WEBVTT 00:00:00.942 --> 00:00:03.775 (mid-tempo music) 00:00:48.620 --> 00:00:50.395 Welcome to the California Public 00:00:50.395 --> 00:00:52.545 Utilities Commission on this day, 00:00:52.545 --> 00:00:55.128 Wednesday, February 24th, 2021. 00:00:56.657 --> 00:00:58.310 This is the En Banc meeting 00:00:58.310 --> 00:01:02.344 of the California Public Utilities Commission. 00:01:02.344 --> 00:01:05.094 Mary Claire Brown, you may begin. 00:01:07.777 --> 00:01:08.892 Thank you. 00:01:08.892 --> 00:01:10.539 Good morning, everyone, 00:01:10.539 --> 00:01:13.110 and welcome to the California Public Utilities Commission's 00:01:13.110 --> 00:01:16.562 En Banc hearing on electric costs and rates. 00:01:16.562 --> 00:01:18.925 Can we afford the future? 00:01:18.925 --> 00:01:23.610 My name is Mary Claire Brown, or MC, and coincidentally, 00:01:23.610 --> 00:01:25.981 I will be your emcee for today. 00:01:25.981 --> 00:01:28.925 I'm an interim energy advisor to our new Commissioner, 00:01:28.925 --> 00:01:31.452 Darcie Houck, and until very recently, 00:01:31.452 --> 00:01:34.378 I was an advisor to Commissioner Shiroma. 00:01:34.378 --> 00:01:36.547 We have a really great agenda planned today, 00:01:36.547 --> 00:01:38.183 a very packed agenda. 00:01:38.183 --> 00:01:41.080 So I'm just gonna briefly cover some housekeeping items, 00:01:41.080 --> 00:01:43.214 and then I'll hand it over to President Batjer 00:01:43.214 --> 00:01:45.787 to kick off opening remarks. 00:01:45.787 --> 00:01:48.004 So all the materials for this En Banc, 00:01:48.004 --> 00:01:52.125 including the agenda, slides, and the white paper, 00:01:52.125 --> 00:01:55.842 are available on the CPUC En Banc web page. 00:01:55.842 --> 00:01:58.712 So for those watching the webcast online, 00:01:58.712 --> 00:02:00.586 you can find the link to that webpage right below 00:02:00.586 --> 00:02:02.369 the video window. 00:02:02.369 --> 00:02:03.751 And for the virtual dais members, 00:02:03.751 --> 00:02:07.162 I'll put a link to that in the chat. 00:02:07.162 --> 00:02:11.894 The structure of the day, we'll begin with opening remarks. 00:02:11.894 --> 00:02:14.947 Then energy division staff will present on the white paper 00:02:14.947 --> 00:02:17.310 that was released last week. 00:02:17.310 --> 00:02:19.462 Then we'll have three panel discussions 00:02:19.462 --> 00:02:21.226 with our panels of experts, 00:02:21.226 --> 00:02:23.896 one in the morning and two in the afternoon, 00:02:23.896 --> 00:02:26.771 followed by closing remarks from Commissioner Shiroma. 00:02:26.771 --> 00:02:30.132 And then we will have half an hour for public comments. 00:02:30.132 --> 00:02:31.964 So during the panel sessions, 00:02:31.964 --> 00:02:34.202 only members of the virtual dais 00:02:34.202 --> 00:02:37.275 will be able to ask questions of the panelists. 00:02:37.275 --> 00:02:39.193 So we will not be taking questions from the public 00:02:39.193 --> 00:02:41.285 during that time. 00:02:41.285 --> 00:02:45.414 After the last panel and after closing remarks, 00:02:45.414 --> 00:02:48.049 we will have half an hour for public comments, 00:02:48.049 --> 00:02:50.882 that will likely start at 4:15 PM, 00:02:52.309 --> 00:02:54.718 and you'll be able to call in 00:02:54.718 --> 00:02:57.311 and we'll provide more directions about how to do that 00:02:57.311 --> 00:02:59.837 closer to the end of the day. 00:02:59.837 --> 00:03:04.260 We've also created a dedicated email inbox for this event, 00:03:04.260 --> 00:03:06.142 and members of the public can submit 00:03:06.142 --> 00:03:10.046 informal written comments to that inbox at any time. 00:03:10.046 --> 00:03:13.713 The email address is costenbanc@cpuc.ca.gov. 00:03:16.303 --> 00:03:19.644 And you can also find that address on the agenda 00:03:19.644 --> 00:03:21.477 and our event webpage, 00:03:23.549 --> 00:03:27.632 and the webcast webpage that you're watching now. 00:03:28.879 --> 00:03:32.766 And the last thing I'll say is this event is being recorded 00:03:32.766 --> 00:03:35.151 and will be available for viewing afterwards 00:03:35.151 --> 00:03:37.406 on the CPUC webpage. 00:03:37.406 --> 00:03:39.849 So with that, I'll hand it over to President Batjer 00:03:39.849 --> 00:03:42.266 to begin our opening remarks. 00:03:43.113 --> 00:03:45.072 Thanks very much Mary Claire, 00:03:45.072 --> 00:03:46.454 and good morning everyone. 00:03:46.454 --> 00:03:48.719 And thank you all for joining us today 00:03:48.719 --> 00:03:51.849 for the energy rates and costs En Banc. 00:03:51.849 --> 00:03:54.460 I would like to especially thank my colleagues 00:03:54.460 --> 00:03:56.814 for joining me on the virtual dais 00:03:56.814 --> 00:03:58.944 for this important discussion. 00:03:58.944 --> 00:04:01.632 (mumbles), Mr. Chairman, 00:04:01.632 --> 00:04:04.766 Assemblymember Holden, Mr. Chairman, 00:04:04.766 --> 00:04:07.588 from the California Energy Commission, 00:04:07.588 --> 00:04:09.039 Chairman Hochschild, 00:04:09.039 --> 00:04:12.966 Commissioners Douglas, Gunda, McAllister, Monahan, 00:04:12.966 --> 00:04:15.050 and the executive director Bohan, 00:04:15.050 --> 00:04:19.967 from the Cal ISO, chair Galiteva, vice chair Bhagwat, 00:04:19.967 --> 00:04:23.289 Board members, Borenstein, Leslie, Schori, 00:04:23.289 --> 00:04:24.622 and CEO Mainzer. 00:04:25.670 --> 00:04:28.572 From the California Natural Resources Agency, 00:04:28.572 --> 00:04:31.824 deputy secretary of energy, Matthew Baker. 00:04:31.824 --> 00:04:33.480 Thank you all very much. 00:04:33.480 --> 00:04:35.789 Oh, I'm so sorry, wait a minute. 00:04:35.789 --> 00:04:40.789 It's my fellow Commissioners, Commissioner Rechtschaffen, 00:04:41.134 --> 00:04:45.292 Commissioner Guzman Aceves, (cuts out) 00:04:45.292 --> 00:04:46.875 Commissioner Houck. 00:04:49.173 --> 00:04:50.287 Thank you all. 00:04:50.287 --> 00:04:53.913 We begin this work because we understand that 00:04:53.913 --> 00:04:57.660 meeting our state decarbonization and electrification goals 00:04:57.660 --> 00:05:00.463 will depend on maintaining electricity rates 00:05:00.463 --> 00:05:02.970 that are affordable for customers. 00:05:02.970 --> 00:05:07.970 We are working to move our state's climate goals forward. 00:05:08.473 --> 00:05:11.856 We want to take a strong look at the potential rate 00:05:11.856 --> 00:05:16.539 implications as we move forward with these policies. 00:05:16.539 --> 00:05:18.959 The white paper prepared for today's En Banc 00:05:18.959 --> 00:05:21.722 by the talented energy division team, 00:05:21.722 --> 00:05:23.622 found that some of the concerns regarding 00:05:23.622 --> 00:05:26.407 rate crash pressures from our ambitious 00:05:26.407 --> 00:05:29.874 and critical policy goals may not be as acute 00:05:29.874 --> 00:05:31.333 as some had feared, 00:05:31.333 --> 00:05:35.609 though, there are still very real rate pressures. 00:05:35.609 --> 00:05:39.355 As the white paper shows, energy spending in households 00:05:39.355 --> 00:05:42.819 more sensitive to rate increases is forecasted to rise 00:05:42.819 --> 00:05:46.284 faster than inflation over the next decade, 00:05:46.284 --> 00:05:48.684 which is a very troubling finding 00:05:48.684 --> 00:05:51.026 that we will explore further today. 00:05:51.026 --> 00:05:54.511 The common mandate across our agencies is to ensure 00:05:54.511 --> 00:05:58.759 Californians are served by reliable electric grid, 00:05:58.759 --> 00:06:01.889 and that over time it is decarbonized 00:06:01.889 --> 00:06:05.383 at the rate needed to reach our clean energy goals, 00:06:05.383 --> 00:06:08.966 and at a cost that Californians can afford. 00:06:10.133 --> 00:06:13.133 Policies to mitigate climate change, 00:06:14.055 --> 00:06:16.821 while we are also in the midst of experiencing 00:06:16.821 --> 00:06:20.554 and adapting to the effects of climate change. 00:06:20.554 --> 00:06:23.924 Last week, the country experienced yet another 00:06:23.924 --> 00:06:26.423 extreme weather related disaster. 00:06:26.423 --> 00:06:28.850 Our thoughts continue to be with those who endured 00:06:28.850 --> 00:06:31.488 the impacts and suffer the personal loss 00:06:31.488 --> 00:06:33.677 due to the blackouts. 00:06:33.677 --> 00:06:36.184 As the situation in Texas, 00:06:36.184 --> 00:06:39.026 and the experience here in California last summer 00:06:39.026 --> 00:06:41.807 have shown us, we must prepare the grid 00:06:41.807 --> 00:06:45.708 for more frequent and extreme weather events. 00:06:45.708 --> 00:06:49.868 A changing climate means that the level of reliability 00:06:49.868 --> 00:06:51.981 that we require for the power system 00:06:51.981 --> 00:06:55.245 will likely come at an increasingly higher cost, 00:06:55.245 --> 00:06:58.328 which will be one more factor putting 00:07:00.640 --> 00:07:02.916 pressures on our rates. 00:07:02.916 --> 00:07:07.169 Here's the CPUC in our climate adaptation proceeding. 00:07:07.169 --> 00:07:10.867 We are ensuring that the utilities plan for climate change 00:07:10.867 --> 00:07:15.789 in a way that protects the more vulnerable populations. 00:07:15.789 --> 00:07:17.757 Let me also be clear, 00:07:17.757 --> 00:07:20.649 California is not combating climate change 00:07:20.649 --> 00:07:24.992 to the detriment of affordability and reliability. 00:07:24.992 --> 00:07:28.001 The real and much more important conversation 00:07:28.001 --> 00:07:29.731 is happening here today. 00:07:29.731 --> 00:07:32.170 That is, how do we as a state, 00:07:32.170 --> 00:07:36.827 continue with our essential decarbonization work, 00:07:36.827 --> 00:07:40.935 while ensuring that the communities who are more sensitive 00:07:40.935 --> 00:07:44.850 to rate increase are not unduly burdened. 00:07:44.850 --> 00:07:48.170 Many of these communities have historically shouldered 00:07:48.170 --> 00:07:53.087 a disproportionate impact of pollution from power generation 00:07:53.087 --> 00:07:56.199 and who are now feeling the effects of COVID-19 00:07:56.199 --> 00:08:00.078 more severely than the other parts of our state. 00:08:00.078 --> 00:08:02.900 Increasing bills by a few dollars a month 00:08:02.900 --> 00:08:06.470 each year may be absorbable for some in the state, 00:08:06.470 --> 00:08:10.409 but for others, continued rate increases 00:08:10.409 --> 00:08:13.011 during challenging moments in their lives 00:08:13.011 --> 00:08:17.094 could lead to undesired sacrifices within a home, 00:08:18.042 --> 00:08:20.432 and a breakdown in confidence 00:08:20.432 --> 00:08:24.062 in the shared efforts of our organization. 00:08:24.062 --> 00:08:27.333 And as our work at the CPUC's affordability proceeding 00:08:27.333 --> 00:08:31.708 has shown, many households are spending a larger and larger 00:08:31.708 --> 00:08:36.229 proportion of their annual income on energy bills. 00:08:36.229 --> 00:08:39.917 But may we must also recognize that there will not be 00:08:39.917 --> 00:08:42.441 a particular cost metric that will trigger 00:08:42.441 --> 00:08:45.591 so-called rate payer shock or revolt. 00:08:45.591 --> 00:08:50.540 Rather, it will likely be caused by an environment and mood 00:08:50.540 --> 00:08:54.483 we failed to see coming and fail to respond to. 00:08:54.483 --> 00:08:57.468 Today's En Banc and the work leading up to it, 00:08:57.468 --> 00:09:00.341 demonstrates that the CPUC's awareness 00:09:00.341 --> 00:09:04.878 of these potential conditions and our readiness to respond. 00:09:04.878 --> 00:09:08.783 To me, this is the main takeaway from the white paper. 00:09:08.783 --> 00:09:13.252 The CPUC must continue promoting more equitable outcomes 00:09:13.252 --> 00:09:15.710 in our decision-making. 00:09:15.710 --> 00:09:18.954 I am very much looking forward to the conversation today 00:09:18.954 --> 00:09:22.257 on potential options to address the trends 00:09:22.257 --> 00:09:26.421 and the impact the energy division has so well articulated 00:09:26.421 --> 00:09:28.063 in the white paper. 00:09:28.063 --> 00:09:32.753 My hope is that the conversation today will be a catalyst, 00:09:32.753 --> 00:09:36.257 additional efforts that will catalyze the additional efforts 00:09:36.257 --> 00:09:39.953 that continue to contribute to our focus on equity 00:09:39.953 --> 00:09:42.453 as a central tenant in the PUC 00:09:45.002 --> 00:09:47.136 and all of us moves forward. 00:09:47.136 --> 00:09:48.336 Thank you all very much. 00:09:48.336 --> 00:09:51.559 I look forward to the participation of all of you today, 00:09:51.559 --> 00:09:54.372 and I thank the public who has joined us. 00:09:54.372 --> 00:09:55.245 Thank you. 00:09:55.245 --> 00:09:56.245 Mary Claire? 00:09:58.250 --> 00:09:59.765 Thank you, President Batjer. 00:09:59.765 --> 00:10:02.780 Commissioner Shiroma, are you ready? 00:10:02.780 --> 00:10:04.748 Yes, thank you. 00:10:04.748 --> 00:10:05.581 Thank you, MC. 00:10:05.581 --> 00:10:06.460 Thank you, President Batjer. 00:10:06.460 --> 00:10:10.748 And a very warm welcome to all of our distinguished guests 00:10:10.748 --> 00:10:13.369 and colleagues here on the dais. 00:10:13.369 --> 00:10:17.018 As I look through the virtual dais, 00:10:17.018 --> 00:10:20.118 seems we have the who's who of energy in California 00:10:20.118 --> 00:10:21.933 with us today. 00:10:21.933 --> 00:10:24.524 Thank you to the public who are taking time out of their day 00:10:24.524 --> 00:10:26.675 to spend it with us. 00:10:26.675 --> 00:10:29.259 I'll keep my remarks brief because we have a lot 00:10:29.259 --> 00:10:32.992 of great content to plan for today. 00:10:32.992 --> 00:10:35.538 As many of you read in the white paper, 00:10:35.538 --> 00:10:39.299 which is out for public comment until March 19th, 00:10:39.299 --> 00:10:42.054 Pacific Gas and Electric and San Diego Gas 00:10:42.054 --> 00:10:45.511 electric rates have increased at more than twice 00:10:45.511 --> 00:10:48.650 the rate of inflation since 2013, 00:10:48.650 --> 00:10:51.568 and all three electric utilities rates 00:10:51.568 --> 00:10:55.139 are expected to continue increasing faster than inflation 00:10:55.139 --> 00:10:57.790 over the next 10 years. 00:10:57.790 --> 00:11:01.418 We'll hear today about the impact of these 00:11:01.418 --> 00:11:03.376 anticipated rising rates on some of our 00:11:03.376 --> 00:11:05.537 most vulnerable customers, 00:11:05.537 --> 00:11:08.954 for customers who are below the 200% 00:11:14.063 --> 00:11:16.271 of federal poverty limit. 00:11:16.271 --> 00:11:18.620 We do have in place CARE, which is the 00:11:18.620 --> 00:11:22.403 California Alternative Rates for Energy program. 00:11:22.403 --> 00:11:25.872 It is the nation's most generous bill discount program, 00:11:25.872 --> 00:11:29.955 which offers a 35% discount on energy bills. 00:11:30.873 --> 00:11:32.994 However, this only partially mitigates 00:11:32.994 --> 00:11:37.034 the impact of rising rates, and for customers who make 00:11:37.034 --> 00:11:41.187 just above the federal poverty limits, these rising 00:11:41.187 --> 00:11:44.874 electric rates are going to hit them the hardest. 00:11:44.874 --> 00:11:48.349 This underlines one of my key takeaways in the white paper, 00:11:48.349 --> 00:11:51.267 and that is, we as a Commission, 00:11:51.267 --> 00:11:55.300 cannot continue to approve larger and larger 00:11:55.300 --> 00:11:59.440 revenue requirements while relying on programs like CARE 00:11:59.440 --> 00:12:01.680 to shield customers from the worst. 00:12:01.680 --> 00:12:05.449 We must make adjustments to slow the increase 00:12:05.449 --> 00:12:09.059 in utility revenue requirements for all customers. 00:12:09.059 --> 00:12:11.863 And many of these adjustments need to come from 00:12:11.863 --> 00:12:13.543 Commission itself. 00:12:13.543 --> 00:12:15.243 We need to do a better job of considering 00:12:15.243 --> 00:12:18.527 the cumulative impact of the rate increases 00:12:18.527 --> 00:12:21.041 we approve in individual proceedings, 00:12:21.041 --> 00:12:22.982 and we need to be diligent in ensuring that 00:12:22.982 --> 00:12:25.392 when we approve new spending, 00:12:25.392 --> 00:12:28.761 it is only for programs where we have strong evidence 00:12:28.761 --> 00:12:32.043 that the benefits will outweigh the cost. 00:12:32.043 --> 00:12:35.105 We need utilities to be our partners in this, 00:12:35.105 --> 00:12:38.543 and aggressively look for cost cutting measures. 00:12:38.543 --> 00:12:41.146 And I'm very much looking forward to hearing their ideas 00:12:41.146 --> 00:12:43.583 in a panel after lunch. 00:12:43.583 --> 00:12:47.364 Lastly, we need support and collaboration 00:12:47.364 --> 00:12:50.311 of the legislature, our sister agencies 00:12:50.311 --> 00:12:52.146 to assist us in this endeavor, 00:12:52.146 --> 00:12:55.850 as many of our programs are legislatively mandated 00:12:55.850 --> 00:12:59.146 or related to the purview of other agencies. 00:12:59.146 --> 00:13:02.952 I'm thrilled that we have all of these STH representatives 00:13:02.952 --> 00:13:05.305 on the dais with us this morning. 00:13:05.305 --> 00:13:09.638 And before I turn this microphone back to our emcee, 00:13:11.825 --> 00:13:14.380 Mary Claire, I want to take a moment to thank 00:13:14.380 --> 00:13:18.521 the many CPUC staff who've made this day possible, 00:13:18.521 --> 00:13:22.188 Paul Phillips, Ankit Jain, Alireza Eshraghi, 00:13:23.168 --> 00:13:27.271 Simon Hurd, Julia Ende, Bridget Sieren-Smith, 00:13:27.271 --> 00:13:30.495 Josh Huneycutt, and a number of other position staff 00:13:30.495 --> 00:13:33.132 who've been working tirelessly these past months 00:13:33.132 --> 00:13:34.532 on the white paper. 00:13:34.532 --> 00:13:37.983 And thank you to Franz Cheng, David Zizmor, 00:13:37.983 --> 00:13:41.998 Joe Haga, and Robert Stanford for handling the planning 00:13:41.998 --> 00:13:45.560 and logistics of this very complicated event today. 00:13:45.560 --> 00:13:48.249 It's truly been a Herculean task, 00:13:48.249 --> 00:13:50.119 and I thank them for the great work 00:13:50.119 --> 00:13:51.847 in a very short period of time. 00:13:51.847 --> 00:13:55.777 And I'll now turn the microphone back to Mary Claire. 00:13:55.777 --> 00:13:56.610 Thank you. 00:13:58.187 --> 00:14:00.352 Thank you, Commissioner Shiroma. 00:14:00.352 --> 00:14:02.100 Assemblymember Chris Holden, 00:14:02.100 --> 00:14:05.106 are you ready to give some opening remarks? 00:14:05.106 --> 00:14:05.939 I am. 00:14:07.187 --> 00:14:08.349 Good morning everyone. 00:14:08.349 --> 00:14:11.154 And thank you, President Batjer, Commissioners 00:14:11.154 --> 00:14:15.248 for inviting me to be a part of the meeting today. 00:14:15.248 --> 00:14:17.794 Let me just thank you for discussing a topic 00:14:17.794 --> 00:14:20.153 that is of great importance to me. 00:14:20.153 --> 00:14:23.648 And that is how we ensure our energy future 00:14:23.648 --> 00:14:28.068 is not only cleaner and safer, but still affordable. 00:14:28.068 --> 00:14:30.305 Our committee held a hearing around this time last year 00:14:30.305 --> 00:14:32.459 to discuss rates and affordability, 00:14:32.459 --> 00:14:37.041 which remains critical, and critical importance to me. 00:14:37.041 --> 00:14:39.480 I appreciate the Commission's raising the topic 00:14:39.480 --> 00:14:42.763 and I recognize solutions to rate affordability 00:14:42.763 --> 00:14:45.445 is a tight rope we must walk. 00:14:45.445 --> 00:14:47.182 There's not a matter of whether or not 00:14:47.182 --> 00:14:49.706 we can afford the future, 00:14:49.706 --> 00:14:52.185 we can't afford to do nothing. 00:14:52.185 --> 00:14:54.392 Climate change is the reality, 00:14:54.392 --> 00:14:58.786 and we are bearing our response to the changing climate 00:14:58.786 --> 00:15:01.561 and our energy rates, from greening the grid, 00:15:01.561 --> 00:15:06.266 wildfire mitigation, to electric vehicle charging build-out. 00:15:06.266 --> 00:15:08.766 Yet, so often the conversation 00:15:10.925 --> 00:15:13.092 is presented as a duality. 00:15:13.960 --> 00:15:17.883 You either have wildfire safety of the power grid, 00:15:17.883 --> 00:15:19.784 or you keep costs low. 00:15:19.784 --> 00:15:22.734 You either have aggressive GHD reduction goals, 00:15:22.734 --> 00:15:25.083 or you keep costs low. 00:15:25.083 --> 00:15:27.090 I'm not disputing that certain capital investments 00:15:27.090 --> 00:15:30.835 are necessary, but I reject the false choice, 00:15:30.835 --> 00:15:32.803 this either or. 00:15:32.803 --> 00:15:36.966 We must figure out how to get our costs under control 00:15:36.966 --> 00:15:41.012 while continuing to pursue our ambitious goals. 00:15:41.012 --> 00:15:44.162 We need to get more out of what we have already paid for, 00:15:44.162 --> 00:15:47.407 how to manage smarter, and be more nimble, 00:15:47.407 --> 00:15:49.346 including how the development of more coordinated 00:15:49.346 --> 00:15:53.596 western grid could add real benefit to rate payers. 00:15:55.190 --> 00:15:57.314 We need to examine existing programs 00:15:57.314 --> 00:16:00.564 and evaluate whether redundancy exists. 00:16:01.955 --> 00:16:05.076 We must also explore financing options and rate schemes 00:16:05.076 --> 00:16:08.013 to ensure these long-term investments in our grid 00:16:08.013 --> 00:16:09.968 are not front loaded. 00:16:09.968 --> 00:16:12.398 But these are not our only challenges 00:16:12.398 --> 00:16:15.162 in facing future affordability. 00:16:15.162 --> 00:16:18.215 We also recognize that affordability impacts communities 00:16:18.215 --> 00:16:20.701 in our state differently. 00:16:20.701 --> 00:16:23.629 As this pandemic has highlighted very starkly, 00:16:23.629 --> 00:16:28.007 energy is a basic necessity and essential service. 00:16:28.007 --> 00:16:31.271 Unfortunately, as the staff white paper shows, 00:16:31.271 --> 00:16:33.104 some communities pay much higher percentage 00:16:33.104 --> 00:16:37.852 of their discretionary income for vital utility services, 00:16:37.852 --> 00:16:39.915 even when compared to low-income households 00:16:39.915 --> 00:16:42.220 elsewhere in the state. 00:16:42.220 --> 00:16:46.127 Our solutions must have this reality in mind. 00:16:46.127 --> 00:16:50.600 That is why this conversation today is so vital and timely. 00:16:50.600 --> 00:16:52.098 I appreciate the Commissioner's attention 00:16:52.098 --> 00:16:54.371 to this critical issue. 00:16:54.371 --> 00:16:57.692 And I look forward to the discussion today, 00:16:57.692 --> 00:16:59.823 not only as it highlights the challenges 00:16:59.823 --> 00:17:03.375 to ensure our future affordability, 00:17:03.375 --> 00:17:07.286 but also with an eye toward solutions and remedies to help 00:17:07.286 --> 00:17:11.297 moderate this growing trend toward ever increasing rates. 00:17:11.297 --> 00:17:12.932 Again, thank you for inviting me today. 00:17:12.932 --> 00:17:15.849 I look forward to the conversation. 00:17:18.124 --> 00:17:19.507 Thank you, Assemblymember. 00:17:19.507 --> 00:17:22.007 Next we have Senator Ben Bezo. 00:17:23.831 --> 00:17:25.464 Hello, good morning, everybody. 00:17:25.464 --> 00:17:27.668 I'd like to thank you for this opportunity 00:17:27.668 --> 00:17:29.299 to share some comments. 00:17:29.299 --> 00:17:31.307 I want to thank President Batjer, 00:17:31.307 --> 00:17:35.687 Commissioner Shiroma, CPUC chair Fokesield, 00:17:35.687 --> 00:17:40.222 CAISO CEO Mainzer, thank you for the invitation. 00:17:40.222 --> 00:17:42.282 And it's a pleasure to join you. 00:17:42.282 --> 00:17:45.884 I appreciate the CPUC organizing this discussion today 00:17:45.884 --> 00:17:47.876 on electric costs, particularly 00:17:47.876 --> 00:17:49.675 given the economic challenges 00:17:49.675 --> 00:17:52.775 many of our residents are currently facing. 00:17:52.775 --> 00:17:55.647 These challenges have become more pronounced, 00:17:55.647 --> 00:17:58.048 but the economic toll and the impacts of COVID, 00:17:58.048 --> 00:18:01.705 as many have discussed for quite awhile now. 00:18:01.705 --> 00:18:04.088 Electricity is an essential service 00:18:04.088 --> 00:18:07.304 to the people of our state, even more necessary, 00:18:07.304 --> 00:18:09.965 if not more appreciated, 00:18:09.965 --> 00:18:12.926 in the midst of this global pandemic. 00:18:12.926 --> 00:18:16.655 It's always been the key to people's public health, 00:18:16.655 --> 00:18:20.738 safety, and the prosperity of the businesses of our state. 00:18:20.738 --> 00:18:23.449 Unfortunately, the changing climate is creating 00:18:23.449 --> 00:18:25.199 more challenges to maintaining 00:18:25.199 --> 00:18:27.938 reliability of electric service. 00:18:27.938 --> 00:18:30.357 As we witnessed in August, 00:18:30.357 --> 00:18:33.091 with the unexpected rotating outages, 00:18:33.091 --> 00:18:35.408 but also the numerous distribution equipment failures 00:18:35.408 --> 00:18:39.842 due to the 120 Fahrenheit degree temperatures, 00:18:39.842 --> 00:18:43.918 that likely affected customers more on duration, 00:18:43.918 --> 00:18:46.128 and of course, the tragic horrors 00:18:46.128 --> 00:18:48.698 of the recent outages in Texas. 00:18:48.698 --> 00:18:51.614 Catastrophic wildfires in California become 00:18:51.614 --> 00:18:54.074 a nearly yearly occurrence, 00:18:54.074 --> 00:18:58.851 and the electric grid has been a source of ignition 00:18:58.851 --> 00:19:02.381 for some of these horrendous fires. 00:19:02.381 --> 00:19:06.251 As a result, the need to mitigate the vegetation management 00:19:06.251 --> 00:19:08.661 and improvements to electric infrastructure 00:19:08.661 --> 00:19:11.421 have become yet more critical. 00:19:11.421 --> 00:19:13.782 As a state, we're pushing toward cleaner generation 00:19:13.782 --> 00:19:15.751 to achieve our climate goals, 00:19:15.751 --> 00:19:19.825 while allowing local governments to make decisions about 00:19:19.825 --> 00:19:22.149 what generation to procure. 00:19:22.149 --> 00:19:25.626 We've pushed to expand access to solar rooftops, 00:19:25.626 --> 00:19:28.196 to help develop an industry which many argue is no longer 00:19:28.196 --> 00:19:30.845 in need of the current incentives. 00:19:30.845 --> 00:19:33.265 Incentives and rates that raised equity concerns 00:19:33.265 --> 00:19:36.535 about who benefits and who pays. 00:19:36.535 --> 00:19:38.435 The COVID pandemic is further challenging us 00:19:38.435 --> 00:19:41.852 to protect our most vulnerable residents. 00:19:44.214 --> 00:19:47.320 I applied the Governor, the CPUC, and utilities 00:19:47.320 --> 00:19:49.288 for continued policies to protect residents 00:19:49.288 --> 00:19:53.000 from loss of service due to nonpayment during this time. 00:19:53.000 --> 00:19:56.288 It really is the right thing to do. 00:19:56.288 --> 00:19:58.717 Disconnection of service due to nonpayment 00:19:58.717 --> 00:20:01.856 is an issue very important to me. 00:20:01.856 --> 00:20:05.388 As I previously offered to build a direct of CPUC, 00:20:05.388 --> 00:20:08.377 institute protections for customers who could not pay, 00:20:08.377 --> 00:20:12.600 including those on life support medical equipment. 00:20:12.600 --> 00:20:16.001 The CPUC robust policies have been demonstrated 00:20:16.001 --> 00:20:17.941 during this pandemic. 00:20:17.941 --> 00:20:20.720 Nonetheless, I'm mindful that these are all costs 00:20:20.720 --> 00:20:22.970 that need to be shouldered. 00:20:23.875 --> 00:20:26.215 Federal assistance will be helpful, 00:20:26.215 --> 00:20:29.875 but we must continue to be vigilant to protect customers 00:20:29.875 --> 00:20:32.245 at their time of most need. 00:20:32.245 --> 00:20:37.182 Over 100 years ago, what began as the Railroad Commission 00:20:37.182 --> 00:20:39.481 has been transformed into the California Public 00:20:39.481 --> 00:20:42.050 Utilities Commission, with a mission to provide 00:20:42.050 --> 00:20:44.830 rate regulation of monopolies that were needed 00:20:44.830 --> 00:20:48.040 to provide essential services. 00:20:48.040 --> 00:20:51.802 Beginning with the advent of electricity. 00:20:51.802 --> 00:20:55.150 This regulatory compact must always remain 00:20:55.150 --> 00:20:59.428 at the core of the work of what the CPUC does. 00:20:59.428 --> 00:21:04.249 Even as technology has changed, and issues of concerns 00:21:04.249 --> 00:21:08.166 ebb and flow, wildfires, gas, pipeline, safety, 00:21:10.020 --> 00:21:13.192 access to broadband and services, 00:21:13.192 --> 00:21:16.452 the fundamentals of just and reasonable rates 00:21:16.452 --> 00:21:17.732 continues to be the linchpin 00:21:17.732 --> 00:21:20.712 of the regulatory authority of the CPUC. 00:21:20.712 --> 00:21:24.122 So ensuring residents have access to reliable central 00:21:24.122 --> 00:21:28.122 services, including (cuts out). 00:21:34.179 --> 00:21:36.989 Various issues that pose challenges to electric costs. 00:21:36.989 --> 00:21:39.939 I ask everyone to be mindful of the need 00:21:39.939 --> 00:21:44.670 for reliable service at just and reasonable rates. 00:21:44.670 --> 00:21:47.796 California residents provision of essential electric service 00:21:47.796 --> 00:21:51.119 at reasonable rates relies on a strong CPUC 00:21:51.119 --> 00:21:53.952 that can manage the robust issues, 00:21:54.889 --> 00:21:57.309 before it can maintain the regulatory compact 00:21:57.309 --> 00:21:59.339 at the center of its work. 00:21:59.339 --> 00:22:01.619 We will have expenses that must be shouldered 00:22:01.619 --> 00:22:04.010 to meet our many challenges. 00:22:04.010 --> 00:22:06.339 But we must ensure that they are both 00:22:06.339 --> 00:22:08.732 to the benefit of California rate payers, 00:22:08.732 --> 00:22:12.958 that they are prioritized, and judiciously reviewed. 00:22:12.958 --> 00:22:17.958 While our challenges have grown, I ask what additional tools 00:22:18.943 --> 00:22:21.464 does the CPUC to meet those challenges? 00:22:21.464 --> 00:22:25.276 Is the CPUC able to satisfy the necessary review 00:22:25.276 --> 00:22:29.452 of each dollar spent by regulated utilities 00:22:29.452 --> 00:22:32.452 to ensure it as just and reasonable? 00:22:34.013 --> 00:22:36.267 I look forward to today's discussion as well as 00:22:36.267 --> 00:22:38.807 any follow up regarding ways we can ensure 00:22:38.807 --> 00:22:42.527 the CPUC's efforts are bolstered and strengthened. 00:22:42.527 --> 00:22:44.825 What tools does the CPUC need 00:22:44.825 --> 00:22:48.185 to continue the agency website? 00:22:48.185 --> 00:22:51.575 As the website states, protect consumers 00:22:51.575 --> 00:22:54.845 and ensure the provision of safe, reliable utility service 00:22:54.845 --> 00:22:57.386 and infrastructure at reasonable rates, 00:22:57.386 --> 00:23:00.607 with a commitment to environmental enhancement 00:23:00.607 --> 00:23:03.857 and a healthy California economy. 00:23:03.857 --> 00:23:04.905 Thank you very much. 00:23:04.905 --> 00:23:09.457 And I look forward to working with you this year. 00:23:09.457 --> 00:23:10.859 Thank you Senator. 00:23:10.859 --> 00:23:14.276 Next we have CEC chair, David Hochschild. 00:23:16.201 --> 00:23:17.317 Good morning friends. 00:23:17.317 --> 00:23:20.410 Thank you, Chairman Holden and Chairman Hueso, 00:23:20.410 --> 00:23:22.088 President Batjer, Commissioner Shiroma, 00:23:22.088 --> 00:23:24.578 and the rest of my esteemed colleagues. 00:23:24.578 --> 00:23:25.411 I'll be brief. 00:23:25.411 --> 00:23:28.929 I just wanted to point out for the last three years, 00:23:28.929 --> 00:23:32.318 we've had the worst wildfires, climate driven wildfires, 00:23:32.318 --> 00:23:37.063 in state history, and climate solutions need to be 00:23:37.063 --> 00:23:39.823 a fundamental part of the strategy as we think about 00:23:39.823 --> 00:23:44.796 rate and rate design, and really to understand that 00:23:44.796 --> 00:23:48.497 at the electric rates today, our climate policy, 00:23:48.497 --> 00:23:51.756 our functioning climate policy, and to be very mindful about 00:23:51.756 --> 00:23:55.821 proceeding in ways that are going to incense 00:23:55.821 --> 00:23:58.491 the good things we want to have happen, 00:23:58.491 --> 00:23:59.843 and be very mindful of that. 00:23:59.843 --> 00:24:03.142 And then an example, we have now over 800,000 00:24:03.142 --> 00:24:06.084 electric vehicles that have been bought in California. 00:24:06.084 --> 00:24:08.133 Those vehicles together have contributed 00:24:08.133 --> 00:24:10.366 almost a billion dollars to rate base, 00:24:10.366 --> 00:24:13.425 and that's a downward force on electric rates. 00:24:13.425 --> 00:24:16.108 And to think about this as well as we look towards building 00:24:16.108 --> 00:24:18.745 decarbonization electrification. 00:24:18.745 --> 00:24:21.327 The other thing that's on my mind as well, 00:24:21.327 --> 00:24:26.310 now that we have a new administration in Washington, DC, 00:24:26.310 --> 00:24:28.851 our state goal of getting to 100% clean energy 00:24:28.851 --> 00:24:30.412 is now the nation's goal. 00:24:30.412 --> 00:24:32.306 The grid is cleaning up rapidly 00:24:32.306 --> 00:24:37.306 without 60% carbon free today, it would get to 100%. 00:24:37.721 --> 00:24:41.971 Thinking about the opportunity for federal stimulus money 00:24:41.971 --> 00:24:46.156 to go to do the kind of grid upgrades that might otherwise 00:24:46.156 --> 00:24:50.847 be paid for by rate payers, to relieve the burden of those 00:24:50.847 --> 00:24:54.027 from rate payers, and really be strategic about that 00:24:54.027 --> 00:24:57.737 as a way to keep rates down and make use of 00:24:57.737 --> 00:25:00.679 the infrastructure dollars that the federal government 00:25:00.679 --> 00:25:02.837 is going to be pushing. 00:25:02.837 --> 00:25:04.558 I think I'll stop there, but thank you, 00:25:04.558 --> 00:25:08.641 Commissioner Shiroma bring us all together today. 00:25:10.847 --> 00:25:11.747 Thank you. 00:25:11.747 --> 00:25:15.302 And our last opening remarks are from CAISO CEO, 00:25:15.302 --> 00:25:17.282 Elliot Mainzer. 00:25:17.282 --> 00:25:18.523 Good morning, everybody. 00:25:18.523 --> 00:25:22.092 On behalf of the California ISO's governing Board and staff, 00:25:22.092 --> 00:25:25.503 I very much appreciate the CPUC convening us today 00:25:25.503 --> 00:25:28.601 to address this very important set of topics. 00:25:28.601 --> 00:25:30.821 As we've seen over the past year, 00:25:30.821 --> 00:25:32.721 investing in our critical infrastructure 00:25:32.721 --> 00:25:35.172 is essential to the health, safety, 00:25:35.172 --> 00:25:38.922 and economic wellbeing of the people we serve. 00:25:38.922 --> 00:25:42.682 The CPUC has a tremendous task and important role 00:25:42.682 --> 00:25:45.402 in balancing the state's various policy objectives, 00:25:45.402 --> 00:25:48.603 including addressing critical climate, electrification, 00:25:48.603 --> 00:25:50.764 and building decarbonization goals, 00:25:50.764 --> 00:25:52.983 while maintaining affordable service 00:25:52.983 --> 00:25:55.463 for utility customers in California. 00:25:55.463 --> 00:25:59.576 At the California ISO, we recognize how challenging this is 00:25:59.576 --> 00:26:02.256 and stand ready to provide the technical expertise 00:26:02.256 --> 00:26:04.967 in grid operations and transmission planning 00:26:04.967 --> 00:26:07.596 to help the state make informed decisions 00:26:07.596 --> 00:26:09.147 in the realms of resource adequacy, 00:26:09.147 --> 00:26:11.046 planning, and procurement. 00:26:11.046 --> 00:26:14.186 This conversation comes at a critical inflection point, 00:26:14.186 --> 00:26:16.526 as we're all working diligently to ensure 00:26:16.526 --> 00:26:20.506 electric reliability for the summer of 2021 and beyond. 00:26:20.506 --> 00:26:23.108 I would like all of the attendees of today's meeting 00:26:23.108 --> 00:26:25.936 to see the California ISO as a collaborative 00:26:25.936 --> 00:26:28.976 and solutions-oriented partner in the transition 00:26:28.976 --> 00:26:30.957 to a clean energy future. 00:26:30.957 --> 00:26:33.598 We will continue to look for ways to efficiently integrate 00:26:33.598 --> 00:26:36.488 clean energy resources using our market-based 00:26:36.488 --> 00:26:38.278 least cost dispatch. 00:26:38.278 --> 00:26:41.996 We will also work closely with the CPUC, DEC, 00:26:41.996 --> 00:26:44.416 and other stakeholders throughout the west, 00:26:44.416 --> 00:26:47.676 to conduct dynamic and farsighted power and transmission 00:26:47.676 --> 00:26:50.476 resource planning in order to meet the state's long-term 00:26:50.476 --> 00:26:54.885 clean energy goals, in a reliable and affordable fashion. 00:26:54.885 --> 00:26:57.584 Personally, I've very much appreciated the warm welcome 00:26:57.584 --> 00:26:59.288 since returning to California 00:26:59.288 --> 00:27:01.595 and joining the ISO last October. 00:27:01.595 --> 00:27:03.375 I'm here to listen and learn today, 00:27:03.375 --> 00:27:05.445 and very much look forward to the conversation. 00:27:05.445 --> 00:27:07.445 Thank you all very much. 00:27:10.070 --> 00:27:11.451 Thank you, Mr. Mainzer. 00:27:11.451 --> 00:27:13.481 And thank you to all of the folks who gave us 00:27:13.481 --> 00:27:15.450 those great opening remarks. 00:27:15.450 --> 00:27:17.930 Now we're going to launch into the agenda for the day 00:27:17.930 --> 00:27:20.681 and first up, we have a staff presentation 00:27:20.681 --> 00:27:23.523 from energy division on the white paper 00:27:23.523 --> 00:27:25.260 that they released last week, 00:27:25.260 --> 00:27:27.682 that looks at cost and rate trends historically 00:27:27.682 --> 00:27:30.082 and over the next 10 years. 00:27:30.082 --> 00:27:32.582 So I'm going to turn it over to Ed Randolph, 00:27:32.582 --> 00:27:35.271 the CPUC's deputy executive director of energy 00:27:35.271 --> 00:27:39.438 and climate policy to introduce this presentation. 00:27:44.641 --> 00:27:48.135 Ed, I think you need to unmute yourself. 00:27:48.135 --> 00:27:50.635 Yeah, that's the first snafu of the day. 00:27:50.635 --> 00:27:52.552 Thank you, Mary Claire. 00:27:53.713 --> 00:27:56.323 Thank you, and good morning Commissioners, 00:27:56.323 --> 00:27:57.812 legislators, and Board members. 00:27:57.812 --> 00:28:00.733 I am Edward Randolph, the deputy executive director 00:28:00.733 --> 00:28:02.172 for energy and climate policy 00:28:02.172 --> 00:28:04.742 at the California Public Utilities Commission. 00:28:04.742 --> 00:28:08.832 I want to start by echoing the thank yous to the CPUC staff, 00:28:08.832 --> 00:28:11.825 both in energy division and Commissioner Shiroma's office 00:28:11.825 --> 00:28:15.156 who have worked many, many hours to draft the white paper 00:28:15.156 --> 00:28:17.004 and to put this event together. 00:28:17.004 --> 00:28:21.064 I also want to thank David Roland-Holst from UC Berkeley 00:28:21.064 --> 00:28:24.886 and Mark LeBel from the Regulatory Assistance Project 00:28:24.886 --> 00:28:27.471 for the special assistance with the white paper. 00:28:27.471 --> 00:28:30.140 And I want to specifically thank Robert Stanford 00:28:30.140 --> 00:28:33.427 and Joseph Haga for their help on the technical side 00:28:33.427 --> 00:28:35.464 of making this work today. 00:28:35.464 --> 00:28:37.794 Before I hand things over to Paul Phillips 00:28:37.794 --> 00:28:39.314 to discuss the white paper, 00:28:39.314 --> 00:28:42.036 I want to take a few minutes to set the stage on 00:28:42.036 --> 00:28:44.479 why we are having this En Banc 00:28:44.479 --> 00:28:47.418 and what the next steps will be after today. 00:28:47.418 --> 00:28:49.909 Over the past five years, energy division has worked 00:28:49.909 --> 00:28:53.279 to refine our ability to forecast rate and bill trends 00:28:53.279 --> 00:28:56.858 and to provide the CPUC with more tools to understand 00:28:56.858 --> 00:28:59.430 how individual decisions will impact 00:28:59.430 --> 00:29:01.358 overall rates and bills. 00:29:01.358 --> 00:29:02.669 Additionally, under the leadership 00:29:02.669 --> 00:29:04.310 of Commissioner Rechtschaffen, 00:29:04.310 --> 00:29:07.845 and the CPUC has developed metrics to measure 00:29:07.845 --> 00:29:11.543 the affordability of utility bills to California households. 00:29:11.543 --> 00:29:13.866 These efforts have allowed us to better understand 00:29:13.866 --> 00:29:17.633 the dramatic increases Californians could face, 00:29:17.633 --> 00:29:20.693 and energy bills in the years to come. 00:29:20.693 --> 00:29:22.703 And more importantly, to understand that 00:29:22.703 --> 00:29:24.183 for some parts of the state, 00:29:24.183 --> 00:29:27.124 and especially for some communities within the state, 00:29:27.124 --> 00:29:30.933 energy could become increasingly unaffordable. 00:29:30.933 --> 00:29:32.854 It was apparent that meeting the key goals 00:29:32.854 --> 00:29:35.394 for providing safe, environmentally friendly, 00:29:35.394 --> 00:29:38.143 reliable, and affordable electricity 00:29:38.143 --> 00:29:41.805 will get increasingly challenging over the next few years. 00:29:41.805 --> 00:29:43.873 As some witnesses will discuss today, 00:29:43.873 --> 00:29:47.743 higher bills make meeting our policy goals much harder 00:29:47.743 --> 00:29:50.125 in the investments we must make to ensure a safe, 00:29:50.125 --> 00:29:54.361 reliable electric system will lead to cost increases. 00:29:54.361 --> 00:29:56.770 These realizations led to internal discussions 00:29:56.770 --> 00:30:01.222 within the PUC on ways to reduce upcoming bill increases. 00:30:01.222 --> 00:30:03.743 But once we looked at the drivers of the increases 00:30:03.743 --> 00:30:06.126 and ways we could reduce utility costs, 00:30:06.126 --> 00:30:08.563 it was hard to pinpoint places where 00:30:08.563 --> 00:30:10.907 we should cut back on spending. 00:30:10.907 --> 00:30:13.381 As we will discuss in this panel, 00:30:13.381 --> 00:30:15.392 the biggest drivers of bill increases 00:30:15.392 --> 00:30:18.942 are wildfire mitigation spending and transmission build out. 00:30:18.942 --> 00:30:21.262 While we can look at ways to be more efficient 00:30:21.262 --> 00:30:24.402 in these investments, I don't believe we can recommend 00:30:24.402 --> 00:30:26.392 not making these investments. 00:30:26.392 --> 00:30:28.362 They are critical to reducing wildfires, 00:30:28.362 --> 00:30:31.072 maintaining reliability, and avoiding outages, 00:30:31.072 --> 00:30:34.093 such as ones that happened last summer in California, 00:30:34.093 --> 00:30:36.582 and just happened in Texas. 00:30:36.582 --> 00:30:39.542 We also know that investments in clean energy infrastructure 00:30:39.542 --> 00:30:43.724 are absolutely necessary to meet our state policies, 00:30:43.724 --> 00:30:46.404 and analysis shows that these investments 00:30:46.404 --> 00:30:48.315 have minimal impact on bills 00:30:48.315 --> 00:30:52.224 or can even save Californians money over time. 00:30:52.224 --> 00:30:54.465 We quickly realized that while keeping energy bills 00:30:54.465 --> 00:30:57.784 affordable to critical policy objectives, 00:30:57.784 --> 00:30:59.486 there are no easy actions we can take 00:30:59.486 --> 00:31:00.954 to minimize bill impacts. 00:31:00.954 --> 00:31:02.954 In meeting affordability goals, 00:31:02.954 --> 00:31:07.162 must be a joint effort with the CPUC, our sister agencies, 00:31:07.162 --> 00:31:09.552 the legislature, the utilities, 00:31:09.552 --> 00:31:13.628 and the many stakeholder groups we work with. 00:31:13.628 --> 00:31:16.846 Hopefully this En Banc is the start of that joint effort. 00:31:16.846 --> 00:31:19.677 It is my hope that the En Banc and the white paper help 00:31:19.677 --> 00:31:22.964 elevate the importance of these issues, 00:31:22.964 --> 00:31:26.134 and they help everyone joining us today 00:31:26.134 --> 00:31:27.384 to better see the complexities 00:31:27.384 --> 00:31:30.394 and pressures of increasing energy bills. 00:31:30.394 --> 00:31:33.546 There will not be a single big solution to the challenges, 00:31:33.546 --> 00:31:36.094 but instead we will need to think about rate 00:31:36.094 --> 00:31:39.964 and bill pressures in all the decisions going forward, 00:31:39.964 --> 00:31:43.505 and look for ways to find large and small efficiencies 00:31:43.505 --> 00:31:45.956 in each new decision we make. 00:31:45.956 --> 00:31:48.354 After today, energy division staff will incorporate 00:31:48.354 --> 00:31:51.686 the discussion from today and written comments received 00:31:51.686 --> 00:31:55.283 on the white paper into a revised white paper. 00:31:55.283 --> 00:31:59.591 That can help shape further discussions and decision-making. 00:31:59.591 --> 00:32:02.821 But we do not anticipate that a revised white paper 00:32:02.821 --> 00:32:05.321 will be a roadmap for a path forward. 00:32:05.321 --> 00:32:07.023 And we hope that it is not the end 00:32:07.023 --> 00:32:09.042 of this important discussion. 00:32:09.042 --> 00:32:11.060 Instead, we hope that everyone involved 00:32:11.060 --> 00:32:13.440 in these discussions today will incorporate the findings 00:32:13.440 --> 00:32:17.220 from today into their own policy, roadmaps and discussions. 00:32:17.220 --> 00:32:20.440 We will need to look for cost savings in all our decisions, 00:32:20.440 --> 00:32:23.523 and we'll need to look to find some paradigm shifts 00:32:23.523 --> 00:32:26.130 on how we find our investments along the way. 00:32:26.130 --> 00:32:27.220 Thank you. 00:32:27.220 --> 00:32:31.887 And with that, Paul Phillip, the virtual floor is yours. 00:32:40.192 --> 00:32:41.109 Everyone. 00:32:42.610 --> 00:32:45.160 We are going to transition to some slides now 00:32:45.160 --> 00:32:47.618 to begin discussing the white paper. 00:32:47.618 --> 00:32:48.910 And I thank you all for being here. 00:32:48.910 --> 00:32:51.440 I wanted to just echo a lot of the sentiments 00:32:51.440 --> 00:32:54.059 that Ed Randolph just said for all of us, 00:32:54.059 --> 00:32:57.769 and to say that this has been a mammoth effort 00:32:57.769 --> 00:32:59.821 to look at some very mammoth level operations 00:32:59.821 --> 00:33:02.808 for our major investor and utilities in California. 00:33:02.808 --> 00:33:04.448 I want to thank a lot of people in the energy division, 00:33:04.448 --> 00:33:06.240 but especially folks on my staff, 00:33:06.240 --> 00:33:08.362 Ankit Jain and Bridget Sieren-Smith, 00:33:08.362 --> 00:33:10.819 who've done a ton of heavy lifting on this effort. 00:33:10.819 --> 00:33:13.195 And with that, we will transition into 00:33:13.195 --> 00:33:18.033 a brief overview of what we're embarking on here today 00:33:18.033 --> 00:33:20.328 in this discussion, in terms of the scope of the paper, 00:33:20.328 --> 00:33:23.345 and what we hope to provoke in terms of discussion 00:33:23.345 --> 00:33:24.905 about a range of solutions, 00:33:24.905 --> 00:33:27.193 knowing that there is no one silver bullet 00:33:27.193 --> 00:33:28.955 for addressing the issues that Ed Randolph 00:33:28.955 --> 00:33:30.569 just teed up for all of us. 00:33:30.569 --> 00:33:32.069 Next slide please. 00:33:36.656 --> 00:33:38.362 So we have in this white paper, 00:33:38.362 --> 00:33:40.666 a number of kind of key narratives and themes 00:33:40.666 --> 00:33:42.775 that have emerged, understanding of course, 00:33:42.775 --> 00:33:43.962 that we've looked at a number of areas 00:33:43.962 --> 00:33:45.979 where we could potentially cut costs, 00:33:45.979 --> 00:33:48.856 again with no one singular solution in mind. 00:33:48.856 --> 00:33:51.726 But at the top, we should talk about firstly, 00:33:51.726 --> 00:33:54.586 the household energy costs and rates are obviously rising 00:33:54.586 --> 00:33:56.476 disproportionately and impacting affordability 00:33:56.476 --> 00:33:58.456 for certain parts of our state. 00:33:58.456 --> 00:34:01.535 It really has become a bit of a tale of two states, in fact. 00:34:01.535 --> 00:34:06.535 What we have wealthier coastal homeowners who tend to invest 00:34:06.589 --> 00:34:09.650 in DER's, distributed energy resources, 00:34:09.650 --> 00:34:14.317 and who tend to have more of a sense of how to arbitrage 00:34:16.272 --> 00:34:19.092 from a position in billing to take advantage of 00:34:19.092 --> 00:34:22.252 other rate offerings to help themselves in terms of billing, 00:34:22.252 --> 00:34:23.967 in terms of load shifts. 00:34:23.967 --> 00:34:27.555 We're hoping that we can begin the process of 00:34:27.555 --> 00:34:30.387 getting lower income individuals involved in this 00:34:30.387 --> 00:34:32.614 distributed energy resources marketplace, 00:34:32.614 --> 00:34:35.893 and to hopefully address the issue of rising rates 00:34:35.893 --> 00:34:37.202 before we're sunk. 00:34:37.202 --> 00:34:39.272 With that said, we clearly see that 00:34:39.272 --> 00:34:42.414 bundled residential rates have begun outstripping 00:34:42.414 --> 00:34:44.972 inflation, going really back to 2013. 00:34:44.972 --> 00:34:47.961 And that our investment and utilities are kind of gradually 00:34:47.961 --> 00:34:50.692 climbing the national rankings when it comes to 00:34:50.692 --> 00:34:52.574 a comparison with other utilities around 00:34:52.574 --> 00:34:54.074 average residential bills. 00:34:54.074 --> 00:34:57.132 It used to be that we could say that 00:34:57.132 --> 00:35:00.324 our bills effectively paced inflation 00:35:00.324 --> 00:35:02.897 or rates paced inflation over the years. 00:35:02.897 --> 00:35:04.994 But really again, since 2013, that has changed, 00:35:04.994 --> 00:35:09.279 and we're seeing some rather rapid escalation. 00:35:09.279 --> 00:35:11.079 And in particular, we look at transmission distribution 00:35:11.079 --> 00:35:14.109 rate base, that has been an area of an acceleration 00:35:14.109 --> 00:35:16.509 over the past five years, I would say. 00:35:16.509 --> 00:35:17.580 And in particular transmission, 00:35:17.580 --> 00:35:19.890 we'll take a closer look at that today. 00:35:19.890 --> 00:35:23.539 Resulting rate impacts are clearly exacerbated by 00:35:23.539 --> 00:35:27.182 the ongoing substantial wildfire mitigation planning costs, 00:35:27.182 --> 00:35:29.871 and a higher than national average return on equity, 00:35:29.871 --> 00:35:33.989 which is not major, but it is something worth looking into. 00:35:33.989 --> 00:35:36.851 And again, we have the narrative of lower-income customers 00:35:36.851 --> 00:35:38.789 are really kind of less likely to participate in 00:35:38.789 --> 00:35:40.769 our behind the meter offerings, 00:35:40.769 --> 00:35:43.909 and paying for more and more incremental costs 00:35:43.909 --> 00:35:46.009 that are displaced by behind the meter customers. 00:35:46.009 --> 00:35:48.540 This is a not a new or novel concept, 00:35:48.540 --> 00:35:50.446 we've been talking about central cost shifts resulting 00:35:50.446 --> 00:35:51.749 from net energy metering, 00:35:51.749 --> 00:35:53.597 but we think that it could get worse in some ways, 00:35:53.597 --> 00:35:55.557 depending on how we manage the BDR marketplace 00:35:55.557 --> 00:35:57.256 going forward. 00:35:57.256 --> 00:35:59.656 And furthermore, finally, it really becomes 00:35:59.656 --> 00:36:03.286 it's not just about rate design and revenue requirements 00:36:03.286 --> 00:36:04.736 rising and changing, 00:36:04.736 --> 00:36:07.306 and there's no silver bullet within that matrix, 00:36:07.306 --> 00:36:09.076 but you know we have to also consider that 00:36:09.076 --> 00:36:11.706 the upfront investments by all customers 00:36:11.706 --> 00:36:14.669 can be a barrier to entry to a more distributed economy 00:36:14.669 --> 00:36:17.216 in the energy space for household energy bills. 00:36:17.216 --> 00:36:18.799 Next slide, please. 00:36:21.265 --> 00:36:23.685 So we'll start to delve in here into some of the more 00:36:23.685 --> 00:36:26.986 quantitative number crunching that we undertook 00:36:26.986 --> 00:36:30.409 in the process of drafting this paper. 00:36:30.409 --> 00:36:32.940 Here we have just a sense of the range of outcomes, 00:36:32.940 --> 00:36:36.209 of how we model a ten-year forecast, and where PG&E, 00:36:36.209 --> 00:36:38.567 Southern California Edison, and San Diego Gas and Electric 00:36:38.567 --> 00:36:41.721 might end up 10 years from now starting, 00:36:41.721 --> 00:36:45.618 ranging anywhere from, 21.7 cents per kilowatt hour 00:36:45.618 --> 00:36:50.138 at the bubble residential level for Edison to 30 cents 00:36:50.138 --> 00:36:51.579 currently for San Diego Gas and Electric, 00:36:51.579 --> 00:36:52.807 as you can see here. 00:36:52.807 --> 00:36:55.182 Going all the way to potentially 44.3 cents 00:36:55.182 --> 00:36:58.547 per kilowatt hour, based on this ten-year forecast. 00:36:58.547 --> 00:37:01.518 So anywhere in the range from about 3.7 to 4.7, 00:37:01.518 --> 00:37:06.518 5% give or take, annually on average increases in rates. 00:37:06.737 --> 00:37:10.419 This compares to a current inflation rate of about 1.9%. 00:37:10.419 --> 00:37:13.088 So clearly as we look forward, 00:37:13.088 --> 00:37:17.459 a very clear trend of rates that are outpacing inflation 00:37:17.459 --> 00:37:18.829 increasingly over the next 10 years, 00:37:18.829 --> 00:37:20.999 and that's our expectation. 00:37:20.999 --> 00:37:23.279 And so building on the previous slide, 00:37:23.279 --> 00:37:25.769 there's a few critical areas that's identified here. 00:37:25.769 --> 00:37:27.659 Not all of the areas, it's just some 00:37:27.659 --> 00:37:30.840 that we've delved into areas of capital additions 00:37:30.840 --> 00:37:32.202 and transmission distribution, 00:37:32.202 --> 00:37:34.091 looking at the accelerating trend there, 00:37:34.091 --> 00:37:36.369 and a need for maybe greater and more stringent reviews 00:37:36.369 --> 00:37:38.099 at both the state and federal level, 00:37:38.099 --> 00:37:38.932 particularly when it comes to 00:37:38.932 --> 00:37:41.439 jurisdictional costs in transmission. 00:37:41.439 --> 00:37:44.349 We are clearly very, very interested in looking at 00:37:44.349 --> 00:37:46.551 trajectory of wildfire mitigation planning costs 00:37:46.551 --> 00:37:50.468 and the significant rate impact that that will impose. 00:37:50.468 --> 00:37:53.799 And we'll look at the specific impacts of that momentarily. 00:37:53.799 --> 00:37:56.459 And then obviously, how do we look at both the costs 00:37:56.459 --> 00:37:59.029 and the potential long-term benefits or system savings 00:37:59.029 --> 00:38:00.229 that might arise when it comes to 00:38:00.229 --> 00:38:01.921 distributed energy resources, 00:38:01.921 --> 00:38:04.389 and how that marketplace continues to mature, 00:38:04.389 --> 00:38:06.802 whether it's in PV solar storage technologies 00:38:06.802 --> 00:38:07.812 and/or electric vehicles, 00:38:07.812 --> 00:38:10.533 as we move to electrify the system increasingly, 00:38:10.533 --> 00:38:13.814 in transportation and at the household level. 00:38:13.814 --> 00:38:15.314 Next slide please. 00:38:20.144 --> 00:38:21.843 I wanted to take just a moment to make sure that 00:38:21.843 --> 00:38:24.313 we understood here that there were a couple of different 00:38:24.313 --> 00:38:26.974 modeling tools that energy divisions use to help create 00:38:26.974 --> 00:38:28.698 the service forecast. 00:38:28.698 --> 00:38:30.381 First are these cost and rate tracking tools, 00:38:30.381 --> 00:38:34.121 which we've covered before in previous presentations, 00:38:34.121 --> 00:38:36.437 there's we worked very closely with the 00:38:36.437 --> 00:38:38.931 investor of utilities to develop these tools, 00:38:38.931 --> 00:38:41.340 which are updatable on a quarterly basis, 00:38:41.340 --> 00:38:44.119 they look very deliberately at individual proceedings 00:38:44.119 --> 00:38:45.589 and revenue requirements that are, 00:38:45.589 --> 00:38:48.419 as they dynamically change over the course of time, 00:38:48.419 --> 00:38:50.459 throughout a year, we have a sales forecast 00:38:50.459 --> 00:38:51.829 that get updated annually, 00:38:51.829 --> 00:38:53.889 that are uploaded into these tools. 00:38:53.889 --> 00:38:56.741 And it really is an attempt to cover a three to four year 00:38:56.741 --> 00:39:00.523 more precise forecast of where rates and bills are heading 00:39:00.523 --> 00:39:01.810 on a bundled residential basis. 00:39:01.810 --> 00:39:02.960 And we can do it at the system level, 00:39:02.960 --> 00:39:04.399 as well, with these tools. 00:39:04.399 --> 00:39:06.900 What we couldn't do with these tools just to then get to 00:39:06.900 --> 00:39:09.800 2030 or even beyond, in terms of forecasting. 00:39:09.800 --> 00:39:12.141 And as many of you know, forecasting is a difficult 00:39:12.141 --> 00:39:15.029 and not precise area, particularly when it comes to rates 00:39:15.029 --> 00:39:17.500 and given all of the number of factors that go into it. 00:39:17.500 --> 00:39:21.060 So what we had to do here was we had to partner with the CEC 00:39:21.060 --> 00:39:25.314 and work with them on understanding better how the IOU 00:39:25.314 --> 00:39:28.314 service area rates were going to be leveraged 00:39:28.314 --> 00:39:31.234 to derive preliminary bundled residential rates 00:39:31.234 --> 00:39:34.705 that could be used as part of this forecast going into 2030. 00:39:34.705 --> 00:39:37.126 In addition, we had to create a residential energy 00:39:37.126 --> 00:39:39.715 cost calculator tool and work with the consultants on that 00:39:39.715 --> 00:39:43.525 to develop the full 10 year forecast. 00:39:43.525 --> 00:39:45.955 And so we leveraged some escalation factors 00:39:45.955 --> 00:39:49.254 beyond 2024 to get us to 2030. 00:39:49.254 --> 00:39:53.812 And these were based on different revenue assumptions 00:39:53.812 --> 00:39:55.151 across many cost categories, 00:39:55.151 --> 00:39:57.615 obviously within the operations of the IOUs, 00:39:57.615 --> 00:40:00.291 but also with a look at the sales forecast that would be 00:40:00.291 --> 00:40:02.133 dynamically changing over time, 00:40:02.133 --> 00:40:04.197 based on the CEC's long-term looks at 00:40:04.197 --> 00:40:06.622 how sales forecasts may change. 00:40:06.622 --> 00:40:08.122 Next slide please. 00:40:10.001 --> 00:40:12.181 And so what we ended up with here, 00:40:12.181 --> 00:40:15.211 as you can see on this rather cluttered slide, 00:40:15.211 --> 00:40:18.249 a few different themes here. 00:40:18.249 --> 00:40:21.079 We have all three major investor owned utilities 00:40:21.079 --> 00:40:22.549 and their bundled residential rates, 00:40:22.549 --> 00:40:25.400 from PG&E to SDG&E, left to right. 00:40:25.400 --> 00:40:28.689 We find that by 2030, these bundled residential rates 00:40:28.689 --> 00:40:31.119 are forecasted to be somewhere in the neighborhood of 00:40:31.119 --> 00:40:33.869 a 20 to 70% higher than they would have been 00:40:33.869 --> 00:40:35.929 if they had simply tracked inflation 00:40:35.929 --> 00:40:38.720 over the same period of time from 2013 on. 00:40:38.720 --> 00:40:40.513 So that's rather significant, frankly, 00:40:40.513 --> 00:40:43.339 in looking at that, SDG&E in particular, a bit of a concern, 00:40:43.339 --> 00:40:45.090 but we'll get into why that's a concern 00:40:45.090 --> 00:40:49.485 and what the reasons are for that a little bit later. 