Assembly Utilities And Energy Committee

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Madam chair, members of the committee. Hello. Thank you for the opportunity to present 1259. SB 1259. To begin, I'd like to thank the chair for the great thoughtful conversations that we've had about this bill. Thank you for your engagement on this topic. The chair and I both share a strong belief that California needs to be doing more to effectively govern our way through the transportation fuel transition that is underway. I think we also agree that doing so requires more information and a robust holistic strategy, and there are differences of opinion on the best way to go about that. So while I am accepting the amendments that are outlined in the committee analysis, I know we also share a commitment to have further conversations as we refine this bill as it moves forward. I look forward to working with the chair to get the details of the confidentiality provisions right. The amendments we're taking today represent a significant compromise on all sides, especially for my sponsors. I want to recognize that. Petroleum refineries have been closing across the U.S. for years, including in California, as an increasingly competitive global market pushes companies to consolidate operations. And the hard truth is that more will eventually close. I want them to remain open as long as we need fuel for them, as I think everybody in California does. However when it time for a refinery to close we need to be ready And getting ready takes time and foresight We know that personally in our own lives to take care of those who rely on us we need to take care of our own health and we need to make plans for a future we won be part of Refineries are no different. We all know that we will eventually die and we will use a will to plan for the inevitable future. For refineries, the inevitable future will be that some or that they will close one day. But right now, we don't have the equivalent of a will for refineries. I use the analogy of a will because I used to do a state planning law, and so I thought a lot about planning for the future that you won't be a part of. When a refinery closes, communities are left in the dark, and the state lacks the information needed to plan for land reuse, environmental remediation, and economic transition. SB 1259 changes that. It does not increase the cost of doing business for refinery operators and owners. These companies either already have this information or they'll need it eventually. In fact, after conversations a few weeks ago in ESTM, we have made it clear in the bill that existing information, if the information is needed, can be used to meet these requirements. This isn't about creating redundant busy work for refiners. It simply creates more transparency sooner. Under SB 1259, the State Water Board will develop an overview of technologies, costs, and timelines associated with refinery cleanups. Then refiners will submit a report to estimate the eventual cleanup timelines and costs consistent with that overview. Although this is more information than they are required to disclose today, as the committee analysis notes, it is in line with what is already required for other sectors of the energy industry. So, for example, power plants, oil wells, and wind and solar facilities. And that really is all that the bill does. It asks refineries to provide the same type of transparency we already expect from other industries in California today. This bill is an important part of California's holistic fossil fuel transition strategy. In a hearing we held in Senate Environmental Quality Committee this year, which I chair, we heard from Energy Commission Vice Chair Sivagunda and others repeatedly that communities who have directly experienced refinery closures said they needed more information sooner. Without SB 1259, we'll just keep reactively facing crisis after crisis instead of planning intelligently for our future. I would like to address also some of the misconceptions about this bill. Opponents say that the bill is so onerous that it would leave the state's remaining refineries no choice but to close. But they also say it's unnecessary and redundant with what they already do. It obviously can't be both of those things, and it's far from being either of those things. There's also the claim that refineries have an, quote, indefinite useful life. And so it's appropriate that they hide their cleanup costs until further notice. And they say they're so close to leaving that one wrong move will send them packing. So how can they both be here to stay and be eyeing the exit? I appreciate that the chair seems to share some of my frustration with these contradictory messages. And I think some of the amendments that she and her committee have proposed will help us get to the bottom of things. The more I look at the history of California's refineries, the more I worry about their future. I'd like to share a few examples. In the city of Hercules, the Pacific Refining Company closed a refinery in 1995. The city relied on bad information and committed millions in future tax revenues to the developers. Now, decades later, the city is on track to pay tens of millions of dollars of public dollars, more than they accounted for, and was sued by the developers to make sure they paid it all. Shell closed part of a refinery they had in Carson in 1965. Housing was built on land that was not at all remediated to safe levels, and 40 years, and many, many cases of cancer later, the state and the city needed to take the company and the developers to court for a long time. hundreds of millions of dollars in damages. A refinery in Ventura owned by USA Petrochem operated for less than a decade in the 70s and 80s and then sat for nearly 30 years without getting properly cleaned up. Then the EPA finally got involved and found leaking pipelines and tanks spilling onto the shoreline and threatened them with fines, tens of thousands of dollars per day to clean it up. Given the scale of the problems we've already seen at smaller closed refineries, we should all be alarmed that the seven refineries that are left are big, they are old, and they need to get their affairs in order sooner rather than later. Otherwise, just like an estate without a will, we're likely to find ourselves fighting in court for years about what the decedent wanted to do with their assets. Unfortunately, the reporting required by SB 1259 won't guarantee the next California community that's hit by a closure will be ready, but it allows us to know what is coming and plan and prepare however possible. The amendments that we've taken in this committee will unfortunately leave the communities with less information than what is in print today. And I don't take that decision lightly. But with the commitments to continue working on this, I think we can make this the best bill possible. And I wanna thank the chair again for working with me. With me to testify in support,

Thank you very much, chair and committee members. My name is Carrie Birdseye, and I serve on the Benicia City Council. I very much appreciate the opportunity today to testify in support of SB 1259. As an elected official of a city that's experiencing a refinery closure now in real time, I'm acutely aware of the problem that this legislation is addressing and eager for the solution that it offers. The closure of the refinery will hit our local economy hard in the near term, putting an estimated $10 million hole in our local tax revenue. Our community does not have the luxury of decades to let the site's future play out in slow motion while viable opportunities slip away. But the planning and coordination we need to be doing right now is extremely difficult in the absence of hard information about the refinery site. We don't have a complete picture of what's needed to dismantle and redevelop the refinery site. So let me paint you a picture. We could be drawing real maps right now on what we can build on, what the land is all about, and when. What level of cleanup are they going to need to do? Will it be limited to heavy industrial going forward because it's just too hard or too long of a cleanup? Can we put any new housing developments or retail outlets or parks there? How much room do we have to do that? The land the refinery sits upon today has bay views, rolling hills, and so much potential. Limiting the refinery's land to reuse opportunities to heavy industrial is like limiting San Rafael's coast to San Quentin. Right now, we have no information, and it's been well over a year since the refinery first announced its departure. We are asking refineries to do the same as almost everyone else in the energy industry provide a closure plan in advance and a way to pay for it I respectfully urge your aye vote on SB 1259 Thank you. Good afternoon, Chair PT Norris and Committee. My name is Ranjit Deshmukh. I'm an Associate Professor of Energy Studies at the University of California, Santa Barbara. I study energy transitions, including how the transition in the transportation sector will affect refinery retirements, health benefits from reduced pollution, and potential employment losses. Thank you for the opportunity to testify in support of SB 1259. Demand for fossil fuels in our transportation sector is declining and will continue to decline as we decarbonize our transportation systems. In response, will we see some of our refineries retire in the next decade or two? It's likely, and it depends on the pace of electrification and the ability of the state's agent refineries to compete with newer out-of-state and international producers. This bill makes no judgment on whether the state's refinery should close. All it says is that in case any refinery decides to retire, they need to have a retirement plan for decommissioning and remediation in advance. And I'm sure we all agree that we do need a plan to clean up refinery sites after they retire. Existing SEC regulations require refineries to publicly disclose their decommissioning and cleanup costs as part of their closure liabilities. However, currently, refiners choose to do so only after they declare their intent to retire. And even at that point there is no requirement for providing a comprehensive plan that includes costs, timelines, and decommissioning and remediation steps. The limited information is inadequate for both the host communities to plan for the cleanup and redevelopment, and for the state to explore repurposing the remaining infrastructure like marine ports and storage tanks. The question is whether this requirement is onerous and expensive. The answer is no. These are big corporations and they can certainly take on the cost of making a plan, just like other energy industries, including nuclear, coal mining, and wind and solar. Being transparent about cleanup costs will, in fact, help refiners develop better relations with their host communities. I recognize that this bill will not answer all the questions about decommissioning and remediation, but this will help provide initial estimates and plans, which can then lead to finding solutions together. So I respectfully ask for a vote. Thank you.

Alex Lumer on behalf of Earth, Justice, and strong support. Thank you. Mariela Racho with Leadership Council for Justice and Accountability in support. with Asian Pacific Environmental Network and support and with Me Too for NRDC as well. Good afternoon, Allison Hillier with the Climate Center in strong support. Thank you. Daniel Broad with Union of Concerned Scientists in support. Good afternoon, Christina Scarinj with the Center for Biological Diversity in support. Good afternoon, Grishina Mojaveer, California Environmental Voters in support. Ruth McDonald with Climate Action California in support. Good afternoon, Chair and author. Diana Vazquez-Vallestados with the California Romance Justice Alliance action in strong support and one of the co-sponsors of the bill. Thank you.

