schultz, Ta, Wallace, Zabur? Aye. Zabur, aye. All right. 7-1, that measure is also on call. We'll leave the roll open for absent members to add on. and we have reached another lull in our programming. So I'll make a further public service announcement. Senators, if you have a bill to present in Assembly Utilities and Energy, please make your way to room 437. We still have 12 measures to be heard and it's almost 3 o'clock. So please either provide us an update on your whereabouts or come to room 437 by 305 Thank you senators . I said, are you expecting it to go online? . Thank you. Thank you. . Okay, just a little further update for senators and senators staff. So we are going to wait here until 3.05 for a Senate author to show up. If we do not get a Senate author at that time, I'm going to be respectful of the assembly members' times, and your bill is going to be put off until next Wednesday. So please send the message to your boss. Thank you. Thank you. All right. We are back in action. Welcome, Senator McNerney. Thank you so much for joining us. All right. The floor is yours. We're going to go ahead, members, and move to file item number 12, which is SB 1196. Thank you. good afternoon madam chair Petrie Norris vice chair Patterson distinguished members of the committee First I want to say that I am accepting all of the committee amendments and I want to thank the committee and the staff for working closely and cooperating with my staff on this legislation with the committee amendments. SB 1194 no longer focuses solely on utility hookups for accessory drilling units. Instead, I'm getting a little out of breath from running over here on your... We appreciate it, Senator. We appreciate it. Instead, the new bill, the bill now concerns hookups for small energization projects, including ADUs, EVs, chargers, home backup batteries, and so on. So it's basically expanded so this is not just focused on ADUs. Smaller energization products are defined as those that do not require infrastructure upgrades by investor-owned utilities. That's a pretty simple idea. The committee amendments also significantly narrow the legislation by removing some of the bill's most required timelines. During the past few years, California has enacted laws to accelerate the energization of new houses, transportation, and more. But homeowners who have completed small projects, including adding ADUs, an EV charger, backup batteries, and so on, remain frustrated by the extremely long delays. In some cases, applicants have been waiting up to a year for energization once they have completed the project. These long delays not only place an undue financial burden on homeowners, but also exacerbate the state's housing shortage and frustrate California's electrification efforts. SB 1196 streamlines small energization projects by allowing applicants to submit a request for a utility hookup at the same time as a request of building permits. So in the past, you would have to wait until your permit was approved to apply for the utility hookup. That added delays, months of delays, basically. This bars utilities from canceling service connection applications without the application consent. That's another pitfall. If utilities get behind, they just cancel your projects and then say, well, we are behind because we don't have these projects. So this bill bans that. It also directs the CPUC, our friends at the CPUC. I want to emphasize that. It creates a clear timeline for IOUs to process utility service connection requests and establishes penalties for IOUs that do not timely process intergestion applications. And with me today, I have Sylvia Aguilar of the Casita Coalition. Sylvia? Thank you, Senator. Good afternoon, Chair and members. I am Sylvia Aguilar, Programs and Operations Manager for Casita Coalition. We are a nonprofit dedicated to advancing middle housing solutions, including ADUs and JADUs. Our founders co-wrote the 2017 law that legalized ADUs statewide. With the committee's amendments, SB 1196 no longer focuses solely on ADUs and JADUs, but now includes all small energization projects that do not require infrastructure upgrades by an IOU. Since that definition includes most ADU and JADU projects we remain in strong support of the bill From 2016 to 2024 the number of ADUs permitted in California has grown from 1 a year to about 30 ADUs are known as naturally more affordable and most are used as long-term rentals. But as Senator McNerney noted, homeowners and ADU builders are increasingly facing a significant barrier, incredibly long service connection delays with waits up to 9 to 12 months for energization. PG&E estimates on its own website that energization for a home addition can take up to 182 days. Many homeowners can't afford long delays for a service connection as they need to begin renting the ADU to begin to cover their costs and recoup their investment. IOUs also add delays when they prohibit homeowners from applying for the service connection until the building permit is received. As Senator McNerney stated, this problem alone can cause months of delay. Some IOUs cancel small energization applications without the applicant's consent, prompting even more delays. SB 1196 addresses these problems and adds timelines for IOUs to process applications for small energization projects, such as when the homeowner might only need to add a second meter. Thank you. Can you go ahead and wrap up? Sure. SB 1196 is common sense legislation that will ensure California can meet its electrification goals and get low cost housing projects online faster. I respectfully ask for your aye vote. Thank you. Thank you. All right. At this time, we'll open it up for additional witnesses in support. If you'd like to testify in support to this measure, please approach the microphone. Looks like good timing. Good afternoon, Chair and members. Karen Stout here on behalf of Southern California Obtainable Housing, as well as California UMB, both in support. Thank you. Thank you. Good afternoon. Monica Salas on behalf of Housing Action Coalition in support. All right. Turning to opposition testimony. Do our opposition witnesses want to? Save my steps. Okay. Madam Chair, Israel Salas with San Diego Gas and Electric. We have an opposed position on the bill, but with the committee amendments, we will be removing that opposition. So we do appreciate the author and his staff for working with us as well as your committee staff. Thank you. Thank you. Brandon, you're back on behalf of Pacific Gas Electric. I echo the comments of Senator Gas Electric, particularly working through all the technical issues on this one. We will be moving to neutral. Thank you. Thank you. Okay. Bringing it back to committee for questions or comments. All right. Assemblymember Papin? Well, I would just like to thank you for bringing the bill. As someone who went through an addition that delays, I very much appreciate the pragmatism with which you approached it, and congratulations. I'm happy to move the bill. Thank you. Thank you. All right, Senator, would you like to close? Well, I don't have a closing statement ready, but I'll just say this is common sense. If you're going to spend money on a hookup, ADU hookup or some other hookup and doesn't even require the utility to come and do anything except put a tag on it, then let's make sure that that happens expeditiously. I'll ask for an aye vote. Thank you. Thank you, Senator. All right. We have an assembly member. We have a motion by Assemblymember Pappen. Second from Assemblymember Hart. Madam Secretary, please call the roll. Item number 12 SB 1196 The motion is due passes amended to appropriations Petrie Norris aye Petrie Norris aye Patterson Berner Calderon Chen Davies Gonzalez Aye. Gonzalez aye. Herbidion, Hart. Aye. Hart aye. Irwin. Aye. Irwin aye. Kalra. Pappen? Aye. Pappen, aye. Rogers? Aye. Rogers, aye. Schiavo? Schultz? Ta? Wallace? Aye. Wallace, aye. Zabir? 7-0. 7-0, so that measure is on call, and we'll leave the roll open for absent members to add on. Thank you, Senator. All right, moving along to file item number 6, SB 931 by Senator Laird. Welcome. Welcome, Senator Laird. Thank you. Madam Chair and committee members, I'd like to begin by accepting the committee amendments, and I really want to thank the staff and the chair for working with me on them. With the committee amendments, Senate Bill 931 reauthorizes the Essential Services Mitigation Fund, or ESMF through 2028. For the years since Diablo Canyon has been a nuclear power plant, there's been a unitary tax or an essential services mitigation fund that has provided support to local agencies related to hosting the Diablo Canyon plant. The fund itself was authorized in 2018 with bipartisan support through SB 1090 by then Senator Monning. And under SB 1090, the community program funding provided money with regard to impacts associated with the plant's accelerated closure. The funding was scheduled to end with Diablo Canyon's closure date in 2025. However, the plant operations were extended to 2030, and this fund was not extended. In particular, there's a school district that has a large amount of support from this. It's going to go over a fiscal cliff without this renewal. Communities in San Luis Obispo County have relied on this funding, both in the form of the unitary tax and then later the mitigation fund to support essential public services. emergency preparedness, fire protection, public safety response, and other things necessary to host Diablo Canyon. Continued operation of Diablo without a restoration of the funds places a disproportionate burden on the communities. The reauthorization, given the amendment that was taken, will be paid through the volumetric performance fees that are already being collected. Therefore, there's not a ratepayer impact with regard to this bill, which is, I think, very significant. And in closing, I should say one thing, because I know that every time I talk about this subject, people get a little confused. This is not an extension bill. The extension has passed the legislature and the governor signed through 2030. This is just affecting that extension. There quite possibly will be an extension bill, and various stakeholders and legislators are talking about it. And I'm committed to ensuring that Diablo Canyon's host community is made whole for whatever period of time that might be enacted by the legislature. legislature. And so with that, at the appropriate time, I would respectfully ask for an iPhone. Thank you, Senator. Do we have a primary witness in support? No. Okay. Go ahead. Madam Chair, members, Paul Yoder on behalf of the San Luis Obispo County Board of Supervisors, I want to thank Senator Laird again for carrying this vital piece of legislation. Diablo Canyon is a critical component of the clean energy portfolio in California. Continued operation absolutely, in fact, has impacts on the local communities. Emergency preparedness there is arguably unlike anywhere else in California. We all need that emergency preparedness. I want to thank the committee chair and the committee for the thoughtfulness. I urge your aye vote. Thank you. Thank you. Additional witnesses in support? Go ahead and approach the microphone at this time. I'm Maeve Holden. I'm a parent of my son and a bunch of other students, I'm going to get emotional, of SLCUSD and all the staff and families that have been affected by this. And I urge an eye, strong support from our school district. Thank you. All right. At this time, we'll turn to opposition testimony. Is there anyone here to testify in opposition to this measure? See none. Going once, going twice. Okay, bringing it back to committee. All right. I'll just say, Senator, I think like all of us, you are a fierce fighter for the constituents that you represent. Appreciate your commitment to your community and appreciate the approach that we're taking with this bill. So would you like to close? I appreciate that comment, and I appreciate all the work got to the point that we aren't having this animated hearing that was going to be when I first introduced this bill. I respectfully ask for an item. Thank you. All right. We have a motion from Assemblymember Rogers, second from Assemblymember Hart. Madam Secretary, please call the roll. Item number six, SB 931. The motion is do pass as amended to appropriations. Petrie Norris? Aye. Petrie-Norris, aye. Patterson, Berner, Calderon, Chen, Davies, Gonzalez. Aye. Gonzalez, aye. Herabitian, Hart. Aye. Hart, aye. Irwin. Aye. Irwin, aye. Calra, Pappin, Rogers. Aye. Rogers, aye. Schiavo, Schultz, Ta, Wallace. Wallace, not voting. Zabert. All right. Five zero. That bill's on call and we'll leave the roll open for absent members to add on. Thank you, Senator. Welcome, Senator Stern. Come on up. All right. I think you've got two of three. We got a three for. Oh, my four. Wow. You've been busy. Okay. Beginning with file item number 10, SB 1158. Great. Small tweak to this joint reliability power assessment, bringing before you all members. We've been doing this since we had some grid infrastructure challenges a few years back, and we've had a really good coordination between PUC, CEC, looking at weather predictions, looking at what kind of capacity we're going to have online. Right now, the reports are done quarterly, and this bill would say that you only have to do it twice a year as opposed to four times a year. We think that the pace of the projects that are being developed can be sort of accurately projected on this sort of twice a year timeline as opposed to quarterly So that literally all the bill does We think it'll save some money but still get the same quality of data we were looking for. With that respect, we ask for a vote. Move the bill. Thank you. Witnesses in support. If you would like to testify. I don't think we have a primary witness. I might not. Anyone would like to testify in support of this measure, please approach the microphone at this time. Seeing none. Anyone here in opposition? Anyone would like to testify in opposition to SB 1158? Please approach the microphone. Seeing none. Bringing it back to committee. All right, Senator, would you like to close? Respect faster. I vote. Try to be efficient here. Madam Secretary, please call the roll. Item number 10, SB 1158. The motion is due passed to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Berner? Calderon? Chen? Davies? Gonzalez? Aye. Gonzalez, aye. Herbidion? Hart? Aye. Hart, aye. Irwin? Aye. Irwin, aye. Calra? Pappin? Rogers? Aye. Rogers, aye. Schiavo? Schultz? Ta? Wallace? Aye. Wallace, aye. Zabert? 6-0. So that bill is on call. We'll leave the roll open for absent members. Moving on to file item number 13, SB 1245. Okay. Let me just get myself situated. So we are barreling down the road at what we call, according to the CDC, the mid-transition period. And it is a wonky way to describe a harrowing time where our drivers are at the whim, essentially, of what happens in the Strait of Hormuz every single day. And I think this state, thanks to legislature and the work of this administration, have started to look at diversifying our strategies and ensuring that we have all options on the table in this state as we approach what I wish would be the last time we had a conflict like we're having in Iran right now. But I fear it won't be. And I don't think we can afford to rely on the way we've been doing things. This bill puts a few tools on the table to offer, largely leaning on the transportation fuels assessment that came from the Energy Commission. But we, you know, ultimately we feel that we ought to be expanding in general, moving from an analysis into action from that assessment. And in this bill, we're asking them to go deeper on things like CARBOP. But we acknowledge that there are other elements to that assessment that are going to be critical. And they're all kind of uncomfortable conversations to be having, whether you're looking at things like flow reversals of pipelines, marine imports, more domestic production in state. there's no easy conversation. Even demand destruction and looking at deploying more ZEVs is ever more difficult as the president has just submitted the four waiver requests to Congress to permanently undo our Clean Air Act authority in the House. So the stakes are very high We hoping that the tools we offer on the table here for the CEC to keep moving forward are good I think they earned our trust and ought to be empowered in this regard I also think that the Department of Petroleum Market Oversight needs further support direction and frankly a more stable resource set Although this bill is not addressing necessarily the fiscal dimensions of what DPMO has faced, we do think they have to take a harder look at the retail market. And that's really what the bill is putting forward, is saying you've done a lot on the refinery side, but we also want to look at the retail side. Look at these disparities. You've heard them in many hearings. We know some of the contracts are being collected, and we are starting to get better data thanks to CTFA and looking at some of these dealer tank wagon contracts, making sure that these mystery surcharges are not so mysterious anymore. But we think that DPMO is the right place to be doing that analysis. But we do want to we are open to and trying to figure out sort of the best dimension to be doing that analysis in. Right now, you can do analysis for analysis sake. But if you're finding things that are worthy of consideration for, say, things like price gouging, where the president himself today accused the entire oil industry of price gouging, It sounded like a press release from our governor from two years ago. Strangely, though, it was you just strike one word out and add Trump to it. And suddenly it's dawned on him that there are issues. So I feel like this should be a bipartisan approach is actually lighter handed than that and much more focused just on the retail side. And so we're hoping that combination of tools are worthy of your support today. And we recognize that there are going to be other aspects of this conversation that are important to have both in this session and in the coming year. So with that respect, I ask for our vote, and thank you, Madam Chair, for working with us on this. Thank you. Welcome. Yes, I'm Jeremy Martin from the Union of Concerned Scientists. Thank you for the opportunity to testify in support of SB 1245 on behalf of the Union of Concerned Scientists. My focus is on California gasoline regulations called CARBOB. But before offering solutions, a few words about the problem. Bring the microphone up a little, I think. Can you hear? Yeah, maybe just bring it a little closer. Okay. Yes. Okay. A few words about the problem we're trying to solve. California's gasoline market is broken. Gasoline prices are persistently higher than in other states, even after accounting for differences in taxes and fees. This is the so-called mystery gas surcharge. The latest update suggests it's about 60 cents a gallon. And of course, California also suffers from periodic supply disruptions and price spikes. Other states don't have these problems, and the root cause is a lack of competition. California suffers from consolidated market power and vertical integration, and its unique carbob blend and physical isolation leave it cut off from the rest of the U.S. market and forced to rely on international imports that slow down resupply during supply disruptions. Integrating California into the broader U.S. market can increase competition, and allowing the use of non-carbob gasoline can facilitate that integration. UCS analysis found that allowing the use of non-carbob gasoline to address occasional resupply challenges, together with a mitigation fee used to replace a small number of the oldest, most polluting cars on the road, is a win for consumers because it reduces price spikes, it's a win for clean air because it gets the most polluting cars off the road, and it's a win for low-income drivers of older cars that upgrade to a newer used EV and don't have to buy gasoline at all. WSPA has opposed this flexibility and argues that imports would undercut in supply and could lead to more refinery closures In other words they like the broken market just the way it is with inadequate competition leading to inflated prices and price spikes that benefit WISPA members Fuel regulations are just a piece of the puzzle. SB 1245 can help restore competition across the entire fuel market. Thank you. We respectfully request your aye vote. Thank you. All right. At this time, we will open up for additional witnesses here in support. If you'd like to testify in support to SB 1245, come on up. Allison Hilliard, registering support for the Climate Center. Thank you. Will Breger, representing Climate Action California. We believe in competitive energy markets. Thank you. Support. Marie Lu for APEN in support. Good afternoon. Marissa Hagerman with Tratton Price Consulting for California Environmental Voters, NextGen California Environmental Defense Fund. Thank you. Thank you. All right. Let's move to opposition. Do we have a witness here in opposition? Come on up. Chair and members, thank you. Alessandra Brichetto on behalf of the California Fuels and Convenience Alliance. We respectfully oppose SB 1245. Members, every study has a cost. The question is who pays for this one? One of the policies this bill directs DPMO to examine is divorcement, a policy that multiple empirical studies have already found increases retail gasoline prices, not lowers them. But our greatest concern today is what it will take to conduct this study. To analyze private contracts, pricing practices, market competition, and potential policy solutions, DPMO will inevitably have to seek confidential business information from companies throughout California's fuel supply chain, small, medium, and large, branded and unbranded in every single market. And 60% of gas stations are operated by someone who owns just one station. Now imagine you're a husband and wife who own a single unbranded gas station. You don't have a legal department. You don't have a compliance officer. Then one day, the state serves you with a subpoena, demanding years of supply agreements, invoices, pricing records, contracts, emails, and financial documents. Now you're hiring outside counsel. You're spending thousands of dollars in legal fees. You're pulling employees away from running your business just to respond to the state's demands, all while trying to keep your station open. Every business that receives one of these requests will bear that burden. But California's smallest operators, especially independent, unbranded stations, are the least able to absorb it. For some single-site operators, complying with one broad subpoena won't just be another business expense. It could be the difference between staying in business and closing their doors. And that's the irony of this bill. It's intended to study competition, but the study itself could reduce competition. Every independent station that closes means fewer competitors, fewer choices for consumers, and more concentrated market. And when competition shrinks, prices go up. Members, a study should not put the very businesses it is studying out of business. Yet that's exactly the risk this bill creates. If the legislature wants this analysis, it should rely on publicly available information wherever possible and include meaningful guardrails for any confidential business information that is requested. For these reasons, we respectfully ask for your no vote unless amended. Thank you. Thank you. Thank you, Madam Chair and members. Zach Leary on behalf of the Western States Petroleum Association in respectful opposition to SB 1245. I wanted to address a couple comments that I heard from the senator about this mid-transition. I think we need to be honest and realistic with the public about where we are actually at as it relates to demand for petroleum products in California. We are nowhere near mid. The transition is potentially in its infancy when 90 plus percent of vehicles on the road still need our products that our refiners, both in Northern California and Southern California, provide. We do see a very small decline in gasoline consumption, but we are at 13 billion gallons a year. That's 35 million gallons a day, and that is the fuel that our refiners produce and provide. We are also seeing a growing demand for jet fuel. That is the fuel that our refineries provide. The proposal suggests that we should be having a trigger for when to sell non-CARBOB fuel into the market. If you all remember, CARBOB was adopted to address air quality issues, mainly in LA. The days of smog are largely gone due to the investments that our refineries made to design their refineries to yield the most carbob to meet the demand in California. And so the backslide on fuel standard has not been the proposed solution. We know that we are the least competitive refineries in the world. What we are asking the legislature to do is focus on areas to make us competitive so that we can continue to operate. And it's really up to you to decide where do you want to get your fuel? Do you want your fuel to be imported or do you want your fuel to come from California refineries with California jobs paying California taxes? Thank you. Thank you. All right. Additional witnesses here in opposition to this measure SB 1245 come on I'm chair members Mike Monaghan on behalf the state building trades in opposition Madam chair, that's who can tell us on behalf of California's business roundtable in opposition Thank you. Okay, bring it back to committee questions comments Assemblymember Hart. Thank you, Madam Chair. I just want to thank the author. His leadership in this space is really appreciated. And this committee has spent a lot of time in information hearings on this subject. Really appreciate the work of the committee staff and the chair to highlight these issues. Whether we're in the mid-transition or the infancy of the transition, we are in a transition. We need full transparency on the information that is of vital importance to all the consumers in California who need gasoline. Gasoline supply is not a regulated utility, which is what we talk about a lot in this committee. And as such, there's a dynamic between the private sector and the public interest that has to be navigated carefully. It's going to require a lot of cooperation and a lot of patience. And our consumers and customers and constituents are going to rely on us figuring this out. And getting information is critical to making that effective. The idea that this effort in its modest way is going to put gasoline suppliers out of business is frankly absurd. And this is long overdue. I really appreciate the research that Dr. Martin has done. It's, I think, pressing people to get outside of their silos and think a little bit more realistically about what we're going to do and how we're going to do it. And I support this bill and really appreciate that we're having a hearing in this context. This has been a fascinating journey from the bill that I introduced to the bill the senator has introduced We all learned a lot in the process And change doesn happen rapidly but hopefully it takes incremental progress And this is one of those steps. So I appreciate it. Thank you. Thank you. Assemblymember Zipper. I got to say that I'm very torn on this bill because I know that the goals are really important, obviously. And, you know, there's a part of me that's sort of, you know, we're making it easier to sell gas that's more polluting in order to do that for sort of affordability. I originally had some misunderstanding about the bill and thought that what we were trying to do is get supplies in that would allow for modifications to the refineries to allow the non-carbo fuel alternative to be provided. But as it turns out, what I understand is that this would allow for periods of time for us to actually increase imports of fuel that's actually refined outside of the state of California. So it makes me – there's two things that I'm nervous about. One is that it's less – it's worse fuel from an environmental perspective, and it feels like we're exporting jobs outside the state. And so for that, I'm just really torn about this bill. And so I just wanted to give you an opportunity to respond to that. Look, fair point. I'm torn about it all too. And it's such an interesting reversal where you have the environmental community in support of a bill and the oil industry on the other side of a bill where you're arguing about, you know, should we have the clean fuels? I'm sure at the time that the car Bob Starnes got started, it was the exact opposite, but probably sitting on, you know, industry pushing for it. if we weren't in such a jam, we wouldn't have to look at all these options. This doesn't sort of leap towards that step. I'm not trying to say to you that this bill passes and we're off to the races on Carbot, right? There's still – CC has to go through a whole process. I mean, there's a lot of stage gates. There's a lot of permitting. There's a lot to go on, and Mr. Leary may have a comment on that point too. So this isn't sort of a straight green light. But that said, I think that this doesn't make sense in isolation. I think if we only did this piece, it wouldn't. I think it's necessary, but it is not only insufficient, but it's if we don't have the kind of protections we need for leakage around how we refine fuel in the state. I've already stepped out on them last year, but I think if we don't have domestic production in the state under the 237 agreement, I think that's a problem. I think very good news coming out about folks finally starting to utilize our in-state pipeline system and get fuels to market from non-foreign suppliers, right? I mean, Sable has essentially occupied all the pipe coming to Southern California, and we can't get anything out of Kern to our refiners. But now that CRC has bought the San Pablo pipeline, we have a shot at some more – at bringing competition from in-state. I think if you don't bolster that as well, so I guess I wouldn't ask for you to say that this should be adopted in isolation. I think if you're voting for this, you should vote on it in the context of a broader strategy that you're saying, okay, we have to have that option on the table. We have to look at things like flow reversal in the Western Gateway. I do I get that that uncomfortable to bring potentially refined gasoline in from Texas or refiners in Arizona Frankly we rather have that than Iran right now And that's kind of the alternative we're looking for. So, I mean, the one thing I will take issue, and maybe the opposition will like to comment, but to imply that our state's refiners are our domestic energy strategy, I think is a little bit of a misnomer because a lot of the crude coming in to be refined at these refineries from Ecuador, now increasingly Venezuela, I think Iraq is number two. So it's not as if our workers are still exposed to those foreign oil entanglements under the existing system. Yes, this is more American supply potentially coming in, but I guess that's how I So it is a quandary, but I think it does make sense if we sort of embrace the full strategy. That's what I'd say to you. I'd like to hear what the officers are doing. Please, yeah. The one thing that – I mean, what can you tell me, though, about the bill that put some guardrails to make sure that we're not actually importing dirtier fuel from outside the state when we actually have capacity, that it's not going to result in reductions of refinery work happening now and a reduction of jobs, that it's something that is not going to replace cleaner fuel that can be refined here, either by having temporary periods or something like that. It just sort of seems like allowing dirtier fuel to come in where we know that it's exporting jobs. How do we prevent those things from happening? And can you do something in the bill to address it? Yeah. You want to take a shot at it? Yeah.