00:40:49.485 --> 00:40:52.025 Again, rates track inflation historically, 00:40:52.025 --> 00:40:53.610 but we can no longer rely on that narrative, 00:40:53.610 --> 00:40:55.898 it's just not true anymore. 00:40:55.898 --> 00:40:57.481 Finally, just in looking at this, 00:40:57.481 --> 00:40:59.328 I want to just kind of point out that it's clear 00:40:59.328 --> 00:41:02.098 that each utility is sort of escaping gravity 00:41:02.098 --> 00:41:04.508 when it comes to the inflation rate 00:41:04.508 --> 00:41:06.999 and the trajectory of the inflation rate over time. 00:41:06.999 --> 00:41:11.166 So clearly PG&E starts its change somewhere around 00:41:12.052 --> 00:41:16.670 2016, 2017, and Southern California Edison is really 00:41:16.670 --> 00:41:19.030 transitioning upward rather rapidly around 2019, 00:41:19.030 --> 00:41:23.470 but SDG&E clearly just started transitioning 00:41:23.470 --> 00:41:26.348 away from, moving away from the trajectory 00:41:26.348 --> 00:41:28.993 of the inflation rates around 2013. 00:41:28.993 --> 00:41:32.329 So it goes all the way back to that period of time. 00:41:32.329 --> 00:41:35.662 So let's go onto the next slide, please. 00:41:36.555 --> 00:41:37.921 So we'll talk a little bit about some basic concepts 00:41:37.921 --> 00:41:39.945 going back to basics here in terms of rate base 00:41:39.945 --> 00:41:40.984 and return on rate base. 00:41:40.984 --> 00:41:42.723 I think it's important to ground ourselves 00:41:42.723 --> 00:41:45.814 in the fundamentals of what we're talking about here. 00:41:45.814 --> 00:41:49.446 We have a number of concerns about the rise in capital 00:41:49.446 --> 00:41:51.794 additions for distribution and transmission, 00:41:51.794 --> 00:41:54.095 as we have noted clearly generation has changed 00:41:54.095 --> 00:41:56.044 over the past several years with regard to 00:41:56.044 --> 00:41:57.465 utility on a generation in particular, 00:41:57.465 --> 00:42:00.834 that is no longer as much of a concern. 00:42:00.834 --> 00:42:03.434 But in defining rate base for us, 00:42:03.434 --> 00:42:06.985 let's just remember that it is the net of capital additions 00:42:06.985 --> 00:42:09.353 with capital expenditures capex 00:42:09.353 --> 00:42:13.144 net of accumulated depreciation over time. 00:42:13.144 --> 00:42:15.705 And so we derive a return on rate base, 00:42:15.705 --> 00:42:18.874 which ranges anywhere from five to 7%, going back to 2016, 00:42:18.874 --> 00:42:21.233 in three major investor owned utilities. 00:42:21.233 --> 00:42:24.774 And this rate of return on rate base really is 00:42:24.774 --> 00:42:26.524 it just something that is recovered in rates, 00:42:26.524 --> 00:42:29.474 that is measured by which we look at the, 00:42:29.474 --> 00:42:32.826 as you can see from the table below from 2016 to 2020, 00:42:32.826 --> 00:42:36.644 we are measuring the growth in the return on rate base 00:42:36.644 --> 00:42:40.227 up to say 2.37 billion in the case of PG&E. 00:42:42.007 --> 00:42:43.567 And you can see the Delta percentages, 00:42:43.567 --> 00:42:45.067 the changes over time, year over year 00:42:45.067 --> 00:42:46.807 for each utility in this table. 00:42:46.807 --> 00:42:48.297 We don't need to go through all of them. 00:42:48.297 --> 00:42:51.036 But just wanted to give you a flavor for 00:42:51.036 --> 00:42:53.538 what those magnitudes are year over year. 00:42:53.538 --> 00:42:55.038 Next slide please. 00:42:56.850 --> 00:42:59.808 And likewise, I think it's valuable to go back to basics 00:42:59.808 --> 00:43:01.109 and look at cost of capital 00:43:01.109 --> 00:43:02.898 and as we look at rate of return, 00:43:02.898 --> 00:43:04.127 and to understand, of course, 00:43:04.127 --> 00:43:06.887 that within the capital structure that CPUC sets 00:43:06.887 --> 00:43:10.069 for the major investor owned utilities that we have, 00:43:10.069 --> 00:43:12.687 the cost of common stock or return on equity, 00:43:12.687 --> 00:43:15.356 which is a huge component of the overall cost of capital, 00:43:15.356 --> 00:43:17.299 the rate of return on rate base. 00:43:17.299 --> 00:43:20.337 And as you can see from the table below, we have 00:43:20.337 --> 00:43:22.288 everything's kind of within the same neighborhood 00:43:22.288 --> 00:43:24.177 when it comes to the four major utilities 00:43:24.177 --> 00:43:27.347 from SoCalGas to Southern California Edison 00:43:27.347 --> 00:43:30.936 in the stack there, from about 10% to 10.3% 00:43:30.936 --> 00:43:33.157 for return on equity. 00:43:33.157 --> 00:43:36.107 That is down from years past, 00:43:36.107 --> 00:43:38.646 we've had some decline in return on equity 00:43:38.646 --> 00:43:41.288 for reasons that I'll get into momentarily. 00:43:41.288 --> 00:43:43.377 But also you can see on the far right in the table 00:43:43.377 --> 00:43:45.387 that the overall cost of capital, the rate of return 00:43:45.387 --> 00:43:50.387 is comparable across the four areas that we reference here. 00:43:50.708 --> 00:43:52.808 And I think it's important just to keep in mind that 00:43:52.808 --> 00:43:54.508 as we look at the last bullet point there, 00:43:54.508 --> 00:43:59.508 the PG&E's a 0.12% increase in the most recent adjustment, 00:43:59.684 --> 00:44:02.699 really accounts for 46 million in 2020 dollars. 00:44:02.699 --> 00:44:04.805 And that a 1% full increase in rate of return 00:44:04.805 --> 00:44:07.104 would account for 383 million. 00:44:07.104 --> 00:44:08.614 So not insignificant obviously in changes, 00:44:08.614 --> 00:44:11.924 we don't see massive changes on an arbitrary basis, 00:44:11.924 --> 00:44:13.374 we don't see it happening that quickly, 00:44:13.374 --> 00:44:15.493 But it's just important to kind of keep these magnitudes 00:44:15.493 --> 00:44:18.924 in mind as you keep a frame of reference here. 00:44:18.924 --> 00:44:20.507 Next slide, please. 00:44:22.991 --> 00:44:25.632 And a little bit more here on the return on equity. 00:44:25.632 --> 00:44:29.285 So I was just wanted to cite that the authorized ROE 00:44:29.285 --> 00:44:32.575 has been generally above, even though trending downward, 00:44:32.575 --> 00:44:35.118 it has generally been above the national average 00:44:35.118 --> 00:44:36.663 for a very long time now. 00:44:36.663 --> 00:44:40.120 And there are reasons for that, they've been discussed, 00:44:40.120 --> 00:44:42.708 I'm no expert in this, but certainly these arguments 00:44:42.708 --> 00:44:44.608 have been processed in different CPUC 00:44:44.608 --> 00:44:46.829 cost of capital proceedings, 00:44:46.829 --> 00:44:49.440 but it really is a reflection of the perceived risk 00:44:49.440 --> 00:44:52.669 of operating in California relative to other states. 00:44:52.669 --> 00:44:56.219 The perceived expected return on alternative investments 00:44:56.219 --> 00:44:58.539 of comparable risk when looking at 00:44:58.539 --> 00:45:00.818 different capital market financial models. 00:45:00.818 --> 00:45:04.350 So you can see from the table below there, 00:45:04.350 --> 00:45:06.289 what the percentage difference between 00:45:06.289 --> 00:45:09.188 what we currently have in California relative to the nation 00:45:09.188 --> 00:45:11.292 accounts for in actual dollars. 00:45:11.292 --> 00:45:14.178 I mean, you can see that for a half a percentage point 00:45:14.178 --> 00:45:18.070 in ROEs, we really do get a potentially large impact 00:45:18.070 --> 00:45:20.359 in terms of revenue requirement in the millions of dollars, 00:45:20.359 --> 00:45:25.031 over a hundred million in the case of Edison and PG&E. 00:45:25.031 --> 00:45:26.531 Next slide please. 00:45:29.842 --> 00:45:32.421 And should we turn, I just wanted to kind of spotlight 00:45:32.421 --> 00:45:34.733 as the paper does, the work that was done 00:45:34.733 --> 00:45:39.015 around wildfire mitigation scenario analysis, 00:45:39.015 --> 00:45:40.015 revenue and rate impacts. 00:45:40.015 --> 00:45:42.598 And here we have a look at the, 00:45:43.704 --> 00:45:45.754 if you look at the yellow portion of the stack, 00:45:45.754 --> 00:45:49.267 the bar chart here, with a stack of rate components in it, 00:45:49.267 --> 00:45:52.155 that is representative of what the actual 00:45:52.155 --> 00:45:55.444 wildfire mitigation impacts are in the rate. 00:45:55.444 --> 00:45:57.152 So not insignificant at all. 00:45:57.152 --> 00:45:59.185 I mean, if you actually kinda measure it and look at it, 00:45:59.185 --> 00:46:01.635 you can see that it isn't far off 00:46:01.635 --> 00:46:04.526 from the total transmission components in this case. 00:46:04.526 --> 00:46:05.874 So very interesting. 00:46:05.874 --> 00:46:08.535 And you can see from the numbers here that 00:46:08.535 --> 00:46:10.675 we estimate over the course of the next decade, 00:46:10.675 --> 00:46:12.508 between 2021 and 2030, 00:46:13.364 --> 00:46:16.398 we'll see anywhere from a 4.6 billion to 23.7 billion 00:46:16.398 --> 00:46:20.747 in our three major IOUs spending on wildfire mitigation 00:46:20.747 --> 00:46:22.936 planning that is subject to change, of course, 00:46:22.936 --> 00:46:26.375 that is likely to change on some level. 00:46:26.375 --> 00:46:29.686 But I also just wanted to be clear that we are evaluating 00:46:29.686 --> 00:46:30.525 as we go. 00:46:30.525 --> 00:46:33.137 It is gonna depend a lot on the needs. 00:46:33.137 --> 00:46:34.696 In the case of San Diego Gas and Electric, 00:46:34.696 --> 00:46:37.855 a lot of wildfire mitigation planning expenditures 00:46:37.855 --> 00:46:39.647 have occurred over the past decade, 00:46:39.647 --> 00:46:42.629 as a result of previous wildfires Guejito, Witch, 00:46:42.629 --> 00:46:44.724 and Rice fires that occurred back in '08, 00:46:44.724 --> 00:46:47.212 I think there's been a lot of attempts to harden the system 00:46:47.212 --> 00:46:50.923 distribution transmission system to address those concerns, 00:46:50.923 --> 00:46:52.620 but still more work to do. 00:46:52.620 --> 00:46:55.122 So very significant part of revenue requirement 00:46:55.122 --> 00:46:57.252 and rates going forward. 00:46:57.252 --> 00:47:02.252 And we just received our IOU's most recent 2021 estimates 00:47:02.330 --> 00:47:03.820 for wildfire mitigation planning spending. 00:47:03.820 --> 00:47:05.521 It's not inconsistent with what we're seeing here 00:47:05.521 --> 00:47:08.099 with what we had forecasted. 00:47:08.099 --> 00:47:09.599 Next slide please. 00:47:11.258 --> 00:47:14.090 And in turning to another big theme, broad theme, 00:47:14.090 --> 00:47:17.380 that I mentioned earlier in this white paper, 00:47:17.380 --> 00:47:18.819 it's critical I think to, 00:47:18.819 --> 00:47:20.488 we don't want to spend a ton of time speaking about 00:47:20.488 --> 00:47:22.186 net energy metering because it tends 00:47:22.186 --> 00:47:23.890 to suck the oxygen out of the room in a sense 00:47:23.890 --> 00:47:25.908 that we have a whole nother process dealing with it, 00:47:25.908 --> 00:47:28.820 but it is important to mention that we, 00:47:28.820 --> 00:47:31.678 as we transition into more advanced rate offerings 00:47:31.678 --> 00:47:35.479 and more advanced DER offerings in a maturing marketplace, 00:47:35.479 --> 00:47:39.873 that there is the risk of greater cost shifting 00:47:39.873 --> 00:47:42.175 from participants to non-participants. 00:47:42.175 --> 00:47:43.353 And that's a broad theme here 00:47:43.353 --> 00:47:46.223 that we wanna address today discussion. 00:47:46.223 --> 00:47:48.695 Net energy metering is well-documented 00:47:48.695 --> 00:47:50.896 what the concerns are from the IOU perspective, 00:47:50.896 --> 00:47:53.743 and certainly the arguments from the solar and storage 00:47:53.743 --> 00:47:56.673 perspective and other other stakeholders in our process. 00:47:56.673 --> 00:47:59.154 But it's just important to kind of tee this up to say, 00:47:59.154 --> 00:48:02.115 look, we're aware that this is going to result in 00:48:02.115 --> 00:48:05.003 potential revenue requirement shortfall as we go forward, 00:48:05.003 --> 00:48:07.043 and build out this distributed system, 00:48:07.043 --> 00:48:08.183 the grid of the future. 00:48:08.183 --> 00:48:13.183 And that we are looking for not a single silver bullet 00:48:13.412 --> 00:48:16.181 solution to this problem, but to look at many different 00:48:16.181 --> 00:48:20.437 portfolios of solutions from different types of rate design, 00:48:20.437 --> 00:48:22.276 that my team would be responsible for, 00:48:22.276 --> 00:48:25.228 to other solutions with marketing and education and outreach 00:48:25.228 --> 00:48:27.428 for customers to get them involved, 00:48:27.428 --> 00:48:28.766 to ensure that they're taking advantage of 00:48:28.766 --> 00:48:29.976 the offerings in the market. 00:48:29.976 --> 00:48:32.867 And that's obviously we have to look at 00:48:32.867 --> 00:48:34.908 low-income concerns as well. 00:48:34.908 --> 00:48:36.609 So again, we know that this is potentially 00:48:36.609 --> 00:48:39.897 a tale of two states, with folks who are wealthier 00:48:39.897 --> 00:48:41.966 and tending to invest in these 00:48:41.966 --> 00:48:44.638 distributed energy resources more broadly, 00:48:44.638 --> 00:48:47.246 versus those who may have barriers to investments 00:48:47.246 --> 00:48:48.706 around income. 00:48:48.706 --> 00:48:51.146 And as we look at affordability in a more granular basis, 00:48:51.146 --> 00:48:53.286 we can begin to assess and diagnose 00:48:53.286 --> 00:48:55.696 how to address these problems. 00:48:55.696 --> 00:48:57.196 Next slide please. 00:49:02.569 --> 00:49:04.601 And finally, before I close, 00:49:04.601 --> 00:49:06.589 I wanted to kind of start the conversation here 00:49:06.589 --> 00:49:09.029 a little bit about household energy costs in general. 00:49:09.029 --> 00:49:11.259 So what you have here in front of you are 00:49:11.259 --> 00:49:13.639 a few charts that look at the three different 00:49:13.639 --> 00:49:16.239 major investment utilities and their electric, gas, 00:49:16.239 --> 00:49:20.762 and gasoline prices forecasted out to 2030 within a range. 00:49:20.762 --> 00:49:23.462 And so you can see obviously the escalation pattern 00:49:23.462 --> 00:49:26.574 that is occurring across all three fronts here. 00:49:26.574 --> 00:49:29.323 And just wanted to demonstrate the acceleration 00:49:29.323 --> 00:49:32.104 of the bundled residential electric rate forecast trends, 00:49:32.104 --> 00:49:34.437 as well as gas and gasoline, 00:49:35.282 --> 00:49:39.122 and how that begins to factor into a decision that customers 00:49:39.122 --> 00:49:42.323 are going to be making about how to 00:49:42.323 --> 00:49:44.972 address escalating costs in the future. 00:49:44.972 --> 00:49:48.092 And we will get into that a little bit more. 00:49:48.092 --> 00:49:49.553 I'm going to hand this off now to my colleague, 00:49:49.553 --> 00:49:51.822 Nathan Barcic, who's gonna dive into this a little bit more 00:49:51.822 --> 00:49:54.155 deliberately, but thank you. 00:49:56.432 --> 00:49:58.448 Thanks very much, Paul. 00:49:58.448 --> 00:50:01.633 This is Nathan Barcic, program and project supervisor 00:50:01.633 --> 00:50:03.663 for the generation and transmission planning section 00:50:03.663 --> 00:50:05.746 and energy division, also home to our 00:50:05.746 --> 00:50:06.983 integrated resource planning team 00:50:06.983 --> 00:50:08.750 that I think a lot of you are familiar with. 00:50:08.750 --> 00:50:12.000 If we can go to the next slide, please. 00:50:13.880 --> 00:50:18.629 As was discussed earlier, pretty in detail by Paul, 00:50:18.629 --> 00:50:22.018 there's a broad trend across the three major IOUs 00:50:22.018 --> 00:50:24.468 accelerating rates increases. 00:50:24.468 --> 00:50:26.508 Those earlier slides showed how rates are increasing 00:50:26.508 --> 00:50:28.861 over time relative to inflation. 00:50:28.861 --> 00:50:31.278 Now we're actually going to discuss a potentially more 00:50:31.278 --> 00:50:34.718 impactful or important concept for customers, 00:50:34.718 --> 00:50:36.629 which would be looking at their overall energy bills, 00:50:36.629 --> 00:50:38.338 not just rates. 00:50:38.338 --> 00:50:40.787 The trend for bills, not surprisingly, is similar. 00:50:40.787 --> 00:50:42.747 They are projected to grow steadily over the decade, 00:50:42.747 --> 00:50:46.700 outpacing that 2% approximate inflation projection 00:50:46.700 --> 00:50:50.437 that you see represented in this chart as a dotted red line. 00:50:50.437 --> 00:50:53.278 Note, household bills can include more than 00:50:53.278 --> 00:50:55.100 just electricity and gas. 00:50:55.100 --> 00:50:57.787 In this section, we're actually gonna cover some costs 00:50:57.787 --> 00:50:59.977 of owning and operating a gasoline vehicle. 00:50:59.977 --> 00:51:04.977 And those costs are usually depicted in our charts in gray. 00:51:04.989 --> 00:51:06.829 When the chart here depicts a forecast for 00:51:06.829 --> 00:51:09.147 San Diego Gas and Electric household energy use 00:51:09.147 --> 00:51:12.137 or energy costs over the next 10 years. 00:51:12.137 --> 00:51:14.568 While the annual growth rate for San Diego Gas and Electric 00:51:14.568 --> 00:51:17.347 household cost is higher than that for PG&E 00:51:17.347 --> 00:51:19.437 and for Southern California Edison, 00:51:19.437 --> 00:51:24.437 the trend still holds for PG&E and Edison at the same time, 00:51:24.756 --> 00:51:27.673 it's just not quite as significant. 00:51:28.566 --> 00:51:31.847 Main drivers of the costs increase is depicted here. 00:51:31.847 --> 00:51:34.876 Mainly we're talking about kilowatt hour sales decline. 00:51:34.876 --> 00:51:35.815 It's driven by several factors 00:51:35.815 --> 00:51:37.587 that Paul started to touch on, 00:51:37.587 --> 00:51:40.756 the behind the meter resource adoption, rooftop solar, 00:51:40.756 --> 00:51:45.285 energy efficiency, as well as load departure away from IOUs. 00:51:45.285 --> 00:51:46.593 And then that can kind of lead to 00:51:46.593 --> 00:51:48.213 a loss of economies of scale. 00:51:48.213 --> 00:51:53.079 So basically smaller LLCs making decisions based on 00:51:53.079 --> 00:51:56.104 smaller customer base, could mean a loss of 00:51:56.104 --> 00:51:59.632 economies of scale that kind of feed this dynamic. 00:51:59.632 --> 00:52:01.132 Next slide please. 00:52:05.648 --> 00:52:07.598 So this slide shows the relative impact 00:52:07.598 --> 00:52:11.779 of climate policy decisions on bill impacts. 00:52:11.779 --> 00:52:15.329 So in CPUC's current integrated resource planning cycle, 00:52:15.329 --> 00:52:19.671 CPUC's considering two different 2030 electric sector 00:52:19.671 --> 00:52:21.660 greenhouse gas emissions targets, 00:52:21.660 --> 00:52:23.150 46 million metric ton target, 00:52:23.150 --> 00:52:24.865 which was adopted last March, 00:52:24.865 --> 00:52:28.120 and a more strict 38 million metric ton target. 00:52:28.120 --> 00:52:29.902 An IRP modeling and analysis, 00:52:29.902 --> 00:52:32.403 moving from that 46 million metric ton target 00:52:32.403 --> 00:52:35.701 to the lower, more strict 38 million metric ton target, 00:52:35.701 --> 00:52:38.910 results in more renewables and storage being needed 00:52:38.910 --> 00:52:41.579 to meet your goals, thus they're added to the portfolio 00:52:41.579 --> 00:52:44.661 and may increase costs, not surprisingly. 00:52:44.661 --> 00:52:47.470 Those costs could translate to a 2030 rate impact 00:52:47.470 --> 00:52:51.740 between 0.6 and 0.80 cents per kilowatt hour. 00:52:51.740 --> 00:52:54.394 Figure here shows the corresponding impact on 00:52:54.394 --> 00:52:57.487 monthly energy costs for the representative households 00:52:57.487 --> 00:53:00.219 under three different configurations, 00:53:00.219 --> 00:53:03.624 showing their average energy usage. 00:53:03.624 --> 00:53:07.606 So from left to right, you have starting on the left, 00:53:07.606 --> 00:53:10.355 the customer in a mixed fuel building 00:53:10.355 --> 00:53:12.895 with a gasoline powered vehicle under a 46 million 00:53:12.895 --> 00:53:16.045 metric ton versus 38 million metric ton target. 00:53:16.045 --> 00:53:17.525 Moving to the middle, to the customer 00:53:17.525 --> 00:53:20.376 in mixed fuel building, but with an electric vehicle. 00:53:20.376 --> 00:53:23.118 And on the right, the customer in an electrified building 00:53:23.118 --> 00:53:25.137 with an electric vehicle. 00:53:25.137 --> 00:53:27.435 Just a quick note, this analysis and that presented 00:53:27.435 --> 00:53:29.915 in the next couple of slides does not actually take 00:53:29.915 --> 00:53:32.525 into account upfront capital costs 00:53:32.525 --> 00:53:34.005 associated with these investments, 00:53:34.005 --> 00:53:36.635 but it does instead focus on ongoing fuel 00:53:36.635 --> 00:53:39.215 and maintenance type costs. 00:53:39.215 --> 00:53:43.813 So assuming a rate increase of 0.70 cents per kilowatt hour, 00:53:43.813 --> 00:53:46.383 the more aggressive GHG target, 00:53:46.383 --> 00:53:49.203 the green boxes in this chart show that 00:53:49.203 --> 00:53:52.044 the mixed fuel customer with gasoline powered vehicle 00:53:52.044 --> 00:53:54.033 would see an impact of approximately $4 a month 00:53:54.033 --> 00:53:55.313 in their energy costs, 00:53:55.313 --> 00:53:58.194 which can translate to about $48 a year. 00:53:58.194 --> 00:54:00.743 Moving to the center of the mixed fuel customer 00:54:00.743 --> 00:54:02.985 with an electric vehicle, would see an impact of 00:54:02.985 --> 00:54:06.333 about $8 a month, about $96 per year. 00:54:06.333 --> 00:54:08.093 And on the right, the electrified customer 00:54:08.093 --> 00:54:11.875 with the EV, electric vehicle would see an impact 00:54:11.875 --> 00:54:15.803 of about $9 per month, about $108 a year. 00:54:15.803 --> 00:54:18.343 The main takeaways that I see here that other costs 00:54:18.343 --> 00:54:21.144 to further reduce GHG emissions in the electric sector 00:54:21.144 --> 00:54:23.994 from the 46 million metric ton target that's adopted, 00:54:23.994 --> 00:54:26.703 to the 38 million metric one would increase bills 00:54:26.703 --> 00:54:30.035 by approximately between four and $9 a month. 00:54:30.035 --> 00:54:32.094 These costs are smaller than the potential savings 00:54:32.094 --> 00:54:33.993 that are depicted in these charts. 00:54:33.993 --> 00:54:36.295 So a well-managed effort to move customers 00:54:36.295 --> 00:54:39.287 to electrified homes and electric vehicles 00:54:39.287 --> 00:54:42.433 could potentially result in over $100 a month savings, 00:54:42.433 --> 00:54:45.055 which could be more than $1,200 a year 00:54:45.055 --> 00:54:47.285 in overall energy bills. 00:54:47.285 --> 00:54:48.785 Next slide please. 00:54:52.122 --> 00:54:55.022 So the electrification of vehicle building technologies 00:54:55.022 --> 00:54:57.482 represents a pretty key pillar for 00:54:57.482 --> 00:55:00.092 decarbonizing California's economy. 00:55:00.092 --> 00:55:02.062 Together, those vehicles and buildings 00:55:02.062 --> 00:55:05.002 represent more than half the state's emissions. 00:55:05.002 --> 00:55:07.342 And that begs one key question, 00:55:07.342 --> 00:55:10.942 whether rising electric rates may affect electrification 00:55:10.942 --> 00:55:13.981 cost effectiveness by 2030, and what the relationship of 00:55:13.981 --> 00:55:17.730 those are to gasoline price forecast? 00:55:17.730 --> 00:55:21.042 So what we have here are four different scenarios 00:55:21.042 --> 00:55:24.319 depicted in this chart, that kind of evaluate 00:55:24.319 --> 00:55:27.785 the potential cost savings and even decision-making 00:55:27.785 --> 00:55:29.495 that a customer might make 00:55:29.495 --> 00:55:32.046 as it relates to electric vehicle adoption. 00:55:32.046 --> 00:55:35.949 So the two panels on the left of the chart 00:55:35.949 --> 00:55:38.464 show managed electric vehicle charging, 00:55:38.464 --> 00:55:40.205 which basically means that the customer's 00:55:40.205 --> 00:55:41.929 on a rate structure that incense 00:55:41.929 --> 00:55:43.630 a particular type of charging behavior, 00:55:43.630 --> 00:55:45.786 one that could potentially save them money. 00:55:45.786 --> 00:55:48.805 The right side of the chart shows fund manage. 00:55:48.805 --> 00:55:52.656 The top two panels show energy plus maintenance costs 00:55:52.656 --> 00:55:53.860 for vehicle ownership, 00:55:53.860 --> 00:55:56.936 while the bottom shows energy costs only. 00:55:56.936 --> 00:55:58.486 And the main takeaway here that 00:55:58.486 --> 00:56:01.156 under a mid gasoline price forecast, 00:56:01.156 --> 00:56:04.030 much of people under see cost savings throughout the decade 00:56:04.030 --> 00:56:06.200 in all four of the scenarios. 00:56:06.200 --> 00:56:09.140 In 2030, electric vehicle owners manage charging 00:56:09.140 --> 00:56:13.973 are forecasted to save between 130 and $140 per month, 00:56:13.973 --> 00:56:16.994 which could be approximately between 1,500 and $1,700 00:56:16.994 --> 00:56:19.753 per year in operating costs, 00:56:19.753 --> 00:56:23.043 as compared to the gasoline vehicle owner in the top left, 00:56:23.043 --> 00:56:27.132 depending on which IOUs territory they're in. 00:56:27.132 --> 00:56:28.632 Next slide please. 00:56:30.952 --> 00:56:33.493 Now turning from vehicle electrification 00:56:33.493 --> 00:56:35.452 to building electrification. 00:56:35.452 --> 00:56:37.994 This slide depicts the impacts of the residential building 00:56:37.994 --> 00:56:41.102 electrification for representatives above average 00:56:41.102 --> 00:56:45.245 energy usage household in a hot climate zone. 00:56:45.245 --> 00:56:48.724 The top figure shows the average monthly home energy bills, 00:56:48.724 --> 00:56:51.525 which is going to be electricity plus natural gas 00:56:51.525 --> 00:56:54.614 for a 1990s era home, across the three electric 00:56:54.614 --> 00:56:58.094 IOU territories, considering retrofit electrification 00:56:58.094 --> 00:57:00.574 of space and of water heating. 00:57:00.574 --> 00:57:02.744 Retrofit electrification provides this representative 00:57:02.744 --> 00:57:06.425 customer with substantial energy cost savings 00:57:06.425 --> 00:57:09.415 under all three of the scenarios that we've depicted here. 00:57:09.415 --> 00:57:11.903 Primary source of these cost savings is actually equipment 00:57:11.903 --> 00:57:15.424 efficiency, which might not be surprising to many of you. 00:57:15.424 --> 00:57:18.127 Bill savings in these scenarios will vary based on 00:57:18.127 --> 00:57:20.296 building types and climate zone. 00:57:20.296 --> 00:57:22.463 And energy cost savings will be greater for homes 00:57:22.463 --> 00:57:24.905 with larger demands, particularly for 00:57:24.905 --> 00:57:26.929 space and water heating. 00:57:26.929 --> 00:57:28.638 If you move to the bottom figure, 00:57:28.638 --> 00:57:31.284 we're showing a new single family home, 00:57:31.284 --> 00:57:35.847 comparison between mixed fuel home and all electric home, 00:57:35.847 --> 00:57:38.277 across the three electric IOU territories 00:57:38.277 --> 00:57:40.247 in a hot climate zone. 00:57:40.247 --> 00:57:43.138 Energy costs for mixed fuel and all electric homes 00:57:43.138 --> 00:57:46.167 are likely to be similar over the decade. 00:57:46.167 --> 00:57:50.047 Main takeaways here are whether an all electric home sees 00:57:50.047 --> 00:57:53.404 net bill savings or costs sensitive to the trajectory 00:57:53.404 --> 00:57:56.404 of the natural gas rate that you assume. 00:57:56.404 --> 00:57:58.804 And on top of that, new homes tend to be more 00:57:58.804 --> 00:58:00.765 energy efficient than existing homes, 00:58:00.765 --> 00:58:03.099 which could reduce space heating demand, 00:58:03.099 --> 00:58:05.150 and that's opportunities for energy savings, 00:58:05.150 --> 00:58:07.150 particularly from adopting something like 00:58:07.150 --> 00:58:11.915 keep home heating ventilation and air conditioning system. 00:58:11.915 --> 00:58:13.498 Next slide, please. 00:58:15.795 --> 00:58:18.424 While we've discussed energy costs for customers 00:58:18.424 --> 00:58:20.194 that are adopting technologies, 00:58:20.194 --> 00:58:23.074 a separate question is what is the impact of electrification 00:58:23.074 --> 00:58:24.935 for non-adopting customers? 00:58:24.935 --> 00:58:25.768 And kind of looking at things 00:58:25.768 --> 00:58:29.475 from a more system-wide perspective. 00:58:29.475 --> 00:58:31.794 Some prior work has indicated that building electrification 00:58:31.794 --> 00:58:34.795 may lead to increases in natural gas rates 00:58:34.795 --> 00:58:38.981 for remaining gas customers, as gas sales decline. 00:58:38.981 --> 00:58:40.879 The impact of electrification on electric rates 00:58:40.879 --> 00:58:42.739 is a little more complicated though. 00:58:42.739 --> 00:58:45.123 As electrification will increase both 00:58:45.123 --> 00:58:47.144 increased electric system costs 00:58:47.144 --> 00:58:49.032 and retail electricity sales, 00:58:49.032 --> 00:58:51.492 which can have countervailing effects. 00:58:51.492 --> 00:58:53.502 While the reference case that we described 00:58:53.502 --> 00:58:56.374 in our white paper includes about 15 terawatt hours 00:58:56.374 --> 00:58:59.078 of CAISO-wide vehicle and building electrification 00:58:59.078 --> 00:59:00.779 load in 2030. 00:59:00.779 --> 00:59:04.199 High electrification scenario that assumes more, 00:59:04.199 --> 00:59:07.759 adds about 18 terawatt hours of electrification 00:59:07.759 --> 00:59:11.450 loaded 2030 for a total of 33 terawatt hours. 00:59:11.450 --> 00:59:13.680 This slide tends to articulate the cost differences 00:59:13.680 --> 00:59:17.762 associated with that increase in electrification. 00:59:17.762 --> 00:59:19.772 The main takeaways are that the additional electrification 00:59:19.772 --> 00:59:21.848 load will increase electric system costs 00:59:21.848 --> 00:59:24.319 in three categories, resource procurement 00:59:24.319 --> 00:59:27.328 needed to serve load, electrification programs, 00:59:27.328 --> 00:59:30.209 and transmission and distribution infrastructure. 00:59:30.209 --> 00:59:33.238 The high electrification scenario adds between about 4.7 00:59:33.238 --> 00:59:37.023 and 5.8% to the 2030 revenue requirements, 00:59:37.023 --> 00:59:40.906 driven primarily by additional resource procurement costs. 00:59:40.906 --> 00:59:42.874 The proportional increase in electricity sales 00:59:42.874 --> 00:59:44.963 is larger than the increased cost. 00:59:44.963 --> 00:59:47.645 And the high electrification scenario has 18 terawatt hours 00:59:47.645 --> 00:59:50.193 of increased retail sales in 2030, 00:59:50.193 --> 00:59:54.542 corresponding to an 8.5% increase in sales. 00:59:54.542 --> 00:59:57.791 The result is that the system average rates would fall 00:59:57.791 --> 01:00:02.201 by between 0.6 and 0.90 cents per kilowatt hour. 01:00:02.201 --> 01:00:05.551 Taking the mid-cost estimates that you see, 01:00:05.551 --> 01:00:07.660 residential rates for the three IOUs 01:00:07.660 --> 01:00:11.822 would fall between 1.4 and 2.10 cents per kilowatt hour, 01:00:11.822 --> 01:00:13.883 and the high electrification scenario 01:00:13.883 --> 01:00:15.303 relative to the reference scenario, 01:00:15.303 --> 01:00:20.136 which is based on the upper-mid demand forecast from CPUC. 01:00:22.255 --> 01:00:24.102 That concludes my slides. 01:00:24.102 --> 01:00:28.019 And I can hand things over to the next speaker. 01:00:29.294 --> 01:00:31.524 Thank you, Nathan. 01:00:31.524 --> 01:00:33.344 We're transitioning to transmission now. 01:00:33.344 --> 01:00:34.844 Next slide please. 01:00:36.721 --> 01:00:39.290 Good morning, my name is Elaine Sison-Lebrilla, 01:00:39.290 --> 01:00:42.289 and I'm the program and project supervisor 01:00:42.289 --> 01:00:45.985 for the FERC electric costs section. 01:00:45.985 --> 01:00:48.460 Transmission is under the jurisdiction of the 01:00:48.460 --> 01:00:52.490 Federal Energy Regulatory Commission, also known as FERC. 01:00:52.490 --> 01:00:57.381 The CPUC's role is to advocate at FERC on behalf of 01:00:57.381 --> 01:00:59.298 California rate payers. 01:01:00.471 --> 01:01:03.580 Transmission cost is a portion of the California 01:01:03.580 --> 01:01:06.170 consumers electric bill. 01:01:06.170 --> 01:01:10.420 For PG&E, it is 16.6% of the residential rate. 01:01:11.580 --> 01:01:15.580 For Southern California Edison, it is 9.1%. 01:01:16.723 --> 01:01:21.056 And for San Diego Gas and Electric, it's 15.1%. 01:01:22.452 --> 01:01:24.500 Over the last five years, 01:01:24.500 --> 01:01:28.788 the trend has been increasing transmission costs. 01:01:28.788 --> 01:01:31.967 In the next four slides, we will see supporting data 01:01:31.967 --> 01:01:35.938 that reflect increased transmission revenue requirements 01:01:35.938 --> 01:01:38.561 and transmission rate base. 01:01:38.561 --> 01:01:40.511 Transmission revenue requirements, 01:01:40.511 --> 01:01:43.171 which has also been known as TRR, 01:01:43.171 --> 01:01:47.661 is driven by capital investments or capitalization, 01:01:47.661 --> 01:01:49.435 operations and maintenance, 01:01:49.435 --> 01:01:52.768 and administrative and general expenses. 01:01:53.668 --> 01:01:57.925 These are, for example, increased capacity on certain lines, 01:01:57.925 --> 01:02:01.102 substation upgrades, renewable transmission, 01:02:01.102 --> 01:02:03.852 insurance expenses, and IT costs. 01:02:04.742 --> 01:02:07.361 We will also see that in the past decade, 01:02:07.361 --> 01:02:09.921 transmission costs have increased, 01:02:09.921 --> 01:02:12.754 while energy demand has decreased. 01:02:13.632 --> 01:02:15.215 Next slide, please. 01:02:19.147 --> 01:02:22.203 In this slide, we see increases in both transmission 01:02:22.203 --> 01:02:26.340 revenue requirements and transmission rate base. 01:02:26.340 --> 01:02:28.850 In the top table, you can see across, 01:02:28.850 --> 01:02:30.928 the three biggest utilities, 01:02:30.928 --> 01:02:33.468 the total transmission revenue requirement 01:02:33.468 --> 01:02:35.468 increased by 38.1%, 01:02:36.968 --> 01:02:39.551 from about 3.14 billion in 2016 01:02:42.468 --> 01:02:45.468 to a projected 4.34 billion in 2021. 01:02:49.062 --> 01:02:51.022 Similarly in the lower table, 01:02:51.022 --> 01:02:55.772 the total transmission rate base increased by 38.3%, 01:02:56.804 --> 01:02:58.887 from 13.9 billion in 2016 01:03:02.258 --> 01:03:05.258 to a projected 19.2 billion in 2021. 01:03:07.145 --> 01:03:09.889 Conservative assumptions indicate that every dollar 01:03:09.889 --> 01:03:14.837 you put into transmission rate base, costs rate payers 01:03:14.837 --> 01:03:19.587 in excess of $3.50 over the life of a transmission asset. 01:03:22.427 --> 01:03:24.010 Next slide, please. 01:03:29.365 --> 01:03:32.396 As mentioned earlier, transmission capital investments, 01:03:32.396 --> 01:03:35.063 also known as capital additions, 01:03:36.984 --> 01:03:39.793 contribute to the transmission revenue requirement 01:03:39.793 --> 01:03:42.126 and are close to additional. 01:03:43.646 --> 01:03:48.646 Transmission cap further additions have increased by 21%, 01:03:48.884 --> 01:03:50.967 from 2.14 billion in 2016 01:03:52.626 --> 01:03:55.626 to a projected 2.59 billion in 2021. 01:03:59.344 --> 01:04:03.693 Looking at the top table, it lists capital additions, 01:04:03.693 --> 01:04:07.693 transmission projects in excess of $500 million. 01:04:08.734 --> 01:04:12.640 As you can see in some cases, individual project expenses 01:04:12.640 --> 01:04:15.140 were more than originally set. 01:04:16.734 --> 01:04:20.927 FERC incentives also add tens of millions of dollars 01:04:20.927 --> 01:04:22.344 to rate annually. 01:04:23.286 --> 01:04:27.286 For example, FERC award is 50 basis point added, 01:04:28.434 --> 01:04:31.622 which is half a percent, to the return on equity 01:04:31.622 --> 01:04:34.232 to incentivize transmission owners to join 01:04:34.232 --> 01:04:37.709 an independent system operators. 01:04:37.709 --> 01:04:41.272 California's three big utilities get this incentive, 01:04:41.272 --> 01:04:43.873 even though they are mandated by California law 01:04:43.873 --> 01:04:46.875 to be a member of the CAISO. 01:04:46.875 --> 01:04:50.625 The CPUC is advocating against the incentive. 01:04:52.067 --> 01:04:55.836 So capital investments come in two flavors. 01:04:55.836 --> 01:05:00.156 Projects that expand the capacity of the transmission grid 01:05:00.156 --> 01:05:03.156 and are under reviews are in review, 01:05:04.692 --> 01:05:07.811 are reviewed under the CAISO's annual transmission 01:05:07.811 --> 01:05:12.200 planning process, and projects that are not related to 01:05:12.200 --> 01:05:14.190 grid capacity expansion, 01:05:14.190 --> 01:05:17.193 and therefore receive no review by the CAISO 01:05:17.193 --> 01:05:20.891 through the transition planning process. 01:05:20.891 --> 01:05:25.375 On the lower table, you can see that spending 01:05:25.375 --> 01:05:28.021 on self-approved projects, and these are the ones 01:05:28.021 --> 01:05:31.104 that are not under CAISO transmission 01:05:33.275 --> 01:05:35.275 planning process review, 01:05:36.697 --> 01:05:40.198 account for about 41% of the nearly 20 billion 01:05:40.198 --> 01:05:43.448 in capital additions from 2009 to 2019. 01:05:50.825 --> 01:05:55.242 And further in 2020 and 2021, capital additions 01:05:55.242 --> 01:05:58.492 have suggested to total 5.3 billion across 01:05:58.492 --> 01:06:00.492 the three big utilities, 01:06:01.444 --> 01:06:05.194 in which 60% are self-approved projects. 01:06:07.049 --> 01:06:08.549 Next slide please. 01:06:12.256 --> 01:06:14.578 So the next part, this part slide, 01:06:14.578 --> 01:06:17.696 provides data on operations and maintenance, 01:06:17.696 --> 01:06:21.538 and administrative and general expenses. 01:06:21.538 --> 01:06:25.853 As you can see in the top, across the three big IOUs, 01:06:25.853 --> 01:06:30.853 operation and maintenance expenses increased by almost 80%, 01:06:31.235 --> 01:06:35.652 from 375.5 million in 2016 to 674.6 million for 2021. 01:06:42.524 --> 01:06:45.194 Operational expenses are those expenses related to 01:06:45.194 --> 01:06:48.505 the transmission system that are not a capital expense, 01:06:48.505 --> 01:06:50.422 depreciation, or taxes. 01:06:51.585 --> 01:06:56.017 In the lower table, administrative and general expenses 01:06:56.017 --> 01:06:59.767 tend to be the most variable cost categories. 01:07:01.146 --> 01:07:03.983 As you can see in this category, 01:07:03.983 --> 01:07:08.983 there was an increase by 29% from 203.2 million in 2016 01:07:12.171 --> 01:07:15.088 to 262.8 million projected in 2021. 01:07:17.297 --> 01:07:21.334 So examples of A&G expenses are wages and salaries 01:07:21.334 --> 01:07:25.765 of employees providing accounting, human resources, 01:07:25.765 --> 01:07:30.098 and legal services, in addition to IT and insurance. 01:07:31.687 --> 01:07:33.187 Next slide please. 01:07:36.398 --> 01:07:39.347 So in review, the previous slide provided data 01:07:39.347 --> 01:07:43.764 showing increasing costs from 2016 to projected 2021. 01:07:45.270 --> 01:07:48.400 We look deeper at components and drivers of the transmission 01:07:48.400 --> 01:07:51.452 revenue requirements, mainly capital additions, 01:07:51.452 --> 01:07:55.526 O&M, and A&G expenses, and these components 01:07:55.526 --> 01:07:58.837 increased to over the same (mumbles). 01:07:58.837 --> 01:08:01.519 Now, recall that the transmission revenue requirement 01:08:01.519 --> 01:08:05.168 is a total cost of providing transmission service, 01:08:05.168 --> 01:08:10.001 including the return on associated capital investments. 01:08:10.001 --> 01:08:14.168 The transmission access charge, also known as TAC, 01:08:15.208 --> 01:08:18.508 is one of the mechanisms you use to recover the utilities 01:08:18.508 --> 01:08:21.341 transmission revenue requirements. 01:08:23.113 --> 01:08:27.483 In this slide, we see that the TAC increased 01:08:27.483 --> 01:08:32.066 while electricity loads decreased over the past decade. 01:08:33.351 --> 01:08:37.518 In 2009, the transmission access charge was $3.83, 01:08:41.035 --> 01:08:45.785 increasing to $13.60 in 2020, this is a 255% change. 01:08:52.176 --> 01:08:56.343 In the same time period, transmission load in 2009 01:08:57.426 --> 01:09:00.176 was 216.7 million megawatt hours, 01:09:02.685 --> 01:09:06.268 decreasing to 196.5 million megawatt hours, 01:09:08.158 --> 01:09:10.741 a change of negative 9.3%. 01:09:12.466 --> 01:09:16.684 So you see a clear trend of increasing amounts of revenue 01:09:16.684 --> 01:09:18.734 being collected through the TAC, 01:09:18.734 --> 01:09:22.817 and spread across fewer and fewer megawatt hours. 01:09:25.238 --> 01:09:28.729 So in closing, we have seen that transmission costs 01:09:28.729 --> 01:09:33.049 have been increasing over the last five years or so. 01:09:33.049 --> 01:09:38.049 Remember that transmission is under FERC jurisdiction, 01:09:38.350 --> 01:09:41.870 and the CPUC advocates for California's 01:09:41.870 --> 01:09:43.537 base payers at FERC. 01:09:45.054 --> 01:09:46.844 This is the last of my slides. 01:09:46.844 --> 01:09:49.616 Thank you for your attention. 01:09:49.616 --> 01:09:54.366 I guess I will return this to either Mary Claire or Paul. 01:09:59.728 --> 01:10:00.627 This is Paul Phillips. 01:10:00.627 --> 01:10:03.787 Just to jump in here and thank Nathan and Elaine 01:10:03.787 --> 01:10:05.617 for adding to the conversation here 01:10:05.617 --> 01:10:07.328 with some great slides. 01:10:07.328 --> 01:10:09.798 And to sum up by saying that very clearly, 01:10:09.798 --> 01:10:13.384 we have some trends that are heading upward 01:10:13.384 --> 01:10:14.634 when it comes to transmission. 01:10:14.634 --> 01:10:18.374 We also can look at more aggressive emissions reduction 01:10:18.374 --> 01:10:20.215 scenarios, per Nathan's slide, 01:10:20.215 --> 01:10:24.512 to understand how electrification will impact bills 01:10:24.512 --> 01:10:27.231 in a more meaningful way over the next 10 years. 01:10:27.231 --> 01:10:30.342 And clearly sales decline is a part of the equation 01:10:30.342 --> 01:10:32.941 that needs further discussion. 01:10:32.941 --> 01:10:37.426 And as a countervailing measure, will begin to come back up 01:10:37.426 --> 01:10:39.796 as electrification continues into the future 01:10:39.796 --> 01:10:41.129 and beyond 2030. 01:10:42.045 --> 01:10:43.325 With that, I want to kind of make sure 01:10:43.325 --> 01:10:45.465 that we're opening it up to Q and A, 01:10:45.465 --> 01:10:49.325 and I'll let Mary Claire take over as emcee at this point 01:10:49.325 --> 01:10:51.034 to help that out. 01:10:51.034 --> 01:10:51.867 Thank you. 01:10:54.225 --> 01:10:56.225 Great, thanks Paul. 01:10:56.225 --> 01:10:58.435 So at this point, we're gonna open it up for Q and A 01:10:58.435 --> 01:11:02.205 from the dais, and if you could use the raise hand function 01:11:02.205 --> 01:11:05.195 in the WebEx to indicate whether you have a question. 01:11:05.195 --> 01:11:10.195 And Paul is gonna be monitoring that, and we'll call on you. 01:11:13.599 --> 01:11:15.516 This is, I apologize. 01:11:16.997 --> 01:11:20.360 I didn't click on the raise hand. 01:11:20.360 --> 01:11:23.647 Can I take liberty of asking the first question? 01:11:23.647 --> 01:11:25.157 Of course. 01:11:25.157 --> 01:11:26.020 Okay, thank you. 01:11:26.020 --> 01:11:28.946 Just very briefly, very sobering information folks. 01:11:28.946 --> 01:11:31.061 Thank you so much. 01:11:31.061 --> 01:11:33.993 This is for Paul or Nathan, and (mumbles). 01:11:33.993 --> 01:11:38.410 Does the analysis of the total household energy bills 01:11:39.331 --> 01:11:44.331 take into account the upfront investment, the upfront costs 01:11:44.643 --> 01:11:48.310 of buying an electric vehicle and heat pump? 01:11:50.309 --> 01:11:54.976 Or is that separate from the metrics that were provided? 01:11:55.901 --> 01:11:59.722 All onto that is do we know what the payback period is 01:11:59.722 --> 01:12:02.639 for folks who are electric vehicles 01:12:03.572 --> 01:12:06.333 and heat pump technology, other building electrifications 01:12:06.333 --> 01:12:09.083 for their residential households? 01:12:12.486 --> 01:12:15.084 For sure, this is Nathan, great question. 01:12:15.084 --> 01:12:17.854 We actually did not take into account the upfront capital 01:12:17.854 --> 01:12:19.224 costs that would be associated with those 01:12:19.224 --> 01:12:21.494 different electrification measures. 01:12:21.494 --> 01:12:23.655 It'd be extremely important for us to do so in the future. 01:12:23.655 --> 01:12:27.814 It does involve adding some complexity to the analysis. 01:12:27.814 --> 01:12:29.673 And to answer the second part of your question, 01:12:29.673 --> 01:12:31.985 it would change the payback period 01:12:31.985 --> 01:12:34.652 associated with those decisions. 01:12:36.920 --> 01:12:37.753 [Commissioner Shiroma] Thank you, 01:12:37.753 --> 01:12:41.336 we'll look forward to that future analysis. 01:12:42.495 --> 01:12:45.038 Okay I'm gonna call on Severin Borenstein, 01:12:45.038 --> 01:12:46.705 who has his hand up. 01:12:48.378 --> 01:12:51.244 Thanks, can you hear me? 01:12:51.244 --> 01:12:52.484 Sure can. 01:12:52.484 --> 01:12:54.147 Okay, great. 01:12:54.147 --> 01:12:56.850 So I have a few questions I wanted to, 01:12:56.850 --> 01:12:58.398 and there was a lot of content there. 01:12:58.398 --> 01:13:02.520 So excuse me for sort of jumping around a little bit. 01:13:02.520 --> 01:13:06.770 On the cost in 2030, which I'm not sure what slide, 01:13:09.216 --> 01:13:10.636 I couldn't see slide numbers, 01:13:10.636 --> 01:13:14.553 but in the white paper, it's up around page 77. 01:13:16.105 --> 01:13:21.105 I'm trying to figure out what technology is being assumed. 01:13:21.625 --> 01:13:24.864 We actually have a project right now working on 01:13:24.864 --> 01:13:29.447 the relative economics of heat pumps versus natural gas 01:13:31.153 --> 01:13:33.773 for water heating and space heating. 01:13:33.773 --> 01:13:37.203 And we find that even at current rates, 01:13:37.203 --> 01:13:40.094 heat pumps are way out of the money. 01:13:40.094 --> 01:13:42.102 Though they would be if we brought rates down to 01:13:42.102 --> 01:13:44.471 true social marginal costs. 01:13:44.471 --> 01:13:47.791 And so I'm sort of surprised that the, 01:13:47.791 --> 01:13:51.856 if I'm interpreting figure 38 correctly, 01:13:51.856 --> 01:13:56.856 that it's actually a money saver to switch by 2030, 01:13:56.868 --> 01:14:00.627 even though electricity rates are gonna be a lot higher 01:14:00.627 --> 01:14:02.461 in real terms by then. 01:14:02.461 --> 01:14:04.451 So that I found that confusing. 01:14:04.451 --> 01:14:07.809 And I wanted to understand what's being assumed about 01:14:07.809 --> 01:14:10.226 technologies in 2030, or why, 01:14:12.112 --> 01:14:13.901 if this would also imply if heat pumps 01:14:13.901 --> 01:14:16.484 are a massive winner right now? 01:14:17.704 --> 01:14:20.406 Maybe I could get an answer to that before I, 01:14:20.406 --> 01:14:24.323 my other questions are more about transmission. 01:14:25.565 --> 01:14:26.398 That's a good question. 01:14:26.398 --> 01:14:28.885 And I can try to direct that to our consultant 01:14:28.885 --> 01:14:30.905 from Energy and Environmental Economics, 01:14:30.905 --> 01:14:32.238 Ari Gold-Parker. 01:14:34.834 --> 01:14:37.452 This is our Ari Gold-Parker from E3. 01:14:37.452 --> 01:14:40.850 To answer your question, we are assuming heat pumps, 01:14:40.850 --> 01:14:42.740 HVAC, and water heating devices 01:14:42.740 --> 01:14:45.400 that are substantially more efficient 01:14:45.400 --> 01:14:48.660 than minimum federal standards. 01:14:48.660 --> 01:14:51.045 But these do reflect efficient technologies 01:14:51.045 --> 01:14:53.795 that are available in today's market. 01:14:53.795 --> 01:14:57.478 And the other component of this is that in this analysis, 01:14:57.478 --> 01:15:01.930 natural gas rates are seen to escalate at a higher rate 01:15:01.930 --> 01:15:04.359 than electric rates over the decades. 01:15:04.359 --> 01:15:07.026 And so the energy costs savings, 01:15:08.558 --> 01:15:13.554 when building electrification increased from 2020 to 2030, 01:15:13.554 --> 01:15:15.094 as the growth in natural gas rates 01:15:15.094 --> 01:15:18.735 outpaces the growth in electric rates. 01:15:18.735 --> 01:15:22.779 Okay, I would just say those are certainly not 01:15:22.779 --> 01:15:25.919 certain assumptions, and I would not even consider them 01:15:25.919 --> 01:15:28.502 the best base case assumptions, 01:15:30.543 --> 01:15:33.759 given what's happened in natural gas technology. 01:15:33.759 --> 01:15:37.926 But did you do this calculation for today's rates? 01:15:42.162 --> 01:15:42.995 Yes. 01:15:42.995 --> 01:15:46.093 The residential energy cost calculator 01:15:46.093 --> 01:15:50.380 can run these kinds of comparisons for any of the rates 01:15:50.380 --> 01:15:52.829 that are provided in the white paper. 01:15:52.829 --> 01:15:56.589 And the comparison for today's rates was shown 01:15:56.589 --> 01:16:01.422 in the figure indicating energy cost savings for retrofits 01:16:02.519 --> 01:16:05.582 over the decades for the three IOUs. 01:16:05.582 --> 01:16:09.683 And so there are some energy cost savings for PG&E 01:16:09.683 --> 01:16:11.183 and SDG&E in 2020, 01:16:12.783 --> 01:16:16.354 and those cost savings grow over the decade. 01:16:16.354 --> 01:16:17.555 Okay just to be clear though, 01:16:17.555 --> 01:16:19.536 those are not at today's rates, 01:16:19.536 --> 01:16:21.794 those are including a forecast 01:16:21.794 --> 01:16:23.986 over the life of the equipment. 01:16:23.986 --> 01:16:26.545 And so the increase in natural gas prices 01:16:26.545 --> 01:16:29.378 are built in again, is that right? 01:16:31.123 --> 01:16:34.233 Assuming efficient heat pump, HVAC, 01:16:34.233 --> 01:16:37.832 and water heating devices available in today's market. 01:16:37.832 --> 01:16:39.372 There would be energy cost savings 01:16:39.372 --> 01:16:41.705 using today's rates in 2020. 01:16:43.072 --> 01:16:46.152 But that's not at all consistent with our calculations, 01:16:46.152 --> 01:16:47.703 but okay. 01:16:47.703 --> 01:16:50.370 Let me move to the transmission. 01:16:52.408 --> 01:16:55.789 I was wondering, so looking at these numbers, 01:16:55.789 --> 01:16:59.200 which are indeed eye-popping and very worrisome, 01:16:59.200 --> 01:17:03.952 one of the things, my understanding is that PG&E 01:17:03.952 --> 01:17:08.952 handles the accounting of transmission very differently 01:17:09.079 --> 01:17:10.779 than Southern California Edison 01:17:10.779 --> 01:17:13.839 and San Diego Gas and Electric. 01:17:13.839 --> 01:17:17.778 And that their transmission calculations go down 01:17:17.778 --> 01:17:20.151 to a much lower voltage, 01:17:20.151 --> 01:17:22.439 what they call a transmission line 01:17:22.439 --> 01:17:23.789 at San Diego Gas and Electric 01:17:23.789 --> 01:17:26.019 and Southern California Edison. 01:17:26.019 --> 01:17:28.939 So first of all, just a larger share of their costs 01:17:28.939 --> 01:17:30.639 are in transmission. 01:17:30.639 --> 01:17:33.806 And second of all, the wildfire impact 01:17:34.649 --> 01:17:37.320 would appear to be larger. 01:17:37.320 --> 01:17:41.388 How was that handled in doing these calculations? 01:17:41.388 --> 01:17:44.408 Just trying to understand the comparison 01:17:44.408 --> 01:17:46.110 'cause the comparison between the utilities 01:17:46.110 --> 01:17:48.867 is also pretty eye-popping. 01:17:48.867 --> 01:17:53.117 So I'm gonna let Simon Hurd, who's my PG&E person 01:17:54.800 --> 01:17:56.550 answer that question. 01:17:57.559 --> 01:17:58.451 That's a great question. 01:17:58.451 --> 01:18:02.951 And it's an important point that we strictly looked at 01:18:04.708 --> 01:18:06.946 what falls under FERC's jurisdiction 01:18:06.946 --> 01:18:09.972 and under the transmission on a rate cases there. 01:18:09.972 --> 01:18:13.368 And you're exactly right, SCE, for example, 01:18:13.368 --> 01:18:14.926 well, let's take PG&E. 01:18:14.926 --> 01:18:19.370 PG&E, anything 69 KV and above, is generally considered 01:18:19.370 --> 01:18:21.434 to be transmission, it's networked in a way 01:18:21.434 --> 01:18:26.267 that makes it FERC jurisdictional under the ISO's control. 01:18:27.354 --> 01:18:30.437 Often the case with SDE, for example, 01:18:32.185 --> 01:18:35.385 anything that's 115 KV, which would certainly put it into 01:18:35.385 --> 01:18:38.135 the FERC jurisdiction under PG&E, 01:18:39.015 --> 01:18:43.073 is often configured in a radial fashion, 01:18:43.073 --> 01:18:46.703 which doesn't meet all the net and criteria 01:18:46.703 --> 01:18:50.223 to make it FERC jurisdictional, considered sub-transmission, 01:18:50.223 --> 01:18:52.625 still falling under the CPUC's jurisdiction. 01:18:52.625 --> 01:18:55.875 So that's just the point you're making. 01:18:57.043 --> 01:19:00.013 So as a result, we just strictly looked at 01:19:00.013 --> 01:19:03.180 what is allowed to go into FERC rates, 01:19:04.090 --> 01:19:08.007 based on what qualifies us FERC jurisdictional. 01:19:09.960 --> 01:19:11.097 So just to be clear, 01:19:11.097 --> 01:19:15.764 the increase in the TAC is including some wildfire costs 01:19:18.870 --> 01:19:22.924 and is including a larger share probably for PG&E. 01:19:22.924 --> 01:19:24.091 Is that right? 01:19:25.221 --> 01:19:28.807 Yes, those TAC numbers are actually the high voltage TAC. 01:19:28.807 --> 01:19:32.989 Now the high voltage TAC overall of the $4.3 billion 01:19:32.989 --> 01:19:35.779 of revenue requirements for FERC jurisdictional 01:19:35.779 --> 01:19:37.529 transmission in 2021, 01:19:38.928 --> 01:19:42.399 altogether for all three of the utilities, 01:19:42.399 --> 01:19:45.739 about 40% of that is considered to be low voltage, 01:19:45.739 --> 01:19:47.567 which is under 200 KV. 01:19:47.567 --> 01:19:51.089 That means it's billed directly in the service area. 01:19:51.089 --> 01:19:54.881 So PG&E's low voltage, anything under 200 KV 01:19:54.881 --> 01:19:59.881 in transmission system, that stays in PG&E's territory. 01:20:00.036 --> 01:20:02.186 Anything that's 200 KV or higher, 01:20:02.186 --> 01:20:05.626 that actually gets spread throughout California, 01:20:05.626 --> 01:20:08.437 California-wide through the high voltage TAC. 01:20:08.437 --> 01:20:10.152 Those numbers that Elaine was sharing 01:20:10.152 --> 01:20:13.152 are related to the high voltage TAC. 01:20:15.316 --> 01:20:17.020 And it varies widely. 01:20:17.020 --> 01:20:22.020 About 56% of PG&E's revenue requirement is low voltage. 01:20:22.365 --> 01:20:26.075 It stays being billed to folks in PG&E's territory. 01:20:26.075 --> 01:20:27.985 Southern California Edison, which has had some 01:20:27.985 --> 01:20:30.995 massive projects in recent years in the last decade, 01:20:30.995 --> 01:20:35.995 97% of their revenue requirement is actually billed through 01:20:37.793 --> 01:20:38.972 the high voltage TAC. 01:20:38.972 --> 01:20:41.672 It's spread throughout all of California. 01:20:41.672 --> 01:20:44.233 So it's very much different. 01:20:44.233 --> 01:20:48.196 Yes, the revenue requirements will reflect 01:20:48.196 --> 01:20:51.223 those wildfire costs, whether it's mitigation costs, 01:20:51.223 --> 01:20:53.433 or in some cases, the injuries and damages 01:20:53.433 --> 01:20:56.543 that are allowed to be recovered through FERC jurisdiction. 01:20:56.543 --> 01:20:59.154 And as we know from recent history, 01:20:59.154 --> 01:21:01.973 sometimes FERC will allow recovery of certain costs 01:21:01.973 --> 01:21:04.073 that the CPUC has disallowed in the past 01:21:04.073 --> 01:21:05.334 related to wildfires. 01:21:05.334 --> 01:21:08.522 So well, that's a kind of a long answer, 01:21:08.522 --> 01:21:13.224 but I hope it provides some further information for you. 01:21:13.224 --> 01:21:14.493 That's incredibly helpful. 01:21:14.493 --> 01:21:17.623 And I'll just ask one quick, final question. 01:21:17.623 --> 01:21:21.040 On figure 21, and this the TAC increasing 01:21:22.374 --> 01:21:25.344 is definitely a concern, but at the same time, 01:21:25.344 --> 01:21:29.735 I sort of expect it to increase as low decreases 01:21:29.735 --> 01:21:33.675 because the TAC is that's the tax per megawatt hour. 01:21:33.675 --> 01:21:36.204 And there are huge economies of scale here. 01:21:36.204 --> 01:21:40.330 So that alone wouldn't, so we should be expecting 01:21:40.330 --> 01:21:44.200 that if we actually lower transmission flow, 01:21:44.200 --> 01:21:46.961 we're going to see a higher TAC, shouldn't we? 01:21:46.961 --> 01:21:50.471 It obviously does not explain the whole thing at all, 01:21:50.471 --> 01:21:52.304 but that aspect of it. 01:21:53.610 --> 01:21:55.710 It certainly makes sense, it certainly makes sense, 01:21:55.710 --> 01:22:00.710 but a 9.9% reduction in load compared to a 255% increase. 01:22:01.835 --> 01:22:05.217 And that's of course, some of the really large scale 01:22:05.217 --> 01:22:08.717 projects, Tehachapi, Sunrise, and so forth 01:22:09.782 --> 01:22:12.670 that have occurred, especially in Southern California 01:22:12.670 --> 01:22:14.480 in the last decade. 01:22:14.480 --> 01:22:16.242 Thank you. 01:22:16.242 --> 01:22:17.592 Thank you. 01:22:17.592 --> 01:22:19.133 This is Paul Phillips, just jumping in here 01:22:19.133 --> 01:22:22.353 to tell people if it wasn't clear, 01:22:22.353 --> 01:22:23.693 that in your lower right hand corner, 01:22:23.693 --> 01:22:26.028 you have a participants tab. 01:22:26.028 --> 01:22:27.344 If you do wish to raise your hand, 01:22:27.344 --> 01:22:29.583 there's a little tiny hand icon, 01:22:29.583 --> 01:22:32.034 right above that once you click on participants 01:22:32.034 --> 01:22:34.594 and please do that if you do have a question 01:22:34.594 --> 01:22:36.919 'cause I'm not seeing very many hands up right now. 01:22:36.919 --> 01:22:38.947 But I do believe that Commissioner Shiroma has a question, 01:22:38.947 --> 01:22:41.218 so I'll turn it over to her. 01:22:41.218 --> 01:22:42.718 Okay, thank you. 01:22:43.707 --> 01:22:45.707 I'm going the old fashioned way, just raise my hand. 01:22:45.707 --> 01:22:47.786 All right, just a poll. 01:22:47.786 --> 01:22:49.109 Just real brief because I know we're running 01:22:49.109 --> 01:22:51.288 a little bit behind. 01:22:51.288 --> 01:22:55.197 Some of the drivers behind California's higher rate 01:22:55.197 --> 01:22:58.558 on equity and what are the future opportunities 01:22:58.558 --> 01:23:01.725 for us to look at those numbers again? 01:23:04.406 --> 01:23:06.351 That's a good question. 01:23:06.351 --> 01:23:08.700 While I am no expert in cost of capital, 01:23:08.700 --> 01:23:10.551 I will just put that out there at the outset, 01:23:10.551 --> 01:23:13.621 I do know that we on a fairly regular basis, 01:23:13.621 --> 01:23:15.661 it varies, so it's anywhere from three to five years 01:23:15.661 --> 01:23:17.611 have opt capital proceedings, 01:23:17.611 --> 01:23:20.041 in which we entertain arguments about where 01:23:20.041 --> 01:23:23.352 that line should be for return on equity, in particular. 