Thank you Madam Chair and members Zach Leary on behalf of the Western States Petroleum Association and respectful opposition to SB 1259 I wanted to start by thanking the Chair and her staff for the significant time that has gone into this bill and been dedicated to the analysis and to the committee members as well. I know we've spent a lot of time looking at this thing and talking about it. We appreciate that the committee analysis acknowledges the significant shortcomings in the bill in print, the fact that it may accelerate refinery closures rather than prevent them, the public disclosure requirements could create serious market consequences, and the planning assumptions that were overly speculative. Our position at WSPA remains that if the legislature is serious about stabilizing the few remaining refineries, it has to start with doing no more harm. And unfortunately, we're in this bill's final policy committee, and you are being asked to vote on a bill that isn't in print. It's a significant rewrite. I think we have serious concerns about the details of the final proposal. I'm urging extreme caution. Many of you were here for the special sessions when bad policies were rushed through a bad process, and that ultimately did not help stabilize refineries and created a worse business environment. What you are being asked to vote on here are significant amendments to a complex policy imposed on a complex industry with very little time to understand the full consequences. is let's learn from the lessons of the past and reject this bill today and focus on protecting the few remaining refineries that you all know you need. We respectfully request a no vote on SB 1259. Thank you, Madam Chair. Members of the committee, Keith Dunn here on behalf of the State Building Construction Trades Council. I'm here today in opposition. I do also want to recognize the discussions that went into looking at the goals of this legislation. legislation, which, you know, we all are planners. We all like to plan for the future. Sometimes when we do that, we need to make sure that we're actually asking the right question. The workforce that safely maintains and repairs and operates these facilities looks towards their future, the future careers that they have, the careers of their families depend on. And, you know, when we have opportunities to plan around these facilities, we need to make sure the questions we ask are the questions that we need answered, which are today, what are we doing to maintain the existing facilities that continue to need to serve the citizens of the state of California? The State Building Construction Trades Council are, if not the largest, one of the largest supporters of alternative energy, alternative fuels. We support almost every opportunity to move those projects forward. There may be some that we don't, but in general we do. but we still rely upon the petroleum industry to provide the fuel that brings groceries to our stores, our children to their schools, and each of us to our homes. We're decades away from that alternative fuel source. I appreciate the history lesson and failures of the past that our authors discussed. They're terrible. We used to also use leaded fuel. We don't do what we used to do in the 70s. We've learned. We've learned safety standards. We've learned better practices from the refiners and how to make a cleaner, safer fuel. Um, we are transitioning. We're decades away from that. Again, as, uh, Mr. Leary pointed out, this legislation is critically important. We've had special sessions that perhaps some of you voted on One of you had your name on the bill uh that was rushed and probably could have used a little more more discussion Um we this bill today We still reviewing the amendments that were thoughtfully prepared from the committee but today we're asking for a no vote on 1259 with respect to the author. Thank you.

I'm sure good afternoon, Horacio Gonzalez. Horacio Gonzalez on behalf of California's Business Roundtable in opposition. Good afternoon, Chair Petrie-Norris and members. John Kendrick from the California Chamber of Commerce in opposition. Good afternoon, Dawn Kepke on behalf of the California Council for Environmental and Economic Balance in opposition. Thank you.

I had a question for Councilmember Brugzai. You probably are the person that has had the most experience in a really tough situation, and you've got a long career in the Planning Commission and the Council as well. Can I get a photo? It's on, but I'm probably too far away. Thank you. And so what do you think could have been done with additional information earlier in the process in your community's response to the closure? We could be looking at real maps right now, planning our future and not waiting on information from state agencies or others. We have asked, the city of Benicia has asked the state water board, the California Energy Commission and others for information about this 900 acre site. and we have no information on what remediation, what cleanup is needed. The refiner, Valero, has partnered with a reputable developer who may or may not have that information, but they're not sharing that with us, with our community right now. If this bill had been in, you know, been a law five, ten years ago, we could be looking at real investments in our community at this very moment. So you're stuck in trying to react, whereas if the bill had been in place, you would have been proactively engaged in thinking about the future and getting community engagement on an economic development plan that works for the community. Absolutely. We could be talking to investors, retailers, people that want to build parks in this area, heavy and light industrial investors. So, yeah, I mean, 900 acres is a lot of potential development that is essentially on ice right now. Thank you for that. That's really valuable. And then, Professor, take that information and extrapolate it statewide, and what does that mean for all of us as consumers and the refinery workers, the operators of these refineries as we're in this mid-transition? depending on how you see that early in that stage or further advanced. But the issues are there. We're going to have to deal with it one way or the other. Yeah, so my research basically looks at how this transition is potentially going to evolve. Now, we're not saying that all the refineries are going to retire in the state, but there could be more. But that decision to retire is completely up to the refineries and their ability to compete with refineries elsewhere or imported products or whatever that is. All we're saying in this bill is that just be transparent about what the cost would be. And right now, as Kerry just mentioned, there's no information about not just the cost, but the steps taken for remediation and decommissioning and the timelines, which are so important. So all we're doing is like, okay, can we prepare for that? And one additional point I wanna make is this information would also be useful for the state, especially the CC, as they think about repurposing some of the infrastructures. For example, if the state chooses to rely more on imports, do we need more storage tanks? Can we repurpose the existing storage tanks for petroleum products instead of crude oil? Can our marine ports accept those imported products? Like, do we have that capacity? So that information will also be useful coming through this particular bill. Thank you very much for those comments.

Thank you, Madam Chair. I think we do talk a lot about transparency, and I think that's important. We're talking about where we are in our transition to a more renewable future, and I'm appreciative of that. What I hear about often in my district, though, is the costs. And so I'm sort of curious about what that's going to look like with this measure goes forward. And maybe the opposition can speak to that. Is this a bill that's going to increase costs for consumers and increase fuel prices? Because that's something that is really important to my district. It's a heavily commuter district. And so we'd like to hear more about that. Yeah. Keith Dunn, state building construction trades council through the chair. I can respond to that. You know, it doesn't take a academic or environmentalist city council member to to answer the question. Go out on the streets and ask folks if the price of fuel is too high. There's a lot of factors that go into that, but I can tell you the more that we write the obituary for the future six that are remaining here, the more we're going to have business decisions that drive them out of the state. Planning is great, but it's only as good as the questions that you ask, and the questions that we ask are preparing for their exit, not to sustain and maintain until we get to that just transition. I can't say that enough. Go talk to your constituencies. We all talk about affordability here. It's a great little word, but it actually has meaning when you go out and talk to real people are impacted mostly by the price of fuel. And some of this is driven by world events. But when we're asking questions about planning and all we're asking about is the future demise and the exit of, we're asking the wrong question. And that will impact every single Californian's pocketbook, every single one. And if I may respond, on the bill and the proposed amendments, one of our major concerns with the bill is it puts us in potential conflict with our federal reporting requirements. As you know, we are heavily regulated at publicly traded companies, at the SEC, at the Federal County Standards Board, and with the gap reporting requirements, the generally accepted accounting principles at the federal level. What this bill and the proposed amendments from the way we read them would do is put together a potential 10-year plan of when we were going to close that would remain confidential. But those plans may be in that plan may be inconsistent with the plans that we are telling our investors through the SEC and reporting requirements that we have to do and puts us at conflict. If the state is now requiring us to develop something that is misleading or mischaracterizing our plans in the future as companies, These are multibillion-dollar assets. We are continuously trying to get investment to continue to do the turnarounds and the maintenance needed, and this bill potentially sends the wrong signal of closure signals to the markets. And we think that has severe consequences at a time when California needs us more than ever Do you mind if he answers it I was going to yeah I actually was going to ask the author if you wanted to respond to that point about the potential conflict

I'd like to hit the witness too if he's able to. So, I mean, to be clear, like, I don't want California's refineries to retire before they need to retire, okay? We need those refineries, and they have supported California's economy for, like, decades. All we are saying, exactly, but all we are saying is that we just need a plan. This bill doesn't say that you're gonna retire in like 10 years or 20 years, there's no timeline for natural retirement. All it is saying like if you choose to retire, these might be the costs and this might be the remediation steps that you might take and that's all there is, right? In fact, I totally understand the affordability question. Like I care about Californians and we shouldn't be raising those costs, but we should plan for the potential retirement if they happen, right? Because the decisions depend on the internal finances of those refineries. This bill doesn't give a signal that any refinery is going to retire. All it is saying is like, okay, we have this plan, this is done for nuclear power plants, for coal mining, coal, ash bonds, wind and solar industry. All of them have these particular plans, but they're not saying that they're going to retire in like 10 years or five years. That's not part of the bill. Thank you.