And actually, before we hear from the competition, because I think there was, you know, there's sort of two parts of your question. I believe you're responding to the second part. I would also like Dr. Martin to just clarify, I think, where we are in our non-CARBOB journey, as it were. So I know the opposition used the phrase, we're going to backslide on our fuel standard. Mr. Zabur, you asked about, you know, concerns that were, you know, bringing in more polluting fuels. So it is my understanding as we dug into this bill that when we established CARB standards some 30 years ago the delta between CARB and non was significant As engines and technology has moved forward over the intervening three decades that delta has narrowed. So it is a very important question at this juncture for all of us to be asking, what is the cost-benefit analysis? If the environmental impact is enormous, that cost-benefit calculation is very different than it is today, where the environmental delta is, as I understand it, very narrow. So perhaps the scientist, Dr. Martin, can say that. Can you just speak to what is the actual differential in terms of non-carbon fuel simply related to some of the environmental concerns that have been raised by the opposition and by some members.

Thank you. And that's helpful. And then I believe for the second part of your question, you wanted to hear from Mr. Larry as well.

I do think that last comment, you may be conflating this proposal with Mr. Hart's prior proposal. There's nothing in this related to a trigger. So under the, it says implement a strategy to facilitate sale of gasoline with alternative specifications that consider a trigger mechanism for when those alternative gasolines are going to be sold. Understood, yes, which they would not. Again, I think the complexity of this issue and the challenge of this issue is one of the reasons that the proposal doesn't just tomorrow do anything. What it does is in our existing law, we've asked the CEC to study this as part of the work that we've already asked them to do. This would give them then the authority to take action once that study is done. So, you know, is it a trigger or not, I think is very much an open question. Or would it become statewide policy full stop? Would California refiners be able to produce non-carb up fuels? Those are all open questions that need to be answered as part of the CEC's work. And I may respond, Madam Chair.

Thank you. Mr. Zabar, did you have an additional follow-up?

If I can – it's – the CEC is still studying it. We've already authorized that study. We're giving them more power to act on that analysis, but it's not done. So they're considering things like these mitigation fees right now. They actually haven't arrived at that conclusion. They actually haven't arrived at the conclusion of whether it makes sense to move forward. I think some of that's supposed to come this fall, winter, when they finalize what they call the TFA. But it's given me a little more power than just studying. I don't want to hide the ball from you. Yeah, but can we put guardrails around the actions that they're taking so that we're looking at the potential job loss?

Okay. And I would welcome both your input and the committee's guidance on looking at other things right now in the framework we passed last year on jobs, analyses, things like that. Do we need something new here? Do we need an extra piece? I know there's like discussion about task forces and things like that too.

Committed. Work with you on that. Thank you. Yes. Thank you. All right. Assemblymember Patterson.