01:23:23.352 --> 01:23:27.412 And various arguments about the complexities and risks 01:23:27.412 --> 01:23:30.502 of operating in California relative to other states, 01:23:30.502 --> 01:23:34.602 and how the markets prices that risk effectively 01:23:34.602 --> 01:23:36.562 in order to attract the right amount of capital 01:23:36.562 --> 01:23:38.944 for projects ongoing. 01:23:38.944 --> 01:23:43.217 So it's essentially, there's a lot of technical arguments 01:23:43.217 --> 01:23:44.968 that would go into that. 01:23:44.968 --> 01:23:47.106 I believe if I'm not mistaken and someone can correct me 01:23:47.106 --> 01:23:51.384 if I'm wrong, we just adjusted these returns on equity 01:23:51.384 --> 01:23:54.262 over the past a couple of years. 01:23:54.262 --> 01:23:56.242 And they were downward adjusted by, 01:23:56.242 --> 01:23:57.881 as you saw in the slides, 01:23:57.881 --> 01:24:00.699 under a percentage point, under a full percentage point 01:24:00.699 --> 01:24:02.799 for each of the three utilities, somewhere in the 01:24:02.799 --> 01:24:06.799 55 to 65 basis point range, if I'm not mistaken. 01:24:08.131 --> 01:24:09.611 So I don't know if that fully answers, 01:24:09.611 --> 01:24:10.970 but I mean, things that come to mind 01:24:10.970 --> 01:24:13.607 that become operating risks, obviously wildfires 01:24:13.607 --> 01:24:15.323 are an operating risk in California, 01:24:15.323 --> 01:24:19.379 the sense of competition within the state of California 01:24:19.379 --> 01:24:21.681 in the utility industry is also 01:24:21.681 --> 01:24:23.881 something that would be priced into the risk. 01:24:23.881 --> 01:24:26.411 The comparatively speaking with other states, 01:24:26.411 --> 01:24:28.217 you clearly have natural disaster concerns 01:24:28.217 --> 01:24:30.091 and infrastructure concerns around the country 01:24:30.091 --> 01:24:34.640 that would obviously create return on equity related 01:24:34.640 --> 01:24:38.818 impacts in different states, southeast, for example. 01:24:38.818 --> 01:24:42.446 If anyone from Elaine's team would like to step in 01:24:42.446 --> 01:24:46.529 and add to that conversation, please let me know. 01:24:53.708 --> 01:24:58.375 So the CPUC advocates at FERC for these rates, 01:24:58.375 --> 01:25:02.676 and in particular, when these rates are proposed 01:25:02.676 --> 01:25:05.311 for the IOUs in (mumbles) cases, 01:25:05.311 --> 01:25:10.311 those are the types of things that we and the leaders 01:25:10.517 --> 01:25:15.350 essentially negotiate or advocate for lower rates at FERC. 01:25:18.467 --> 01:25:21.186 Unfortunately, it is under court jurisdiction, 01:25:21.186 --> 01:25:23.386 and so it needs to be approved by FERC, 01:25:23.386 --> 01:25:26.510 but we do play a strong advocacy role 01:25:26.510 --> 01:25:31.218 in reducing the (mumbles) in those rates (mumbles) 01:25:31.218 --> 01:25:33.135 that we're involved in. 01:25:35.158 --> 01:25:36.270 Thank you. 01:25:36.270 --> 01:25:38.589 Very sobering information. 01:25:38.589 --> 01:25:41.938 As I said before, I'm gonna send the microphone back 01:25:41.938 --> 01:25:45.271 to Mary Claire to tee up our next panel. 01:25:47.361 --> 01:25:50.032 And Mary Claire, just this is Commissioner Douglas, 01:25:50.032 --> 01:25:54.700 I'm on my phone, but I lost my WebEx participant status. 01:25:54.700 --> 01:25:57.638 So I do have a question at some point. 01:25:57.638 --> 01:26:00.450 I just wasn't able to raise my hand. 01:26:00.450 --> 01:26:02.329 Great, well, I don't see any other raised hands, 01:26:02.329 --> 01:26:04.169 so why don't you go ahead. 01:26:04.169 --> 01:26:05.872 [Commissioner Douglas] Thank you. 01:26:05.872 --> 01:26:10.220 So I'm trying to understand the transmission costs 01:26:10.220 --> 01:26:12.372 pictured here, and I have some questions 01:26:12.372 --> 01:26:17.122 that might just be a bit basic, but I'll just list three. 01:26:18.908 --> 01:26:23.309 One is when I looked at the list of the transmission lines 01:26:23.309 --> 01:26:26.392 that were over $500 million, I guess, 01:26:27.381 --> 01:26:29.591 they had a wide range of online dates. 01:26:29.591 --> 01:26:32.758 And I'd be interested in at what point 01:26:35.213 --> 01:26:37.783 do they start showing up in rates? 01:26:37.783 --> 01:26:40.782 Or at what point do we see those costs appear? 01:26:40.782 --> 01:26:43.573 Is it at the online data, is it before? 01:26:43.573 --> 01:26:45.945 Presumably not after. 01:26:45.945 --> 01:26:49.195 Secondly, I'm puzzled by in some cases, 01:26:51.478 --> 01:26:55.494 the really large difference between original estimated costs 01:26:55.494 --> 01:26:57.934 and actual or projected costs 01:26:57.934 --> 01:27:01.484 because it's so substantial in some cases. 01:27:01.484 --> 01:27:05.067 Let me just start with those two questions. 01:27:09.056 --> 01:27:12.545 So, the first question really is to answer that 01:27:12.545 --> 01:27:16.973 essentially these rates generally go in when 01:27:16.973 --> 01:27:19.140 the project is in service. 01:27:20.000 --> 01:27:22.417 So that's the answer to that. 01:27:25.471 --> 01:27:27.581 So in general, that's what happened. 01:27:27.581 --> 01:27:29.451 And the next question. 01:27:29.451 --> 01:27:30.791 [Commissioner Douglas] Just to understand that. 01:27:30.791 --> 01:27:32.748 So like the project, for example, 01:27:32.748 --> 01:27:34.909 the in service date is 2026. 01:27:34.909 --> 01:27:36.279 It's not. 01:27:36.279 --> 01:27:37.862 That's projected. 01:27:39.111 --> 01:27:41.390 This is Simon Hurd. 01:27:41.390 --> 01:27:43.188 Just to add a little bit to that. 01:27:43.188 --> 01:27:44.921 That's when they can start recovering on it. 01:27:44.921 --> 01:27:46.929 So then they recover over the life, 01:27:46.929 --> 01:27:49.529 the estimated life of the asset. 01:27:49.529 --> 01:27:53.499 However, it was mentioned about the tens of millions 01:27:53.499 --> 01:27:56.269 of dollars of impact from FERC incentives, 01:27:56.269 --> 01:27:59.398 now those are ROE boosts, ROE adders. 01:27:59.398 --> 01:28:01.918 One of the other incentives that FERC does offer 01:28:01.918 --> 01:28:03.453 is what's called a CWIP incentive, 01:28:03.453 --> 01:28:05.471 the construction work in progress. 01:28:05.471 --> 01:28:08.889 And what that allows is especially for large projects 01:28:08.889 --> 01:28:12.639 to in theory, compensate for cashflow issues, 01:28:13.808 --> 01:28:17.168 they allow them to put into rates, 01:28:17.168 --> 01:28:19.147 they allow the utilities to put into rates 01:28:19.147 --> 01:28:23.280 before it's used in useful, and that's the term at FERC, 01:28:23.280 --> 01:28:26.310 before the actual project is used and useful, which is, 01:28:26.310 --> 01:28:28.740 as Elaine said, typically when you can start 01:28:28.740 --> 01:28:29.880 recovering those costs. 01:28:29.880 --> 01:28:32.432 This CWIP incentive provided by FERC actually allows them 01:28:32.432 --> 01:28:34.847 to start collecting on it before 01:28:34.847 --> 01:28:38.739 sometimes before it's even close to finished. 01:28:38.739 --> 01:28:41.639 This is Ed Randolph to build on that. 01:28:41.639 --> 01:28:43.355 I think that's a very important question, 01:28:43.355 --> 01:28:45.272 Commissioner Douglas. 01:28:45.272 --> 01:28:47.359 And that same mechanism actually holds true 01:28:47.359 --> 01:28:51.526 for generation resources, so not the transmission, 01:28:53.721 --> 01:28:56.930 but it typically doesn't show into rates 01:28:56.930 --> 01:28:58.992 until it's used and useful. 01:28:58.992 --> 01:29:01.325 So that means if we approve, 01:29:02.339 --> 01:29:05.192 looking at the (mumbles) or the whole sustain for FERC, 01:29:05.192 --> 01:29:08.379 but if we approve construction or a contract 01:29:08.379 --> 01:29:12.932 for a new solar facility or a new geothermal facility 01:29:12.932 --> 01:29:15.322 or a new offshore wind facility, 01:29:15.322 --> 01:29:18.194 those costs don't start going into rates immediately. 01:29:18.194 --> 01:29:22.822 They start going into rates when the project has hit 01:29:22.822 --> 01:29:25.802 its commercial online date out there, 01:29:25.802 --> 01:29:28.502 with the exceptions that as Simon has mentioned, 01:29:28.502 --> 01:29:30.217 for some rate making treatments for things like 01:29:30.217 --> 01:29:32.332 construction or on projects. 01:29:32.332 --> 01:29:34.672 And the reason why I focused on that here 01:29:34.672 --> 01:29:37.332 is that could be a very important factor 01:29:37.332 --> 01:29:40.749 as we look forward into trends and rates, 01:29:41.769 --> 01:29:45.940 is that a project we approve today doesn't impact rates 01:29:45.940 --> 01:29:48.170 for several years. 01:29:48.170 --> 01:29:49.710 But you then have the potential, 01:29:49.710 --> 01:29:53.491 and we've seen this in the past, for big spikes in rates 01:29:53.491 --> 01:29:57.908 if we are not careful on when projects are layered in 01:30:00.361 --> 01:30:01.581 and when they go into rates. 01:30:01.581 --> 01:30:04.624 And you could see big rate increases in a single year, 01:30:04.624 --> 01:30:08.360 and then no rate increases over several years after that. 01:30:08.360 --> 01:30:09.751 [Commissioner Douglas] That makes a lot of sense to me. 01:30:09.751 --> 01:30:12.733 I don't know, I was just wondering if, 01:30:12.733 --> 01:30:17.198 some of this increase is just sort of a factor of 01:30:17.198 --> 01:30:21.163 TAC approvals coming into rates kind of concurrently, 01:30:21.163 --> 01:30:24.996 or if that was a factor, but that makes sense. 01:30:26.219 --> 01:30:28.369 And that can definitely be a factor if you go back 01:30:28.369 --> 01:30:30.780 to some of the slides, you'll see in certain years, 01:30:30.780 --> 01:30:33.370 there's in certain rate categories big spikes. 01:30:33.370 --> 01:30:36.419 So for example, looking at transmission, 01:30:36.419 --> 01:30:39.639 when the Sunrise Powerlink transmission project 01:30:39.639 --> 01:30:44.348 was completed, that year it had a bigger impact on rates 01:30:44.348 --> 01:30:46.578 than before because that's when most of the project 01:30:46.578 --> 01:30:48.740 then becomes part of rate base, 01:30:48.740 --> 01:30:52.657 and similar with Tehachapi transmission project 01:30:54.267 --> 01:30:56.387 and other big projects. 01:30:56.387 --> 01:30:58.747 [Commissioner Douglas] Yeah, that's really helpful. 01:30:58.747 --> 01:31:00.771 In terms of the differences between projected 01:31:00.771 --> 01:31:02.081 and estimated cost, I mean, 01:31:02.081 --> 01:31:05.291 some of these are multiple times different. 01:31:05.291 --> 01:31:07.010 Do you have any insights into 01:31:07.010 --> 01:31:09.843 what's going on with some of that? 01:31:10.772 --> 01:31:12.805 Some insight. 01:31:12.805 --> 01:31:15.571 Thank you for the question, again. 01:31:15.571 --> 01:31:20.389 Many of these projects were approved years and years ago. 01:31:20.389 --> 01:31:22.759 Sometimes there's a decade delay. 01:31:22.759 --> 01:31:26.608 So sometimes you're just looking at the changing situation. 01:31:26.608 --> 01:31:29.908 One of the most obvious examples is the $1.7 billion 01:31:29.908 --> 01:31:33.408 Tehachapi project, at least that's when it was approved. 01:31:33.408 --> 01:31:35.557 I think I believe back in 2007, 01:31:35.557 --> 01:31:37.557 it went online, I think, 01:31:38.477 --> 01:31:41.227 it was finally energized in 2016, 01:31:42.228 --> 01:31:44.337 but between that time it went from 1.7 billion 01:31:44.337 --> 01:31:46.419 up to about three (cuts out), 01:31:46.419 --> 01:31:49.528 now about 3.1 billion has been put into rate base. 01:31:49.528 --> 01:31:53.528 Now, what occurred there was some undergrounding 01:31:55.477 --> 01:32:00.227 and as there's it seems like as there's delays over time, 01:32:01.650 --> 01:32:03.872 there are certain approvals. 01:32:03.872 --> 01:32:06.400 And then through the CPCM process, 01:32:06.400 --> 01:32:09.733 the permitting process here at the CPUC, 01:32:10.674 --> 01:32:13.814 estimated costs, that then can be adjusted. 01:32:13.814 --> 01:32:16.385 And that was adjusted more than once 01:32:16.385 --> 01:32:17.944 for the Tehachapi project. 01:32:17.944 --> 01:32:19.694 The other, the largest one though, 01:32:19.694 --> 01:32:22.954 you're probably picking up on is the Riverside transmission 01:32:22.954 --> 01:32:25.151 reliability project. 01:32:25.151 --> 01:32:28.121 Initially a $48 million project, 01:32:28.121 --> 01:32:31.621 it's now expected to be $580 plus million. 01:32:33.855 --> 01:32:36.976 I believe during that time, there was actually a new city 01:32:36.976 --> 01:32:39.605 that's been incorporated, demanding some undergrounding 01:32:39.605 --> 01:32:41.105 of the utilities and so forth. 01:32:41.105 --> 01:32:44.855 So that's a really profound example, I think, 01:32:46.104 --> 01:32:49.010 of what you're seeing in the way of cost escalations. 01:32:49.010 --> 01:32:52.201 So it varies, but a lot of it just has to do with 01:32:52.201 --> 01:32:55.981 changing situations over what can be very quite lengthy 01:32:55.981 --> 01:32:58.371 delays in many of these projects. 01:32:58.371 --> 01:33:02.450 However, we would love it if there was more of an ability 01:33:02.450 --> 01:33:07.241 to monitor these costs and perhaps revisit projects 01:33:07.241 --> 01:33:10.251 that have been approved years and years before 01:33:10.251 --> 01:33:13.245 to monitor the progress and the cost 01:33:13.245 --> 01:33:16.085 as they're being developed. 01:33:16.085 --> 01:33:16.918 [Commissioner Douglas] Okay, thank you. 01:33:16.918 --> 01:33:17.751 That's really helpful. 01:33:17.751 --> 01:33:20.272 I have one last question and it may be, 01:33:20.272 --> 01:33:22.789 if it's a longer conversation we can follow up. 01:33:22.789 --> 01:33:27.023 But I'm really curious about this self-approved category, 01:33:27.023 --> 01:33:28.392 especially with the dollar threshold. 01:33:28.392 --> 01:33:30.142 Is it certain types of projects? 01:33:30.142 --> 01:33:33.473 What has been built under that category? 01:33:33.473 --> 01:33:34.493 It looks like it's a lot, 01:33:34.493 --> 01:33:38.910 but I don't really have much insight into what it is. 01:33:40.046 --> 01:33:41.796 Simply put, the self approved projects 01:33:41.796 --> 01:33:43.645 would be any projects that aren't approved 01:33:43.645 --> 01:33:46.639 in the CAISO transmission planning process. 01:33:46.639 --> 01:33:50.987 So any expansion, any capacity expansion projects, 01:33:50.987 --> 01:33:54.899 be them substations or actual transmission lines, 01:33:54.899 --> 01:33:58.247 those projects are approved through the TPP. 01:33:58.247 --> 01:34:00.247 Any project that aren't, 01:34:01.197 --> 01:34:04.308 granted, some of them are our compliance projects, 01:34:04.308 --> 01:34:07.406 whether it's the Geo 95 clearance order 01:34:07.406 --> 01:34:09.239 for CPUC and so forth, 01:34:10.244 --> 01:34:14.374 but still, when and how the utilities choose to do 01:34:14.374 --> 01:34:17.453 those projects that are outside of TPP approval, 01:34:17.453 --> 01:34:20.548 we consider those to be self approved projects. 01:34:20.548 --> 01:34:22.716 So that's, and of course, 01:34:22.716 --> 01:34:26.206 as we see fewer of the really large transmission projects, 01:34:26.206 --> 01:34:28.106 and we see that declining load, 01:34:28.106 --> 01:34:31.218 more and more of the capital work that's being done 01:34:31.218 --> 01:34:33.801 is not part of expansion needs, 01:34:34.636 --> 01:34:36.886 capacity expansion needs under the TPP. 01:34:36.886 --> 01:34:40.146 So an increasing proportion of the work being done 01:34:40.146 --> 01:34:44.036 is self approved by the utilities themselves. 01:34:44.036 --> 01:34:47.376 So just to add, there is no dollar limit. 01:34:47.376 --> 01:34:51.694 It's just whether or not they expense capacity 01:34:51.694 --> 01:34:55.174 is the criteria, whether or not they're going through 01:34:55.174 --> 01:34:57.091 the CPUC process versus 01:34:58.133 --> 01:35:01.216 being self approved by the utilities. 01:35:03.257 --> 01:35:06.458 Hi, this is MC, I'm so sorry to cut in here. 01:35:06.458 --> 01:35:07.851 This is such an interesting conversation 01:35:07.851 --> 01:35:10.471 and great questions, but we do need to move onto 01:35:10.471 --> 01:35:11.721 the next panel. 01:35:13.451 --> 01:35:17.961 And we can circle back to this topic later in the day. 01:35:17.961 --> 01:35:22.961 Thank you to our staff who presented today, that was great. 01:35:23.175 --> 01:35:25.952 So we're now going to start the first panel of the day, 01:35:25.952 --> 01:35:29.865 and I am very happy to introduce Dorothy Duda. 01:35:29.865 --> 01:35:33.441 Dorothy is the manager of the market structure costs 01:35:33.441 --> 01:35:37.150 and natural gas branch within energy division at the CPUC. 01:35:37.150 --> 01:35:40.093 And she will be moderating this panel 01:35:40.093 --> 01:35:42.991 for a team of analysts and engineers, 01:35:42.991 --> 01:35:46.780 provides advisory support to CPUC decision makers 01:35:46.780 --> 01:35:49.760 on all electric and gas utility rate matters, 01:35:49.760 --> 01:35:53.868 including general rate cases, fuel and purchase power cases, 01:35:53.868 --> 01:35:56.860 pipeline safety investments, wildfire related, 01:35:56.860 --> 01:35:58.939 and nuclear cost matters. 01:35:58.939 --> 01:36:02.073 Dorothy served 16 years as an Administrative Law Judge 01:36:02.073 --> 01:36:04.889 here at the PUC, handling major telecommunications 01:36:04.889 --> 01:36:07.689 and energy cases, including four years 01:36:07.689 --> 01:36:10.159 as an assistant chief judge. 01:36:10.159 --> 01:36:13.326 So Dorothy, can I hand it over to you? 01:36:15.239 --> 01:36:17.249 Absolutely, thank you, Mary Claire. 01:36:17.249 --> 01:36:18.958 It's a pleasure to be here. 01:36:18.958 --> 01:36:22.872 Hello, Commissioners, legislators, Board members. 01:36:22.872 --> 01:36:26.728 Welcome to panel one, can we afford the future? 01:36:26.728 --> 01:36:28.548 In the last hour, we heard a summary 01:36:28.548 --> 01:36:31.159 from our Commission energy division staff 01:36:31.159 --> 01:36:34.168 regarding their thought provoking white paper 01:36:34.168 --> 01:36:39.077 and analysis of estimated tenure trends in electric costs. 01:36:39.077 --> 01:36:42.738 We heard the extent to which wildfire mitigation spending 01:36:42.738 --> 01:36:45.160 and growth trends in capital investments 01:36:45.160 --> 01:36:48.267 are impacting electric rates. 01:36:48.267 --> 01:36:49.971 I'm a California native. 01:36:49.971 --> 01:36:54.311 I grew up in the 1970s and lived through the inflation 01:36:54.311 --> 01:36:57.462 and spiraling energy costs of that time. 01:36:57.462 --> 01:37:00.879 My very frugal dad was ahead of his time, 01:37:01.850 --> 01:37:03.001 he grew up during the depression, 01:37:03.001 --> 01:37:05.813 and he put solar water heating on the roof of our house 01:37:05.813 --> 01:37:09.331 in the 1970s to shave our energy costs. 01:37:09.331 --> 01:37:12.320 He certainly taught me the value of money. 01:37:12.320 --> 01:37:14.510 And so in my 30 years here at the Commission, 01:37:14.510 --> 01:37:17.460 or close to 30 years, I've worn a lot of hats, 01:37:17.460 --> 01:37:20.240 but ensuring just and reasonable rates 01:37:20.240 --> 01:37:22.890 has really been the heart and soul of my work. 01:37:22.890 --> 01:37:25.990 And watching the pennies for California customers 01:37:25.990 --> 01:37:28.791 is near and dear to my heart. 01:37:28.791 --> 01:37:31.950 So now we turn to our distinguished panel 01:37:31.950 --> 01:37:36.322 to tackle questions, including the significant context 01:37:36.322 --> 01:37:39.242 and importance of the current cost trends 01:37:39.242 --> 01:37:41.283 that we are seeing. 01:37:41.283 --> 01:37:45.429 What do these rising electric costs mean for affordability, 01:37:45.429 --> 01:37:49.929 for Californians, and for our important climate goals? 01:37:50.867 --> 01:37:54.929 Will these trends hinder electrification efforts 01:37:54.929 --> 01:37:58.401 or dampen our demand for electric vehicles? 01:37:58.401 --> 01:38:00.903 What research and analysis has been conducted 01:38:00.903 --> 01:38:02.616 on this question? 01:38:02.616 --> 01:38:04.361 What does that research indicate 01:38:04.361 --> 01:38:07.789 as priority for our consideration? 01:38:07.789 --> 01:38:11.972 So I would now like to introduce our first panelist, 01:38:11.972 --> 01:38:14.877 which is Michael Campbell. 01:38:14.877 --> 01:38:18.816 Michael Campbell is program manager of the electric pricing 01:38:18.816 --> 01:38:23.053 and customer programs branch at the CPUC. 01:38:23.053 --> 01:38:26.184 His branch is responsible for advocating on the behalf of 01:38:26.184 --> 01:38:29.964 California's small consumers at the PUC 01:38:29.964 --> 01:38:33.374 on proceedings matters related to rate design 01:38:33.374 --> 01:38:35.523 and customer programs. 01:38:35.523 --> 01:38:39.233 Mike has worked on energy policy since 2000, 01:38:39.233 --> 01:38:41.902 including as an advisor to former Commissioner, 01:38:41.902 --> 01:38:43.069 Loretta Lynch. 01:38:44.031 --> 01:38:46.341 And he's also been director of San Francisco's 01:38:46.341 --> 01:38:49.471 community choice aggregation program at the 01:38:49.471 --> 01:38:53.200 San Francisco Public Utilities Commission. 01:38:53.200 --> 01:38:56.981 So let me turn it over to Mike Campbell. 01:38:56.981 --> 01:38:58.699 Thank you, Dorothy. 01:38:58.699 --> 01:39:00.405 This has been a great panel so far, 01:39:00.405 --> 01:39:02.260 and I didn't realize that about your history. 01:39:02.260 --> 01:39:06.211 My first job in college was working on roofs, 01:39:06.211 --> 01:39:09.593 repairing hot water heating systems, 01:39:09.593 --> 01:39:11.481 which definitely taught me that I wanted to work 01:39:11.481 --> 01:39:14.951 behind a desk the rest of my life. 01:39:14.951 --> 01:39:17.012 So I really appreciate all the hard work 01:39:17.012 --> 01:39:19.421 that went into this white paper. 01:39:19.421 --> 01:39:23.725 My group that deals with rate design has been working 01:39:23.725 --> 01:39:26.285 on a variety of ways of rate forecasting 01:39:26.285 --> 01:39:29.444 and trying to understand what's driving rates 01:39:29.444 --> 01:39:31.484 and where rates are going. 01:39:31.484 --> 01:39:33.202 It's been a pretty concerted effort of ours 01:39:33.202 --> 01:39:35.265 for many years now. 01:39:35.265 --> 01:39:38.124 And so I'm very aware of how hard it is 01:39:38.124 --> 01:39:42.294 to pull those pieces together, understand the rate drivers. 01:39:42.294 --> 01:39:44.998 One of the key things that I wanna leave everyone with 01:39:44.998 --> 01:39:49.415 here today is as really excellent as is to be looking 01:39:50.790 --> 01:39:54.331 and trying to anticipate where rates are in 10 years, 01:39:54.331 --> 01:39:56.033 we're in a rates crisis now. 01:39:56.033 --> 01:39:58.310 We are not in a place where we should be worried about 01:39:58.310 --> 01:39:59.270 what happens a few years, 01:39:59.270 --> 01:40:01.062 obviously we should be worried about that, 01:40:01.062 --> 01:40:03.530 but we need to understand that we're standing right now 01:40:03.530 --> 01:40:07.447 on shaky ground from a rate payers perspective. 01:40:08.942 --> 01:40:12.275 The esteemed focused on the virtual dais 01:40:13.187 --> 01:40:15.926 made a number of remarks, which I think highlight 01:40:15.926 --> 01:40:18.488 what we're gonna hopefully hear from 01:40:18.488 --> 01:40:20.696 the experienced people in all the various panels, 01:40:20.696 --> 01:40:24.536 which is that we really need to be focusing on 01:40:24.536 --> 01:40:26.866 prioritizing rate payer funds, 01:40:26.866 --> 01:40:29.956 and taking a comprehensive look at all the different 01:40:29.956 --> 01:40:32.467 incentive mechanisms that are out there 01:40:32.467 --> 01:40:36.406 that are intended to drive the state's equity 01:40:36.406 --> 01:40:39.565 and environmental goals, as well as other goals, 01:40:39.565 --> 01:40:42.136 but those two big ones. 01:40:42.136 --> 01:40:46.237 And really working to avoid unintended consequences 01:40:46.237 --> 01:40:50.158 where those goals and incentives can be conflicting. 01:40:50.158 --> 01:40:52.491 And unfortunately many times 01:40:54.576 --> 01:40:58.446 can be directly traced back to rising inequity. 01:40:58.446 --> 01:41:01.566 So before going into the forecast, 01:41:01.566 --> 01:41:04.667 I thought it would be worth spending a little bit of time 01:41:04.667 --> 01:41:07.326 to put today into perspective. 01:41:07.326 --> 01:41:11.784 The comment about how we expect rates to increase 01:41:11.784 --> 01:41:14.565 at a pace faster inflation going forward. 01:41:14.565 --> 01:41:15.744 Our analysis bears that out. 01:41:15.744 --> 01:41:17.630 We expect that as well. 01:41:17.630 --> 01:41:19.838 But that's been happening for some time now. 01:41:19.838 --> 01:41:22.648 And so we're already in a bit of trouble. 01:41:22.648 --> 01:41:26.065 So if I can go to the next slide, please. 01:41:27.926 --> 01:41:30.907 I guess it's up, I'm just seeing myself on the screen. 01:41:30.907 --> 01:41:33.006 I don't know if that's big for everybody else. 01:41:33.006 --> 01:41:34.423 So on this slide, 01:41:36.026 --> 01:41:38.216 as this just to show over the last 10 years, 01:41:38.216 --> 01:41:40.216 where are we by utility? 01:41:42.108 --> 01:41:44.206 You can see that the comments about 01:41:44.206 --> 01:41:49.013 how we've been able to track, add inflation for roughly, 01:41:49.013 --> 01:41:51.103 that story, I think really stopped being something 01:41:51.103 --> 01:41:55.270 that we could say in the mid-2013 to 16 timeframe, 01:41:59.515 --> 01:42:03.306 Edison deserves some credit for their work on 01:42:03.306 --> 01:42:07.516 trying to keep rates tracking at inflation. 01:42:07.516 --> 01:42:08.557 They've been very aggressive about that 01:42:08.557 --> 01:42:10.270 in a number of areas. 01:42:10.270 --> 01:42:13.607 But we see that they are starting to significantly diverge 01:42:13.607 --> 01:42:18.267 there, and we expect some big wildfire expenditures to hit 01:42:18.267 --> 01:42:22.080 in the coming years that may see rates get up even further, 01:42:22.080 --> 01:42:24.663 I'll touch on that in a moment. 01:42:26.761 --> 01:42:29.562 One of the just in terms of rate design, 01:42:29.562 --> 01:42:33.562 just to level set for just the basic arithmetic, 01:42:35.694 --> 01:42:37.680 there's more to it than this, 01:42:37.680 --> 01:42:41.024 but basically you take the total authorized costs 01:42:41.024 --> 01:42:44.320 for the utility, and you spread it over the amount 01:42:44.320 --> 01:42:46.449 of kilowatt hours that are sold. 01:42:46.449 --> 01:42:48.860 And this analysis I'm gonna provide here today 01:42:48.860 --> 01:42:52.301 is going to be all focused on the residential side. 01:42:52.301 --> 01:42:57.218 In the past, we've been able to have some increase in sales 01:42:58.674 --> 01:43:02.174 be able to offset some modest increases in 01:43:04.536 --> 01:43:07.616 the authorized amount of money that utilities can collect. 01:43:07.616 --> 01:43:10.154 That has stopped being true around the same time 01:43:10.154 --> 01:43:14.832 you start seeing this divergence between the inflation 01:43:14.832 --> 01:43:18.332 and how much utility customers are paying. 01:43:20.189 --> 01:43:23.566 So if you go to the next slide here, please. 01:43:23.566 --> 01:43:25.345 I've got three slides in a row. 01:43:25.345 --> 01:43:26.555 I'll describe this one. 01:43:26.555 --> 01:43:28.696 And we can sort of click through. 01:43:28.696 --> 01:43:30.765 This is intended to just really describe 01:43:30.765 --> 01:43:31.768 what I was talking about, 01:43:31.768 --> 01:43:36.294 about how the average rates are they tracking, 01:43:36.294 --> 01:43:39.394 what has the Commissions authorized revenues 01:43:39.394 --> 01:43:41.794 they're allowed to collect or not. 01:43:41.794 --> 01:43:45.544 And we see that as we're moving towards 2021, 01:43:46.382 --> 01:43:49.465 those numbers are starting to diverge 01:43:50.617 --> 01:43:53.817 and that we're seeing significant growth there. 01:43:53.817 --> 01:43:58.150 So here's Edison, if you go to the next one, please. 01:43:59.656 --> 01:44:02.323 So PG&E, you can see in like 16, 01:44:03.295 --> 01:44:05.396 it starts getting a bit wider. 01:44:05.396 --> 01:44:07.896 And as the next slide, please. 01:44:09.000 --> 01:44:10.500 And here is SDG&E, 01:44:12.626 --> 01:44:17.626 with that whopping 78% residential average rate. 01:44:17.759 --> 01:44:20.889 And I should point out that if I had more time, 01:44:20.889 --> 01:44:22.718 I would drill down into things 01:44:22.718 --> 01:44:25.529 that get obscured by averages. 01:44:25.529 --> 01:44:29.956 I know director Eccles was able to give a presentation 01:44:29.956 --> 01:44:32.564 a couple of years ago to the emerging trends committee 01:44:32.564 --> 01:44:34.954 of the Commissioners to describe how 01:44:34.954 --> 01:44:38.121 looking at the averages can blunt the, 01:44:40.401 --> 01:44:42.108 make it look like things are better than they are 01:44:42.108 --> 01:44:45.022 because your average in some of the lower and higher. 01:44:45.022 --> 01:44:48.251 So suffice it to say that this is the average. 01:44:48.251 --> 01:44:50.421 There are customers in all the territories 01:44:50.421 --> 01:44:52.741 that are seeing a rate and bill impacts 01:44:52.741 --> 01:44:55.482 that are more significant than this. 01:44:55.482 --> 01:44:58.151 So I'd like to drill into this a little bit. 01:44:58.151 --> 01:45:01.671 And we talk about, I mentioned incentive mechanisms, 01:45:01.671 --> 01:45:05.808 one significant incentive mechanism that's baked into rates 01:45:05.808 --> 01:45:09.709 have to do with how we compensate rooftop solar generation 01:45:09.709 --> 01:45:13.884 and the growth of rooftop solar has led to declining sales. 01:45:13.884 --> 01:45:15.591 Paul talked about that a bit. 01:45:15.591 --> 01:45:18.758 So can we go to the next slide please? 01:45:21.413 --> 01:45:25.754 So what's key here is to see where, and again, 01:45:25.754 --> 01:45:30.101 I'm gonna go through each of the major utilities here. 01:45:30.101 --> 01:45:34.210 The blue line shows the percent change in sales. 01:45:34.210 --> 01:45:37.690 So you can see that growth in sales going on, 01:45:37.690 --> 01:45:40.344 positive increases in kilowatt hours being sold 01:45:40.344 --> 01:45:42.491 to the residential class for a time. 01:45:42.491 --> 01:45:45.201 And then it really starts to decline, 01:45:45.201 --> 01:45:47.790 and then actually go negative. 01:45:47.790 --> 01:45:52.623 And so that is as a big driver as to why we're seeing that 01:45:54.520 --> 01:45:58.187 the rate of change of the authorized revenue 01:45:59.399 --> 01:46:02.399 and the rates being divorced significant. 01:46:02.399 --> 01:46:05.501 You're gonna see this trend for the other utilities. 01:46:05.501 --> 01:46:08.584 Can you go to the next slide, please? 01:46:09.571 --> 01:46:12.032 Here's PG&E, for example. 01:46:12.032 --> 01:46:14.699 And then the next slide, please. 01:46:16.675 --> 01:46:21.198 And here is SDG&E with that steep drop there. 01:46:21.198 --> 01:46:24.365 So just what this means in real terms, 01:46:26.242 --> 01:46:30.559 I'll just give a quick simplifying assumption, 01:46:30.559 --> 01:46:33.106 pretending I'm an economist for a moment. 01:46:33.106 --> 01:46:36.450 And let's just presume that next year 01:46:36.450 --> 01:46:39.867 there is no authorized change in revenue. 01:46:42.307 --> 01:46:46.222 So each utility is going to collect the same amount of money 01:46:46.222 --> 01:46:47.628 next year as it is this year. 01:46:47.628 --> 01:46:49.201 We obviously know that is not true. 01:46:49.201 --> 01:46:52.307 So it's an extremely simplified assumption. 01:46:52.307 --> 01:46:55.025 My rates team is still going to tell me that 01:46:55.025 --> 01:47:00.025 we're going to, we'll be seeing a rate increase of about 4%, 01:47:00.150 --> 01:47:01.579 more or less dependent on utilities. 01:47:01.579 --> 01:47:03.288 And that is just going to be, 01:47:03.288 --> 01:47:04.393 if there are no policy changes, 01:47:04.393 --> 01:47:08.560 that's going to be because of additional customers 01:47:09.899 --> 01:47:13.841 being able to take advantage of the rooftop solar incentive 01:47:13.841 --> 01:47:18.070 and the reduced sales with that would be associated with. 01:47:18.070 --> 01:47:21.737 We also know that the folks that are able to 01:47:23.376 --> 01:47:26.555 take advantage of that rooftop solar incentive 01:47:26.555 --> 01:47:30.638 primarily are not wealthy, they are lower income, 01:47:32.955 --> 01:47:34.900 they are communities of color, there are people 01:47:34.900 --> 01:47:37.594 in rental environments and those types of things. 01:47:37.594 --> 01:47:40.366 So that's exacerbating an equity concern 01:47:40.366 --> 01:47:42.783 that we need to keep in mind. 01:47:44.215 --> 01:47:47.497 I'm just gonna break in line. 01:47:47.497 --> 01:47:49.416 Quick time check: just two minutes. 01:47:49.416 --> 01:47:52.248 If you can wrap up your slides in two more minutes. 01:47:52.248 --> 01:47:54.157 Oh my goodness, I even did a readthrough. 01:47:54.157 --> 01:47:54.990 So, okay. 01:47:58.076 --> 01:47:59.781 One of the key things I just want to point out is that 01:47:59.781 --> 01:48:01.798 the white paper does a great job of 01:48:01.798 --> 01:48:04.306 touching on regulatory drivers, 01:48:04.306 --> 01:48:06.385 it lays out a bunch of the costs, 01:48:06.385 --> 01:48:10.523 and it makes an estimate of those overall costs 01:48:10.523 --> 01:48:13.203 being about $7 billion a year. 01:48:13.203 --> 01:48:16.223 We've calculated that the rooftop solar subsidy, 01:48:16.223 --> 01:48:20.104 if it were added as a authorized amount of money 01:48:20.104 --> 01:48:22.494 that the Commission would say the utilities could collect, 01:48:22.494 --> 01:48:23.705 that's about 3 billion. 01:48:23.705 --> 01:48:27.274 So you could bump that 7 billion up to roughly 3 billion. 01:48:27.274 --> 01:48:30.265 That has real meaningful effects on bills. 01:48:30.265 --> 01:48:34.373 For SDG&E's bills, their rates are about 20% higher 01:48:34.373 --> 01:48:36.155 than they would be otherwise. 01:48:36.155 --> 01:48:38.182 PG&E in the 10% range. 01:48:38.182 --> 01:48:40.852 And Edison is around six or 7%. 01:48:40.852 --> 01:48:44.263 So if you can go to the next slide, please. 01:48:44.263 --> 01:48:45.392 I wanna look at some forecasting. 01:48:45.392 --> 01:48:48.642 I'm just going to focus on the vehicle, 01:48:49.790 --> 01:48:52.828 the gas equivalence for charging, 01:48:52.828 --> 01:48:55.139 using electricity to fuel your vehicle versus gasoline. 01:48:55.139 --> 01:48:57.718 That's what this blue line is intended to draw. 01:48:57.718 --> 01:49:02.718 We're just making a rough prediction beyond the 2021 01:49:02.725 --> 01:49:07.365 timeframe that is based really on the last five years trend. 01:49:07.365 --> 01:49:10.385 And this is again at the average rate. 01:49:10.385 --> 01:49:11.554 I want to go to the next slide, please. 01:49:11.554 --> 01:49:14.534 I want to zoom in on the forecast. 01:49:14.534 --> 01:49:15.615 So here's just what it looks like, 01:49:15.615 --> 01:49:16.946 we're looking at the average rates. 01:49:16.946 --> 01:49:21.586 Remember I'd mentioned average rates can obscure things. 01:49:21.586 --> 01:49:24.253 So go to the next slide, please. 01:49:25.972 --> 01:49:29.561 And these darker bars are what those rates, 01:49:29.561 --> 01:49:31.269 forecasted rates would look like. 01:49:31.269 --> 01:49:33.616 If I'm looking at rates that for customers 01:49:33.616 --> 01:49:36.190 that don't get a low-income customer discount. 01:49:36.190 --> 01:49:38.280 So these are non-discounted bills. 01:49:38.280 --> 01:49:43.026 And if we're being realistic, probably it's more likely 01:49:43.026 --> 01:49:45.457 to be customers that are non CARE 01:49:45.457 --> 01:49:48.276 that are going to be adopting electric vehicles. 01:49:48.276 --> 01:49:51.038 So you can see already right now, 01:49:51.038 --> 01:49:55.360 we're in a place where, just on a pure economic basis, 01:49:55.360 --> 01:49:59.230 fueling your vehicle with electricity 01:49:59.230 --> 01:50:02.980 in San Diego's territory it's at a dead even, 01:50:04.005 --> 01:50:06.675 and then it gets worse, and likely will be crisscrossing 01:50:06.675 --> 01:50:10.206 over the next 10 years with the other utilities. 01:50:10.206 --> 01:50:12.457 This doesn't presume any policy changes, 01:50:12.457 --> 01:50:15.407 the line is very, very flat there. 01:50:15.407 --> 01:50:18.269 The rate design for electric vehicles 01:50:18.269 --> 01:50:20.444 and electrification matters as well. 01:50:20.444 --> 01:50:22.283 I think this gets a little bit to what Severin Borenstein 01:50:22.283 --> 01:50:25.450 was potentially highlighting, which is 01:50:27.399 --> 01:50:30.806 when we work on creating rates for the charging 01:50:30.806 --> 01:50:32.556 of electric vehicles, 01:50:34.456 --> 01:50:36.997 we can try to make those rates be as economic as possible, 01:50:36.997 --> 01:50:41.479 but we really shouldn't be designing rates so that 01:50:41.479 --> 01:50:45.009 we're having exacerbating equity problems. 01:50:45.009 --> 01:50:47.031 In other words, that we are creating rates 01:50:47.031 --> 01:50:51.305 where the kilowatt hour going into the vehicle, 01:50:51.305 --> 01:50:54.390 and getting the customer for charging their vehicles 01:50:54.390 --> 01:50:57.080 is paying less money than it costs to provide it. 01:50:57.080 --> 01:50:59.810 In other words, that we're raising other customers rates. 01:50:59.810 --> 01:51:02.630 And as the overall rates continue to go up, 01:51:02.630 --> 01:51:05.310 we have less and less tools to be able to address that. 01:51:05.310 --> 01:51:10.310 We do as much as we can, but we're already finding ourselves 01:51:10.455 --> 01:51:12.538 having a challenge there. 01:51:15.069 --> 01:51:16.008 Now, Mike. 01:51:16.008 --> 01:51:18.078 How many can you wrap up? 01:51:18.078 --> 01:51:20.064 I think I can actually wrap up there. 01:51:20.064 --> 01:51:23.624 I did have, I know the slides are going to be available. 01:51:23.624 --> 01:51:27.515 I did have some slides at the end that just tries to break 01:51:27.515 --> 01:51:30.134 things out into bills because I know people understand 01:51:30.134 --> 01:51:31.843 bills better. 01:51:31.843 --> 01:51:34.624 So I would just, if folks are interested in that, 01:51:34.624 --> 01:51:37.814 they can see what we're talking about in terms of bills. 01:51:37.814 --> 01:51:38.775 So I won't go through these, 01:51:38.775 --> 01:51:41.525 but just know that they're there. 01:51:42.840 --> 01:51:44.122 Thank you, Mike. 01:51:44.122 --> 01:51:47.160 I wanna make sure we have some time for Q and A 01:51:47.160 --> 01:51:48.910 from our dais members. 01:51:48.910 --> 01:51:52.582 So let me turn now to our second panelist, 01:51:52.582 --> 01:51:55.665 Mad Stano from Greenlining Institute. 01:51:57.001 --> 01:52:00.521 Mad is energy, equity, senior legal counsel 01:52:00.521 --> 01:52:03.761 at the Greenlining Institute in Oakland, California, 01:52:03.761 --> 01:52:06.722 as well as the lecturer at Berkeley Law School. 01:52:06.722 --> 01:52:09.471 Mad started their legal career as an attorney, 01:52:09.471 --> 01:52:12.401 with the center on race, poverty, and the environment, 01:52:12.401 --> 01:52:14.591 where they work with residents impacted by 01:52:14.591 --> 01:52:18.321 oil and gas pollution in the San Joaquin Valley. 01:52:18.321 --> 01:52:20.322 Mad previously worked as a program director 01:52:20.322 --> 01:52:23.621 of the California Environmental Justice Alliance. 01:52:23.621 --> 01:52:25.842 According their climate justice, energy equity, 01:52:25.842 --> 01:52:27.564 and (mumbles) work. 01:52:27.564 --> 01:52:30.461 Their litigation, legislation, and work experience 01:52:30.461 --> 01:52:33.561 include among other things, anti-discrimination, 01:52:33.561 --> 01:52:37.754 land use, climate change, and community-led just transition 01:52:37.754 --> 01:52:39.604 away from fossil fuels. 01:52:39.604 --> 01:52:40.937 So welcome, Mad. 01:52:44.679 --> 01:52:46.428 Wonderful, good morning, everyone. 01:52:46.428 --> 01:52:47.569 My name is Mad. 01:52:47.569 --> 01:52:49.559 Thank you so much for the opportunity to spend time 01:52:49.559 --> 01:52:50.720 with you all today, 01:52:50.720 --> 01:52:53.289 and participate in this vital conversation. 01:52:53.289 --> 01:52:55.450 Thank you so much to the Commission for organizing, 01:52:55.450 --> 01:52:58.039 for preparing and sharing the white paper, 01:52:58.039 --> 01:52:59.369 and for the invitation. 01:52:59.369 --> 01:53:00.479 And thank you so much to Dorothy 01:53:00.479 --> 01:53:03.779 for the introduction and facilitation. 01:53:03.779 --> 01:53:07.619 Now let's get into what will undoubtedly be a highly rated, 01:53:07.619 --> 01:53:10.928 somebody had to do it, conversation. 01:53:10.928 --> 01:53:13.928 So can I have the next slide please? 01:53:17.173 --> 01:53:18.878 As an attorney, 01:53:18.878 --> 01:53:21.653 I have to start with a little bit of a roadmap. 01:53:21.653 --> 01:53:23.432 And this is building on Mike's presentation, 01:53:23.432 --> 01:53:25.182 so I think it fits well. 01:53:25.182 --> 01:53:28.253 First as a starting point, the white paper details 01:53:28.253 --> 01:53:31.473 how California's policy goals could result in rate 01:53:31.473 --> 01:53:34.375 and bill increases that would make other policy goals 01:53:34.375 --> 01:53:37.753 more difficult to achieve, and could result in overall 01:53:37.753 --> 01:53:41.652 energy bills becoming unaffordable for some Californians. 01:53:41.652 --> 01:53:44.673 Unfortunately, the electric rates crisis is already here, 01:53:44.673 --> 01:53:45.923 as Mike stated. 01:53:45.923 --> 01:53:48.564 It is devastating, it has disproportionate, 01:53:48.564 --> 01:53:51.825 and at times life-threatening impacts on low-income people 01:53:51.825 --> 01:53:54.392 and people of color, who are simultaneously 01:53:54.392 --> 01:53:57.693 disproportionately experiencing the greatest social cost 01:53:57.693 --> 01:54:00.103 of California's energy system, with the least amount 01:54:00.103 --> 01:54:03.432 of access to its benefits and services. 01:54:03.432 --> 01:54:07.215 It demands systemic rate reform, focused on rate protection, 01:54:07.215 --> 01:54:10.022 especially for low-income and overburdened people. 01:54:10.022 --> 01:54:13.642 Our electric rates now are unjust and unreasonable, 01:54:13.642 --> 01:54:16.033 in violation of the Commission's mission, 01:54:16.033 --> 01:54:18.223 and are projected in this white paper to become 01:54:18.223 --> 01:54:22.362 increasingly more unaffordable and inequitable. 01:54:22.362 --> 01:54:25.970 Second, the promise, the benefits, and the material shifts 01:54:25.970 --> 01:54:29.730 required for energy decarbonization will simply not occur 01:54:29.730 --> 01:54:33.410 under inequitable financing and rate scheme. 01:54:33.410 --> 01:54:36.210 Functionally, we cannot and we will not be able 01:54:36.210 --> 01:54:39.850 to decarbonize the grid and California's economy 01:54:39.850 --> 01:54:42.130 if low income people disproportionately impacted 01:54:42.130 --> 01:54:46.256 by fossil fuels are the ones required to pay for it. 01:54:46.256 --> 01:54:47.839 Next slide, please. 01:54:52.642 --> 01:54:54.897 I think these are out of order. 01:54:54.897 --> 01:54:58.323 Previous, actually, next slide, please. 01:54:58.323 --> 01:55:00.535 We'll go back to this one. 01:55:00.535 --> 01:55:02.023 Thank you. 01:55:02.023 --> 01:55:04.794 How do we know rates are unjust and unreasonable? 01:55:04.794 --> 01:55:06.683 People can't pay them. 01:55:06.683 --> 01:55:08.593 Research confirms that if people have the money 01:55:08.593 --> 01:55:11.403 to pay utility bills, they paid them. 01:55:11.403 --> 01:55:13.422 Prior to the economic recession connected to 01:55:13.422 --> 01:55:16.673 the COVID-19 pandemic, California had significant 01:55:16.673 --> 01:55:18.923 residential arrearages. 01:55:18.923 --> 01:55:22.217 As of December 2020, over $1 billion 01:55:22.217 --> 01:55:25.866 in residential arrearages across IOU territory. 01:55:25.866 --> 01:55:30.866 Hundreds of thousands of people on rate assistance programs 01:55:31.023 --> 01:55:33.634 still are unable to pay. 01:55:33.634 --> 01:55:35.713 Unjust and unreasonable. 01:55:35.713 --> 01:55:37.953 Households inability to pay for electricity 01:55:37.953 --> 01:55:41.606 doesn't just jeopardize access to life-sustaining services, 01:55:41.606 --> 01:55:44.493 technologies, their credit worthiness, 01:55:44.493 --> 01:55:46.831 or financial future of their household, 01:55:46.831 --> 01:55:48.871 or even their housing security, 01:55:48.871 --> 01:55:52.181 energy and security jeopardizes early childhood development, 01:55:52.181 --> 01:55:54.022 at times the custody of children, 01:55:54.022 --> 01:55:55.725 and the lives of chronically ill, 01:55:55.725 --> 01:55:57.610 and medically vulnerable people. 01:55:57.610 --> 01:56:00.721 Any rate increase is an extremely high stakes question 01:56:00.721 --> 01:56:04.382 that cannot be obscured as a demonimous 01:56:04.382 --> 01:56:07.200 because it's only part of a penny increase 01:56:07.200 --> 01:56:11.024 per kilowatt hour per program, consistent with 01:56:11.024 --> 01:56:13.731 Commissioner Shiroma's remarks earlier today. 01:56:13.731 --> 01:56:16.181 Questions raised in the white paper and in this panel around 01:56:16.181 --> 01:56:18.920 decarbonization focused price signals, 01:56:18.920 --> 01:56:21.431 and how they may impact low income households 01:56:21.431 --> 01:56:22.961 need to be reframed. 01:56:22.961 --> 01:56:25.141 What is the true price tag of the price signal 01:56:25.141 --> 01:56:28.370 we're imposing on low income families, and why? 01:56:28.370 --> 01:56:30.087 Does it mean they will go without cooling 01:56:30.087 --> 01:56:31.541 in the sweltering heat? 01:56:31.541 --> 01:56:34.131 Does it mean youth can't attend remote schools? 01:56:34.131 --> 01:56:37.179 Does it mean people have to choose between food, medicine, 01:56:37.179 --> 01:56:39.942 and other health, safety, and comfort necessities? 01:56:39.942 --> 01:56:42.282 And as the data in this white paper and other sources 01:56:42.282 --> 01:56:45.611 confirm, low-income people pay three times the percentage 01:56:45.611 --> 01:56:47.711 of their income on energy. 01:56:47.711 --> 01:56:50.560 And upper income households are more likely to be 01:56:50.560 --> 01:56:52.391 excessive energy users. 01:56:52.391 --> 01:56:55.270 Upper income households can afford to pay higher prices 01:56:55.270 --> 01:56:57.950 for unchanged behaviors, while lower income households 01:56:57.950 --> 01:57:00.431 cannot and should not. 01:57:00.431 --> 01:57:02.411 Please go to the previous slide. 01:57:02.411 --> 01:57:04.581 Sorry, I switched up the order. 01:57:04.581 --> 01:57:07.217 These graphs from the California Budget and Policy Center 01:57:07.217 --> 01:57:09.895 demonstrate just some of the disproportionate impacts 01:57:09.895 --> 01:57:12.907 of the ongoing housing and economic crisis on Black, 01:57:12.907 --> 01:57:15.477 Indigenous, and people of color in California, 01:57:15.477 --> 01:57:19.295 both prior to and during the COVID-19 pandemic. 01:57:19.295 --> 01:57:21.029 I won't go through all of this information, 01:57:21.029 --> 01:57:23.998 but I'll just read you some of these headlines. 01:57:23.998 --> 01:57:25.505 More than one in two renters, 01:57:25.505 --> 01:57:28.045 and more than one in three homeowners with mortgages 01:57:28.045 --> 01:57:30.786 were cost-burdened before COVID-19. 01:57:30.786 --> 01:57:33.515 Black and Latinx Californians were most likely to have 01:57:33.515 --> 01:57:37.076 unaffordable housing costs before COVID-19. 01:57:37.076 --> 01:57:39.776 About three in five Latinx and Black households 01:57:39.776 --> 01:57:42.916 in California lost earnings during the pandemic. 01:57:42.916 --> 01:57:45.286 Most Latinx and Black households with children 01:57:45.286 --> 01:57:48.645 are having difficulties paying basic expenses. 01:57:48.645 --> 01:57:50.587 During the pandemic, people of California 01:57:50.587 --> 01:57:54.713 are also experiencing higher job loss, unemployment rate, 01:57:54.713 --> 01:57:57.902 COVID infection rates, and mortality rates. 01:57:57.902 --> 01:58:00.282 We also know that low income communities and households 01:58:00.282 --> 01:58:03.381 face greater barriers to accessing and benefiting from 01:58:03.381 --> 01:58:06.143 the DER programs highlighted in the white paper, 01:58:06.143 --> 01:58:09.582 like transportation electrification, net energy metering, 01:58:09.582 --> 01:58:11.752 and building electrification. 01:58:11.752 --> 01:58:14.752 We have two slides from now, please. 01:58:17.234 --> 01:58:18.973 Thank you so much. 01:58:18.973 --> 01:58:22.463 E3 and others predict low income communities and households 01:58:22.463 --> 01:58:27.130 are more likely to stay on the natural gas system longer 01:58:31.886 --> 01:58:33.629 because of these barriers. 01:58:33.629 --> 01:58:35.496 They're also more likely to be left paying for 01:58:35.496 --> 01:58:38.716 the utility death spiral predicted for future gas rates, 01:58:38.716 --> 01:58:41.990 and stranded assets, whose rate based values, 01:58:41.990 --> 01:58:44.099 the useful life of many of these assets 01:58:44.099 --> 01:58:47.638 are no longer accurate, due to our climate mandates. 01:58:47.638 --> 01:58:51.409 In decarbonization, the Commission must stop completely 01:58:51.409 --> 01:58:54.779 bifurcating electric and gas rate design, 01:58:54.779 --> 01:58:57.629 as households and communities move from dual fuel 01:58:57.629 --> 01:58:59.569 to all electric. 01:58:59.569 --> 01:59:02.089 As these shifts continue, the Commission must develop 01:59:02.089 --> 01:59:06.384 specific rate protections for low income households. 01:59:06.384 --> 01:59:08.250 Why do these barriers exist? 01:59:08.250 --> 01:59:11.230 And how do we redress them in terms of the DER programs 01:59:11.230 --> 01:59:12.939 highlighted in the white paper? 01:59:12.939 --> 01:59:14.450 We have great foundational documents 01:59:14.450 --> 01:59:16.270 for the energy Commission. 01:59:16.270 --> 01:59:19.121 So you can see there's a variety of structural barriers 01:59:19.121 --> 01:59:22.071 and policy barriers and additional burdens 01:59:22.071 --> 01:59:24.734 that also impacts the cost assumptions 01:59:24.734 --> 01:59:28.459 and functional success of some of the assumptions 01:59:28.459 --> 01:59:32.292 built into projected savings, specifically for 01:59:33.211 --> 01:59:36.741 low income people on some of these DER programs 01:59:36.741 --> 01:59:39.532 that were highlighted in the white paper. 01:59:39.532 --> 01:59:42.472 We have that next slide, please? 01:59:42.472 --> 01:59:46.150 So this is a graph from a June 2020 UCLA report 01:59:46.150 --> 01:59:48.671 analyzing the degree to which disadvantaged communities 01:59:48.671 --> 01:59:50.960 have been able to participate and benefit 01:59:50.960 --> 01:59:54.266 in California's energy transformation. 01:59:54.266 --> 01:59:56.521 And it remains far from equal. 01:59:56.521 --> 01:59:58.995 The trends they found are consistent with state trends 01:59:58.995 --> 02:00:01.061 and DER programs. 02:00:01.061 --> 02:00:02.982 As you can see, they found the higher 02:00:02.982 --> 02:00:04.911 the CalEnviroScreen percentile, 02:00:04.911 --> 02:00:08.192 meaning the more environmentally and socially overburdened, 02:00:08.192 --> 02:00:11.151 the lower the clean TAC access. 02:00:11.151 --> 02:00:15.804 And this was along electric vehicle plugin hybrid, EVs, 02:00:15.804 --> 02:00:18.175 rooftop solar, energy consumption, 02:00:18.175 --> 02:00:22.290 and participation in state energy transformation programs. 02:00:22.290 --> 02:00:26.098 They also found that electrifying excessive energy consumers 02:00:26.098 --> 02:00:28.799 for their participation in DER programs, 02:00:28.799 --> 02:00:32.970 the GHG abatement impacts are more marginal, 02:00:32.970 --> 02:00:37.029 and those were more likely to be affluent households. 02:00:37.029 --> 02:00:40.278 The conclusion being, trickle down equity doesn't work, 02:00:40.278 --> 02:00:43.109 unless these DER programs are community-led 02:00:43.109 --> 02:00:45.711 and designed to benefit low income communities, 02:00:45.711 --> 02:00:46.878 they will not. 02:00:47.799 --> 02:00:50.216 Go to the next slide, please. 02:00:51.223 --> 02:00:53.722 A few closing thoughts and recommendations 02:00:53.722 --> 02:00:56.939 and bird pictures, I had to add something. 02:00:56.939 --> 02:00:59.188 The time for studying whether rates are inequitable 02:00:59.188 --> 02:01:01.571 or unaffordable are over. 02:01:01.571 --> 02:01:02.979 The Commission's electric rate design 02:01:02.979 --> 02:01:06.288 must set equity protection goals and metrics, 02:01:06.288 --> 02:01:08.579 focused on redressing current, historic, 02:01:08.579 --> 02:01:10.449 and projected inequity. 02:01:10.449 --> 02:01:13.621 The Commission must value and prioritize non-energy benefits 02:01:13.621 --> 02:01:16.188 and DER programs for overburdened, 02:01:16.188 --> 02:01:18.571 environmental, and social justice communities 02:01:18.571 --> 02:01:21.108 to ensure they reach and benefit them. 02:01:21.108 --> 02:01:23.659 The Commission must center and give the material support 02:01:23.659 --> 02:01:26.848 necessary for impacted community participation 02:01:26.848 --> 02:01:30.280 in these conversations, like this conversation today. 02:01:30.280 --> 02:01:32.878 The Commission must engage in holistic rate planning 02:01:32.878 --> 02:01:35.271 across the electric and gas system, 02:01:35.271 --> 02:01:38.279 in order to reach decarbonization. 02:01:38.279 --> 02:01:39.568 Thank you very much for the time, 02:01:39.568 --> 02:01:42.901 and looking forward to the conversation. 02:01:45.793 --> 02:01:48.433 Thank you so much, Mad. 02:01:48.433 --> 02:01:52.021 Those are some fascinating slides. 02:01:52.021 --> 02:01:54.091 So now I want to turn to our third panelist, 02:01:54.091 --> 02:01:56.240 and I just wanna remind our dais members, 02:01:56.240 --> 02:01:58.991 we will have time for Q and A at the end. 02:01:58.991 --> 02:02:02.334 But we're gonna move to Michael Colvin, 02:02:02.334 --> 02:02:05.705 who is director of legislative and regulatory affairs 02:02:05.705 --> 02:02:08.556 for California energy programs 02:02:08.556 --> 02:02:11.665 at the Environmental Defense Fund. 02:02:11.665 --> 02:02:16.395 Michael's work focuses on building decarbonization, 02:02:16.395 --> 02:02:21.274 gas utility business model, wholesale electricity markets, 02:02:21.274 --> 02:02:24.045 and transportation electrification. 02:02:24.045 --> 02:02:27.844 Prior to joining EDF, Michael spent 10 years 02:02:27.844 --> 02:02:30.275 at the Public Utilities Commission 02:02:30.275 --> 02:02:34.360 working on various energy and utility safety matters. 02:02:34.360 --> 02:02:38.731 He also served as an advisor to Commissioner Mark Ferron 02:02:38.731 --> 02:02:41.481 and Commissioner Catherine Sandoval. 02:02:41.481 --> 02:02:44.331 So, welcome Michael Colvin. 02:02:44.331 --> 02:02:46.761 Oh thank you, Dorothy, and members of the dais, 02:02:46.761 --> 02:02:48.491 it's a pleasure to be here today. 02:02:48.491 --> 02:02:51.021 Thank you to Dorothy for moderating. 02:02:51.021 --> 02:02:53.094 And to all the staff organizers for including me 02:02:53.094 --> 02:02:56.173 with such esteemed company. 02:02:56.173 --> 02:02:59.803 If the theme today is ensuring access to an affordable, 02:02:59.803 --> 02:03:02.201 clean, and safe energy system, 02:03:02.201 --> 02:03:04.411 then the theme of my remarks are going to be 02:03:04.411 --> 02:03:06.302 how do we advance those priorities 02:03:06.302 --> 02:03:08.981 within this new state identified priority, 02:03:08.981 --> 02:03:12.561 which is deployment as medium and heavy duty vehicles. 02:03:12.561 --> 02:03:15.728 So let's go to the next slide, please. 02:03:17.807 --> 02:03:19.169 I'm not seeing them up. 02:03:19.169 --> 02:03:21.468 So I'm hoping that they will catch up. 02:03:21.468 --> 02:03:22.950 While we're doing that, let me just mention that 02:03:22.950 --> 02:03:25.411 EDF is a multi-disciplinary organization 02:03:25.411 --> 02:03:26.868 with members throughout California 02:03:26.868 --> 02:03:31.051 and every single (mumbles) territory. 02:03:31.051 --> 02:03:33.171 And I'm hoping that we can get onto our slides, 02:03:33.171 --> 02:03:35.088 to slide three, please. 02:03:36.521 --> 02:03:39.651 Right, can we get Michael's slides pulled up? 02:03:39.651 --> 02:03:40.984 Oh, there we go. 02:03:43.321 --> 02:03:45.061 While we are doing that, 02:03:45.061 --> 02:03:48.301 I'm going to just keep marching forward. 02:03:48.301 --> 02:03:52.468 So zero emission vehicles and heavy duty vehicles, 02:03:55.178 --> 02:03:58.748 in particular, are our new frontier for California. 02:03:58.748 --> 02:04:01.368 California's revenue requirements and rate design 02:04:01.368 --> 02:04:04.758 are not the same for a skyscraper or a single family home, 02:04:04.758 --> 02:04:06.462 even though they have similar attributes 02:04:06.462 --> 02:04:08.709 like a door or window. 02:04:08.709 --> 02:04:11.697 So similarly, an electric car is not the same as 02:04:11.697 --> 02:04:14.308 it's a passenger car or a heavy duty truck, 02:04:14.308 --> 02:04:17.439 even though they all have batteries and wheels. 02:04:17.439 --> 02:04:20.948 We need to change the state's approach to accommodate this, 02:04:20.948 --> 02:04:24.178 this is a major new category of electric usage. 02:04:24.178 --> 02:04:26.787 And it's an identified priority both within the Governor's 02:04:26.787 --> 02:04:29.448 executive order and the advanced clean truck rules 02:04:29.448 --> 02:04:31.031 that are out there. 02:04:32.449 --> 02:04:34.438 This is more than just prudent management 02:04:34.438 --> 02:04:37.278 of the revenue requirements, it's also about 02:04:37.278 --> 02:04:41.111 proper allocation of that revenue requirement, 02:04:42.480 --> 02:04:45.010 and then reasonable rate design that will mean 02:04:45.010 --> 02:04:48.500 operational profiles of the vehicle operators. 02:04:48.500 --> 02:04:50.212 So let's move onto slide four. 02:04:50.212 --> 02:04:53.545 It looks like the slides are finally up. 02:04:55.729 --> 02:04:58.100 Great, thank you so much. 02:04:58.100 --> 02:05:00.550 So a lot of this morning's remarks were focused on 02:05:00.550 --> 02:05:01.979 combating climate change, 02:05:01.979 --> 02:05:05.830 but I would argue we also need to be focused on air quality. 