Please note that the transcript provided below is AI-generated and intended for reference. It may contain missing words, misspellings, or other small errors. To request a correction or clarification, please contact info@theclimatecenter.org.
Kurt Johnson, The Climate Center (00:15):
This electricity affordability crisis is a problem for not only low-income Californians, everyone else’s burden with high electricity bills, but it’s actively impeding us in achieving our climate goals. So that’s the context for today’s conversation. I’m very pleased we have a distinguished panel. We have bios up on the Event Leaf website. You can get more information, but I’ll just quickly go down the line. First on my left is Roger Lin with Center for Biological Diversity. Roger scored a victory yesterday on 332, so we will talk a little bit more about that. Next step after that is Adrian Tendon from Turn Utility Reform Network, in case you’re not familiar with Turn, been around for a long time. And then finally, Edson Perez from Advanced Energy United. So without further ado, take it away. Roger.
Roger Lin, The Center for Biological Diversity (01:13):
I haven’t even done anything yet. Well, happy Earth Day everyone. It’s fantastic to see so many potential domestic terrorists in this room. So thank you for spending Earth Day over here. I am going to be talking briefly about the root causes of the affordability crisis. In particular focusing on the investor owned utilities. And there are three categories that this short presentation will cover. Overspending, profiteering, and lobbying. So first for overspending, the next five slides are from the California Solar and Storage Association and M Cubed from a Fuller report. If you haven’t seen it, definitely check it out. This one shows and these focus on transmission and distribution infrastructure spending. This one is for Pacific Gas and Electric. The spending, which is the blue line tracks closely with rate increases, which is the yellow dotted line. There’s correlation between spending and rate increases. Then we see Southern California Edison.
(02:25):
The spending is the green line, which tracks closely with rate increases, the orange dotted line and with San Diego Gas and Electric, a little different rates, the dotted blue line and spending the orange line diverged in 2022 or so when the utility over collected for a two year period, but then came back into alignment. But again, pretty heavy correlation between transmission and distribution spending and rate increases. And what the has said is that it’s because of your damn climate and energy policies. But that is not true. This shows over the last 20 years, if it were because of our climate policies, then demand would be increasing. But over the last 20 years, peak load, which is what causes grid investment, has remained stable, pretty constant. And Kaiso peak load has been steady for the past 20 years as grid spending in the meantime has still increased dramatically. And that again with transmission and distribution has been about 300% in the last 20 years.
(03:38):
And the other argument we hear, oh, it’s the wildfire mitigation, but it is not wildfire mitigation as well. Wildfire spending is not the bulk of utility spending these two charts. The one on the, am I right, 2023 shows that it was 12.7% and actually wildfire spending did not increase in 2024. But transmission and distribution spending increased by 5 billion during the same period. We have not yet. We are yet to feel the full impact on rates of wildfire mitigation, especially expensive undergrounding, even though in the PG&E’s most recent general rate case, the PUC said that other wildfire mitigation solutions, overhead covered conductors are just as safe and more cost effective. But what we see from the utilities is a lot of proposals for undergrounding. So why is that? And this goes to the second root cause profiteering. Why is there this drive to overspend? So when the utilities build infrastructure, again transmission distribution and wildfire mitigation, they finance these projects with two things. First debt and then shareholder equity for debt. The utilities passed the interest rates charged by their lenders to the customers for shareholder equity. Customers get charged a rate of return that is set by regulators right now about eight to 10%.
(05:20):
And this is from a recent op-ed that some of you might’ve read from Mark Ellis prior at Sempra I believe. So he definitely knows what’s going on. And the standard for utility regulation is to set the rate of return at the market based cost of capital. In other words, the profit investors receive on their stock should be exactly the same as the rate shareholders would obtain in a competitive market. But in California we have monopolies. So utility stocks are worth more than twice what utilities have invested. So each dollar utilities invest increases their stock market value by $2. So this two for one deal encourages but perhaps more than encourages because there’s a fiduciary duty to shareholders. So requires utilities to spend as much as possible.
(06:16):
To put numbers on this, you can see the record profits on this slide for the three main utility companies in addition to in 2024 six rate hikes. And between 2022 and October, 2024, the three big electric utilities sent $8.3 billion to shareholders. In that same time, they disconnected electricity for nonpayment from practically half a million people and less than 1% of the billions that were sent to the shareholders could have covered and prevented those shutoffs. And that leads to the third reason, lobbying political campaigns and promotional advertising. Quick plug for SB 24 that I believe will be discussed next, but right now rate payers pay for certain utility expenses, contributions for advertising and even litigation against existing or proposed regulations that they don’t like. Recent examples you might’ve seen on TV, PG&E talking near a skateboard park, which is very community oriented. I expect to promote Undergrounding and SoCal gas also opposing decarbonization policies.