Thank you. Assemblymember Irwin. Yeah, I just want to make a comment. I've known Senator Stern for many, many years as such an avid environmentalist, way back to the Fran Pavley days, and I think even before then. But, you know, we are facing very hard realities now, and whether it's affordability and, you know, refinery capacity, what are the next steps? And I do think that it is really important to explore alternatives, so I commend you for this. I know that based on your background, these are not easy discussions to have. So, thank you. Thank you. All right. Thank you. A couple of questions. I want to first follow up with the California Fuels and Convenience Alliance. You mentioned that some of the information in this study is already publicly available. Actually, I guess I want to ask the senator to respond to some of the concerns that were raised about that aspect of the bill from the witness, if you want her to remind you of the concerns she can, but you're probably taking notes. Yeah, and if you don't mind, redirect me. There was one particular, you were talking about divorcement? I think it's in section 6A2. To assess one of the potential solutions. So what I would say is they have this existing authority study, this work already. This is micromanaging that a little bit. I will admit to that. The current law would allow them to go look at these issues. We just didn't direct it specifically. I don't think, maybe you have a different view, but I think it was very broad authority under the 237 framework that we came up with. And so this isn't necessarily like new data gathering power for the DPMO. This isn't new subpoena power. This isn't saying you're going to have access to, that you have some new authority in that regard, but it is telling them specifically to study a range of options. I get that option is an uncomfortable one. And look, there's litigation going on right now. That's a very uncomfortable issue, too. Under the tweaks of the Cartwright Act we made last year on an Aguiar-Curry bill, there's currently a lawsuit against some of our biggest retailers in the state. We're using a software called Calibrate that's supposed to actually, or they're being accused of price pollution. So that is under current law. So this wouldn't even change any of that existing litigation posture. We get it's a very sensitive subject, though, at the moment. But I still think it makes sense to study the uncomfortable things here. I think it's important for us to give that surgical level of direction versus the sort of open-ended directive that we have at DPMO right now, which is really implying stay way, way upstream. And I think they need more direction there. So that'd be mine. Okay, and what I was asking about specifically is that our opposition witness raised a point that some of the, I guess, questions that are being posed here and the conclusions that you want them to do a bunch of – Oh, right, that I'm tipping – It's already publicly available. I think the analysis says that if the CFCA actually has some publicly available data, perhaps you would wish to provide it to the author for further consideration. And can I just I guess perhaps what I asking Senator is to the like I I do not believe that you are trying to send DPMO off into an exercise that would be both costly for California taxpayers and unnecessarily burdensome for the CFCA in order to find conclusions that have already been studied So can you commit to talking to the CFCA and narrowing the scope of that work to uncovering new information rather than things that we already know? Yes. Okay, thank you. All right, and then just more broadly, you know, I think this is, as the vice chair noted, or somebody noted, we've talked a lot about this topic in this committee and with good reason. So, you know, I think 30 years ago, legislators got to come up to Sacramento and they could pass bills and they could say in 40 years, we're going to do something super, super hard. And they could have a press conference, pat themselves on the back and move on. Sadly, those chips are all like coming due now on our watch. And so as we are trying to navigate, again, whether you call it a mid-transition, an early transition with the petroleum fuel sector, as we build out our clean energy future, it is very hard. And I think we have to all acknowledge it is hard and it is complicated, but we need to have tough conversations as part of that. And I think, Mr. Larry, you asked, like, where do we want to get our fuel? I think that we've made it very, very clear in this committee, and I think the same in Senate energy, that number one, we want to make sure that we shore up California production and that we protect, to Mr. Zuber, your line of questioning, we protect California jobs. But we also know we need to have a liquid market and a diverse fuel supply. Like those, those are two conclusions we have reached. So we have to navigate those transition in a way that makes both of those true. So I guess what I would ask of you, you know, and other folks who have registered opposition is to the extent that you're, you know, you look at this and say, oh my gosh, this is going to cause all refineries to close and we're going to lose all of these California jobs. help us understand what is necessary to establish a level playing field so that both of those things can be true, so that we can shore up existing California production while also ensuring that we have adequate market liquidity to protect California ratepayers from price spikes and exorbitant prices. So that would be my ask of you as we continue to have this conversation. seeing no additional, I don't think any questions or comments from committee. Senator, would you like to close?

Thank you. All right. I think we need a motion and a second. All right. Motion from Assemblymember Hart. Second. Second from Assemblymember Rogers. Madam Secretary, please call the roll. Item number 13, SB 1245, the motion is due pass to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? No. Patterson, no. Burner? Calderon? Chen, Davies, Gonzalez, Gonzalez, not voting. Herbidion, Hart, Hart, aye. Irwin, aye. Irwin, aye. Kalra, Pappin, Rogers, aye. Rogers, aye. Schiavo, Schultz, Ta, Wallace, Wallace, no. Zibir, aye. 5-2, so that bill is on call. We'll leave the roll open for absent members to add on. Moving swiftly on. All right. File item 14. Okay. Set up time. Okay. Thank you. Yeah, yeah. Please. Thank you. All right. File item 14, SB 1295. This is the Henry Stern show. Oh, boy. No, please. The most boring show you could ever tune into. You want to go to sleep? Yeah. Watch my show. Very nice. Thank you. I'm sorry, 1359 or 1295. 1295. Oh, there you are. Yes, you're 12. I got you. I'm right here.

Okay. Thanks.

Second. Awesome.

Thank you. Okay. Additional witnesses in support, if you'd like to testify in support of SB 1295.

Wilberger for two climate groups, Climate Action California and 350 Humboldt in support.

Hello good afternoon Valerie Torella with Pacific Gas and Electric Company And just want to thank the author and the sponsor and the committee work on this bill to recognize that the utility had concerns with delays that would happen in these considerations and that we did have a lot of conversations about a planning construct. We're very focused, as this committee knows, in the last several years with SB410 and AB50 on getting customers connected. I think PG&E calls it speed to power. And we want to focus on getting those customers connected. But we think that we're going to review the bill when it gets into print. And we do think that we have struck a balance here. So appreciate that work.

Catherine Borg with Southern California Edison. We look forward to looking at the amendments in print and we will get back to you.

Scott Wetsch on behalf of the California Coalition of Utility Employees and the State Association of Electrical Workers. We appreciate the amendments. makes the bill much better. We still haven't removed our opposition. We can look at those,

Madam Chair, Israel Salas with San Diego Gas and Electric, what the prior two speakers said.

Thank you. Okay. Bringing it back to committee. Questions or comments on this one? All right. Seeing none, Senator, would you like to close?