02:05:05.830 --> 02:05:09.421 California suffers from the worst air quality in the country 02:05:09.421 --> 02:05:11.479 with emissions from medium and heavy duty vehicles 02:05:11.479 --> 02:05:14.048 being a primary contributor. 02:05:14.048 --> 02:05:16.589 And surprisingly, there are direct local hotspots 02:05:16.589 --> 02:05:19.168 within major transit corridors, 02:05:19.168 --> 02:05:21.935 and disproportion and health impacts, such as asthma 02:05:21.935 --> 02:05:23.334 and chronic respiratory disease 02:05:23.334 --> 02:05:26.105 on California's most vulnerable communities. 02:05:26.105 --> 02:05:28.737 These negative impacts can be hyper-local, 02:05:28.737 --> 02:05:30.205 as you can see from this map, 02:05:30.205 --> 02:05:32.774 with major differences in emissions and outcomes, 02:05:32.774 --> 02:05:34.874 even within a two mile radius. 02:05:34.874 --> 02:05:38.665 But luckily your response can also be hyper-local. 02:05:38.665 --> 02:05:41.248 Let's go to slide five, please. 02:05:43.052 --> 02:05:45.792 What if we started targeting policy levers, 02:05:45.792 --> 02:05:49.132 such as rate design, baseline electric usage allocation, 02:05:49.132 --> 02:05:51.882 targeted marketing education and outreach, 02:05:51.882 --> 02:05:54.262 infrastructure deployment, based on this health data 02:05:54.262 --> 02:05:58.271 with electric infrastructure laid on top of it? 02:05:58.271 --> 02:06:00.284 I make this suggestion to target investments 02:06:00.284 --> 02:06:02.555 to get the best bang for the rates they're buying, 02:06:02.555 --> 02:06:05.202 and not just assume that the market's gonna work on its own. 02:06:05.202 --> 02:06:06.905 We really need to start targeting this. 02:06:06.905 --> 02:06:08.202 And that's one of the things that I think that 02:06:08.202 --> 02:06:11.035 the white paper tried to draw out. 02:06:12.542 --> 02:06:14.642 While this type of geographic health targeting 02:06:14.642 --> 02:06:17.044 is somewhat new for an energy policy regulator, 02:06:17.044 --> 02:06:19.032 the concept itself isn't. 02:06:19.032 --> 02:06:20.993 California has a long history of authorizing 02:06:20.993 --> 02:06:22.882 geographically distinct rates within 02:06:22.882 --> 02:06:26.692 a utility service territory, we call them climate zones. 02:06:26.692 --> 02:06:30.212 I'm just suggesting that we extend this concept 02:06:30.212 --> 02:06:33.164 to a major new category of electric usage 02:06:33.164 --> 02:06:36.032 to meet the decarbonization challenge that we're in. 02:06:36.032 --> 02:06:37.615 Next slide, please. 02:06:40.248 --> 02:06:43.296 So I want to make two key points on this slide. 02:06:43.296 --> 02:06:46.386 The first one is the lower the fuel costs, 02:06:46.386 --> 02:06:48.709 meaning the lower the rate, 02:06:48.709 --> 02:06:50.446 the greater the difference is going to be 02:06:50.446 --> 02:06:53.455 between a conventional internal combustion vehicle 02:06:53.455 --> 02:06:54.865 and a zero emission vehicle. 02:06:54.865 --> 02:06:57.095 And that will lead to faster payback. 02:06:57.095 --> 02:07:02.095 That will drive vehicle adoption, pun semi-intended there. 02:07:02.263 --> 02:07:04.643 EDF and many other stakeholders have developed 02:07:04.643 --> 02:07:06.805 a total cost of ownership calculator, 02:07:06.805 --> 02:07:09.384 where we can consider how rate design will influence 02:07:09.384 --> 02:07:12.644 the go, no-go decision of adopting a vehicle. 02:07:12.644 --> 02:07:16.375 As demonstrated in this chart, the more the fuel is used, 02:07:16.375 --> 02:07:17.834 meaning the more that it's on the road, 02:07:17.834 --> 02:07:20.014 the more vehicle miles traveled there are, 02:07:20.014 --> 02:07:22.354 the better along with the better rate design, 02:07:22.354 --> 02:07:24.614 there's going to be a better total cost of ownership. 02:07:24.614 --> 02:07:27.424 And that's the difference that you're starting to see 02:07:27.424 --> 02:07:29.488 between that first and second bar. 02:07:29.488 --> 02:07:30.718 And if we have smart rate design, 02:07:30.718 --> 02:07:32.432 that's going to be the difference between 02:07:32.432 --> 02:07:35.184 that second and third bar. 02:07:35.184 --> 02:07:38.184 We also imply from this that we wanna keep 02:07:38.184 --> 02:07:39.196 charging rates low, 02:07:39.196 --> 02:07:41.475 but we also want to keep them predictable. 02:07:41.475 --> 02:07:43.994 Small businesses are gonna finance their vehicle acquisition 02:07:43.994 --> 02:07:45.734 on these operational savings, 02:07:45.734 --> 02:07:48.644 and predictability's gonna be important. 02:07:48.644 --> 02:07:50.349 The second key point I wanted to make is that 02:07:50.349 --> 02:07:53.625 fuel savings itself through the rate is one key aspect, 02:07:53.625 --> 02:07:56.764 but there are other upfront costs of the vehicle. 02:07:56.764 --> 02:07:58.164 And the cost of charging infrastructure 02:07:58.164 --> 02:08:00.764 is really key in there as well. 02:08:00.764 --> 02:08:04.827 We don't ask every fleet to install their own gas station. 02:08:04.827 --> 02:08:06.576 So we might want to think about multiple models 02:08:06.576 --> 02:08:08.816 of deploying charging infrastructure, 02:08:08.816 --> 02:08:12.409 and how we pay for that charging infrastructure. 02:08:12.409 --> 02:08:13.598 With an individual fleet doing it 02:08:13.598 --> 02:08:15.577 might not be the best use of capital, 02:08:15.577 --> 02:08:20.244 and there might be a benefit of having a rate tear here. 02:08:21.368 --> 02:08:23.656 I do want to also note before we leave this slide that 02:08:23.656 --> 02:08:27.859 Senator Leyva is offering Senate Bill 37 to this session 02:08:27.859 --> 02:08:30.650 to help coordinate the financing of these vehicles. 02:08:30.650 --> 02:08:33.640 And I think coordinating upfront cost purchases 02:08:33.640 --> 02:08:36.631 with rate design and with charging infrastructure deployment 02:08:36.631 --> 02:08:40.251 for the entire package is going to be really critical. 02:08:40.251 --> 02:08:43.334 Let's move to the next slide, please. 02:08:44.671 --> 02:08:48.131 So as I mentioned earlier, there is going to be a need for 02:08:48.131 --> 02:08:51.093 very targeted marketing, education, and outreach. 02:08:51.093 --> 02:08:52.891 There are very different operational constraints. 02:08:52.891 --> 02:08:55.151 If you're a bakery that's small and only delivers 02:08:55.151 --> 02:08:57.442 to a couple of local supermarkets 02:08:57.442 --> 02:09:00.351 versus a big heavy duty drayage vehicle. 02:09:00.351 --> 02:09:02.361 So we need to think about how we communicate 02:09:02.361 --> 02:09:04.444 infrastructure programs and rates 02:09:04.444 --> 02:09:08.422 to these different customers within this new broad category. 02:09:08.422 --> 02:09:10.222 Think of it this way, we don't treat an office park 02:09:10.222 --> 02:09:11.373 and a skyscraper the same, 02:09:11.373 --> 02:09:13.523 even though they're both technically commercial, 02:09:13.523 --> 02:09:16.314 we need to start doing different segmentation, 02:09:16.314 --> 02:09:19.823 even within this new category (mumbles). 02:09:19.823 --> 02:09:22.384 And I argue that we could prioritize early adoption, 02:09:22.384 --> 02:09:24.289 where it's gonna provide the most good. 02:09:24.289 --> 02:09:25.678 Targeting vulnerable communities 02:09:25.678 --> 02:09:28.503 and disadvantaged communities 02:09:28.503 --> 02:09:31.243 with a variety of different charging models. 02:09:31.243 --> 02:09:34.827 And so any and all plans need to be designed accordingly. 02:09:34.827 --> 02:09:37.744 Let's go to the next slide, please. 02:09:38.603 --> 02:09:40.935 So let's start putting these pieces together. 02:09:40.935 --> 02:09:43.614 What if we started deploying subsidized charging 02:09:43.614 --> 02:09:45.616 and smart dynamic rates, where it would be 02:09:45.616 --> 02:09:48.004 the most cost effective for the grid, 02:09:48.004 --> 02:09:51.282 utilize excess low cost renewables, 02:09:51.282 --> 02:09:53.846 and yield large health benefits. 02:09:53.846 --> 02:09:56.516 That seems to be the kind of sweet spot of where 02:09:56.516 --> 02:09:58.555 it makes sense for rate payer investment 02:09:58.555 --> 02:09:59.985 to really be targeted. 02:09:59.985 --> 02:10:03.465 And we're working to get that kind of thing for the box. 02:10:03.465 --> 02:10:05.284 The Commission has the opportunity, 02:10:05.284 --> 02:10:08.104 along with the other partners that are on the dais today, 02:10:08.104 --> 02:10:10.064 to design programs that are gonna capture these 02:10:10.064 --> 02:10:12.554 economic savings and health savings 02:10:12.554 --> 02:10:15.471 and climate savings simultaneously. 02:10:16.904 --> 02:10:19.315 And as noted in the white paper, 02:10:19.315 --> 02:10:24.085 changes to how we aggressively procure new clean generation 02:10:24.085 --> 02:10:26.835 to meet this new predictable demand, 02:10:26.835 --> 02:10:29.515 charging behaviors are going to be relatively predictable 02:10:29.515 --> 02:10:31.930 because the operational profiles and vehicles 02:10:31.930 --> 02:10:33.775 are going to be much more predictable. 02:10:33.775 --> 02:10:34.775 It's gonna be important 02:10:34.775 --> 02:10:37.637 and it will help contain overall costs, 02:10:37.637 --> 02:10:39.707 and I think more than maybe what was projected 02:10:39.707 --> 02:10:42.035 in the white paper itself. 02:10:42.035 --> 02:10:43.535 Next slide please. 02:10:45.715 --> 02:10:46.785 Michael, I'm just gonna break in 02:10:46.785 --> 02:10:48.495 with a time check. 02:10:48.495 --> 02:10:50.267 I've gotten the last up in this slide, 02:10:50.267 --> 02:10:52.434 so I think we're on track. 02:10:53.515 --> 02:10:58.368 So I agree with both what Mad and Mike just said that yes, 02:10:58.368 --> 02:11:00.224 we need to keep rates low, 02:11:00.224 --> 02:11:03.193 but I also think we need to invest. 02:11:03.193 --> 02:11:05.014 Zero emission vehicles are going to be using 02:11:05.014 --> 02:11:07.552 existing generation assets frequently, 02:11:07.552 --> 02:11:09.384 and more usage with the same assets means 02:11:09.384 --> 02:11:12.346 the per unit cost of rates will go down. 02:11:12.346 --> 02:11:14.254 We also need to think about the unique attributes 02:11:14.254 --> 02:11:15.990 of these vehicles. 02:11:15.990 --> 02:11:17.707 They're big batteries on wheels, 02:11:17.707 --> 02:11:20.024 which means that we can use them for grid support 02:11:20.024 --> 02:11:23.574 and compensate customers for the services of grid support. 02:11:23.574 --> 02:11:26.094 And we can do that more cost effectively 02:11:26.094 --> 02:11:28.854 than the high utility rate on return on equity 02:11:28.854 --> 02:11:29.884 that's out there. 02:11:29.884 --> 02:11:32.674 We should be thinking about these in a very dynamic way, 02:11:32.674 --> 02:11:35.044 and that they can provide multiple benefits 02:11:35.044 --> 02:11:38.306 for any rate payer investments that's out there. 02:11:38.306 --> 02:11:40.577 And last, I think we can connect this 02:11:40.577 --> 02:11:42.036 with environmental benefits. 02:11:42.036 --> 02:11:44.105 We can charge in favorable grid conditions 02:11:44.105 --> 02:11:46.716 and in favorable low emission time, 02:11:46.716 --> 02:11:48.266 and that's gonna mean a more affordable 02:11:48.266 --> 02:11:50.846 and a cleaner electric grid. 02:11:50.846 --> 02:11:52.596 So next slide please. 02:11:54.096 --> 02:11:55.846 I know this was a very high-level overview, 02:11:55.846 --> 02:11:57.766 but I'm hoping to give you some food for thought 02:11:57.766 --> 02:11:59.836 on how we can approach medium and heavy duty vehicles 02:11:59.836 --> 02:12:01.746 as this new category. 02:12:01.746 --> 02:12:04.197 With new approaches to revenue requirements, 02:12:04.197 --> 02:12:06.856 allocation of that revenue requirement, and rate designs 02:12:06.856 --> 02:12:09.285 within that (cuts out). 02:12:09.285 --> 02:12:10.427 I know this was very fast, 02:12:10.427 --> 02:12:12.186 so I look forward to more questions 02:12:12.186 --> 02:12:13.899 and to further discussion. 02:12:13.899 --> 02:12:17.066 Thank you again so much for having me. 02:12:19.158 --> 02:12:20.956 Thank you, Michael. 02:12:20.956 --> 02:12:23.149 Again, wonderful slides. 02:12:23.149 --> 02:12:26.237 And I'm sorry to move everyone along, 02:12:26.237 --> 02:12:30.095 but I do want to introduce Professor David Rapson, 02:12:30.095 --> 02:12:31.762 our fourth panelist. 02:12:33.636 --> 02:12:36.754 David Rapson is an associate professor at UC Davis 02:12:36.754 --> 02:12:38.768 in the department of economics. 02:12:38.768 --> 02:12:42.676 And he's director of the Davis Energy Economics Program, 02:12:42.676 --> 02:12:44.386 also known as DEEP. 02:12:44.386 --> 02:12:47.986 He studies how firms and consumers make decisions, 02:12:47.986 --> 02:12:50.236 primarily about energy use, 02:12:51.305 --> 02:12:53.945 and what this implies for optimal climate regulation 02:12:53.945 --> 02:12:55.778 and government policy. 02:12:56.806 --> 02:12:58.804 His current research topics include 02:12:58.804 --> 02:13:02.413 transportation electrification, electricity markets, 02:13:02.413 --> 02:13:06.089 energy efficiency, and climate policy. 02:13:06.089 --> 02:13:10.204 His research appears in the American Economic Review, 02:13:10.204 --> 02:13:13.954 Science, Nature, and other academic journals. 02:13:14.891 --> 02:13:17.189 So welcome Dr. Rapson. 02:13:17.189 --> 02:13:20.168 And I'll turn it over to you. 02:13:20.168 --> 02:13:21.449 Thank you, Dorothy. 02:13:21.449 --> 02:13:25.130 And thank you everybody for inviting me to speak today, 02:13:25.130 --> 02:13:28.411 and for hosting this important discussion. 02:13:28.411 --> 02:13:31.228 Dorothy and the organizers have asked me to discuss 02:13:31.228 --> 02:13:34.208 some of my recent research on electric vehicle demand 02:13:34.208 --> 02:13:36.348 and energy prices. 02:13:36.348 --> 02:13:39.498 And this research is all in collaboration with other 02:13:39.498 --> 02:13:43.498 fantastic scholars, two from UC Davis economics, 02:13:44.793 --> 02:13:46.613 Jim Bushnell and Erich Muehlegger, 02:13:46.613 --> 02:13:51.590 as well as a paper with Catherine Wolfram at UC Berkeley, 02:13:51.590 --> 02:13:54.528 and Fiona Burlig at University of Chicago. 02:13:54.528 --> 02:13:57.444 So I hope this, some of this research is useful 02:13:57.444 --> 02:14:00.573 in helping you to achieve your dual goals here, 02:14:00.573 --> 02:14:04.247 which I've been hearing throughout of cost control, 02:14:04.247 --> 02:14:08.324 as well as ambitious climate change mitigation. 02:14:08.324 --> 02:14:10.760 So next slide, please. 02:14:10.760 --> 02:14:14.145 Today, I'm gonna focus on three main questions. 02:14:14.145 --> 02:14:19.144 Each of these looks backwards in order to learn from 02:14:19.144 --> 02:14:24.010 the observed consumer behavior over the last few years, 02:14:24.010 --> 02:14:26.670 with the idea that what we learn from that 02:14:26.670 --> 02:14:29.062 can inform future decisions. 02:14:29.062 --> 02:14:31.062 So there are three main questions 02:14:31.062 --> 02:14:32.401 that I'm going to focus on. 02:14:32.401 --> 02:14:36.469 One is how effective are electric vehicle subsidies, 02:14:36.469 --> 02:14:38.267 and what can we learn from this? 02:14:38.267 --> 02:14:41.397 The second is do energy prices affect 02:14:41.397 --> 02:14:43.516 electric vehicle demand? 02:14:43.516 --> 02:14:46.708 Gonna look both at the effective electricity 02:14:46.708 --> 02:14:49.489 and gasoline prices on EV demand. 02:14:49.489 --> 02:14:53.989 And how much electricity do electric vehicles consume? 02:14:54.834 --> 02:14:56.334 Next slide please. 02:14:58.254 --> 02:15:01.318 So increasing electric vehicle adoption 02:15:01.318 --> 02:15:03.694 requires very large subsidies. 02:15:03.694 --> 02:15:07.256 And this is because electric vehicles are not yet 02:15:07.256 --> 02:15:11.044 cost competitive, relative to conventional vehicles. 02:15:11.044 --> 02:15:14.994 And while battery costs are declining steadily, 02:15:14.994 --> 02:15:19.994 it's likely to take several years before they actually reach 02:15:20.188 --> 02:15:23.068 before EVs reach parity with gasoline cars. 02:15:23.068 --> 02:15:25.078 So there are three points I'm gonna highlight on this slide. 02:15:25.078 --> 02:15:27.998 The first is that subsidies actually work. 02:15:27.998 --> 02:15:30.998 I found this graph to be quite provocative, 02:15:30.998 --> 02:15:33.471 and even though it's not from California, 02:15:33.471 --> 02:15:35.195 I thought it might be helpful. 02:15:35.195 --> 02:15:38.517 In 2015, the state of Georgia removed 02:15:38.517 --> 02:15:41.517 a state electric vehicle tax credit. 02:15:42.586 --> 02:15:44.301 And you can see that when that happened, 02:15:44.301 --> 02:15:48.125 demand for electric vehicles in Georgia fell dramatically, 02:15:48.125 --> 02:15:49.886 almost to zero. 02:15:49.886 --> 02:15:52.017 And this tells us two things. 02:15:52.017 --> 02:15:55.029 It tells us that in the absence of subsidies, 02:15:55.029 --> 02:15:58.769 very few people were desiring electric vehicle technology 02:15:58.769 --> 02:16:01.586 in this place and at this time. 02:16:01.586 --> 02:16:05.246 And that electric vehicle subsidies actually worked, 02:16:05.246 --> 02:16:08.920 that when they're in place, they do induce people 02:16:08.920 --> 02:16:11.420 to buy a different technology. 02:16:12.797 --> 02:16:15.964 If you could push forward one, please. 02:16:17.006 --> 02:16:22.006 So California, we haven't had an experiment like this 02:16:22.239 --> 02:16:24.659 where a tax credit was removed, 02:16:24.659 --> 02:16:26.460 but in work with Erich Muehlegger, 02:16:26.460 --> 02:16:29.551 we've attempted to estimate the sensitivity 02:16:29.551 --> 02:16:33.866 of electric vehicle demand, to subsidies in California. 02:16:33.866 --> 02:16:35.922 And what we find is that in California, 02:16:35.922 --> 02:16:39.089 it takes about 15 to $25,000 in total, 02:16:40.532 --> 02:16:42.892 California plus federal subsidies, 02:16:42.892 --> 02:16:45.353 for each incremental vehicle purchase. 02:16:45.353 --> 02:16:47.812 Now this is high relative to what might be implied 02:16:47.812 --> 02:16:49.024 by this Georgia graph, 02:16:49.024 --> 02:16:51.542 and that's because a lot of people in California, 02:16:51.542 --> 02:16:54.392 probably more people in California than in Georgia, 02:16:54.392 --> 02:16:57.693 would purchase an electric vehicle without the subsidy. 02:16:57.693 --> 02:16:59.765 And yet, the subsidy is available to them. 02:16:59.765 --> 02:17:02.112 And it's very difficult for us to identify 02:17:02.112 --> 02:17:04.781 who would purchase without the subsidy and who wouldn't. 02:17:04.781 --> 02:17:08.030 And that means that for each incremental electric vehicle 02:17:08.030 --> 02:17:12.617 induced by these subsidies, the cost can be quite high. 02:17:12.617 --> 02:17:15.137 And push forward one more, please. 02:17:15.137 --> 02:17:19.067 So what does this tell us about the total cost of achieving 02:17:19.067 --> 02:17:22.408 our electric vehicle adoption targets? 02:17:22.408 --> 02:17:26.922 Well, when we took the sensitivity of EV demand 02:17:26.922 --> 02:17:30.324 to these subsidies and projected it forward, 02:17:30.324 --> 02:17:34.203 this is actually from 2018 through to 2025. 02:17:34.203 --> 02:17:38.536 We included very aggressive cost reduction estimates 02:17:39.474 --> 02:17:41.702 for associated with batteries. 02:17:41.702 --> 02:17:44.920 And we estimated that from 2018 to 2025, 02:17:44.920 --> 02:17:48.182 it would cost roughly 12 to $18 billion, 02:17:48.182 --> 02:17:50.962 at least in state and federal subsidies 02:17:50.962 --> 02:17:54.810 to reach the 1.5 million EVs on the road goal. 02:17:54.810 --> 02:17:59.454 So these are very expensive ways to induce demand, 02:17:59.454 --> 02:18:02.512 while it is also true that they're effective. 02:18:02.512 --> 02:18:04.095 Next slide, please. 02:18:07.637 --> 02:18:11.304 I wanna turn now to how energy prices affect 02:18:12.633 --> 02:18:14.382 electric vehicle demand. 02:18:14.382 --> 02:18:17.103 So you can actually push forward one more, 02:18:17.103 --> 02:18:19.448 just to see the results here. 02:18:19.448 --> 02:18:24.153 So in a study with Jim Bushnell and Erich Muehlegger, 02:18:24.153 --> 02:18:27.796 we took advantage of the fact that there are many 02:18:27.796 --> 02:18:30.858 municipal utilities in California 02:18:30.858 --> 02:18:34.209 that have very different electric rates than the IOUs. 02:18:34.209 --> 02:18:36.455 And this gives us an opportunity to look at 02:18:36.455 --> 02:18:38.855 electric vehicle adoption behavior, 02:18:38.855 --> 02:18:42.508 right along the boundaries of those utilities. 02:18:42.508 --> 02:18:44.325 And on one side of the boundary, 02:18:44.325 --> 02:18:46.895 the electricity price can be very low. 02:18:46.895 --> 02:18:49.386 And on the other side, they can be very high. 02:18:49.386 --> 02:18:53.529 And this gives us an opportunity to estimate the effect of 02:18:53.529 --> 02:18:56.789 high electricity prices on EV demand. 02:18:56.789 --> 02:19:01.388 And what we find is that every 10 cents per kilowatt hour 02:19:01.388 --> 02:19:03.678 increase in electricity prices, 02:19:03.678 --> 02:19:08.596 decreases electric vehicle demand by roughly 15%. 02:19:08.596 --> 02:19:11.936 And there's also quite a bit of variation both over time 02:19:11.936 --> 02:19:14.095 and space and gasoline prices. 02:19:14.095 --> 02:19:16.544 And so we can ask a similar question 02:19:16.544 --> 02:19:20.725 about the effect of gasoline prices on EV adoption. 02:19:20.725 --> 02:19:23.637 And we find that actually gasoline prices appear to be 02:19:23.637 --> 02:19:27.455 an even more important determinant of EV demand 02:19:27.455 --> 02:19:29.566 than electricity prices. 02:19:29.566 --> 02:19:33.649 A 50 cent per gallon increase in gasoline prices, 02:19:36.428 --> 02:19:40.809 increases electric vehicle demand by about 30% 02:19:40.809 --> 02:19:42.028 in our sample. 02:19:42.028 --> 02:19:45.278 So prices do actually affect EV demand, 02:19:46.788 --> 02:19:50.226 and they do so in ways that I think are important 02:19:50.226 --> 02:19:52.797 to understand if we want to be efficient 02:19:52.797 --> 02:19:55.047 in inducing demand for EVs. 02:19:57.636 --> 02:20:02.386 If we can find the next slide there, that would be great. 02:20:08.085 --> 02:20:09.166 Thank you. 02:20:09.166 --> 02:20:13.666 So this is the final result that I'm going to discuss. 02:20:17.292 --> 02:20:21.375 It has been a struggle to figure out how much EVs 02:20:22.247 --> 02:20:24.798 are charging, particularly at home. 02:20:24.798 --> 02:20:27.449 And the challenge here is that unless a home 02:20:27.449 --> 02:20:31.651 has a dedicated EV meter, when they plugged their EV in, 02:20:31.651 --> 02:20:33.979 that electricity demand is intermingling with 02:20:33.979 --> 02:20:38.562 the rest of the demand from other electricity end uses. 02:20:39.715 --> 02:20:43.380 And so the approach to date has been to take 02:20:43.380 --> 02:20:48.380 the 500 households in California that have dedicated meters 02:20:48.590 --> 02:20:52.359 and assume that they reflect the home charging behavior 02:20:52.359 --> 02:20:56.499 of the hundreds of thousands of electric vehicles 02:20:56.499 --> 02:20:58.327 that are charging at home. 02:20:58.327 --> 02:21:01.494 And this I think has been a necessary, 02:21:03.475 --> 02:21:06.975 but perhaps not representative assumption. 02:21:07.928 --> 02:21:10.199 And so in this paper, my coauthors and I, 02:21:10.199 --> 02:21:12.799 we take an indirect approach to estimating 02:21:12.799 --> 02:21:15.018 the amount of EV load. 02:21:15.018 --> 02:21:17.358 And what we do is we match electric vehicle 02:21:17.358 --> 02:21:19.998 registration records at the household level, 02:21:19.998 --> 02:21:23.778 so we'll know when an electric vehicle shows up at the home, 02:21:23.778 --> 02:21:28.173 and we look at using meter data from the utilities. 02:21:28.173 --> 02:21:31.864 We look at how household electricity demand increases 02:21:31.864 --> 02:21:34.724 at the time that the EV arrives. 02:21:34.724 --> 02:21:38.584 And what we find, you can flip forward one, please. 02:21:38.584 --> 02:21:42.584 What we find is that EV home charging is roughly 02:21:43.771 --> 02:21:48.771 about 2.9 kilowatt hours per day in PG&E's territory. 02:21:48.818 --> 02:21:52.188 And this is substantially below the amount that's implied 02:21:52.188 --> 02:21:55.668 by the dedicated meters that have been used in the past, 02:21:55.668 --> 02:21:59.668 and as reported in the joint IOU report of 2019, 02:22:00.553 --> 02:22:03.343 they indicate that EV charging at home 02:22:03.343 --> 02:22:06.684 is roughly 7.2 kilowatt hours per day. 02:22:06.684 --> 02:22:10.053 So more than twice as much as we're finding. 02:22:10.053 --> 02:22:13.443 This has implications for both financial transfers 02:22:13.443 --> 02:22:16.610 that are linked to EV electricity use, 02:22:17.827 --> 02:22:22.043 as well as I think raising some questions about 02:22:22.043 --> 02:22:25.845 EV technology and the how it's being used and the cost 02:22:25.845 --> 02:22:27.345 and benefits of it. 02:22:27.345 --> 02:22:29.262 And next slide, please. 02:22:30.595 --> 02:22:32.894 So there are many potential explanations 02:22:32.894 --> 02:22:34.977 for low EV electric load. 02:22:36.335 --> 02:22:38.040 And I just want to list a few of them here. 02:22:38.040 --> 02:22:40.953 And I think many people probably have beliefs 02:22:40.953 --> 02:22:43.065 about what is the explanation. 02:22:43.065 --> 02:22:45.302 Certainly the first that comes to my mind, 02:22:45.302 --> 02:22:47.394 and likely many of your minds, 02:22:47.394 --> 02:22:50.513 is that battery range was low during our sample period. 02:22:50.513 --> 02:22:53.430 So we were looking at 2014 to 2017, 02:22:54.607 --> 02:22:57.269 and battery range has increased since then. 02:22:57.269 --> 02:23:01.447 And it's almost certain that that is going to make 02:23:01.447 --> 02:23:05.378 EVs more desirable for providing transportation services, 02:23:05.378 --> 02:23:08.406 and people will be charging them more at home. 02:23:08.406 --> 02:23:11.796 However, there are also other potential explanations 02:23:11.796 --> 02:23:15.276 that I don't think we have evidence to reject yet. 02:23:15.276 --> 02:23:18.148 So one is that there may be desirable attributes 02:23:18.148 --> 02:23:22.648 of conventional vehicles that make drivers prefer them 02:23:23.859 --> 02:23:26.179 to EVs at this point. 02:23:26.179 --> 02:23:29.215 It may be that the early adopters of electric vehicles 02:23:29.215 --> 02:23:32.099 are simply different than future adopters, 02:23:32.099 --> 02:23:35.389 they might just have lower transportation needs. 02:23:35.389 --> 02:23:37.732 And it may be that in some cases, 02:23:37.732 --> 02:23:40.689 electric vehicles are compliments to gasoline cars, 02:23:40.689 --> 02:23:42.391 rather than substitutes. 02:23:42.391 --> 02:23:45.849 With the idea there being that households own multiple cars, 02:23:45.849 --> 02:23:49.059 and maybe they buy an electric vehicle that they don't use 02:23:49.059 --> 02:23:52.229 all that much for some of their transportation services, 02:23:52.229 --> 02:23:54.861 but they have other cars in the portfolio, 02:23:54.861 --> 02:23:58.102 gasoline cars, that provide the rest of the services. 02:23:58.102 --> 02:24:00.719 And I think that it's an open question, 02:24:00.719 --> 02:24:02.889 which of these explanations or how much of 02:24:02.889 --> 02:24:07.488 each of these explanations actually is relevant 02:24:07.488 --> 02:24:09.678 to explaining the low load. 02:24:09.678 --> 02:24:11.178 Next slide please. 02:24:12.105 --> 02:24:15.246 And David, just to ask you to wrap up 02:24:15.246 --> 02:24:16.556 if you can. 02:24:16.556 --> 02:24:18.351 This is my last slide. 02:24:18.351 --> 02:24:22.807 So the last observation I just would like to make is that 02:24:22.807 --> 02:24:26.633 there's still much to learn about the costs and benefits 02:24:26.633 --> 02:24:29.734 of electric vehicle technology. 02:24:29.734 --> 02:24:33.314 We are striving for an affordable transition 02:24:33.314 --> 02:24:35.254 to a low carbon economy. 02:24:35.254 --> 02:24:38.464 And so it's important to figure out what the levers are 02:24:38.464 --> 02:24:42.637 that are most effective at providing low cost 02:24:42.637 --> 02:24:46.387 carbon abatement and local pollution abatement. 02:24:46.387 --> 02:24:50.530 The effect of electricity prices on EV usage decisions 02:24:50.530 --> 02:24:51.532 is not yet known. 02:24:51.532 --> 02:24:55.271 And as has been a theme up until this point today 02:24:55.271 --> 02:24:58.740 in the En Banc is that electricity prices are going up. 02:24:58.740 --> 02:25:02.711 And if what we want to do is transition people 02:25:02.711 --> 02:25:06.793 to electric technology, it's possible that this will both 02:25:06.793 --> 02:25:09.303 change their decision of what cars to buy, 02:25:09.303 --> 02:25:12.068 as well as how much they use them. 02:25:12.068 --> 02:25:15.233 There are also potential for vehicle to grid services 02:25:15.233 --> 02:25:17.578 that I think could increase the value proposition 02:25:17.578 --> 02:25:19.161 of this technology. 02:25:20.402 --> 02:25:24.242 And because of what's been going on in Texas, as well as, 02:25:24.242 --> 02:25:27.092 the rolling blackouts in California last fall, 02:25:27.092 --> 02:25:30.612 I think it's worth identifying that there is a risk here 02:25:30.612 --> 02:25:33.613 of relying on the same energy source for transportation 02:25:33.613 --> 02:25:36.042 and other electricity services. 02:25:36.042 --> 02:25:39.632 Right now, gasoline is always going to be available 02:25:39.632 --> 02:25:42.732 when electricity is potentially not. 02:25:42.732 --> 02:25:45.512 And of course there are costs associated with that. 02:25:45.512 --> 02:25:49.715 But moving to a single source for all of our energy needs 02:25:49.715 --> 02:25:52.382 does include an additional risk. 02:25:53.553 --> 02:25:55.572 So thank you for your time and consideration 02:25:55.572 --> 02:25:56.442 about these points. 02:25:56.442 --> 02:25:59.233 I hope that some of this research helps you 02:25:59.233 --> 02:26:01.803 as you approach the difficult trade-offs 02:26:01.803 --> 02:26:03.252 and decisions that you face. 02:26:03.252 --> 02:26:08.002 And please let me know if I can be helpful going forward. 02:26:10.251 --> 02:26:12.481 Thank you so much, Professor Rapsom. 02:26:12.481 --> 02:26:16.021 Now I do want to point out for our panel, 02:26:16.021 --> 02:26:18.312 for our dais members, that we did have 02:26:18.312 --> 02:26:21.872 an unfortunate scratch this morning from 02:26:21.872 --> 02:26:25.535 Professor David Roland-Holst from UC Berkeley. 02:26:25.535 --> 02:26:27.265 He was going to be our fifth panelist, 02:26:27.265 --> 02:26:31.952 but he did have a family medical issue this morning. 02:26:31.952 --> 02:26:34.421 And everything's okay, it's not life threatening, 02:26:34.421 --> 02:26:36.754 but he is unable to join us. 02:26:38.031 --> 02:26:40.854 So we can now actually at this point, 02:26:40.854 --> 02:26:44.282 turn to questions from our dais members. 02:26:44.282 --> 02:26:49.114 And I will remind you to raise your virtual hand 02:26:49.114 --> 02:26:51.354 over in the lower right-hand corner 02:26:51.354 --> 02:26:53.080 of the participant window. 02:26:53.080 --> 02:26:55.614 And I will try to call on you 02:26:55.614 --> 02:26:59.114 so you can ask questions of our panelists. 02:27:00.749 --> 02:27:03.832 Let me see if I see any hands raised. 02:27:05.613 --> 02:27:10.231 Let me call on, I see a hand from Patty Monahan. 02:27:12.939 --> 02:27:13.970 Yes, thank you. 02:27:13.970 --> 02:27:15.970 I found this a really fascinating panel. 02:27:15.970 --> 02:27:17.819 I have several questions. 02:27:17.819 --> 02:27:22.034 I want to start with a question for Mad from Greenlining. 02:27:22.034 --> 02:27:24.144 So I'm with the public utilities, 02:27:24.144 --> 02:27:27.861 I mean the California Energy Commission, oh my goodness. 02:27:27.861 --> 02:27:31.778 And we did an analysis of, required by SD 1000, 02:27:33.300 --> 02:27:36.821 of the equity implications of charger of distribution. 02:27:36.821 --> 02:27:40.020 And what we found was that perhaps not surprisingly 02:27:40.020 --> 02:27:43.941 chargers follow where EVs are being used. 02:27:43.941 --> 02:27:46.852 And that's a problem in terms of making sure that 02:27:46.852 --> 02:27:49.041 lower income families have access, 02:27:49.041 --> 02:27:51.101 but no matter where you live, if you're in a rural 02:27:51.101 --> 02:27:53.172 or mountain community that you have access. 02:27:53.172 --> 02:27:56.505 And then I'm curious about the fact that 02:27:59.056 --> 02:28:01.976 we want to make sure that we contain rates, 02:28:01.976 --> 02:28:04.836 and we want to make sure that lower income families 02:28:04.836 --> 02:28:06.636 and families that live in disadvantaged communities 02:28:06.636 --> 02:28:08.476 have access to electric vehicles. 02:28:08.476 --> 02:28:10.315 And part of this, the reason we wanna do this 02:28:10.315 --> 02:28:13.826 is because they can save money, so much money. 02:28:13.826 --> 02:28:16.886 In fact, a recent report from Consumer Reports found 02:28:16.886 --> 02:28:19.204 over the lifetime of the electric vehicle, 02:28:19.204 --> 02:28:21.496 it can be between six and $10,000, 02:28:21.496 --> 02:28:24.026 and it's a combination of reduced fuel costs 02:28:24.026 --> 02:28:27.435 and also reduced operation and maintenance costs. 02:28:27.435 --> 02:28:32.435 And I'm wondering about what you think the appropriate role 02:28:32.768 --> 02:28:35.168 of utility investments in infrastructure are, 02:28:35.168 --> 02:28:37.887 and specifically, do they have a role to play 02:28:37.887 --> 02:28:41.290 in providing access in low-income 02:28:41.290 --> 02:28:42.994 and disadvantaged communities? 02:28:42.994 --> 02:28:45.778 I mean, there is a rate payer implication there, 02:28:45.778 --> 02:28:48.999 but there could be a very large benefit 02:28:48.999 --> 02:28:52.729 if we can find better ways to get zero emission vehicles 02:28:52.729 --> 02:28:56.062 into the hands of lower income families. 02:28:57.074 --> 02:28:59.515 Well, thank you so much for the question, 02:28:59.515 --> 02:29:04.348 and totally agree with the opportunity that you presented. 02:29:05.986 --> 02:29:10.153 And I think it's all in the design of the program, 02:29:11.458 --> 02:29:15.139 of the investment decision, and of the implementation. 02:29:15.139 --> 02:29:19.496 So while I don't work on vehicles, I can connect you 02:29:19.496 --> 02:29:22.318 to my esteemed colleagues at Greenlining that do, 02:29:22.318 --> 02:29:25.186 I can speak to the questions that you highlighted 02:29:25.186 --> 02:29:28.436 more generally, which is what's the role of the utility? 02:29:28.436 --> 02:29:31.856 Absolutely, they need to invest and they need to prioritize 02:29:31.856 --> 02:29:34.907 investment in the communities that are most in need, 02:29:34.907 --> 02:29:37.116 both from an infrastructure perspective 02:29:37.116 --> 02:29:39.846 and from a non-energy benefit perspective. 02:29:39.846 --> 02:29:41.748 So one thing that I think would help would be 02:29:41.748 --> 02:29:45.498 non-energy benefit analysis in both agencies, 02:29:46.832 --> 02:29:49.623 decision-making around where investments go 02:29:49.623 --> 02:29:52.472 because cost-effectiveness remains a significant barrier 02:29:52.472 --> 02:29:56.547 to investments in TAC along these issues. 02:29:56.547 --> 02:29:59.969 The second issue that, well, second thought 02:29:59.969 --> 02:30:04.802 in responding to your question is we need rate protection. 02:30:08.263 --> 02:30:10.893 Yes, we need to prioritize investments in these communities, 02:30:10.893 --> 02:30:13.093 and also they're not the communities that should pay 02:30:13.093 --> 02:30:16.043 a disproportionate amount of their income 02:30:16.043 --> 02:30:20.006 to overcome a lot of historic disinvestment and inequities 02:30:20.006 --> 02:30:24.372 that result in current investments around electrification, 02:30:24.372 --> 02:30:26.643 whether it's vehicles or buildings, 02:30:26.643 --> 02:30:30.861 being more expensive under certain upfront metrics. 02:30:30.861 --> 02:30:34.465 Also in terms of making sure that low-income customers 02:30:34.465 --> 02:30:36.632 benefit from DER programs, 02:30:37.542 --> 02:30:39.861 one of the things that I've found that I would invite 02:30:39.861 --> 02:30:44.665 both agencies to consider is that the assumption of use 02:30:44.665 --> 02:30:47.831 and activity for low-income customers is often off. 02:30:47.831 --> 02:30:51.854 So the projected savings are not rooted as closely, 02:30:51.854 --> 02:30:55.385 and the assumptions are off because these populations 02:30:55.385 --> 02:31:00.385 are under engaged with, and their behavior around energy use 02:31:00.557 --> 02:31:04.428 and driving is often a least priority, 02:31:04.428 --> 02:31:08.200 in terms of academic and institutional research. 02:31:08.200 --> 02:31:09.308 So in the San Joaquin Valley, 02:31:09.308 --> 02:31:11.337 affordable energy pilot proceeding, 02:31:11.337 --> 02:31:16.159 we were able to focus on what are those rate protections 02:31:16.159 --> 02:31:17.897 when we're making these investments? 02:31:17.897 --> 02:31:20.856 And we are uncertain and we know that the 02:31:20.856 --> 02:31:25.109 folks participating are extremely economically vulnerable. 02:31:25.109 --> 02:31:28.479 They need a separate design policy to make sure 02:31:28.479 --> 02:31:31.519 they are protected from these rate increases. 02:31:31.519 --> 02:31:34.391 So in terms of the cost of shift question, 02:31:34.391 --> 02:31:36.403 as a advocate focused on 02:31:36.403 --> 02:31:39.501 low income rate payers and communities, 02:31:39.501 --> 02:31:42.311 it has, I would say it has to go elsewhere. 02:31:42.311 --> 02:31:45.644 And in terms of who's footing that bill. 02:31:47.343 --> 02:31:52.029 But I think there absolutely is an extreme opportunity. 02:31:52.029 --> 02:31:56.753 And if we delay investing in these communities, 02:31:56.753 --> 02:31:59.665 it becomes more expensive, and their bills become 02:31:59.665 --> 02:32:02.723 more expensive as well, as they're left out of 02:32:02.723 --> 02:32:04.894 the transition in the longterm. 02:32:04.894 --> 02:32:09.028 So I think the cost comparison, we need a lot more 02:32:09.028 --> 02:32:12.087 individualized focus on low income 02:32:12.087 --> 02:32:15.087 and extremely low income California. 02:32:17.200 --> 02:32:19.807 And I think Michael, thank you, 02:32:19.807 --> 02:32:22.998 and I think Michael Colvin made a great point earlier, 02:32:22.998 --> 02:32:25.728 which is those targeted investments in TAC, 02:32:25.728 --> 02:32:29.830 depending on how you do them, can help offset 02:32:29.830 --> 02:32:34.542 some of the costs system-wide if you do it right. 02:32:34.542 --> 02:32:35.922 Great, thank you. 02:32:35.922 --> 02:32:38.601 I have a question for David. 02:32:38.601 --> 02:32:42.656 So I appreciate the fact that you've caveated some of 02:32:42.656 --> 02:32:45.553 your comments around the EV usage 02:32:45.553 --> 02:32:47.794 with the fact that these were older vehicles 02:32:47.794 --> 02:32:49.513 and that was when they didn't have much range. 02:32:49.513 --> 02:32:52.724 I just want to say we recently did a survey 02:32:52.724 --> 02:32:57.724 and found that a consumer survey and found that EV owners 02:32:57.784 --> 02:33:00.834 said they drove more miles than their ICE vehicles 02:33:00.834 --> 02:33:04.703 in internal combustion engines powered vehicles. 02:33:04.703 --> 02:33:06.853 And when we normalize for vehicle age, 02:33:06.853 --> 02:33:08.754 it was pretty equivalent. 02:33:08.754 --> 02:33:10.735 So I think the data is shifting, 02:33:10.735 --> 02:33:14.293 and as we find EVs with greater and greater range, 02:33:14.293 --> 02:33:16.662 we may find that they're being driven as many, 02:33:16.662 --> 02:33:18.845 if not more miles than their ICE counterparts 02:33:18.845 --> 02:33:22.033 because of the fuel savings aspect. 02:33:22.033 --> 02:33:23.893 I wanted to ask you a question about 02:33:23.893 --> 02:33:25.372 the vehicle subsidies piece. 02:33:25.372 --> 02:33:27.715 And I don't know if we can do this, 02:33:27.715 --> 02:33:29.624 but can we go back to the slide that talks about 02:33:29.624 --> 02:33:31.457 the vehicle subsidies? 02:33:33.425 --> 02:33:36.243 We can try, you're asking for. 02:33:36.243 --> 02:33:37.947 Well, I can ask my question whether or not 02:33:37.947 --> 02:33:38.780 we go back to that. 02:33:38.780 --> 02:33:41.170 Well one of the slides from David Rapson, 02:33:41.170 --> 02:33:43.109 if we could have the folks pull that up. 02:33:43.109 --> 02:33:45.609 But I do recall which slides you were talking about 02:33:45.609 --> 02:33:48.632 with the, I think 12 billion, 12 to 18 billion. 02:33:48.632 --> 02:33:50.631 Shocking number, I gotta say. 02:33:50.631 --> 02:33:53.963 Yeah, and I do believe in vehicle subsidies. 02:33:53.963 --> 02:33:57.200 I do think though the fact that we're transitioning 02:33:57.200 --> 02:33:59.437 to using the low carbon fuel regulations, 02:33:59.437 --> 02:34:03.908 a low carbon fuel standard to provide a consistent 1.5K 02:34:03.908 --> 02:34:06.498 incentive for vehicles. 02:34:06.498 --> 02:34:07.459 Here we go. 02:34:07.459 --> 02:34:12.126 So California required, sorry my screen is, there we go. 02:34:13.431 --> 02:34:17.263 15,000 to 25,000 per vehicle subsidies. 02:34:17.263 --> 02:34:19.013 Is that right, David? 02:34:19.923 --> 02:34:20.781 Yes, that's right. 02:34:20.781 --> 02:34:24.413 So there were some over this period of time, 02:34:24.413 --> 02:34:28.799 there were $7,500 in a federal subsidy and about $2,500, 02:34:28.799 --> 02:34:31.545 so 10,000 per EV purchase. 02:34:31.545 --> 02:34:34.454 And many of the EVs that were purchased 02:34:34.454 --> 02:34:37.427 would have been bought without the subsidies, 02:34:37.427 --> 02:34:39.705 and yet they got the subsidies anyway. 02:34:39.705 --> 02:34:43.545 So that basically squanders some of those resources, right? 02:34:43.545 --> 02:34:47.415 It's impossible to know who actually needs the subsidy 02:34:47.415 --> 02:34:49.967 in order to be induced to buy an EV, 02:34:49.967 --> 02:34:53.604 as opposed to somebody who just really wants to buy an EV. 02:34:53.604 --> 02:34:57.021 And so that's why this number is so high. 02:34:58.235 --> 02:35:01.113 I'm a little confused about the 15 to 25,000, 02:35:01.113 --> 02:35:03.254 where did that come from? 02:35:03.254 --> 02:35:07.171 So we estimated the sensitivity of EV demands 02:35:09.224 --> 02:35:10.744 to subsidies. 02:35:10.744 --> 02:35:15.626 And what this tells us is basically how many additional EVs 02:35:15.626 --> 02:35:18.255 were induced by the subsidy programs. 02:35:18.255 --> 02:35:19.506 We know how much was spent, 02:35:19.506 --> 02:35:23.818 we know how many incremental EVs were induced by this. 02:35:23.818 --> 02:35:27.609 Not all the EVs purchased were induced by the subsidies, 02:35:27.609 --> 02:35:28.568 only some were. 02:35:28.568 --> 02:35:31.567 And when you divide one by the other, it's gonna be some, 02:35:31.567 --> 02:35:34.778 obviously there's some uncertainty about this, 02:35:34.778 --> 02:35:36.691 but it's gonna be in the range of 02:35:36.691 --> 02:35:39.569 15 to $25,000 over that period. 02:35:39.569 --> 02:35:43.528 And that number is like could end up going down 02:35:43.528 --> 02:35:46.788 as electric vehicles get more cost competitive, 02:35:46.788 --> 02:35:49.157 as their cost goes down. 02:35:49.157 --> 02:35:50.760 But also the population that's buying them 02:35:50.760 --> 02:35:52.021 is probably going to change as well, 02:35:52.021 --> 02:35:55.250 it's going to be fewer early adopters. 02:35:55.250 --> 02:35:58.750 Yeah, I mean, it looks like according to 02:36:00.473 --> 02:36:01.732 pretty reputable analysts, 02:36:01.732 --> 02:36:03.682 but in the next two to five years, 02:36:03.682 --> 02:36:05.387 battery electric vehicles should be cheaper 02:36:05.387 --> 02:36:08.815 than their internal combustion engines counterparts 02:36:08.815 --> 02:36:11.682 on the vehicle basis, let alone not counting for, 02:36:11.682 --> 02:36:14.152 reduced operation maintenance and reduced fuel costs. 02:36:14.152 --> 02:36:16.743 And so with that calculus I think becomes 02:36:16.743 --> 02:36:19.132 more commonly known, one would think, 02:36:19.132 --> 02:36:23.316 that the need for subsidies would go dramatically down. 02:36:23.316 --> 02:36:27.407 And I just look at like the Ford F-150 is coming out 02:36:27.407 --> 02:36:29.100 in electric model next year, it's gonna have 02:36:29.100 --> 02:36:33.017 the best low end torque, great towing capacity, 02:36:33.879 --> 02:36:35.438 if it has some performance characteristics 02:36:35.438 --> 02:36:37.478 that are better than its ICE counterpart. 02:36:37.478 --> 02:36:42.438 And so I just wonder your reaction to this idea of well, 02:36:42.438 --> 02:36:46.050 if these vehicles actually perform better, 02:36:46.050 --> 02:36:48.551 and the biggest barrier and become cost competitive, 02:36:48.551 --> 02:36:51.719 I mean (mumbles), it's just infrastructure. 02:36:51.719 --> 02:36:54.598 Would you agree with that? 02:36:54.598 --> 02:36:56.310 Well, I think there are a few different marks. 02:36:56.310 --> 02:36:58.319 I mean, I agree with the general point that this technology 02:36:58.319 --> 02:37:01.159 is changing and EVs are becoming cheaper 02:37:01.159 --> 02:37:04.188 and more attractive as more different models are available 02:37:04.188 --> 02:37:06.314 to meet different transportation needs. 02:37:06.314 --> 02:37:10.616 And absolutely, it's if they reach costs parity, 02:37:10.616 --> 02:37:14.134 then subsidies will likely be either unnecessary 02:37:14.134 --> 02:37:15.967 or far less necessary. 02:37:17.178 --> 02:37:19.748 I think that there is one missing piece 02:37:19.748 --> 02:37:22.578 to the subsidy puzzle that I just want to highlight, 02:37:22.578 --> 02:37:24.440 which is it doesn't do anything, 02:37:24.440 --> 02:37:27.387 if you are only subsidizing, 02:37:27.387 --> 02:37:29.288 then you're not doing anything to create 02:37:29.288 --> 02:37:32.409 the right incentives for on the usage margin. 02:37:32.409 --> 02:37:36.662 So as long as there's some fossil fuel on the grid, 02:37:36.662 --> 02:37:40.254 we want to disincentivize the usage of that as well. 02:37:40.254 --> 02:37:43.193 And subsidies are not the best tool for doing that. 02:37:43.193 --> 02:37:46.943 We kind of need some carrots and some sticks. 02:37:48.988 --> 02:37:51.321 (crosstalk) 02:37:54.385 --> 02:37:56.348 I hate to cut you off Commissioner Monahan. 02:37:56.348 --> 02:37:58.427 I do have a couple other hands raised 02:37:58.427 --> 02:38:00.132 and we have a stop time, 02:38:00.132 --> 02:38:02.408 we're already a little behind schedule. 02:38:02.408 --> 02:38:05.973 I want to turn to, I see Commissioner Rechtschaffen 02:38:05.973 --> 02:38:08.193 has his hand raised, and then Severin Borenstein, 02:38:08.193 --> 02:38:10.452 and if we have time, we will get both. 02:38:10.452 --> 02:38:12.714 Oh, and we have some additional questions too. 02:38:12.714 --> 02:38:14.693 But let's turn to Commissioner Rechtschaffen 02:38:14.693 --> 02:38:16.276 with your question. 02:38:17.203 --> 02:38:19.303 Well, first I just want the record to reflect that 02:38:19.303 --> 02:38:22.194 Commissioner Monahan subconsciously said she's at the 02:38:22.194 --> 02:38:23.593 Public Utilities Commission, 02:38:23.593 --> 02:38:27.217 so it indicates that that's where her allegiance is really, 02:38:27.217 --> 02:38:29.023 where she really wants to be aligned with. 02:38:29.023 --> 02:38:32.033 So just putting it out there. 02:38:32.033 --> 02:38:35.156 I have two questions that hopefully can be answered 02:38:35.156 --> 02:38:38.405 relatively quickly, so I'll just pose them, 02:38:38.405 --> 02:38:41.415 and then we can have the people answer. 02:38:41.415 --> 02:38:44.393 Mad, my question for you is, 02:38:44.393 --> 02:38:48.476 do you think given the needs that you identified, 02:38:49.381 --> 02:38:52.582 do you think we need to have external sources of funding 02:38:52.582 --> 02:38:56.053 from taxpayers more generally to fund the kind of equitable 02:38:56.053 --> 02:38:58.470 transition that you envision? 02:39:00.171 --> 02:39:01.231 So that's one thing. 02:39:01.231 --> 02:39:02.935 We're here talking about rates obviously, 02:39:02.935 --> 02:39:05.900 but some discussion is how much can we dare from 02:39:05.900 --> 02:39:07.263 rate payers? 02:39:07.263 --> 02:39:11.327 And then Mike Campbell, I have a question for you, 02:39:11.327 --> 02:39:14.377 roughly straightforward question about your slide 02:39:14.377 --> 02:39:17.377 showing that the cost of EV charging 02:39:19.545 --> 02:39:23.045 will exceed gasoline costs as rates go up. 02:39:26.031 --> 02:39:29.395 What rate design are you assuming? 02:39:29.395 --> 02:39:32.321 What TOU rates or other dynamic rates, 02:39:32.321 --> 02:39:36.601 and did you factor in some of the managed charging options 02:39:36.601 --> 02:39:39.726 that were discussed elsewhere in the white paper? 02:39:39.726 --> 02:39:42.923 And the white paper is, was as Paul presented earlier, 02:39:42.923 --> 02:39:45.982 showed that especially with managed charging 02:39:45.982 --> 02:39:47.692 and not even including ownership costs, 02:39:47.692 --> 02:39:50.359 but just managed charging shows, 02:39:52.256 --> 02:39:54.516 saved cost savings for electric vehicles, 02:39:54.516 --> 02:39:58.183 as opposed to gasoline over the next decade. 02:40:00.661 --> 02:40:03.744 Mad, I think you were first. 02:40:07.899 --> 02:40:09.898 Sorry, phone computer. 02:40:09.898 --> 02:40:13.480 Thank you so much, Commissioner, for the question. 02:40:13.480 --> 02:40:15.339 In terms of outside funding, 02:40:15.339 --> 02:40:17.480 a couple of things come to mind. 02:40:17.480 --> 02:40:22.086 First, it has to be anchored in the protections 02:40:22.086 --> 02:40:22.991 for low-income people. 02:40:22.991 --> 02:40:27.408 So the treatment of other classes within rate payers, 02:40:30.407 --> 02:40:35.065 that's not where the question and the research should start, 02:40:35.065 --> 02:40:38.452 and that's not how we should set it up. 02:40:38.452 --> 02:40:42.619 I think that significant amount of money is needed 02:40:44.958 --> 02:40:48.639 to make the types of investments because of the barriers, 02:40:48.639 --> 02:40:51.329 the significant barriers in historic disinvestment. 02:40:51.329 --> 02:40:53.400 I think one way to help answer your question, 02:40:53.400 --> 02:40:57.150 we need to pilot a lot more DER technologies, 02:40:59.313 --> 02:41:03.024 decarbonization programs in different 02:41:03.024 --> 02:41:05.803 disadvantaged communities because they are not a monolith, 02:41:05.803 --> 02:41:07.497 regionally across the state to help 02:41:07.497 --> 02:41:10.364 answering these questions with more precision. 02:41:10.364 --> 02:41:13.947 Absolutely I think that wealthier customers 02:41:16.933 --> 02:41:21.576 can afford to pay more, controversial statement. 02:41:21.576 --> 02:41:25.909 And I think that there is a public good in investing 02:41:28.232 --> 02:41:31.052 in DEC investments and that over the longterm, 02:41:31.052 --> 02:41:34.592 it will be also more efficient on the system. 02:41:34.592 --> 02:41:38.233 And I think that there's also a public health crisis 02:41:38.233 --> 02:41:40.970 associated with our energy system. 02:41:40.970 --> 02:41:43.217 And so there's an urgency that makes 02:41:43.217 --> 02:41:46.677 outside funding attractive and necessary, 02:41:46.677 --> 02:41:51.231 and I think something for the Commission to consider. 02:41:51.231 --> 02:41:55.293 Also I will say, utility profits and dividends 02:41:55.293 --> 02:41:59.130 during a crisis when folks are in precarious levels 02:41:59.130 --> 02:42:02.310 of access to vital services, are also concerning. 02:42:02.310 --> 02:42:07.060 So I think there are a lot of places to look for funding. 02:42:08.002 --> 02:42:09.975 And let me let Mike Campbell 02:42:09.975 --> 02:42:13.014 give a one minute response to Commissioner Rechtschaffen. 02:42:13.014 --> 02:42:15.769 And then I think we really need to break for lunch. 02:42:15.769 --> 02:42:18.461 We're behind our target. 02:42:18.461 --> 02:42:20.849 Mike, do you have a quick answer for the Commissioner? 02:42:20.849 --> 02:42:24.591 Yeah, I'll save the two hour answer for a different day. 02:42:24.591 --> 02:42:28.864 The short answer is that, just looking at the average rates, 02:42:28.864 --> 02:42:30.796 not a time of use and those other things, 02:42:30.796 --> 02:42:33.485 but I think the key point there is, 02:42:33.485 --> 02:42:38.478 and why I was using that as indicative, is the average rate 02:42:38.478 --> 02:42:42.849 I think we can use that as a rough heuristic of 02:42:42.849 --> 02:42:45.430 what we're up against in terms of how 02:42:45.430 --> 02:42:50.405 we're talking about subsidizing EVs in a lot of ways. 02:42:50.405 --> 02:42:54.947 And so I think that we should be careful about 02:42:54.947 --> 02:42:56.188 how we could create inequities 02:42:56.188 --> 02:42:59.616 and reducing the amount that creating costs 02:42:59.616 --> 02:43:02.283 for non-participating customers. 02:43:03.336 --> 02:43:07.503 And so one key thing is in the before COVID times, 02:43:08.409 --> 02:43:11.810 most folks would, we're talking residential rates here, 02:43:11.810 --> 02:43:15.060 but super off peak for charging vehicle is at night. 02:43:15.060 --> 02:43:17.470 Really, if we're gonna be planning and thinking about this 02:43:17.470 --> 02:43:20.601 holistically, we're probably need to be thinking about 02:43:20.601 --> 02:43:22.950 how we're gonna be charging vehicles during the day 02:43:22.950 --> 02:43:25.909 when we have, we can be absorbing that solar energy, 02:43:25.909 --> 02:43:28.051 getting more of that environmental benefit, 02:43:28.051 --> 02:43:29.581 and reducing costs. 02:43:29.581 --> 02:43:34.422 Just as we all know, when you consume energy matters. 02:43:34.422 --> 02:43:38.313 And so we need to be real looking at the underlying costs 02:43:38.313 --> 02:43:40.523 associated with the charging of those vehicles. 02:43:40.523 --> 02:43:44.023 So simply a kilowatt hour is not the same, 02:43:46.361 --> 02:43:48.459 you really have to be thinking about when it's being used 02:43:48.459 --> 02:43:50.529 and what it's offsetting. 02:43:50.529 --> 02:43:54.169 We're at a place where the rates are getting 02:43:54.169 --> 02:43:57.529 and underlying costs are getting so high. 02:43:57.529 --> 02:43:58.959 We're not at a place where we could really 02:43:58.959 --> 02:44:02.035 rate design our way out of it, so to speak, 02:44:02.035 --> 02:44:03.841 by just adjusting the rates. 02:44:03.841 --> 02:44:05.821 So that was the key theme there. 02:44:05.821 --> 02:44:07.747 I hope that answers your question, Commissioner. 02:44:07.747 --> 02:44:09.996 If you want more, obviously I'm more than happy 02:44:09.996 --> 02:44:12.215 to stay on the soapbox. 02:44:12.215 --> 02:44:13.266 Thank you, Mike. 02:44:13.266 --> 02:44:14.514 Thank you, Mike. 02:44:14.514 --> 02:44:19.009 I think I need to turn it back to Mary Claire, our emcee, 02:44:19.009 --> 02:44:20.225 and have our lunch breaks. 02:44:20.225 --> 02:44:22.275 Sorry if I didn't get to with your question 02:44:22.275 --> 02:44:23.397 for our panel. 02:44:23.397 --> 02:44:26.900 And thank you to my panel members. 02:44:26.900 --> 02:44:28.619 Great, thank you so much, Dorothy, 02:44:28.619 --> 02:44:31.446 and thank you for that great panel. 02:44:31.446 --> 02:44:34.685 So we have a very full afternoon planned, 02:44:34.685 --> 02:44:37.905 so to make sure that we have the full time allotted 02:44:37.905 --> 02:44:40.375 in the afternoon, we are gonna shorten lunch a little bit. 02:44:40.375 --> 02:44:43.256 So let's plan to be back here at one, 02:44:43.256 --> 02:44:45.982 as the agenda calls for. 02:44:45.982 --> 02:44:48.553 And a couple of housekeeping items before we go. 02:44:48.553 --> 02:44:51.661 So the slides have not yet been posted to our webpage, 02:44:51.661 --> 02:44:52.931 but we are working on that, 02:44:52.931 --> 02:44:56.141 they should be posted very shortly. 02:44:56.141 --> 02:45:00.126 And we do recommend that the panelists and the dais members 02:45:00.126 --> 02:45:03.235 stay logged into the WebEx and on the phone line, 02:45:03.235 --> 02:45:06.357 and just turn off your video and mute your phone 02:45:06.357 --> 02:45:07.388 during lunch. 02:45:07.388 --> 02:45:10.147 And if you do want to log off and then log back in, 02:45:10.147 --> 02:45:12.945 please do log back in 15 minutes early 02:45:12.945 --> 02:45:15.975 so we can make sure to get you squared away. 02:45:15.975 --> 02:45:18.415 All right, thank you. 02:45:18.415 --> 02:45:19.748 Thank you, MC. 02:45:22.145 --> 02:45:24.635 Great (mumbles) put me on speaker view. 02:45:24.635 --> 02:45:27.145 Welcome back everyone. 02:45:27.145 --> 02:45:28.625 Thank you for joining us. 02:45:28.625 --> 02:45:31.065 This is the California Public Utilities Commission 02:45:31.065 --> 02:45:33.465 En Banc hearing on rates and costs. 02:45:33.465 --> 02:45:35.487 Can we afford the future? 02:45:35.487 --> 02:45:38.055 I hope you were all able to stretch your legs 02:45:38.055 --> 02:45:41.986 and get some food and are ready for the afternoon 02:45:41.986 --> 02:45:44.207 because we have some great panels planned. 02:45:44.207 --> 02:45:47.285 Where this morning was really dealing with the issues, 02:45:47.285 --> 02:45:50.595 this afternoon is going to be focused on solutions. 02:45:50.595 --> 02:45:52.755 So we're going to have two panels 02:45:52.755 --> 02:45:55.805 with a 15 minute stretch break in between. 02:45:55.805 --> 02:45:57.035 And then after the panels, 02:45:57.035 --> 02:46:00.065 we'll have closing remarks from Commissioner Shiroma, 02:46:00.065 --> 02:46:02.441 and then half an hour of public comments. 02:46:02.441 --> 02:46:05.272 And we'll provide directions on how the public can call in 02:46:05.272 --> 02:46:09.105 to make comments closer to the end of the day. 02:46:10.210 --> 02:46:11.681 So without further ado, 02:46:11.681 --> 02:46:15.578 I'm going to introduce the moderator for panel two, 02:46:15.578 --> 02:46:17.268 Leuwam Tesfai. 02:46:17.268 --> 02:46:20.649 Leuwam served as Commissioner Shiroma's chief of staff 02:46:20.649 --> 02:46:22.401 and legal advisor. 