SACRAMENTO, October 6, 2025 — Late on Friday, October 3, 2025, Governor Newsom vetoed AB 740 (Harabedian), co-sponsored by The Climate Center, Advanced Energy United, and Environment California.
The bill would have accelerated the use of virtual power plants (VPPs), which are networks of clean, distributed energy resources like smart thermostats, home batteries, rooftop solar, smart plugs, electric water heaters, and electric vehicles. When aggregated, these resources can deliver energy during peak demand hours, creating billions of dollars in savings for VPP participants and all electricity customers by significantly reducing strain on the electrical grid and reducing the need for costly utility infrastructure investments.
In response, The Climate Center CEO Ellie Cohen said:
“Make no mistake, this bill was vetoed because it threatens corporate utility profits. This is a huge missed opportunity to save ratepayers money and make electricity more affordable in California. AB 740 was a low-cost, non-controversial solution that passed out of the legislature with bipartisan support. It would have directed state regulators to adopt a strategy for scaling up virtual power plants while maximizing savings for Californians.
“PG&E and other corporate utilities are wielding their immense influence in Sacramento to protect their profits at the expense of a more affordable, cleaner, and more reliable electricity system for us all. The Climate Center and our partners are committed to advancing solutions like virtual power plants that will keep the lights on during climate disasters, reduce reliance on dirty fossil fuels, and make electricity more affordable for everyone.”
A recent study found that VPPs have the potential to cut $13.7 billion in costs through 2030 in California alone, creating significant savings for all electricity customers. The Senate Appropriations Committee estimated that AB 740 would have cost the California Energy Commission just $191,000 up front and $114,000 annually after that. Despite the low cost and high potential savings, California’s corporate utilities have fiercely opposed locally-controlled, clean energy solutions like VPPs because they only earn a guaranteed high rate of return on utility-owned, capital-intensive infrastructure investments like utility poles and power lines.
ENDS
Notes:
Governor Newsom’s veto message for AB 740 is available here. Last week, the governor also vetoed related clean energy legislation AB 44 (Schultz) and SB 541 (Becker). Legislation to restrict investor-owned utilities from using ratepayer funds for lobbying and political activities, AB 1167 (Berman), still awaits the governor’s signature.
Contact:
Ryan Schleeter, Communications Director, The Climate Center: ryan@theclimatecenter.org, (415) 342-2386
About The Climate Center:
The Climate Center is a climate and energy policy nonprofit working to rapidly reduce climate pollution at scale, starting in California. We are a think-tank, do-tank working to turn bold ideas into action for a climate-safe future. Our flagship Climate-Safe California campaign is a unique and comprehensive effort to make California the first state in the nation to reach carbon negative. www.theclimatecenter.org
