.California’s Last-ditch Efforts to Cut Electric Bills

The Legislature and Gov. Gavin Newsom have significantly scaled back their eleventh-hour plans to reduce Californians’ electric bills and fast-track renewable energy projects.

The main proposal to address California’s rising electric bills would give each household a small, one-time credit of between $30 and $70, according to a person familiar with the bill. This measure would save an estimated $500 million, which would come from cuts in utility programs that assist low-income residents and schools.

For weeks, top lawmakers and the governor’s aides have negotiated a series of proposals to address California’s twin clean energy challenges: meeting mandates for clean, carbon-free energy and reducing electric bills that are among the highest in the nation.

By the deadline last week, the state’s leaders unveiled six bills that address the cost of electricity and building of renewable energy projects.

Environmental groups, clean-energy businesses and consumer advocates have mixed feelings about them, with some saying they are largely ineffective and others saying they are a good first step.

Loretta Lynch, an environmental consultant and former California Public Utilities Commission president, said that customer bills are climbing because the commission keeps approving rate increases. She added that the Assembly measures wouldn’t address the biggest drivers of consumer costs.

“The last-minute, gut-and-amend backroom deals do not attack the root causes of California’s incredibly high energy bills,” she said. “Instead, they rob Peter to pay Paul—taking away key funds from programs that work to create a sham (consumer) bill reduction.”

But the executive director of The Utility Reform Network, Mark Toney, supported the measures, saying they are “an important first step towards affordable energy for all California residents.” He has called lowering ratepayers’ costs an urgent priority because the state could lose public support for clean energy.

Molly Croll, director of Pacific offshore wind for American Clean Power, a renewable industry group, said she was surprised by the streamlining proposal and has no position on it, since it wasn’t anything the industry lobbied the Legislature for. “We haven’t had input,” she said, echoing comments from other renewable energy groups.

Senate President Pro Tem Mike McGuire, from Santa Rosa, said he would try again next year by bringing back more proposals.

“This is a two-year effort,” he said. “Anything worth its weight in life, anything big and bold, takes time. But we’re committed.”

Californians’ electric bills have nearly doubled over the last decade as the state’s biggest utilities have passed spending on reducing wildfire risks and transitioning rapidly away from fossil fuels. Rates are expected to continue outpacing inflation through 2027.

Two measures authored by Assemblymember Cottie Petrie-Norris, from Irvine, aimed at reducing energy bills were introduced last week by gutting and amending two unrelated bills.

Assembly Bill 3121 would require ratepayers to be paid funds—reportedly amounting to a single $30 to $70 credit for each household—from a few consumer energy programs in areas served by Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. Included are a program to upgrade school heating and air conditioning systems and two programs to help low-income Californians save on their energy bills, such as incentives for installing solar panels and rebates for energy storage.

Advocates for the programs say the proposed cuts would harm low-income Californians and children while cutting ratepayers’ utility bills only inconsequentially.

“It is a pound-foolish decision that doesn’t address the systemic (energy) affordability crisis we’re facing,” said Stephanie Seidmon, program director for UndauntedK12, a nonprofit that helps public schools transition to clean energy. “It feels more like a political stunt, and it’s unconscionable we would do that to our children, our staff members and our teachers who come to schools that are not always safe learning and working environments.”

Jennifer Robison, a Pacific Gas & Electric spokesperson, said the company hasn’t taken a position on AB 3121, but supports returning money to customers from the programs.

“PG&E shares the Legislature’s and Governor’s focus on making energy bills more affordable for our customers. We’re working to stabilize bills and limit average annual bill increases to no more than 3% through 2026,” Robison said in a statement. She added that the company has “adopted companywide savings initiatives to reduce our operating costs and limit unnecessary expenses” and is “supporting customers with ways to reduce energy use and bills.”

The second legislative proposal, Assembly Bill 3264, would require the Public Utilities Commission to study how to reduce the costs of expanding transmission capacity and report to the Legislature on energy efficiency programs funded through consumers’ utility bills.

Two other Senate bills address utility costs. Advocates said that Senate Bill 1003 would help address the cost of utilities’ wildfire plans, and Senate Bill 1142 would prevent power shutoffs for ratepayers who agree to payment plans.

Furthermore, the Senate moved forward with a considerably scaled-back version of proposals to fast-track renewable energy projects. Those proposals aimed to streamline and assist solar, offshore wind, battery storage and other green energy projects.

Senate Bill 1272 would allow the California Energy Commission to adopt an overall environmental impact report that evaluates the potential effects common to a wide range of clean energy projects. This approach allows developers to rely on that analysis in most cases, saving time and money.

Renewable energy advocates asked for more time to craft better legislation, given the bill “raises more questions than it answers.”

Instead, the clean energy groups wanted the state to update its tax code to align with federal rules, which would allow them to take advantage of renewable energy tax credits, part of the Biden administration’s Inflation Reduction Act, without being taxed on them as income.

“We appreciate the intent to facilitate project streamlining, which is definitely needed, but deserves more discussion,” Shannon Eddy, executive director of the Large-scale Solar Association, said. “What clean energy projects need in that timeframe is tax conformity.”

McGuire previously backed away from proposals that would create the tax credits, streamline local and state permitting and grant “by right” approval to developers building in areas already zoned for them, eliminating the need for local approvals.

Also gone are proposals to consolidate the process by creating a “one-stop shop” system for applications, hearings and decision-making.

Due to the state’s large fiscal deficit, McGuire said that creating tax credits was difficult. He added that he would bring back the rest of the measures next year.

To meet its ambitious greenhouse gas targets, California must supply 60% of its energy from renewable sources by 2030 and 100% by 2045. Californians are facing the highest energy bills in continental America.