(07:37):
This is a cyclical problem because as utility political power increases, it increases the ability to maintain and sustain that business model that increases spending and negatively impacts affordability. And this is my last slide, just some takeaways. First, there are clear increases in utility spending and profits. And again, remember the correlation between the increases in rates and to address the affordability crisis. Three recommendations. The first which this presentation tried to get into is to focus on root causes, utility spending, and the conflict of interest between the utilities drive for profits and consumers need to control that spending. There’s a definite contrast there. And second, we’ll hear from in the next panel. We need to, while we’re figuring out these root causes, we need to mitigate the impacts of the crisis because we’re not going to fix it overnight unfortunately. And the final panel will get into innovation and community resources to avoid or decrease future spending. Something we desperately need if we definitely if we want to meet our clean energy and climate goals. So thank you again for the time. Happy birthday.
Kurt Johnson, The Climate Center (08:56):
Thank you, Roger. Next up is Adria Tinnin from TURN.
Adria Tinnin, The Utility Reform Network (TURN) (09:05):
Alright, perfect. Hello everyone. Ooh, that’s loud. Thank you. Hi, I’m Adria Tinnin, Director of Race Equity and Legislative Policy at turn, the utility reform network. For those who are not familiar with turn, we are a nonprofit consumer advocacy organization that has been fighting on behalf of California rate payers for over 50 years. Everyone in California deserves clean, safe, reliable, and why we’re all here today, affordable energy. That is what TURN stands for. And what we’ve been working on for the last 50 years, both at the Public Utilities Commission and at the California state legislature, we want to see folks get the most green for the least green, cleanest energy, most affordable prices is. So as Roger laid out beautifully I might add, we are in the midst of really an unprecedented affordability crisis. In the last year alone, PG&E received six rate increases. All of the for-profit, investor-owned utilities in the state made record or near record profits in 2024.
(10:11):
While thousands of homes were disconnected from utilities, many of whom were not reconnected that year. These high bills are not just a problem for individuals trying to make their budget meet. This is a problem for a state that is also in the midst of a terrible housing crisis. 44% of Californians are renters in the state of California standard lease agreement per the California Apartment Owners Association and other realtor organizations. Standard lease agreements place the responsibility for paying the utility bill on the tenant. So if a tenant is unable to pay their bill and they default, they’re disconnected for nonpayment, they’re inherently in violation of their lease and vulnerable to eviction. I think in the midst of homeless crisis, that’s something that we have to be aware of also is Roger rightfully pointed out and Kurt as well. Thank you. The affordability crisis is one of the largest barriers to meeting our clean climate goals, our clean energy goals.
(11:16):
If people cannot afford to pay their electricity bill, they are disincentivized to make the transition that we need to make to transition to electric vehicles, to transition to electric heat pumps. And so we’ve got to get this under control to move forward. So there are some solutions to the root causes that we’re laid out. First and foremost, turn advocates for public financing. Public financing of infrastructure. We know everyone in this room knows we need to continue to build out particularly transmission infrastructure in order to meet our electrification goals. How we do that, how we pay for that is going to carry a lot of weight. And so with public financing, what we can do, the easiest way to think about this is you’re essentially getting a lower interest rate as compared to private shareholder financing. Not only are we getting that lower interest rate, but you also eliminate that line item that is the shareholder’s return.
(12:19):
And so we save millions of dollars for rate payers by switching to alternative forms of financing, public financing, we advocate for reducing the rate base, right? We talk often about the rate of return, but it’s the rate of return on what right? The size of the base when we continue to put things into rates and fill up that base. Think about the difference between buying a million dollar house with a 7% interest rate. We’re buying a $3 million house with a 4% interest rate, $3 million house is still going to cost you more, right? So let’s lower the rate base. We need to clamp down on utility overspending and increase transparency and accountability in order to do that. So I’m going to walk you through and introduce you to TURN’S campaign for affordable power or cap. The affordability crisis, as I said, hurts us all, but when I say all, I don’t just mean at our homes.
(13:20):
So we have pulled together a really interesting big tent of groups. So we have the CLECA, California Large Energy Consumers Association, California Farm Bureau and Agriculture Energy Consumers, AARP and Envirovoters, Earth Justice, NRDC, and other environmental groups. What I say to folks is when you see Earth Justice and the Farm Bureau on the same side of something, you’re in a situation, right? That is a sign that the affordability crisis is impacting everyone and has to be addressed. So we have a slate of bills right now in the legislature that address affordability and accountability and that also give a hand up to people who are currently facing disconnection. So I’m going to just start at the top. AB 1020 gets authored by assembly member Shiavo gets at a really important financing issues, particularly as we move forward and explore public financing. I’m sure you all have seen, well, we’ll see what the feds do now, but the Department of Energy did give a 15 billion loan to PG&E.