Vice Chair Patterson. Thank you. Sorry, in between things, so I missed the – you said, sir, you didn't want refineries to close. Maybe good legislation would be to prevent refineries from closing. I think we pass a lot of policies out of this place, not necessarily now or whatever, but just over time. I think that have resulted in business decisions where we have fractional amount, the number of refineries. And so, you know, unfortunately, we're faced with the prospects of some closing. And I'm wondering, you know, maybe, I don't know, it's a crazy idea, but I wonder if maybe we can come up with some of those ideas to stop them from closing. and so we don't even need a plan in the first place because actually my goal is that no more refineries close. But I think my concerns with this bill is I'm not sure. It seems that we're coming up with a hypothetical plan for maybe someday it might close, maybe 10 years, maybe 20. that's like, just putting that in the air is, you know, if you think about something, it's going to happen. And I think this bill kind of does that psychologically. We're saying, we expect you to close and let's plan for your demise now. And I don't know if I'm reading this wrong, but that's kind of my impression of it. And I know there's committee amendments. Yes, and perhaps the author would like to respond, not to make you repeat your testimony,

the concerns raised by our vice chair. Well, yeah, I mean, that's exactly right. I appreciate what you said, chair, because that is exactly the way that this bill is framed and that we should be looking at this. I mean, the reality is that the state of California is transitioning away from fossil fuels and that that clean energy transition is underway. And so are we talking about 10 years? Are we talking about 100 years? The reality is that these large oil refineries, seven of them left in the state of California, they are sitting on large amounts of land and most of them predate the EPA. So they are actually out of step with other parts of our energy sector, specifically power plants, oil wells, and wind and solar facilities that all provide this kind of information. So refocusing on, you know, it's not what my witness himself wants or what any individual person wants. We know that the reality is that refineries will stay in business here as long as it makes sense financially because they are a business. They are a private business. And so Looking at the market forces that are driving the decision-making is what is going to drive what happens in California. Now, to Assemblymember Patterson's point, could we be giving large subsidies to them? Yes, we could be shoveling money to refineries or to any industry we wanted to. But the question is, is that in the best interest of California residents? Is that something that we want to do? And if we are even considering doing things like that, we need to have more information about what it would look like if a refinery closed. Because we don't know if there is a large lake of oil underneath a refinery that needs to be cleaned up. And so the estimated decommissioning and environmental remediation costs and timelines, that's the core of what this bill is asking for. So it's asking those who are closest to this, the refineries themselves, to assess the decommissioning and environmental remediation costs. And so thinking about that 10 years out or when it's 10 years from now, 10 years later and 10 years later, is not going to be driving any of the business decisions. They are having to assess their own liabilities when they're making decisions about whether to stay in business in California. So I appreciate coming back to the core of what this is. This is not going to drive up costs for consumers. I think there's a specter of affordability can seem to infuse nearly every single topic or bill we talk about here. But the reality of this is that the companies are already doing this internally. We just want the state to get out of this asymmetrical information situation where we don't know anything and they have all the information and all the cards. and we'd like to know a little bit more, but we don't want to put them at a disadvantage and we're obviously not trying to put them out of business. Well, thanks for that, Madam Chair and Senator,

You just lost 20 percent of refining capacity this past year. And it's you know, we're not asking for subsidy. We're asking for changes in the state policies that are making us the most competitively disadvantaged refineries in the world. and layering on top of bills like this that put us in conflict with our federal reporting requirements is another example of the layering effect of all the bills that California has done for the past 20 years that drive decisions, that make the companies think, why are we doing business here in California? And, you know, my companies, and I have these conversations with them, they want to stay here. They want to compete, but it's the policies that have to change, and it starts by doing no more harm with bills like this. Thank you.

So thank you for working so hard on this bill. I missed the first part of the presentation. Could you describe when the obligation kicks in in connection with the 10-year period? What is the standard in which that would trigger this planning exercise? Yes, this is what we worked on in committee. And correct me if I'm wrong, but I believe that it is two years after the bill passes and then 10 years from then. So basically every 10 years. So if a refinery doesn't have a current intention to close in that 12-year period, what would happen at that point? Would this apply essentially to every refinery that's currently operating in the state? Yes. Okay. You know, one of the things that, I mean, I just think this is a prudent step. I mean, I don't think the exercise of having a planning exercise that gives more transparency to what might happen to allow both the communities that are within and as well as the state agencies to have the tools that they need to plan ahead is just something that's unreasonable. I mean, it is a compliance obligation, but there's tons of compliance obligations that lots of folks who do business in the state of California have to comply with. And I don't think it necessarily sends market signals. I don't. I mean, you know, in the state of California already, we have hazardous waste facility closure plans that kick into place for certain kinds of facilities on the day they begin operating. So I think, you know, if everyone says that this is California wanting to close refineries, I don't want the refineries to close in advance of the time that demand is reduced. I mean, I think we have to be careful about not doing things that require importing refined fuel from other places, because I think that's way, way worse than actually supporting our refineries here because it keeps the jobs here. But I just don't think this – I think this is a prudent measure. I don't think – you know, I think there's other obligations that require prior planning as, again, you know, the hazardous waste facility closure plans kick in the day a facility begins operating for those that do. So I don't think this is really, I think if we characterize it that way, then of course that's a narrative that gets out there, but I just don't see that happening. And so I do think we have to be careful about making sure We're not doing things that are pushing, you know, that are making it more necessary to import fuel from outside of the state of California because the demand has not reduced. I mean, we should be focusing much, much more on reducing things that move us to a clean energy economy and supporting the supply side when it's needed. But I just don't think this does this. I just think this is prudent planning. So I'll be supporting the bill today. Thank you.