02:46:22.401 --> 02:46:24.879 Prior to her Governor's appointment in this role, 02:46:24.879 --> 02:46:26.349 she practiced in the federal section 02:46:26.349 --> 02:46:28.427 of the CPUC's legal division, 02:46:28.427 --> 02:46:31.257 representing the CPUC before FERC, 02:46:31.257 --> 02:46:34.148 and advising on energy matters, including rate making, 02:46:34.148 --> 02:46:37.818 transmission planning, procurement, and climate change. 02:46:37.818 --> 02:46:40.082 Leuwam also previously served as an advisor 02:46:40.082 --> 02:46:43.490 to Commissioner Leanne Randolph, and in the private sector 02:46:43.490 --> 02:46:44.895 in renewable energy markets 02:46:44.895 --> 02:46:47.800 and electric generation project development. 02:46:47.800 --> 02:46:49.467 Over to you, Leuwam. 02:46:52.876 --> 02:46:54.959 Thank you, Mary Claire. 02:46:56.005 --> 02:46:57.156 Good afternoon, everyone. 02:46:57.156 --> 02:46:59.495 And I hope everyone had a good lunch break. 02:46:59.495 --> 02:47:01.465 We're moving into panel two. 02:47:01.465 --> 02:47:04.014 What strategies for cost control 02:47:04.014 --> 02:47:07.346 or reduction do we need to explore? 02:47:07.346 --> 02:47:09.736 As we learned from our last panel, 02:47:09.736 --> 02:47:12.695 customer acceptance through affordable rates is essential 02:47:12.695 --> 02:47:16.637 to the success of California's climate initiative. 02:47:16.637 --> 02:47:19.635 As California works to address our climate goals, 02:47:19.635 --> 02:47:22.329 safety, and reliability, 02:47:22.329 --> 02:47:25.799 affordability can not be lost on us. 02:47:25.799 --> 02:47:29.805 We must tirelessly analyze the most promising opportunities 02:47:29.805 --> 02:47:32.325 to contain utility costs. 02:47:32.325 --> 02:47:34.785 Much of my time at the Commission has been spent wrestling 02:47:34.785 --> 02:47:37.335 with these energy cost and rate issues, 02:47:37.335 --> 02:47:40.375 both at the CPUC and litigating transmission costs 02:47:40.375 --> 02:47:43.345 before the Federal Energy Regulatory Commission 02:47:43.345 --> 02:47:45.255 to ensure rate payer value 02:47:45.255 --> 02:47:48.666 and California's longterm climate success. 02:47:48.666 --> 02:47:51.374 Our experts joining me on this panel will help us explore 02:47:51.374 --> 02:47:52.874 these areas today. 02:47:54.715 --> 02:47:57.245 As the child of immigrants from Ethiopia and Eritrea, 02:47:57.245 --> 02:48:00.315 I also know that communities of color care deeply about 02:48:00.315 --> 02:48:02.355 issues around climate change. 02:48:02.355 --> 02:48:04.887 It is not news to us that communities of color 02:48:04.887 --> 02:48:09.348 are disproportionately impacted by the climate crisis. 02:48:09.348 --> 02:48:12.440 To build customer acceptance, we must also grow the benefits 02:48:12.440 --> 02:48:16.248 to the California economy, from increasing investments 02:48:16.248 --> 02:48:20.553 in renewable generation resources, wildfire mitigation, 02:48:20.553 --> 02:48:22.902 and transportation electrification, 02:48:22.902 --> 02:48:25.863 especially for disadvantaged communities 02:48:25.863 --> 02:48:28.083 and communities of color. 02:48:28.083 --> 02:48:31.495 I am pleased to introduce our next panel of diverse speakers 02:48:31.495 --> 02:48:36.188 to explore both opportunities to contain electric costs 02:48:36.188 --> 02:48:38.058 and the benefits of utility investments 02:48:38.058 --> 02:48:40.568 in the California economy. 02:48:40.568 --> 02:48:43.801 In order of their presentations, we have Robert Kenney, 02:48:43.801 --> 02:48:46.928 vice president of regulatory and external affairs, 02:48:46.928 --> 02:48:49.000 Pacific Gas and Electric Company, 02:48:49.000 --> 02:48:51.688 Carla Peterman, senior vice president of strategy 02:48:51.688 --> 02:48:55.837 and regulatory affairs at Southern California Edison, 02:48:55.837 --> 02:48:58.144 Scott Crider, chief customer officer 02:48:58.144 --> 02:49:01.144 from San Diego Gas and Electric Company, 02:49:01.144 --> 02:49:04.342 Jennifer Dowdell, senior policy expert 02:49:04.342 --> 02:49:07.362 from the Utility Reform Network, 02:49:07.362 --> 02:49:10.904 Betony Jones, advisor from NextGen Policy 02:49:10.904 --> 02:49:14.173 and CEO of Inclusive Economics, 02:49:14.173 --> 02:49:16.903 and Rick Umoff, senior director and counsel at 02:49:16.903 --> 02:49:20.799 the Solar Energy Industries Association. 02:49:20.799 --> 02:49:23.507 So to start, we have Robert Kenney. 02:49:23.507 --> 02:49:27.575 Robert is vice president of regulatory and external affairs, 02:49:27.575 --> 02:49:31.226 responsible for strategic guidance of regulatory affairs, 02:49:31.226 --> 02:49:33.733 federal, state, and local government affairs, 02:49:33.733 --> 02:49:35.943 and community relations and marketing, 02:49:35.943 --> 02:49:38.103 and communications for PG&E. 02:49:38.103 --> 02:49:39.814 Previously, Robert was chairman 02:49:39.814 --> 02:49:42.645 of the Missouri Public Service Commission. 02:49:42.645 --> 02:49:44.803 Robert will present first. 02:49:44.803 --> 02:49:47.193 We'll go through all of the presentations, 02:49:47.193 --> 02:49:51.903 and then allow for questions from all of our dais members. 02:49:51.903 --> 02:49:53.903 Robert, please go ahead. 02:49:55.704 --> 02:49:56.841 Good afternoon. 02:49:56.841 --> 02:49:58.811 Leuwam, thank you very much for the introduction. 02:49:58.811 --> 02:50:01.993 Good afternoon Commissioners, both CEC and CPUC, 02:50:01.993 --> 02:50:06.814 and members of the public and members of the CAISO Board, 02:50:06.814 --> 02:50:09.964 and our elected officials that were with us this morning, 02:50:09.964 --> 02:50:13.169 Chair Holden and Chair Hueso. 02:50:13.169 --> 02:50:14.687 I'm Robert Kenney, our vice president 02:50:14.687 --> 02:50:17.498 of regulatory and external affairs. 02:50:17.498 --> 02:50:19.657 I'm really excited to be a part of this discussion 02:50:19.657 --> 02:50:23.944 because we all share the goal of safe, reliable, 02:50:23.944 --> 02:50:26.444 clean, and equitable energy. 02:50:26.444 --> 02:50:29.885 And because we recognize that we will not be able to do this 02:50:29.885 --> 02:50:34.080 and reach all of our goals if we don't take bold action now. 02:50:34.080 --> 02:50:36.819 At PG&E, we are working hard to deliver 02:50:36.819 --> 02:50:39.750 on our affordability goals, while continuing to make 02:50:39.750 --> 02:50:42.168 needed safety and infrastructure investments, 02:50:42.168 --> 02:50:45.009 including significant and substantial investments 02:50:45.009 --> 02:50:47.280 to further mitigate wildfire risk, 02:50:47.280 --> 02:50:50.010 along with meeting California's ambitious 02:50:50.010 --> 02:50:52.147 clean energy mandate. 02:50:52.147 --> 02:50:55.338 I appreciate and I meaningfully appreciate, 02:50:55.338 --> 02:50:59.662 and really do appreciate, the challenge that the CPUC has, 02:50:59.662 --> 02:51:03.338 and the challenge that you've presented to us to think big, 02:51:03.338 --> 02:51:05.708 to think about impactful ideas that can help reduce 02:51:05.708 --> 02:51:08.048 energy costs over the long term, 02:51:08.048 --> 02:51:10.138 even as we continue to make strides toward 02:51:10.138 --> 02:51:13.798 our shared safety and clean energy goals. 02:51:13.798 --> 02:51:16.248 So I'd like to share briefly our thinking here 02:51:16.248 --> 02:51:17.477 in some important areas. 02:51:17.477 --> 02:51:22.477 And I'd like to advance to the next slide, if I may please. 02:51:22.729 --> 02:51:25.161 Operational cost efficiencies, 02:51:25.161 --> 02:51:28.590 transactions to benefit customers and electrification. 02:51:28.590 --> 02:51:30.279 And then of course, I look forward to hearing from others 02:51:30.279 --> 02:51:33.509 and having a productive discussion. 02:51:33.509 --> 02:51:36.338 I'd first like to talk about operational cost efficiencies 02:51:36.338 --> 02:51:38.329 and near term cost efficiencies 02:51:38.329 --> 02:51:40.441 that we're looking to achieve. 02:51:40.441 --> 02:51:43.798 And mitigate upward rate pressure in the near term. 02:51:43.798 --> 02:51:45.990 We've identified a set of operational efficiencies 02:51:45.990 --> 02:51:48.843 that we estimate can save on average a billion dollars 02:51:48.843 --> 02:51:50.676 per year through 2025. 02:51:52.199 --> 02:51:55.509 These efforts reflect potential opportunities to moderate 02:51:55.509 --> 02:51:57.508 expected customer bill increases 02:51:57.508 --> 02:52:00.799 due to an increase in infrastructure investment. 02:52:00.799 --> 02:52:05.258 And this billion dollars is roughly comprises 800 million 02:52:05.258 --> 02:52:07.757 a year identified in operational savings 02:52:07.757 --> 02:52:12.096 and process redesign, and 260 million per year identified 02:52:12.096 --> 02:52:14.176 in transactional savings. 02:52:14.176 --> 02:52:17.707 So you'll see on this slide in bucket one, 02:52:17.707 --> 02:52:20.718 process redesign includes several initiatives 02:52:20.718 --> 02:52:22.275 that continue to evolve. 02:52:22.275 --> 02:52:25.153 But what we've identified initially is 02:52:25.153 --> 02:52:28.083 focusing on negotiations with our top suppliers, 02:52:28.083 --> 02:52:32.834 largely concentrated on price and rate reductions. 02:52:32.834 --> 02:52:35.894 Creating updated insourcing versus outsourcing 02:52:35.894 --> 02:52:38.987 cost calculators to make the best decisions about 02:52:38.987 --> 02:52:40.785 what work is done internally 02:52:40.785 --> 02:52:43.054 and what work is contracted out, 02:52:43.054 --> 02:52:47.637 and targeting specific groups that should be insourced. 02:52:48.769 --> 02:52:52.821 Ensuring consistent and detailed quality planning 02:52:52.821 --> 02:52:53.791 in our work planning, 02:52:53.791 --> 02:52:55.791 making sure that our work is completed 02:52:55.791 --> 02:52:58.801 in a timely and cost-effective fashion. 02:52:58.801 --> 02:53:00.811 And then a bottoms up initiative from 02:53:00.811 --> 02:53:03.432 each of our operating lines of business. 02:53:03.432 --> 02:53:07.011 A lot of the benefits that we expect to be able to achieve 02:53:07.011 --> 02:53:09.611 over the coming years will be through empowered employees 02:53:09.611 --> 02:53:12.602 initiating improvements from groups out in the field, 02:53:12.602 --> 02:53:14.316 and from groups like our IT 02:53:14.316 --> 02:53:17.511 to streamline and improve processes. 02:53:17.511 --> 02:53:19.874 The second bucket we see there are initiatives 02:53:19.874 --> 02:53:22.311 that do also continue to evolve, 02:53:22.311 --> 02:53:26.021 but include sales of excess renewables, 02:53:26.021 --> 02:53:30.548 reducing customer costs through the sale of excess recs. 02:53:30.548 --> 02:53:34.881 For instance in 2020, we realized about $129 million 02:53:36.805 --> 02:53:40.565 in excess sale of renewable energy credits. 02:53:40.565 --> 02:53:44.367 And we'll be able to do this while remaining on track 02:53:44.367 --> 02:53:47.200 to meet our SB350 and SB100 goals. 02:53:49.728 --> 02:53:52.338 And let me move to bucket three, the third column there, 02:53:52.338 --> 02:53:55.755 is rationalizing our portfolio footprint. 02:53:56.789 --> 02:54:00.475 Starting with the sale of our San Francisco general office 02:54:00.475 --> 02:54:02.678 headquarters in the financial district, 02:54:02.678 --> 02:54:06.908 and moving to a more effective, cost-effective location 02:54:06.908 --> 02:54:09.241 in Oakland and the East Bay. 02:54:10.638 --> 02:54:13.721 I can move to the next slide, please. 02:54:14.607 --> 02:54:17.797 This next slide depicts from my perspective, 02:54:17.797 --> 02:54:21.058 what is an innovative and creative transaction 02:54:21.058 --> 02:54:24.718 that we believe will benefit all of our customers. 02:54:24.718 --> 02:54:27.017 So in addition to the initiatives that I described 02:54:27.017 --> 02:54:30.089 on the preceding slide, we're actively looking for 02:54:30.089 --> 02:54:32.998 other assets that present opportunities for us 02:54:32.998 --> 02:54:36.157 that can be used to benefit customers. 02:54:36.157 --> 02:54:39.187 So increment are on top of the 1 billion per year 02:54:39.187 --> 02:54:42.118 through 2025 that I just previously ran through. 02:54:42.118 --> 02:54:45.060 Just a few weeks ago, I think you will have read, 02:54:45.060 --> 02:54:46.447 that we announced an agreement with 02:54:46.447 --> 02:54:48.637 SBA Communications Corporation, 02:54:48.637 --> 02:54:50.828 a major operator of wireless infrastructure, 02:54:50.828 --> 02:54:55.828 to whom we are selling future wireless license agreements 02:54:56.107 --> 02:55:00.273 for an upfront lump sum, while maintaining control 02:55:00.273 --> 02:55:02.942 over the safety and the operate of that infrastructure. 02:55:02.942 --> 02:55:04.721 So to be clear, we aren't selling 02:55:04.721 --> 02:55:07.342 any electric transmission towers. 02:55:07.342 --> 02:55:10.484 But the sale of these licenses is expected to generate 02:55:10.484 --> 02:55:14.912 approximately $973 million in initial proceeds. 02:55:14.912 --> 02:55:17.382 And we estimate that approximately half of that 02:55:17.382 --> 02:55:20.172 will be returned to electric transmission 02:55:20.172 --> 02:55:21.636 and distribution customers in the form of 02:55:21.636 --> 02:55:23.912 lower monthly bills. 02:55:23.912 --> 02:55:25.461 Selling these licenses. 02:55:25.461 --> 02:55:26.951 Two minutes left. 02:55:26.951 --> 02:55:28.411 Time check, two minutes left. 02:55:28.411 --> 02:55:29.414 Thank you. 02:55:29.414 --> 02:55:30.923 Thank you. 02:55:30.923 --> 02:55:32.920 Selling these license agreements is another way 02:55:32.920 --> 02:55:35.563 we're continuing to reduce our financing needs, 02:55:35.563 --> 02:55:38.400 which will then reduce costs, and ultimately will inure 02:55:38.400 --> 02:55:40.710 to the benefit of our customers. 02:55:40.710 --> 02:55:43.520 And with respect to this particular transaction, 02:55:43.520 --> 02:55:45.980 the work on our infrastructure will continue to be required 02:55:45.980 --> 02:55:49.680 to meet all of our regulatory safety requirements, 02:55:49.680 --> 02:55:51.480 our wildfire mitigation procedures, 02:55:51.480 --> 02:55:54.900 and other utility standards and protocols. 02:55:54.900 --> 02:55:58.440 And the agreements with SBA include provisions 02:55:58.440 --> 02:56:01.431 that will preserve existing and future safety requirements 02:56:01.431 --> 02:56:03.140 and procedures. 02:56:03.140 --> 02:56:06.640 We will also continually regularly inspect 02:56:06.640 --> 02:56:09.014 and maintain these towers and audit the attachments. 02:56:09.014 --> 02:56:11.544 So any work on our infrastructure will continue 02:56:11.544 --> 02:56:15.488 to be performed by trained and qualified electric workers. 02:56:15.488 --> 02:56:16.957 Finally, turning briefly to 02:56:16.957 --> 02:56:18.494 California's clean energy future. 02:56:18.494 --> 02:56:20.877 We do agree with the white paper's analysis that 02:56:20.877 --> 02:56:22.795 building a transportation electrification 02:56:22.795 --> 02:56:26.545 provides significant opportunity to reduce GHG emissions, 02:56:26.545 --> 02:56:30.782 and as well, provide an opportunity to keep rates affordable 02:56:30.782 --> 02:56:33.713 through incremental load on our system. 02:56:33.713 --> 02:56:35.223 We also agree with the white paper that 02:56:35.223 --> 02:56:37.025 to gain these benefits, we need to ensure that 02:56:37.025 --> 02:56:40.643 the cost of accelerating electrification doesn't outpace or 02:56:40.643 --> 02:56:44.838 outweigh the contribution of that new load's lowering rates. 02:56:44.838 --> 02:56:47.267 Let me, I know we have a lot to talk about today. 02:56:47.267 --> 02:56:49.078 So let me just wrap up quickly. 02:56:49.078 --> 02:56:51.906 We all know that we can't avoid the costs of providing safe 02:56:51.906 --> 02:56:54.381 and reliable service for our customers, 02:56:54.381 --> 02:56:57.127 and we need to continue to innovate and drive efficiencies 02:56:57.127 --> 02:56:58.537 where we can. 02:56:58.537 --> 02:57:02.792 But as we've seen, and I think as we noted earlier, 02:57:02.792 --> 02:57:05.035 our risk of wildfire mitigation from work 02:57:05.035 --> 02:57:07.775 or the risk of wildfires requires that 02:57:07.775 --> 02:57:10.681 our wildfire risk mitigation work continue. 02:57:10.681 --> 02:57:12.789 And that regardless of the efficiencies and innovation, 02:57:12.789 --> 02:57:15.280 there's more work that will need to be done 02:57:15.280 --> 02:57:18.840 so that no matter our path, we still have the difficult 02:57:18.840 --> 02:57:21.420 and expensive work of hardening our system, 02:57:21.420 --> 02:57:23.621 being aggressive with our veg management program, 02:57:23.621 --> 02:57:26.346 and continuing to treat hundreds of miles per years of 02:57:26.346 --> 02:57:28.063 with all the resources we can muster, 02:57:28.063 --> 02:57:29.916 just as we're doing now. 02:57:29.916 --> 02:57:33.448 And as we conduct this work and plan for our shared future, 02:57:33.448 --> 02:57:35.266 we have to keep the customer at the center of everything 02:57:35.266 --> 02:57:37.516 that we do, all of our customers, 02:57:37.516 --> 02:57:40.326 and we're committed to providing safe and reliable energy 02:57:40.326 --> 02:57:42.846 while also working to keep customer rates affordable. 02:57:42.846 --> 02:57:44.066 I look forward to the discussion, 02:57:44.066 --> 02:57:45.781 and thank you very much again for this convening, 02:57:45.781 --> 02:57:48.957 and thank you for inviting us to participate. 02:57:48.957 --> 02:57:49.957 Thank you. 02:57:51.005 --> 02:57:53.824 Our next speaker is Carla Peterman. 02:57:53.824 --> 02:57:56.481 Carla is the senior vice president of strategy 02:57:56.481 --> 02:58:01.020 and regulatory affairs at Southern California Edison. 02:58:01.020 --> 02:58:04.919 She is responsible for the company's regulatory, energy, 02:58:04.919 --> 02:58:08.544 and environmental policy and strategic planning. 02:58:08.544 --> 02:58:12.390 Carla previously served as a California Public Utilities 02:58:12.390 --> 02:58:16.042 Commissioner, California energy Commissioner, 02:58:16.042 --> 02:58:18.640 and chair of the California Commission 02:58:18.640 --> 02:58:23.059 on Catastrophic Wildfire Costs and Recovery. 02:58:23.059 --> 02:58:24.476 Thank you, Carla. 02:58:25.389 --> 02:58:27.574 Thank you, Leuwam. 02:58:27.574 --> 02:58:31.665 We can move to the slides and I'll start on slide two. 02:58:31.665 --> 02:58:33.765 Let me just start off by saying Commissioners, 02:58:33.765 --> 02:58:36.436 Chair Hueso, Chair Holden, distinguished guests, 02:58:36.436 --> 02:58:38.631 thank you for the opportunity to join today's 02:58:38.631 --> 02:58:41.277 important discussion, and thank you to the staff 02:58:41.277 --> 02:58:44.627 for the careful analysis of rate trends. 02:58:44.627 --> 02:58:46.328 As the white paper shows, 02:58:46.328 --> 02:58:50.058 Edison has a long standing commitment to and track record 02:58:50.058 --> 02:58:53.059 with keeping rates as low as possible, 02:58:53.059 --> 02:58:56.397 while ensuring power is safe and reliable. 02:58:56.397 --> 02:58:59.596 Our investments, including our additions to rate base, 02:58:59.596 --> 02:59:03.117 are informed by a Commission adopted risk framework, 02:59:03.117 --> 02:59:06.389 and increases in rates are reviewed and vetted 02:59:06.389 --> 02:59:09.218 through an extensive public process. 02:59:09.218 --> 02:59:12.105 As the first two slides in my presentation highlight, 02:59:12.105 --> 02:59:16.185 even as cost pressures mount from public policy initiatives, 02:59:16.185 --> 02:59:18.665 wildfire mitigation and grid hardening, 02:59:18.665 --> 02:59:22.068 increasing customer expectations, safety measures, 02:59:22.068 --> 02:59:24.797 and the need to integrate new technologies, 02:59:24.797 --> 02:59:28.315 Edison continues to take a broad and thoughtful approach 02:59:28.315 --> 02:59:32.047 to finding areas where costs can be reduced. 02:59:32.047 --> 02:59:35.527 Similar to the PUC's white paper, Edison's analysis, 02:59:35.527 --> 02:59:39.930 Pathway 2045, shows that greater electrification 02:59:39.930 --> 02:59:43.290 achieved greenhouse gas targets, as well as improved 02:59:43.290 --> 02:59:46.832 overall energy bill affordability for customers. 02:59:46.832 --> 02:59:49.175 We forecast that while electricity bills 02:59:49.175 --> 02:59:53.160 increase over time, energy bills for an average household 02:59:53.160 --> 02:59:57.827 decreased by 1/3 by 2045, driven primarily by 02:59:58.782 --> 03:00:01.702 energy efficiency gains from transportation 03:00:01.702 --> 03:00:04.114 and building electrification. 03:00:04.114 --> 03:00:06.753 We also support these technologies being available 03:00:06.753 --> 03:00:08.713 to all of our customers. 03:00:08.713 --> 03:00:13.178 47% of the chargers for EVs that Edison has installed 03:00:13.178 --> 03:00:15.846 to date are in disadvantaged communities. 03:00:15.846 --> 03:00:18.057 And the target for our last approved program, 03:00:18.057 --> 03:00:20.390 Charge Ready 2, is 50%. 03:00:21.232 --> 03:00:23.783 But today I want to focus the remainder of my time 03:00:23.783 --> 03:00:26.442 on one possible idea for reducing costs 03:00:26.442 --> 03:00:28.243 in the next few years. 03:00:28.243 --> 03:00:32.044 Customer funded self-insurance for wildfire. 03:00:32.044 --> 03:00:34.762 Leuwam, let's move to the last slide. 03:00:34.762 --> 03:00:37.115 So as an aside to that, I would just say as an aside, 03:00:37.115 --> 03:00:40.095 some of you may know, that my dad spent 34 years 03:00:40.095 --> 03:00:41.854 in the insurance industry. 03:00:41.854 --> 03:00:43.083 So if he's watching right now, 03:00:43.083 --> 03:00:44.935 I know he's happy that I'm finally excited 03:00:44.935 --> 03:00:46.344 to talk about insurance. 03:00:46.344 --> 03:00:49.013 And I hope by the end of these next few minutes, 03:00:49.013 --> 03:00:50.680 you will be as well. 03:00:51.835 --> 03:00:54.534 So like our customers and other businesses, 03:00:54.534 --> 03:00:58.042 Edison carries insurance in order to manage your risks 03:00:58.042 --> 03:01:00.663 and protect against financial loss. 03:01:00.663 --> 03:01:03.363 Like other normal business expenses, where we cover 03:01:03.363 --> 03:01:07.675 the costs for insurance premium and customer rates. 03:01:07.675 --> 03:01:11.924 AB 1054 requires utilities to have 1 billion 03:01:11.924 --> 03:01:13.757 in wildfire insurance. 03:01:14.624 --> 03:01:18.017 At Edison, we aggressively pursue getting insurance 03:01:18.017 --> 03:01:20.496 at the lowest cost possible, 03:01:20.496 --> 03:01:23.025 but the cost of wildfire insurance premiums 03:01:23.025 --> 03:01:25.804 have increased significantly for the utilities. 03:01:25.804 --> 03:01:28.374 This is due to the frequency of wildfires, 03:01:28.374 --> 03:01:31.496 more construction in the wild land urban interface, 03:01:31.496 --> 03:01:34.614 inverse condemnation, climate change, drought, 03:01:34.614 --> 03:01:37.135 and forest management issues. 03:01:37.135 --> 03:01:40.374 Edison's current wildfire insurance expense 03:01:40.374 --> 03:01:43.186 is about 400 million per year. 03:01:43.186 --> 03:01:47.853 So for perspective, it was 55 million four years ago, 03:01:47.853 --> 03:01:50.604 and 21 million 10 years ago. 03:01:50.604 --> 03:01:52.380 We think there is value in foregoing 03:01:52.380 --> 03:01:55.604 some of the highest cost commercial insurance, 03:01:55.604 --> 03:01:57.873 which tends to be the insurance in the first layers 03:01:57.873 --> 03:02:01.578 of an insurance tower, and instead, self-insure that risk 03:02:01.578 --> 03:02:04.179 with customer funded self-insurance. 03:02:04.179 --> 03:02:07.830 This approach could save over a multi-year period, 03:02:07.830 --> 03:02:10.370 potentially hundreds of millions of dollars, 03:02:10.370 --> 03:02:13.469 as long as actual claims costs do not exceed 03:02:13.469 --> 03:02:16.689 the amount of premiums collected for funded self-insurance 03:02:16.689 --> 03:02:18.389 over the period. 03:02:18.389 --> 03:02:20.922 So you can see on this slide, 03:02:20.922 --> 03:02:23.122 simple schematic about how this works. 03:02:23.122 --> 03:02:26.113 A typical insurance program has multiple layers 03:02:26.113 --> 03:02:29.063 and claims that are paid sequentially by layer. 03:02:29.063 --> 03:02:32.511 As a result of the various drivers of insurance costs, 03:02:32.511 --> 03:02:35.151 premiums for some layers may be well above 03:02:35.151 --> 03:02:37.651 the expected loss in those layers. 03:02:37.651 --> 03:02:40.591 So using customer funded self-insurance for some of those 03:02:40.591 --> 03:02:44.170 layers could reduce costs for customers over time. 03:02:44.170 --> 03:02:47.190 If there are no claims in a self-insured layer, 03:02:47.190 --> 03:02:50.334 customers save the entire premium for that layer, 03:02:50.334 --> 03:02:53.670 and those dollars can be used to fund self-insurance again 03:02:53.670 --> 03:02:55.072 the next year. 03:02:55.072 --> 03:02:57.640 So this is in contrast to commercial insurance, 03:02:57.640 --> 03:03:00.180 where premiums are paid every year. 03:03:00.180 --> 03:03:03.350 Funding needs to be established on a multi-year basis, 03:03:03.350 --> 03:03:05.640 that claims, payments, and customer savings 03:03:05.640 --> 03:03:07.557 will vary year by year. 03:03:08.651 --> 03:03:11.580 Modeling a third-party actuarial analysis, 03:03:11.580 --> 03:03:14.630 analyze the risks, establish the funding requirements, 03:03:14.630 --> 03:03:17.700 and potential savings from self-insuring. 03:03:17.700 --> 03:03:20.070 So if Edison gets timely authorization 03:03:20.070 --> 03:03:24.521 in our pending 2021 GRC, to use the revenue requirements 03:03:24.521 --> 03:03:26.840 for self-insurance, in addition to purchasing 03:03:26.840 --> 03:03:30.201 commercial insurance, we can implement this tool 03:03:30.201 --> 03:03:33.701 as part of the future wildfire insurance renewal, 03:03:33.701 --> 03:03:36.779 using Edison's existing captive insurance company 03:03:36.779 --> 03:03:39.932 to account for the funded self-insurance. 03:03:39.932 --> 03:03:43.380 Benefits of this approach are that it's easy to administer, 03:03:43.380 --> 03:03:45.900 provides potential for significant savings 03:03:45.900 --> 03:03:48.603 over a multi-year period, and may actually result 03:03:48.603 --> 03:03:50.839 in more competitive pricing for the insurance 03:03:50.839 --> 03:03:54.271 we continue to purchase above the self-insured layer, 03:03:54.271 --> 03:03:56.688 resulting in further savings. 03:03:57.935 --> 03:04:00.100 Five minutes, that's it in a nutshell. 03:04:00.100 --> 03:04:02.440 I'm wrapping up, and I look forward to your questions. 03:04:02.440 --> 03:04:04.291 Thanks for the time. 03:04:04.291 --> 03:04:05.874 Thank you, Carla. 03:04:06.711 --> 03:04:10.362 Moving to our next presentation from Scott Crider, 03:04:10.362 --> 03:04:13.029 chief customer officer at SDG&E. 03:04:13.990 --> 03:04:17.092 Scott Crider is the chief customer officer 03:04:17.092 --> 03:04:19.872 for San Diego Gas and Electric. 03:04:19.872 --> 03:04:24.832 Scott oversees all customer related activities for SDG&E, 03:04:24.832 --> 03:04:28.984 including customer service, digital channel management 03:04:28.984 --> 03:04:31.854 and strategy, customer programs, 03:04:31.854 --> 03:04:35.723 field and metering operations, revenue cycle activities, 03:04:35.723 --> 03:04:37.447 and electric rates. 03:04:37.447 --> 03:04:40.384 He is also leading an initiative to replace the utilities 03:04:40.384 --> 03:04:44.153 customer information systems and digital portals. 03:04:44.153 --> 03:04:45.570 Thank you, Scott. 03:04:46.673 --> 03:04:48.065 Well, thank you very much. 03:04:48.065 --> 03:04:52.840 And I really appreciate the invitation to join you today. 03:04:52.840 --> 03:04:57.071 Again, Scott Crider, chief customer officer for SDG&E. 03:04:57.071 --> 03:04:59.575 As we think about rate management and affordability, 03:04:59.575 --> 03:05:01.752 these are very critical aspects 03:05:01.752 --> 03:05:04.294 of our responsibility to customers. 03:05:04.294 --> 03:05:08.465 And frankly, we understand this has very real implications 03:05:08.465 --> 03:05:11.773 on families and companies across the state. 03:05:11.773 --> 03:05:15.022 As we implement state policy and ensure delivery of safe, 03:05:15.022 --> 03:05:16.971 clean, and reliable energy. 03:05:16.971 --> 03:05:20.192 If you could go to the next slide, please. 03:05:20.192 --> 03:05:23.565 So really our big idea is a little bit more thematic, 03:05:23.565 --> 03:05:26.622 and it's really focused on opportunities to improve 03:05:26.622 --> 03:05:29.783 efficiency through the utilization of new technology. 03:05:29.783 --> 03:05:32.562 The conversation on innovation within our sector 03:05:32.562 --> 03:05:36.034 is understandably focused on areas like micro grids 03:05:36.034 --> 03:05:37.872 or batteries or electric vehicles, 03:05:37.872 --> 03:05:40.862 but we view innovation and technology much more broadly, 03:05:40.862 --> 03:05:42.584 and consider it a major driver 03:05:42.584 --> 03:05:45.592 of improved efficiencies at SDG&E. 03:05:45.592 --> 03:05:48.662 Whether it's cloud computing or process automation, 03:05:48.662 --> 03:05:51.072 yeah, we are really just starting to scratch the surface 03:05:51.072 --> 03:05:53.241 on this next generation of technologies 03:05:53.241 --> 03:05:56.014 that really are changing the way that we run the business, 03:05:56.014 --> 03:06:00.692 while improving customer service, reliability, and safety. 03:06:00.692 --> 03:06:02.613 And as you can see on this slide, 03:06:02.613 --> 03:06:05.491 I've highlighted just a few examples where technology 03:06:05.491 --> 03:06:08.371 investments are delivering value to customers, 03:06:08.371 --> 03:06:11.530 either through direct savings or more efficient spending, 03:06:11.530 --> 03:06:14.319 that also deliver operational improvements. 03:06:14.319 --> 03:06:16.059 In the interest of time, I'm just gonna call your attention 03:06:16.059 --> 03:06:18.200 to a couple of examples. 03:06:18.200 --> 03:06:20.869 First, is the use of robotic process automation, 03:06:20.869 --> 03:06:23.562 and it really is an efficiency game changer. 03:06:23.562 --> 03:06:25.929 We started automating manual and repetitive work 03:06:25.929 --> 03:06:29.130 using RPA really back in 2018. 03:06:29.130 --> 03:06:31.960 And this first investment in automation 03:06:31.960 --> 03:06:34.580 is estimated to generate ongoing savings of about 03:06:34.580 --> 03:06:36.997 165,000 labor hours per year. 03:06:38.060 --> 03:06:41.629 That's about 80 employees by the end of 2021. 03:06:41.629 --> 03:06:44.502 And by the end of 2024, we could have potentially 03:06:44.502 --> 03:06:47.669 700,000 hours of labor capacity saved. 03:06:48.769 --> 03:06:50.279 And that's gonna have a significant 03:06:50.279 --> 03:06:52.460 positive impact on rates. 03:06:52.460 --> 03:06:56.520 And really over time we think more and more complex tasks 03:06:56.520 --> 03:06:58.672 can be automated using machine learning, 03:06:58.672 --> 03:07:01.410 and potentially create even more savings opportunities 03:07:01.410 --> 03:07:02.743 in future years. 03:07:03.633 --> 03:07:05.403 The second is really the use of drones 03:07:05.403 --> 03:07:08.820 and artificial intelligence for assessing grid assets. 03:07:08.820 --> 03:07:11.142 Yeah, drones are providing an enhanced view 03:07:11.142 --> 03:07:12.670 of the wires and other infrastructure 03:07:12.670 --> 03:07:16.280 that may not be captured by inspectors on the ground. 03:07:16.280 --> 03:07:20.323 And this improves safety, and reduces reliability risk. 03:07:20.323 --> 03:07:22.844 And we're investing in intelligent image processing 03:07:22.844 --> 03:07:26.063 to assess the millions of images that are created 03:07:26.063 --> 03:07:28.293 by the drones, and detect potential damage 03:07:28.293 --> 03:07:30.293 to electric facilities. 03:07:30.293 --> 03:07:33.824 These models process images in near real time, 03:07:33.824 --> 03:07:36.443 and this lowers the cost of inspections, 03:07:36.443 --> 03:07:39.253 improves asset inventory data, 03:07:39.253 --> 03:07:42.586 reduces the risk of wildfires, and minimizes faults 03:07:42.586 --> 03:07:44.876 that disrupt power to customers. 03:07:44.876 --> 03:07:47.023 And finally, technology and innovation 03:07:47.023 --> 03:07:49.894 are also strategically important to deploying 03:07:49.894 --> 03:07:52.195 physical asset solutions in the most 03:07:52.195 --> 03:07:54.113 cost effective way possible. 03:07:54.113 --> 03:07:57.545 And exactly what we're doing using advanced analytical tools 03:07:57.545 --> 03:08:00.315 like the wildfire next-generation system, 03:08:00.315 --> 03:08:02.634 or what we call at SDG&E, wings. 03:08:02.634 --> 03:08:06.237 That data and analytics drive the best mitigation strategy 03:08:06.237 --> 03:08:10.617 to reduce wildfire risk, whether it's hardening, PSPS, 03:08:10.617 --> 03:08:14.283 vegetation management, or inspection on a segment by segment 03:08:14.283 --> 03:08:17.534 basis, resulting in more cost effective use 03:08:17.534 --> 03:08:19.394 of limited capital dollars. 03:08:19.394 --> 03:08:22.473 And it goes without saying, the savings associated with 03:08:22.473 --> 03:08:25.675 no significant utility related wildfires 03:08:25.675 --> 03:08:28.925 at SDG&E's service territory since 2007, 03:08:28.925 --> 03:08:31.446 is a tremendous benefit to our customers. 03:08:31.446 --> 03:08:34.925 Again, these are just two examples of the tremendous value 03:08:34.925 --> 03:08:39.385 technologies can deliver in terms of efficiencies. 03:08:39.385 --> 03:08:40.430 If I could just shift gears, 03:08:40.430 --> 03:08:43.540 while the panel's focus is on cost reductions, 03:08:43.540 --> 03:08:45.243 I wanted to touch on two issues 03:08:45.243 --> 03:08:48.322 highlighted in the white paper, and really highlighted by 03:08:48.322 --> 03:08:50.511 some of the other panelists this morning. 03:08:50.511 --> 03:08:53.229 If you could go to the next slide, please. 03:08:53.229 --> 03:08:55.900 First, it's the role, the critical role 03:08:55.900 --> 03:08:59.224 of declining energy sales has on rates. 03:08:59.224 --> 03:09:00.523 Because of the success. 03:09:00.523 --> 03:09:03.972 Two minutes left, two minutes left. 03:09:03.972 --> 03:09:05.793 Because of the success of efficiency 03:09:05.793 --> 03:09:07.222 and rooftop solar, 03:09:07.222 --> 03:09:12.153 we are now experiencing an approximately 2% annual decline 03:09:12.153 --> 03:09:15.344 system-wide, and this decrease is even more dramatic 03:09:15.344 --> 03:09:19.754 for residential customers, declining at about 4% per year, 03:09:19.754 --> 03:09:22.733 largely due to the fact that SDG&E has the highest 03:09:22.733 --> 03:09:26.526 rooftop solar penetration in the mainland United States. 03:09:26.526 --> 03:09:29.444 We see this impact only growing over time. 03:09:29.444 --> 03:09:33.464 Now we are proud of this achievement at SDG&E, 03:09:33.464 --> 03:09:35.564 I know the state's proud of this achievement, 03:09:35.564 --> 03:09:38.424 and it's really a testament to why we're investing 03:09:38.424 --> 03:09:41.643 in energy saving technologies. 03:09:41.643 --> 03:09:44.301 However, this means that costs are being spread across 03:09:44.301 --> 03:09:47.981 fewer kilowatt of sales, resulting in higher average rates 03:09:47.981 --> 03:09:49.710 each year for customers, 03:09:49.710 --> 03:09:52.491 even if we didn't invest another dollar in the grid. 03:09:52.491 --> 03:09:55.542 And our service territory is largely comprised 03:09:55.542 --> 03:09:58.355 of small businesses and residential, 03:09:58.355 --> 03:10:01.524 with very little industrial load with higher usage 03:10:01.524 --> 03:10:03.391 that could absorb these costs. 03:10:03.391 --> 03:10:07.410 And in fact, if sales were flat since 2012, we estimate that 03:10:07.410 --> 03:10:11.091 system average rate would be about 15% lower. 03:10:11.091 --> 03:10:12.815 You go to the next slide, please. 03:10:12.815 --> 03:10:14.723 And I'm wrapping up. 03:10:14.723 --> 03:10:16.701 Second issue, and we don't need to belabor this, 03:10:16.701 --> 03:10:18.671 I think we've heard it both in the white paper 03:10:18.671 --> 03:10:21.253 and from the panelists this morning, 03:10:21.253 --> 03:10:23.192 reforming net energy metering. 03:10:23.192 --> 03:10:25.631 It remains one of the most impactful actions 03:10:25.631 --> 03:10:28.130 the Commission can take to provide rate relief 03:10:28.130 --> 03:10:30.620 to more than 80% of SDG&E customers 03:10:30.620 --> 03:10:33.162 that do not have rooftop solar. 03:10:33.162 --> 03:10:36.580 The annual NEM cost shift from solar to non-solar customers 03:10:36.580 --> 03:10:40.830 in our territory is now $540 million and growing. 03:10:40.830 --> 03:10:42.888 And just as a point of comparison, 03:10:42.888 --> 03:10:45.978 that's about four times the current CARE subsidy. 03:10:45.978 --> 03:10:47.428 Now with that, I'll go ahead and close there. 03:10:47.428 --> 03:10:49.531 And thank you again for the invitation, 03:10:49.531 --> 03:10:54.067 and I look forward to answering your questions. 03:10:54.067 --> 03:10:55.339 Thank you, Scott. 03:10:55.339 --> 03:10:57.396 And as a brief announcement for those of you 03:10:57.396 --> 03:11:00.937 watching at home, the slides for all of the presentations 03:11:00.937 --> 03:11:05.073 today are now available on the CPUC website, 03:11:05.073 --> 03:11:08.171 on the page that was made for the En Banc, 03:11:08.171 --> 03:11:10.181 or if you're watching on admin monitor, 03:11:10.181 --> 03:11:12.512 the link should be right there below the video. 03:11:12.512 --> 03:11:14.292 Thanks everyone. 03:11:14.292 --> 03:11:17.523 Our next speaker is Jennifer Dowdell. 03:11:17.523 --> 03:11:20.601 Jennifer Dowdell is a senior policy expert 03:11:20.601 --> 03:11:23.101 at the Utility Reform Network, 03:11:23.954 --> 03:11:25.667 where she focuses on financial 03:11:25.667 --> 03:11:28.532 and regulatory cost recovery issues. 03:11:28.532 --> 03:11:32.081 Jennifer has worked in energy, independent power, 03:11:32.081 --> 03:11:35.151 and related financial services since 1984, 03:11:35.151 --> 03:11:37.902 including various leadership roles and regulation, 03:11:37.902 --> 03:11:40.193 and finance at PG&E. 03:11:40.193 --> 03:11:41.860 Thank you, Jennifer. 03:11:45.690 --> 03:11:47.431 And Jennifer, you're still on mute. 03:11:47.431 --> 03:11:50.549 So we'll just let you edit that. 03:11:50.549 --> 03:11:51.382 Thank you. 03:11:52.250 --> 03:11:53.250 Thank you. 03:11:55.259 --> 03:11:57.909 Good afternoon, I'm Jennifer Dowdell. 03:11:57.909 --> 03:12:01.437 I'd like to extend a very brief and very broad thank you 03:12:01.437 --> 03:12:04.937 to President Batjer, Commissioner Shiroma, 03:12:05.889 --> 03:12:07.889 the entire Commission and Commission staff 03:12:07.889 --> 03:12:10.089 for this convening. 03:12:10.089 --> 03:12:12.051 And I feel very privileged to be healthy 03:12:12.051 --> 03:12:14.399 and able to share some thoughts about affordability 03:12:14.399 --> 03:12:15.889 with you today. 03:12:15.889 --> 03:12:16.889 First slide. 03:12:18.639 --> 03:12:21.309 I'm not seeing the slides, I'm just seeing 03:12:21.309 --> 03:12:22.726 President Batjer. 03:12:25.230 --> 03:12:27.659 Can we, okay thank you. 03:12:27.659 --> 03:12:29.090 Thank you. 03:12:29.090 --> 03:12:30.007 Next slide. 03:12:33.176 --> 03:12:36.405 So quickly responding to the CPUC white paper 03:12:36.405 --> 03:12:39.987 and some of the remarks of the other panelists today, 03:12:39.987 --> 03:12:44.154 I just want to look at slide of what it highlights 03:12:45.312 --> 03:12:48.645 is that indeed disadvantaged communities 03:12:51.012 --> 03:12:53.794 may well be canaries in the coal mine 03:12:53.794 --> 03:12:55.635 regarding affordability. 03:12:55.635 --> 03:12:59.885 But as you see, the ability of Board rate increases 03:13:02.327 --> 03:13:05.994 kind of across the Board, is not increasing. 03:13:06.983 --> 03:13:11.277 And what this slide shows is the ratio of median income 03:13:11.277 --> 03:13:14.386 to self-sufficiency income as a percentage. 03:13:14.386 --> 03:13:17.638 Self-sufficiency income is the amount of household income 03:13:17.638 --> 03:13:21.329 needed to cover living expenses without public assistance. 03:13:21.329 --> 03:13:24.177 And these figures are for a family of four, two adults, 03:13:24.177 --> 03:13:28.094 and two young children, comparing 2011 to 2020. 03:13:29.381 --> 03:13:32.922 Looking at this, the upshot is that CA families 03:13:32.922 --> 03:13:36.204 have less money to absorb rate increases upon inflation. 03:13:36.204 --> 03:13:37.037 Next one. 03:13:39.106 --> 03:13:40.606 Next slide please. 03:13:41.585 --> 03:13:44.653 And so in this context, so my main remarks 03:13:44.653 --> 03:13:47.178 are centered around three principles 03:13:47.178 --> 03:13:50.898 to potentially increase rate affordability, 03:13:50.898 --> 03:13:55.731 and actions that can be taken to support those principles. 03:13:56.849 --> 03:14:01.182 The first of those is simply that we need to measure 03:14:02.095 --> 03:14:06.694 and allow affordability directly inform utility rates 03:14:06.694 --> 03:14:08.395 revenue requests. 03:14:08.395 --> 03:14:12.210 We can't impact what we don't objectively measure. 03:14:12.210 --> 03:14:16.960 And so in terms of actions, the CPUC could start applying 03:14:17.839 --> 03:14:20.990 the metrics that come out of the Affordability Rulemaking, 03:14:20.990 --> 03:14:22.740 which is R.18-07-006, 03:14:24.418 --> 03:14:26.869 and using those metrics will help refine them. 03:14:26.869 --> 03:14:31.331 It will also create a baseline for future discussions. 03:14:31.331 --> 03:14:34.401 Additionally, another thing that we could do 03:14:34.401 --> 03:14:38.734 is explicitly acknowledge affordability by requiring 03:14:40.944 --> 03:14:43.194 a CPI constrained proposal. 03:14:45.675 --> 03:14:47.654 Sorry, I got a call there. 03:14:47.654 --> 03:14:52.654 A CPI constrained proposal along with IOU based proposals. 03:14:53.195 --> 03:14:55.666 That would address the anchor bias 03:14:55.666 --> 03:14:57.450 that I talk about on my slide, 03:14:57.450 --> 03:15:01.398 which is essentially the fact that IOU proposals 03:15:01.398 --> 03:15:05.686 are the starting point, the anchor for evaluation. 03:15:05.686 --> 03:15:09.958 So requiring a CPI constrained revenue proposal 03:15:09.958 --> 03:15:12.723 would book end that discussion. 03:15:12.723 --> 03:15:16.473 And as has been discussed, IOU rate increases 03:15:17.802 --> 03:15:22.283 have certainly outstripped inflation and general wage work. 03:15:22.283 --> 03:15:25.533 So requiring a CPI constrained proposal 03:15:27.867 --> 03:15:32.747 would drive in addition, wider risks and deficiency data, 03:15:32.747 --> 03:15:36.154 and add transparency so that rate payers could 03:15:36.154 --> 03:15:38.054 see specifically what they're paying for. 03:15:38.054 --> 03:15:38.971 Next slide. 03:15:43.384 --> 03:15:46.245 This is to us common sense. 03:15:46.245 --> 03:15:49.944 Basically, investment in societal benefits 03:15:49.944 --> 03:15:52.245 and policy objectives should not create shareholder 03:15:52.245 --> 03:15:55.245 windfalls to rate payer's detriment. 03:15:56.652 --> 03:15:59.830 And there are a number of actions we can think about 03:15:59.830 --> 03:16:02.540 that would begin to address this. 03:16:02.540 --> 03:16:06.400 First, we can consider state ownership 03:16:06.400 --> 03:16:08.143 and alternative rate structures, 03:16:08.143 --> 03:16:12.310 but certainly state ownership or strategic assets, 03:16:16.507 --> 03:16:19.306 elements of transmission potentially, 03:16:19.306 --> 03:16:22.223 and in addition, looking at funding 03:16:25.708 --> 03:16:27.538 customer side infrastructure on expense 03:16:27.538 --> 03:16:29.300 rather than capital basis, 03:16:29.300 --> 03:16:32.689 and EV charging stations come to mind in this context. 03:16:32.689 --> 03:16:37.022 I think TURN has raised this on number of occasions. 03:16:39.972 --> 03:16:40.889 Next slide. 03:16:42.620 --> 03:16:46.703 Finally, and my executive director, Mark Toney's, 03:16:47.842 --> 03:16:49.562 gonna talk a little bit more about this 03:16:49.562 --> 03:16:51.332 in his panel coming up, 03:16:51.332 --> 03:16:54.582 but the idea, the takeaway here is that 03:16:56.676 --> 03:17:01.261 other people's money needs to be part of our thinking 03:17:01.261 --> 03:17:04.761 in terms of addressing rate affordability. 03:17:06.586 --> 03:17:09.154 And those are my prepared remarks. 03:17:09.154 --> 03:17:09.987 Thank you. 03:17:11.384 --> 03:17:12.924 Great, thank you Jennifer. 03:17:12.924 --> 03:17:17.924 Some very interesting opportunities in that presentation. 03:17:18.021 --> 03:17:19.983 Let's move to the next speaker. 03:17:19.983 --> 03:17:22.984 So next we have Betony Jones. 03:17:22.984 --> 03:17:26.851 Betony is the founder of Inclusive Economics, 03:17:26.851 --> 03:17:30.502 and is an advisor to NextGen Policy. 03:17:30.502 --> 03:17:33.931 Betony has written extensively about the economic impacts 03:17:33.931 --> 03:17:37.143 of climate and energy policy in California, 03:17:37.143 --> 03:17:40.701 quantifying both the costs and also the benefits. 03:17:40.701 --> 03:17:44.314 She focuses on distributional effects of policy 03:17:44.314 --> 03:17:47.391 through an equity and job quality lens. 03:17:47.391 --> 03:17:50.703 Thanks for joining us, Betony. 03:17:50.703 --> 03:17:51.969 Yeah, thank you. 03:17:51.969 --> 03:17:54.469 And I commend you for putting together such 03:17:54.469 --> 03:17:57.578 an illuminating and rich day today 03:17:57.578 --> 03:18:01.495 with such important presentations and dialogue. 03:18:02.891 --> 03:18:06.311 If you can pull up my slides, I will get started. 03:18:06.311 --> 03:18:08.641 You can go to the first slide. 03:18:08.641 --> 03:18:10.709 So what I want to just briefly touch on today 03:18:10.709 --> 03:18:13.876 is that investments in infrastructure, 03:18:15.523 --> 03:18:17.067 EV charging infrastructure, 03:18:17.067 --> 03:18:20.442 and wildfire mitigation activities like grid hardening, 03:18:20.442 --> 03:18:23.775 do get passed onto rate payers as costs, 03:18:24.960 --> 03:18:26.771 but they also yield employment 03:18:26.771 --> 03:18:29.123 and economic benefits in the state. 03:18:29.123 --> 03:18:32.273 And the more equitably we look at managing the energy costs 03:18:32.273 --> 03:18:36.142 to cut to a rate payers, the greater the overarching 03:18:36.142 --> 03:18:39.056 benefits for the California economy. 03:18:39.056 --> 03:18:42.527 And finally, just wanted to point out that the IOUs 03:18:42.527 --> 03:18:44.297 have multiple levers at their disposal 03:18:44.297 --> 03:18:47.051 to improve affordability, 03:18:47.051 --> 03:18:50.297 and looking at the types of jobs that are created 03:18:50.297 --> 03:18:54.797 in the employment impacts of kind of these investments 03:18:57.101 --> 03:18:59.493 also addresses affordability. 03:18:59.493 --> 03:19:02.584 So I'm gonna go through these in a little bit of detail. 03:19:02.584 --> 03:19:03.834 The next slide. 03:19:05.753 --> 03:19:10.503 I show an example where we look at $10 billion investment 03:19:12.493 --> 03:19:14.708 in wildfire mitigation, 03:19:14.708 --> 03:19:17.547 or the $10 billion cost to residential consumers 03:19:17.547 --> 03:19:20.773 that is proposed in the white paper. 03:19:20.773 --> 03:19:25.168 And what we find is that the resulting investments 03:19:25.168 --> 03:19:29.643 stimulate economic activity and create good in-state jobs. 03:19:29.643 --> 03:19:32.560 So when we act, when we shift money 03:19:33.554 --> 03:19:38.377 from residential households to direct investments 03:19:38.377 --> 03:19:41.676 in infrastructure and wildfire mitigation, 03:19:41.676 --> 03:19:45.343 we actually see net benefits of 22,000 jobs, 03:19:46.752 --> 03:19:49.229 2.3 billion in labor income, 03:19:49.229 --> 03:19:52.992 and 6.6 billion in increased economic activity, 03:19:52.992 --> 03:19:56.423 just by shifting spending from household spending, 03:19:56.423 --> 03:19:58.680 much of which trickles out of the state, 03:19:58.680 --> 03:20:01.781 to in-state investments in infrastructure. 03:20:01.781 --> 03:20:04.819 What's interesting is that when we look at 03:20:04.819 --> 03:20:07.520 sort of insulating lower income households 03:20:07.520 --> 03:20:11.567 from those rate increases, the net benefits are even greater 03:20:11.567 --> 03:20:13.606 because low income households, 03:20:13.606 --> 03:20:16.277 when they're able to keep money and spend it, 03:20:16.277 --> 03:20:20.198 just the spending patterns are such that more of that money 03:20:20.198 --> 03:20:22.365 stays in state by default. 03:20:24.855 --> 03:20:27.732 So looking at how we fund these things 03:20:27.732 --> 03:20:30.499 and who pays for them is important. 03:20:30.499 --> 03:20:35.212 I show on the next slide, a bar chart showing this. 03:20:35.212 --> 03:20:38.539 So I modeled really simply and in plan, 03:20:38.539 --> 03:20:43.051 which is an input output model, a billion dollars 03:20:43.051 --> 03:20:46.718 of investment in grid hardening and repairs, 03:20:48.031 --> 03:20:51.131 and a billion dollars of reduced household income 03:20:51.131 --> 03:20:53.460 modeled as rate increases. 03:20:53.460 --> 03:20:56.138 And what we show is the net effect, 03:20:56.138 --> 03:20:58.955 this is per billion dollars, the net effect. 03:20:58.955 --> 03:21:02.288 And the next slide shows the same thing. 03:21:04.409 --> 03:21:08.763 But for only looking at rate impacts for households earning 03:21:08.763 --> 03:21:11.135 above $100,000 a year, 03:21:11.135 --> 03:21:15.385 and we show actually 50% more net job benefits 03:21:17.425 --> 03:21:20.580 when we do that, when we look at it that way. 03:21:20.580 --> 03:21:23.053 You have about two minutes, Betony. 03:21:23.053 --> 03:21:26.600 Thank you, of those household spending patterns. 03:21:26.600 --> 03:21:28.100 On the next slide, 03:21:30.159 --> 03:21:32.362 I just wanna point out some of the 03:21:32.362 --> 03:21:34.473 affordability considerations. 03:21:34.473 --> 03:21:36.943 So there's been a lot of talk around ways to manage 03:21:36.943 --> 03:21:40.162 rate increases, but affordability really has 03:21:40.162 --> 03:21:41.547 three components. 03:21:41.547 --> 03:21:43.542 How much energy are you using? 03:21:43.542 --> 03:21:45.549 What are the rates that you're charged? 03:21:45.549 --> 03:21:48.000 And what is the household income? 03:21:48.000 --> 03:21:49.862 As Jennifer from TURN just mentioned, 03:21:49.862 --> 03:21:53.856 the disposable income to spend on energy? 03:21:53.856 --> 03:21:57.939 And all three of those can address affordability. 03:21:58.940 --> 03:22:02.317 So maybe we don't just have an affordability crisis 03:22:02.317 --> 03:22:05.250 in California, but we have a poverty crisis. 03:22:05.250 --> 03:22:09.109 And when we think about the investments that the IOUs make 03:22:09.109 --> 03:22:11.003 or public agencies make, 03:22:11.003 --> 03:22:15.162 are they creating good in-state jobs for California workers? 03:22:15.162 --> 03:22:18.147 Are they ensuring access to those jobs for people 03:22:18.147 --> 03:22:19.961 who have been excluded? 03:22:19.961 --> 03:22:23.866 Are those investments moving the needle on household income? 03:22:23.866 --> 03:22:27.204 Are they chipping away at the poverty problem 03:22:27.204 --> 03:22:31.344 as a way of not entirely addressing affordability? 03:22:31.344 --> 03:22:33.451 Everything that has been covered today 03:22:33.451 --> 03:22:36.688 is still really important, but are we chipping away at it? 03:22:36.688 --> 03:22:40.355 Are we creating and raising household income 03:22:42.497 --> 03:22:45.409 to reduce the number of customers that require 03:22:45.409 --> 03:22:47.926 rate assistance in the first place? 03:22:47.926 --> 03:22:51.024 And I would argue that looking at things like 03:22:51.024 --> 03:22:53.334 labor standards, wage standards, 03:22:53.334 --> 03:22:55.241 diversity and inclusion standards, 03:22:55.241 --> 03:23:00.241 every single time the IOUs or agencies make investments 03:23:00.278 --> 03:23:03.117 is a way to chip away at the affordability crisis 03:23:03.117 --> 03:23:05.881 by raising household income. 03:23:05.881 --> 03:23:07.004 And if you could wrap up, Betony, 03:23:07.004 --> 03:23:08.776 you're at time. 03:23:08.776 --> 03:23:10.547 I'm finished, thanks. 03:23:10.547 --> 03:23:13.109 Perfect, thank you. 03:23:13.109 --> 03:23:15.378 Your wildfire mitigation investment example slide 03:23:15.378 --> 03:23:16.564 was really interesting. 03:23:16.564 --> 03:23:19.227 We might get to revisit that. 03:23:19.227 --> 03:23:23.681 So moving onto our final panelist, Rick Umoff, 03:23:23.681 --> 03:23:27.653 from the Solar Energy Industries Association. 03:23:27.653 --> 03:23:31.166 So Rick Umoff is the senior director and counsel 03:23:31.166 --> 03:23:34.607 at CS, where he leads the association's efforts 03:23:34.607 --> 03:23:37.310 to grow solar markets in California. 03:23:37.310 --> 03:23:40.025 In his role, Rick directs CS legislative 03:23:40.025 --> 03:23:43.197 and regulatory initiatives, advocating on behalf of 03:23:43.197 --> 03:23:46.671 all major solar market segments in the state. 03:23:46.671 --> 03:23:47.754 Thanks, Rick. 03:23:51.192 --> 03:23:52.139 Great, thanks Leuwam. 03:23:52.139 --> 03:23:55.144 And I wanna thank the dais for having me, 03:23:55.144 --> 03:23:57.623 for the Commission for pulling this together, 03:23:57.623 --> 03:24:01.479 and for the opportunity to speak today. 03:24:01.479 --> 03:24:05.305 First, I just wanna acknowledge the importance of the topic 03:24:05.305 --> 03:24:07.246 of bills and rate (mumbles) today. 03:24:07.246 --> 03:24:09.265 I thank the other stakeholders for providing 03:24:09.265 --> 03:24:12.105 their perspective on this topic. 03:24:12.105 --> 03:24:14.445 As we all know, the climate crisis is here 03:24:14.445 --> 03:24:17.656 and the crisis is associated with increasing costs 03:24:17.656 --> 03:24:20.600 from extreme weather events and other cost drivers. 03:24:20.600 --> 03:24:24.064 We really do need to leverage all tools at our disposal 03:24:24.064 --> 03:24:26.424 to address these challenges. 03:24:26.424 --> 03:24:29.034 Distributed energy resources have been 03:24:29.034 --> 03:24:32.136 and will continue to be play a critical role 03:24:32.136 --> 03:24:34.738 in helping California meet these challenges. 03:24:34.738 --> 03:24:36.542 And I want to talk a little bit today about 03:24:36.542 --> 03:24:41.542 some of the strategies we can use to leverage DER's, 03:24:41.614 --> 03:24:44.594 to help reduce costs going forward. 03:24:44.594 --> 03:24:47.633 And I also want to acknowledge that we need to 03:24:47.633 --> 03:24:51.635 continue to increase and expand access to DERs 03:24:51.635 --> 03:24:54.591 and their benefits to all Californians 03:24:54.591 --> 03:24:57.031 to ensure an equitable clean energy transition. 03:24:57.031 --> 03:25:01.281 So with that, you can go to the next slide, please. 03:25:02.275 --> 03:25:06.858 I just wanna take net-metering on head-on briefly here. 03:25:08.377 --> 03:25:12.277 This is obviously a focus in the paper, 03:25:12.277 --> 03:25:14.835 and it is a hot topic at the moment. 03:25:14.835 --> 03:25:19.002 And CS position and is that NEM should continue to 03:25:20.337 --> 03:25:24.739 evolve as the changing, as the needs of the state change, 03:25:24.739 --> 03:25:26.997 as the needs on the grid change. 03:25:26.997 --> 03:25:31.592 And some of the considerations the state should make 03:25:31.592 --> 03:25:35.282 as it looks in that reform, include of course, 03:25:35.282 --> 03:25:38.916 following AB 327 and ensuring the continued growth 03:25:38.916 --> 03:25:41.473 of DERs and distributed solar. 03:25:41.473 --> 03:25:44.582 But also ensuring that we see continued alignment 03:25:44.582 --> 03:25:47.267 of NEM with the state's GHG target, 03:25:47.267 --> 03:25:49.846 with its reliability needs, 03:25:49.846 --> 03:25:53.248 and using them to do things like leverage 03:25:53.248 --> 03:25:57.525 or like drive adoption of behind the meter storage. 03:25:57.525 --> 03:26:01.152 Additionally, we need to expand access 03:26:01.152 --> 03:26:03.908 to the various benefits of distributed solar storage 03:26:03.908 --> 03:26:05.187 to more low income customers, 03:26:05.187 --> 03:26:09.108 disadvantaged communities, and renters. 03:26:09.108 --> 03:26:12.126 NEM provides an opportunity to do that. 03:26:12.126 --> 03:26:14.350 We're looking forward to kind of having that, 03:26:14.350 --> 03:26:16.451 continuing that conversation in the context of 03:26:16.451 --> 03:26:19.279 the NEM proceeding, as the PUC. 03:26:19.279 --> 03:26:21.186 And then finally, implementing policy changes 03:26:21.186 --> 03:26:23.211 that are gradual and predictable 03:26:23.211 --> 03:26:26.164 to continue to attract the private capital 03:26:26.164 --> 03:26:29.414 and customer participation that we need 03:26:30.419 --> 03:26:32.530 to make sure that we can meet our climate 03:26:32.530 --> 03:26:35.234 and grid challenges cost effectively. 03:26:35.234 --> 03:26:38.023 And the last comment I will make about NEM 03:26:38.023 --> 03:26:41.392 before I move on, is that it is important we recognize 03:26:41.392 --> 03:26:43.971 as a state, and that has been foundational, 03:26:43.971 --> 03:26:47.744 as a policy to help support the growth of distributed solar 03:26:47.744 --> 03:26:50.440 is put California on the map as a solar leader, 03:26:50.440 --> 03:26:53.008 with over a million solar systems deployed, 03:26:53.008 --> 03:26:57.021 supported the growth over 75,000 clean energy jobs 03:26:57.021 --> 03:26:58.311 in the solar space. 03:26:58.311 --> 03:27:02.394 And the industry has invested roughly $70 billion 03:27:03.477 --> 03:27:05.390 in the state, and much of that has come from 03:27:05.390 --> 03:27:08.178 this distributed solar space, as a result of NEM 03:27:08.178 --> 03:27:10.756 and its success as a policy. 03:27:10.756 --> 03:27:13.804 So it's important that we look forward 03:27:13.804 --> 03:27:16.021 towards sort of what is the next iteration of NEM, 03:27:16.021 --> 03:27:18.141 and how does that fit in with the state's needs. 03:27:18.141 --> 03:27:21.267 But also acknowledge that it has been a successful policy 03:27:21.267 --> 03:27:24.085 for the state in many ways. 03:27:24.085 --> 03:27:26.175 Rick, you have two minutes. 03:27:26.175 --> 03:27:27.425 Great. 03:27:29.771 --> 03:27:34.021 So a few strategies that we think are ways in which 03:27:34.938 --> 03:27:36.529 we can leverage distributed resources 03:27:36.529 --> 03:27:38.609 to achieve the state's goals, 03:27:38.609 --> 03:27:42.000 include supporting electrification and DER deployment. 