(14:36):
So how do we make sure that that $15 billion is replacing rate payer money and not adding to it? In other words, how do we make sure that utilities are not double recovering, that they’re receiving these public funds and rate payer funds for the same projects? So 10 20 lays out a really thoughtful approach to how we can do that accounting properly and make sure that the savings borne by public financing are actually given passed through to rate payers. AB 1167 authored co-authored by assembly members Berman and Addis is a rerun. You may remember the min bill from last year. This is critical bill for accountability. As Roger pointed out, utilities of time and time again spent rate payer money in violation of existing rules and spent it on lobbying and promotional advertising That PG&E promotional ad, for example, ran during Warriors games. Now whether or not you’re a Golden State Warriors fan, you know that that’s primetime television in a very expensive slot, that ad costs millions of dollars.
(15:43):
So CalGas spent our hard earned rate payer money to fight climate change to lobby at CARB and South Coast AQMD. So 1167 preserves labor rights to act politically, but protects rate payer dollars from being misused by the utility. SB 24, which just passed committee yesterday, Woohoo, authored by Senator McNerney does much the same thing. Protects rate payers from having their money abused and used against them for lobbying promotional advertising and municipalization. Fighting municipalization is one way that utilities seek to undermine our freedom of choice in order to maintain monopoly power within their districts. And Senator McNerney is taking a stand to push back on that we shouldn’t be paying for someone to work against our own wellbeing. SB three 30 by Senator Padilla is an infrastructure, excuse me, electric transmission infrastructure financing pilot projects to explore exactly how public financing can work to meet our climate goals and our electrification goals.
(16:53):
And lastly, SB 636, which also made it through committee. So keep an eye out. Senator Menjivar. This is an incredibly important bill to help people right now. This offers folks who are facing a hardship, a death in the family, been impacted by wildfires, lost your job, provides them with a three month hardship deferment so they can get a break from having to make their monthly payment similar to other sort of loan deferment programs where they would still be responsible for the amount accrued at the end, but it could be managed through a payment program and gives people a break from these really high bills at the time when they’re most vulnerable. That bill will help people avoid disconnection and get back on the right path. So that is in a nutshell, the campaign for Affordable power. We think that we have strong and actionable solutions to the affordability crisis and need everybody’s help to get on board and push the legislature and the utilities commission to do the right thing and look out for California’s rate payers. Thank you.
Kurt Johnson, The Climate Center (18:07):
Obviously we’re going to take questions at the end, but just keep your questions coming. I think since we’re in a smaller group, I’m just going to be pointing to people so you don’t have to write them down. But we will have lots of time for questions at the end. So finally, Edson Perez from Advanced Energy United.
Edson Perez, Advanced Energy United (18:31):
All right. Hi everyone. I’m Edson Perez, I’m the California lead with Advanced Energy United and I’m excited to talk about innovation and how we can pursue our affordability, clean energy and reliability goals with innovative technologies and policies. First off, for those of you who are not familiar, advanced Energy United is a national industry association of clean energy and clean tech companies that span the electric grid from utility scale generation to transmission distribution behind the meter and also clean energy buyers. So we have a wide diversity of members, but all of them are united behind the goal of getting to a hundred percent clean energy. So we try to have a macro view of the electric grid with that main goal in mind. And innovation is advancing across the grid. We have a list here of some innovative technologies and policies that is not exhaustive, but that is very important.
(19:27):
And as you can see here, starting off with generation, of course, we have all these great sources of clean energy, solar, wind, geothermal, and offshore wind that’s developing. I repeat there, but battery energy storage systems is a key innovation that should be coupled with older generation sources. We have some emerging technologies in generation going onto transmission. We have things like advanced conductor, green enhancing technologies and innovative transmission financing that Azure spoke about. Some key innovations that we need to advance. We see some in distribution and behind the meter too as well. And I’ll focus a little bit on some of these that we’re uplifting and we can walk through explaining what they are and how we can move them forward. So first off, in transmission, for those of you who are not familiar, green has and technologies are a key way to help us save over $600 million per year in California, potentially if deployed to their maximum capabilities.
(20:30):
They are hardware and software that can simply increase the capacity of the existing lines. So we have things like dynamic line ratings, which it’s kind of like having a dynamic speed limit and adjusted to the conditions at the time. And so this is applied to the lines in the transmission system so that the electricity being pushed through these lines is the most amount of electricity that the line is capable of at the time, no matter what the weather is or other conditions. We have advanced power flow controls, which is hardware, which are hardware solutions that can be applied to the grid. And there are things like changing the physical track of a train so that it goes through a less congested area. Then we have to polish optimization, which is software solutions, which is kind of like GPS for the grid, just more advanced software to make sure that the electrons go through the more efficient path and not the congested one.