Thank you, Madam Chair. This goes to opposition. I know that you were saying that these aren't the questions we should be answering right now. What are the questions we should be asking? And then who decides what happens to the land once you decide to shut down? Thank you. Thank you, Assemblymember. Great question. I think on the first part, it's really looking at the policies. And we worked closely with the Energy Commission at the direction of Governor Newsom. to identify the policies that are causing our refineries to be some of the least competitive refineries in the world. And how do you improve that? Changing the policies. And so we really need to be focused on what are those policies? Happy to provide that list for you. And how do we change them going forward to keep us competitive, keep us operating, lower the hard costs of doing business here in the state. And thank you for the second question on what happens with this land. And with all due respect to the council member from Benicia, I find it hard to believe that the company operating there wasn't communicating challenges it was having in operating in California and operating under a very tough business environment. And I think with the land, who's planning what to do with it? At the end of the day, it's private property. So it's owned by that refinery. In some cases, it may be turned into a terminal. And I know from discussions I've had, the state is in desperate need of terminal and capacity and infrastructure to keep fuel moving to your constituents so that they have it when they go to the gas station. And so the decision at what happens with the land at the end of the day is going to be that companies. And there may be a whole host of use for those those properties. A lot of them have waterfront. A lot of them have port access. A lot of them have rail. A lot of them have transmission. These are valuable assets that still have useful life. And I would love to give you an opportunity to respond, Council Member. I think that the experience that you have gone through is incredibly useful and instructive. And I think it's fascinating that I think the opposition, some of your objection to the bill was that it was speculative and baseless exercise. And so as we worked with the author, we tried to ensure that we're solving a real problem. So Benicia is navigating this right now. So if there's anyone who can speak to what's not working today and anyone who can help us identify the gaps in what exists today, it is the author's witness. So thank you for being here, and I would really value your input on that question. Thank you, Chair. Well first of all the city of Benicia has a deep water port that is now currently being used as a terminal for refined product And we going to stay that way until the state tells us that we don need our port anymore So we are helping out the state by keeping that terminal open and bringing in large ships of refined product. The four, there's 900 acres associated with that port. And we have approximately 120 storage tanks and 60 of those tanks are being used for refined product right now. So that's stabilizing our petroleum market right now. Benicia is helping out. What Benicia wants to understand is what can we do with the 400 acres of buffer zone that has maybe experienced episodes and product dropping on it but hasn't really been used as a heavy industrial site. We want to understand what it takes to clean up the rest of the refinery acreage while the marine terminal serves the state of California. And we've asked, like I said before, we've asked the water board. We know that the California Energy Commission has data that they're not sharing with us. This bill would ensure that future communities that have closing refineries would be better prepared and would not be in the dark when the refinery chooses to go. And yes, it's private land, but it's our community. And Valero has been an industrial partner to Benicia, and we want to make sure that we can work with them in ensuring that whatever development happens on this acreage is good for Valero's bottom line and good for our community. Thank you. All right, before we take any additional questions, we're going to pause for a moment to establish quorum. So, Madam Secretary, please call the roll. Petrie Norris? Present. Petrie Norris present. Patterson? Here. Patterson here. Berner? Calderon? Calderon here. Chen? Davies? Davies here. Gonzalez? Here. Gonzalez here. Herbidion? Hart? Hart here. Irwin? Kalra? Here. Kalra here. Pappin? Here. Pappin here. Rogers? Here. Rogers here. Chiavo? Schultz, Ta, Wallace. Wallace present. Sabir. Sabir here. Schultz here. All right, great. We've got a quorum. Any additional questions or comments on this measure? All right. So I want to thank the author for your work on this bill, for our opportunity to really engage in a very authentic and open way. I think the assertion that this was a rushed process is pretty disingenuous. This bill has been in print since the beginning of the year. It went through the normal committee process on the Senate side. It went through another committee in the Assembly our team has been working in collaboration with the author staff with proponents with opposition for more than a month So let the record show that. And I think as we have done that work and dug into this, I have arrived at the conclusion that this is an important part of a holistic transition strategy. Is it the only thing we should be doing for the rest of time in this sector? Of course not. Absolutely not. And I think there's many people on this dais who are very open to a conversation about some of the other concerns the opposition has raised. But you can separate that conversation from the bill before us. So with that, would you like to close, Senator? Well, I appreciate those comments, Chair, and also the conversation here today. We'll continue to be in dialogue with the opposition to see if we can get to any things that make them more comfortable with the bill. and I respectfully ask for your aye vote. Thank you. All right. Do we have, we need a motion and a second. Thank you. Thank you. Motion from Assemblymember Kalra, second from Assemblymember Zabur. Madam Secretary, please call the roll. Item one, the motion is due pass as amended to appropriations. Sorry, that was SB 1259. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? Patterson, no. Berner? Calderon? Calderon, not voting. Chen? Davies? Davies, no. Gonzalez? Gonzalez, not voting. Herbidion, Hart? Hart, aye. Irwin? Calra? Calra, aye. Papin? Papin, aye. Rogers? Aye. Rogers, aye. Schiavo? Schultz? Schultz, aye. Ta? Wallace? No. Wallace, no. Zipper? Zipper, aye. 7-3, so that bill's on call, and we'll leave the roll open for absent members to add on. All right. Thank you, Senator. Thank you. Thank you. Moving to file item number 2, SB 1425 by Senator Cortese. Welcome. Welcome. Are you? This is about to run around the desk. We're just going to scoot down. just moving down the line may I begin all right welcome Senator Cortese you got to keep it real Thank you. Good afternoon, Chair and members. I'm pleased to have the opportunity to present 1425. Thank you so much for that. Before I begin, I want to thank the Chief Consultant and Chair specifically for working with my office and stakeholders on this bill. I'll be accepting the committee amendments as outlined starting on page 8 of the analysis. As we know, California is building the nation's first 220-mile-per-hour fully electrified high-speed rail system, and there will be massive development potential on the 500-mile corridor. While the state is responsible for managing this land, it lacks legal authority through the High-Speed Rail Authority to regulate encroachments that may delay the building operation and maintenance of the project. SB 1425 simply enables the authority to adopt regulations to establish a permit program for encroachments within the projects right of way A codified permit process will bridge the gap between local property owners businesses and public utilities to bolster the surrounding communities and support expansion along the corridor. With us today to testify is Robert Persall, California Political Director of U.S. High-Speed Rail, and Keith Dunn, who is here representing the building trades. With that, I respectfully ask for your aye vote. Hi. Good afternoon. I'm Madam Chair, members of the committee. My name is Robert Pearsall. I'm the California Political Director for U.S. High-Speed Rail, a very proud sponsor of Senate Bill 1425. A coalition of more than 50 leading unions, public agencies, and companies, U.S. High-Speed Rail is co-chaired by former U.S. DOT Secretaries Ray LaHood and Anthony Fox. USHSR works with its members and allied environmental and progressive groups to advocate for public support for world-class high-speed rail projects across the U.S. Senate Bill 1425 will establish a permit program administered by the authority for encroachments on its rights of way. The measure allows for the authority to accommodate utilities that are trying to expand their business in the Central Valley. Right now, they cannot access authority rights of way because there is no permitting process. While the authority is charged with managing these lands, it lacks the legal authority to regulate encroachments that might interfere with high-speed rail construction and operations. Common encroachments include utility and broadband lines, equalizer pipes, sewage drainage, vegetation management, all of which, of course, are critical in the region where the project is developing. It's vital that the authority be able to protect its infrastructure from encroachments that may interfere with or delay the construction, operation, or maintenance of the high-speed project. Without statutory authority, the project will continue to experience encroachments and barriers to land development. A clear permitting process will help ensure that the authority can protect the project's land, facilities, and rights of way, while, of course, working more effectively with local property owners and businesses, while at the same time limiting unnecessary delays. For these reasons, U.S. High-Speed Rail supports SB 1425 and requests your aye vote on this particular important measure. I would thank you to the Senator for authoring the bill and the committee for working on amendments, and I'm happy to take questions. Thank you very much. Thank you. Thank you, Madam Chair, members of the committee. Keith Dunn with the State Building Construction Trades Council. I promise you after today, you won't have to see me for a month. I'm very pleased to be here in support of this measure. I've been involved with high-speed rail for almost two decades. As we continue to learn from mistakes from the past, I'll remind everyone that the Central Valley, who I often call the train to nowhere, has almost 5 million residents. It's linear infrastructure across the cities, counties, water irrigation districts, bridges, everything under the sun. We've been working with folks who initially identified some concerns with this bill to try and take amendments, which I appreciate from your staff working to work those out. This project is necessary. This project is important. This project is part of the transition that we talked about on the bill before. We're here to support it. It's important. And the more that we can deliver some certainty in process, the more money that we can save, the quicker than we can actually get people on this train and start getting them out of their vehicles. So with that, I'm going to be quiet, ask for your vote. Thank you very much. Thank you. All right. Additional witnesses in support. Go ahead and come on up. Good afternoon, Madam Chair and members. Matt Kremins on behalf of the California Nevada Conference of Operating Engineers in strong support. Good afternoon, Madam Chair. Matt Easley on behalf of the Associated General Contractors of California in support. Thank you. Ruth McDonald with Climate Action California in support. All right, turning to opposition. Do we have a, all right, yes, primary opposition witnesses for 1425. Come on up. Good afternoon, Madam Chair and members. Brian White on behalf of Los Angeles Department of Water and Power. First of all, Madam Chair, I want to thank you and the committee, and committee consultant, Lord Scheiber, for really digging into this complicated issue. We know it's important in providing some very thorough and thoughtful comments in the analysis on this issue of encroachments that the authority is seeking to get authorization for. As the nation's largest municipality that provides water and power for millions of residents, four million residents in the city of Los Angeles, was we want to make sure that we can provide reliable and affordable water and power to our residents and our businesses and visitors. But we have to make sure that we do this in a thoughtful way with respect to encroachment permits. We have expressed our concerns with the author about this, various iterations of the bill going forward. And primarily, we want to make sure that this doesn't impose significant relocations or delays with our own rights of ways, our own encroachment permit process that we have to do. We appreciate that the author took some amendments earlier in the process to address existing rights. And now with the committee-suggested amendments, we think that these amendments are very helpful. We think it will get us into a better place where we eventually will go neutral once we see them in print. Of course, we'll wait for that. But there is one issue regarding emergencies, and we appreciate the fact that the author and the sponsors are willing to address the emergency issue. it's in the bill where the language that it would not be considered an emergency for an encroachment permit. As long as we get consent, we don't know exactly what that means is consent, like picking up the phone and saying, Hey, we have an emergency. We have to deal with this right now. That's what we do with department of water resources. It's simply a phone call. So something like that or something less bureaucratic than what an encroachment permit is requiring is what we'd like to see going forward. So I will continue to work with the author to try to get that fixed. But for that, for those reasons, we have an opposing lesson now, but we think we'll be moving to a neutral once that's in print. All right, thank you. Thank you. Sorry, Madam Chair, members. Joe Zanzi with the Southern California Gas Company and San Diego Gas Electric. We just want to align my comments with my colleague from LADWP. Really appreciate the thorough analysis and recommendations. We think the amendments go a long way to address a lot of our concerns. Still hope to review them with our experts and get to a better place, but happy to answer any questions. Right. Great. Additional witnesses here in opposition. Hi, Madam Chair, committee, Catherine Borg with Southern California Edison. We appreciate everything that's been done so far on the bill with the analysis and the proposed amendments. I'm looking forward to getting a review. And yes, as a reminder for everybody else, name, position, and affiliation, please. Thank you. Thank you. Thank you, Madam Chair and members. Jason Akerner on behalf of the California Municipal Utilities Association, opposed to the bill in print. Echo the comments by LADWPA, especially the appreciation for staff. All right. Thank you. Name, position, and affiliation only, please. Marjorie Sampson, advisors on behalf of the Southern California Public Power Authority, opposed to bill in print. Reviewing. Thank you. Thank you. Five stars. Keira Ross on behalf of the City of Burbank. I'll say ditto. Thank you. Thank you. Grace Martin on behalf of Pacific Gas and Electric Company in opposition to the bill in print. Thank you. Yolanda Benson representing US Telecom the Broadband Association Appreciate the author and opposed unless amended at this point Thank you We look forward to it Thank you so much Okay. Bringing it back to the committee, Assemblymember Zuber. So first of all, I want to thank the author. You know, I've been someone who supported high speed rail since I was actually the president of California Environmental Voters. And I wrote op-eds in favor because I think it's something we need to do for the people of the state of California. It's a smart climate investment. So, you know, obviously a bill that's actually trying to make sure that that is happening in a in in the right way is something that I strongly support. It's for all the reasons why this is important. The reason I'm speaking today is that I think the issues that are raised by the utilities are really, really important ones. When I was in a prior life, I ended up spending about half of my time for about five years actually doing entitlements for a long line telecommunications line, which ran from San Diego all the way to the California northern border. And the issues that the utilities are raising are real ones, and they need to, you know, I know that there's been some good movement over the course of the last couple days, and I want to thank you, and I want to thank the committee staff for that. But they do need opportunities to have their lawyers look at these things. They're really crucial. I mean, they've got, you know, just knowing from what we dealt with on that telecommunications line, the utilities potential encroachments are significant, they're numerous, and they, in some cases, they affect their ability to provide service. So I'm hoping that once they've thoroughly reviewed that, you're going to continue working with them to address details, which they may not be aware of right now. And I think this issue with respect to the emergencies is something that I'm hoping that you're committed to doing. working with them over the course of the next couple weeks, because I suspect that they are sending all this stuff to their lawyers, and the lawyers are going to need time, and I bet you anything that they're going to come back with some things that they're going to need fixed. I think these things should be handled through master agreements with utilities, and so I just want to accommodate, I think, the way these things are done, but obviously the goals of what you're trying to do are really important. Thank you. Through the Chair. Yeah, absolutely. We've been going back and forth, as you know, as we both know about each other, being attorneys. One of the first things I did when we started dealing with the opposition on this is encourage, especially the utilities, to go back and have their attorneys look at language that we were offering because it is important. Even conjunctives are important sometimes and things like that. So that has, as far as I know that's been done, we've been receiving feedback from them. Certainly the committee staff has done a great job handling some of those same issues. The agreements now, thanks to the amendments that we're taking, are expressly embedded in this bill, as I guess we call around here sort of a carve-out, but they're fully respected in the bill as preexisting agreements that likely govern a lot of the issues that an over-the-counter kind of an encroachment permit might cover. We think those agreements are probably much more comprehensive. Obviously, we can't do agreements for every possible – I think your example is a great one in that regard – every possible neighbor, farmer, whomever that's, you know, coming along can't have a master agreement, but they can have an orderly encroachment prevent process And again as you know as certainly as the committee staff knows this is about getting them in and out when they trying to create an efficiency that needs to cut across light rail right-of-way to make it as streamlined a process as possible for them to walk away with a permit and go out and do their work. We will keep, I did not miss the point of your question. We won't stop here in terms of the dialogue back and forth. And if they pick up something, something that flares up for them in legal review, we'll address it. Thank you. I know I know you would never do this, but sometimes, you know, you've got issues that are raised by opponents and you realize that there's a, you know, that that's a wish and a hope. And, you know, we discount whether or not that's really necessary. And I think that the point I just wanted to emphasize is that this language is going to be really crucial. And so I hope that when they come back, if they do, and I suspect that they will once their lawyers look at this, that you're going to be working with them to really try to address those. The short answer is yes. Thank you. Assemblymember Papin. Thank you, Madam Chair. I don't have too much to say other than I'm going to vote for the bill with trepidation. As high-speed rail comes through my district, very tight quarters along the peninsula, what does operating right of way mean? One man's operating right of way might be some very valuable land to my community. And so I will be looking with benevolence to the high-speed rail authority as it comes through and how a right of way might be handled through what I consider to be extremely tight quarter. You're out in the valley now. You get in my parts, and we're surrounded by water on both sides. It is narrow, to say the least. So there's not a question, but you look like you might want to add something, and I'd love to hear from you on the record. I'm with U.S. High-Speed Railway. We're based in Washington, D.C., although I'm based here. We are not with the authority, so I certainly do not want to speak on their behalf. Oh, I would have taken it if you'd like to. I've been to the Federal Rental Authority, too, for various matters as it relates to the railroad that comes up the spine of my community. But that's all right. Welcome. All right. Seeing no additional questions. Oh, sorry. Assemblymember Schultz. Thank you very much, Madam Chair. I'll be brief. Senator, thank you for the bill. I will be supporting it. Like my colleague from West Hollywood, I have long supported the project. The one thing I would be remiss if I didn't just ask of you is to continue engagement with the city of Burbank, which is another community through which the project will run, and specifically Secondly, the Burbank to Los Angeles final EIR does note impacts on the Burbank operable unit, a Superfund site that's going to be impacted by construction for the project. So just please do continue to engage. We obviously want the project to be a success, but there are unique environmental concerns as it relates to that particular segment of the project. And we just want to make sure we get it done the right way. Thank you, Senator. Thank you. And we are aware and have been aware of those issues. All right. Okay. We've got a motion in a second. I see no additional questions or comments. Senator, would you like to close? Thank you very much, Chair. The amendments, I think, are really extensive and have covered some of the concerns, and it's understandable. I think as recently as last night yesterday afternoon I was doing my final review of those to make sure I was completely familiar the scope of right away which my friend from the peninsula right next door to my district who worked so hard on Caltrain and the right there trying to adopt high rail we understand that's sort of probably a narrower definition of right-of-way in that particular area for high-speed rail when they get there officially. But I think the committee staff has given us this really comprehensive, Now, it wasn't in print before, but they've given us this really comprehensive description of what would constitute right of way. If you see anything there even now that, you know, another word, another thing that needs to be added based on your experience on the peninsula, we would love to hear that. And with the committee's consent, we would, you know, add that in. We're not trying to miss anything, that's for sure. it's so important on a bill like this for all parties to make sure all T's are crossed, all I's are dotted. I do want to just say for the record, because I also think it's fairly recently amended language, on the bottom of page five of the RN, it says the authority shall establish reasonable notification and coordination rules for emergencies related to encroachments. That does not require consent. That is a follow-on on a subparagraph on page four, which basically takes emergencies completely out of the bill. It says qualified work, which is what the bill is covering, qualified work, does not include an emergency response necessary to prevent or mitigate a threat to life, health, property, or essential public services. And then it says in terms of does there need to be a notification process, it says the parties, it directs the parties to sit down. I think it does kind of force some engagement with utilities going, you know, in months and years from now. They're going to have to sit down what constitutes a notification in the year 2040. I don't know, but they'll come up with it. With that, I'll stop breaking down the bill and just, you know, again, thank you for your help with it and respectfully ask for your aye vote. Thank you, Senator. We have a motion and a second. Madam Secretary, please call the roll. Item number two, SB 1425. The motion is due pass as amended to appropriations. Petrie-Norris? Aye. Petrie-Norris, aye. Patterson? No. Patterson, no. Berner? Not voting. Berner, not voting. Calderon? Aye. Calderon, aye. Chen? Davies? Davies, no. Gonzalez? Gonzalez, Gonzalez, aye. Herbidion, Hart, Hart, aye. Irwin, aye. Irwin, aye. Kalra, aye. Kalra, aye. Pappen, aye. Pappen, aye. Rogers, aye. Rogers, aye. Schiavo, Schultz, aye. Schultz, aye. Ta, no. Ta, no. Wallace, not voting. Sabir, aye. Sabir, aye.