03:27:42.000 --> 03:27:45.952 So especially solar and storage can provide power, 03:27:45.952 --> 03:27:50.396 low cost power at the point of use, off-peak, 03:27:50.396 --> 03:27:52.534 to help facilitate electrification, 03:27:52.534 --> 03:27:55.726 help charge EVs, help power heat pumps. 03:27:55.726 --> 03:27:57.934 And so looking at strategies to incentivize 03:27:57.934 --> 03:28:01.093 that kind of behavior from customers. 03:28:01.093 --> 03:28:03.870 Reducing grid costs and enhancing resilience. 03:28:03.870 --> 03:28:08.170 Using dynamic rates, using the aggregation of BDRs, 03:28:08.170 --> 03:28:11.550 increasing the role of BDRs as a capacity resource 03:28:11.550 --> 03:28:15.045 to help California meet its capacity needs 03:28:15.045 --> 03:28:16.878 more cost effectively. 03:28:17.910 --> 03:28:20.818 And also ensuring that we're leveraging BDRs 03:28:20.818 --> 03:28:23.530 to avoid the costly T&D upgrades 03:28:23.530 --> 03:28:26.017 that we can avoid with those resources 03:28:26.017 --> 03:28:27.888 that are identified in the white paper 03:28:27.888 --> 03:28:29.437 will be an important strategy 03:28:29.437 --> 03:28:31.580 for reducing costs going forward. 03:28:31.580 --> 03:28:33.777 And then finally, of course, solar and storage 03:28:33.777 --> 03:28:36.146 provides a unique opportunity for our customers, 03:28:36.146 --> 03:28:38.288 for communities to be more resilient 03:28:38.288 --> 03:28:40.058 in the face of outages. 03:28:40.058 --> 03:28:42.127 PSPS, which we see as only increasing 03:28:42.127 --> 03:28:44.915 with extreme weather events. 03:28:44.915 --> 03:28:48.248 And then last point is continuing to use 03:28:49.132 --> 03:28:53.175 solar storage and other DERs to ensure that 03:28:53.175 --> 03:28:55.942 customers are participating in this transition. 03:28:55.942 --> 03:28:58.885 We need customers engaged in their energy bills. 03:28:58.885 --> 03:29:00.680 We need them engaged in their energy use. 03:29:00.680 --> 03:29:02.941 And we also need to attract private capital 03:29:02.941 --> 03:29:05.949 into this process to help keep costs down for rate payers, 03:29:05.949 --> 03:29:08.819 help keep costs down for the state 03:29:08.819 --> 03:29:11.649 as we make this energy transition. 03:29:11.649 --> 03:29:13.207 And then the final point I'll make is that 03:29:13.207 --> 03:29:17.389 DERs do provide a unique benefit of unique land use benefit 03:29:17.389 --> 03:29:20.142 that other resources, other renewable resources 03:29:20.142 --> 03:29:22.659 don't provide, and we will need to use 03:29:22.659 --> 03:29:26.125 the built environment as a way to help meet our climate 03:29:26.125 --> 03:29:30.046 and reliability goals as we make this transition. 03:29:30.046 --> 03:29:30.963 Next slide. 03:29:32.157 --> 03:29:34.423 And you're at time, so please try and wrap it up. 03:29:34.423 --> 03:29:35.256 Thank you, Rick. 03:29:35.256 --> 03:29:37.368 Sure, I'll just leave you with this last slide, 03:29:37.368 --> 03:29:40.737 which just shows the role that behind the meter storage 03:29:40.737 --> 03:29:44.074 can play in helping reduce the peak. 03:29:44.074 --> 03:29:46.508 The dotted brown line you see there shows 03:29:46.508 --> 03:29:49.399 a goal that three people at the storage could have played 03:29:49.399 --> 03:29:54.081 in reducing types of net load during August 14, 2020. 03:29:54.081 --> 03:29:54.914 Thank you. 03:29:59.391 --> 03:30:00.451 Very good. 03:30:00.451 --> 03:30:02.220 Thank you to all of our speakers. 03:30:02.220 --> 03:30:04.945 So now we'll be moving to Q and A. 03:30:04.945 --> 03:30:06.838 A couple of thoughts on Q and A. 03:30:06.838 --> 03:30:10.404 We're going to try and have each person be able to ask 03:30:10.404 --> 03:30:13.600 one question, rather than several questions in a row, 03:30:13.600 --> 03:30:16.519 just to make sure that all of our members of the dais 03:30:16.519 --> 03:30:20.107 have an opportunity to ask at least one question. 03:30:20.107 --> 03:30:23.591 And again, there is a raise hand feature in WebEx, 03:30:23.591 --> 03:30:24.424 so you can use that, 03:30:24.424 --> 03:30:26.983 or you can also just physically raise your hand 03:30:26.983 --> 03:30:29.165 and I'll keep an eye out for you. 03:30:29.165 --> 03:30:32.079 So the first hand I do see Commissioner Monahan's hand 03:30:32.079 --> 03:30:33.662 is raised in WebEx. 03:30:34.515 --> 03:30:36.286 Commissioner Monahan, is that from earlier, 03:30:36.286 --> 03:30:39.764 or do you have a question for panel number two? 03:30:39.764 --> 03:30:41.546 It is from earlier, I'm sorry about that. 03:30:41.546 --> 03:30:43.477 I'll take it down now. 03:30:43.477 --> 03:30:45.598 Not a problem. 03:30:45.598 --> 03:30:50.098 Do we have any questions from the members of the dais? 03:30:51.724 --> 03:30:52.576 I don't see any. 03:30:52.576 --> 03:30:57.097 I see Commissioner Rechtschaffen, please go ahead. 03:30:57.097 --> 03:30:58.387 I'm happy to defer to others 03:30:58.387 --> 03:31:01.887 since I didn't get a chance to ask before. 03:31:03.572 --> 03:31:08.572 But I'm wondering if we could hear from the utilities 03:31:08.744 --> 03:31:12.327 about the comments earlier of how additions 03:31:14.290 --> 03:31:18.873 to the capital base are driving costs up significantly? 03:31:20.100 --> 03:31:24.063 And if you have any ideas about respond to that ways 03:31:24.063 --> 03:31:28.146 to limit those additions and those costs drivers? 03:31:33.671 --> 03:31:36.004 (crosstalk) 03:31:38.402 --> 03:31:42.235 I was going to say, let's have Robert start. 03:31:43.975 --> 03:31:45.226 Sure, thank you for the question. 03:31:45.226 --> 03:31:48.043 I think one of the things that I want to emphasize 03:31:48.043 --> 03:31:49.404 is was what I said before, 03:31:49.404 --> 03:31:53.682 to the extent that we're making investments 03:31:53.682 --> 03:31:57.531 that are going to drive safety and reliability, 03:31:57.531 --> 03:32:00.266 we can't defer those divestments. 03:32:00.266 --> 03:32:02.035 We've got to make them smartly. 03:32:02.035 --> 03:32:04.187 We've gotta make them efficiently. 03:32:04.187 --> 03:32:06.724 One of the things that we're learning with respect to 03:32:06.724 --> 03:32:11.511 our wildfire spending is gaining increasing efficiencies 03:32:11.511 --> 03:32:13.283 as we continue to learn more 03:32:13.283 --> 03:32:15.910 and as we deploy smart technologies, 03:32:15.910 --> 03:32:18.987 making our investments locationally specific, 03:32:18.987 --> 03:32:21.430 making the right investments in the right spaces. 03:32:21.430 --> 03:32:23.928 So I think one of the things that we've got to do 03:32:23.928 --> 03:32:28.892 is find offsetting efficiencies and offsetting cost savings 03:32:28.892 --> 03:32:31.098 to make head room for candidly, 03:32:31.098 --> 03:32:34.082 what is going to be necessary additions to rate base 03:32:34.082 --> 03:32:37.617 and necessary infrastructure investment. 03:32:37.617 --> 03:32:42.199 There was one component I think of your earlier question 03:32:42.199 --> 03:32:44.207 that was striking to me. 03:32:44.207 --> 03:32:47.484 And you asked a question about the extent to which 03:32:47.484 --> 03:32:49.781 we should be using third-party funds 03:32:49.781 --> 03:32:51.547 for different types of investments. 03:32:51.547 --> 03:32:55.137 And I think that is your question really goes to the heart 03:32:55.137 --> 03:32:57.020 of what's the appropriate role of government 03:32:57.020 --> 03:33:01.672 in helping to advance societally beneficial efforts. 03:33:01.672 --> 03:33:04.396 And I think that that's something that merits 03:33:04.396 --> 03:33:05.789 a lot of discussion as well. 03:33:05.789 --> 03:33:08.872 And so are there ways in which we can 03:33:10.464 --> 03:33:13.709 find additional sources of capital 03:33:13.709 --> 03:33:16.381 for public policy spending or for things that are 03:33:16.381 --> 03:33:19.451 societally beneficial, in order to make room 03:33:19.451 --> 03:33:21.363 for this necessary spending that we're going to have 03:33:21.363 --> 03:33:24.780 to for safety, reliability, and wildfire. 03:33:25.941 --> 03:33:26.796 Thank you. 03:33:26.796 --> 03:33:29.179 Next, I want to turn to Carla for a response. 03:33:29.179 --> 03:33:32.713 I did get a note asking for all of the panelists to try 03:33:32.713 --> 03:33:34.487 and be as concise as possible 03:33:34.487 --> 03:33:37.341 with responses to the question. 03:33:37.341 --> 03:33:39.117 Go ahead, Carla. 03:33:39.117 --> 03:33:39.950 Duly noted. 03:33:39.950 --> 03:33:41.665 So I'll just pick up on something that was asked earlier 03:33:41.665 --> 03:33:43.808 about first rate base in particular, 03:33:43.808 --> 03:33:45.274 and just add a couple of comments. 03:33:45.274 --> 03:33:47.926 So what we see is that it can take 10 years 03:33:47.926 --> 03:33:50.132 from proposing a project to actually seeing it 03:33:50.132 --> 03:33:52.210 go into commercial operation. 03:33:52.210 --> 03:33:54.894 And during that time there can be increasing costs. 03:33:54.894 --> 03:33:57.675 And so efforts that can be done, for example, 03:33:57.675 --> 03:34:00.448 the streamlined state permitting can be really helpful 03:34:00.448 --> 03:34:03.547 in terms of lowering some of those project costs. 03:34:03.547 --> 03:34:06.741 Tehachapi was raised, we saw the cost of Tehachapi go up 03:34:06.741 --> 03:34:11.741 $350 million because of PUC direction to underground 03:34:11.902 --> 03:34:15.402 about 3.5 miles of that transmission line. 03:34:16.374 --> 03:34:18.218 Same thing with the Riverside project, 03:34:18.218 --> 03:34:20.453 there were significant costs from some undergrounding. 03:34:20.453 --> 03:34:22.596 And so when looking at some of these trade-offs 03:34:22.596 --> 03:34:23.896 and what we're trying to accomplish, 03:34:23.896 --> 03:34:26.757 it is important to look at some of the costs impact 03:34:26.757 --> 03:34:28.932 per mile with some of these investments. 03:34:28.932 --> 03:34:31.301 And then on transmission, greater utilization 03:34:31.301 --> 03:34:34.568 of a transmission system with more transportation 03:34:34.568 --> 03:34:37.180 electrification, building electrification 03:34:37.180 --> 03:34:42.097 will lower the rate impacts for customers across the Board. 03:34:43.106 --> 03:34:43.939 Thank you. 03:34:43.939 --> 03:34:46.816 Scott, can you provide a response on that for SDG&E? 03:34:46.816 --> 03:34:47.649 Thank you. 03:34:47.649 --> 03:34:50.386 Thanks for the question, Commissioner. 03:34:50.386 --> 03:34:52.437 I think much has been said already, 03:34:52.437 --> 03:34:55.504 but as I said in my comments, 03:34:55.504 --> 03:34:58.529 really as we look at kind of the capital and cost drivers 03:34:58.529 --> 03:35:02.418 at SDG&E one of the biggest issues is our wildfire spending 03:35:02.418 --> 03:35:03.875 and our wildfire investments. 03:35:03.875 --> 03:35:05.311 And we've certainly seen good results 03:35:05.311 --> 03:35:07.662 in our service territory, 03:35:07.662 --> 03:35:12.195 but really moving towards using risk spin deficiencies, 03:35:12.195 --> 03:35:13.682 and making sure that again, 03:35:13.682 --> 03:35:16.770 we are using those capital dollars as effectively 03:35:16.770 --> 03:35:19.364 and efficiently as possible, 03:35:19.364 --> 03:35:21.493 to understand where we can get the best 03:35:21.493 --> 03:35:26.493 wildfire risk reductions or the best PSPS reductions 03:35:26.636 --> 03:35:29.301 and really getting down to that granular level. 03:35:29.301 --> 03:35:31.576 So we're not looking at it as a system, 03:35:31.576 --> 03:35:35.196 but really getting down into really that segment by segment 03:35:35.196 --> 03:35:36.979 basis, again to make sure 03:35:36.979 --> 03:35:39.053 that we're being as efficient as possible. 03:35:39.053 --> 03:35:42.069 Maybe the second thing as well is also finding 03:35:42.069 --> 03:35:45.078 capital investments that may not actually lead to 03:35:45.078 --> 03:35:47.995 an increase in costs for customers, 03:35:49.766 --> 03:35:52.150 but we're still be able to provide an important benefit 03:35:52.150 --> 03:35:52.983 to customers. 03:35:52.983 --> 03:35:56.204 For example, as we're replacing all of our 03:35:56.204 --> 03:35:58.862 customer service systems at SDG&E, 03:35:58.862 --> 03:36:00.457 it's a big capital investment, 03:36:00.457 --> 03:36:03.193 we've got systems that are almost 25 years old. 03:36:03.193 --> 03:36:06.106 But in the end, what we've found that is through 03:36:06.106 --> 03:36:10.659 avoided costs, through actual direct savings, 03:36:10.659 --> 03:36:13.647 that these are systems that can actually pay for themselves. 03:36:13.647 --> 03:36:16.140 And we actually think there'll be a net benefit 03:36:16.140 --> 03:36:18.137 to come up customers over the long-term, 03:36:18.137 --> 03:36:21.226 while improving overall customer service. 03:36:21.226 --> 03:36:22.994 And so I think those are the opportunities 03:36:22.994 --> 03:36:26.094 that we want to continue to look at. 03:36:26.094 --> 03:36:27.195 Great, thank you, Scott. 03:36:27.195 --> 03:36:32.195 I know we have a question from Commissioner Guzman-Aceves. 03:36:32.399 --> 03:36:33.823 Thank you everyone, 03:36:33.823 --> 03:36:38.275 and apologies for my lack of connectivity now suddenly. 03:36:38.275 --> 03:36:42.658 But just as a follow-up, I think some of the arguments 03:36:42.658 --> 03:36:47.075 on cost savings and need to look for outside funding, 03:36:48.198 --> 03:36:50.465 outside of the rate payer base for funding, 03:36:50.465 --> 03:36:53.866 it's maybe more tangible when you think about 03:36:53.866 --> 03:36:56.072 some of the clean energy programs, 03:36:56.072 --> 03:36:58.306 even potentially transportation electrification, 03:36:58.306 --> 03:37:00.084 as it was talked about earlier. 03:37:00.084 --> 03:37:02.944 But in these larger pots of transmission 03:37:02.944 --> 03:37:05.253 and wildfire investments, 03:37:05.253 --> 03:37:07.645 it's particularly encouraging investments. 03:37:07.645 --> 03:37:11.999 Those just in terms of greater transparency, 03:37:11.999 --> 03:37:14.568 I know we talked earlier about the oversight needed 03:37:14.568 --> 03:37:17.469 on the self-approved projects and transmission, 03:37:17.469 --> 03:37:19.240 that's a clear one from my perspective 03:37:19.240 --> 03:37:21.027 that needs some oversight. 03:37:21.027 --> 03:37:24.030 But in addition to that, are there different models? 03:37:24.030 --> 03:37:26.620 And maybe this is not a question to the utilities, 03:37:26.620 --> 03:37:28.440 I don't think they're seeking out different models, 03:37:28.440 --> 03:37:30.216 but for the panelists. 03:37:30.216 --> 03:37:32.823 Are there different models on ownership 03:37:32.823 --> 03:37:36.521 of both the responsibility of the work 03:37:36.521 --> 03:37:38.384 on the wildfire safety side, 03:37:38.384 --> 03:37:41.277 and ownership on transmission to lower 03:37:41.277 --> 03:37:44.944 some of the longer term cost of rate payers? 03:37:46.190 --> 03:37:48.067 Is there something really outside the box 03:37:48.067 --> 03:37:52.669 that we're not thinking about for those sectors of the cost? 03:37:52.669 --> 03:37:56.725 I think again, those are some of the higher growing areas 03:37:56.725 --> 03:37:59.149 and they're less traditionally funded 03:37:59.149 --> 03:38:02.154 from other government sources, 03:38:02.154 --> 03:38:05.617 or other well, there's a lot of prejudice in there, 03:38:05.617 --> 03:38:07.865 but I just wonder if there are other things 03:38:07.865 --> 03:38:09.342 that we should be contemplating 03:38:09.342 --> 03:38:12.116 to bring down those costs in particular? 03:38:12.116 --> 03:38:12.949 Thank you. 03:38:14.873 --> 03:38:16.706 Thanks Commissioner. 03:38:18.024 --> 03:38:21.802 So did we have any further response to that question 03:38:21.802 --> 03:38:22.800 from the panelists? 03:38:22.800 --> 03:38:26.300 If not, Jennifer Dowdell, please go ahead. 03:38:28.509 --> 03:38:32.543 Yeah, if I understood the question correctly, 03:38:32.543 --> 03:38:36.162 the question is ownership outside of utilities 03:38:36.162 --> 03:38:37.949 for things like transmission. 03:38:37.949 --> 03:38:41.862 And I mean, I think there's potentially a state, 03:38:41.862 --> 03:38:45.730 a role for state ownership of transmission assets. 03:38:45.730 --> 03:38:48.070 And certainly right off the box, 03:38:48.070 --> 03:38:52.737 you would reduce the costs by simply using debt funding, 03:38:54.201 --> 03:38:56.520 rather than the equity component. 03:38:56.520 --> 03:38:59.652 So if I've understood correctly, 03:38:59.652 --> 03:39:03.272 I think that that is something that could make sense, 03:39:03.272 --> 03:39:06.829 particularly in transmission projects 03:39:06.829 --> 03:39:10.746 that have significant kind of Statewide support 03:39:14.010 --> 03:39:16.093 for climate change goals. 03:39:18.455 --> 03:39:20.238 Is that responsive? 03:39:20.238 --> 03:39:21.655 Yes, thank you. 03:39:22.623 --> 03:39:24.774 Thanks, Jennifer. 03:39:24.774 --> 03:39:26.678 The next question I see Commissioner Shiroma 03:39:26.678 --> 03:39:28.011 has her hand up. 03:39:30.537 --> 03:39:31.740 Thank you, Leuwam. 03:39:31.740 --> 03:39:33.040 Thank you everybody. 03:39:33.040 --> 03:39:34.957 Very interesting ideas. 03:39:36.701 --> 03:39:40.534 I appreciate that the utilities are looking at 03:39:42.238 --> 03:39:46.814 a (mumbles) of different options for reducing costs 03:39:46.814 --> 03:39:50.981 on customers, and that stakeholders are looking at 03:39:52.834 --> 03:39:54.668 thinking outside of the box on this. 03:39:54.668 --> 03:39:57.580 Now I'm going to go back and drill down for a moment 03:39:57.580 --> 03:40:00.094 on self-approved projects. 03:40:00.094 --> 03:40:03.758 And I do want to make sure that the viewing audience 03:40:03.758 --> 03:40:08.175 knows that when we talk about self-approved projects, 03:40:10.219 --> 03:40:13.136 this is a I'll call it an artifact, 03:40:14.119 --> 03:40:16.379 but an artifact of FERC, 03:40:16.379 --> 03:40:19.967 in terms of their overall regulation 03:40:19.967 --> 03:40:22.327 of transmission projects. 03:40:22.327 --> 03:40:27.244 The CPUC has an advocacy role in going in to argue at FERC, 03:40:30.398 --> 03:40:35.333 or sometimes in the court to towards a cost-containment. 03:40:35.333 --> 03:40:39.317 I also appreciate how long these projects can take, 03:40:39.317 --> 03:40:42.041 whether it's a regular transmission project, 03:40:42.041 --> 03:40:43.031 it's not a self-approve, 03:40:43.031 --> 03:40:45.948 but also in the self-approved vein. 03:40:47.054 --> 03:40:51.137 So my question to the investor owned utilities is 03:40:55.852 --> 03:40:58.446 if those are big dollar amounts, 03:40:58.446 --> 03:41:01.863 and what else can you share with us today 03:41:03.025 --> 03:41:06.608 on what you're doing to much of those costs 03:41:07.915 --> 03:41:11.832 to cost contain, to control that particular bin 03:41:14.257 --> 03:41:16.674 of multimillion dollar costs? 03:41:17.888 --> 03:41:21.609 And I want to maybe send that over to Robert Kenney. 03:41:21.609 --> 03:41:23.751 Maybe you can talk about the star process or 03:41:23.751 --> 03:41:26.918 and any other opportunities, go ahead. 03:41:28.014 --> 03:41:29.125 Commissioner, thanks for the question, 03:41:29.125 --> 03:41:31.394 and Leuwam, thanks for the clarification. 03:41:31.394 --> 03:41:35.727 We do see a rise in FERC jurisdictional transmission 03:41:38.030 --> 03:41:40.380 spending, a lot of it being driven by 03:41:40.380 --> 03:41:43.347 lifecycle replacements and substations, 03:41:43.347 --> 03:41:45.925 equipment enhancements and upgrades, 03:41:45.925 --> 03:41:48.392 as well as capacity upgrades to meet load growth 03:41:48.392 --> 03:41:49.667 in certain areas, 03:41:49.667 --> 03:41:52.653 and then spending associated with large infrastructure 03:41:52.653 --> 03:41:56.480 projects like Caltrain electrification or high-speed rail, 03:41:56.480 --> 03:41:58.915 and then connecting large renewable generation stations 03:41:58.915 --> 03:42:00.265 and energy storage projects. 03:42:00.265 --> 03:42:04.145 That's probably what's driving it most significantly. 03:42:04.145 --> 03:42:08.003 And then just going back to those projects that are approved 03:42:08.003 --> 03:42:10.083 in the transmission planning process at the CAISO 03:42:10.083 --> 03:42:11.856 versus those that are not those. 03:42:11.856 --> 03:42:14.106 (cuts out) 03:44:59.043 --> 03:45:02.068 Begin in FERC proceedings, 03:45:02.068 --> 03:45:04.880 at least to me the RE segment. 03:45:04.880 --> 03:45:07.797 So there is for folks, information, 03:45:09.700 --> 03:45:13.348 there is a hearing April 16th, if I'm correct, 03:45:13.348 --> 03:45:14.772 and we will be there. 03:45:14.772 --> 03:45:15.939 So stay tuned. 03:45:18.330 --> 03:45:19.755 Very good, thank you. 03:45:19.755 --> 03:45:23.332 So I see Commissioner McAllister's hand is up, 03:45:23.332 --> 03:45:25.518 please go ahead with your question. 03:45:25.518 --> 03:45:26.941 Yes, great, thank you. 03:45:26.941 --> 03:45:28.524 Thanks everybody for your presentation 03:45:28.524 --> 03:45:32.260 and to Commissioner Shiroma and staff at the PUC 03:45:32.260 --> 03:45:33.476 for putting this together. 03:45:33.476 --> 03:45:35.867 This is so far been a great day, 03:45:35.867 --> 03:45:38.706 and looking forward to seeing it through here. 03:45:38.706 --> 03:45:41.257 So I guess my question is sort of on the other end 03:45:41.257 --> 03:45:44.427 of the spectrum, we've talked about the transmission side 03:45:44.427 --> 03:45:46.344 and the planning there, 03:45:48.169 --> 03:45:50.418 and I guess I want to talk about 03:45:50.418 --> 03:45:52.239 really our built environment. 03:45:52.239 --> 03:45:53.080 It's sort of come up, 03:45:53.080 --> 03:45:54.951 but I wanted to dig in a little bit. 03:45:54.951 --> 03:45:57.896 How can it be part of the solution? 03:45:57.896 --> 03:45:59.776 Load flexibility, for example, 03:45:59.776 --> 03:46:04.776 as a way to avoid much of the large capital investment 03:46:05.079 --> 03:46:06.857 and putting that into the rate base, 03:46:06.857 --> 03:46:09.320 but providing services that does mitigate peak 03:46:09.320 --> 03:46:11.452 and does manage the grid in a way that optimizes 03:46:11.452 --> 03:46:13.449 the resources that we've already invested, 03:46:13.449 --> 03:46:16.206 the physical resources that we already have. 03:46:16.206 --> 03:46:20.539 So I want to get folks' opinions about the potential 03:46:21.629 --> 03:46:24.219 to use load flexibility in a way 03:46:24.219 --> 03:46:28.727 that does help manage costs, enhance reliability, 03:46:28.727 --> 03:46:29.850 give us a little push along 03:46:29.850 --> 03:46:32.848 the decarbonization pathway as well. 03:46:32.848 --> 03:46:36.652 It seems to check boxes, but also has some complications 03:46:36.652 --> 03:46:41.434 because we're talking about customer level resources. 03:46:41.434 --> 03:46:42.953 And I'm not just talking about solar 03:46:42.953 --> 03:46:45.482 and behind the meter storage, 03:46:45.482 --> 03:46:49.899 but lots of different as we electrify transportation, 03:46:50.824 --> 03:46:54.313 put in more heating and uses that are electric, 03:46:54.313 --> 03:46:56.366 the opportunity to manage those. 03:46:56.366 --> 03:46:59.666 So one, kind of want to get your handicap on that approach. 03:46:59.666 --> 03:47:02.583 And then two, just maybe talk about 03:47:08.109 --> 03:47:10.607 how the state could encourage, 03:47:10.607 --> 03:47:12.488 and we've all obviously doing some stuff at the CEC, 03:47:12.488 --> 03:47:14.578 I don't have to go into, but how the state 03:47:14.578 --> 03:47:15.576 has sort of enabled that. 03:47:15.576 --> 03:47:16.845 There's a really good conversation going on 03:47:16.845 --> 03:47:20.111 across the three agencies to try to enable that, 03:47:20.111 --> 03:47:23.397 and would love to have the panelists view of 03:47:23.397 --> 03:47:26.174 paint that vision of how that could work 03:47:26.174 --> 03:47:28.952 in terms of our buildings actually participating 03:47:28.952 --> 03:47:32.364 in real time to enhance the operation of the grid 03:47:32.364 --> 03:47:35.364 for reliability and cost mitigation. 03:47:40.503 --> 03:47:44.060 I'm happy to start off with just a comment on this. 03:47:44.060 --> 03:47:47.292 And so Commissioner (mumbles) very much appreciate 03:47:47.292 --> 03:47:49.063 your recommendation and your point there. 03:47:49.063 --> 03:47:52.233 And we saw real contributions in terms of 03:47:52.233 --> 03:47:54.004 demand and response last August, 03:47:54.004 --> 03:47:56.892 when we are having some supply constraints. 03:47:56.892 --> 03:47:59.119 And so do agree that if we can have customers 03:47:59.119 --> 03:48:00.480 a part of that solution, 03:48:00.480 --> 03:48:02.646 that can be cheaper than the alternative. 03:48:02.646 --> 03:48:05.197 I'll say very well we have, 03:48:05.197 --> 03:48:07.406 we're still in the infancy of building electrification. 03:48:07.406 --> 03:48:09.976 And so there really is a need to have customers 03:48:09.976 --> 03:48:12.294 start adopting these technologies, 03:48:12.294 --> 03:48:15.363 feeling comfortable with having an all electric home, 03:48:15.363 --> 03:48:18.857 and there's opportunities both in terms of 03:48:18.857 --> 03:48:20.699 improving the building codes to make sure that 03:48:20.699 --> 03:48:23.246 homes are built that way with smart technology, 03:48:23.246 --> 03:48:24.213 smart panels. 03:48:24.213 --> 03:48:26.501 And there's also a need for significant funding. 03:48:26.501 --> 03:48:28.269 So this is a particular space that 03:48:28.269 --> 03:48:30.744 one of the examples of where it'd be great to have 03:48:30.744 --> 03:48:33.323 some complimentary funding at the state level 03:48:33.323 --> 03:48:35.373 to support the investment that the PUC 03:48:35.373 --> 03:48:38.206 has already approved in this area. 03:48:40.664 --> 03:48:43.108 Thanks, I see that Jennifer Dowdell's hand is up. 03:48:43.108 --> 03:48:46.520 Did you have a response to that question as well, 03:48:46.520 --> 03:48:48.289 or is it just? 03:48:48.289 --> 03:48:49.756 No, I sure did. 03:48:49.756 --> 03:48:51.274 And it's just my two cents. 03:48:51.274 --> 03:48:53.004 I mean, and I think this is where (mumbles) 03:48:53.004 --> 03:48:55.583 has been a lot of places. 03:48:55.583 --> 03:48:59.666 When we think about funding for various solutions 03:49:00.789 --> 03:49:03.399 to improve the operations of the grid, 03:49:03.399 --> 03:49:06.642 we need to make sure that we get the pricing right. 03:49:06.642 --> 03:49:08.972 And if we haven't got, 03:49:08.972 --> 03:49:12.639 if there needs to be some kind of incentive, 03:49:13.890 --> 03:49:16.436 ultimately everybody has to pay their fair share. 03:49:16.436 --> 03:49:20.353 So subsidies really need to be fully considered 03:49:21.627 --> 03:49:24.491 and vetted and understood. 03:49:24.491 --> 03:49:26.775 And if there're on ramps on those kinds of things, 03:49:26.775 --> 03:49:29.575 there really need to be off ramps too. 03:49:29.575 --> 03:49:33.173 So that's just my two cents broadly 03:49:33.173 --> 03:49:38.090 on funding for various load response, flexibility programs. 03:49:43.833 --> 03:49:45.427 Yeah, thank you. 03:49:45.427 --> 03:49:46.828 I see Rick's hand is up. 03:49:46.828 --> 03:49:49.481 Do you have a response to that question? 03:49:49.481 --> 03:49:50.314 Sorry, thanks. 03:49:50.314 --> 03:49:53.619 So I'll just quickly, I wanted to, I guess point to 03:49:53.619 --> 03:49:57.686 rate design as an important platform moving forward 03:49:57.686 --> 03:50:00.810 for supporting DER deployment generally, 03:50:00.810 --> 03:50:04.685 and harmonizing DERs and incentivizing the right kind of 03:50:04.685 --> 03:50:08.484 customer behavior that we want to see to meet grid needs. 03:50:08.484 --> 03:50:10.551 And I think that's going to be an increasingly important 03:50:10.551 --> 03:50:14.389 area that the Commission should be focused on. 03:50:14.389 --> 03:50:18.174 And you know, that we see is it needs to be, 03:50:18.174 --> 03:50:20.483 we need to start looking at the (mumbles) not in silos, 03:50:20.483 --> 03:50:21.793 but kind of across the platform 03:50:21.793 --> 03:50:24.238 that supported by rates, 03:50:24.238 --> 03:50:26.494 that send the right signals to customers. 03:50:26.494 --> 03:50:28.282 I think the other comment I wanted to make was that 03:50:28.282 --> 03:50:31.746 we do need to acknowledge today that not all customers 03:50:31.746 --> 03:50:34.942 can access all DERs and there may need to be 03:50:34.942 --> 03:50:36.711 some funding made available for customers, 03:50:36.711 --> 03:50:41.183 where the cost is just too high to otherwise participate. 03:50:41.183 --> 03:50:42.298 Thank you. 03:50:42.298 --> 03:50:44.067 I know Severin's been patiently waiting. 03:50:44.067 --> 03:50:46.317 Let's jump to his question. 03:50:48.388 --> 03:50:49.761 Thanks. 03:50:49.761 --> 03:50:51.828 So I was surprised both in the white paper 03:50:51.828 --> 03:50:55.137 and the discussion of cost savings 03:50:55.137 --> 03:50:58.027 that there wasn't a discussion of the authorized rate 03:50:58.027 --> 03:51:02.917 of return on capital outside of the FERC discussion. 03:51:02.917 --> 03:51:05.869 Most of that capital that the utilities are earning 03:51:05.869 --> 03:51:07.710 rates of return on it, I believe, 03:51:07.710 --> 03:51:09.960 is not FERC jurisdictional. 03:51:11.018 --> 03:51:15.302 If you look back over the last 40 years the treasury bill, 03:51:15.302 --> 03:51:18.628 and pretty much all the other interest rates have come down, 03:51:18.628 --> 03:51:21.520 and the authorized rate of return hasn't come down 03:51:21.520 --> 03:51:23.338 nearly as much. 03:51:23.338 --> 03:51:24.911 And I'm wondering if somebody, 03:51:24.911 --> 03:51:27.312 and I know there are lots of potential explanations 03:51:27.312 --> 03:51:29.114 with risk and so forth, 03:51:29.114 --> 03:51:31.857 but I wonder if somebody has done a study of this, 03:51:31.857 --> 03:51:34.374 that really tries to pin this down 03:51:34.374 --> 03:51:37.546 because the gap has really widened 03:51:37.546 --> 03:51:39.409 over the last couple of decades. 03:51:39.409 --> 03:51:44.043 And the authorized rate of return seems to not have 03:51:44.043 --> 03:51:47.126 gone down as the cost of capital has. 03:51:48.782 --> 03:51:50.624 Great, and Severin, I think you want us to focus on 03:51:50.624 --> 03:51:52.811 rate of return but at the CPUC, 03:51:52.811 --> 03:51:56.242 not the FERC jurisdictional rate of return, right? 03:51:56.242 --> 03:51:58.715 Yeah, I mean, I think this also applies to FERC, 03:51:58.715 --> 03:52:01.934 but there's nobody from FERC here to answer the question. 03:52:01.934 --> 03:52:04.581 Though, if somebody has insight on that too, 03:52:04.581 --> 03:52:06.736 I'd be interested. 03:52:06.736 --> 03:52:07.891 Okay, so for this question, 03:52:07.891 --> 03:52:10.558 I wanted to maybe turn to Carla. 03:52:11.792 --> 03:52:12.625 Sure. 03:52:12.625 --> 03:52:14.421 Hello professor. 03:52:14.421 --> 03:52:16.335 Nice to be back in class. 03:52:16.335 --> 03:52:17.502 Hello Carla. 03:52:19.497 --> 03:52:21.268 So first of all, to your point about having them (mumbles) 03:52:21.268 --> 03:52:23.552 yes, it's a study as a part of the 03:52:23.552 --> 03:52:26.040 cost of capital proceeding and the utilities, 03:52:26.040 --> 03:52:28.982 electric utilities went in for our last pop of capitol 03:52:28.982 --> 03:52:30.959 proceeding in 2019. 03:52:30.959 --> 03:52:33.952 Recent analysis that we've done shows that 03:52:33.952 --> 03:52:37.593 our cost of equity we think has changed very little, 03:52:37.593 --> 03:52:40.380 since Edison's last costs of capital case. 03:52:40.380 --> 03:52:41.827 And I think what's been interesting, 03:52:41.827 --> 03:52:44.289 there's been significant volatility in the equity markets, 03:52:44.289 --> 03:52:46.277 as you know, with certain industries 03:52:46.277 --> 03:52:47.722 fairing better than others. 03:52:47.722 --> 03:52:51.165 Electric utilities have collectively seen 03:52:51.165 --> 03:52:53.858 their respective equity risks increase, 03:52:53.858 --> 03:52:56.146 relative to the rest of the market. 03:52:56.146 --> 03:52:58.904 And even for EIS, our holding company, 03:52:58.904 --> 03:53:01.388 there's 35 investment grade utilities. 03:53:01.388 --> 03:53:04.019 We have the second lowest price to earnings ratio, 03:53:04.019 --> 03:53:07.847 implying that investors are requiring a higher ROE. 03:53:07.847 --> 03:53:10.438 So this is something I think that the Commission looks at 03:53:10.438 --> 03:53:11.709 and we look at as well. 03:53:11.709 --> 03:53:15.376 We think at this point, the ROE is accurate. 03:53:17.608 --> 03:53:18.441 Thanks. 03:53:18.441 --> 03:53:20.395 I wanted to turn to Scott. 03:53:20.395 --> 03:53:22.849 I'm actually going to ask Bruce Folkman, 03:53:22.849 --> 03:53:25.305 who's our chief financial officer's joining me today. 03:53:25.305 --> 03:53:26.421 And I was wondering if 03:53:26.421 --> 03:53:29.671 you could adjust this question, please? 03:53:31.523 --> 03:53:33.124 Can you hear me okay? 03:53:33.124 --> 03:53:33.957 Yes. 03:53:33.957 --> 03:53:35.258 Thank you, thank you. 03:53:35.258 --> 03:53:37.674 I appreciate the time. 03:53:37.674 --> 03:53:40.507 I certainly echo Carla's comments. 03:53:41.653 --> 03:53:43.435 With regard to cost of capital, 03:53:43.435 --> 03:53:45.399 that obviously has two significant components, 03:53:45.399 --> 03:53:48.465 the cost of debt and the cost of equity. 03:53:48.465 --> 03:53:49.790 And I think most of this discussion 03:53:49.790 --> 03:53:52.599 is usually about the cost of equity. 03:53:52.599 --> 03:53:55.853 Debt rates have been relatively low and moderate 03:53:55.853 --> 03:53:58.961 for a number of years since the financial crisis. 03:53:58.961 --> 03:54:02.385 I think my main feedback here would be is 03:54:02.385 --> 03:54:07.305 as Carla noted, we litigated the last cost of capital 03:54:07.305 --> 03:54:09.055 in the state in 2019. 03:54:11.193 --> 03:54:13.453 Even in the FERC jurisdiction, where we've been 03:54:13.453 --> 03:54:18.453 touching on issues, we had a vigorous settlement discussion, 03:54:19.952 --> 03:54:21.365 certainly including the CPUC, 03:54:21.365 --> 03:54:26.365 and we settled our ROE, as well as the broader rate case 03:54:26.428 --> 03:54:29.496 last year to determine those amounts, 03:54:29.496 --> 03:54:32.605 which are ultimately approved by the FERC this year. 03:54:32.605 --> 03:54:34.655 So I think there's a balance of interest 03:54:34.655 --> 03:54:37.238 that's effective in this space. 03:54:39.893 --> 03:54:43.976 And my final point would be, it's as we all know, 03:54:45.510 --> 03:54:50.015 we rely, we at the utilities, to support the programs 03:54:50.015 --> 03:54:52.397 in the state of California, 03:54:52.397 --> 03:54:56.503 do rely on capital from our capital market. 03:54:56.503 --> 03:54:59.793 We think that's an efficient design candidly, 03:54:59.793 --> 03:55:02.946 and it's important to set those rates consistent 03:55:02.946 --> 03:55:05.752 with market expectations and demands. 03:55:05.752 --> 03:55:09.249 And so I think balancing all of these constituencies' 03:55:09.249 --> 03:55:12.243 interests have been relatively recently, 03:55:12.243 --> 03:55:14.240 in the last 18 months updated, 03:55:14.240 --> 03:55:19.157 and I think reasonably reflect the realities that we're in. 03:55:20.620 --> 03:55:21.998 Great, thank you. 03:55:21.998 --> 03:55:24.381 So I just wanted to check on the hands that are up. 03:55:24.381 --> 03:55:26.315 I see that Commissioner McAllister's hand, 03:55:26.315 --> 03:55:27.398 took it down. 03:55:29.204 --> 03:55:30.721 Severin Borenstein, do you have another question? 03:55:30.721 --> 03:55:33.138 Or are you taking yours down? 03:55:34.186 --> 03:55:36.436 I think he's taken it down. 03:55:37.297 --> 03:55:39.096 I know that Ed Randolph has a question. 03:55:39.096 --> 03:55:41.346 Ed, do you want to come on? 03:55:46.353 --> 03:55:47.884 We'll give him a second, there he is. 03:55:47.884 --> 03:55:49.967 Yeah, thank you Leuwam. 03:55:51.418 --> 03:55:53.759 I would like to connect a few dots 03:55:53.759 --> 03:55:57.929 and follow up on some questions that may not have been 03:55:57.929 --> 03:56:00.689 fully answered, and heads up, this is for 03:56:00.689 --> 03:56:05.171 the three large utility representatives here. 03:56:05.171 --> 03:56:07.322 In this conversation about what the appropriate 03:56:07.322 --> 03:56:11.655 cost of equity is or cost of debt or rate of return, 03:56:12.520 --> 03:56:16.995 it ties back to the bigger question in the white paper. 03:56:16.995 --> 03:56:21.578 It was noted that large drivers of this, earlier today, 03:56:23.863 --> 03:56:25.433 I talked about it from a standpoint of 03:56:25.433 --> 03:56:27.213 very particular investments, 03:56:27.213 --> 03:56:29.637 but large drivers of the rate increases so far as 03:56:29.637 --> 03:56:33.887 we look forward are increases in overall rate base. 03:56:37.564 --> 03:56:39.894 And so for folks that aren't nuanced in 03:56:39.894 --> 03:56:42.025 the terminology of rate making, 03:56:42.025 --> 03:56:44.293 that's basically saying that utilities are making 03:56:44.293 --> 03:56:48.414 more and more capital investments in infrastructure, 03:56:48.414 --> 03:56:51.906 and that is really where they make their profits. 03:56:51.906 --> 03:56:54.789 They don't make much profit, if any profit at all, 03:56:54.789 --> 03:56:57.293 on operation and maintenance, 03:56:57.293 --> 03:56:59.771 but do make a large profit or make all of their profit 03:56:59.771 --> 03:57:03.221 off of those investments in actual capital. 03:57:03.221 --> 03:57:06.133 And again, for other folks that don't follow this, 03:57:06.133 --> 03:57:09.119 the great example of the modern era is 03:57:09.119 --> 03:57:12.414 if the utility invest in cutting down a tree 03:57:12.414 --> 03:57:14.703 to prevent a wildfire, there's no profit in that. 03:57:14.703 --> 03:57:17.990 But if they put a new steel pole 03:57:17.990 --> 03:57:21.213 or underground the infrastructure, 03:57:21.213 --> 03:57:23.388 then there's profit in that. 03:57:23.388 --> 03:57:26.091 And we do see a increasing trend 03:57:26.091 --> 03:57:29.159 in that rate base out there. 03:57:29.159 --> 03:57:30.934 And so I think a question earlier coming from 03:57:30.934 --> 03:57:34.064 Commissioner Rechtschaffen was about that, 03:57:34.064 --> 03:57:37.284 and the utilities in your response talked about, yes, 03:57:37.284 --> 03:57:40.324 we need to continue to make these investments. 03:57:40.324 --> 03:57:43.741 I'd like to turn it around to further go, 03:57:44.917 --> 03:57:46.082 what are the alternatives? 03:57:46.082 --> 03:57:47.850 And would you support some of the alternatives 03:57:47.850 --> 03:57:49.368 that are out there? 03:57:49.368 --> 03:57:53.951 For example, in SB 1054, there was a provision in there 03:57:55.143 --> 03:57:57.733 that specifically said a certain amount of money 03:57:57.733 --> 03:58:02.650 spent on wildfire mitigation would not go in the rate base, 03:58:03.795 --> 03:58:07.840 and could be financed through a securitization. 03:58:07.840 --> 03:58:09.613 And so we've gone through that process 03:58:09.613 --> 03:58:13.196 on that particular investment and seen that 03:58:14.471 --> 03:58:17.376 it does actually provide rate payer savings 03:58:17.376 --> 03:58:20.047 relative to alternative forms of financing. 03:58:20.047 --> 03:58:23.175 So I want to throw it back to the utilities on 03:58:23.175 --> 03:58:27.242 should we continue to look for those alternative forms 03:58:27.242 --> 03:58:29.582 of financing that can save rate payer's money? 03:58:29.582 --> 03:58:32.503 Or are there other ideas you have out there 03:58:32.503 --> 03:58:35.323 on how to finance these projects 03:58:35.323 --> 03:58:37.771 that need to be made, 03:58:37.771 --> 03:58:42.521 that would help reduce the long-term cost to rate payers? 03:58:45.773 --> 03:58:47.073 I'll start off and just say 03:58:47.073 --> 03:58:49.301 I think it's important to remember 03:58:49.301 --> 03:58:51.910 what's driving the investments in the first place 03:58:51.910 --> 03:58:53.220 and what informs them. 03:58:53.220 --> 03:58:55.362 And the big investments that we're seeing coming up 03:58:55.362 --> 03:58:58.399 are to harden our grid, is to really invest 03:58:58.399 --> 03:58:59.969 in infrastructure is what you need 03:58:59.969 --> 03:59:02.478 in order to really address wildfire risk. 03:59:02.478 --> 03:59:04.619 And this is informed by our REM filings. 03:59:04.619 --> 03:59:07.967 This is informed by, before we even go in with a GRC, 03:59:07.967 --> 03:59:10.756 we're coming in, we're talking about our top safety risks, 03:59:10.756 --> 03:59:12.615 our top reliability risks. 03:59:12.615 --> 03:59:15.008 The Commission lets those stakeholders look at that. 03:59:15.008 --> 03:59:18.169 And then our GRC is submitted to address those top risks. 03:59:18.169 --> 03:59:21.242 And so we can't forget for what's driving 03:59:21.242 --> 03:59:23.842 those initial investments in the first place. 03:59:23.842 --> 03:59:26.082 Then in terms of looking at what are different ways 03:59:26.082 --> 03:59:28.459 to finance, and again, these are big investments, 03:59:28.459 --> 03:59:31.659 these are big dollar investments. 03:59:31.659 --> 03:59:35.047 Edison is using securitization where it makes sense. 03:59:35.047 --> 03:59:39.781 We've been able to reduce rates in 2021 by 3%, 03:59:39.781 --> 03:59:44.060 by utilizing the securitization authority within 1054, 03:59:44.060 --> 03:59:46.057 as well as AB 913. 03:59:46.057 --> 03:59:49.000 But securitization isn't the solution for everything. 03:59:49.000 --> 03:59:51.653 And there is a point in time when you actually don't get 03:59:51.653 --> 03:59:54.285 the benefits from it because rating agencies 03:59:54.285 --> 03:59:57.299 start to see less benefits if too much of your rate 03:59:57.299 --> 03:59:59.806 is dedicated through a securitization. 03:59:59.806 --> 04:00:01.837 So I think it's one of the tools we need to have, 04:00:01.837 --> 04:00:04.106 but it's not the only tool. 04:00:04.106 --> 04:00:06.181 In our rate cases, we have this process 04:00:06.181 --> 04:00:08.594 where we are assessing some of those trade-offs. 04:00:08.594 --> 04:00:10.706 And I think that continues to be the right forum 04:00:10.706 --> 04:00:13.223 to look at whether these investments make sense. 04:00:13.223 --> 04:00:16.259 And I think I'll just end by saying longer term, 04:00:16.259 --> 04:00:18.786 this is a risk that we're looking to reduce. 04:00:18.786 --> 04:00:21.688 So the intention is not to have wildfire spend 04:00:21.688 --> 04:00:24.102 continue to multiply years out. 04:00:24.102 --> 04:00:26.952 Our focus is on how do we get our grid ready 04:00:26.952 --> 04:00:29.207 for this climate constrained future? 04:00:29.207 --> 04:00:30.891 And then I think we need to think about it 04:00:30.891 --> 04:00:32.891 in that context as well. 04:00:35.389 --> 04:00:36.222 Thank you. 04:00:36.222 --> 04:00:38.187 I saw Robert's hand go up in response to this. 04:00:38.187 --> 04:00:42.256 Do you have an answer that you'd like to contribute? 04:00:42.256 --> 04:00:44.741 Yeah, Carla said much of what I was going to say, 04:00:44.741 --> 04:00:46.408 but I will just add. 04:00:48.401 --> 04:00:51.988 We are making these investments based upon 04:00:51.988 --> 04:00:56.075 a risk model that dictates whether we're going to do 04:00:56.075 --> 04:00:57.855 system hardening versus undergrounding 04:00:57.855 --> 04:00:59.444 plus enhanced veg management. 04:00:59.444 --> 04:01:02.575 And so I just, I really want to emphasize that 04:01:02.575 --> 04:01:05.664 the investments that we're making, 04:01:05.664 --> 04:01:10.571 first and foremost are tied to robust risk modeling 04:01:10.571 --> 04:01:13.283 that tells us and informs what we're going to do, 04:01:13.283 --> 04:01:14.676 the spending that we're going to do, 04:01:14.676 --> 04:01:15.842 and where we're going to do it. 04:01:15.842 --> 04:01:17.733 We've also made use of securitization 04:01:17.733 --> 04:01:21.011 and it's an effective tool, I think as Carla pointed out, 04:01:21.011 --> 04:01:26.011 at a certain point though, too much of it will begin to harm 04:01:27.613 --> 04:01:29.869 the balance sheet to the point where the markets 04:01:29.869 --> 04:01:32.461 will not react appropriately to it. 04:01:32.461 --> 04:01:37.461 To the extent that there are other opportunities to explore, 04:01:37.516 --> 04:01:39.840 more creative financing options, 04:01:39.840 --> 04:01:44.327 be happy to participate in that discussion as well. 04:01:44.327 --> 04:01:45.160 Thank you. 04:01:45.160 --> 04:01:47.293 Do we have a response from SDG&E? 04:01:47.293 --> 04:01:49.377 I see Bruce, please go ahead. 04:01:49.377 --> 04:01:52.037 Yeah, thank you, Leuwam. 04:01:52.037 --> 04:01:54.377 One thing I think we should keep in mind 04:01:54.377 --> 04:01:58.710 that's really valuable to the citizens of California 04:02:00.406 --> 04:02:03.073 is the need to manage fire risk. 04:02:04.389 --> 04:02:07.904 So I think the discussions we've had about the success 04:02:07.904 --> 04:02:12.244 in mitigating fire risk to the maximum extent possible 04:02:12.244 --> 04:02:15.105 is a benefit for everyone in California, 04:02:15.105 --> 04:02:17.570 and the world more broadly. 04:02:17.570 --> 04:02:20.820 In terms of a hyper-focus on rate case, 04:02:22.548 --> 04:02:25.759 or a rate base rather forgive me, 04:02:25.759 --> 04:02:29.556 one of the biggest opportunities I think to leverage this 04:02:29.556 --> 04:02:34.003 better grid is that what we've been talking about 04:02:34.003 --> 04:02:37.946 in part today is the potential to reduce 04:02:37.946 --> 04:02:40.909 or perhaps even one day eliminate the purchase of gasoline 04:02:40.909 --> 04:02:42.875 by all the households of California, 04:02:42.875 --> 04:02:45.205 and replace that with electricity. 04:02:45.205 --> 04:02:49.761 That inevitably will have some impact on rate base. 04:02:49.761 --> 04:02:52.458 The goal would be to leverage what we've already built 04:02:52.458 --> 04:02:56.191 to make it as cost effective as possible. 04:02:56.191 --> 04:02:59.708 I think there's a downward impact on rates, potentially, 04:02:59.708 --> 04:03:01.661 if we manage that well. 04:03:01.661 --> 04:03:05.010 But I think this the biggest new source of revenue 04:03:05.010 --> 04:03:06.791 that we should all be excited about 04:03:06.791 --> 04:03:10.541 as an electric business is charging vehicles. 04:03:14.093 --> 04:03:14.935 Thank you. 04:03:14.935 --> 04:03:17.381 (crosstalk) 04:03:17.381 --> 04:03:19.501 One quick nerdy comment about rate base. 04:03:19.501 --> 04:03:22.184 Which is, one of the reasons we've also seen 04:03:22.184 --> 04:03:26.212 rate base increase is because of a delay in actually having 04:03:26.212 --> 04:03:28.718 depreciation expense go to customers. 04:03:28.718 --> 04:03:31.360 And so we do want to make sure that current customers 04:03:31.360 --> 04:03:33.418 pay for their share of assets. 04:03:33.418 --> 04:03:36.629 And over time we've seen less depreciation expense 04:03:36.629 --> 04:03:39.562 being approved for customer recovery by the Commission. 04:03:39.562 --> 04:03:42.298 And although that might have some short-term benefits, 04:03:42.298 --> 04:03:44.337 it also keeps the rate base higher. 04:03:44.337 --> 04:03:46.918 And so that's an area when it began to catch up, 04:03:46.918 --> 04:03:49.037 it would be helpful to be able to actually start 04:03:49.037 --> 04:03:52.178 to have depreciation expense charged to customers 04:03:52.178 --> 04:03:53.761 in a timely manner. 04:03:54.872 --> 04:03:57.234 Thank you for that. 04:03:57.234 --> 04:03:58.319 Thank you. 04:03:58.319 --> 04:03:59.856 Of course, Commissioner Shiroma, 04:03:59.856 --> 04:04:02.598 I think you had a question. 04:04:02.598 --> 04:04:03.962 Yeah, thank you. 04:04:03.962 --> 04:04:07.879 And this question is for Ms. Jones, for Betony, 04:04:09.748 --> 04:04:13.665 really, I was intrigued by your presentation on 04:04:14.954 --> 04:04:17.528 the wildfire mitigation investments, 04:04:17.528 --> 04:04:19.945 in terms of the job creation, 04:04:22.476 --> 04:04:25.143 the raising of household income, 04:04:27.546 --> 04:04:29.355 the increased economic activity, 04:04:29.355 --> 04:04:33.665 because most of our conversation today is about 04:04:33.665 --> 04:04:36.665 the stresses and pressures of rates, 04:04:38.233 --> 04:04:41.066 and these projects small and large 04:04:42.703 --> 04:04:44.469 are rate design and so forth. 04:04:44.469 --> 04:04:49.469 And so I was wondering if you have done a similar analysis, 04:04:49.751 --> 04:04:53.413 when we look at renewable generation 04:04:53.413 --> 04:04:56.583 or transportation electrification, have you expanded 04:04:56.583 --> 04:05:01.000 this analysis to other parts of our energy landscape? 04:05:03.844 --> 04:05:05.684 Yeah, I wrote a couple papers, 04:05:05.684 --> 04:05:07.456 one looking at the San Joaquin Valley 04:05:07.456 --> 04:05:10.043 and the other looking at the Inland Empire. 04:05:10.043 --> 04:05:11.436 And it, among other things, 04:05:11.436 --> 04:05:15.269 evaluated the net impacts of the RPS policies, 04:05:17.061 --> 04:05:18.916 the renewable portfolio standards. 04:05:18.916 --> 04:05:23.083 So there as well because of the structure of that, 04:05:25.451 --> 04:05:28.810 where most of the complying power generation 04:05:28.810 --> 04:05:31.796 has been built in the state of California, 04:05:31.796 --> 04:05:33.925 and most of it with union labor, 04:05:33.925 --> 04:05:36.381 we were able to quantify the job benefits, 04:05:36.381 --> 04:05:40.478 the increase in lifetime earnings for those workers, 04:05:40.478 --> 04:05:43.629 the contributions to our apprenticeship programs, 04:05:43.629 --> 04:05:45.570 the expansion of apprenticeship programs, 04:05:45.570 --> 04:05:49.737 and some of California's highest poverty counties, 04:05:51.280 --> 04:05:55.022 the contributions to health insurance for families, 04:05:55.022 --> 04:05:58.226 the contributions to retirement programs 04:05:58.226 --> 04:06:00.309 through that construction 04:06:02.485 --> 04:06:05.283 because most of it has been built union. 04:06:05.283 --> 04:06:09.975 So the benefits of that, I mean, it's really extraordinary. 04:06:09.975 --> 04:06:13.107 It's something really unique to California to reap 04:06:13.107 --> 04:06:16.107 all of those, not only job benefits, 04:06:17.204 --> 04:06:19.011 but quality job benefits 04:06:19.011 --> 04:06:23.153 from the development of renewable energy. 04:06:23.153 --> 04:06:24.724 I think similarly, I mean, we don't have 04:06:24.724 --> 04:06:27.243 a lot of EV infrastructure yet, 04:06:27.243 --> 04:06:31.493 but with BB 841 requiring the EBI TP certification, 04:06:32.802 --> 04:06:35.827 that helps ensure that those are going to be 04:06:35.827 --> 04:06:38.577 electrician jobs, trained people, 04:06:39.916 --> 04:06:42.277 and expand opportunities for electricians, 04:06:42.277 --> 04:06:46.300 which provides a good family sustaining 04:06:46.300 --> 04:06:49.087 career track opportunity. 04:06:49.087 --> 04:06:52.935 So wherever we can expand broad occupational training, 04:06:52.935 --> 04:06:57.005 expand work opportunities for skilled workers in this state, 04:06:57.005 --> 04:07:00.937 and ensure that those have labor standards attached to them 04:07:00.937 --> 04:07:02.713 to make sure they're quality jobs, 04:07:02.713 --> 04:07:07.471 we are really chipping away at the poverty crisis 04:07:07.471 --> 04:07:10.840 and increasing household earnings. 04:07:10.840 --> 04:07:14.242 So when we think about the broader economic impacts, 04:07:14.242 --> 04:07:16.344 like what's good for the state as a whole 04:07:16.344 --> 04:07:19.215 and think about the types of jobs that are created, 04:07:19.215 --> 04:07:22.965 it's often when you're consolidating spending 04:07:24.200 --> 04:07:25.809 to infrastructure investments, 04:07:25.809 --> 04:07:30.392 you get a lot of good direct jobs for in-state workers. 04:07:34.202 --> 04:07:35.035 Yeah, thank you. 04:07:35.035 --> 04:07:37.562 I think it really points to the notion 04:07:37.562 --> 04:07:41.371 that any Commissioners, regulators, what have you, 04:07:41.371 --> 04:07:46.038 that we look at the larger holistic perspective as well, 04:07:51.931 --> 04:07:54.448 that there is a lot that goes into 04:07:54.448 --> 04:07:55.529 what happens to households. 04:07:55.529 --> 04:07:58.613 And it does go back to my first question 04:07:58.613 --> 04:08:02.446 of our own CPUC staff in terms of factoring in 04:08:03.545 --> 04:08:06.878 what is a household's initial investment 04:08:08.109 --> 04:08:11.624 into whether it's electric vehicles, 04:08:11.624 --> 04:08:13.218 heat pumps and what have you, 04:08:13.218 --> 04:08:16.385 how does that affect household income? 04:08:19.221 --> 04:08:22.778 And along with what does that mean 04:08:22.778 --> 04:08:26.286 for their household energy bills? 04:08:26.286 --> 04:08:30.369 And if you have these other papers available, 04:08:30.369 --> 04:08:34.138 if you could, maybe we already have the links to those, 04:08:34.138 --> 04:08:36.904 but I'd be interested in seeing those. 04:08:36.904 --> 04:08:40.666 And I'm really pleased that you have focused on 04:08:40.666 --> 04:08:45.294 the Inland Empire and the San Joaquin Valley as well. 04:08:45.294 --> 04:08:46.127 Thank you. 04:08:48.448 --> 04:08:50.873 Earlier, I saw Commissioner Gunda's hand up, 04:08:50.873 --> 04:08:52.277 and I don't see it anymore, 04:08:52.277 --> 04:08:55.733 but I just wanted to check with him. 04:08:55.733 --> 04:08:58.112 And also, Rick Umoff, I see your hand up. 04:08:58.112 --> 04:09:01.138 Did you want to also provide a response? 04:09:01.138 --> 04:09:03.405 Commissioner Gunda, is that you? 04:09:03.405 --> 04:09:05.911 Yeah, I'm just say, I'm good, thank you so much. 04:09:05.911 --> 04:09:07.305 Okay, of course. 04:09:07.305 --> 04:09:08.886 Rick, did you also want to provide a response 04:09:08.886 --> 04:09:11.061 to Commissioner Shiroma's question? 04:09:11.061 --> 04:09:12.965 I see your hand up. 04:09:12.965 --> 04:09:13.798 Thank you. 04:09:13.798 --> 04:09:15.460 One thing I did wanna touch on 04:09:15.460 --> 04:09:17.333 and something we haven't talked about here, 04:09:17.333 --> 04:09:20.962 is on the supply side, on the utility scale side 04:09:20.962 --> 04:09:23.209 of (mumbles) energy development. 04:09:23.209 --> 04:09:26.299 And the extension of the EITC, 04:09:26.299 --> 04:09:28.149 which recently happened the next couple of years, 04:09:28.149 --> 04:09:31.039 provide a new kind of a renewed opportunity 04:09:31.039 --> 04:09:35.914 for the state to procure solar storage is going to need 04:09:35.914 --> 04:09:39.306 to meet its climate and reliability targets, 04:09:39.306 --> 04:09:41.703 very cost effective right now, 04:09:41.703 --> 04:09:43.646 at a 30% discount essentially. 04:09:43.646 --> 04:09:47.816 And that procurement is sort of ramping up 04:09:47.816 --> 04:09:51.020 sort of a new round of procurement, 04:09:51.020 --> 04:09:54.359 has the effect of stimulating local economies, 04:09:54.359 --> 04:09:57.686 bringing investment into local economies, creating jobs. 04:09:57.686 --> 04:10:00.642 And we've seen that in previous rounds of build outs 04:10:00.642 --> 04:10:02.919 of the state's renewable fleet. 04:10:02.919 --> 04:10:06.989 And we really sort of have that new opportunity now. 04:10:06.989 --> 04:10:11.019 And we've looked at some of the planning scenarios, 04:10:11.019 --> 04:10:13.538 the 30 MMT versus the 46, for example. 04:10:13.538 --> 04:10:16.031 And when you factor in that ITC extension, 04:10:16.031 --> 04:10:18.371 it is cost effective for the state to move now 04:10:18.371 --> 04:10:20.868 on getting those resources online. 04:10:20.868 --> 04:10:24.155 And that's the benefit of sort of simultaneously happening 04:10:24.155 --> 04:10:26.317 at a time when the state could use 04:10:26.317 --> 04:10:30.085 that renewed investment in our economy. 04:10:30.085 --> 04:10:31.018 Thank you. 04:10:31.018 --> 04:10:32.860 And I know we're trying to end at 2:30, 04:10:32.860 --> 04:10:35.677 but I think we have time for one more question. 04:10:35.677 --> 04:10:37.884 If we don't have one from the dais, I have one, 04:10:37.884 --> 04:10:42.190 but I wanted to give the dais members an opportunity. 04:10:42.190 --> 04:10:43.023 Nope, okay. 04:10:43.023 --> 04:10:46.361 So I'm going to direct my question to Robert Kenney. 04:10:46.361 --> 04:10:48.722 In your presentation, you were telling us about 04:10:48.722 --> 04:10:51.493 the opportunity with SBA communication 04:10:51.493 --> 04:10:52.957 that PG&E was able to find. 04:10:52.957 --> 04:10:56.296 Can you tell us a little bit more about your strategy 04:10:56.296 --> 04:10:59.375 for finding more opportunities like that, 04:10:59.375 --> 04:11:03.376 and how you're looking to leverage those benefits for, 04:11:03.376 --> 04:11:05.414 I guess it's both your shareholders and rate payers, 04:11:05.414 --> 04:11:06.589 but if you could tell us a little bit more 04:11:06.589 --> 04:11:08.256 about that strategy. 04:11:10.448 --> 04:11:12.007 Yeah, that specific strategy, 04:11:12.007 --> 04:11:14.796 we have a lot of creative thinkers in the company, 04:11:14.796 --> 04:11:16.463 candidly that are always looking for ways 04:11:16.463 --> 04:11:20.963 to develop new revenue streams, non-tariffed products, 04:11:21.875 --> 04:11:26.369 and or ways to make more efficient use of our real estate. 04:11:26.369 --> 04:11:30.363 And so it's a broad strategy, candidly, 04:11:30.363 --> 04:11:34.963 of making sure that we're getting maximum value 04:11:34.963 --> 04:11:37.177 for both customers and shareholders. 04:11:37.177 --> 04:11:41.177 That specific transaction was long in the making 04:11:42.043 --> 04:11:45.460 and was an opportunity that we identified 04:11:46.716 --> 04:11:50.345 that would bring value to both our shareholders 04:11:50.345 --> 04:11:53.512 and to our customers while making sure 04:11:54.475 --> 04:11:57.718 that we weren't relinquishing any control over the asset 04:11:57.718 --> 04:12:01.586 to continue to ensure safety and reliability. 04:12:01.586 --> 04:12:06.081 And that it was also going to maintain its open access 04:12:06.081 --> 04:12:08.910 for purposes of wireless attachment. 04:12:08.910 --> 04:12:10.689 And so there were a whole host of things that we looked at 04:12:10.689 --> 04:12:12.297 in that specific transaction. 04:12:12.297 --> 04:12:14.776 But it's something that we committed to, 04:12:14.776 --> 04:12:16.835 it's something that we continue to be committed to. 04:12:16.835 --> 04:12:21.394 It was just finding creative ways to bring value 04:12:21.394 --> 04:12:23.494 more holistically to all of our stakeholders, 04:12:23.494 --> 04:12:26.813 customers, and shareholders alike. 