(21:25):
So just by relieving congestion with gets, we can reduce about 40% of this really a cost driver anorexic and transmission system. Advanced reconductoring is another key technology that can be applied to the transmission system now, and it is simply better conductors, better lines, physical lines that can be used to replace existing lines and doing so can double or even triple at times the capacity of existing rights of way. So by reconductoring existing lines with advanced conductors, we can avoid having to build as much new transmission lines and towers and do break new ground and do new permitting. And so it’s a much more cost efficient way to achieve this capacity. So these great innovations in addition to the public financing for transmission have been advancing last year and this year. So I’ll focus on the bills this year to keep us moving here. But AB 854 is a new bill by some member Petri Norris that looks at a qua exemption for reconductoring of transmission infrastructure.
(22:35):
So that’s specifically talking about the advanced conductors and making sure that they get deployed expeditiously. Now this is something that the PUC has already looked into and has an order GO 131E that seeks to expedite technologies as well. But this bill just makes it more clear that these technologies should be priority and that we should make sure that they get deployed. Now we do have Proposition four funds for transmission projects with a preference for projects that provide multiple benefits like reconductoring and grid enhancing technologies. So that’s in the budget that’s being discussed in the budget right now and we think we should take advantage of it as soon as possible. SB330 by Padilla and a recent bill we saw that just came out AB 825, snow member Petr Nors speak to the exploring innovative financing of transmission, which is just what Asia was talking about.
(23:34):
And we think it’s a very important conversation to have, just how to leverage the lower cost borrowing power of the state and public-private partnerships to make sure that we get the most bang for our buck when building this very necessary infrastructure. We also have, last year we had some great momentum with two bills there and with the climate bond that gave us those funds for these technologies that the first two bills there are still being implemented. So we’re tracking that closely to make sure that they take advantage of these technologies. And now moving on to behind the meter. I think this is what a lot of folks have talked about in prior panels and we’ll talk about after this too, but wanted to give an overview of why this is really important for controlling costs. So specifically starting with the demand flexibility. So distributed energy resources, which I think you’re probably all familiar with, right?
(24:27):
Things like electric vehicles, home batteries, smart thermostats, heat pumps, they can help us dynamically shift or shape our demand and our electricity consumption. As you can see here in the first, the top left graph, it shows exactly how they can help us avoid peaks, right? If we pre-cool or preheat our homes before peak demand time, or if we have an automated charging mechanisms for your EV once you get home so that it doesn’t start charging when everybody else wants to charge but starts charging a little bit later, we can effectively shave that peak using these DERs. I’ll also point out that in the bottom left curve here, we can also shape that peak AKA, just decrease it altogether with solar and storage, which has been happening now in California for a long time. And as Roger pointed out, has been critical to controlling costs. So this is what we call overall demand flexibility, being able to control these loads in a way that benefits the grid.
(25:37):
And this is especially important because peaks are going to rise, electrification is happening, data centers are coming online, and the kaiso projects increasing peaks. This is a projection from 2022, so by now the peaks are probably a lot higher with the data center demand built in. So what this says is that in the orange line, which is the demand curve, you’ll see that that’s the 2025 projected demand. But in 2030 and in 2035, the peaks are just going to go off the hook and the grid, it’s built to the peaks. Now this is an illustrative picture. The grid is not just one big line, but this is happening all over the grid, right? The grid is built to the peak, and as the peaks rise, you have to build that much more and more grid just for those 40 hours of peak time. That’s Senator Becker spoke about earlier.
(26:33):
And as Roger pointed out, distribution and transmission infrastructure are some of the major key cost drivers for our affordability crisis. Because of this shifting these peaks is of pivotal importance, and we should take advantage of this ability right now because the build out of transmission distribution infrastructure is being planned right now. So we either plan for load shifting as much as possible and plan for our grid upgrades using that forecast, or we ignore that ability and we plan for our grid upgrades using the pickiest of peak forecasts. So these decisions need to be made this year, and that’s why we’re pushing this as well as Senator Becker and other legislators.
(27:21):
So the way to do this in an automated way that is market focused and customer centric is through versa power plants. And it’s something we’re championing very strongly. Virtual power plants, as it says here, they’re an actively coordinated aggregation of distributed energy resources that can balance electricity, demand and supply and reduce or shift demand. So as you’ll see in the graph here, you see the traditional way of generating energy through the old school generation. Well, it’s traditional, it’s going to be still the main source of energy, but you see generation that happens really far away from the load centers, right? And it comes through the grid through transmission, but VPPs, they work at the distribution level and there’s software companies that tap into the DERs and thousands, tens of thousands of homes and businesses to do the load shifting that’s necessary. In doing so, we can avoid or defer a lot of great infrastructure upgrades, and in doing so, we can save 550 million per year or likely even more.