Berner. Aye. Berner, aye.

Irwin, aye.

Aye. Shiavo, aye.

No. Ta, no.

Thank you.

Thank you. Thank you.

Thank you, Chair and members of the committee. Thanks for the opportunity to be here and be a part of this conversation. I'm Sivagunda, for the record, Vice Chair of the California Energy Commission, and with me are colleagues from the California Public Utilities Commission, DWR, and California ISO. Collectively, we have...

Collectively, we have a presentation to walk through the conditions this summer. Some of the work we have been able to do over the last five years really kind of lifting up to the need of reliability and how best to plan for the future and set up the conversation and dialogue for the future of reliability planning With that I pass it to Luam Test 5 from CPUC to provide a context of the different roles of the agencies

So I'm going to just set the stage on some of the work that we have done collectively, some core aspects of our work, and how we see things moving forward. And we'll connect the specific elements of this slide into future slides in a one-by-one. So at the top, just noting that following the 2020 rolling outages, there has been a significant amount of coordination and work among the agencies to look at the recommendations in the root cause analysis and ensure that we move forward with those recommendations. One of the core parts of that is to improve our planning processes, including the forecasting process, to ensure that it's not retroactive in its assumptions, but looking forward, looking at climate change impacts and other electrification impacts and scenarios to really make the forecasting a robust planning regime so we can think through planning and procurement beyond that, using that forecast. So that has been a significant change in the way we all work. There is a whole range of forecasts that are developed for different purposes. And second, looking at just the development of the procurement and the supply side and demand side resources, I want to just thank CPUC for the extraordinary amount of procurement that has been done since 2020 that included significant amount of midterm procurement that has been coming online, which you will see the benefits and impacts of also future procurement that is currently in planning. So as we move forward from the procurement, the other concern we had is, can we build the amount of procurement we're actually putting out there? So the important part of that was ensuring that the permitting is streamlined, and thanks to the legislature on the 205, there has been significant work in ensuring the overall permitting regime has smoothened and more collaborative and done in a way that we can move the projects more quickly And similarly, we have also had significant progress in the processes at both CPUC as well as CAISO in terms of interconnection and anesthesia and so on. So something that you'll hear over the next few slides. And finally, we have dedicated significant amount of work to ensure that we are well prepared for extreme events. Coming into 2020, most of us were in the middle of that. we had to really scramble the August 15th and then 16th was okay, 17th, 18th, 19th, 20th. Those four days, we really had to scramble, but we also learned a lot. And much of our work since then has been to really standardize all the work that we have done into a planning document. CAISO currently runs the overarching plan of action for the summer, supported by all the agencies. So we have done significant work in that. Thanks to the legislature, you have given us some important tools moving from 2020 to where we are, where we were structurally deficient when we looked at 2022. We were structurally in a deficit, and today we are looking much, much better, and we'll talk about that as well. So along with that, we have programs such as DSGS, ELRP, and some of the non-rate-paid programs that CAISO does through just sheer coordination with the balancing areas and more efficiently using the market for reliability. So with that, I'll pass it to Luam to walk through the CPUC slides.