04:12:26.813 --> 04:12:28.260 Great, thank you. 04:12:28.260 --> 04:12:31.348 So with that, I just wanted to thank all of our panelists 04:12:31.348 --> 04:12:34.394 this afternoon for your great presentations 04:12:34.394 --> 04:12:38.109 and also your great responses to the many questions 04:12:38.109 --> 04:12:40.114 from the dais members. 04:12:40.114 --> 04:12:42.412 And I'm going to turn it over to Mary Claire 04:12:42.412 --> 04:12:44.912 to lead us into our next item. 04:12:46.281 --> 04:12:47.114 Thank you. 04:12:49.099 --> 04:12:50.327 Great, thank you. 04:12:50.327 --> 04:12:52.879 Thank you, Leuwam, and thank you to all the panelists. 04:12:52.879 --> 04:12:54.813 It was a really interesting discussion. 04:12:54.813 --> 04:12:57.485 So we're now going to take a 15 minute break. 04:12:57.485 --> 04:13:00.959 So let's be meet back here at 2:45. 04:13:00.959 --> 04:13:03.331 And again, please just stay logged in. 04:13:03.331 --> 04:13:05.123 You can turn off your video and mute your phone, 04:13:05.123 --> 04:13:07.116 but please do stay logged in. 04:13:07.116 --> 04:13:09.033 Great, see you at 2:45. 04:13:12.745 --> 04:13:14.745 Test has been restarted. 04:13:17.492 --> 04:13:18.325 All right, hello. 04:13:18.325 --> 04:13:21.699 Welcome back to the CPUC En Banc on rates and costs. 04:13:21.699 --> 04:13:23.467 Can we afford the future? 04:13:23.467 --> 04:13:27.489 I hope everyone had a chance to re-caffeinate 04:13:27.489 --> 04:13:30.141 'cause we are approaching the end of the day, 04:13:30.141 --> 04:13:32.678 we're to our last panel. 04:13:32.678 --> 04:13:34.667 So without further ado, I will turn it over 04:13:34.667 --> 04:13:38.284 to our panel moderator, Ed Randolph, 04:13:38.284 --> 04:13:41.054 who is the CPUC deputy executive director 04:13:41.054 --> 04:13:43.331 of climate and energy policy. 04:13:43.331 --> 04:13:45.122 Over to you, Ed. 04:13:45.122 --> 04:13:46.544 All right, thank you, Mary Claire. 04:13:46.544 --> 04:13:48.877 And good afternoon everyone. 04:13:50.132 --> 04:13:53.094 Hopefully this panel is so exciting 04:13:53.094 --> 04:13:55.511 that you don't need caffeine. 04:13:57.315 --> 04:14:00.861 If you are a true energy and rates nerd 04:14:00.861 --> 04:14:02.473 with this group of people, 04:14:02.473 --> 04:14:05.531 you definitely don't need caffeine here. 04:14:05.531 --> 04:14:07.781 The final panel of the day, 04:14:09.016 --> 04:14:11.907 I hope it's going to be a good bookend 04:14:11.907 --> 04:14:14.123 to the conversation today. 04:14:14.123 --> 04:14:16.493 I've titled, do we need a paradigm shift 04:14:16.493 --> 04:14:19.934 on how California funds climate initiatives? 04:14:19.934 --> 04:14:22.747 It's from the panelists this afternoon, 04:14:22.747 --> 04:14:26.520 we'll hear some more about other ways to think about 04:14:26.520 --> 04:14:30.064 how we fund programs, both in terms of 04:14:30.064 --> 04:14:31.606 maybe other sources of funding, 04:14:31.606 --> 04:14:33.932 but also other ways to look at the funding. 04:14:33.932 --> 04:14:38.663 Our panelists this afternoon are Severin Borenstein, 04:14:38.663 --> 04:14:40.587 Mark LeBel, Michael Wara, 04:14:40.587 --> 04:14:43.539 Anthony Kinslow, and Mark Toney. 04:14:43.539 --> 04:14:46.366 I will give each one of them eight minutes 04:14:46.366 --> 04:14:48.728 to make their presentation. 04:14:48.728 --> 04:14:51.827 And we will then once everybody's done, 04:14:51.827 --> 04:14:54.376 do questions out there. 04:14:54.376 --> 04:14:57.626 Our first panelist, Severin Borenstein, 04:14:59.203 --> 04:15:04.192 I feel like doesn't need much introduction to this crowd. 04:15:04.192 --> 04:15:06.989 He's quite known in Northern California, in California, 04:15:06.989 --> 04:15:11.989 for his expertise on energy rates, energy rates design. 04:15:12.373 --> 04:15:15.379 He's a professor of business administration 04:15:15.379 --> 04:15:17.369 and public policy at the Haas School of Business, 04:15:17.369 --> 04:15:21.786 and faculty director of the Energy Institute at Haas. 04:15:23.448 --> 04:15:27.348 My first experience with him was 15, 20 years ago, 04:15:27.348 --> 04:15:32.181 he was teaching a three day class on energy and economics, 04:15:34.098 --> 04:15:37.238 which is, I highly recommend for anybody 04:15:37.238 --> 04:15:40.098 who wants a basic level of economics 04:15:40.098 --> 04:15:45.015 and wants to understand what a hockey stick price graph is. 04:15:46.987 --> 04:15:51.270 But with that, I will hand it over to Severin. 04:15:51.270 --> 04:15:52.570 Thanks Ed. 04:15:52.570 --> 04:15:54.820 Can I have the first slide? 04:15:57.085 --> 04:16:02.085 So this is joint work with Meredith Fowlie and Jim Sallee, 04:16:02.449 --> 04:16:05.000 my colleagues, and is supported by Next 10, 04:16:05.000 --> 04:16:07.628 and this is a study that we put out yesterday. 04:16:07.628 --> 04:16:09.780 And if you want to get to the study, 04:16:09.780 --> 04:16:13.317 you just go to the Next10.org, and they've got it there. 04:16:13.317 --> 04:16:17.466 So the question we're trying to address is two issues. 04:16:17.466 --> 04:16:21.127 One is, the efficiency of the rates that we're charging now, 04:16:21.127 --> 04:16:22.940 and the other is the equity. 04:16:22.940 --> 04:16:25.245 And it turns out that the problems we're facing 04:16:25.245 --> 04:16:30.206 in California are failures that on in both these areas 04:16:30.206 --> 04:16:31.787 in the same direction. 04:16:31.787 --> 04:16:33.264 First of all, we'd like prices, 04:16:33.264 --> 04:16:36.573 if we want people to start choosing electrification, 04:16:36.573 --> 04:16:40.127 to reflect the cost of the additional electricity 04:16:40.127 --> 04:16:41.573 they're going to need, 04:16:41.573 --> 04:16:44.651 and they make those choices for electrification. 04:16:44.651 --> 04:16:47.523 And in fact, prices in California are way above 04:16:47.523 --> 04:16:48.491 the full cost. 04:16:48.491 --> 04:16:50.049 That's just the social marginal cost, 04:16:50.049 --> 04:16:52.817 meaning it includes all the pollution. 04:16:52.817 --> 04:16:54.733 And the second is we have to cover those costs, 04:16:54.733 --> 04:16:58.172 and we'd like to cover those costs, the additional costs, 04:16:58.172 --> 04:17:01.084 we're going to need to cover all the costs of utility. 04:17:01.084 --> 04:17:04.360 And we'd like to do that in an equitable way. 04:17:04.360 --> 04:17:05.860 Next slide please. 04:17:06.783 --> 04:17:09.200 So that's not the next slide. 04:17:12.212 --> 04:17:14.018 What you will see in just a moment 04:17:14.018 --> 04:17:17.731 is a map of the United States, there it is, 04:17:17.731 --> 04:17:20.792 from a study Jim Bushnell and I did a couple of years ago, 04:17:20.792 --> 04:17:24.536 comparing price to social marginal costs. 04:17:24.536 --> 04:17:27.781 And what you see here is California actually has rates 04:17:27.781 --> 04:17:30.841 way, way above the additional costs 04:17:30.841 --> 04:17:33.085 of consuming electricity. 04:17:33.085 --> 04:17:34.344 It's not true everywhere in the country. 04:17:34.344 --> 04:17:36.725 In fact, much of the country is pretty close. 04:17:36.725 --> 04:17:38.639 And other parts of the country like the upper Midwest, 04:17:38.639 --> 04:17:40.463 actually, the prices are way too low, 04:17:40.463 --> 04:17:42.257 and that's largely because they don't reflect 04:17:42.257 --> 04:17:44.320 the very high levels of pollution 04:17:44.320 --> 04:17:47.739 from coal fired power plants, both CO2 and SO2. 04:17:47.739 --> 04:17:49.299 But California does have prices 04:17:49.299 --> 04:17:51.814 well above social marginal costs. 04:17:51.814 --> 04:17:54.738 And so we set out to figure out why that is. 04:17:54.738 --> 04:17:56.321 Next slide, please. 04:17:57.348 --> 04:18:01.098 So this is my waterfall graph, as we call it, 04:18:02.590 --> 04:18:05.325 trying to break out what's going on with rates. 04:18:05.325 --> 04:18:06.636 This one's for PG&E. 04:18:06.636 --> 04:18:08.084 PG&E's sort of the middle case 04:18:08.084 --> 04:18:09.981 between Edison, which has lower rates, 04:18:09.981 --> 04:18:12.025 and San Diego, which has higher rates. 04:18:12.025 --> 04:18:16.006 And what this shows is that the marginal cost 04:18:16.006 --> 04:18:19.365 is actually a pretty small component of the total rates. 04:18:19.365 --> 04:18:21.903 In fact, for PG&E, it's about a third, 04:18:21.903 --> 04:18:24.941 about two thirds of the rates are additional costs 04:18:24.941 --> 04:18:26.784 that are covering costs that have nothing to do with 04:18:26.784 --> 04:18:28.956 the additional costs you impose 04:18:28.956 --> 04:18:31.565 when you consume extra electricity. 04:18:31.565 --> 04:18:34.414 Much of it is sunk, these fixed costs 04:18:34.414 --> 04:18:38.420 of high-cost contract sign, some of it's from transmission, 04:18:38.420 --> 04:18:42.788 that pink box in the middle is very high distribution costs, 04:18:42.788 --> 04:18:44.584 some of which are associated with wildfire, 04:18:44.584 --> 04:18:47.760 but there's gonna be a lot more of that going forward. 04:18:47.760 --> 04:18:50.235 We did a calculation of how much is this rate pushed up 04:18:50.235 --> 04:18:53.003 by some people with having rooftop solar, 04:18:53.003 --> 04:18:56.278 and therefore not buying that power from the grid, 04:18:56.278 --> 04:18:58.263 and that's the brown box on the right. 04:18:58.263 --> 04:19:00.624 The CARE program, and the CARE program it's worth noting, 04:19:00.624 --> 04:19:03.871 this isn't most of the costs, large parts of the CARE costs 04:19:03.871 --> 04:19:07.551 are actually paid by commercial industrial customers. 04:19:07.551 --> 04:19:09.051 Next slide please. 04:19:11.158 --> 04:19:15.080 So this is showing what's happened over time again with PG&E 04:19:15.080 --> 04:19:17.254 which is again, the middle case. 04:19:17.254 --> 04:19:19.413 If you go back in time, 04:19:19.413 --> 04:19:22.064 you'll see that rates were much closer 04:19:22.064 --> 04:19:23.200 to social marginal costs. 04:19:23.200 --> 04:19:27.119 In fact, CARE was pretty reflective of what it really costs 04:19:27.119 --> 04:19:29.907 when you consume a little more electricity. 04:19:29.907 --> 04:19:33.224 But as we got as costs have gone up, 04:19:33.224 --> 04:19:34.993 marginal cost hasn't gone up, 04:19:34.993 --> 04:19:38.729 both because we are getting cheaper and cheaper renewables, 04:19:38.729 --> 04:19:41.990 and because California has an incredibly clean grid, 04:19:41.990 --> 04:19:44.263 so there isn't much pollution associated with 04:19:44.263 --> 04:19:47.700 the higher cost or with the higher consumption. 04:19:47.700 --> 04:19:49.895 One thing worth noting though is when we talk about 04:19:49.895 --> 04:19:53.257 higher rates and say, but CARE is helping low-income, 04:19:53.257 --> 04:19:56.655 CARE is just the 35% discount off of the standard rate. 04:19:56.655 --> 04:19:58.049 So when we pull up the standard rate, 04:19:58.049 --> 04:20:00.555 we're also pulling up the CARE rates. 04:20:00.555 --> 04:20:02.138 Next slide, please. 04:20:03.530 --> 04:20:07.158 So California IOUs have to cover the residential rate, 04:20:07.158 --> 04:20:08.998 the residential revenue requirement. 04:20:08.998 --> 04:20:12.585 And if we just were to charge a volumetric price 04:20:12.585 --> 04:20:16.877 that equals the marginal costs, how would we cover the rest? 04:20:16.877 --> 04:20:19.176 Well, what we do now is we just raise 04:20:19.176 --> 04:20:20.628 the volumetric rates. 04:20:20.628 --> 04:20:22.413 And one way to think about that, 04:20:22.413 --> 04:20:25.745 is that that is a tax on electricity above 04:20:25.745 --> 04:20:29.673 the marginal cost to cover the additional revenue needed. 04:20:29.673 --> 04:20:31.046 There are lots of ways you could cover, 04:20:31.046 --> 04:20:32.397 this is a covering it through 04:20:32.397 --> 04:20:34.755 raising the rate of electricity. 04:20:34.755 --> 04:20:37.601 And when we do that, we're essentially charging 04:20:37.601 --> 04:20:40.326 wealthier households about the same as poor households, 04:20:40.326 --> 04:20:42.985 because at this point, poor households only consume 04:20:42.985 --> 04:20:45.602 slightly less electricity than wealthier households. 04:20:45.602 --> 04:20:46.972 So that's in part because the wealthier 04:20:46.972 --> 04:20:49.925 has been putting more solar panels on. 04:20:49.925 --> 04:20:52.162 This is a really regressive tax. 04:20:52.162 --> 04:20:53.662 Next slide please. 04:20:54.991 --> 04:20:56.405 In fact, what we did is we took 04:20:56.405 --> 04:20:59.410 the consumer expenditure survey for California, 04:20:59.410 --> 04:21:01.902 and we looked at well, how do expenditures 04:21:01.902 --> 04:21:05.058 on electricity vary by income bracket? 04:21:05.058 --> 04:21:07.014 And these are the five income Quintiles, 04:21:07.014 --> 04:21:09.533 from lowest to highest, versus other things. 04:21:09.533 --> 04:21:13.283 And what we found is electricity expenditures 04:21:14.873 --> 04:21:17.512 are much flatter across the income brackets 04:21:17.512 --> 04:21:20.975 than all of these other categories, including gasoline. 04:21:20.975 --> 04:21:24.126 So essentially we are taking the most regressive thing 04:21:24.126 --> 04:21:27.869 that we can, in order to recover these costs. 04:21:27.869 --> 04:21:30.658 Now, some people say that well, we got to recover them. 04:21:30.658 --> 04:21:33.041 And this is associated with electricity. 04:21:33.041 --> 04:21:34.541 Next slide please. 04:21:36.379 --> 04:21:37.764 And that's true to some extent, 04:21:37.764 --> 04:21:40.594 but there's a lot of that's going on here that's really not 04:21:40.594 --> 04:21:43.524 that associated with electricity consumption. 04:21:43.524 --> 04:21:46.363 Energy efficiency programs are fine programs, 04:21:46.363 --> 04:21:47.653 but there's no reason we have to pay for them 04:21:47.653 --> 04:21:50.941 through electricity, volumetric charges. 04:21:50.941 --> 04:21:52.875 Low-income programs, we have low-income programs 04:21:52.875 --> 04:21:55.485 on food and medicine and lots of things in the state, 04:21:55.485 --> 04:21:59.270 and again, there's no reason, and those are not financed by 04:21:59.270 --> 04:22:02.629 taxing the other people who consume food 04:22:02.629 --> 04:22:04.490 and healthcare and so forth. 04:22:04.490 --> 04:22:06.499 Here, we are choosing to do it. 04:22:06.499 --> 04:22:08.286 So one way we could reduce the problem 04:22:08.286 --> 04:22:11.525 is to lower fewer costs into electricity bills. 04:22:11.525 --> 04:22:15.382 These very good public policies could be paid for 04:22:15.382 --> 04:22:16.569 through the state budget. 04:22:16.569 --> 04:22:19.543 Now, politically that might not be very popular 04:22:19.543 --> 04:22:22.853 in Sacramento, but practically it would be essentially 04:22:22.853 --> 04:22:25.845 treating electricity the way we treat many other things 04:22:25.845 --> 04:22:29.981 when we have public policies to change technologies, 04:22:29.981 --> 04:22:32.539 help low-income people, and so forth. 04:22:32.539 --> 04:22:34.837 Next slide, please. 04:22:34.837 --> 04:22:36.613 An alternative that I will close with 04:22:36.613 --> 04:22:38.706 is that we've proposed in the study, 04:22:38.706 --> 04:22:40.500 and obviously I'm rushing through all of this, 04:22:40.500 --> 04:22:43.055 is income-based fixed charges. 04:22:43.055 --> 04:22:45.686 We would still be paying for it through our bills. 04:22:45.686 --> 04:22:48.136 We would lower the price, the volumetric price 04:22:48.136 --> 04:22:50.808 of electricity to eight to 10 cents, 04:22:50.808 --> 04:22:54.044 which is our calculation of the social marginal costs. 04:22:54.044 --> 04:22:57.287 And we do the rest through a fixed charge, 04:22:57.287 --> 04:22:59.637 and the fixed charge would be probably zero 04:22:59.637 --> 04:23:02.799 for the poorest people and going up to higher levels 04:23:02.799 --> 04:23:04.620 for wealthier households. 04:23:04.620 --> 04:23:06.203 Next slide, please. 04:23:07.188 --> 04:23:09.942 We sketch out a couple of examples here 04:23:09.942 --> 04:23:12.806 of how that might be structured 04:23:12.806 --> 04:23:15.651 if you made it as progressive as the sales tax here, 04:23:15.651 --> 04:23:17.232 which is not thought to be a terrible. 04:23:17.232 --> 04:23:19.924 Severin, two minutes. 04:23:19.924 --> 04:23:23.353 Or as progressive as the income tax. 04:23:23.353 --> 04:23:27.444 And what you see is these would be substantial fixed costs, 04:23:27.444 --> 04:23:29.636 fixed charges, but they would be associated with 04:23:29.636 --> 04:23:32.007 massively lower marginal costs. 04:23:32.007 --> 04:23:35.387 And this would be a much less regressive way 04:23:35.387 --> 04:23:38.041 to raise revenue than what we're doing now, 04:23:38.041 --> 04:23:40.940 which is essentially a tax on every kilowatt hour 04:23:40.940 --> 04:23:44.362 that hits the low-income customers much more 04:23:44.362 --> 04:23:45.758 as a proportion of their income, 04:23:45.758 --> 04:23:47.743 than higher income customers. 04:23:47.743 --> 04:23:49.243 Next slide please. 04:23:50.854 --> 04:23:53.494 So I will just wrap it up saying that 04:23:53.494 --> 04:23:55.823 the current residential rate schedules create 04:23:55.823 --> 04:23:59.223 very perverse incentives by charging people too much, 04:23:59.223 --> 04:24:01.056 relative to the real costs they're imposing 04:24:01.056 --> 04:24:05.475 and discouraging electrification and decarbonization. 04:24:05.475 --> 04:24:07.493 Most of the revenue collected through those rates 04:24:07.493 --> 04:24:09.994 is not really a marginal cost. 04:24:09.994 --> 04:24:11.850 It doesn't pay for costs that change 04:24:11.850 --> 04:24:14.308 when you consume more electricity. 04:24:14.308 --> 04:24:16.780 And the differential is due to all sorts of costs 04:24:16.780 --> 04:24:19.299 that are essentially fixed cost relative to 04:24:19.299 --> 04:24:22.418 the consumption of it, of people making those choices, 04:24:22.418 --> 04:24:25.279 everything from infrastructure, wildfires, 04:24:25.279 --> 04:24:27.981 subsidized rooftop solar, subsidizing low income, 04:24:27.981 --> 04:24:30.248 energy efficiency, et cetera. 04:24:30.248 --> 04:24:32.015 The way we're collecting this 04:24:32.015 --> 04:24:35.156 in a time of increasing inequality in this country 04:24:35.156 --> 04:24:39.025 is the most regressive tax you could practically imagine. 04:24:39.025 --> 04:24:42.676 And so we're proposing that we consider alternatives, 04:24:42.676 --> 04:24:44.450 including paying for many of these programs 04:24:44.450 --> 04:24:48.604 on the state budget and income-based fixed charges. 04:24:48.604 --> 04:24:49.687 Thanks a lot. 04:24:52.331 --> 04:24:55.166 Perfect Severin, thank you. 04:24:55.166 --> 04:24:57.416 Next up we have Mark LeBel. 04:24:59.625 --> 04:25:01.744 I have not worked with Mark much, 04:25:01.744 --> 04:25:04.761 but I have worked with and PUC works with his organization, 04:25:04.761 --> 04:25:07.224 Regulatory Assistance Project, quite a bit. 04:25:07.224 --> 04:25:12.224 They provide support to organizations across the country 04:25:12.464 --> 04:25:15.920 on regulatory and policy design. 04:25:15.920 --> 04:25:19.503 Mark specifically is focused on rate design 04:25:20.484 --> 04:25:23.895 and compensation for distributed energy resources, 04:25:23.895 --> 04:25:26.805 as well as broader issues of regulatory reform 04:25:26.805 --> 04:25:29.388 and beneficial electrification. 04:25:30.279 --> 04:25:33.612 Mark, why don't you get started, please? 04:25:35.522 --> 04:25:37.102 Great, thank you very much, Ed. 04:25:37.102 --> 04:25:38.173 Glad to be on this great panel. 04:25:38.173 --> 04:25:39.639 Thank you for the invitation. 04:25:39.639 --> 04:25:41.933 The extremely important issue 04:25:41.933 --> 04:25:42.874 wrestling with some tough problems, 04:25:42.874 --> 04:25:45.768 a lot of great ideas earlier today, and a lot of these ideas 04:25:45.768 --> 04:25:48.220 that should be able to work together. 04:25:48.220 --> 04:25:52.694 So great, great to see some good thinking on these topics. 04:25:52.694 --> 04:25:54.469 So I thought I'd zoom out a little bit 04:25:54.469 --> 04:25:57.002 and start at a higher level, 04:25:57.002 --> 04:26:00.335 on why and how do we regulate utilities? 04:26:02.772 --> 04:26:05.593 So that's our next slide. 04:26:05.593 --> 04:26:08.107 And I don't need to read all the text here, 04:26:08.107 --> 04:26:10.759 but the point is that utility regulation is hard 04:26:10.759 --> 04:26:12.541 and requires balancing of lots of different goals 04:26:12.541 --> 04:26:13.692 in the real world. 04:26:13.692 --> 04:26:15.607 Efficient pricing is an important goal, 04:26:15.607 --> 04:26:18.444 it is one of many different goals. 04:26:18.444 --> 04:26:21.751 Efficient competition and control of monopoly pricing, 04:26:21.751 --> 04:26:24.163 environmental and public health requirements, 04:26:24.163 --> 04:26:27.440 societal equity has always been part of utility regulation. 04:26:27.440 --> 04:26:29.216 Traditionally, that's been universal access 04:26:29.216 --> 04:26:30.373 and affordability. 04:26:30.373 --> 04:26:32.391 Now we have some new societal equity goals 04:26:32.391 --> 04:26:37.391 and that's a great thing, and an increasing center of focus. 04:26:37.397 --> 04:26:39.311 So there are three traditional steps 04:26:39.311 --> 04:26:40.278 to the rate making process, 04:26:40.278 --> 04:26:43.544 I believe that separated the two phases in California. 04:26:43.544 --> 04:26:45.331 There's the revenue requirement, 04:26:45.331 --> 04:26:47.871 there's allocation of costs across customer classes, 04:26:47.871 --> 04:26:49.357 and then there's rate designs. 04:26:49.357 --> 04:26:51.524 So there's all of these different moving pieces, 04:26:51.524 --> 04:26:53.894 lots of different goals and constraints 04:26:53.894 --> 04:26:55.369 that you have to meet. 04:26:55.369 --> 04:26:56.286 Next slide. 04:26:58.395 --> 04:27:02.682 So if you're primarily worried about socially efficient 04:27:02.682 --> 04:27:07.682 price signals, this is sort of a oversimplified algorithm, 04:27:08.177 --> 04:27:10.007 four step process. 04:27:10.007 --> 04:27:12.504 So you can start with short run marginal costs 04:27:12.504 --> 04:27:15.155 where you can, and that could be real-time pricing 04:27:15.155 --> 04:27:17.307 for large industrial customers. 04:27:17.307 --> 04:27:19.742 For small customers, you probably can't do 04:27:19.742 --> 04:27:22.217 real-time pricing yet. 04:27:22.217 --> 04:27:25.274 Or you could do critical peak pricing or peak time rebates 04:27:25.274 --> 04:27:26.941 for small customers. 04:27:27.874 --> 04:27:29.943 With a short run marginal cost, there's a very small 04:27:29.943 --> 04:27:33.677 customer charge for billing every month. 04:27:33.677 --> 04:27:37.431 Then you layer in long run marginal costs. 04:27:37.431 --> 04:27:39.992 That should primarily be done in multi period 04:27:39.992 --> 04:27:41.893 time of use rates. 04:27:41.893 --> 04:27:44.171 Demand charges can be a proxy for certain costs, 04:27:44.171 --> 04:27:45.941 that should be very small. 04:27:45.941 --> 04:27:47.759 And you can have a slightly bigger customer charge 04:27:47.759 --> 04:27:50.745 to connect a customer to the grid. 04:27:50.745 --> 04:27:54.083 Then we get the unpriced externalities. 04:27:54.083 --> 04:27:57.495 And then last, residual costs and Professor Borenstein 04:27:57.495 --> 04:27:59.274 talked about this, though maybe he didn't use 04:27:59.274 --> 04:28:03.586 this exact term, that the hard part here is 04:28:03.586 --> 04:28:06.238 where does the lump of cost that's left over, 04:28:06.238 --> 04:28:08.057 where does it go? 04:28:08.057 --> 04:28:10.774 And the hard part is all the answers are wrong. 04:28:10.774 --> 04:28:12.675 No matter what you do, you're distorting 04:28:12.675 --> 04:28:15.296 the correct incentives that you might wanna have 04:28:15.296 --> 04:28:17.097 in a perfect system. 04:28:17.097 --> 04:28:20.236 But because you need to recover a certain amount of money, 04:28:20.236 --> 04:28:23.044 then you have to do it somewhere. 04:28:23.044 --> 04:28:24.916 So while all the answers are wrong, 04:28:24.916 --> 04:28:26.382 you can have better and worst answers, 04:28:26.382 --> 04:28:30.031 and there's different opinions on this. 04:28:30.031 --> 04:28:31.781 So next slide please. 04:28:33.640 --> 04:28:38.640 So if you just wanted to create a marginal cost rate, 04:28:38.671 --> 04:28:41.439 the New York Value of Distributed Energy Resources 04:28:41.439 --> 04:28:45.099 export credit structure, it's a pretty good example 04:28:45.099 --> 04:28:47.118 of a combination of short run marginal costs, 04:28:47.118 --> 04:28:52.118 long run marginal costs, and externality-based pricing. 04:28:52.293 --> 04:28:54.102 The first three elements are all time bearing 04:28:54.102 --> 04:28:55.912 kilowatt hour pricing. 04:28:55.912 --> 04:28:57.696 The last element of environmental value 04:28:57.696 --> 04:29:00.000 is constant per kilowatt hour, 04:29:00.000 --> 04:29:04.376 but it's only available for qualifying clean technologies. 04:29:04.376 --> 04:29:06.602 All four of these elements are only applied 04:29:06.602 --> 04:29:08.423 to export credit value, 04:29:08.423 --> 04:29:10.761 and it's primarily designed for community solar 04:29:10.761 --> 04:29:14.455 and projects onsite at larger CNI customers. 04:29:14.455 --> 04:29:16.005 For those CNI customers, the more traditional 04:29:16.005 --> 04:29:20.016 import rates apply on their bills as well. 04:29:20.016 --> 04:29:23.210 But in principle, this could be implied as an import rate. 04:29:23.210 --> 04:29:26.580 But it would not be designed to recover all the costs 04:29:26.580 --> 04:29:28.129 that need to be recovered, 04:29:28.129 --> 04:29:31.553 unless you really had to jack up the environmental value. 04:29:31.553 --> 04:29:34.630 And even then the numbers might not work out. 04:29:34.630 --> 04:29:35.463 You still need to figure out 04:29:35.463 --> 04:29:37.850 how to recover those residual costs. 04:29:37.850 --> 04:29:39.350 Next slide please. 04:29:40.969 --> 04:29:44.910 So it's often helpful to look at competitive market examples 04:29:44.910 --> 04:29:46.275 when you're thinking about principles 04:29:46.275 --> 04:29:48.149 and utility regulations. 04:29:48.149 --> 04:29:52.299 And while these aren't dispositive, they are informative. 04:29:52.299 --> 04:29:54.660 Different market definitions and structures 04:29:54.660 --> 04:29:57.593 lead to many good thing priced per unit. 04:29:57.593 --> 04:30:01.594 And the units can change from industry to industry. 04:30:01.594 --> 04:30:04.403 All industries have fixed costs and big investments, 04:30:04.403 --> 04:30:08.188 but that doesn't automatically lead to 04:30:08.188 --> 04:30:09.972 high fixed monthly charges. 04:30:09.972 --> 04:30:12.110 Most competitive business to do not charge you 04:30:12.110 --> 04:30:14.347 for entering their store without buying anything. 04:30:14.347 --> 04:30:17.039 Some do, but some do not. 04:30:17.039 --> 04:30:19.019 To take the gasoline example, 04:30:19.019 --> 04:30:21.885 refineries are massive fixed capital investment, 04:30:21.885 --> 04:30:25.296 but everyone still pays for gasoline by the gallon. 04:30:25.296 --> 04:30:26.710 Furthermore, a lot of these industries 04:30:26.710 --> 04:30:28.540 basically have delivery grid, 04:30:28.540 --> 04:30:30.393 delivery networks associated with them. 04:30:30.393 --> 04:30:33.950 With oil and gasoline, it's literally pipelines, 04:30:33.950 --> 04:30:37.867 but there's trucks that serve similar purposes. 04:30:40.157 --> 04:30:42.840 Again, this is just informative, it's not dispositive. 04:30:42.840 --> 04:30:44.590 So next slide please. 04:30:46.662 --> 04:30:49.121 So I'm going to spend a little more time on this slide, 04:30:49.121 --> 04:30:51.288 it's a little complicated. 04:30:52.240 --> 04:30:54.156 And this is an illustrative example. 04:30:54.156 --> 04:30:55.537 The numbers might work out very differently 04:30:55.537 --> 04:30:57.785 in a real rate case, but this is our best guesstimate 04:30:57.785 --> 04:30:58.980 looking at different things 04:30:58.980 --> 04:31:01.696 that have been coming out recently in California. 04:31:01.696 --> 04:31:05.709 The label here, the advanced residential rate design. 04:31:05.709 --> 04:31:07.933 And the general idea is to identify a large subset 04:31:07.933 --> 04:31:10.295 of residential customers that can be moved 04:31:10.295 --> 04:31:13.436 onto more sophisticated rates fairly quickly. 04:31:13.436 --> 04:31:16.356 That could be larger users, people with EVs, 04:31:16.356 --> 04:31:18.459 people adopting distributed generation. 04:31:18.459 --> 04:31:21.658 It can be rolled out geographically if you really want. 04:31:21.658 --> 04:31:24.029 If you subdivide the residential rate class, 04:31:24.029 --> 04:31:26.160 it does give you another tool to spread costs 04:31:26.160 --> 04:31:28.336 in the cost allocation process. 04:31:28.336 --> 04:31:31.429 One other way to do it is to just have 04:31:31.429 --> 04:31:33.208 low-income customers on the simpler rate, 04:31:33.208 --> 04:31:34.668 although I'm not quite sure if that's allowed 04:31:34.668 --> 04:31:36.668 under the CARE statutes. 04:31:38.647 --> 04:31:40.540 But in any case, the other customers 04:31:40.540 --> 04:31:42.331 that are not on the advanced rate, 04:31:42.331 --> 04:31:43.889 can stay on a less complex rate, 04:31:43.889 --> 04:31:47.248 and you can shield them from certain costs if you want. 04:31:47.248 --> 04:31:49.454 You could allow low-income customers to opt onto this 04:31:49.454 --> 04:31:53.798 advanced rates and offer them a discount at the same time. 04:31:53.798 --> 04:31:56.409 So again, I'll walk through the different elements 04:31:56.409 --> 04:31:58.756 here pretty quickly. 04:31:58.756 --> 04:31:59.746 This would be some. 04:31:59.746 --> 04:32:01.329 Two minutes. 04:32:02.210 --> 04:32:04.289 From current rate results. 04:32:04.289 --> 04:32:06.151 There are some metric charges and credits at the bottom 04:32:06.151 --> 04:32:09.759 or combination of short run cost and marginal cost pricing. 04:32:09.759 --> 04:32:10.592 For residential customers, 04:32:10.592 --> 04:32:13.616 it's probably too soon to do real-time pricing, 04:32:13.616 --> 04:32:16.039 but you can have a critical peak element. 04:32:16.039 --> 04:32:17.204 At the top, there are three elements 04:32:17.204 --> 04:32:19.275 that are cost recovery only. 04:32:19.275 --> 04:32:20.797 $10 per month customer charge, 04:32:20.797 --> 04:32:24.412 a $1 per month per kilowatt demand charge. 04:32:24.412 --> 04:32:27.033 But the really new innovation here is 04:32:27.033 --> 04:32:28.904 a bi-directional kilowatt hour charge 04:32:28.904 --> 04:32:30.881 on both imports and exports, 04:32:30.881 --> 04:32:33.357 that would in fact, recover significantly more costs 04:32:33.357 --> 04:32:36.251 than currently from distributed generation customers. 04:32:36.251 --> 04:32:38.046 It has a clear link to the size of the customer 04:32:38.046 --> 04:32:40.440 and user to the system, and distribution network 04:32:40.440 --> 04:32:43.256 is no longer being built just for deliveries and sales, 04:32:43.256 --> 04:32:44.869 being built for flows. 04:32:44.869 --> 04:32:47.611 So I think this makes some intuitive sense. 04:32:47.611 --> 04:32:49.111 Next slide please. 04:32:51.209 --> 04:32:55.098 So another rule for how to allocate residual cost 04:32:55.098 --> 04:32:56.232 is called Ramsey pricing, 04:32:56.232 --> 04:32:59.394 where you place it on the least elastic pricing elements. 04:32:59.394 --> 04:33:02.129 In many cases, people argue that that means 04:33:02.129 --> 04:33:04.011 just put it on the customer charge. 04:33:04.011 --> 04:33:05.072 There are number of problems with that, 04:33:05.072 --> 04:33:06.696 often that's regressive. 04:33:06.696 --> 04:33:10.168 Elasticity estimates are not always obvious and can change. 04:33:10.168 --> 04:33:12.592 One issue with a tier six charge 04:33:12.592 --> 04:33:14.848 is that you give the highest income people, 04:33:14.848 --> 04:33:17.937 the biggest incentive, disconnect from the grid. 04:33:17.937 --> 04:33:21.209 The Ramsey model also has some other issues with it. 04:33:21.209 --> 04:33:23.646 It puts a lot more pressure on the regulatory process 04:33:23.646 --> 04:33:25.752 to monitor utility investments, 04:33:25.752 --> 04:33:28.904 and the distributional impacts can be quite challenging. 04:33:28.904 --> 04:33:30.078 So thanks again. 04:33:30.078 --> 04:33:32.411 And that is my presentation. 04:33:33.698 --> 04:33:35.865 All right, perfect Mark. 04:33:39.677 --> 04:33:42.595 Next up, we have Michael Wara. 04:33:42.595 --> 04:33:44.206 A lot of us know Michael, 04:33:44.206 --> 04:33:47.586 and I'm a little curious to know if 04:33:47.586 --> 04:33:51.669 he loves or is somewhat begrudgingly just accepts 04:33:54.312 --> 04:33:57.479 his new, what he's known for most now, 04:33:58.723 --> 04:34:02.401 which is becoming a expert on utility wildfire measures 04:34:02.401 --> 04:34:04.501 and utility wildfire costs. 04:34:04.501 --> 04:34:07.080 But he's actually the director of climate and energy 04:34:07.080 --> 04:34:09.909 policy programs and a senior research scholar 04:34:09.909 --> 04:34:13.909 at Stanford Woods Institute for the Environment. 04:34:15.040 --> 04:34:18.097 His legal and policy scholarship actually goes far beyond 04:34:18.097 --> 04:34:22.874 wildfires, and focuses on carbon pricing, energy innovation, 04:34:22.874 --> 04:34:24.790 and regulated utilities. 04:34:24.790 --> 04:34:27.877 And he's also an expert on international environmental law, 04:34:27.877 --> 04:34:32.877 with a particular focus on ozone and climate treaty regimes. 04:34:33.025 --> 04:34:35.401 I will also add he's quite an informative person 04:34:35.401 --> 04:34:37.425 to follow on Twitter. 04:34:37.425 --> 04:34:41.096 I learned probably more about energy happenings 04:34:41.096 --> 04:34:44.902 across the country from his retweets than anywhere else. 04:34:44.902 --> 04:34:47.485 So Michael, the floor is yours. 04:34:48.781 --> 04:34:50.048 Thanks very much, Ed. 04:34:50.048 --> 04:34:51.608 Good to know I'm big on Twitter. 04:34:51.608 --> 04:34:55.301 I would definitely be put myself in the latter category. 04:34:55.301 --> 04:34:57.443 I wish that I didn't have to know as much 04:34:57.443 --> 04:35:00.534 about wildfire as I do, and probably a lot of us in the room 04:35:00.534 --> 04:35:04.068 or whatever we call this environment, feel the same way. 04:35:04.068 --> 04:35:06.148 Nevertheless, we are here. 04:35:06.148 --> 04:35:09.269 I've been asked to talk about wildfire, 04:35:09.269 --> 04:35:10.112 and I think before I start, 04:35:10.112 --> 04:35:12.453 I just want to say that I'm speaking on my personal behalf, 04:35:12.453 --> 04:35:14.665 and the opinions I express are mine, 04:35:14.665 --> 04:35:17.181 and not and the views don't reflect 04:35:17.181 --> 04:35:19.648 the California Catastrophe Response Council, 04:35:19.648 --> 04:35:21.979 in which I serve, the Wildfire Fund, 04:35:21.979 --> 04:35:25.825 or the Earthquake Authority that manages the Wildfire Fund. 04:35:25.825 --> 04:35:28.158 So with that out of the way, 04:35:29.174 --> 04:35:30.722 I'm gonna talk about wildfire, before I do, 04:35:30.722 --> 04:35:35.460 I just wanna provide three kind of broad comments on today, 04:35:35.460 --> 04:35:39.771 and on the issues at play in the both in the 04:35:39.771 --> 04:35:43.993 wonderful report that staff put together for this En Banc, 04:35:43.993 --> 04:35:47.106 and also in the conversation. 04:35:47.106 --> 04:35:51.015 One is just to note at the outset and to reinforce something 04:35:51.015 --> 04:35:53.238 that's been said by a number of parties, 04:35:53.238 --> 04:35:55.453 most recently Severin Borenstein, 04:35:55.453 --> 04:35:57.314 that breaks are an extremely regressive way 04:35:57.314 --> 04:35:59.285 to pay for anything. 04:35:59.285 --> 04:36:02.431 And so we need to be extremely careful about 04:36:02.431 --> 04:36:04.482 what we decide to pay for in rates, 04:36:04.482 --> 04:36:08.348 and what pathways we walk down in terms of investments 04:36:08.348 --> 04:36:12.240 and strategy, because some pathways are going to be 04:36:12.240 --> 04:36:13.298 more rate dependent, 04:36:13.298 --> 04:36:16.751 and some are going to be less rate dependent. 04:36:16.751 --> 04:36:18.239 And I'm going to talk more about that, 04:36:18.239 --> 04:36:21.931 but I think it's just a really important part to start with. 04:36:21.931 --> 04:36:24.770 Secondly, we're talking about affordability here, 04:36:24.770 --> 04:36:27.422 but I think everybody who lives in California 04:36:27.422 --> 04:36:31.177 and pays a mortgage, knows that the real affordability 04:36:31.177 --> 04:36:33.954 challenge in California is housing. 04:36:33.954 --> 04:36:37.812 And if we can solve the housing crisis as a society, 04:36:37.812 --> 04:36:40.934 then energy becomes much more affordable. 04:36:40.934 --> 04:36:44.717 There is much more room in the household budget 04:36:44.717 --> 04:36:48.139 of normal Californians to afford the kinds of investments 04:36:48.139 --> 04:36:50.025 that we need to make in order to be safe 04:36:50.025 --> 04:36:51.843 and reliable with our energy, 04:36:51.843 --> 04:36:54.503 and also want to make in order to achieve the kind of 04:36:54.503 --> 04:36:58.586 clean energy outcomes that we have set ourselves. 04:36:59.428 --> 04:37:01.342 Obviously that's beyond the scope of today, 04:37:01.342 --> 04:37:02.841 but I think it's important to keep in mind, 04:37:02.841 --> 04:37:06.200 and important to keep framing as a key component 04:37:06.200 --> 04:37:08.133 of affordability when we talk about 04:37:08.133 --> 04:37:09.973 the affordability of energy. 04:37:09.973 --> 04:37:13.780 There's a total budget, it includes other things. 04:37:13.780 --> 04:37:16.340 Finally, I just say that well, 04:37:16.340 --> 04:37:18.159 I really enjoyed the staff report. 04:37:18.159 --> 04:37:20.864 I generally enjoy everything that the PUC puts out 04:37:20.864 --> 04:37:25.864 about rates, I look forward to the AB 67 report every year. 04:37:26.115 --> 04:37:29.507 I would emphasize that the report is kind of, 04:37:29.507 --> 04:37:33.760 if everything goes as planned assessment of the situation, 04:37:33.760 --> 04:37:36.651 and it doesn't really take account of risk, 04:37:36.651 --> 04:37:39.771 and especially downside risk. 04:37:39.771 --> 04:37:42.683 And I think anyone who has dealt with the history 04:37:42.683 --> 04:37:46.387 of the California energy system knows, 04:37:46.387 --> 04:37:48.008 starting with the energy crisis, 04:37:48.008 --> 04:37:52.686 moving onto San Bruno and then the Camp and Woolsey fires, 04:37:52.686 --> 04:37:55.946 that everything doesn't always go according to plan. 04:37:55.946 --> 04:38:00.372 And so one way to frame this report is not so much that 04:38:00.372 --> 04:38:04.708 we need to worry about affordability and energy, we do. 04:38:04.708 --> 04:38:06.562 But another way to think about it is that 04:38:06.562 --> 04:38:09.119 we essentially have no margin for error. 04:38:09.119 --> 04:38:12.342 Everything has to go right for this scenario to play out. 04:38:12.342 --> 04:38:14.692 And there are lots of things that could go wrong. 04:38:14.692 --> 04:38:17.833 And so we should be really focused on creating some space 04:38:17.833 --> 04:38:21.666 and some room for things not to go as planned. 04:38:22.623 --> 04:38:27.540 So moving to wildfire, I would just note that first of all, 04:38:28.402 --> 04:38:31.709 stepping back to the science basis, 04:38:31.709 --> 04:38:35.566 there's been a ton of work on fire science since 2017. 04:38:35.566 --> 04:38:37.426 I mean, of course there was before, long before, 04:38:37.426 --> 04:38:40.744 but since 2017 in particular, minds have been focused 04:38:40.744 --> 04:38:44.134 on understanding risks of wildfire in the western US, 04:38:44.134 --> 04:38:46.444 and in California in particular. 04:38:46.444 --> 04:38:51.108 And what we can say is that the climate modeling 04:38:51.108 --> 04:38:53.061 and the meteorology strongly suggest 04:38:53.061 --> 04:38:55.341 the problem is gonna get worse, not better. 04:38:55.341 --> 04:38:57.283 If the climate change is an important driver 04:38:57.283 --> 04:39:01.833 and it's a non-linear driver, so that as we warm California, 04:39:01.833 --> 04:39:04.663 wildfire is likely to get worse faster 04:39:04.663 --> 04:39:06.806 than the warming is occurring. 04:39:06.806 --> 04:39:10.788 And so this is a problem that is not going to go away. 04:39:10.788 --> 04:39:13.089 It's not going to go away for our utilities, 04:39:13.089 --> 04:39:15.509 and it's not going to go away for our state. 04:39:15.509 --> 04:39:19.924 And I'm going to get to why that's important in a second. 04:39:19.924 --> 04:39:24.924 I think the so far to date, the Wildfire Safety Division 04:39:25.170 --> 04:39:27.564 has emphasized the need, and I think the utilities 04:39:27.564 --> 04:39:30.653 have been making best efforts here as well, 04:39:30.653 --> 04:39:33.406 to move toward a risk-based spending approach. 04:39:33.406 --> 04:39:35.601 And this is consistent with RAMP and S Map 04:39:35.601 --> 04:39:37.951 and all of the work the Commission has done, 04:39:37.951 --> 04:39:40.741 even prior to the wildfire crisis to move in that direction 04:39:40.741 --> 04:39:42.074 after San Bruno. 04:39:43.016 --> 04:39:45.491 And that emphasizes quantification of risk 04:39:45.491 --> 04:39:46.962 and cost effectiveness. 04:39:46.962 --> 04:39:48.206 And that's essential. 04:39:48.206 --> 04:39:51.659 I mean, we need to make sure that our risk spend 04:39:51.659 --> 04:39:55.090 is appropriate and we're getting value for every dollar 04:39:55.090 --> 04:39:57.399 of rate payer money that goes into this issue. 04:39:57.399 --> 04:40:00.238 But I would argue, and this is really based on experience 04:40:00.238 --> 04:40:02.040 serving on the Wildfire Commission, 04:40:02.040 --> 04:40:03.972 and now on the Wildfire Fund, 04:40:03.972 --> 04:40:07.968 that the real problem that we have in California 04:40:07.968 --> 04:40:10.743 is that we're not evaluating the problem with wildfire risk 04:40:10.743 --> 04:40:13.094 in a holistic enough fashion, 04:40:13.094 --> 04:40:17.222 that expands really beyond the silo of the utility sector. 04:40:17.222 --> 04:40:19.271 We need to be evaluating costs and benefits 04:40:19.271 --> 04:40:23.897 of other activities, like fuels reduction and home hardening 04:40:23.897 --> 04:40:27.745 in conjunction with decisions regarding utility investments. 04:40:27.745 --> 04:40:30.647 We created a $21 billion Wildfire Fund. 04:40:30.647 --> 04:40:33.641 We spend billions of rate payer dollars on activities 04:40:33.641 --> 04:40:36.357 in the wildfire mitigation plans every year. 04:40:36.357 --> 04:40:40.666 We spent three and a half billion this year on Cal Fire. 04:40:40.666 --> 04:40:43.858 But we spend just hundreds of millions on fuels reduction. 04:40:43.858 --> 04:40:45.762 And if the Governor's January budget is approved, 04:40:45.762 --> 04:40:48.508 we'll be in the tens of millions kind of scale, 04:40:48.508 --> 04:40:51.877 25 million to be precise, on home hardening 04:40:51.877 --> 04:40:54.053 to reduce the chance of home ignition. 04:40:54.053 --> 04:40:57.607 And I would argue that the biggest kind of benefits 04:40:57.607 --> 04:41:00.217 from cost effectiveness probably would come 04:41:00.217 --> 04:41:03.016 from an overarching evaluation of state policy, 04:41:03.016 --> 04:41:04.824 which the safety division is 04:41:04.824 --> 04:41:06.155 maybe the wildfire safety division, 04:41:06.155 --> 04:41:07.604 once it's part of resources, 04:41:07.604 --> 04:41:10.066 could begin to walk down the road on. 04:41:10.066 --> 04:41:12.874 But an overarching evaluation of what is a cost effective 04:41:12.874 --> 04:41:15.776 approach to reducing societal risk from wildfire. 04:41:15.776 --> 04:41:18.573 We saw this summer that utilities are not the only reason 04:41:18.573 --> 04:41:21.475 that catastrophic wildfires can occur, 04:41:21.475 --> 04:41:23.253 and we need to be thinking more holistically, 04:41:23.253 --> 04:41:26.690 and not just thinking about how to avoid 04:41:26.690 --> 04:41:29.556 every single ignition during dangerous times, 04:41:29.556 --> 04:41:32.407 which is what the utility spend is really oriented at. 04:41:32.407 --> 04:41:35.777 But how to reduce the consequences when inevitable ignitions 04:41:35.777 --> 04:41:39.374 do occur, even during contexts where the utilities 04:41:39.374 --> 04:41:41.768 have made best efforts, including turning the power off 04:41:41.768 --> 04:41:45.268 for hundreds of thousands of Californians. 04:41:47.500 --> 04:41:51.250 Another aspect of the wildfire spend that I would suggest 04:41:51.250 --> 04:41:53.560 that the Commission think about as they consider rates 04:41:53.560 --> 04:41:57.719 and affordability, is relates to cost shift. 04:41:57.719 --> 04:42:01.806 Today's discussion to focus extensively on cost shifts 04:42:01.806 --> 04:42:03.253 related to NEM. 04:42:03.253 --> 04:42:05.623 And I think that's an issue to focus on, to consider, 04:42:05.623 --> 04:42:07.395 and we need to balance all of the interests, 04:42:07.395 --> 04:42:11.124 value of solar, value solar in terms of avoided investments, 04:42:11.124 --> 04:42:13.194 in conjunction with the fact that there are costs 04:42:13.194 --> 04:42:16.527 that are shifted from rooftop providers. 04:42:17.436 --> 04:42:20.992 But a cost shift we haven't really talked about much 04:42:20.992 --> 04:42:22.762 that I think is increasingly important 04:42:22.762 --> 04:42:24.714 in terms of the future of rates, 04:42:24.714 --> 04:42:29.211 is one that was raised by former President Picker, 04:42:29.211 --> 04:42:31.894 at least in his discussions before the legislature, 04:42:31.894 --> 04:42:36.281 and that's the cost shift from wildfire prone parts 04:42:36.281 --> 04:42:39.225 of the distribution system, to non-wildfire prone parts 04:42:39.225 --> 04:42:41.820 of the distribution system. 04:42:41.820 --> 04:42:44.018 President Picker, suggested I think it was prior 04:42:44.018 --> 04:42:45.805 to the PG&E bankruptcy actually, 04:42:45.805 --> 04:42:48.388 is sort of an SB 901 timeframe, 04:42:49.272 --> 04:42:54.189 that there might be a rationale to consider a separate rate 04:42:56.057 --> 04:42:58.140 for tier three customers, 04:42:59.288 --> 04:43:01.618 customers located in tier three wildfire areas, 04:43:01.618 --> 04:43:04.137 that better reflects the cost to serve them. 04:43:04.137 --> 04:43:06.217 Now that rate wouldn't include all of the costs 04:43:06.217 --> 04:43:07.421 in a wildfire mitigation plan, 04:43:07.421 --> 04:43:09.295 but it might include many of them, 04:43:09.295 --> 04:43:11.635 especially investments related to the distribution system, 04:43:11.635 --> 04:43:15.377 and not the backbone transmission architecture. 04:43:15.377 --> 04:43:19.145 And obviously, geographic segregation of rates 04:43:19.145 --> 04:43:21.213 is challenging, as was pointed out earlier, 04:43:21.213 --> 04:43:23.056 we already do this when it comes to. 04:43:23.056 --> 04:43:26.016 Michael, I actually got so enwrapped in your thing, 04:43:26.016 --> 04:43:27.453 I forgot to give you a two minute warning, 04:43:27.453 --> 04:43:28.512 and we're at eight minutes. 04:43:28.512 --> 04:43:32.102 So if you can wrap it up, that'd be great. 04:43:32.102 --> 04:43:32.935 Done. 04:43:32.935 --> 04:43:36.073 So I think that's something that's worth considering. 04:43:36.073 --> 04:43:37.863 I think we all need to be realistic, 04:43:37.863 --> 04:43:39.924 and I applaud this report for being realistic 04:43:39.924 --> 04:43:43.002 in suggesting that wildfire costs are unlikely to fall, 04:43:43.002 --> 04:43:45.050 and could well increase. 04:43:45.050 --> 04:43:46.650 And that there's a lot of downside risk, 04:43:46.650 --> 04:43:48.574 and we need to be thinking about that. 04:43:48.574 --> 04:43:51.101 We should be considering whether, 04:43:51.101 --> 04:43:52.466 and I'll just close by saying, 04:43:52.466 --> 04:43:55.449 I think there are opportunities to think about resilience, 04:43:55.449 --> 04:43:59.254 in particular, in resilience related to wildfire 04:43:59.254 --> 04:44:01.896 and customer sided generation and storage. 04:44:01.896 --> 04:44:05.391 Especially also pushing I would push the Commission 04:44:05.391 --> 04:44:09.643 to consider really, really asking and trying to get 04:44:09.643 --> 04:44:13.243 solid answers about why we cannot use electric vehicles 04:44:13.243 --> 04:44:15.071 as backup generation in homes. 04:44:15.071 --> 04:44:17.536 I think if we could kill two birds with one stone, 04:44:17.536 --> 04:44:20.604 and find resilient solutions that enable PSPS, 04:44:20.604 --> 04:44:22.541 which is going to happen anyway, 04:44:22.541 --> 04:44:25.541 and achieve our EV deployment goals, 04:44:27.388 --> 04:44:28.750 that would be fantastic for the state 04:44:28.750 --> 04:44:30.197 and probably save money. 04:44:30.197 --> 04:44:31.477 Thank you very much. 04:44:31.477 --> 04:44:34.762 I appreciate the opportunity to speak to everyone. 04:44:34.762 --> 04:44:36.301 Thank you, Michael. 04:44:36.301 --> 04:44:38.175 And our next panelist is somebody I didn't meet 04:44:38.175 --> 04:44:40.444 before last week, and doing the briefings for us, 04:44:40.444 --> 04:44:43.044 but I've heard great things. 04:44:43.044 --> 04:44:45.206 And I'm just going to read from his bio directly 04:44:45.206 --> 04:44:48.695 'cause it's actually one of the best bios I've ever read. 04:44:48.695 --> 04:44:53.572 Anthony Kinslow II's purpose in life is making meaningful 04:44:53.572 --> 04:44:56.275 impact toward mitigating global warming. 04:44:56.275 --> 04:44:58.490 He spent the last decade working for making 04:44:58.490 --> 04:45:00.592 meaningful impact through research, 04:45:00.592 --> 04:45:04.978 implementing, and educating on energy efficiency. 04:45:04.978 --> 04:45:08.145 Anthony is the CEO of Gemini Energy Solutions, 04:45:08.145 --> 04:45:10.141 which provides energy efficiency services 04:45:10.141 --> 04:45:13.160 to businesses historically under served. 04:45:13.160 --> 04:45:17.203 Anthony holds a BS in civil and environmental engineering 04:45:17.203 --> 04:45:21.036 from North Carolina A&T, A&T State University, 04:45:22.191 --> 04:45:25.715 and a PhD and CEE, which I don't know what that is, 04:45:25.715 --> 04:45:27.785 from Stanford University. 04:45:27.785 --> 04:45:31.155 Anthony is committed to improving the quality of life 04:45:31.155 --> 04:45:33.452 of those most disadvantaged. 04:45:33.452 --> 04:45:37.880 He is actively involved in understanding wage theft 04:45:37.880 --> 04:45:39.429 in the construction industry, 04:45:39.429 --> 04:45:42.280 was recognized by the city of San Jose. 04:45:42.280 --> 04:45:44.348 Moreover, he has introduced the concept of 04:45:44.348 --> 04:45:47.445 environmental justice to hundreds of high school students. 04:45:47.445 --> 04:45:51.776 Anthony, that is quite the impressive bio, 04:45:51.776 --> 04:45:53.693 and the floor is yours. 04:45:56.159 --> 04:45:57.784 Well, thanks Ed. 04:45:57.784 --> 04:46:00.103 I want to start by thanking all those who were possible 04:46:00.103 --> 04:46:03.573 for putting this En Banc together, 04:46:03.573 --> 04:46:06.372 and to say it is encouraging to see the increased level 04:46:06.372 --> 04:46:10.293 of racial diversity on the screen during this En Banc. 04:46:10.293 --> 04:46:12.881 As Ed mentioned, my name is Anthony Kinslow II, 04:46:12.881 --> 04:46:14.855 and a little bit about me. 04:46:14.855 --> 04:46:18.121 On top of what all of that was said, 04:46:18.121 --> 04:46:21.704 CEE is civil and environmental engineering. 04:46:24.349 --> 04:46:26.493 And that's where I got my PhD from Stanford, 04:46:26.493 --> 04:46:28.977 where I focused on developing scalable models 04:46:28.977 --> 04:46:32.960 to identify energy saving measures in single family homes. 04:46:32.960 --> 04:46:35.355 Following when I founded Gemini Energy Solutions, 04:46:35.355 --> 04:46:37.631 it was to address both the lack of diversity 04:46:37.631 --> 04:46:39.658 in the energy efficiency space, 04:46:39.658 --> 04:46:42.018 and the lack of affordable quality energy audits 04:46:42.018 --> 04:46:44.746 to support a small commercial sector. 04:46:44.746 --> 04:46:46.741 I serve on the California Energy Efficiency 04:46:46.741 --> 04:46:50.483 Coordinating Committee, underserved working group, 04:46:50.483 --> 04:46:53.503 which is actually working actually meeting right now 04:46:53.503 --> 04:46:55.288 to review the final analysis. 04:46:55.288 --> 04:46:58.049 And the goal of that working group is to investigate 04:46:58.049 --> 04:47:00.687 what groups of customers are currently underserved 04:47:00.687 --> 04:47:02.923 by energy efficiency programs. 04:47:02.923 --> 04:47:05.888 And then devise the appropriate strategy forums 04:47:05.888 --> 04:47:07.822 to address these problems. 04:47:07.822 --> 04:47:09.850 I am wearing many hats, 04:47:09.850 --> 04:47:12.330 with one of them being a consultant for Clean Energy Work, 04:47:12.330 --> 04:47:15.220 a nonprofit whose mission is to accelerate investments 04:47:15.220 --> 04:47:18.045 in cost-effective distributed energy solutions, 04:47:18.045 --> 04:47:20.903 to open a clean energy economy to all. 04:47:20.903 --> 04:47:24.358 And lastly, I'm also a lecturer at Stanford University, 04:47:24.358 --> 04:47:28.185 where I co-teach two courses, racial equity in energy, 04:47:28.185 --> 04:47:31.380 and quest for an inclusive clean energy economy. 04:47:31.380 --> 04:47:35.123 Now, I believe we are all here to support an equitable 04:47:35.123 --> 04:47:38.533 and accelerate transition to a clean energy economy. 04:47:38.533 --> 04:47:41.533 I want to pause for a second because I don't see 04:47:41.533 --> 04:47:43.616 if my, there's the slide. 04:47:48.172 --> 04:47:52.206 So as I was saying, I believe we're all here to implement 04:47:52.206 --> 04:47:53.827 an equitable and accelerated transition 04:47:53.827 --> 04:47:55.607 to clean energy economy. 04:47:55.607 --> 04:47:58.739 And the science tells us the sooner the better. 04:47:58.739 --> 04:48:01.672 So while we have a goal of 100% zero carbon electricity 04:48:01.672 --> 04:48:06.672 by 2045, getting there by 2040 or 2030 is preferable. 04:48:06.709 --> 04:48:09.765 And would directly result in more aligned states. 04:48:09.765 --> 04:48:11.607 The question to this panel is whether or not 04:48:11.607 --> 04:48:15.107 we need a paradigm shift in how California 04:48:16.178 --> 04:48:19.203 is funding our climate change initiatives? 04:48:19.203 --> 04:48:21.025 To that, my answer is yes. 04:48:21.025 --> 04:48:24.592 But I want to go deeper into what that means and why. 04:48:24.592 --> 04:48:25.509 Next slide. 04:48:27.328 --> 04:48:29.115 Great, thank you. 04:48:29.115 --> 04:48:30.417 To do so, I want to introduce everyone 04:48:30.417 --> 04:48:32.704 to the point of intervention in a system, 04:48:32.704 --> 04:48:34.637 authored by Donella Meadows, 04:48:34.637 --> 04:48:36.190 who was an environmental scientist 04:48:36.190 --> 04:48:38.510 and expert in systems thinking. 04:48:38.510 --> 04:48:41.397 As you look at the list of 12 options, 04:48:41.397 --> 04:48:42.916 the further down the list you go, 04:48:42.916 --> 04:48:44.468 the more impactful the change, 04:48:44.468 --> 04:48:46.432 but also the harder to accomplish. 04:48:46.432 --> 04:48:49.084 I'm going to highlight a few of these in relation to 04:48:49.084 --> 04:48:51.485 how we find climate change initiatives, 04:48:51.485 --> 04:48:55.219 and to end with number two, the mindset or paradigm. 04:48:55.219 --> 04:48:56.136 Next slide. 04:48:59.471 --> 04:49:04.327 The first is the length of delays in a system relative. 04:49:04.327 --> 04:49:07.077 Excuse me, one slide back, sorry. 04:49:08.060 --> 04:49:09.227 All right, thanks. 04:49:09.227 --> 04:49:11.346 The first is the length of delays in a system 04:49:11.346 --> 04:49:13.876 relative to the rate of system change. 04:49:13.876 --> 04:49:16.369 The delay between approving an initiative, 04:49:16.369 --> 04:49:17.368 implementing an initiative, 04:49:17.368 --> 04:49:20.020 and determining the efficacy of said initiative, 04:49:20.020 --> 04:49:22.557 is simply too long to meet our climate goals. 04:49:22.557 --> 04:49:24.505 Now next slide. 04:49:24.505 --> 04:49:25.512 And then we can take a look at 04:49:25.512 --> 04:49:28.713 the residential energy efficiency loan program, 04:49:28.713 --> 04:49:32.156 which was a funding was approved in 2012. 04:49:32.156 --> 04:49:35.163 The first loan was not given out until 2016. 04:49:35.163 --> 04:49:38.742 And the evaluation report of the REEL program 04:49:38.742 --> 04:49:41.511 was not complete until 2020. 04:49:41.511 --> 04:49:44.320 So eight years and only a couple of hundred households 04:49:44.320 --> 04:49:47.653 reached, which is inherently problematic 04:49:49.939 --> 04:49:53.356 in terms of our California climate goals. 04:49:54.391 --> 04:49:58.339 Now the technology to track real time metrics for success, 04:49:58.339 --> 04:50:00.244 which I should also add should also include 04:50:00.244 --> 04:50:02.036 human based quantitative metrics, 04:50:02.036 --> 04:50:05.599 such as reducing hospitalizations, racial equity, 04:50:05.599 --> 04:50:07.849 excitement for the upgrade. 04:50:09.477 --> 04:50:12.433 So why does it, so then I'll ask the question. 04:50:12.433 --> 04:50:14.885 So why does it take four years to evaluate 04:50:14.885 --> 04:50:17.326 whether this initiative was successful? 04:50:17.326 --> 04:50:19.784 I'll also add that it's my understanding that folks 04:50:19.784 --> 04:50:22.704 managing REEL do send out monthly updates. 04:50:22.704 --> 04:50:24.600 And so the responsibility to address this 04:50:24.600 --> 04:50:26.699 is not necessarily on their shoulders. 04:50:26.699 --> 04:50:27.616 Next slide. 04:50:28.799 --> 04:50:32.367 Now by reducing the delay in approval, implementation, 04:50:32.367 --> 04:50:34.310 and evaluation, we can then connect both 04:50:34.310 --> 04:50:36.921 the positive and negative feedback loops. 04:50:36.921 --> 04:50:39.876 The feedback loop should be connected to performance metrics 04:50:39.876 --> 04:50:41.871 and tied to funding. 04:50:41.871 --> 04:50:43.463 And the speed of that feedback 04:50:43.463 --> 04:50:46.686 should be fast to ensure equity and impact. 04:50:46.686 --> 04:50:51.013 What we don't want is to analyze initiative after a year 04:50:51.013 --> 04:50:53.539 and find that not one Black family was breached, 04:50:53.539 --> 04:50:55.025 for example. 04:50:55.025 --> 04:50:55.942 Next slide. 