(28:33):
This is a graphic from a great study by the BRI group that came out last year when it comes to the potential of virtual power plants in California. So as you can see here, it shows on the left what we would save from the traditional power systems, $750 million. You can see how it’s broken down there even we would save $194 million per year in transmission for $117 million in generation and so on, so and so on and so forth. And then on the right you can see how those savings translate to customer benefits. $500 million would actually go to other Californians businesses. Consumers that have DERs could also be community centers, right? Schools that have smart thermostats, backup of batteries, bidirectional charging vehicles and school buses. So it would be Californians paying other Californians to provide energy to the grid. And because it’s just a more efficient way to do things, we would save around $52 million per year just for everybody else, even if you don’t have the ERs on site or even if you’re not part of a VPP. So again, DVPs are key solutions that we just need to take advantage of as soon as possible. And oh, they’re not brand new. They’ve been around, they’re just small programs, small pilots. Here are just a couple of examples with the Energy Commission having a great, the statewide VVP program through the Demand site great support program, there’s a pg and e and Sunrun partnership that I know it’s going to be.
(30:05):
They’re elevating that program and there’s a new partnership between Energy and Renew Home in Texas that promises to deliver one gigawatt of VPP power by 2035. But there are a lot of VP programs out there, A lot of CCAs have them. I’m sure a lot of you’re involved with them, but there are, as a lot of you probably know, still a lot of barriers to allowing VPPs to scale completely. So that’s where these bills come in. AB 740 would require the energy agencies of California to work together to identify what the specific barriers to VPP deployment at scale are and to prepare a plan to tackle them accordingly. AB 44 takes advantage of an existing process by which LSCs can reduce their demand forecast and makes it more clear so that utilities and CCAs can have more confidence and they can reduce their demand forecast using VPPs.
(31:00):
And in doing so, they reduce their requirements to procure energy. So they just have to buy less energy and that’s rate payer savings. SB 541 is a bill by Becker that takes the load shift goal that the CCC put together and allocates it between all load serving entities and utilities and CCAs so that they know how much load shifting they should try to achieve to take advantage of the demand flexibility that I spoke about earlier. And we of course have the SGS and DIVA some great programs that our DSGS is active right now, diva. We’re hoping that it goes public soon or that it gets funded and it gets implemented soon with their key programs to advance these initiatives as well. And the Energy Commission has been doing some great work in this space and they’re going to have their demand flexibility someone in May 22nd. So I encourage everyone to attend and to support the Energy Commission in this great work and support these bills as well. So with that, these are some key innovations I wanted to highlight, but happy to talk further with anybody and it’s great to be here. Thank you.
Kurt Johnson, The Climate Center (32:21):
Thank you. Edson. I should have mentioned at the outset, really the vision of the program at the climate center is to build this more decentralized smart grid of the future. And to that end, we are engaged in legislation. We’re pleased to work along with Advanced Energy United on AB seven 40 that just talked about. We ran a bill last year with Senator Skinner SB 59 that was signed into law that is seeking to accelerate the use of EVs as grid assets to help lower everyone’s costs. We also put out a paper which is on our website, a grid for the future vision paper, and that it basically, it lays out where we’re trying to get to and what it would look like and why it would make a lot of sense for everybody. I mean, if you think about it, it’s really not technically difficult to conceive of a future where every single building has solar on it.
(33:18):
Every rooftop has solar and every single electric vehicle on the road has bidirectional capability so that during the daytime you can soak up that extra rooftop solar into a massive vehicle fleet. We’ve got about 2 million EVs in California right now. Previously the CEC was estimating 7 million by 2030. Given recent changes, I think that number’s gone down to perhaps five. We’re going to have a VGI panel today from four to five to learn more about that. So it’s not complicated to think about why that vision is achievable, it’s just going to take some policy reforms and get to the point where everyone says, yeah, that makes so much sense. We can save a lot of money. So more information on our website about all of that. Just to put a little bit more numbers around also what Edson was just talking about in terms of savings.
(34:09):
So the last couple of years there were a couple of different estimates associated with build out of the grid associated with meeting the increased demand. We have electrification of transportation, electrification of buildings, so that’s going to dramatically increase the amount of electricity that’s needed. Well, two different state funded estimates came out looking at what that might cost just to build out the infrastructure poles and wires to accommodate that. Kavalla said, well that’ll cost maybe 50 billion a year, I think, I dunno what the market cap of PG&E is at this moment, but I’m pretty sure it’s less than $50 billion. And then a different state estimate from the public advocate’s office said that was going to cost maybe $26 billion vast difference in the amount of expenditure of public funds needed to accommodate load growth. That difference was accounted for based on the extent to which policymakers are or are not taking advantage of the smart technologies that Edson was just describing to lower everyone’s cost. So these issues are front and center for the legislature right now. And so I think some of we have lobby day tomorrow. One of the bills that we’re going to be lobbying in favor of is AB 740 trying to persuade legislators that the vision that Edson just outlined is a really no-brainer policy step for California. Anyway, why don’t you stop talking and start answering questions.