Thank you, thank you Luam. So I'm gonna go now into the 2026 summer grid readiness assessment. Following my presentation, we'll have Mark Rothlater speak to KISOS assessment and then we'll close with long run planning opportunities. So just before I jump into this particular slide, which is a summary of what I'm going to speak in the next few slides, I just want to note for the committee that as we move forward from 2025 to 2045 we are looking at about 20 gigs of load coming over the time through electrification through that's both buildings and transportation. We have significant chunks from that area, electrification, and another significant chunk from a data center. So those are the two things we are closely monitoring. Happy to answer more questions during the Q&A. But as we move into just year ahead assessment, which is 2026, I just want to note for the committee that 2026 forecast is looking even better compared to 2025. Again, to Luam's points, we have made consistent progress as a team collectively in making sure we are doing the forecasting better, planning better, procuring, building, but also having contingency plans ready to deploy if the conditions were to manifest as extraordinary during the summertime. So some of the core reasons why we are in a better position than the last in 2020, definitely, but significantly over year after year, is due to the significant addition of resources, which Luam spoke to, which is about 32,000 megawatts in a variety of diverse resources. Wanted to note here, you will see those numbers, 32, 31, 28, you'll see them because one of the reasons is they're fast moving numbers, they're constantly changing. So we apologize for different vintages that you might come across. Another important statistic is, as you remember, in 2020 when we had tough conditions on the grid, it was primarily happening when the overall solar supply was coming down, the demand was still high, and we kind of spoke about the importance of net peak. And we have been able to provide significant support during net peak through additions of storage. As you see here, the number is right now 16,000 megawatts. We expect to update that number in a few weeks again, which will show further progress. And finally, through the extraordinary work that CAISO has done and the legislative body has done through many opportunities on the market side, we have been able to better depend on the market to plan for those emergency situations. It's important though for us to kind of keep eye on some of the federal changes. Every time the federal statutes change, whether it's tax credits for vehicles, whether it's tax credit options for supply side, you will have significant uncertainty induced in the planning process, both on demand forecasting, but also making sure the supply comes on, either on time or on cost that we anticipate, which are both threatened regularly. Finally, we have done some work on thinking through how best to plan for long-lasting extreme events. We have both the analytical capability, but there are several options that we have, which we spoke about in terms of contingency, strategic reserve, and so on. So if the conditions were to manifest as normal, we are good. Even under 2020 conditions and 2022 conditions, we still have surplus. But I will note, as always, while we are all cautiously optimistic, if an extraordinary coincidental event that has heat, fire, all come together at the same time, we will still have to navigate tough conditions. Next slide. Just going through, this is a table that we tried to put in front of the committee as a regular template, comparing summer after summer, which gives you a nice way of comparing the last analysis that we provided you with the latest analysis. So I will point your attention to the last three columns table, as you see, in going into 2024, our demand was about 46,000 megawatts. It increased slightly, or about 200 megawatts coming into 2025. And as you went into 2026, there's a little bit more, about 500 megawatts. So that's the net demand that's growing. But what has been changing the situation is really the resources. As you see, each year, we have been adding significant amount of resources on the system. To earlier points by Director Luom, it's really around the 32,000 megawatts that added since start of 2020. And as you see today, we have 66,000 megawatts of installed capacity in California. And it does point out the importance of noting that these are resources that are installed in California. not all of them are under a resource adequacy contract. But we do see those resources in California available to go through these situations. So there are three sets of reliability assessments there for you. One is the traditional planning. So we are in excess. So we have 6,600 megawatts in surplus. If we have 6,600 megawatts in surplus for 2026, if we had a normal event, normal summer, Under 2020 conditions, those surpluses reduced to 4,500, but still significant. And finally, under a 2022 condition, it's close to 3,000 megawatts available. We do note up in red in text that this does not include a coincidental fire risk, which is very, very unlikely, but we do like to put that in, that if all things go wrong at the same time, that we could still find ourselves in some deficit that we have to manage. The next slide then kind of goes into, while we have surplus and an extraordinary condition where you could have a thousand megawatts of deficit, you know, we still do plan for contingency resources. These are incremental to the resources that are already in the ground, shown in the previous slide. So what you're seeing here is different sets

Thank you, Vice Chair Gunda. So before I get into the material, I just want to give a little bit of context. I'm Mark Rothlater. I'm the chief operating officer at the California Independent System Operator. And in our role, as mentioned before, we support the development of the new resources, the addition of the new resources. We do that through our transmission planning and interconnection process and that helps ensure that those resources that are brought onto the system are actually able to deliver the energy to serve the load and they are usable and useful In our operational role, we have the responsibility as a balancing area operator to ensure reliability, which entails constantly balancing supply and demand, ensuring we're not overloading any lines, effectively operating the system securely. and then also ensuring that we're operating with sufficient operating reserve on a daily and hourly basis to ensure that we can sustain any loss of at least single largest contingency loss of the largest resource at any given time. Also, as part of our operational role on an annual basis, we do a summer assessment, and that summer assessment allows us to evaluate what you just heard about, all the resources that are coming on the system, as well as the ability to meet the forecasted demand as forecasted by the California Energy Commission with a certain distribution around that forecast, the probabilistic forecast around that. So it doesn't mean that we evaluate not just the one and two load, which is that 46,000-plus megawatt forecast, but we also look at the tails and the distribution of that, which take you well above 50,000, 52,000 megawatts at the tails. So, long story short, we've been performing this assessment, and if we think back four years ago, our summer assessment indicated that we were about 1,700 megawatts short of meeting what we call a one-in-ten-year event performance standard. Obviously, that notion is a little bit kind of, what does that mean? Well, no one wants any outage or any insufficiency any year, but that is kind of the industry balance between how much you invest in resources with the amount of reliability and insurance you have sufficient resources to meet all conditions over the year. So that's what that is doing. So long story short is that four years ago, we saw that as 1,700 megawatt shortfall. We're very happy to see the latest assessment, thanks to all the resources that have been added to the system. We're seeing over 2,500 megawatt surplus above and beyond what is necessary to meet that one in 10 year performance. Now, that doesn't mean that if we have extreme events, as Vice Chair Gunda indicated, with coincident events of fires, extreme heat across the West and in California along the coast, that we couldn't deplete that surplus. And that's why, at least in the current feeling that the strategic reserve is at least still necessary for this year events. But we are optimistic, cautiously optimistic and vigilant that we can get through this summer based on the amount of resources that we expect to have. We also do perform a stack analysis similar to what Vice Chair Gundah described, and that also indicates that we also have sufficient resources. So everything is looking good for the summer. I will say that as an operational operator we coordinate with the other state agencies on a playbook and that allows us to deploy when we do need to have contingency events and need to deploy some of those strategic reserves We do it in the most effective way following the playbook based on conditions that we've looked ahead as far as seven days out so that we are ready for those conditions. So while the conditions are overall good and we have a surplus, we should talk about a little bit about some of the things that are different this year. And this is not new, but it's more severe in parts of the West with regards to the dry conditions that we're seeing. And the dry conditions, especially in the Colorado River Basin, are pretty extreme in terms of dry conditions. In California, we're actually in a better spot, but not great. And that's in part because of the March heat. A lot of the early snowpack basically was melted off. So from a storage perspective, we are probably good. But from a snowpack, it's going to be depleted very early, if not already depleted. Similarly, in the northwest, they also experienced the March heat, and they also lost a lot of their early snowpack early on. So overall, the west, in terms of the hydro conditions, it could be tight. but there seems to be enough energy and storage, water and storage for those peak days, as long as we don't have long duration, heat events, high load events. So in terms of the weather conditions, we are forecasting what looks like for the balance of the summer, effectively, the indications are that the probability of having higher temperatures does exist in the West, probably more pronounced and more likely in northern California and in the northwest than in more than in the south. Now, these are all probabilities, so we have to recognize that even within these probabilities, we could have a very strong heat wave, just as they're experiencing in the East Coast today or in Europe last week. And so with all these models, you still have to be prepared for those extreme events. And our exposure is if we have an extreme west-wide heat event, it will deplete not just our resources, but any resources we have available from outside the area at that given time. The other thing that we're seeing is a pattern. You may have heard about the super El Nino or the transition to the super El Nino conditions. And this is as a result of sea surface temperatures being at higher levels than has ever been seen before. And the concern is that with those conditions, are we more likely or potentially more likely to experience a coastal heat event, which if we have a coastal heat event, obviously that's where the load centers are. and that's where we get to those extreme high peak conditions. And that's what happened in 2023 when we had 52,000, just over 52,000 megawatts seen as our peak. So I think the forecast is somewhat encouraging but also cautious with regards to the fact that we could still see extreme conditions and if we have those west white heat conditions they could tap out our supply The other thing is that the dry conditions itself are indications that we could have a very strong fire event, and the combination of heat and fire potentially taking out transmission lines and availability supply, we still have to be prepared for those conditions. Let's see. Is this the right slide? Yes, it is. Sorry, different color. So just to give you a little perspective, it's been three years straight that we have not had to call a flex alert. So all the things we've been doing over these years have really been paying off. It doesn't mean that we haven't had extreme events and we've been able to ride through those. And it doesn't mean that we may still need flex alerts and we may still need to go into emergency conditions, but we are prepared to do so, and we are carefully monitoring the conditions that would lead to that. And as I said earlier, we have a very good coordinated playbook that if we got into the conditions, it will not be a surprise. We are coordinated. We will be able to deploy the resources that are available to us, and we will do it effectively to mitigate any ultimate impacts on customers. With that, I think I'll pass it on to Delphine.