All right, thank you. And we do have a motion from Assemblymember Rogers and a second from Calderon. Madam Secretary, please call the roll. Item number 14, SB 1295, the motion is due pass as amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Not voting. Patterson, not voting. Berner? Calderon? Aye. Calderon, aye. Chen? Voting. Chen, not voting. Davies? Gonzalez? Aye. Gonzalez, aye. Herabitian? Hart? Hart, aye. Irwin? Aye. Irwin, aye. Kalra? Kappan? Rogers? Aye. Rogers, aye. Schiavo? Schultz? Ta? Wallace? Wallace, not voting. Zabir? Six-zero. That bill is on call. We'll leave the roll open for absent members to add on. Thank you. All right. And I think we are now on to your final bill for the day. We've got file item 16 SB 1359. Yes. And let me just say at the outset, I want to accept the committee amendments. Thanks staff for their good work, as well as the stakeholders here, both support and opposition. And I think getting us close to a place of landing, something that makes good sense. We've approached affordability on the electricity side pretty aggressively. And I think both this committee and our body have done some pretty powerful work to at least start to get our hands around electric affordability. I think one of the concerns going forward, though, is going to be, do we have the same sort of scrutiny in our general rate cases around the gas side of the system? And this bill is not really intended to bias that conversation one way or another and to say what parts of that gas system ought to be pruned where should you be only electric where should you be dual fuel It really just trying to get the PUC's long-term proceeding around gas, where they're looking at some of these sort of bigger high-level issues to start talking to the general rate case. And if we can get the rigor of the general rate case and the sort of cost decisions that have to be made there applied when we're looking at expansions of our gas, both distribution, transmission system, and just being rigorous in that context, I think will be very helpful. I should note that I think we've agreed on additional language to be incorporated going forward to further clarify the definition of a project so that this doesn't become a sort of project. It's clear this is not a project by project bill so much as it is a overall reasonableness test that the PUC currently employs in their GRC. GRC. And this bill was really only meant to capture additional reporting on larger distribution projects like subdivision builds, upgrades, but not so much on individual meter repairs. And I really appreciate the work with our coalition as well as the opposition on landing that. Yeah, we think this is going to save folks money in the end. And we think the same rigor ought to apply on gas that it does on electric. So hope we struck a balance here. I want to turn to my lead in this support, Marquise Mason with NRDC, and I respectfully ask for an aye vote. Dear Madam Chair and members of the committee, my name is Marquise King Mason. I'll be speaking on behalf of the Natural Resource Defense Council. Electrification is not a nice-to-have. It is essential for the state and world's climate goals. SB 1359 is about better planning and oversight for energy infrastructure. We spend billions on long-lived gas infrastructure without a comprehensive mechanism to fully consider whether those investments will become stranded assets. As demand for gas declines, infrastructure costs don't disappear. They get shifted onto of the remaining gas customers. A majority of gas customers' bills now go towards building and maintaining infrastructure rather than purchasing gas itself, meaning that even if gas prices come down, these infrastructure costs will remain elevated. Ensuring that gas companies have to report to the Commission expenditures associated with gas infrastructure replacement and upgrade projects, the status of existing projects, the estimated remaining costs and projected completion dates for these projects, and also available electrification alternatives is common sense in order to guarantee the best bang for our buck and ensure the CPUC has the information they need for prudent oversight of these investments. Before authorizing recovery costs associated with gas infrastructure project, the commission must consider whether cost-effective electrication or non-pipeline alternatives could reasonably avoid or reduce costs and deliver on our climate goals. Finally, this bill empowers the PUC to do something that our state should have done a decade ago. Look at electricity infrastructure and gas infrastructure with different lenses for depreciation. The PUC would be directed to assess whether depreciation schedules for gas infrastructure appropriately reflect project reductions in gas, projected reductions in gas. In a moment of the rising prices and global volatility, continuing to double down on fossil fuel infrastructure is not just environmentally sound, it's financially risky. Low-income households cannot afford a mismanaged transition if we misalign critical investments towards fossil fuels. SB 1359 provides a framework to protect rate payers, prioritize lease-cost solutions, and guide California through a managed equitable transition of fossil gas. For those reasons, we recommend an aye vote. Thanks so much. Thank you. Okay, opening it up for additional witnesses here in support, if you'd like to testify in support of SB 1359. Thank you. Marissa Hagerman with Tratton Price Consulting, registering support on behalf of California environmental voters. Sorry, long afternoon. Good afternoon. Christina Scrincher at the Center for Biological Science. Logical diversity in support. Bill Brigger for Climate Reality Project in Los Angeles and in San Fernando Valley, 350 Sacramento, and Climate Action California in support. Thank you. Afternoon. Gabriella Fosso is here, Cope California in support. All right. Do we have anyone here to testify in opposition to this measure? Our primary witnesses can come on up. Good afternoon, Chair and Committee. Thank you for the time here. I'm Nate Taylor. I'm the Director of Distribution Planning and Project Management at SoCal Gas. My team plans, engineers, and delivers investments that keep our gas distribution safe, reliable, and affordable. My team's also heavily involved in the long-term gas proceeding at the CPUC that you alluded to, Senator Stern. I want to highlight that we truly appreciate the dialogue that's going on with this bill. The thoughtful analysis produced by this committee was very helpful to see, as well as the ongoing dialogue with your office to try and improve via amendments. I think the amendments that we saw through this committee were helpful, but there are still some open issues that we'd like to highlight that create some risks. First, we think the bill adds unnecessary process and likely introduces delays to the execution of essential safety and reliability investments. Second, it creates significant additional reporting burdens, which unnecessarily augment existing processes and will substantially increase costs. Third, it does not contemplate actual implementation of alternative investments in instances where they're preferred. On the first point, related to added costs and delays, I want to be clear. Our distribution portfolio is comprised of essential safety and reliability investments, as well as customer requested work. This portfolio is driven by safety mandates, regulatory requirements, and contractual obligations to our local franchise partners. This work is not discretionary. We do this work because we must. The requirements contemplated here would delay critical work, increase costs, impact affordability, and ultimately confirm what is already known. These investments are necessary. On the second point, the utilities already provide annual risk spending accountability reports, also known as RSAR, which provide meaningful information at a level that is reasonable both for utilities to produce and for stakeholders to review. The reporting SB 1359 would require constitutes an overly broad and complicated regime that would likely require significant resources to produce and would generate unclear benefits. The last point I'll make is it does require an alternative analysis. If those alternatives are selected, there's no real process in place for us to pursue those. So it puts energy access, energy service at risk. How will we serve customers in that case? Thank you. Thank you for the time. Good afternoon, Chair Petrie-Norris. Members, John Kennard from the California Chamber of Commerce respectfully oppose the bill in print. The Chamber agrees that California needs to responsibly manage the long-term transition of the natural gas system. For several years now, the PUC has been grappling with how to reduce long-term stranded asset risk. while maintaining safe, reliable, and affordable service for customers who remain on the gas system. Strag and appropriate balance is an incredibly difficult task. Gas demand may decline over time but the system still serves millions of customers today and many businesses manufacturers restaurants critical facilities runners and low households do not have practical or cost alternatives in the near or even midterm future The question is how to manage this transition without creating new cost spikes, reliability risks, or uncertainty around necessary safety investments. Recognizing the difficulty of achieving that balance, we appreciate the work that the committee and the author have put in to appropriately tailor this bill. Our primary issue right now is a provision that directs the PUC to evaluate depreciation schedules and consider methodologies that minimize future-stranded asset costs. We're concerned that this may be perceived as a direction to accelerate depreciation. And if you're accelerating depreciation to minimize future-stranded asset costs, that does have significant impacts in the near- and midterm affordability context, putting upward pressure on rates. Customers who remain on the system, including restaurants, manufacturers, small businesses, hospitals, other customers, they're not going to have practical alternatives. They'll be paying more for gas to serve their needs in the near and midterm. We also do appreciate the proposed amendments to the provision on cost recovery, direct the PUC to establish a monetary threshold for projects to trigger review. That threshold is necessary, but based on the current language of the bill, we're concerned about the potential to aggregate multiple small projects into a larger project. I believe that's some of the language that you were talking about. So I definitely think that there's still room to work here and appreciate it. Thank you. Thank you. Okay. We are now going to bid it up for additional witnesses here in opposition. If you'd like to testify in opposition to SB 1359, go ahead and approach the microphone. Thank you. Valerie Tirella with Pacific Gas and Electric Company, and we are opposed to the bill in print. Thank you. Elizabeth Esquivel with the California Manufacturers and Technology Association, also in opposition. Scott Wetsch with the California Coalition of Utility Employees. We worked with the author on language, and with that amendment that he mentioned, we remove our opposition. Thank you. Good afternoon, Madam Chair. Chris Shimoda with the California Council for Environmental and Economic Balance in opposition. Thank you. Madam Chair and members, Moira Top here on behalf of the Orange County Business Council in opposition. Mary Creasy on behalf of the San Bernardino County Board of Supervisors in opposition in print. Esau Flores of the California Restaurant Association also in opposition. Thank you. Bringing it back to the committee, questions or comments? Senator, the opposition raised some concerns that this could lead to delays in necessary safety upgrades. Did you want to perhaps respond to that concern? I appreciate that prompting. Yes. We hope this new provision, it's in 329.1C, where we say nothing in this section shall delay or disallow recovery of prudently incurred costs required for the safety, reliability, or legal compliance. of gas distribution infrastructure or for emergency or catastrophic event response. Very up for continuing to work through that line and try to figure out, does that not capture certain upgrades that you think are critical? So, yeah, we try to address that issue. If it's not, or maybe I think you would try. I accepted what you did, but the committee did an excellent job, I thought, of making that amendment. but we're open for fleshing that out. We don't assume everything is perfect here. So I'm open to looking further if there are other things that may get in the way Yeah I couldn quite tell It doesn make adoption execution of any project contingent for example on that long-term proceeding being completed, but it does sort of prompt this alternatives analysis. So maybe it's that there's concern about how quickly can you get through that analysis and does that stall out your ability to execute on projects? So keep talking with the opposition and try to figure that out. But I thought the savings clause in C was at least a good shot. Thank you. Okay. See no additional questions from the committee. Senator, would you like to close? Respectfully ask where I vote. Thanks for bearing with me through four long bills. You all have been very patient. And we need a motion on this bill. Moved by Assemblymember Hart. Do we have a second seconded by Assemblymember Irwin? Madam Secretary, please call the roll. Item number 16, SB 1359. The motion is do pass as amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? No. Patterson, no. Berner? Calderon? Aye. Calderon, aye. Chen? Chen, no. Davies? Gonzalez? Not voting. Gonzalez, not voting. Herbidion? Hart? Aye. Hart, aye. Irwin? Aye. Calra? Pappin? Aye. Pappin, aye. Rogers? Aye. Rogers, aye. Chiavo? Schultz, Ta? Ta, no. Wallace? Wallace, no. Zabert? 5-4, so that measure is on call. We'll leave it open for absent members to add on. Destiny hangs in the balance. Thank you all. Okay. Thank you, Senator. I appreciate it. Thank you. Welcome, Senator Padilla. Come on up. Thank you. All right. Good afternoon, Madam Chair and members. I'm pleased to present. SB886, and begin by thanking you and the committee staff for working diligently with us on this bill, and we will be accepting the committee's proposed amends. This bill will require the PUC to create a special tariff for large energy users like data centers to protect rate payers from cost shifts and stranded asset liabilities. The development of artificial intelligence has led to a corresponding explosion, as we all know, in data center development. But where once on average small-scale facilities are now being proposed to be developed as massive hyperscale data centers requiring more energy than the grid provides in often entire communities where they're proposed to be located. The costs associated with this energy and infrastructure are being passed down to ordinary rate payers, small businesses, homeowners, and renters. In the Atlantic states, as we are aware, data set and development has led to massive rate increases, for example, for PJM customers with rates there projected to have cost an increase of nearly 76 percent in the first quarter due to unprecedented demand. Without guardrails, these energy consumers threaten to raise costs for all rate payers and threaten public health, among other complications. ratepayers are already struggling as we are well aware with affordability should not be faced to bear the burden of these potentially stranded assets and obligations as well as rising consumption costs Many other states that experienced this rapid development have struggled with high energy costs and have imposed everything from exit fees to minimum contract terms to demand requirements and upfront payments from large utility or energy consumers. The bipartisan little Hoover Commission has recommended many of these measures to protect rate payers and the environment from unchecked data center development. and even President Trump has announced an agreement with tech companies to fully pay for their data center costs. And this legislation simply memorializes some elements of those commitments. Our state must take steps to ensure grid investments for large energy consumers on a scale not yet seen in this state and being created on the demand side by one specific consumer are not adversely or inequitably distributed to regular rate payers. So I'm really pleased again to be joined today by Matt Friedman with TURN and Sam Uden with NetZero California. Thank you, Madam Chair, members of the committee. Matt Friedman with TURN. We are a co-sponsor of this bill along with NetZero California. The bill would direct the Public Utilities Commission to authorize the establishment of new electricity tariffs to serve data centers that protect non-participating customers, ensure a fair sharing of system costs to all customers, and promote greater use of clean energy and distributed resources by these facilities. Forecasts of growth and new data center deployment have led to serious concerns about needed grid upgrades, the amount of electricity to be consumed by these facilities, cost shifting, and potential impacts on progress towards California's zero-carbon electricity objectives. As mentioned by the senator, on March 4th of this year, a number of the largest technology companies in the United States attended an event at the White House and signed a pledge to build, bring, or buy new generation resources needed to meet all electricity needs for new data centers. The companies promised to pay for all grid upgrades, needed to power the data centers through utility tariffs, and we believe the state of California should be requiring at least as much from these companies as they promised to President Trump. For the investor on utilities, the bill has several key elements. It prohibits cost shifting to non-participating customers. It establishes an obligation for data center customers to pre-fund a 10-year contract through a load-serving entity for the cost of procurement to meet clean energy targets. It requires participation in demand response programs, assigns all transmission facility upgrades to these customers, and ensures that data centers contribute a reasonable share of non-bypassable costs, including wildfire mitigation that are collected typically from distribution customers. Recent polling shows that the provisions of this bill are overwhelmingly supported by California voters. 63% support a new state law that includes these very specific provisions. 76% support requiring data centers to buy or build clean energy. And 74% believe that a law is needed rather than deferring to the Public Utilities Commission. So this bill establishes a robust framework for preventing adverse impacts from data center load growth in a manner that fairly balances the interests of data centers and the broader needs of all electricity customers, and we respectfully ask for a supporting vote. Thank you. Thank you, Chair and members. My name is Sammy Den, and I'm with Natura California, and we're proud to co-sponsor SB886, which provides a robust set of protections for ratepayers from data-centre-driven load growth. So no one needs to look further than the East Coast and Midwest to see what happens when data-centre expansion is left unregulated. States such as Virginia, Ohio, and Pennsylvania have seen billions in cost increases to consumers. In a recent address, FERC Chair Laura Sweat highlighted data centres as having the potential for causing historically unprecedented catastrophic failure in reference to the future operations of PJM. California voters are seeing and feeling this acutely. A recent found that 70% of voters oppose new data centre construction but move to support, as Matt indicated, for either a strong guardrail set in place. These include data centres paying for their grid connection costs, 87% support that, reducing demand when the grid is strained, 81% support, are held financially responsible in the event that they cancel their projects, 81% support, and buy or bring their own clean energy, 76% support. It is notable that this voter sentiment actually parallels the best available research for how to protect ratepayers from data center load growth, including studies from Harvard, MIT, Princeton, Duke, and many others. SB86 includes many of these policies and so provides robust protections for California ratepayers. It is responsive to California voters, align with the best available research on policy design, and overall stands as a nation-leading standard. I want to thank the Senator for his leadership and all the staff and stakeholders that have contributed to getting the bill to where it is today, and we respectfully request your aye vote. Thank you. All right. Additional witnesses here in support. If you'd like to testify in support of SB 886, come on up. Jonathan Clay on behalf of the City of Imperial in support. Scott Wetscher on behalf of the California State Pipe Trades Council, the Western State Council of Sheet Metal Workers, and the State Association of Electrical Workers in support. Good afternoon. Ada Welder with Earthjustice here in support of Amend. And we've really appreciated the author's leadership on this issue and the conversations with the staff. Yes, name, affiliation, and position. Thank you. Marissa Hagerman for Union of Concerned Scientists and California Environmental Voters. We were supportive of amend. We're reviewing the amendments. Thank you. Mariela Racho for Leadership Council for Justice and Accountability and NextGen California, supportive of amend. And thank you for your leadership, but concerned with some of the amendments from the committee. Thank you. Yes. As a reminder, name, affiliation, and position only. Thank you. Will Brigger here to support on behalf of Climate Action California, 350 Humboldt, and 350 Sacramento. Thank you. Thank you. Marquise Mason with NRDC in support. Thanks. Thank you. Sean McNeil, California Community Choice Association. We're a tweener. We do have a number of concerns. Okay. We can at this point only. We have to just be fair to everybody, so we can't do that. We're going to work with the staff to fix our issues. Okay. All right. Moving now to any witnesses who are here in opposition. Good afternoon. Brandon Ebeck here on behalf of Pacific Gas Electric. There's a lot to cover in two minutes. I want to definitely acknowledge the work of the author and the committee. I know there's a lot of committee amendments that we look forward to reviewing that probably directly go against some of the original intent of the author. So we want to recognize the progress that has been made on this. We still have some concerns with the direction beyond what we view as loopholes from the definition of what a data center is or the applicability not to public utilities like Silicon Valley Power ID. We still have concerns with the way that the 75% refund language is in the bill directly conflicts with the ongoing proceeding that we proactively filed called Rule 30 of the CPUC. As the sponsors pointed out in some of their materials, we've seen a couple of resolutions called exceptional case filings that have used something like a 75% refund plus tax. It's very complicated. We are awaiting a decision in Rule 30 in the next couple of months that are based upon the several stakeholders hundreds of pages of testimony and data requests We don want this bill to forego that process that will set how customers can be refunded We also very much support early termination fees, demand charges, all of the other provisions that are in the bill. So we view that provision as conflicting with where we want the PUC to finish that work. The other key issue we have is the assignment of what are called transmission network costs. These are essentially the interstate highways. This proposal is essentially the equivalent of saying a new subdivision's impact fees have to pay for Interstate 5. This completely flips around how transmission planning is done. We do not plan transmission projects for single customers. There's no way to parse a single customer's impact on the interstate project. We know the roads in the neighborhood that lead to that customer, Those are pretty easy to assign, but it's not appropriate to assign the interstate costs to specific customers. No utility in the state is looking to do, in the country, is looking to do this. If you're going to do this, it may be done at the federal level through tax. And if you can wrap up, I'm sure you'll have an opportunity to respond to questions in a moment. Thank you. Thank you. All right. Next up. Welcome. Thank you, Chair Petru Norris and members of the committee. My name is Ahmad Thomas. I'm the CEO of the Silicon Valley Leadership Group. I want to thank the Chair and Senator Padilla and his staff for their work on SB 886 and for engaging with stakeholders on these issues. As the bill is currently in print, we respectfully oppose SB 886. SVLG represents Silicon Valley's innovation ecosystem. Our members support reliable energy infrastructure, responsible grid planning, and fair cost allocation, including the principle that large new loads should pay their fair share of the cost they cause. We recognize the importance of