(35:40):
If you could just state your name and your organizational affiliation I think, is there a microphone? No microphone. Okay, I will repeat the question then. This gentleman,
Speaker 1 (35:54):
My name’s Steve Heck Rock. I have a company called Renewables. We make small electric tractors. I installed solar on my homestead up in Mendocino when the net metering wall was in place and we didn’t pay any electric bills for years and years. And recently, I don’t know what has changed, but we’ve installed more solar and we’re producing more electricity than we’re using and we’re still getting $200 a month bills. I would like somebody to explain to me how
Kurt Johnson, The Climate Center (36:32):
This can be happening. So the question was, what’s happening with solar policy in California? You had a solar rooftop that was essentially offsetting all your bills and now you’re having a $200 a month bill. Is that a correct restatement of the question? Yeah, so we’ve gone through different iterations in solar policy in California. We no longer have this thing called net energy metering, which started 20 plus years ago where you’d get the full retail value associated with the export of rooftop solar. And so if you’re sending power back to the grid, it would true up in real time and in real cost. So you would essentially get the full retail value of that. The economic value of that has sort of gone down through successor tariffs that have been implemented by the PUC. We no longer have that metering in California. That’s gone as of April of 23.
(37:35):
Basically the new regime, it’s now called a net billing tariff and it’s tied, it’s kind of a complicated story, but essentially we are now incentivizing people to put a lot more onsite storage. And so in certain cases people should have been grandfathered such that if you had a net metering agreement from the very first net metering agreement, you should be good going forward into the future in perpetuity. If you change your system, you may have lost that status. And then there was a bill that was referenced this morning, AB 942, that is seeking to entirely eliminate even people who are on the original net metering tariff to essentially tear up the contract that everybody that spent their own dollars to put rooftop solar and was counting on when they made that private investment in California’s energy future, that contract would be torn up. So yeah, there can be an agreement made between individual consumers and utilities, but legislators and regulators can tear up those contracts and they have been doing so very aggressively in recent years. The decision from May of 23 had a massively negative impact on California’s rooftop solar industry. In fact, we have a national expert on this subject sitting right here. Roger Lin, who is taking the PUC to court. Roger, would you care to comment?
Roger Lin, The Center for Biological Diversity (39:13):
No, just two quick things to add. We are in litigation with the Public Utilities Commission and the investor owned utilities right now over the changes to that metering. And we did not succeed at the California Court of Appeal, but the California Supreme Court did take up the case and we may likely have oral arguments in June. So more to come soon. And the second thing is the author of the bill that you’re talking about, there is an interesting article in the, I think it was the LA Times this morning pointing out that I can’t remember her name, but is also a prior executive at Southern California Edison. So a bit of a coincidence.
Kurt Johnson, The Climate Center (39:58):
And just to put that in the broader climate perspective. So in order to achieve California’s climate goals, we have this thing called this carb spilling plan, which is a document put out by the California Air Sources Board that says how are we going to get to the climate goals that the state has set and it goes by different sectors and it says, okay, we’re going to reduce transportation emissions by this much. And it looks at different sources and then it comes up with policy basically saying we have to reduce and their projections for how we’re going to meet our goals include things like we’re going to need to double rooftop solar in California, I think we’re at about 15 gigawatts of rooftop solar moss Manus at the moment getting to 30 gigawatts relatively rapidly. Well the decision that was made by the PUC that basically cratered the solar industry runs 100% in the opposite direction of the scoping plan for how to achieve California’s climate goals put out by the regulatory agency that oversees this.
(41:01):
So this gets back to the point that Roger was making about there is a challenge with how we are currently regulating utilities in California and the extent to which our regulatory structures are up for the challenge of dealing with what we need to do. And the question is always, are people acting in what’s in the best interest of the climate in all California rate payers or is there a degree of regulatory capture such that what’s happening by our regulators is serving the interests of wealthy stakeholders who have outsized influence on both our public officials and the associated regulators, which gets us the kind of outcomes that we’re struggling with right now. Anyway, we didn’t plan on getting into solar policy. It’s a complicated topic, but do any other panelists want to weigh in …in the back?
Speaker 2 (42:33):
In general, where does PERMITING reform and the kinds of constraints that are often brought up against building infrastructure, how does that fit in with the regulatory capture regulatory problem but also a permitting? And I just wonder if any of you comment either on the SE case or the general.
Edson Perez, Advanced Energy United (43:02):
So the question I know is about the bill that I brought up been unclear about is why, well, SE seems
Kurt Johnson, The Climate Center (43:10):
CEQA stands for the California Environmental Quality Act and it is often used as a cudgel to shut anything down including energy projects. But reconduct seems like the simplest case for a judge to simply say BS.
Roger Lin, The Center for Biological Diversity (43:32):
I don’t know about reconductoring impacts, but actually Edison does. But for us this Environmental Quality Act process in regards to permitting reform, the process speeds up projects, it’s litigation under CQA that slows projects down. So if we do CQA properly, then project like big transmission projects for instance will actually happen faster. And in the case of reconductoring though, I dunno the impacts associated, but maybe they’re minimal.