Thank you so much, Mark.

Thank you.

Yeah, absolutely. So, thank you for that question. And remember that the main piece here is, do we have access to the data? So when we started on the data centers a few years ago, we didn't really know how best to forecast that. Thanks to CPOC, we are having LSC by LSC application level data today. So what we have is a line of sight around 25,000 megawatts of new applications. The question then is what part of those 25,000 will actually show up as a load and we should plan for as a load. So what the technical teams collectively have kind of come together is looking at a few different kind of characteristics. When you put an application, what percentage of those applications actually become, you know, move beyond an inquiry to an actual assessment application, right? So we have a percentage of that. Second, understanding even if you moved forward with building a 200 megawatt data center, what is the ramp rate? Meaning you don't bring on a 200 megawatt load on day one. It usually ramps up over five years. So what is the ramping rate on that? So looking at a few characteristics like that, the overall consensus amongst the technical teams is to bake in about 5,000 megawatts of data center load through 2045. for system-wide. For local reliability it almost 8 megawatts and we continue to observe and update it every year So those are broad statistics that we observed from two particular LSEs both the Silicon Valley Power, as well as PG&E, who had a lot of data centers and looked at historical data and how they're showing up. But also, and Bihar, please go ahead.

Yeah, thank you. Yeah, recently the Federal Energy Regulatory Commission did issue a show cause order, and this is not unexpected. Maybe the show cause order was unexpected, but the process of FERC evaluating how large loads were being considered and the planning process, interconnection process, so that they could be, one, timely considered and what transmission upgrades would be necessary to support, but also to support the idea that any transmission upgrade that would be necessary to support those data centers, the cost allocation of those were being appropriately allocated to those data centers and not general consumers. So the show cause order for us and really our participating transmission owners is basically our responsibility to show how our current tariff, our current rules and processes are supportive of that. And if they are not, identify what things we could do to make them supportive of the timely interconnection of those large loads and also the proper cost allocation for any transmission upgrades. We have a responsibility to respond to that within 30, first report is 30 days and another report in 60 days So we are in the middle of that process as we speak and we look forward to the opportunity to have that dialogue with FERC and collaborate with our participating transmission owners and their regulators in doing so because this is also a jurisdictional question about how does cost allocation of transmission occur. So we do need some coordination, and I think FERC was appropriately respectful of recognizing those jurisdictional boundaries. That is really helpful.

So data centers, what we've observed, have different types of operating that they are doing for each of their particular needs. So we have seen some that have a backup generation that's diesel that they could possibly shift some of their use to. A number of them are looking into natural gas backup opportunities for them to be able to shift their loads. And then through the advanced rate design rulemaking, we're looking at, you know, how can we set in advance of an emergency, set up rate design structures that encourage them to shift their use in a way that is predictable for the system operator, for example, that is in alignment with the resources that we have on the grid, you know, when solar is available, things of that nature. And so that's what that rulemaking is going to be looking at, both for large loads and other customers as well, so that we can better align the new data centers coming on the grid in California with our grid.

So, remember on that question, just purely reducing demand at a data center, staff are still evaluating for the technical potential, but there seems to be, based on some analysis that data centers showed, a potentially 5% to 10% reduction just through using the compute differently. So I think, again, how do we capture that demand flexibility? Is it through the rates? Is that the best way to do it? Is it some sort of an incentive to reduce it under extraordinary conditions? Those are additional questions we need to think through. And finally, all the way going towards do we want them to go offline onto their backup generation for a significant reduction under extraordinary situations? As we've noted in these hearings previously, the rough number today that we have with backup generators at data centers could be as high as 17,000 megawatts in the state. So those exist and are extraordinary events. We do not want to go there because it does have local impacts, and that's something that we heard from the legislature, but that's another tool in the toolbox. All right. Thank you. Assemblymember Hart.

Just kind of going back to the slide we've noted on the construct for the Strategic Reserve, I think, again, noting that we were in a structurally short situation. So the tools that you've given us are, one, about for three years, recognizing that we have to address the bucket one and two of the stack. that we've shown you the kind of cushion of the OTC power plants. So I think as we move towards the future years and as of today, we are structurally long and just recognizing that the legislature has given us tools in tranches. So the OTCs were for three years, the emergency demand side programs up to five years or so, and then being an extra cushion of Diablo through 2030. And what I think was expected for us to do is address much of these buckets and come back to you with what is the small amount and number we might need beyond that 2030 or so. But I think the way I would approach the OTC power plants is based on where we were in 2022 and where we are today. I think they've served their purpose through this year. And as we move forward, we have additional resources and buckets we've given us and will continue to kind of come back to us. I'll come back to you if the conditions significantly change, but I'll pass it to Director Ho if she wants to add anything else.

Yeah. So, you know, another detail that I wanted to make sure was clear there, you know, those contracts over the last three years, you know, we removed the ones through cooling facilities, you know, those ones on the coast from the resource adequacy program three years ago. And so we have been planning for those facilities already to be closed. We kept them on for three years through the funding supported at the legislature and managed by the Department of Water Resources. And so, you know, we haven't had to have any flex alerts in the last three years. And so that's really proved out. You know, we had them in case of an emergency. We haven't needed to use them. But we have done the planning. And, you know, looking back at slide number five, you know, you can really see that huge growth in resources coming online. And that did come to fruition. So we had those resources available over the last three years in case. But we were able to really scale up those resources, bring them online, and we have that pipeline of new resources as well that you can see further to the right of the slide. So we don have any recommendations to extend those facilities That great news It really important Yeah Should have been a slide on on the Yeah I think as a member heard I think the the pieces the SACWIS is a interagency body that staff work on recommend Extension to of these resources to the water board and staff have

That's right. So in the CPUC's integrated resource planning process, and this was pursuant to the legislature in SB 846, we actually continued our resource planning with the expectation that Diablo, the units there would go offline in 2024 and 2025. And so that's why we've been able to have this very large increase in resources is because we continue to plan as if it would close and to make sure that we were getting these new resources built out. And so, you know, the future of Diablo is, you know, I think in the hands of the legislature, but pursuant to 846, we have been doing the planning as if it is closing. And so for reliability reasons, we've been able to bring those new resources online. Now, there are other things that could be studied in relation to Diablo, rather, you know, related to affordability or other things like that. But for planning for reliability, we planned as if it were closed. We're closing in 24 and 25.

Yeah, thank you, Assemblymember. I think the basic notion of this is as we go through different stacks of the strategic reserve, first looking at the OTCs as a significant part, we know that the OTCs are not going to extend beyond this year. I think it's important for us to recognize that there will be some level of usefulness to have demand-side programs. As the governor's budget put in, there is a recognition inherent to the budget that there is having support for demand-side programs would be helpful. So I know that there is an active discussion with the legislature, and I will not comment on how it's done, but I think it's important to have that. Good. That's nice to underline that as well.

Absolutely, and thank you for asking about that. So May 1st, we started the extended day ahead market with Pacific Core. So now we are able to optimize C across effectively six states and those resources that are in that extended area. I think it's a very powerful capability to deal with situational awareness and move resources around from where they may be available because maybe we're not all peaking at the same time. Maybe the weather condition is not across the entire west or moderating over the day. And so we do believe and it still early because it hasn been tested through the summer so I want to be a little cautious but we do expect it to be an additional tool being able to enhance the reliability and move energy around from where it is available to where it needed across a wider footprint In terms of economic benefits and affordability events, we do also, we have not quantified this yet, but we are starting to do our benefits in the assessment, and we expect that we'll be able to quantify the benefits similar to the way we have done with the extended real-time energy balance market, which has delivered over $8.6 billion of benefits since its inception in 2014. So I expect the extended day-to-day market to be similar. As the footprint grows, the benefits will grow because you have access to a larger set of resources, a larger diverse footprint of load and a wider, more transmission that you are able to optimize over that footprint. So ask me again in a few months, I'll have more quantified answers, but we are, we, it's, it's off to a very good start and we look forward to testing it through the summer. So it's not quite ready for the playbook to be an element in that,

I would say it's an embedded element in the playbook. In other words, to the extent that we are forecasting and able to now better forecast what is available and how much energy we can get from outside inside the area, it already is effectively part of the playbook. But it's not a new element in terms of a box that says we'll use the extended dayhead market. It's embedded within our operations and our market optimization already.