managing California's growing electricity demand in a way that protects ratepayers and supports grid reliability. Our opposition to the bill, as in print, centers on three concerns. First, SB 886 is premature. Through SB57 last year, the legislature tasked the CPUC with assessing whether large data center loads shift costs to other ratepayers, with a report to the legislature due Jan 1, 2027. The CPUC has since opened its Advanced Electric Rate Design Rulemaking to address these very questions, and FERC has directed the nation's grid operators, including CAISO, to address large load interconnection cost allocation. The framework is actively being built through these proceedings, and SB 886 would lock statutory requirements into place before that work is complete. Second, the bill embeds prescriptive operational, procurement, and rate-making requirements directly into statute, including on-site generation and zero-carbon procurement mandates, demand response participation, and long-duration contract terms. These are complex, rapidly evolving questions best resolved through existing CPUC proceedings rather than fixed in code. We're encouraged that the committee's analysis recommends removing the bill's procurement mandate and moving the demand response requirement outside the tariff. We look forward to reviewing the language when available to get this right. Thank you very much. Thank you. Okay, additional witnesses who are here in opposition to SB 886. Thanks. Good afternoon, Chair and members. Timothy Burr on behalf of the Data Center Coalition and TechNet in opposition. Thank you. Good afternoon. John Kenner from the California Chamber of Commerce in opposition. Good afternoon Monica Salas on behalf of Bay Area Council Opposed unless amended Thank you All right Coming back to committee questions comments from committee members Assemblymember Hart I see that the amendments have strucken the provision to require incremental new clean energy to feed the data centers. And I understand we're trying to strike a balance between our greenhouse gas reduction goals and cost and affordability. I understand that, you know, the bill is as it is now and just hope that you can continue to work on that space. I appreciate that you had that in the bill in the first place and your creativity and maybe another vehicle or something could help to get at that issue in the future. And I don't know if you want to respond to that. I'm happy to respond to that because I know other committee members have asked. And it was indeed a committee amendment. With the fact that I'm sure I think they're very good questions. I think it's just I think it's important. I think folks have been focusing on what has been removed from the bill. I think it's important to remind everyone and for everyone to understand what remains in the bill. So what we added was to ensure that procurement is consistent with state goals. And SB 100 sets incredibly ambitious clean energy procurement goals and requirements for the electricity sector. So by 2030, California's utilities must procure 60% of retail electricity sales from eligible renewable resources. That includes solar, wind, geothermal, and certain hydroelectric resources. By 2045, we are getting to 100% renewable and zero carbon resources. And so I think given that, it seemed to me curious to have a tariff that combined different clean energy mandates that actually would over time become less aggressive than our state goals in statute. The bill retains the requirement to establish a demand response program to address GHG reduction. There's also the requirement to pre-fund the contract with the installation of behind the meter, zero emission resources would then reduce what you are allowed to install. So I think there are, and I want stakeholders, I want members to know, I want stakeholders to know, this is still would be one of the most, I think, ambitious clean energy requirements for data centers in the nation. I may be wrong. You can correct me if I'm wrong. Anyone? No. I think it would be one of the, if not the most ambitious clean energy requirements for data center development in America today with the bill as amended. All right. Additional questions or comments from committee members? All right. I have a question for our opposition witness because you said that you said something that caught my attention. So you said that when we're doing what, you know, that we shouldn't, if you're building a neighborhood, you shouldn't say that neighborhood needs to be responsible for all of I-5. And so you're not looking to assign the cost of new transmission to these new large load users. I think that many of us think you should be. Yeah, we agree. Certainly the author does. But explain to me, why wouldn't you be trying to find a formula that assigns at least your fair share of the interstate costs to the user that's making the building of that interstate necessary. That's, yeah, we agree. The way it works in what's in our Rule 30 application, we've broken this out. We call them type one through four costs Type one through three are your neighborhood streets your county roads something that we can directly attribute in the planning process to that customer load that would not exist without that customer Type four is still an upstream upgrade, adding a lane on I-5 that the customer needs, but also so do the other thousand drivers using that road. So the way the transmission planning works, there are projects in the South Bay that are data center projects that are going to be reliant on new large transmission projects that we've been trying to plan for probably 20 years. So it's kind of a chicken and egg situation of like we're building it for everybody, including EVs, building electrification, every other customer. So it's that one wrinkle of the very large 250 kV, 500 kV lines are split across multiple customers. They're not just serving the one customer. So it's the point in time of, well, Kaiso has already approved it a few years ago, but now it's going to be used for this customer. Why should that customer be attributing the cost for a project that we're going to build anyway? Because it's meeting all of our other load needs. That's really the wrinkle here. Senator, do you want to respond and perhaps explain why you think we need to take a different approach than he articulated it? Well, thank you, Madam Chair, and I'll respond in part and I'll allow my expert witness to respond. First, I think it's important to not lose context here that we draw a distinction in the definition of bill as to what type of large low demand customer we're talking about. And I think we'll all understand that the history in California to date with respect to data centers and their average sizes, the context of built environment in which they currently reside, and they're typically on average 35 megawatt type of facilities. In terms of attributable recoverable cost and cost socialization, that's going to be a very different scenario than we look at the new phenomenon, which I think is what we're trying to get at here. We're going to see consistently more in this state, in any service territory, places where we look at hyperscale applications. We look at large load consumers, and that's why we set out that framework. It's a distinct set of circumstances, both from an infrastructure, from a cost, and certainly from a demand response and demand consumption standpoint. Right. So what my point here would be is the distinction is when you have a single consumer that is disproportionately drawing massive demand, both in the consumption of resource and then in turn requiring the costs associated with the infrastructure designed to serve that one particular consumer. I think, Jerry, you mentioned in some testimony there was opposition comment about the treatment, the disparity in treatment as a single customer shouldn't be responsible. Here we're talking about potential large load consumers that are the equivalent of, I don't know, hundreds, thousands of individuals. So I don't know that there's a one-to-one comparison. So I would just say that on the Rule 30 proceedings, which is relevant, and I think my expert can testify a little bit more to this. First, the Rule 30 proceedings there, as you know, are incomplete. The only determination that's been made is that there are elements of those costs that are recoverable. And thirdly, there's no setting yet on that. And it's very distinct from what we're trying to do in this bill. So with that, if I may, Madam Chair, can I have my witness answer additionally? Thank you. One data point here, PG&E says you just can't know how many of these costs are attributable to data centers. Well, the California ISO has actually put a number on it in their most recent transmission plan. They've identified $1.85 billion in network upgrades in PG&E service territory alone that they claim are attributable to 840 megawatts of new data center loads. That's in their transmission plan. So the California ISO has a good idea of what's cost these upgrades and what the costs are attributable to. And I think we can identify them. The PUC certainly can figure that out if they were to implement the provisions of this bill. Thank you. All right. Short response. Just to clarify, the issue is the upfront funding, not the like on the ongoing basis. Yes, we want everybody to pay in rates. We just don't want that customer. It's hard on the upfront basis because we can have a single transmission line that goes into the Santa Clara that provides power to us, provides power to Silicon Valley Power. that we might not even be building. Because these are competitive projects, we don't know how to give a third party money to upfront fund a competitive project if it's not even our project. So that's like the wrinkle is really upfront funding, not the ongoing once you're on energized. Yes, we want every customer to pay their share of transmission costs. So I just want to clarify that. Yeah, yeah, understand. But I do think it does seem like there's a difference between the way you think we should be calculating upfront funding and the way I think the author and his sponsor think we should be calculating upfront funding. And I would just say that, yeah, for like in a normal world, nobody is going to transition and trigger some new transmission line. But the volume that we're talking about, the size of these users, absolutely. Like we're not bringing more stuff on the grid. We don't need to build as much transmission. So I think we've heard from our constituents loud and clear that they want to make sure that data centers are paying their fair share. They want to make sure that data centers are good neighbors. And I would also say to the opposition, to the data center community more broadly, I think it's really, really important that communities, that you start to have a posture that enables communities to think that you are good neighbors or else we're going to see, I think, more communities that are just going to say no. And it would be my goal to ensure that we're navigating this, I think, real, you know, pretty big challenge for California in a way that demonstrates, yeah, we're open for business and we're going to make sure that right payers aren't left holding the bag full stop. Vice chair. Thank you for letting me go for a second. I'm old enough to remember like two hours ago when I swear you were up here talking about concerns about infrastructure being built and how much that's going to add on to the bills. That was just like a little bit ago. And now there's a bill up where you're saying like, we need more money now for, you know, and PG&E should pay it despite coming through these pre-funded contracts and stuff like that. But doesn't that go against the whole perverse incentive that you were talking about just a couple hours ago? Madam Chair, if Mr. Freeman could please respond. No, not at all, actually. A couple hours ago, if I remember correctly, we were talking about, for example, the use of alternative financing to bring down costs of grid infrastructure upgrades, which would be great if PG&E were to be able to use public funds or other types of debt to finance these network upgrades. But here we're talking about costs that are going to be triggered by the addition of data centers. And the question is, who pays for those costs? PG&E's proposal would be that all customers would pay a share of those costs. And the proposal in this bill is to try to assign all of the costs that are identifiable associated with that incremental load that the customer brings on to the data center customer itself, consistent with their promises, the industry's promises that they have made loud and repeatedly, that they will pay for all grid upgrade costs and grid costs associated with their interconnection. We're just trying to operationalize that. So we can stop these costs from happening unless we wanna ban data centers and that not the topic of this bill Instead we talking about who pays Yeah I mean the prior bill was a little bit more nuanced in the sense of we were talking about the incentives that were created as a result of and profit margins and things like that So I just, you know, the bills, the testimony seems just somewhat incompatible. And I understand what you're saying in the sense of you want to attribute the cost to the customer base, to that single customer who's going to be the large user here. And there has been other bills in this committee that have done that that I've thought were fair and supported. I just, I'm just, yeah, well, I mean, I think I've expressed my concerns with that perspective. I just, this bill will, we need to build infrastructure in this state. I mean, I think that's the bottom line. And while data centers themselves are users of electricity, I am a user of that data center. And so I think it is somewhat of an argument to say, you know, look, if a data center is built next door to me, I don't want to pay for all the data center's costs to upgrade the infrastructure around it. I agree with that. But we are users of data center on a regular basis, and we haven't talked a lot about that in this committee. So I appreciate your clarification on how your position is consistent between the two bills. I still have some concerns on this bill in particular about, you know, just I think the philosophical debate on who the users are of said data center being broader. And feel free to respond to that, Senator, if you have anything to say to that. But, okay, thanks. Thank you. Okay. Assemblymember Rogers. Yeah, we might be at the point where the more comments that are made, the more discussion it generates. So I'll be very mindful of that. But I heard the comment about who pays, and that's obviously the focus of the bill. But you can't have the conversation about who pays without also having the conversation about who benefits. And trying to compare this to public works projects that benefit the entire community is not comparable when you have private businesses that are making money off of the data center and not helping to support the infrastructure that is necessary for that business to thrive. And I originally, not that it's important anymore, I was going to nitpick with the analogy because we actually do do this in local government. You do have large projects like a water treatment plant that is built up front that you have up front costs for that you do then charge people for for the use of it later for new developments to be able to tie in your demand fees, your impact fees for critical public works. We do this all the time. And the difference is who actually gets the benefit from it, who actually gets to see, for instance, the increase in property values on a public works project versus the expected income generation for the corporation, for the shareholders versus the cost to the public for that infrastructure. So I supportive of the bill I know that you worked very closely with the committee on it But I do think that the message from the chair is a good one to folks in the data center community You should be mindful of the relationship that you have with local governments because even just this week I had another county that I represent introduce an ordinance to ban all data centers and a complete ban to the point of the vice chair has a different type of impact and still an impact on the communities So just food for thought. Assembly member Patman. So just to dovetail a little on Assembly Rogers. It is astounding to me that data centers come forward and say, how could you dare treat us differently? when in fact the magnitude of the use of resources is like the Senator suggested, like we have not seen, whether that's electricity and having to increase our electricity infrastructure to accommodate. And I appreciate the constraints on PG&E and also its desire to not have ratepayers pay for a larger system that they may not necessarily have needed, even if they do use chat GPT now and again, or whatever it might be. So the magnitude of these things does require us to come today and figure out how we can accommodate the increase in the infrastructure that's needed. And I appreciate the amendments that were made and separating out the tariffs because that might trigger down then for how electricity is used by data centers and are we increasing how much we have to generate? Are we increasing the transmission line? or are we increasing the interconnection costs? I don't know. But in any event, I am supporting the bill because I do believe the magnitude of this user is like nothing we've ever seen. So I'm ready to vote yes. Thank you. All right. Oh, Assemblymember Shiavo. Thank you. So, you know, I mean, I think I appreciate the discussion around the magnitude of what data centers are when you talk about them as one user. You know, there's a data center that's the size of Manhattan. So it's hard to say this. There's just one customer, but it's as large as one of our largest cities in the country. And so we know that not only are they massive, massive users of energy, but they are, you know, I think the analogy you were talking about, about the kind of the public good piece of it or Assemblymember Patterson's comment about using AI, but not everybody's using AI. And yet everybody's going to be paying it if you distribute it to all customers, right? And people, I would argue, are not even begging to use AI. They're struggling to figure it out to keep up with the times, but don't even really want. I mean, my mom's not begging for it. My brother's not begging for it. My kid's not begging for it. My kid hates AI and thinks that it's probably ruining their future. So, you know, so I would say that it brings us back to who's benefiting from it, right? And it's a handful of companies that are going to make trillions of dollars in the near future on this technology. And absolutely, they should be paying to develop, you know, for the infrastructure that goes into it. And it should not go on rate payers, full stop. And I think that that is why you see literally a rebellion happening in cities and communities around the country who are not only experiencing their rates going up but also tons of environmental impacts raising the temperatures of their communities the noise in their communities the water that used in their communities This is not like a mystery of what's going to happen. We're seeing this happening and how it's impacting communities already. And so this is, I think, really the least that we can do as a state to make sure that data centers are responsible neighbors and respectful of people and their pocketbooks as they are going to the bank and making trillions of dollars. And, you know, it's something that they've said that they're going to pay for. We should put in writing that they do. And so I'm happy to support this bill and thank you for your leadership on this. Right. Thank you. So the very first hearing, the first informational hearing that our committee had this year was on the topic of data centers. And I think that is a testament really just to how important an issue this is for our constituents. So I want to thank you for your work in this space that you've really dug in. With that, would you like to close? Thank you for your leadership as well, Madam Chair, for your collaboration. This is not as simple. It's a very complex, multilayered set of issues to get at to try to produce an equitable outcome. And equity is at the heart of our whole socialization of costs and benefits that we put in. And we decided to regulate, for example, IOUs the way we do and basically the whole grid, regardless of who's procuring or generating or whatever. We have this construct, right? And along comes this new phenomenon. I can't overemphasize that enough. I just briefly remind everybody that we're like third in the nation in data centers right now. And people don't think about it that way because the average data center in California that's been serving us for other technology with less demand are smaller scale, 35 megawatt on average. They're in existing built environments. They're in territories where there's existing interconnect and transmission of their infrastructure already built and financed. So the whole scenario is just completely different. So what's the horizon for California? What's the big business opportunity? It's where in California do you have large swaths of land, often in inland communities, rural, poor, agricultural communities, that are already overburdened with a number of these issues, never mind having costs shifted to them as rate payers, who are supposed to assume a portion of cost obligations and risk and no direct benefit. This is a unique creature that I do think, and I appreciate many of the members recognizing that we're dealing with a different beast here, and we need to be prepared for that. And I thank the members for the great questions. We'll continue working diligently as much as we can to try to operationalize this in a way that maintains what we're trying to do, but gets it right, and I would respectfully ask for an aye vote. Thank you. All right. We need a motion. Second. Moved by Assemblymember Schiavo. Second from Assemblymember Harbadian. Madam Secretary, please call the roll. Item number two, SB 886. The motion is due passed as amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Not voting. Patterson, not voting. Berner, Calderon? Aye. Calderon, aye. Chen? Chen, not voting. Davies? Not voting. Davies, not voting. Gonzalez? Aye. Gonzalez, aye. Herabitian? Aye. Herabitian, aye. Hart? Aye. Hart, aye. Irwin? Kalra? Pappin? Aye. Pappin, aye. Rogers? Aye. Rogers, aye. Chiavo? Chiavo, aye. Schultz? Ta? Aye. Ta, aye. Wallace? Wallace, not voting. Sibir? Okay. 9-0, that bill's on call. We'll leave it open for absent members to add on. Thank you. All right. We got a double header. We got a Padilla double header, so we're going to move on now to file item number 3, SB887. Thank you, Madam Chair. Members, appreciate your patience. Good thing you're sitting over here on the desk. All right, sorry. Oh, this is, there we go. Let's do it. Thank you, Madam Chair, members. Again, I want to thank you and your committee staff for your work on this bill. We'll be accepting committee's pros and cons. SB 887 would ensure that data centers comply with CEQA and meet specified, and those that meet specified environmental, climate, and labor standards are eligible for a predictable CEQA timeline. The bill encourages better data centers that contribute to the grid and to their community. So you're all aware the rise of AI requires a corresponding build-out of data centers, with Meta, for example, building a data center nearly the size of Manhattan in Louisiana, which in itself is set to consume over 5 gigawatts, equivalent to 5 million homes. These data centers consume also massive amounts of energy and water and require large investments in the grid, as we've just recently discussed, in addition to using often diesel and other non-clean sources of generation to maintain as backup. Without proper guardrails, these centers threaten public health, air quality, water supply, and most importantly, often do so in some of our most vulnerable communities. In my district alone, currently the largest proposal, a nearly 1 million square foot, 330 megawatt project is proposed in such a vulnerable community alongside a residential community, elementary school, and has had virtually no public input of any meaningful consequence. Data centers with proper guard wells can provide an economic boon to local communities without contributing to degrading the environment, pollution, and higher water resource consumption. This bill ensures that data centers are not exempt from environmental review and public scrutiny creates a pathway for such centers to get expedited sequer review if they are good neighbors and contribute to the local grading communities. It recognizes the economic opportunities presented by the tech that these centers support, but we make sure that we set a high standard for them in exchange, that they invest in community benefit, that they make opportunities for good union jobs. They support the grid rather than sapping it. They support communities like the one I represent in Imperial County. It ensures communities near data centers are protected from the negative attributes. In short, what this bill does is applies an