Edson Perez, Advanced Energy United (44:10):
Yeah, I mean on reconductoring, I’ll just say that the CPUC through their GEO 1 31 E docket and process, they have been looking at ways to speed up transmission build out and reconductoring and all these things. And they have identified and I think already approved ways to do that. And one of ’em is similar to what this bill does. So a lot of the policy thing has been hashed out in the process now the bill just puts it into statute to make sure that there’s more certainty around it. But that has been a long process that the PUC has taken on and a lot of the legal issues that could come up down the road I think have been hashed out there. I haven’t been in the docket myself, so maybe we could have this conversation online or offline rather, but I know that this bill is not a brand new exemption that nobody’s ever thought of before. It’s been talked thoroughly about in that venue.
Kurt Johnson, The Climate Center (45:10):
And just to sort of connect the dots about potential regulatory capture as was described earlier, the way utilities get a rate of return right now, it’s based on two factors, Nicole, capital expenditure, CapEx and opex. In other words, the more it costs them to operate things, the more they can charge, the more they build, the more they charge. So they have an economic incentive to spend as much money as possible on everything across the board. And the result were evident in the charts that showed before. So when you have a technology that comes along reconductoring, maybe we can basically utilize our existing infrastructure and don’t need to build entirely new infrastructure in order to move more electricity. That would cost less than much more extensive transmission upgrades. When you have technologies like virtual power plants which enable you to do things like keep the lights on using distributed batteries and vehicles that leads to utilities not needing to spend as much money, well guess what? When they don’t spend as much money, they don’t make as much money. So this goes back to the underlying incentive problem we have with how we currently compensate utilities and the associated capture we have. I think we should take the next question. I see Jean had a question. Yeah. Jean Fraser,
Jean Fraser, The Climate Center (46:35):
I’m curious about the data centers that are needed for AI and whether you or other people are thinking about policy implications of policy changes which make so that the data don’t exacerbate all of these problems.
Kurt Johnson, The Climate Center (46:51):
Great question. I think there is a bill the question. Oh yeah. So the question is what’s happening with data centers is their policy to address. So there’s huge new demand growth associated with electricity to basically power servers in data centers as we all use perplexity and chat GBT. And so that’s leading to a huge new demand growth on the grid. Well, interesting problem because conventionally the cost associated with the load anywhere or spread out across all rate payers. So if I’m a low income resident who can barely struggle to pay my bill and I’m not going to pick a tech row to pick on, but pick your tech row villain and say they want to basically put in a new data center, all rate payers are going to help sort of finance that. So that raises some interesting policy questions. And so I think there is a bill that’s targeting specifically data centers, and I could be wrong, Roger seven 50, SB 58, NSB 50, and Roger, you had a comment on that.
Roger Lin, The Center for Biological Diversity (48:06):
Oh no. The Center for Biological Ddiversity, the organization I’m at is trying to figure out best practices for data sensors right now. And one of the recommendations we have obviously is don’t use diesel backup generators, which is being proposed a lot though unfortunately. And the other thing I’d add is something I’ve learned is that I hope there are no crypto investors in here, but there’s a big difference between data centers for crypto and data centers for the other stuff. And do we actually need the data centers for the other stuff? Potentially? I don’t even have Facebook, so I don’t know. But for crypto though, oh hell no, let’s get rid of that.
Adria Tinnin, The Utility Reform Network (TURN) (48:56):
I would add there’s also SB 57 this year, which is a data center tariff that turns supports just to address your question of how do you combat these affordability issues but also allow data centers and the business they bring to being in the state. SB 57 prohibits any cost shifting to non-participating customers related to the interconnection costs. And future data center loads requires a portion of backup onsite generation to be provided not with the diesel generation, ensuring data centers connect directly to transmission systems. So that would be required to contribute a reasonable share of costs related to wildfire mitigation. So getting them to pay their fair share essentially. And there are a few other provisions in there, so I would look at SB 57 for some of those protection kind of tariff measures on the data centers.
Kurt Johnson, The Climate Center (49:58):
I think I saw over here.
Jean Fraser, The Climate Center (50:04):
My question is more about the narrative because everything you say resonates with me and I think if we were like a science-based rational society, we would just be doing those things. But the reality is that at the state level, I think utilities have been really successful at being making it sound like you cannot have both clean energy and affordability at the same time. Just curious about your campaign approach to how do we change that narrative that people have and make them understand that it’s not the renewables that are driving the costs. It’s mostly utility profits in one way or another.
Kurt Johnson, The Climate Center (50:38):
Yeah. The question, how do we change the narrative so it’s more reflective of what’s real instead of how it gets projected in certain media that works against us? Looks like, why don’t we ask everyone that question?