I just want to say thanks. I think it's been a very productive five, six years of work, as you noted. It has been some extraordinary moments over the last five years, but I think the collective work that's represented here and the staff that we represent, there are thousands of staff that work in the agencies that don't always show to these hearings, but we stand on their hard work. So I think thanks to the legislature, the administration, and sometimes the unsung heroes of stakeholders who we call in a pinch moment and ask for support, and they do. So it's been a collective statewide effort and really glad that we are making significant progress. Thank you.

My name is Dan Jacobson with the Environment California. I just want to make some really quick comments. First, it's the 24th anniversary of the passage of the first RPS here in California. and next year will be the 25th anniversary. It was 10 years ago that we passed S&P 100 that set us on a goal for 100% clean energy. So the numbers and the statistics that I think you're seeing are incredible. When we passed the first RPS, I think we had something like 4% of our clean energy on the grid. And today, I'm almost positive we hit 100%. I just looked at the ISO We were at 92 with plenty of extra room on the grid So great job for the legislature to do it and great job for the staff to be able to implement that kind of work I think there's maybe two key things that I would say going forward. One is that we have to look at the grid itself. Grid utilization, there's a bill that we have, a couple that have been introduced this year. But things like, thank you, right now SB905 and SB913 are really looking at this issue and saying, how do we use some of the resources that we have even better? And then the second thing that I'd say is the grid-enhancing technologies and the advanced conductors. We didn't talk about that here, but those are sort of superheroes, sort of unknown superheroes that we have. And we should really come back to that next year in 2027 and figure out how we can do even more. But I'd also want to thank you there, Assemblymember. The points that you hit on, I think, and your questions were exactly the right ones, and appreciate your comments. Thank you.

Good afternoon. Adam Hoddefi with California Advocates here on behalf of the California Coalition of Large Energy Users, or CLU. We account for a good chunk of the state's commercial load, and our members include mostly health care providers, but also research institutions, education, and technology providers for the state's critical infrastructure, like 911 call centers. We are actually extremely concerned with the reliability of the grid. As you might expect, all our members have a serious interest in having electricity be reliable. and the analysis that you heard today, we have some issues with, and I want to read a section of the CAISO's reliability analysis that was the underlying basis for a lot of what you heard today. And what the CAISO said in their full report was that the 2026 summer assessment model portfolio includes all existing resources, and the resulting portfolio represents the full set of RA-eligible capacity and energy-only co-located resources. This includes resources that may not be contracted by load-serving entities within the CAISO balancing authority area. Examples include resources contracted by entities without RA requirements, resources serving load outside the CAISO, or that remain uncontracted. And then they say that this may be overestimating the reliability of our grid. We have that concern, that this analysis may be overestimating the reliability of the grid. And we hope that in the coming days and in the coming months, there is some remedy for that. Thank you.

Good afternoon, Michael Colvin with Environmental Defense Fund. I wanted to make three really quick points. First, I just wanted to thank the legislature for renewing the DSGS program. I think it's going to be really critical, not just for the summer reliability, but for going forward, being able to have that level of flexibility. It was a really smart budget play. The second observation is something that was mentioned during the presentation, but I think is really worth underscoring the role that energy markets are going to be playing to help us out with summer reliability. California is not an island, and we should not be treating it as such. The more interconnected, the more we can think of our grid as a larger expansion of resources, the better off we're going to be. And so we need to be thinking through how can we more heavily rely on the use of cleaner resources in the market to help us display some of the summer reliability reserve that we have, excuse me, the strategic reliability reserve that we have. Third, an observation, you've heard a couple of other people say this already, but when you look at the amount of fossil use that we have this summer versus where we were even a few years ago, we're down about 60%. That's an incredible achievement. And now we need to be thinking about how do we target that even more specifically and really looking at taking advantage of the runway that we have to use more proactive planning to really drive down the amount of fossil usage with more intentionality. With that, thank you so much for your time.

Jacob Evans with Sierra California. I really appreciate the comments you raised about DSGS and about OTC plants. And I have a comment about one OTC plant in particular to urge the retirement of Ormond Beach Generation Station, which is currently being paid to remain available as an emergency, break the glass, reliability resource has had little use. Taxpayers have paid approximately million per month to keep the plant available despite the plant not being turned on since 2024 As you likely know once through cooling plants like Ormond Beach pulling millions of gallons of ocean water, killing enormous quantities of fish, larvae, and plankton, and damaging local marine habitats by churning heated water to coastal environments. And we also spew large quantities of air pollutants and harm local neighboring communities. So we really appreciate the dialogue here that connects California's increasing and good reliability to a need to retire those plans, specifically to Ormond Beach. We urge the state to retire them swiftly. Thank you.

Hi, good afternoon. So thank you for staying. Definitely, Diana Vazquez-Vallesteros, representing California for Environmental Justice Alliance. And we're here to really just echo some of the things that we have heard earlier. I'm really grateful for the panel. This is something that's really critical, given that we're going to go into the summer season, knowing that it's going to be a hot summer, knowing that we're going to have some events that we probably are going to be dealing with either this summer and hopefully we're prepared for it. But also is we also heard about the OTCs, right? That's something that at least our alliance, and you're going to hear from our member in a few minutes, really is why are we not retiring these OTCs sooner and we're still keeping them online? And I think one of the things is that we have heard that response support programs are critical. They're not funded at the same rate that we're keeping these OTCs. So it's really critical of how we're shifting the cost and are really spending the monies that we currently have, which are really limited, in the retirement of the OTCs and really thinking about how are these plants gonna be replaced with renewable infrastructure. And that's something that we have been actively with, obviously pursuing with the CPUC, with a couple proceedings, IRP, RA, obviously with the advanced, you know, claim rate design, sorry, and really thinking about how are these proceedings, literally thinking about it in a cumulative matter. These proceedings are being seen individually. They're not really talking to each other, and that's something we have heard in other oversight hearings. So really thinking about how the proceedings kind of really dictate the market, but more than anything, how are we going to actually think about the communities who have been dealing with these OTCs for years? So that something that we gonna be looking at and really hoping that in the next couple of months or even the next year we can actually have a clear plan so the communities can actually plan for a better future So just thank you

Good afternoon, Marie Lu. I'm reading a statement on behalf of the Central Coast Alliance for the United for a Sustainable Economy, known as CAUSE. They represent the Central Coast communities, including South Oxnard and the Port of Ainemi. They are one of the three coastal communities that have been impacted by the ongoing operations of one of the three OTC plants. It's a predominantly Latino neighborhood who has quite a high EnviroScreen score. So we were really happy to hear the discussion today confirming the planning has been working on no longer needing these OTC plants. We're really looking forward for the deadline for these facilities to actually be real. this time. Simply, it hasn't been worth the $13 million a month that ratepayers have been paying to keep these facilities open, and the benefits just hasn't justified the cost. So looking forward to hopefully the next era of clean energy in California. Thank you. I'm very familiar with

Assembly members, thank you so much for the hearing today, and thanks to staff for their really great presentation on the reliability concerns facing the state. My name is Julian Lake. I'm representing the Bay Area Council, a leading member for the Diablo Canyon 2045 coalition, coalition seeking to keep the Diablo Canyon nuclear power plant, California's only remaining nuclear power plant, open until 2045. We feel that California faces two significant challenges, keeping the lights on reliably and sustainably, and also ensuring that that cost of energy is affordable and equitable for as many Californians as possible. Unfortunately, reliability isn't free, as the procurement decisions outlined in our presentation have described. And we feel that despite the fact that many of these procurement decisions have been made since the continuation of Diablo Canyon power plant existing we feel that it would be more prudent and affordable for California to keep the power plant going until 2045 A recent MIT study found that keeping Diablo Canyon open until 2045 would save over billion a year or over $20 billion over the course of that extension. That's savings that can help affect rate payers, keep costs low, and keep the lights on in a clean, affordable way, as I'm sure you know, Diablo Can provides about 9% of California's power, about 17% of our clean power, and is just an incredible asset that we should be considering going forward in terms of meeting these critical needs facing Californians. So I urge folks to consider keeping the plant open, and we would be happy to work and answer questions around what that might entail. Thank you.

Good afternoon. Tiffany Fan on behalf of the California Efficiency and Demand Management Council, or SEDMEC. I just wanted to say thanks for including the discussion around DSGS in the background document. Appreciate the legislature administration funding for that program to get us through the summer, and appreciate the recognition that there is a funding cliff at the end of the summer. So hoping that we can find some additional dollars to extend that program and allow that successful program to continue. Thank you.