environmental leadership development project standard, already a framework and statute, to the environmental review and mitigation standards expected of data center applicants. And we think that's equitable and appropriate. With me today, I continue to have my two distinguished panelists joining me today. Thank you. Madam Chair, members of the committee, Matt Friedman again with TURN, co-sponsor of SB887 along with Net Zero California. As mentioned by the senator, this bill would add data centers as eligible to be classified as environmental leadership development projects that may receive judicial streamlining under the California Environmental Quality Act. This bill offers a voluntary purely voluntary pathway for data centers to demonstrate superior performance with respect to environmental impacts and labor standards It establishes specific criteria that would allow data center projects with at least 50 megawatts of peak demand to receive this designation from the governor if key demonstrations are made First of all the project would need to have onsite energy storage sufficient to meet 100% of peak demand for four hours. And there are vendors today that are marketing battery storage products that could meet the entire needs of a 400 megawatt data center, under this bill, four hours on just an acre of land. So there are products available that could be used by data centers to meet this benchmark. Secondly, reliance on zero carbon generation located behind the meter to the extent feasible. Reliance on 100% zero carbon electricity resources to serve hourly needs within five years of initial operations. And it's important to note that both Google and Microsoft have committed to achieve 24-7 hourly matching of data center operations with zero carbon energy for all their facilities by 2030. If they believe it's achievable, we believe it's achievable. The bill would also allow designation if the facility has a community benefits program, uses recycled water, and bears the full cost responsibility for grid interconnections. The bill would direct the Energy Commission to establish uniform standards for compliance with these requirements to ensure regular reporting by data center operators and to enforce non-compliance as appropriate. We believe that tying superior performance to ELDP eligibility could yield significant benefits to ratepayers and the environment. The benchmarks in this bill are aggressive but achievable, and we ask for a supportive vote. Thank you. Thanks. We have a bit of an overlap in our testimony, so I won't go through all the same points other than to say that, you know, this is... So SB886 is based, yeah, rate pay protections against the key risk that data centres could drive increased costs. And then this bill, as the senator mentioned, is about acknowledging the economic opportunity presented by data centres and the importance of incentivising projects that meet those high standards. So that's what this bill is about. Sort of collectively as a package, we see that this... The 886 and 887 together can establish a nation-leading model for affordable and clean data centres. and I thank the senator for his leadership and request your answer. Thanks. Thank you. All right. Additional witnesses here in support of SB887, come on up. Good afternoon. This is Scott Cox on behalf of CIRES here in strong support. Thank you. Thank you. Madam Chair, members, Scott Wesson, behalf of the California State Pipe Trades Council, the State Association of Electrical Workers, and the Western States Council of Sheet Metal Workers in support. Will Brueger in support for Climate Action California, 350 Humboldt, 350 Sacramento, and the Climate Reality Project chapters in Los Angeles and San Fernando Valley. Thank you, Senator. Thank you. Marquis King Mason, Natural Resources Defense Council, in support. Thank you to the Chair and author. Jonathan Clay, on behalf of the City of Imperial, in support. All right, turning to our opposition witness. Welcome back. Thank you again, Madam Chair. My name is Ahmad Thomas, CEO of the Silicon Valley Leadership Group. The bill is currently in print. We must respectfully oppose unless amended. We appreciate the committee's and the author's work to plan thoughtfully for California's rapidly growing data center infrastructure. The questions of energy, water, land use, and community impact are real, and they merit careful attention. As written SB887 creates a framework that could make it materially harder to build this infrastructure here At the very moment demand for advanced computing is accelerating Our concerns with the bill in print center on three areas First, it bars data centers and only data centers from CEQA categorical exemptions that remain available to comparable industrial facilities without any project-specific environmental finding. Second, the environmental leadership pathway the bill offers in exchange sets eligibility requirements that exceed what any other industrial customer must meet. As the committee's own analysis recognizes, these terms sit above any requirement imposed on any other industrial electricity customer and right ahead of the state's own 2045 clean energy timeline. Third, the bill conditions that streamlining on a unique stranded asset obligation, requiring operators to fully repay all grid investments, including the cost of new generation, if a facility ceases operations. We are encouraged that the committee's analysis recognizes several of these issues. And to be clear, SVLG supports environmental stewardship, grid reliability, and paying the full fair cost of service. We'll take a look at the amendments, take them back to members for feedback, and we very much appreciate your time once again today. Thank you. Thank you, Madam Chair. Members, Timothy Byrd, Jr., on behalf of the Data Center Coalition, or DCC. Data Center Coalition appreciates our continued conversation with the author and his team. We remain opposed to SB887 unless amended. We look forward to reviewing the amendments, which I believe were accepted, and we'll see what that language looks like in print and review with our own membership. The data center industry is committed to paying for its full cost of service for electricity, and we fully support California's goals for energy efficiency. Our member companies continue to innovate and invest in increasingly resource-efficient technologies and take energy use seriously. Data centers aren't just about AI. They are underlying facilities that support the cloud, streaming, e-commerce, e-banking, telehealth, emergency, and government services. Data centers are the backbone of California's digital economy, supporting millions of jobs and driving billions of tax revenues. We are concerned SB887 creates a regulatory environment that threatens to drive innovation and high-paying jobs out of California. Yeah. The bill strips data centers of the availability of ministerial status under CEQA. We're not here arguing that data centers, you know, the size that could have environmental impacts shouldn't go through CEQA. But as as was in print, there was no definitions or parameters around the size. So even the smallest code compliant projects would be pushed into years of discretionary review. This introduced unpredictable risks and delays that do not apply to other similar industrial facilities. Data centers, again, aren't trying to circulate regulation, but do seek equitable treatment to other comparable end users. And while the bill does offer streamlining for ELDPs, the criteria are virtually impossible to meet. by creating unattainable standards, putting those into law. We're concerned that this will shift investment out of state. Thank you very much. Thank you. Additional witnesses here in opposition to SB887, please approach the microphone at this time. Good afternoon. John Kendrick from the California Chamber of Commerce in opposition. Good afternoon Monica Salas on behalf of the Bay Area Council and we respectfully oppose Matt Easley on behalf of the California chapters of the Associated General Contractors in opposition Thank you. Thank you. All right, bringing it back to committee for questions or comments. Assemblymember Patterson. I know there's a lot of amendments in this proposed, which I think are good. And it sounds like you're still looking at them. Would you still remain in steadfast opposition? Are you still looking at them, I guess? What's your... Yeah, I think for the data center coalition, I think for the ELDP criteria, it sets out, I think, at least 11 or 12. You'd probably break them down even more. It's hard to see those as realistic and attainable, but if this was something that applied more broadly, we're going to continue to work with the Elder's Office and take a look. And so the committee analysis proposes a man, so it's even unclear to us, like, aligning the definitions, for example, it's possible to move this in a better direction. But there are pieces of this bill, particularly the LADP sort of criteria that I'm not sure how we get there. But if it becomes more realistic or more reasonable, then we're going to continue to work with the author's office and this committee to review and, of course, with our membership. Yeah. So as mentioned on a prior bill, obviously, the size and scope of data centers has changed quite a lot, you know, over time. And I guess as a former city council member myself, I guess I'm wondering why data centers should get categorical exemptions from CEQA. I mean, I understand there, you know, that I, you know, it would be great for everybody to have those. I'm sure who wants to put in a facility. I just kind of what makes them unique at that scope and size, you know, in the to be exempt from those kind of analyses that on the impacts and things like that. And I'm not really by the way, I think we need to reform CEQA just generally speaking, you know, but but I think on the whole, I'm just, you know, the size of these things are not like, you know, some they're not small, you know. Assemblymember through the chart, I believe that question. Yeah, sorry, I'm kind of like looking at you. No, no, no. I welcome it, Assemblymember. The bill, as we read it, I think kind of does the opposite. It makes sure that data centers, regardless of the size, anything, are compelled to go through CEQA. I want to be very clear. I'm not here arguing, the DCC is not here arguing that we should be exempt from CEQA. That is not the argument. But data centers come in different sizes. The history of the data centers is interesting, right? You have individual companies of all sizes who used to house this in-house. That was inefficient, and it does not make sense at a certain point, particularly as we all rely on this technology more and more every single day. So they started to consolidate to utilize and take advantage of those efficiencies. Well, that has led to increased size of data centers that are being proposed. And so as you know, and that's why we've seen data center clusters. Data centers have traditionally attracted more data centers. And so you get increased fiber routes, more end up in a particular area, as we've seen in places like Santa Clara. So to be clear, so let me remember, we're not arguing that data centers should be exempt from CEQA, but just making the point that making sure sure that there's absolutely no time, no matter the size, no opportunity for data centers to try to take it. We're always mandated to go through CEQA basically under this, despite the size. Yeah. Yeah. And I mean, CEQA is obviously weaponized, you know, by many cities throughout. I sit on the vice chair of the housing committee too. And it's, you know, it's a problem how cities and local governments use CEQA, you know, to slow down, slow down projects, you know, but I don't know. This bill is interesting. I hope there's more discussion on it because I'm undecided right now, to be honest with you. All right. Thank you. Seeing no additional questions or comments from the committee, Senator, would you like to close? Thank you to you and the members of the committee for your patience and engagement on the bill. I think I would just, you know, we had a lengthy discussion about the unique nature of data centers with respect to the future and the intensity of consumption and demand on energy, cost shifts, impacts, those equities to be considered. Here are very much the same. I think we can walk and chew gum and we can set the right standards. Obviously, something that we continue to see applications that will have massive impacts now environmentally and resource-wise, I think it's entirely appropriate that we make clear, one, there are no categorical exemptions under CEQA, and two, that if we're going to, And that we should try to be in a place where we provide some incentive, right? We don't want to just be anti-data center, you know, completely. We recognize the benefits. But we're going to appropriately review for environmental impact, but we're going to give the appropriate incentives and certainty to do it in exchange for standards. There was some testimony about qualms with the standards. I would just respectfully submit that if there's any scenario in which we should have higher standards and the highest standards because of the intensity of use here, I would argue this is one of them. And with that, I would just respectfully ask for an aye vote. Thank you, Senator. All right. Do we have did we have a motion in a second? All right. We've got a motion in a second. Madam Secretary, please call the roll. Item number three, SB 887. The motion is due pass as amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Aye. Patterson, aye. Berner? Calderon? Aye. Calderon, aye. Chen? Chen, not voting. Davies? Davies, not voting. Gonzalez? Aye. Gonzalez, aye. Herabitian? Aye. Herabitian, aye. Hart? Aye. Hart, aye. Irwin? Kalra? Pappen? Aye. Pappen, aye. Rogers? Aye. Rogers, aye. Chiavo? Aye. Chiavo, aye. Schultz. Ta? Ta, no. Wallace? Wallace, not voting. Zabir? Aye. Zabir, aye. All right, 10-1. That bill is out, and we'll leave the roll open for absent members to add on. I believe we are going to be having Assemblymember Gonzalez present a bill on behalf of Senator Menjabar. Before we do that, we're going to do a quick lap through the bills and open the rolls in our bills to enable members to add on. All right. File item. We're going to buzz through this so people pay attention. All right. File item number one is SB 804. Item number one, SB 804, burner. Chen Chen I Davies Davies I Gonzalez Gonzalez I hair bidion hair bidion I Ta Not voting Ta not voting Wallace Aye. Wallace, aye. Okay, 14-0, that's out, and we'll leave the roll open for absent members to add on. File item number 2, SB 886. Berner. Irwin. Kalra. Aye. Kalra, aye. Schultz. Zabir. Aye. Zabir, aye. That's 11-0. 11-0, that's out, and we'll leave the roll open for absent members to add on. File item number three, SB887. Berner. Irwin. Kalra. Aye. Kalra, aye. Schultz. That's 11-1. 11-1, that's out, and we'll leave the roll open for absent. members to add on. File item number four, SB 905. Berner, Chen, Chen, no. Davies, no. Gonzalez, aye. Herabitian, aye. Kalra, aye. Kalra, aye. Schultz, Ta, not voting. Wallace, no. 10-4. That bill is out and we'll leave the roll open for absent members. File item number 5, SB 913. Berner? Chen? Chen, not voting. Davies? I'm sorry, repeating this as a 913? Yes. Not voting, thank you. Davies, not voting. Gonzalez? Aye. Gonzalez, aye. Herbidion? Aye. Herbidion, aye. Kalra? Aye. Kalra, aye. Schultz? Ta? Aye. Ta, aye. Wallace? Aye. Wallace, aye. 13-0. 13-0. That measure is out and we'll leave the roll open for absent members to add on. File item number 10, SB 1158. I'm sorry. Highlighting number six, SB 931. Patterson? Aye. Patterson, aye. Berner? Calderon? Aye. Calderon, aye. Chen? Chen, not voting. Davies? Not voting. Davies, not voting. Herbidion? Aye. Herbidion, aye. Calra? Aye. Calra, aye. Pappin? Aye. Pappin, aye. Shiavo? Aye. Shiavo, aye. Schultz? Ta? No. Ta, no. Wallace? Oops, I have you as not voting. Zuber? Aye. Zuber, aye. 12-1. That measure is out. We'll leave the roll open for absent members to add on. File item number 12, SB 11... Oh my God. All right. File item number 10, SB 1158. Patterson? not voting Patterson not voting Berner Calderon Calderon aye Chen Chen aye Davies Davies aye Herabitian Herabitian aye Irwin sorry Calra Aye Calra aye Pappen Aye Pappen aye Chiavo Aye Chiavo aye Schultz Ta Ta Yes Ta aye Zabur Aye Zabur, aye. 15-0. That bill is out. We'll leave the roll open for absent members to add on. File item number 12, SB 1196. Patterson? 1196. Aye. Patterson, aye. Berner? Calderon? Aye. Calderon, aye. Chen? Chen, not voting. Davies? Aye. Davies, aye. Carabidion? Aye. Carabidion, aye. Calra? Aye. Calra, aye. Chiavo? Aye. Chiavo, aye. Schultz? Ta? Aye. Ta, aye. Zabir? Aye. Zabir, aye. Zabir, aye. 16, 0. 16-0. That bill is out and we'll leave the roll open for absent members. File item number 13, SB 1245. Berner, Calderon? 1245? No. Calderon, not voting. Chen? No. Chen, no. Davies? No. Davies, no. Herabitian? Aye. Herabitian, aye. Calra? Aye. Calra, aye. Pappin? Pappin, aye. Chiavo? Aye. Chiavo, aye. Schultz top top I 10 for that bill is out we'll leave the roll open for absent members to add on file item number 14 SB 1295 burner Davies no Davies no Harabitian? Aye. Harabitian, aye. Kalra? Aye. Kalra, aye. Pappin? Aye. Pappin, aye. Shiavo? Aye. Shiavo, aye. Schultz? Ta? This one is SB 1295, file item 14 by Senator Stern. Aye. Ta, aye. Zabir? Aye. Zabir, aye. 12-1. That bill is out and we'll leave the roll open for absent members to add on. All right. Next SB 1359 by Senator Stern. By letter 16. Davies? No. Davies, no. Harabideon? Aye. Harabideon, aye. Irwin? Aye. Irwin, aye. Chalra? Aye. Chalra, aye. Chiava? File item 16, SB 1359. Stern. Aye. Schiavo, aye. Schultz. Zabir. Aye. Zabir, aye. 10-5, that bill's out and we'll leave the roll open for absent members. And that just leaves the consent calendar. Berner, Chen, Chen, Aye, Davies, Aye, Davies, Aye, Gonzalez, Aye, Gonzalez, Aye, Herbidion, Aye, Herbidion, Aye, Kalra, Aye, Kalra, Aye, Schultz, Ta, Aye, Ta, Aye, Wallace, Aye, Wallace, Aye. 16 the consent calendar is out and we leave the roll open for absent members to add on That brings us to our next author Welcome Senator Perez We got I think you got two bills up We'll start with file item number eight, SB 1098. Thank you for your patience, Madam Chair. As Assemblymember Erwin can attest, we were in a meeting, or I would have been here, so apologies. I would like to begin by accepting the committee amendments and thanking the chair and staff for their work on this bill. SB 1098 restricts IOUs from collecting unlimited amounts of ratepayer money through memorandum and balancing accounts that never expire. Memorandum and balancing accounts act as a way for the IOUs to recover costs outside of the traditional general rate case, which occurs every three to four years. These accounts can be beneficial to overall goals of the IOUs and the state, such as for wildfire mitigation. However, both the structure and the oversight of these accounts can become avenues for out-of-control spending and lax oversight. There are approximately 200 accounts open, creating more work for the CPC to give each account the time it truly needs for review. These accounts are only reviewed after the money has already been spent by the LUs and the review for recovery is sometimes done through the staff-only advice letter process, completely sidestepping commissioner involvement. Just last year, the legislature adopted SB 254, which gave the CPUC discretion to shift memorandum accounts for wildfire mitigation back to the general rate case. This ensures that the full commission can review the spending plans before money is collected from ratepayers. This leads to greater fiscal discipline and helps reduce the monthly utility bills for many of our constituents. SB 1098 does not eliminate these accounts altogether. It allows for the use of these accounts when they are needed for costs that cannot be reasonably forecasted in the GRC. And if the Commission approves one of these accounts, they must explain why the account is necessary in a written finding. SB 1098 will strengthen oversight and accountability of these accounts by doing the following. Requiring the CPUC to only allow IOUs to create new or extend existing memorandum and balancing accounts when costs cannot be easily forecasted. Requiring the CPUC to consider adopting a cost-sharing mechanism for memorandum and balancing accounts or set a lower rate of return for capital spending done through these accounts than what is authorized for forecasted spending. And considering a termination date for all new or renewed balancing and memorandum accounts. With me to testify is Ignacio Hernandez on behalf of TURN. At the appropriate time, I ask for your aye vote. Thank you, Madam Chair and members. Ignacio Hernandez on behalf of TURN. TURN is a consumer advocacy organization, and we've been fighting to protect rate payers from high utility bills for just over 50 years. Let me be really clear. TURN is not opposed to balancing a memo account. In fact, TURN oftentimes is the one advocating for balancing or memo accounts creation at the CPUC. What we are concerned about is the proliferation of these accounts that oftentimes go on for years without any expiration date. I think as the committee analysis pointed out, about a third of the money collected by utilities right now are collected through balancing accounts. So what was once a very limited practice of using these accounts has now become significant. And a lot of the utility bills that your constituents are facing are in large part the money is coming out of these balancing and memo accounts. With this buildup. is make clear that if the justification for the accounts is there, the costs cannot be forecast, then the accounts can be created and they can be renewed. What this bill does is ensure that there's a way to look at these accounts, especially during the general rate case, to determine whether or not these costs are not forecastable. Oftentimes these accounts are created and then once you determine it cannot be forecast, then the accounts go on for years and years, perhaps over decades. And there's no opportunity, no required opportunity to go back in front of the full commission to determine whether or not those costs continue to be forecast or not able to be forecastable. And so that's really what we're asking for is that there's always a way to come back to the commission, the full commission, not just the staff, to look at it during the general rate case to determine whether or not those costs are forecastable, but also to give the commission opportunity to look at all of the different costs and expenses that are being proposed by the utilities. If we do it all at the same time, the commission could make much better decisions and ensure that the ratepayers are protected. So for those reasons, we're the sponsor and we ask for your support. Thank you. Additional witnesses here in support of SB 1098, please come on up to the microphone. Good evening. Marissa Hagerman with Tratton Price Consulting, registering support on behalf of California environmental voters. Thank you. Thank you, Madam Chair. Annabel Hopkins with the Public Advocates Office in very strong support. Thank you. Thank you, Chair. Meredith Alexander with the Coalition of Large Energy Users in support. Laura O'Connor representing Southern California Grantmakers Climate Mitigation Committee Task Force. Thank you. Thank you. Turning to opposition. Our opposition witnesses can come on up at this time. I am saying good evening, Madam Chair and members of the committee. Valerie Torella of Pacific Gas and Electric Company. First, I just want to appreciate the committee's work in the amendments to SB 1098 and the analysis, providing the CPC with some discretion. However, we must remain opposed. I'll start off with balancing accounts. The bill treats balancing accounts as though they are a problem to be solved. They are not. They are tools authorized and overseen by the CPUC. They can protect customers from over or under collections. They can help manage costs that are difficult or impossible to forecast for many, many years in advance. They're used for programs such as any energy procurement, low-income assistance, the greenhouse gas revenues, AKK, climate credit, other state-mandated activities, pipeline safety work. And so one of the core issues with this bill is that starting off with a balancing account, you would begin already with a disallowance up front, just because some work that the commission deems as important that should be guarded off from the base of the GRC is something that's difficult to forecast. So we don't agree with that position. We remain concerned about the requirements that memorandum and balancing accounts are reviewed in general rate cases Perhaps this can be improved in the bill A vague term review is used in the GRCs that might indicate retrospective reasonableness review, which we hope is not the intent. Also, everything in GRC could just get GRC bogged down. And we know that there's exceptions after exceptions after exceptions. This could actually go against affordability if GRCs, one, are bogged down, or two, maybe we need a mid-cycle application for cost recovery. Just can't