Adria Tinnin, The Utility Reform Network (TURN) (50:58):
Yeah, so I think that is well stated and a really important question that I think we all struggle with. Part of the reason why we are focused in the campaign for affordable power in building such a big tent of groups is largely to combat that narrative. I think it’s easy for investor-owned utilities to blame climate goals as the reason for affordability and use all of the enviro groups as this scapegoat and paint people as extremists. And so I think when you pull together enviro groups and ag groups, heavy industry, steel manufacturers, glass manufacturers is, I think it was stated this morning, California has one of the largest industrial production centers in the country. And so when you bring all of those folks together, it puts the for-profit utilities in a bit different position in terms of how to craft their narrative and who they can really point to as a scapegoat.
(52:04):
As we’ve noted here, and many folks here understand it’s not the climate programs that are driving up the affordability, right? A lot of it is opportunistic. We hear a lot of, you’ll hear, I hear IOU is often talking about undergrounding as though it’s the only way to combat wildfires. Turn has done extensive research and we have found repeatedly, we are just for the record, one of those weird data-driven groups. What the data bears out is that Undergrounding is like twice as expensive, takes twice as long to install and gets you the same amount of safety as insulated power lines and overhead conductors. There are cheaper faster ways and particularly if you’re in a fire risk area, you want that safety sooner rather than later. And so looking for things that are cost-effective ways to achieve the same outcomes also undercuts their narratives. So some of it’s that and also a lot of it is education. My background is in education coming as a university lecturer. And so that’s my goal. And I think much of turn’s goal is to communicate and educate legislators so that their only voice they’re hearing is not the IOUs, but they’re getting some science and data-driven answers to what actually is causing rates to drive up not climate.
Kurt Johnson, The Climate Center (53:33):
That was great. Yeah, we can’t top that. Thank you. Just related to your point about the differences in undergrounding versus other options. So again, it goes back to the underlying problem is we have a incentive structure where the incentive is to spend as much money. So if the utilities make as much money as possible by undergrounding, even though alternatives, that’s what they’re going to do. So until we have a more aggressive legislature, which is willing to consider changing the compensation mechanism, that’s going to continue to be the case. That triggers me to do a shout out. Senator Stern has a bill, something called SB 500, which basically is working to get to a study where you look at something called performance based regulation where you actually figure out what it is you’re actually wanting the utilities to achieve and then you create a compensation mechanism tied to those outcomes.
(54:36):
We want clean energy and we want reliable energy and we want rapid interconnection. We don’t want to spend as much money. So essentially the way we’re compensating utilities right now, which is authorized and directed by, I’m sorry, our legislature and our governor, until we change that, the problem is going to continue. So there are a few courageous legislators who are taking steps to move us in that direction. So thank you to those legislators and we’ll see how it all goes. I think we’re out of, we have one minute. Any closing thoughts? Roger down. What’s our dream for 2025? And I should say that the next panel is going to start in this room at two 40, but 2025, what can we get done this year?
Roger Lin, The Center for Biological Diversity (55:23):
I’m just going to stick with the education, the great point on education because any campaign, any movement has to be exactly that, A movement and the fact that we’re having this dialogue, and again, everyone here together talking about this and a lot of other organizations going into a world where turn has really been leading. And I hope you don’t mind just crashing the policy, but I think just as many folks getting these messages out as possible is really key.
Adria Tinnin, The Utility Reform Network (TURN) (55:51):
Crashing the party. Roger, have you ever been to a party by yourself? It’s not fun. We welcome folks to join the party. That is what a campaign for affordable power requires. In order for us to win moving forward, we have to make sure that every single legislator and it can’t be overlooked that I think there are what, 30 freshmen right now, which means there are a lot of new folks, new faces who don’t have this education, who are not living this and eating, sleeping, drinking, breathing, all of energy affordability and the incredibly tricky nuances of energy regulation every day. So we have a large lift to do in terms of education. First and foremost for me, I think my goal for 2025 is to make some tangible change to get some bills passed. So please join the campaign for affordable power and let your legislators know
Edson Perez, Advanced Energy United (56:45):
Etson. Yeah, on my end, I think it’s worth noting that for better or worse utilities right now own not just all the grid infrastructure system, but also the custom relationship. We each, most of us interact directly with utilities and I think most if not all of our member companies work with utilities because we want to deliver benefits to customers. And so while we think of the long-term viewpoint of how to align utility incentives with actual customer benefits and affordability and clean energy, which I think is a very important conversation, we can also look at really straightforward solutions that we can implement right now with technologies when it comes to technologies, hardware, software, or policy innovations that can deliver those benefits right now. And so I think we can, can and should do both.
Kurt Johnson, The Climate Center (57:38):
So please join me in thanking our panel. So virtual power plants and microgrid session starts here in 10 minutes. So get a cup of coffee and come on back in.