say everything in two minutes, so remain opposed and ask for a no vote. Thank you. Madam Chair, member Scott Wetch on behalf of the California Coalition of Utility Employees, associate myself with those comments about the memorandum and balancing accounts. I want to focus on the conversation earlier about return on investment and the impacts on the markets. The legislature should be very careful to continue to mess around with markets. My trust funds, my pension funds are in constant contact with Moody's, with S&P, and this is what we hear from them. Currently, PG&E's credit rating is at junk bond status, BB minus. Edison is close behind. The billions of dollars of infrastructure they are mandated to build only happens if investors invest. Investors have to look at other opportunities, other national utilities that they compete against, like NextEra and Duke. They're at BBB plus, much safer investments because they don't have strict liability and the wildfire problem that we have. PG&E trades at a discounted price to earning multiple, roughly 13x compared to 17x or 22x of other utilities. Why? Because their stock price has been driven down and they've been over diluted. The only reason investors today accept lower valuation is because they expect California to build billions of dollars. PGD has $73 billion worth of approved infrastructure work. That's why they're willing to take lower valuations. If you continue to push this narrative to the markets with this bill and 905, that it's a hostile environment and that we're going to be rationing down the rate of return even further, that drives stock prices down and it compresses further this problem. And there's no more dilution that can happen. When they're trading at 13x on PE compared to 22x of other utilities, you cannot dilute that stock anymore. Nobody's going to buy it. So we would ask an urgent no vote or that that provision be stripped from the bill. Thank you. Thank you. All right. Additional witnesses in opposition. Thank you, Madam Chair. Israel Solace with SDG&E and SoCal Gas in opposition. Good evening. John Kenner, California Chamber of Commerce, opposition. Thank you. Laura Parr on behalf of Southern California Edison, in opposition. Thank you. Okay. Bringing it back to committee for questions or comments. Assemblymember Harvey. I just want to thank the senator for the bill, for continued work. I'll move the bill. And I just think to respond to some of the testimony, I don't think it's a secret that Southern California Edison last year, a few months ago, paid out $1.3 billion to its shareholders in dividends. So I just think that we need to be a little bit more honest about the state of play financially for these institutions I have no doubt that we have a long road ahead of us to figure out what this all looks like But I think that bills like this actually have a place in the debate. And so I'm going to support today and I appreciate the Senator bringing it. Thank you. Thank you. Assemblymember or Vice Chair Patterson. Great. Thank you. It's not often we talk about Wall Street in the Utilities Committee, but I think what Mr. Wetch was saying and why it's so important is because the need for the private markets to come to basically fund all the infrastructure needs that we have is critically important. And my colleague over here made a great point. But also, you know, securities, as you know, aren't the only investment vehicle out there for Wall Street, if you will. You know, bonds, obviously, things like that. And so I do have concerns about the message this sends to Wall Street because I'm trying to keep prices down for Main Street. And I know that's a goal we all have. I mean, I don't want to say that's not a goal of yours, of course, but those are the concerns I have with the bill. And feel free to, you know, address in your closing or whatnot, you know, some of those points. But thank you for bringing the bill and being concerned about utility rates like we all are, you know. All right. And I'll simply say, I think, you know, to the points raised by the vice chair, by our opposition witnesses, I certainly think that in policymaking, we need to be really mindful of unintended consequences. And we talk a lot about that here in this committee. At the same time, we've also talked a lot about the proliferation in recent years of balancing memorandum accounts and the degree to which that makes it very, very difficult for anyone, from our regulators to policymakers to interveners to normal California rate payers to get a clear picture of what is really going on. And so I think that we can both agree that there is a place for balancing memorandum accounts. Our opposition witnesses articulated some of those examples. I think we perhaps could also agree that there's not 600 good reasons for balancing and memorandum accounts and that's how many there currently are. So, um, appreciate your focus on this. This, we had a conversation about a bill earlier, you know, this is really like getting into the, you know, the guts of, um, how the rate making process, how the GRC process works. And, um, I appreciate your work. Would you like to close? Thank you so much, Madam Chair. Just, um, honestly, like that was a perfect closing. I couldn't have said it better myself and we are not trying to eliminate these memorandum balancing accounts for trying to create oversight and accountability where there frankly isn't enough. So urge an aye vote and thank you. Thank you. All right. I think we've got a motion from Assemblymember Harabadian. Do we have a second on this measure? Second from Assemblymember Rogers. Madam Secretary, please call the roll. Item number eight, SB 1098. The motion is due pass is amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? No. Patterson, no Berner Calderon No Calderon no Chen Davies No Davies no Gonzalez Aye Gonzalez aye Herbidion Aye Herbidion aye Hart Aye Hart aye Irwin Aye Irwin aye Kalra Aye Kalra aye Papen Papen aye Rogers Aye Rogers aye Schiavo Schultz Ta Not voting Ta not voting Wallace Zabur 8-3, so we will leave the rule open for that bill's on call. We'll leave the rule open for absent members to add on. All right. Up next, file item number 18, SB 1417. Thank you, Madam Chair and members. I'm here to present SB 1417, the Mutual Water Company Rate and Disclosure Notice Act. I begin by accepting the committee amendments outlined in Commons 4 through 9 and pages 6 and 7 of the analysis. These amendments remove a requirement that the notice to shareholders of the water service increase include reference to which board members supported the measure, instead ensuring board member votes are recorded in the meeting minutes. It removes the requirement that a list of shareholder contact information is made available upon request by a defined eligible person. Provides flexibility around requirements requiring providing a public space for shareholders to engage their mutual water bodies board members on this rate increase, as well as the requirements to provide notice of proposed rate increases through public forums of community communication to best ensure impacted individuals are aware of these pending proposals. California is served by thousands of public and private water service providers, including mutual water companies. These companies operate as small, private, nonprofit corporations that deliver water to shareholders within a designated area. Unlike public water providers, mutual water companies are not automatically subject to standard transparency requirements, leaving their constituents with limited rights to know about the operations of their water service provider. Prior legislation extended necessary Brown Act-style open meeting public record audit and budget requirements to mutual water companies. Public water agencies are also subject under Prop 218 to provide advanced notification and a public forum before adopting a rate increase. These specific requirements do not apply to mutual water companies, leaving shareholders of these companies without assurance of an advance notice or audience with company board members to discuss a potential rate before adopted. In Altadena, approximately 25,000 residents receive water primarily from one of three companies, Lincoln Avenue Water Company, Rubio Canyon Land and Water Association, and Las Flores Water Company. As these companies pursued water service increases and charges to recover financially from the Eaton Fire, they have done so without abiding by standards of advanced outreach and stakeholder engagement. Las Flores is considering a $3,000 wildfire recovery fee to standing homes and to be applied once destroyed homes are rebuilt. Rubio Canyon Land and Water Association have a proposed 11% rate increase in fire recovery fee of up to $30 a month. Lincoln Avenue Water Company is approaching with a $15 rate increase in addition to a 10% increase to all tiers. Apart from these fire-related community reports, there's also been concerns from residents that are still receiving water service charges from the time of the Eaton Fire, although their property was destroyed. One company is protesting. pursuing a $12,000 meter charge for ADU meters in the midst of the rebuilding process as residents are being urged to build these units to expedite rehousing. There are also accounts of mutual water companies contemplating providing CEO pay raises among this process. And there are also accounts being targeted with tactics to make individuals feel unwelcome in shareholder meetings, including requiring validating their identity multiple times. SB 1417 addresses this gap in issues by extending rights and benefits of advanced transparency and accountability regarding rate increases to Californians serviced by mutual water companies. Specifically, SB 1417 will provide a written outline of the proposed rate increase reasoning and the reasoning for the proposal, convene a public meeting to discuss the proposed service increase, send the written proposal and notice of the public meeting in advance to shareholders and local media outlets, and requires a mutual water company to make available to qualified individuals upon request certain company information and any written rate increase proposal. With me here today to testify and support is Zaire Calvin, Altadena resident and community leader for Eaton Fire Recovery. I'm also joined by Abraham Mendoza III, Rural Justice Director for Central California Environmental Justice Network, to also speak in support. Not the appropriate time I ask for your aye vote. Hello, everyone. I'm Zaire Calvin. Everything that's going on with water is so important. and the meetings that we've been having to support our community at this time, everything has been discriminatory. Imagine losing all your houses, losing everything, and then turn around and you're getting a water bill. Right now I pay for two homes that have—I pay for two lots, I'm sorry, that is hollow ground because my sister died, and I'm paying for water on that lot. I'm still receiving a bill to make sure that they're okay and they're able to pay their bills. I've been in every water meeting from all the municipals, meaning because I have family members in each district. So literally, my cousin, my brother is Rubio. On one street, there's three different water companies on one street, three different ones. And like I said, it's just been so rough and hard to have to fight against all of the bureaucracy of that and still have us charged during this time. Also, when going to a meeting, they actually tried to block me literally out of a meeting when I was trying to go to a meeting by asking for ID. And the general manager of that company literally asked three times, oh, did you check his ID? Did you check his ID? because she knows I'm not in that district, but she doesn't know that this is my aunt, and I'm with her. So it's discriminatory when you're using ploys like that, so I won't go in and speak up about what's going on with water. And my only issue is water is our most important asset, and if we don't get this right for the environment and the build back, because we're going to have density, and we're building back more houses and ADUs, and if we don't get the infrastructure right and everything with this water company, how are we gonna come back as a community? And I'm fighting for the whole community. I know that's my time. Thank you. And thank you Thank you for being here I so sorry to hear about everything that you had to navigate and we really appreciate you taking the time to be here and to bring this thing back to why the policy in front of us matters Thank you. Thank you, Zaire. Good evening, Madam Chair and members of the committee. My name is Abraham Mendoza, Rural Justice Director for the Central California Environmental Justice Network. CCEJN operates in five counties in the San Joaquin Valley region, Badera, Fresno, Kings, Tolaria, and Kern, working at the intersections of environmental policy and community engagement to help uplift low-income communities of color accessing clean air, water, land, and food sovereignty. CCEJN has worked in and closely supported the community of Shirley Lane in unincorporated Bakersfield, California, in addressing injustices the renters and shareholders have experienced with their mutual water company for the past year through our IVAN program, where community members can report issues in their communities and receive assistance with addressing the impacts. Shirley Lane residents in this past year reported their mutual watering company with illegal water shutoffs and rate increases that the company had levied upon various customers by walking on their property, shutting off their water line, and asking for direct cash payment of their water bill charge, plus a $100 shutoff fee immediately. No notice, no payment plans. Furthermore, residents have received year-over-year increases of close to 50% with no explanation of why their bills are increasing. This mutual water company in question has not had a board meeting in over two decades until recently in April 2026. This left many customers at a disadvantage with not being able to address their rate increases, water shutoffs, or the basic understanding of how these rate increases and fees they're required to pay go towards their drinking water services. My view that the makeup of this mutual water company's board is family-owned, with the exception of their CFO. All decisions were made behind closed doors, with no public awareness, and all financials decided within the company. These actions do not demonstrate that trust, safe drinking water, and reliable service is the priority for their shareholders. Our organization works alongside many others, like PSRLA and Leadership Council, to advance the human rights of water, and it's crucial to recognize governance and transparency as essential parts of how customers access safe, affordable, and reliable drinking water for their families. I urge you to support this bill. Thank you. All right, turning to additional testimony in support, if you'd like to testify in support of SB 1417. Good evening, Michael Claiborne with Leadership Council for Justice and Accountability in support. Thank you. Hi, good evening. Mateo Kushner with Community Water Center and on behalf of Clean Water Action, Amigos of Los Rios, Communities for a Better Environment, Designing Resilience, Community 3.0X, Green Circle SGV, Altadena CoLab, CCJN, and Soul Forest Project all in support. Good evening. John Scoglin with the County of Los Angeles in support. Okay. Turning to opposition testimony. Do we have one more in support? Sorry. No problem. Laura O'Connor with Compassionate California in collaboration with Dina United, My Tribe Rise, and also Southern California Grantmakers Funders Collaborative on Fire and Disaster Relief. Strongly in support. Thank you. Thank you. All right. Opposition witnesses, go ahead and come on up. Good evening, everyone. Karina Cervantes with the California Association of Mutual Water Companies. I do want to just start off by thanking the committee staff who's worked hard to get us to this point. And of course fully acknowledging that there continuous and tremendous pain and loss in the community of Altadena We also recognize that the desire to ensure residents receive timely information about decisions affecting their water service is both understandable and important. However, the question before us today is whether the provisions within SB 1417 are the most effective way to improve of communication around significant increases. We do wanna thank the author, the committee staff and also members of this committee who met with us and listened and engaged with our concerns regarding the vulnerability of shareholder privacy. So the provisions of this legislation would have been harmful to the communities served by mutual water companies in Altadena and also across the state. There was also very challenging provisions regarding publicly singling out board members called to service on behalf of their mutual water companies who sometimes have to make unpopular decisions necessary to maintain safe and reliable water service across California. And that's what we're encountering in the community of Altadena, well-functioning water systems impacted by a huge disaster and magnitude under the Eaton Fire. They've gone a year, a year and a half in some cases without increasing any water rates. Absent any disaster impact funding, they've had to make the very difficult decision to finally contemplate what those rate increases would look like while still mitigating them with their financial reserves. And I just really think that it's important for us here, policymakers, all of you, to really approach this in a more collaborative manner, really support the long-term recovery of these mutual water companies and other water systems throughout the state that are going to be impacted by disasters, looking for meaningful ways to provide relief when otherwise these well-managed community water systems are faced with extraordinary circumstances under disasters of this scale. Thank you all for your time and consideration. Thank you. Thank you, Madam Chair. My name is Jim Champa. I'm the General Counsel for the California Association of Mutual Water Companies. I'm also general counsel to Rubio Canyon Land and Water Association. So I've been involved with Rubio and my firm also represents Lincoln Avenue. So we're very familiar with the issues those companies have had to deal with. Certainly, as Mr. Vantes mentioned, not been an easy time for the Altadena community, including the water companies. I want to thank the committee and staff for the analysis. Senator Press, thank you for this bill and for accepting the amendments. I want to make clear, mutual water companies are subject to statutes in the corporations code, including requirements for notice to shareholders of shareholder meetings. Also, AB 240 put in place the Mutual Water Company Open Meeting Act and records inspection requirements on top of pre-existing records requirements in both the general corporations law and the nonprofit mutual benefit corporation law. So those inspection rights already exist in statute. With respect to, I'll talk about Rubio Canyon particularly, there was a special shareholders meeting held on February 3rd. Notice of that meeting was provided to all shareholders, both by email, website posting, and mail. Approximately 120 people showed up at that meeting. The company was considering what level of fire recovery fee they should impose. They listen to the community Instead of imposing a per month fee they imposed a per month fee with the understanding that if the litigation that happening has a successful outcome or if money comes from FEMA that money would be credited back to the shareholders So I think that was an example of how things are supposed to work. Certainly there are examples around the state where things don't work like that, as Mr. Mendoza had mentioned. We appreciate the amendments. There are a few remaining concerns we have. I'd like to work with the author to get those clarifying amendments. The one substantive one is the fact that they would add CAOs, Chief Administrative Officer of government water agencies as list of eligible persons, and we'd like to have that revised. Thank you for your time. Thank you. Additional witnesses here in opposition to SB 1417. Go ahead and approach the microphone at this time. Hello. I'm Jennifer Betancourt-Torres. I'm the general manager of Lincoln Avenue Water Company, one of the three private nonprofit mutuals impacted by the Eaton Fire. I oppose unless further amended and happy to answer any questions anyone may have. Thank you. All right. Bringing it Back to the committee, questions or comments? Assemblymember Calderon. Yes, a question for the senator. Will you continue working with the opposition? Yes, I mean, we've had many discussions with the opposition. They actually came to a press conference that I held with the community on this very topic, and we had a conversation in person as well. So we've certainly been open to discussion. This is a very important issue for my constituents and what we're asking for here. I think it's really quite straightforward. I was the mayor of the city of Old Hamper for several years, as you know, the public water agency, the way that we operate, the way that we communicate rate increases to our residents. We're just trying to create parity. Thank you. All right. Assemblymember Harbadian. Thank you, Madam Chair. Just quickly want to thank the author, Mr. Calvin, for being here. Good to see you. all the water districts. I really do trust the author here to continue to work with everyone involved to get this right. I do think it's too important to not get right. I'm a proud co-author of this bill, and I do think that the community really needs transparency. Every community going through anything like this does, and so hoping that this bill gets to a point where we can bring that for our constituents. So I just want to thank the senator again, and do want to thank the the water districts for everything that they're going through totally get the situation that everyone's dealing with. So with that, I'll support the bill. Thank you, Madam Chair. Thank you. All right. Seeing no further questions or comments, you've got a motion from assembly member Schultz and a second from almost everyone else. Would you like to close? Thank you. Thank you. Madam secretary, please call the roll. Item number 18 SB 14, 17. The motion is due passed as amended to privacy and consumer protection. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Berner? Calderon? Aye. Calderon, aye. Chen? Davies? Aye. Davies, aye. Gonzalez? Aye. Gonzalez, aye. Herabitian? Herabitian, aye. Hart? Hart, aye. Irwin? Aye. Irwin, aye. Kalra? Aye. Kalra, aye. Pappin? Pappin, aye. Rogers? Aye. Rogers, aye. Schiavo? Aye. Schiavo, aye. Schultz? Aye. Schultz, aye. Ta? Aye. Ta, aye. Wallace? Zaberg? That bill is out and we'll leave the roll open for absent members to add on. It means everything to the community. Thank you. For real. All right, members, I have some very exciting news. We are on our final bill. Move the bill. All right. We are moving to file item number nine, SB 1125. Welcome, Senator Menjavar. My motion was serious. All right, you have a motion and a second. I will turn over to my witness in support of this bill. Thank you very much. I'm Christine Compton. I am the Director of Strategic Communications and Advocacy and the Deputy General Counsel for Irvine Ranch Water District. We are certainly in strong support. We thank the author and the sponsors for the bill, and we certainly appreciate the long conversations to move this bill to a place in the concept over the years where you now have the water community fully in support of the bill and low-income water rate assistance. And so I realize you have a very long day, and so I thank you for your time. I'm more than happy to answer any questions you may have. Thank you. All right. Are we moving now to any additional witnesses in support? If you'd like to testify in support, SB 1125, go ahead and approach the microphone. I'm Mateo Kushner, Community Water Center. on behalf of Clean Water Action, Physicians for Social Responsibility, Los Angeles, Courage, California, Mono Lake Committee, Center for Environmental Health, and Restore the Delta, all in support. Abraham Mendoza on behalf of Central California Environmental Justice Network, in support. Deanna Latoura-Kean on behalf of San Diego County Water Authority, in support. Thanks. Michaela Byrd on behalf of the Nature Conservancy, in support. Kyle Jones on behalf of Rancho California Water District and the San Joaquin Valley Water Collaborative Action Program in support. Also asked to support for the Association of California Water Agencies. Thank you. Gabriella Foscio is here, Club California in strong support. Trevor Taylor with Metropolitan Water District of Southern California in support. Jack Wurston with Nossaman on behalf of the Santa Clara Valley Water District in support. Andrea Averjel with the California Municipal Utilities Association in support. Debbie Michael, East Bay Municipal Utility District in support. Brian Sanders with the City of Sacramento and on behalf of my colleague Ryan O'Jacken with the Regional Water Authority, both in full support. Thank you.

Marissa Hagerman with Tratton Price for California Environmental Voters and Water Foundation. We're in strong support. Jason Eckert on behalf of the San Francisco Public Utilities Commission in support. All right. Thank you to all of the supporters who stuck around to the bitter end to register their position. Do we have anyone here speaking in opposition to this measure? All right. Any Me Too testimony in opposition? Seeing and hearing none, bringing it back to the committee, Assemblymember Calderon. Yes. Thank you, Senator, for bringing this bill forward, and I'd love to be at it as a co-author. Thank you Assemblymember All right Thank you Would you like to close Senator Memo Cho is playing in his last ever game with the Mexico World Cup right now so we all got to go there But also with this bill, Assemblymembers, IAUs allow a platform to help with their low income. Let's help with this bill to allow our publicly owned water systems, another platform that doesn't violate Prop 218, asking for an aye vote respectfully. Thank you. Thank you. All right. We've got a motion and a second. Madam Secretary, please call the roll. Item 9, SB 1125. The motion is due past appropriations. Petrie Norris? Aye. Petrie Norris, aye. Patterson, Berner, Calderon? Aye. Calderon, aye. Chen, Davies? Aye. Davies, aye. Gonzalez? Aye. Gonzalez, aye. Herbidian? Aye. Herbidian, aye. Hart? Aye. Hart, aye. Irwin? Aye. Irwin, aye. Kalra? Aye. Kalra, aye. Pappan? Aye. Pappan, aye. Rogers? Aye. Rogers, aye. Chiavo? Aye. And I'd like to be added as a co-author, please. Thank you. Chiavo, aye. Schultz? Aye. Schultz, aye. Ta? No. Ta, no. Wallace? Zuber? And that's 3, 2, 4, 6, 8, 12-1, that bill is out. We'll put it on call so that absent members cannot add on. All right, here's the plan. It is 6-04, so if members are not in the room and you would like to add on, please return by 6-10, which is when we're going to gavel down. In the meantime, we're going to do a lap of bills so that members who are not here can add on. If you have a vote change to register, please do it at that time. Okay, beginning with file item number one, SB 804. Berner? Cholra? Aye. Cholra, aye. Schultz? Aye. Schultz, aye. That's 16-0. 16-0. We'll leave the roll open for absent members to add on. File item number 2, SB 886. Berner? Erwin? Aye. Erwin, aye. Schultz? Aye. Schultz, aye. 13-0. That bills out and we'll leave the roll open. File item number 3, SB 887. Berner? Erwin? Aye. Erwin, aye. Schultz, Schultz, I 13, 1 that bills out. We'll leave the roll open. File item number 4 SB 905. Berner Schultz, Schultz, I 11, 4 that bills out. We'll leave the roll open File item number five, SB 913. Berner, Schultz, Schultz, aye. 14-0. 14-0, that bill is out and we'll leave the roll open. File item number six, SB 931. Berner Schultz Schultz aye 13 13 that bill is out and we will leave the roll open for absent members to add on File item number 8 SB 1098 Berner, Chiavo, aye. Schultz, Schultz, aye. Wallace, Zebur. 10-3. That bill is out and we'll leave the roll open. File item number 9, SB 1125. I think we got everybody. Okay. File item number 10, SB 1158. Burner? Aye. Burner, aye. Schultz? Aye. Schultz, aye. 17-0. 17-0. That bill is out. File item number 12, SB 1196. Burner. 11-9. File item 12. Oh, 11-9. Aye. Burner, aye. Schultz. Aye. Schultz, aye. That's 18-0. 18-0. That bill is out. File item number 13, SB 1245. I want to change my vote. I do not vote. On what bill? This one. All right. One, two, four, five. All right. One, two, four, five. We have a request for a vote change. Ta from aye to not voting. Berner? Aye. Berner, aye. Schultz? Aye. Schultz, aye. All right, so that is 11-4. That bill is out. File item number 14, SB 1295. Berner? Aye. Berner, aye. Schultz? Aye. Schultz, aye. 14-1. 14-1, that bill is out. Let's see. File item number 16, SB 1359. Berner? 16? Yes. Aye. Berner, aye. Schultz? Schultz, aye. 12-5. 12-5. That bill's out. And file item number 18, SB 1417. Berner? Aye. Berner, aye. 14-0. 14-0, that bill is out. Let's do the consent calendar. Berner? Consent calendar, aye. Berner, aye. Schultz? Aye. Schultz, aye. 18-0. 18-0, the consent calendar is out. All right, so that's lap one. We're going to do another half lap. Okay. Okay. I voted on item 10. I didn't read my name. I wasn't sure if I walked out right at that time. Okay because I was walking it Last time you had a little All right we going to start at the top with file item number one SB804 Berner. Aye. Burner, aye. 17-0. 17-0, that bill's out. File item number 2, SB 886. Burner? Aye. Burner, aye. 14-0. 14-0, that's out. File item number 3, SB 887. Burner? Aye. Burner, aye. 14-1. 14-1, that bill is out. File item number 4, SB 905. Berner? Aye. Berner, aye. 12-4, that bill is out. File item number 5, SB 913. Berner? Aye. Co-author? Berner, aye. 15-0, that bill is out. File item number 6, SB 931. Berner? Not voting. Berner, not voting. 13-1. That bill is out. File item number 8, SB 1098. Berner? Aye. Berner, aye. 11-3. File item number 9, SB 1125. Berner? Aye. Berner, aye. 13-1. That bill is out. We've got you on everything else. So that concludes the business of today's hearing. Oh, I'm sorry. I think that we maybe had a little miscount. So we are going to just redo SB 1196. All right. The final count on file item number 12, SB 1196 is 17-0. That bill is out. And that concludes today's business of the Assembly Committee on Utilities and Energy. We are adjourned. Thank you. Thank you.