04:50:57.076 --> 04:50:59.882 Implicit in the evaluation of how we fund climate change 04:50:59.882 --> 04:51:03.534 initiatives is the funding of information flow, 04:51:03.534 --> 04:51:04.771 so that we can ensure Californians 04:51:04.771 --> 04:51:06.902 are aware of those initiatives. 04:51:06.902 --> 04:51:09.152 The commercial on-bill financing program, 04:51:09.152 --> 04:51:13.416 which my company helps small customers receive, 04:51:13.416 --> 04:51:14.852 has been around for eight years. 04:51:14.852 --> 04:51:17.025 And of the dozens of business owners, property owners, 04:51:17.025 --> 04:51:20.117 and nonprofits that I've talked to across California, 04:51:20.117 --> 04:51:24.003 I've not met one that was aware of this (mumbles). 04:51:24.003 --> 04:51:26.240 Now when you transpose this with a 0% loan 04:51:26.240 --> 04:51:29.339 from the federal government last year for COVID relief, 04:51:29.339 --> 04:51:31.256 and awareness for that. 04:51:33.499 --> 04:51:35.787 To that point, community based organization's ability 04:51:35.787 --> 04:51:38.299 to spread information will be essential to realize 04:51:38.299 --> 04:51:40.081 and adjust transition. 04:51:40.081 --> 04:51:41.455 They should be compensated for the effort 04:51:41.455 --> 04:51:43.597 in an equitable way. 04:51:43.597 --> 04:51:47.351 I know CPUC does the paid (mumbles) status, 04:51:47.351 --> 04:51:52.045 which reimburses those who can demonstrate hardship. 04:51:52.045 --> 04:51:54.967 But I would argue that a reimbursement is not an equitable 04:51:54.967 --> 04:51:57.401 method of payment, as it requires those organizations 04:51:57.401 --> 04:51:59.742 to find alternative means for income, 04:51:59.742 --> 04:52:02.050 which has a cost associated with it. 04:52:02.050 --> 04:52:02.967 Next slide. 04:52:04.185 --> 04:52:06.427 Now I recognize that some of what I've just discussed 04:52:06.427 --> 04:52:08.934 is not feasible based on the current rules. 04:52:08.934 --> 04:52:13.275 So rules must be changed to ensure that they can happen. 04:52:13.275 --> 04:52:16.352 In addition, and incentives, constraints, and punishments 04:52:16.352 --> 04:52:18.629 should align with what is required to execute 04:52:18.629 --> 04:52:23.296 inclusive solutions at scale to reach our climate goals. 04:52:24.270 --> 04:52:26.144 Now due to time, I'm not gonna go dive into 04:52:26.144 --> 04:52:28.626 the goals of the system, other than to refer everyone 04:52:28.626 --> 04:52:33.065 to the CPUC's environmental and social justice action plan, 04:52:33.065 --> 04:52:35.996 which should be central to the goals of the system. 04:52:35.996 --> 04:52:36.913 Next slide. 04:52:38.066 --> 04:52:38.899 Now to the. 04:52:38.899 --> 04:52:40.375 About two minutes. 04:52:40.375 --> 04:52:41.281 Perfect. 04:52:41.281 --> 04:52:43.642 Now to the crux of this paradigm. 04:52:43.642 --> 04:52:45.733 Our current paradigm reflects the assumptions 04:52:45.733 --> 04:52:49.766 and perceptions prevailing in the decision making process. 04:52:49.766 --> 04:52:53.395 Racial biases are pervasive and impact us all, 04:52:53.395 --> 04:52:54.491 no one's immune. 04:52:54.491 --> 04:52:57.462 As such, our assumptions and perceptions are impacted 04:52:57.462 --> 04:52:59.073 by those biases. 04:52:59.073 --> 04:53:01.780 To counter racial biases and other biases, 04:53:01.780 --> 04:53:04.794 we must make our assumptions and perceptions explicit, 04:53:04.794 --> 04:53:06.843 and validate or disprove them. 04:53:06.843 --> 04:53:07.760 Next slide. 04:53:08.638 --> 04:53:11.928 Now, here are some examples of problematic perceptions 04:53:11.928 --> 04:53:14.384 that I've seen espoused. 04:53:14.384 --> 04:53:16.161 People of color do not care about 04:53:16.161 --> 04:53:18.439 or not interested in clean energy, 04:53:18.439 --> 04:53:20.851 clean energy being whether it be energy efficiency, 04:53:20.851 --> 04:53:22.746 electrification, renewable energy, 04:53:22.746 --> 04:53:25.277 battery storage, et cetera. 04:53:25.277 --> 04:53:27.051 Addressing low income customers 04:53:27.051 --> 04:53:29.884 also addresses minority customers. 04:53:30.871 --> 04:53:33.502 To kill two birds, one stone. 04:53:33.502 --> 04:53:35.347 Other ones results that negatively impacts 04:53:35.347 --> 04:53:37.130 communities of color at a higher rate 04:53:37.130 --> 04:53:39.506 only occur when decision makers are racists. 04:53:39.506 --> 04:53:43.134 It has to be active that you make these things happen. 04:53:43.134 --> 04:53:46.555 And then the last one, we can have either a fast transition 04:53:46.555 --> 04:53:48.305 or a just transition. 04:53:49.592 --> 04:53:52.357 Now let's look at the data backed (mumbles). 04:53:52.357 --> 04:53:53.274 Next slide. 04:53:54.875 --> 04:53:58.645 Black and Hispanic individuals have a measurably 04:53:58.645 --> 04:54:01.333 higher degree of concern about global warming, 04:54:01.333 --> 04:54:03.818 and want more action. 04:54:03.818 --> 04:54:08.651 Controlling of in response to poverty and income and race, 04:54:10.966 --> 04:54:12.883 controlling for income, 04:54:14.097 --> 04:54:15.583 households in majority Black communities 04:54:15.583 --> 04:54:17.976 are 69% less likely to have rooftop solar 04:54:17.976 --> 04:54:21.649 than communities with no racial ethnic majority. 04:54:21.649 --> 04:54:23.487 I will add that there was several studies 04:54:23.487 --> 04:54:28.487 of variations around this, that also find similar results. 04:54:28.854 --> 04:54:32.920 Next, our system's institutions were made to privilege 04:54:32.920 --> 04:54:34.804 and uplift white Americans. 04:54:34.804 --> 04:54:36.895 Therefore, without designing solutions 04:54:36.895 --> 04:54:40.346 to oppose this reality, i.e. anti-racist solutions, 04:54:40.346 --> 04:54:42.418 the results will be solutions that uplift 04:54:42.418 --> 04:54:44.751 and benefit white Americans. 04:54:46.422 --> 04:54:49.803 And then lastly, a just transition is a fast transition. 04:54:49.803 --> 04:54:53.970 When we look at the results of inclusive solutions 04:54:55.554 --> 04:54:57.624 that push a just transition, 04:54:57.624 --> 04:54:59.505 such as site specific investment 04:54:59.505 --> 04:55:01.636 with site specific cost recovery, 04:55:01.636 --> 04:55:04.267 also known as CARE form bill, 04:55:04.267 --> 04:55:06.276 the adoption rate is considerably greater 04:55:06.276 --> 04:55:07.699 than non-inclusive solutions, 04:55:07.699 --> 04:55:10.049 such as the debt-based energy efficiency programs 04:55:10.049 --> 04:55:11.651 that are currently used in California. 04:55:11.651 --> 04:55:12.568 Next slide. 04:55:13.908 --> 04:55:16.538 Now, part of the concern with rising electricity rates 04:55:16.538 --> 04:55:20.221 is that it makes electrification less cost-effective, 04:55:20.221 --> 04:55:22.115 and thus harder to implement. 04:55:22.115 --> 04:55:24.245 However, as more buildings are electrified, 04:55:24.245 --> 04:55:26.668 gas rates will most likely increase at a faster rate 04:55:26.668 --> 04:55:28.531 than electricity rates. 04:55:28.531 --> 04:55:31.620 This is good for our electrification transition, 04:55:31.620 --> 04:55:34.273 but not great for whomever is left with gas. 04:55:34.273 --> 04:55:37.204 The question is, who will have to shoulder that burden? 04:55:37.204 --> 04:55:39.273 Is it going to be those who have historically 04:55:39.273 --> 04:55:42.248 and currently have disproportionately shouldered it? 04:55:42.248 --> 04:55:46.054 Or the time for other Californians to take on that burden? 04:55:46.054 --> 04:55:48.622 Californians who happen to do better financially, 04:55:48.622 --> 04:55:52.107 who happen to financially be able to do so. 04:55:52.107 --> 04:55:54.510 Or as one of my students proposed last night, 04:55:54.510 --> 04:55:57.432 is there a way that no one has to bear this burden? 04:55:57.432 --> 04:55:58.349 Next slide. 04:55:59.262 --> 04:56:01.571 I will end with this, we need a paradigm shift 04:56:01.571 --> 04:56:04.438 in how we fund our climate change initiatives 04:56:04.438 --> 04:56:06.606 because our current paradigm was not created 04:56:06.606 --> 04:56:07.688 with everyone in mind. 04:56:07.688 --> 04:56:08.521 Thank you. 04:56:10.724 --> 04:56:12.803 Thank you, Anthony. 04:56:12.803 --> 04:56:16.720 And our last panelist, Mark Toney, someone else 04:56:18.355 --> 04:56:20.164 many of us have worked with for many years. 04:56:20.164 --> 04:56:22.831 He's executive director of TURN, 04:56:23.942 --> 04:56:28.942 he's been the executive director of TURN since 2008. 04:56:28.981 --> 04:56:30.981 Before he was with TURN, 04:56:31.928 --> 04:56:33.901 Mark served as executive director of 04:56:33.901 --> 04:56:37.479 the Center for Third World, organizing for four years 04:56:37.479 --> 04:56:41.193 and for direct action for rights and equity for eight years. 04:56:41.193 --> 04:56:44.938 He holds a BA from Brown University, 04:56:44.938 --> 04:56:47.688 a sociology PhD from UC Berkeley. 04:56:49.420 --> 04:56:51.196 And his leadership has been recognized 04:56:51.196 --> 04:56:53.528 as a Kellogg National Leadership Fellow, 04:56:53.528 --> 04:56:55.650 National Science Foundation Fellow, 04:56:55.650 --> 04:56:57.867 Mother Jones Hero for Hard Times. 04:56:57.867 --> 04:57:01.117 Mark, you are our cleanup hitter today. 04:57:03.074 --> 04:57:06.579 And Mark bragged that if I give him five minutes, 04:57:06.579 --> 04:57:08.055 he'll take five minutes exactly. 04:57:08.055 --> 04:57:09.615 If I give him eight minutes, 04:57:09.615 --> 04:57:11.196 he will take eight minutes exactly. 04:57:11.196 --> 04:57:14.187 So Mark, you have eight minutes. 04:57:14.187 --> 04:57:16.656 Thank you very much, Ed. 04:57:16.656 --> 04:57:20.223 I really appreciate the work that the staff 04:57:20.223 --> 04:57:22.532 have put into this white paper, 04:57:22.532 --> 04:57:26.532 and appreciate the Commissioners from CPUC, CEC, 04:57:27.590 --> 04:57:30.626 and other agencies for taking the time 04:57:30.626 --> 04:57:35.626 to look at this question of what's happening with rates. 04:57:35.643 --> 04:57:37.847 When it comes to paradigm shifts, 04:57:37.847 --> 04:57:39.948 the paradigm shift I'm looking for 04:57:39.948 --> 04:57:43.985 is ending rate payer funding of non-utility 04:57:43.985 --> 04:57:46.468 climate change initiatives. 04:57:46.468 --> 04:57:51.316 Customers want the most green for the least grief. 04:57:51.316 --> 04:57:55.740 The cost of greening the grid should not be cutting off 04:57:55.740 --> 04:57:59.484 Black, Brown, Indigenous, or any low income communities 04:57:59.484 --> 04:58:03.458 from the grid because the prices are too damn high. 04:58:03.458 --> 04:58:07.291 100% clean energy goal to be matched with 04:58:08.321 --> 04:58:11.773 a 100% goal for residential service. 04:58:11.773 --> 04:58:16.523 Zero carbon emissions need to be matched by zero shut off 04:58:17.796 --> 04:58:19.463 for lack of payment. 04:58:20.344 --> 04:58:22.385 So I'm gonna talk about three paradigm shifts 04:58:22.385 --> 04:58:23.736 to get us there. 04:58:23.736 --> 04:58:27.236 One is regulatory mandates need to replace 04:58:28.430 --> 04:58:30.097 ratepayer subsidies. 04:58:31.930 --> 04:58:36.513 An example to move customer adoption of electrification 04:58:38.581 --> 04:58:42.190 is when it comes to regulatory mandate, 04:58:42.190 --> 04:58:46.288 we have the electric vehicle mandate by the Governor, 04:58:46.288 --> 04:58:50.955 100% by 2035, that's a step in the right direction. 04:58:52.136 --> 04:58:56.548 And in fact, it's driving the market for automobiles. 04:58:56.548 --> 04:59:01.057 We just had General Motors making this huge announcement 04:59:01.057 --> 04:59:04.627 that they will no longer sell non-electric vehicles 04:59:04.627 --> 04:59:05.544 after 2035. 04:59:06.694 --> 04:59:08.777 GM is going 100% EV. 04:59:11.345 --> 04:59:14.851 We've got the four dozen municipalities 04:59:14.851 --> 04:59:19.804 who have banned natural gas hookups in new construction. 04:59:19.804 --> 04:59:22.311 That's another regulatory mandate. 04:59:22.311 --> 04:59:26.233 Zero rate payer subsidies needed for that mandate. 04:59:26.233 --> 04:59:29.566 Outside of clean, safe, reliable energy, 04:59:30.690 --> 04:59:34.080 there should be no new rate payer subsidies 04:59:34.080 --> 04:59:36.247 of climate change by 2025. 04:59:37.366 --> 04:59:39.415 That's a goal I have. 04:59:39.415 --> 04:59:41.248 RPF procurements? Yes. 04:59:42.297 --> 04:59:45.614 Rate payers should pay for that because that's part of 04:59:45.614 --> 04:59:49.378 providing the basic services, but not for EV, 04:59:49.378 --> 04:59:52.461 and not for building electrification. 04:59:53.343 --> 04:59:55.760 So paradigm shift number two, 04:59:56.680 --> 05:00:00.152 let's look at developing alternative revenue streams 05:00:00.152 --> 05:00:02.720 to replace rate payer subsidies. 05:00:02.720 --> 05:00:04.645 I'm going to talk about two quick examples. 05:00:04.645 --> 05:00:08.410 One is, electric vehicle charging stations. 05:00:08.410 --> 05:00:11.832 We can replace rate payer subsidies 05:00:11.832 --> 05:00:16.054 with revenue from the transportation sector. 05:00:16.054 --> 05:00:19.721 Let's say that we impose a $1,000 carbon fee 05:00:22.138 --> 05:00:24.805 on average per gasoline vehicle. 05:00:25.860 --> 05:00:27.463 You can have a sliding scale, 05:00:27.463 --> 05:00:30.130 $2,000 for the gas guzzler SUVs, 05:00:32.147 --> 05:00:35.980 maybe 200 bucks for a one of the high mileage. 05:00:37.416 --> 05:00:42.416 $1,000 times two million new vehicles sold in California 05:00:42.589 --> 05:00:45.922 each year, equals $2 billion of revenue. 05:00:46.815 --> 05:00:49.155 Every year that we can put, 05:00:49.155 --> 05:00:51.087 if you want to put them in the charging stations, 05:00:51.087 --> 05:00:52.710 you want to put them into buying down 05:00:52.710 --> 05:00:55.060 the cost of electric vehicles, 05:00:55.060 --> 05:00:58.754 but we're doing it at the point of sale. 05:00:58.754 --> 05:01:02.558 And we're placing the cost where it belongs, 05:01:02.558 --> 05:01:06.739 on the people who are choosing to buy gasoline automobiles. 05:01:06.739 --> 05:01:09.383 And we're talking about new automobiles here. 05:01:09.383 --> 05:01:13.816 So let's talk about building electrification. 05:01:13.816 --> 05:01:17.568 What if we decided people are talking about 05:01:17.568 --> 05:01:21.053 rate payer subsidies for electrification, 05:01:21.053 --> 05:01:23.881 for tens of thousands of dollars. 05:01:23.881 --> 05:01:24.859 You're only gonna have, 05:01:24.859 --> 05:01:27.459 you're not even going to move the needle. 05:01:27.459 --> 05:01:30.709 Only 8% of GHG emissions come from 05:01:31.971 --> 05:01:34.721 the residential buildings anyway. 05:01:36.146 --> 05:01:39.412 So if you want to do it on a big scale, 05:01:39.412 --> 05:01:42.995 how about a requirement that existing homes 05:01:47.704 --> 05:01:50.954 sold in California must be electrified. 05:01:55.228 --> 05:01:59.478 That the heating, cooling, heat pump, water heater, 05:02:03.072 --> 05:02:05.822 and the stove, you electrify them 05:02:06.754 --> 05:02:09.280 as a condition of closing escrow. 05:02:09.280 --> 05:02:14.280 And you take the cost and put it into the escrow cost. 05:02:14.401 --> 05:02:19.401 $25,000 at 3% is $105 additional monthly, over 30 years. 05:02:21.476 --> 05:02:25.709 And everybody keeps telling me that with the new heat pump 05:02:25.709 --> 05:02:28.725 technology, you're going to be saving money. 05:02:28.725 --> 05:02:32.808 So we would be electrifying 400,000 homes a year. 05:02:37.055 --> 05:02:39.935 Now those are some real numbers. 05:02:39.935 --> 05:02:44.010 My position on residential electrification is 05:02:44.010 --> 05:02:46.351 either go big or go home. 05:02:46.351 --> 05:02:48.140 We need big ideas. 05:02:48.140 --> 05:02:50.367 Paradigm shift number three. 05:02:50.367 --> 05:02:54.367 The CPUC needs to do more to push other agencies 05:02:55.341 --> 05:02:58.896 and the legislature to do their part. 05:02:58.896 --> 05:03:01.353 I encourage the PUC to follow the lead 05:03:01.353 --> 05:03:04.712 of the environmental justice group that insisted that 05:03:04.712 --> 05:03:08.545 the GRIP report on the future of gas go beyond 05:03:09.515 --> 05:03:11.421 CPUC initiatives. 05:03:11.421 --> 05:03:16.223 Then urge the CPUC to purport leadership of car, 05:03:16.223 --> 05:03:19.670 CEC, and CAISO in achieving climate goals. 05:03:19.670 --> 05:03:21.178 Here's the basic challenge we have, 05:03:21.178 --> 05:03:25.178 any time the CPUC sees itself as the lead agency 05:03:26.398 --> 05:03:28.656 to solve the climate problem, 05:03:28.656 --> 05:03:31.329 it means rate payers are gonna pay. 05:03:31.329 --> 05:03:32.829 That is a problem. 05:03:34.388 --> 05:03:36.839 The CPUC also needs to advocate more strongly 05:03:36.839 --> 05:03:40.839 against further legislative rate payer mandates. 05:03:42.021 --> 05:03:44.642 This making the utilities pay for programs 05:03:44.642 --> 05:03:46.981 that legislators are always talking about, 05:03:46.981 --> 05:03:49.159 means one thing and one thing only, 05:03:49.159 --> 05:03:52.026 it means making rate payers pay. 05:03:52.026 --> 05:03:55.063 Bottom line here is that rate payers have invested 05:03:55.063 --> 05:03:59.088 billions of dollars in decarbonizing the electric grid 05:03:59.088 --> 05:04:01.128 over the last 20 years. 05:04:01.128 --> 05:04:03.894 And it has been worth it, we have supported it, 05:04:03.894 --> 05:04:06.811 and in fact, GHG has reduced a lot. 05:04:08.294 --> 05:04:12.278 Lot more work to do, but there's been a lot of progress. 05:04:12.278 --> 05:04:15.992 If the CPUC wants any chance at capping 05:04:15.992 --> 05:04:20.620 utility revenue requirements at the rate of inflation, 05:04:20.620 --> 05:04:23.947 then the transportation and building sectors 05:04:23.947 --> 05:04:26.934 are gonna have to (mumbles) to decarbonize 05:04:26.934 --> 05:04:30.323 their own sector, instead of looking for rate payers 05:04:30.323 --> 05:04:31.740 to bail them out. 05:04:36.711 --> 05:04:38.711 Okay, thank you, Mark. 05:04:39.852 --> 05:04:42.435 Thank you to all the panelists. 05:04:43.514 --> 05:04:46.624 Are there questions from the dais? 05:04:46.624 --> 05:04:51.041 I have a few, but we'll open it up to the dais first. 05:04:52.517 --> 05:04:55.324 Commissioner Rechtschaffen? 05:04:55.324 --> 05:04:58.237 Thank you Ed, I have a comment and a question. 05:04:58.237 --> 05:05:01.087 The comment is for Professor Wara. 05:05:01.087 --> 05:05:06.087 Your question about EVs providing backup power to homes, 05:05:06.540 --> 05:05:08.312 the reason we're not doing it yet 05:05:08.312 --> 05:05:11.145 are both technical and regulatory. 05:05:12.553 --> 05:05:17.235 And for example, until now basically no vehicles 05:05:17.235 --> 05:05:20.011 would warrant their engines to be used 05:05:20.011 --> 05:05:22.820 to provide bi-directional power. 05:05:22.820 --> 05:05:26.389 It's something though that we are actively looking at, 05:05:26.389 --> 05:05:28.890 in our resiliency proceedings and otherwise, 05:05:28.890 --> 05:05:31.522 not at the speed that Anthony has pointed out we need to go, 05:05:31.522 --> 05:05:33.340 but we're definitely looking at it. 05:05:33.340 --> 05:05:36.037 The very real and important point you made. 05:05:36.037 --> 05:05:38.829 Professor Borenstein, I have a question for you. 05:05:38.829 --> 05:05:42.659 Your proposal about six charges that vary by income, 05:05:42.659 --> 05:05:44.430 obviously there are many utilities 05:05:44.430 --> 05:05:46.379 that charge fixed charges. 05:05:46.379 --> 05:05:48.668 Has anyone done what you are proposing? 05:05:48.668 --> 05:05:50.040 Have you seen this elsewhere? 05:05:50.040 --> 05:05:52.735 Fixed charges that vary by income? 05:05:52.735 --> 05:05:56.186 Well, no, not in this structure, 05:05:56.186 --> 05:05:57.956 but we have done a couple of things. 05:05:57.956 --> 05:06:01.327 One is we obviously have volumetric charges 05:06:01.327 --> 05:06:02.552 that vary by income. 05:06:02.552 --> 05:06:03.727 We do it here in California, 05:06:03.727 --> 05:06:06.267 and we do it in lots of other places. 05:06:06.267 --> 05:06:08.750 A fixed charge that varies by income at the magnitude 05:06:08.750 --> 05:06:11.559 we're talking about would probably require 05:06:11.559 --> 05:06:15.777 a bit more monitoring than the CARE program, 05:06:15.777 --> 05:06:18.409 meaning some monitoring. 05:06:18.409 --> 05:06:22.326 So what we proposed in the paper in the report, 05:06:23.307 --> 05:06:25.130 a number of ways of doing that. 05:06:25.130 --> 05:06:28.359 Now there are precedents outside the utility industry. 05:06:28.359 --> 05:06:31.471 What we're proposing is pretty much a parallel 05:06:31.471 --> 05:06:35.928 of the way the discount for the Affordable Care Act is done, 05:06:35.928 --> 05:06:38.827 where you actually declare your income 05:06:38.827 --> 05:06:42.676 and then it gets trued up later when you file your taxes. 05:06:42.676 --> 05:06:46.223 That could be done through the franchise tax Board. 05:06:46.223 --> 05:06:50.155 We also propose alternatives, where the franchise tax Board 05:06:50.155 --> 05:06:54.448 doesn't actually do the true up, but they inform the utility 05:06:54.448 --> 05:06:56.887 of the category that customers are in. 05:06:56.887 --> 05:06:58.985 And then we also propose some other ways. 05:06:58.985 --> 05:07:02.604 So we've thought about the various enforcement issues, 05:07:02.604 --> 05:07:04.631 and we think there are ways to do it. 05:07:04.631 --> 05:07:06.397 It would be a left, 05:07:06.397 --> 05:07:10.516 but the alternative is not only, I think, 05:07:10.516 --> 05:07:13.960 going to really undermine decarbonization, 05:07:13.960 --> 05:07:16.944 but also we're basically balancing the cost 05:07:16.944 --> 05:07:21.013 of all of the carbon reduction programs 05:07:21.013 --> 05:07:25.930 on the back of the people who are least able to pay for it. 05:07:36.099 --> 05:07:39.182 Ed, you're muted if you're talking. 05:07:40.371 --> 05:07:42.144 My second error on that today. 05:07:42.144 --> 05:07:43.534 Anthony, it looks like your hand's up. 05:07:43.534 --> 05:07:44.749 Did you want to respond to that? 05:07:44.749 --> 05:07:48.639 Or respond to a different panelist's comments? 05:07:48.639 --> 05:07:51.403 I quickly wanted to touch on what 05:07:51.403 --> 05:07:52.819 Commissioner Rechtschaffen, 05:07:52.819 --> 05:07:54.328 am I pronouncing your name right? 05:07:54.328 --> 05:07:55.328 I apologize. 05:07:56.841 --> 05:07:59.078 To your point about the vehicle to building 05:07:59.078 --> 05:08:02.078 as a essentially a portable battery. 05:08:02.978 --> 05:08:06.784 I want to point out that Roanoke Electric in North Carolina 05:08:06.784 --> 05:08:07.817 is doing that. 05:08:07.817 --> 05:08:10.518 They started this at the beginning of this year, 05:08:10.518 --> 05:08:13.367 their first demo of that. 05:08:13.367 --> 05:08:16.563 And I believe that the Nissan Leaf does allow for 05:08:16.563 --> 05:08:19.909 kind of bio-directional provision 05:08:19.909 --> 05:08:22.326 from the car to the building. 05:08:23.332 --> 05:08:26.961 We definitely need more electric vehicles to provide that, 05:08:26.961 --> 05:08:30.878 such as Tesla obviously, would be a great boon. 05:08:31.935 --> 05:08:34.244 But I just want to just bring to the attention that 05:08:34.244 --> 05:08:38.892 this is being done by Roanoke Electric Cooperative, 05:08:38.892 --> 05:08:41.892 which I have to say is predominantly 05:08:44.278 --> 05:08:46.695 Black and lower income areas. 05:08:47.806 --> 05:08:51.039 So I would offer that California 05:08:51.039 --> 05:08:54.039 should be able to push this as well. 05:08:59.081 --> 05:09:01.748 Other questions from the dais? 05:09:05.506 --> 05:09:07.256 Commissioner Shiroma? 05:09:08.813 --> 05:09:10.553 Thank you. 05:09:10.553 --> 05:09:14.803 Mark Toney, you described what more would you need, 05:09:17.962 --> 05:09:20.352 and I really appreciate the conversations 05:09:20.352 --> 05:09:22.214 in this last panel as well. 05:09:22.214 --> 05:09:25.012 And where were you tasked, you need to really to think. 05:09:25.012 --> 05:09:27.929 Think out from the usual paradigms, 05:09:29.253 --> 05:09:31.503 what other ideas out there. 05:09:33.029 --> 05:09:36.279 And he said that about low-income areas 05:09:38.876 --> 05:09:43.709 and disadvantaged communities that are paying their bills, 05:09:45.040 --> 05:09:48.161 subsidizing programs, what have you, 05:09:48.161 --> 05:09:52.049 that but I think you were saying that that should justify 05:09:52.049 --> 05:09:53.431 no disconnection. 05:09:53.431 --> 05:09:57.348 Did I understand that particular idea from you? 05:09:59.506 --> 05:10:03.839 What I meant to say is that it's important to link 05:10:07.127 --> 05:10:09.736 climate goals with equity goals. 05:10:09.736 --> 05:10:11.511 That's my main point. 05:10:11.511 --> 05:10:14.613 So explicitly, link the two. 05:10:14.613 --> 05:10:17.613 And if we say 100% carbon free, 05:10:23.300 --> 05:10:28.300 which TURN absolutely supports and as I've said before, 05:10:28.619 --> 05:10:33.202 we wanna couple that with 100% electrical service. 05:10:34.644 --> 05:10:37.577 That doesn't mean that we cut people off 05:10:37.577 --> 05:10:39.457 because they can't afford to pay their bills. 05:10:39.457 --> 05:10:40.634 That's what I mean. 05:10:40.634 --> 05:10:44.551 So that if it's zero carbon, let's connect that 05:10:45.395 --> 05:10:48.978 and link with a zero shut off for non-paid. 05:10:51.204 --> 05:10:55.506 Yes, these are aspirational goals, but guess what? 05:10:55.506 --> 05:10:59.708 Climate goals are 100% is pretty aspirational. 05:10:59.708 --> 05:11:02.225 And it's good, we want it to be aspirational. 05:11:02.225 --> 05:11:04.326 I'm saying we should have equity goals 05:11:04.326 --> 05:11:08.121 as aspirational as our climate goals, 05:11:08.121 --> 05:11:09.630 and let's connect them. 05:11:09.630 --> 05:11:11.547 That was my main point. 05:11:14.318 --> 05:11:15.151 Okay, thank you. 05:11:15.151 --> 05:11:19.568 And yeah, a follow on question for Professor Kinslow. 05:11:21.695 --> 05:11:25.722 Nice to see you again, thank you, Professor Kinslow. 05:11:25.722 --> 05:11:29.889 Also helped us out at our finance seeing workshop. 05:11:33.613 --> 05:11:35.985 And you mentioned our environmental 05:11:35.985 --> 05:11:38.395 and social justice goals, 05:11:38.395 --> 05:11:43.145 and there's a handful of the goals that we have outlined, 05:11:45.052 --> 05:11:49.885 that we want our proceedings to look through those lenses. 05:11:51.396 --> 05:11:56.396 And we do have them folded into our CARE ISA proceeding 05:11:56.802 --> 05:12:01.124 and in some of our transportation efforts and so forth. 05:12:01.124 --> 05:12:04.291 But would you amplify a bit more about 05:12:05.440 --> 05:12:10.357 are you saying that if we more consciously and purposefully 05:12:11.740 --> 05:12:14.668 use that environmental social justice plan 05:12:14.668 --> 05:12:18.668 as our first lens, that will help us to get past 05:12:22.303 --> 05:12:25.479 some of the incorrect paradigms and misconceptions? 05:12:25.479 --> 05:12:27.846 Or I just wanna give you a chance to amplify 05:12:27.846 --> 05:12:30.031 a little bit further on that. 05:12:30.031 --> 05:12:32.864 Thank you, Commissioner Shiroma. 05:12:36.593 --> 05:12:40.327 Yes, that is in part what I'm saying is that 05:12:40.327 --> 05:12:43.827 by putting these goals first and foremost, 05:12:44.902 --> 05:12:48.388 and having them drive how we think about 05:12:48.388 --> 05:12:51.850 our transition to a clean energy economy, 05:12:51.850 --> 05:12:54.600 we will be the decisions we make, 05:12:56.851 --> 05:12:59.684 the choices we consider reasonable 05:13:00.587 --> 05:13:04.499 start to become more inclusive inherently. 05:13:04.499 --> 05:13:08.079 And as a result of being more inclusive, 05:13:08.079 --> 05:13:11.896 it also translates that we will reach more people. 05:13:11.896 --> 05:13:14.976 And by reaching the folks that historically 05:13:14.976 --> 05:13:18.643 have not been able to have access to these solutions, 05:13:18.643 --> 05:13:21.648 we've seen from the data that those people adopt 05:13:21.648 --> 05:13:24.010 the clean energy solutions at a higher rate 05:13:24.010 --> 05:13:26.134 when they had the option to. 05:13:26.134 --> 05:13:28.801 Which means a faster transition. 05:13:34.892 --> 05:13:36.420 All right, thank you. 05:13:36.420 --> 05:13:40.456 I'll relinquish the microphone for now. 05:13:40.456 --> 05:13:41.821 Thank you, Commissioner. 05:13:41.821 --> 05:13:43.154 Other questions? 05:13:46.547 --> 05:13:49.221 Commissioner Guzman-Aceves, go ahead. 05:13:49.221 --> 05:13:50.054 Thank you. 05:13:50.054 --> 05:13:53.922 And thank you so much for this great panel. 05:13:53.922 --> 05:13:58.922 It really is a lot of old and new ideas, in some ways. 05:13:59.038 --> 05:14:02.563 I was just reflecting on some of Michael's comments 05:14:02.563 --> 05:14:04.896 on these geographical areas, 05:14:06.599 --> 05:14:09.574 and even a second to the general fund, 05:14:09.574 --> 05:14:12.973 which is an income tax primarily based budget, 05:14:12.973 --> 05:14:15.366 property taxes probably the next in line 05:14:15.366 --> 05:14:20.366 in terms of having more progressive taxation and assessment. 05:14:20.733 --> 05:14:25.733 And we used to have a state responsibility area fire fee 05:14:25.869 --> 05:14:30.213 on the property tax owners that are in these high hazard 05:14:30.213 --> 05:14:34.847 fire areas, that unfortunately I will say I was no longer 05:14:34.847 --> 05:14:37.960 the GO and that was trade in for (mumbles). 05:14:37.960 --> 05:14:41.034 But at the time we didn't have a super majority. 05:14:41.034 --> 05:14:43.916 So maybe we should re-look at that. 05:14:43.916 --> 05:14:46.327 And many of these things are obviously outside 05:14:46.327 --> 05:14:51.327 of our control, and the ability to have more progressive 05:14:51.598 --> 05:14:53.769 forms of paying for a transition, 05:14:53.769 --> 05:14:57.440 more progressive ways and holistic ways of dealing with 05:14:57.440 --> 05:15:02.107 our terrible climate crisis in our high risk fire areas. 05:15:03.680 --> 05:15:08.128 And I agree that we cannot obviously deal with that alone. 05:15:08.128 --> 05:15:12.392 And so I just want to go back to a question I had 05:15:12.392 --> 05:15:15.226 in terms of, and maybe this is a question 05:15:15.226 --> 05:15:17.208 for all of the panelists, 05:15:17.208 --> 05:15:20.444 but is there a different organizational structure 05:15:20.444 --> 05:15:23.111 that we should be looking at for 05:15:26.173 --> 05:15:28.087 things that are even outside of our control, 05:15:28.087 --> 05:15:30.999 that we could potentially all advocate for, 05:15:30.999 --> 05:15:33.921 for dealing with these other high cost areas? 05:15:33.921 --> 05:15:36.219 I think kind of talking about these incentive programs 05:15:36.219 --> 05:15:38.156 is a kind of a easy target. 05:15:38.156 --> 05:15:43.156 We know that one's understood, we have jurisdiction there. 05:15:43.253 --> 05:15:46.050 We could phase out, potentially eliminate, 05:15:46.050 --> 05:15:49.471 what have you, or focus solely on low income customers. 05:15:49.471 --> 05:15:52.237 But what do we do with the wildfire situation? 05:15:52.237 --> 05:15:56.004 What do we do with this high transmission cost situation? 05:15:56.004 --> 05:15:59.449 And Michael talked about maybe a holistic government 05:15:59.449 --> 05:16:03.566 approach on one end, but what about this transmission issue? 05:16:03.566 --> 05:16:05.937 How are we looking at the wrong model? 05:16:05.937 --> 05:16:09.854 Should we be thinking of a different way to pay 05:16:11.043 --> 05:16:14.205 and therefore own those assets? 05:16:14.205 --> 05:16:19.122 So I think I really appreciate any thoughts you have there. 05:16:24.371 --> 05:16:27.846 Well, I don't mind starting out, 05:16:27.846 --> 05:16:30.096 Commissioner Guzman-Aceves. 05:16:31.037 --> 05:16:31.870 A couple of things. 05:16:31.870 --> 05:16:33.603 Let's talk about the transmission. 05:16:33.603 --> 05:16:36.186 My colleague, Jennifer Dowdell, 05:16:37.098 --> 05:16:39.681 in the earlier panel alluded to 05:16:41.993 --> 05:16:46.410 one of the recommendations that TURN has made is that 05:16:47.641 --> 05:16:52.407 the Commissions or the states should really look at 05:16:52.407 --> 05:16:55.991 base ownership of the transmission system. 05:16:55.991 --> 05:16:58.991 What that does is it would allow for 05:17:02.351 --> 05:17:05.268 much lower rates of borrowing money 05:17:07.673 --> 05:17:11.581 because when it's a state owned entity, 05:17:11.581 --> 05:17:15.081 state owned entities have access to bonds, 05:17:18.382 --> 05:17:20.299 government bond market, 05:17:21.283 --> 05:17:23.783 which is at a much lower cost, 05:17:24.923 --> 05:17:28.756 much lower rates than private capital markets. 05:17:29.738 --> 05:17:32.488 So that's one very concrete thing 05:17:34.065 --> 05:17:36.864 that I believe answers your question. 05:17:36.864 --> 05:17:39.964 Let's go to your property tax question, 05:17:39.964 --> 05:17:44.881 because when we were negotiating and arguing about AB 1054, 05:17:47.212 --> 05:17:50.120 one of the things that I had talked about 05:17:50.120 --> 05:17:53.853 with the Governor's office and the legislators was 05:17:53.853 --> 05:17:58.520 a, first of all, we need to look at the wildfire crisis, 05:17:59.474 --> 05:18:02.185 as Michael Wara said as a Statewide issue, 05:18:02.185 --> 05:18:04.602 and not just a utility issue. 05:18:05.621 --> 05:18:09.526 And that we need to look for more progressive ways 05:18:09.526 --> 05:18:12.359 of funding the insurance fund. 05:18:12.359 --> 05:18:15.485 Our proposal wasn't back property taxes 05:18:15.485 --> 05:18:17.660 because property is one of the ways 05:18:17.660 --> 05:18:20.410 that wealth is stored in society. 05:18:21.880 --> 05:18:25.334 Income is one of the ways that they're the stratification, 05:18:25.334 --> 05:18:26.955 but property is another. 05:18:26.955 --> 05:18:28.677 My only other point is 05:18:28.677 --> 05:18:31.664 when we are trying to figure things out, 05:18:31.664 --> 05:18:36.249 I get so tired of people talking about the poverty problem. 05:18:36.249 --> 05:18:40.443 What we have in California and the US is a wealth problem, 05:18:40.443 --> 05:18:43.257 is a concentration of wealth problem. 05:18:43.257 --> 05:18:45.667 And until we look at that, 05:18:45.667 --> 05:18:50.204 and actually Severin Borenstein's proposal about 05:18:50.204 --> 05:18:53.204 the fixed charges based upon income, 05:18:56.523 --> 05:19:00.089 actually starts to move to solving that. 05:19:00.089 --> 05:19:05.089 I think that's very (mumbles), but I'll stop there. 05:19:09.527 --> 05:19:13.719 If I could just respond briefly to the wildfire question. 05:19:13.719 --> 05:19:18.567 And I think part of the challenge that we face in this state 05:19:18.567 --> 05:19:21.734 is that we have a set of organizations 05:19:23.088 --> 05:19:27.640 that are not well-posed to advocate for systemic change, 05:19:27.640 --> 05:19:31.223 in terms of wildfire risk and investment in 05:19:32.678 --> 05:19:34.578 the kind of things that we need to do 05:19:34.578 --> 05:19:36.661 to reduce home ignitions. 05:19:38.112 --> 05:19:40.773 Cal Fire is trying to change, 05:19:40.773 --> 05:19:44.164 but is primarily a firefighting agency, 05:19:44.164 --> 05:19:47.471 and I think the PUC is not the right place 05:19:47.471 --> 05:19:48.720 to have this conversation, 05:19:48.720 --> 05:19:52.050 even though because of the legal liability regime 05:19:52.050 --> 05:19:55.378 in California, the utilities have ended up 05:19:55.378 --> 05:19:59.698 being the cost bearer and the risk bearer. 05:19:59.698 --> 05:20:03.192 And so I think one thing that I'm hopeful for 05:20:03.192 --> 05:20:06.893 is that other elements of state government can become 05:20:06.893 --> 05:20:09.934 a better resource, perhaps the wildfire Safety Division 05:20:09.934 --> 05:20:13.684 when it moves to resources this year, 05:20:13.684 --> 05:20:15.910 so that they are more capable of thinking about 05:20:15.910 --> 05:20:19.023 these problems and articulating needs 05:20:19.023 --> 05:20:23.273 in the general fund context, and perhaps in others. 05:20:24.519 --> 05:20:26.806 If I can jump for a second. 05:20:26.806 --> 05:20:28.882 First of all, I want to say the white paper 05:20:28.882 --> 05:20:31.132 the CPUC put out was great. 05:20:32.479 --> 05:20:35.766 I have been recommending it to everybody for the last week. 05:20:35.766 --> 05:20:39.197 It covers a huge amount of ground. 05:20:39.197 --> 05:20:42.016 And then I guess I should say in this context, 05:20:42.016 --> 05:20:46.290 my views do not represent those of CAISO necessarily, 05:20:46.290 --> 05:20:48.486 but I have learned a bit being on the CAISO Board 05:20:48.486 --> 05:20:50.397 for a couple of years. 05:20:50.397 --> 05:20:53.038 One of the things, my understanding is that 05:20:53.038 --> 05:20:55.794 for large transmission projects, 05:20:55.794 --> 05:20:59.892 those are not built necessarily by the utilities 05:20:59.892 --> 05:21:02.642 at this point, they are competed. 05:21:03.629 --> 05:21:08.360 And so there is a competitive process to try to get 05:21:08.360 --> 05:21:10.648 a lower cost for them. 05:21:10.648 --> 05:21:13.976 They are competed among private entities. 05:21:13.976 --> 05:21:17.290 State ownership could have some advantages. 05:21:17.290 --> 05:21:19.401 State ownership has not always worked out well 05:21:19.401 --> 05:21:22.085 in all areas of industry. 05:21:22.085 --> 05:21:25.617 And the idea that the state can finance everything 05:21:25.617 --> 05:21:29.550 more cheaply, while true in one sense, 05:21:29.550 --> 05:21:32.667 there's a reason that state bonds are so cheap 05:21:32.667 --> 05:21:36.114 is because everyone knows the state's gonna pay them back, 05:21:36.114 --> 05:21:40.446 meaning a really bad outcome, you still have to pay for it. 05:21:40.446 --> 05:21:43.812 And so the state has all the downside risks 05:21:43.812 --> 05:21:45.027 if and when they do this. 05:21:45.027 --> 05:21:47.149 And there's certainly plenty of cases where the state 05:21:47.149 --> 05:21:51.725 has done big projects and they have had huge cost overruns. 05:21:51.725 --> 05:21:54.840 So I'm not saying state ownership's 05:21:54.840 --> 05:21:56.620 necessarily the wrong model, 05:21:56.620 --> 05:21:59.929 but I think we have to be cautious about it 05:21:59.929 --> 05:22:01.927 when we start looking at alternatives, 05:22:01.927 --> 05:22:06.170 and that there is this competitive process now. 05:22:06.170 --> 05:22:08.596 I will jump in after that. 05:22:08.596 --> 05:22:12.650 And to the question of increased cost high cost, 05:22:12.650 --> 05:22:15.350 the reality is, and we're seeing this in Texas, 05:22:15.350 --> 05:22:19.844 is that the centralized system is not the future. 05:22:19.844 --> 05:22:22.830 We need to decentralize the grid. 05:22:22.830 --> 05:22:26.346 And we have a choice, we can do that slow and painfully, 05:22:26.346 --> 05:22:29.179 and with a lot of battling between 05:22:30.845 --> 05:22:33.062 utilities and private companies, 05:22:33.062 --> 05:22:36.227 or we do have an alternative option, 05:22:36.227 --> 05:22:41.144 which is fast and a lot less problematic for the utilities, 05:22:42.968 --> 05:22:45.681 in terms of their increased costs. 05:22:45.681 --> 05:22:49.431 And that would be an inclusive solution where 05:22:50.667 --> 05:22:54.014 utilities are investing on in specific sites. 05:22:54.014 --> 05:22:57.672 So instead of them trying to fight for 05:22:57.672 --> 05:22:59.761 to keep solar from going on roofs, 05:22:59.761 --> 05:23:01.518 or keep private entities from going on roof, 05:23:01.518 --> 05:23:04.118 they are actually doing that themselves. 05:23:04.118 --> 05:23:05.639 They are investing on the roof themselves. 05:23:05.639 --> 05:23:09.222 And in turn, receiving of that compensation 05:23:11.058 --> 05:23:15.276 back into benefits for that back as a way to counter 05:23:15.276 --> 05:23:19.280 the obvious increased cost as the distributed energy 05:23:19.280 --> 05:23:21.640 becomes more and more prevalent. 05:23:21.640 --> 05:23:25.640 I'll also add to the wealth that Mark mentioned, 05:23:26.647 --> 05:23:28.367 ownership has to be tied to this. 05:23:28.367 --> 05:23:32.220 But people have to have solutions where 05:23:32.220 --> 05:23:35.077 ownership ends up with the customers needs to be 05:23:35.077 --> 05:23:37.744 a staple in whatever is going on 05:23:38.881 --> 05:23:43.881 because ownership is one cornerstone of wealth building. 05:23:43.955 --> 05:23:48.372 And if customers are just continually and perpetually 05:23:49.517 --> 05:23:52.767 paying for clean energy, as opposed to, 05:23:53.601 --> 05:23:55.411 well, let me rephrase that. 05:23:55.411 --> 05:23:58.718 If some customers who can't afford the upfront capital 05:23:58.718 --> 05:24:01.885 are constantly paying for clean energy 05:24:03.560 --> 05:24:06.586 by those who can afford the upfront capital 05:24:06.586 --> 05:24:09.811 of say solar, are not, they have that ownership, 05:24:09.811 --> 05:24:13.478 then we get result in a larger gap increase. 05:24:18.892 --> 05:24:21.017 Okay, thank you. 05:24:21.017 --> 05:24:23.480 I had a question that I was going to ask, 05:24:23.480 --> 05:24:25.807 but we're supposed to wrap up at four. 05:24:25.807 --> 05:24:28.856 And the answer to my question is probably 05:24:28.856 --> 05:24:30.636 about a 10 minutes answer. 05:24:30.636 --> 05:24:33.775 So I'm gonna, I'm passing it. 05:24:33.775 --> 05:24:38.425 I am gonna throw out a thought here to encourage folks 05:24:38.425 --> 05:24:41.199 from other panels and who are listening, 05:24:41.199 --> 05:24:45.940 if they are going to submit any written comments, 05:24:45.940 --> 05:24:48.023 just to think about this. 05:24:49.580 --> 05:24:52.666 And this is, I was going to try to tie back 05:24:52.666 --> 05:24:54.460 some of the proposals in former panels 05:24:54.460 --> 05:24:57.713 to some of the suggestions here. 05:24:57.713 --> 05:25:01.000 And throw out the idea that I'm a little concerned 05:25:01.000 --> 05:25:02.832 of unintended consequences 05:25:02.832 --> 05:25:06.178 with some of the proposals out there. 05:25:06.178 --> 05:25:09.175 And for example, and I think this cuts both ways, 05:25:09.175 --> 05:25:12.425 there was a proposal earlier that we do 05:25:13.366 --> 05:25:17.449 a geographically based rate structure with lower. 05:25:44.779 --> 05:25:48.118 The people with the higher rates were the people who then 05:25:48.118 --> 05:25:51.785 had the biggest incentives to install solar, 05:25:53.681 --> 05:25:56.764 and thus kind of made that cost shift 05:25:58.353 --> 05:26:02.582 more of a wealth transfer than maybe originally intended. 05:26:02.582 --> 05:26:05.464 And I think there's ways to mitigate against that. 05:26:05.464 --> 05:26:09.604 But I just wonder if we look at different ideas, 05:26:09.604 --> 05:26:12.680 if we're also looking at the unintended consequences 05:26:12.680 --> 05:26:16.258 that come, so we can mitigate against those ahead of time. 05:26:16.258 --> 05:26:19.250 But I'll just throw that as food for thought for right now. 05:26:19.250 --> 05:26:20.855 We're right at four o'clock. 05:26:20.855 --> 05:26:23.428 I really want to thank this panel. 05:26:23.428 --> 05:26:27.036 As I told the panel when we were preparing for it, 05:26:27.036 --> 05:26:29.287 anytime somebody says, oh yeah, I'll do that panel, 05:26:29.287 --> 05:26:31.278 you estimate that it's going to take you 05:26:31.278 --> 05:26:32.726 a half an hour to prepare for it. 05:26:32.726 --> 05:26:34.959 And it takes you three hours to prepare for it, 05:26:34.959 --> 05:26:37.329 or whatever the timeframe is. 05:26:37.329 --> 05:26:39.669 So this is a really important conversation. 05:26:39.669 --> 05:26:43.623 I deeply appreciate your time this afternoon. 05:26:43.623 --> 05:26:47.297 And I deeply appreciate everybody's efforts 05:26:47.297 --> 05:26:48.763 in putting into it. 05:26:48.763 --> 05:26:51.961 And I deeply appreciate Michael Wara's compliment 05:26:51.961 --> 05:26:53.795 of the AB 67 report, 05:26:53.795 --> 05:26:57.768 that is also my favorite report of all time, 05:26:57.768 --> 05:27:00.302 and I look forward to it every year as well. 05:27:00.302 --> 05:27:01.232 So with that, thank you. 05:27:01.232 --> 05:27:05.149 And I'll hand it back over to you, Mary Claire. 05:27:08.645 --> 05:27:10.978 Mary Claire, you're muted. 05:27:11.899 --> 05:27:12.847 Thank you. 05:27:12.847 --> 05:27:17.312 I was just thanking the panel and thank you, Ed. 05:27:17.312 --> 05:27:20.318 So we are now going to turn to closing remarks 05:27:20.318 --> 05:27:22.213 from Commissioner Shiroma. 05:27:22.213 --> 05:27:25.234 But before we do, I wanted to present information 05:27:25.234 --> 05:27:27.024 about public comments. 05:27:27.024 --> 05:27:29.133 So we're going to start the public comment period 05:27:29.133 --> 05:27:32.732 immediately following Commissioner Shiroma's remarks, 05:27:32.732 --> 05:27:34.438 so in just a few minutes. 05:27:34.438 --> 05:27:38.688 And to make a public comment, you want to dial into 05:27:40.063 --> 05:27:41.813 +1 800-857-1917, 05:27:44.682 --> 05:27:46.099 passcode 5180519. 05:27:48.289 --> 05:27:51.129 And these numbers are also on the admin monitor page 05:27:51.129 --> 05:27:54.879 and on our En Banc webpage and on the agenda. 05:27:55.739 --> 05:27:56.856 Once you're dialed in, 05:27:56.856 --> 05:27:58.755 you'll press star one on your keypad 05:27:58.755 --> 05:28:02.489 to connect with the operator, who will put you in our queue. 05:28:02.489 --> 05:28:04.693 And if you'd like to cancel your position in the queue, 05:28:04.693 --> 05:28:06.617 just press star two. 05:28:06.617 --> 05:28:08.220 So we'll provide those directions again 05:28:08.220 --> 05:28:11.234 once we start public comments. 05:28:11.234 --> 05:28:15.731 But folks may want to start getting into the queue now. 05:28:15.731 --> 05:28:17.515 And the last thing I'll mention is we've had 05:28:17.515 --> 05:28:19.819 a couple of questions about whether this is being recorded 05:28:19.819 --> 05:28:21.171 and will be available later. 05:28:21.171 --> 05:28:23.606 And the answer is yes, and yes. 05:28:23.606 --> 05:28:27.570 This will be posted to our webpage in a couple of days. 05:28:27.570 --> 05:28:29.543 So with that, Commissioner Shiroma, 05:28:29.543 --> 05:28:32.873 are you ready to give closing remarks? 05:28:32.873 --> 05:28:33.706 [Commissioner Shiroma] Yes thank you, Mary Claire. 05:28:33.706 --> 05:28:38.623 Folks, it's been a long day and I want to thank all of you, 05:28:39.666 --> 05:28:42.594 all of my colleagues on the virtual dais, 05:28:42.594 --> 05:28:46.836 the panelists and all of the attendees for sitting with us. 05:28:46.836 --> 05:28:48.417 I have some brief closing remarks, 05:28:48.417 --> 05:28:50.635 but before I provide those, 05:28:50.635 --> 05:28:53.199 I want to give our president, President Batjer, 05:28:53.199 --> 05:28:57.366 a chance to say a few words, if you would like to. 05:28:58.513 --> 05:29:00.560 Oh my goodness, Genevieve, 05:29:00.560 --> 05:29:02.337 Commissioner Shiroma, thank you. 05:29:02.337 --> 05:29:05.827 This has been an unbelievable day. 05:29:05.827 --> 05:29:08.520 Very, very thought-provoking. 05:29:08.520 --> 05:29:11.618 I go through many days feeling like I'm in a vice, 05:29:11.618 --> 05:29:16.035 a tough vice between our very important climate goals 05:29:16.969 --> 05:29:20.969 and the liability and the cost of the liability. 05:29:24.249 --> 05:29:29.249 And this day both scared me at times and made me worry more. 05:29:29.691 --> 05:29:33.241 But these big brains, your big brains, 05:29:33.241 --> 05:29:37.741 have given me some solace that we're going to make it, 05:29:38.853 --> 05:29:39.924 and we're going to get through this, 05:29:39.924 --> 05:29:43.066 and we're going to lead the, not only the country, 05:29:43.066 --> 05:29:45.467 but the world in doing so. 05:29:45.467 --> 05:29:48.745 I want to thank again, the energy division 05:29:48.745 --> 05:29:52.114 and Professor Borenstein, thank you for saying 05:29:52.114 --> 05:29:54.089 that you have been recommending everyone read 05:29:54.089 --> 05:29:58.725 the white paper and that you think it's just great. 05:29:58.725 --> 05:30:01.522 Let's all tweak that and share it more. 05:30:01.522 --> 05:30:04.658 But it's a lot of work and we so appreciate 05:30:04.658 --> 05:30:08.684 what Ed and his team have been able to do. 05:30:08.684 --> 05:30:10.182 Thank you all for your time, 05:30:10.182 --> 05:30:13.916 your very valuable time, and what you gave to us today. 05:30:13.916 --> 05:30:16.215 There's so much that we can work from here. 05:30:16.215 --> 05:30:20.029 And I dare say that we can work all together on. 05:30:20.029 --> 05:30:22.029 So Commissioner Shiroma, 05:30:22.893 --> 05:30:24.992 thank you for giving me that little, 05:30:24.992 --> 05:30:26.763 that I didn't plan on it. 05:30:26.763 --> 05:30:27.915 So thank you. 05:30:27.915 --> 05:30:30.381 And I look forward to your comments as well, of course, 05:30:30.381 --> 05:30:32.422 the public comments. 05:30:32.422 --> 05:30:33.442 [Commissioner Shiroma] Thank you. 05:30:33.442 --> 05:30:35.058 Thank you, President Batjer. 05:30:35.058 --> 05:30:39.009 Indeed, we heard today that we should expect rates 05:30:39.009 --> 05:30:42.774 to continue to rise over the next 10 years, 05:30:42.774 --> 05:30:46.768 and that this threatens one of our most basic tenants, 05:30:46.768 --> 05:30:51.768 to provide Californians with affordable utility service. 05:30:52.099 --> 05:30:56.936 We also heard ideas from utilities, rate payer advocates, 05:30:56.936 --> 05:31:00.936 and academia on how to combat the rise in rates. 05:31:02.631 --> 05:31:07.631 It was very impactful to hear how essential affordability is 05:31:11.702 --> 05:31:15.768 to California achieving our climate change goals, 05:31:15.768 --> 05:31:20.452 and the impact of energy burden on California today. 05:31:20.452 --> 05:31:24.436 Also that there are some innovative opportunities out there 05:31:24.436 --> 05:31:26.724 to reduce utility costs, 05:31:26.724 --> 05:31:30.052 and it needs to take a step back and reassess business 05:31:30.052 --> 05:31:32.860 as usual to harness these savings, 05:31:32.860 --> 05:31:37.809 these potential savings for customers and rate payers. 05:31:37.809 --> 05:31:41.479 It was also very helpful to see how dollars spent 05:31:41.479 --> 05:31:44.266 on utility bill go back into 05:31:44.266 --> 05:31:47.266 the pockets of California customers. 05:31:48.179 --> 05:31:52.096 The larger economic analysis of the investments 05:31:55.143 --> 05:31:58.893 coming back to provide for lifting all of us. 05:32:00.306 --> 05:32:02.748 But in the meantime, we need to be strategic 05:32:02.748 --> 05:32:03.894 to ensure that living wages 05:32:03.894 --> 05:32:07.586 and appropriate workforce training get to the people 05:32:07.586 --> 05:32:10.319 who need it and who are ready to participate 05:32:10.319 --> 05:32:14.314 in the next phase of our clean economy. 05:32:14.314 --> 05:32:16.086 And finally here at the Commission, 05:32:16.086 --> 05:32:17.880 we are deep in the nuts and bolts, 05:32:17.880 --> 05:32:19.482 as you can tell from the discussion today 05:32:19.482 --> 05:32:21.286 and all the questions. 05:32:21.286 --> 05:32:24.267 Even the nuts and bolts of leveraging rate payer dollars 05:32:24.267 --> 05:32:26.161 to fund climate change initiatives, 05:32:26.161 --> 05:32:29.531 but there are opportunities to think about 05:32:29.531 --> 05:32:33.293 outside of the box on how we fund programs, 05:32:33.293 --> 05:32:35.342 whether it's wildfire mitigation, 05:32:35.342 --> 05:32:39.200 transportation electrification, and so forth. 05:32:39.200 --> 05:32:43.694 It's really up to the community gathered here today 05:32:43.694 --> 05:32:48.090 to consider what we've heard, and ultimately to take action. 05:32:48.090 --> 05:32:52.673 The CPUC will certainly be looking to lead this effort, 05:32:54.383 --> 05:32:58.439 but we need the support and collaboration of everyone 05:32:58.439 --> 05:33:02.691 gathered here today, the legislature, our sister agencies, 05:33:02.691 --> 05:33:05.483 the utilities, the stakeholder community, 05:33:05.483 --> 05:33:07.483 the advocates, academia. 05:33:08.693 --> 05:33:10.776 Again on the white paper, 05:33:11.970 --> 05:33:14.303 comments are being gathered, 05:33:15.406 --> 05:33:18.692 with the deadline set of March 19th. 05:33:18.692 --> 05:33:22.275 Please email them to CostsEnBanc, one word, 05:33:23.256 --> 05:33:25.256 CostsEnBanc@cpuc.ca.gov. 05:33:26.726 --> 05:33:29.244 That will be on our website. 05:33:29.244 --> 05:33:33.289 I'll have every state, that together we can mitigate these 05:33:33.289 --> 05:33:37.982 troubling rate and cost trends, and ensure that all of us, 05:33:37.982 --> 05:33:39.989 all of us in California, 05:33:39.989 --> 05:33:42.444 and as a model to the rest of the nation, 05:33:42.444 --> 05:33:45.688 that we will continue to have access to safe, clean, 05:33:45.688 --> 05:33:48.738 and affordable utility services and infrastructures. 05:33:48.738 --> 05:33:52.252 It really goes to the very quality of life 05:33:52.252 --> 05:33:53.790 that we depend on. 05:33:53.790 --> 05:33:56.110 And I do want to thank this team again, 05:33:56.110 --> 05:33:57.840 and we will be going to public comment shortly, 05:33:57.840 --> 05:34:01.271 but I'll thank the team again that made this event happen. 05:34:01.271 --> 05:34:05.569 Paul Phillips, Ankit Jain, Bridget Sieren-Smith, 05:34:05.569 --> 05:34:08.819 Franz Cheng, David Zizmor, Simon Baker, 05:34:09.985 --> 05:34:13.696 Dorothy Duda, Mary Claire Brown, and Leuwam Tesfai. 05:34:13.696 --> 05:34:17.272 Hard to overstate how much work goes into pulling this off, 05:34:17.272 --> 05:34:22.272 from the white paper to soliciting all of you on the panel, 05:34:22.636 --> 05:34:25.277 you do this with a little sweat equity, 05:34:25.277 --> 05:34:28.291 and to really make a difference for our day today. 05:34:28.291 --> 05:34:30.063 Put in tremendous effort. 05:34:30.063 --> 05:34:31.573 Thank you so much. 05:34:31.573 --> 05:34:33.653 Back to Mary Claire. 05:34:33.653 --> 05:34:36.410 And we will be hearing from folks who have queued up 05:34:36.410 --> 05:34:39.397 to provide public comment. 05:34:39.397 --> 05:34:40.230 Thank you. 05:34:41.562 --> 05:34:44.557 Great thank you, Commissioner Shiroma. 05:34:44.557 --> 05:34:47.651 We will now open the floor to public comment. 05:34:47.651 --> 05:34:51.651 So to comment, again, dial +1 800-857-1917, 05:34:53.437 --> 05:34:54.937 passcode 5180519#. 05:34:58.384 --> 05:35:03.384 Those numbers are on our webpage and on the slide here. 05:35:03.757 --> 05:35:06.497 Once you're dialed in, press star one on your keypad 05:35:06.497 --> 05:35:09.920 to connect with our operator, who will put you in the queue. 05:35:09.920 --> 05:35:12.875 If you wish to cancel press star two. 05:35:12.875 --> 05:35:15.947 Commentors will have two minutes to speak, 05:35:15.947 --> 05:35:19.424 and you'll hear a chime when your time is up. 05:35:19.424 --> 05:35:22.347 We are only able to accept public, 05:35:22.347 --> 05:35:24.216 chime just like that, 05:35:24.216 --> 05:35:27.835 we're only able to accept comments from the public, 05:35:27.835 --> 05:35:28.961 not questions. 05:35:28.961 --> 05:35:31.615 So please do not pose questions to the dais 05:35:31.615 --> 05:35:33.032 or the panelists. 05:35:34.451 --> 05:35:36.183 And please note that we have created 05:35:36.183 --> 05:35:39.657 a dedicated email inbox, it was mentioned earlier, 05:35:39.657 --> 05:35:43.224 to receive informal written comments on today's event. 05:35:43.224 --> 05:35:45.658 So if we reach the end of our allotted time 05:35:45.658 --> 05:35:47.977 before we're able to reach you in the queue, 05:35:47.977 --> 05:35:50.474 or if you would just prefer to submit written comment, 05:35:50.474 --> 05:35:52.366 you can email those at any time 05:35:52.366 --> 05:35:54.616 to CostsEnBanc@cpuc.ca.gov. 05:35:56.853 --> 05:35:58.890 Comments on the white paper that you would like 05:35:58.890 --> 05:36:01.551 energy division staff to take into account 05:36:01.551 --> 05:36:06.468 when revising the paper, should be submitted by March 19th. 05:36:07.439 --> 05:36:09.675 And that email address is listed here on the slide 05:36:09.675 --> 05:36:12.342 and also on the En Banc webpage. 05:36:13.223 --> 05:36:17.628 And we are going to have a soft cutoff for comments at 4:45, 05:36:17.628 --> 05:36:20.603 and if we still have, if we have people in the queue 05:36:20.603 --> 05:36:23.020 at 4:45, we'll go until five. 05:36:24.049 --> 05:36:27.311 But at five we do lose the line. 05:36:27.311 --> 05:36:28.144 All right, operator, 05:36:28.144 --> 05:36:31.492 will you please announce the first speaker? 05:36:31.492 --> 05:36:33.576 The public comment line is now open. 05:36:33.576 --> 05:36:36.493 Our first speaker is Claire Broome. 05:36:39.965 --> 05:36:43.548 Good afternoon, can you hear me? 05:36:45.208 --> 05:36:47.904 Yes, we can hear you. 05:36:47.904 --> 05:36:50.587 Wonderful, thank you so much. 05:36:50.587 --> 05:36:54.670 This has been a wonderful and idea inspiring day. 05:36:55.544 --> 05:36:59.841 I'm Claire Broome, I am a professor of public health 05:36:59.841 --> 05:37:03.841 at Emory University and a California rate payer. 05:37:05.158 --> 05:37:09.067 I really appreciated the focus on transmission 05:37:09.067 --> 05:37:13.067 as a substantial and accelerating part of costs. 05:37:14.700 --> 05:37:19.700 I was surprised no one mentioned the recent LA Times study 05:37:20.177 --> 05:37:23.260 or the Times report on the new model, 05:37:24.820 --> 05:37:28.832 showing that achieving our clean energy goals 05:37:28.832 --> 05:37:32.249 for the country using local clean energy, 05:37:34.437 --> 05:37:36.298 including behind the meter, 05:37:36.298 --> 05:37:40.381 but also local generation and storage, would say. 05:37:42.527 --> 05:37:44.860 (crosstalk) 05:37:46.895 --> 05:37:50.728 The amount of savings there comes largely from 05:37:51.969 --> 05:37:53.753 avoided transmission. 05:37:53.753 --> 05:37:56.516 So it fits with what we're hearing today. 05:37:56.516 --> 05:37:59.726 My three comments are, there are three very concrete ways 05:37:59.726 --> 05:38:04.216 current California policy does not encourage 05:38:04.216 --> 05:38:07.179 local clean energy generation. 05:38:07.179 --> 05:38:11.596 Specifically, we are not providing a resiliency value 05:38:12.532 --> 05:38:17.532 to either behind the meter or in front of the meter 05:38:17.603 --> 05:38:20.169 storage and generation. 05:38:20.169 --> 05:38:24.169 Secondly, our reference system portfolio created 05:38:25.327 --> 05:38:29.650 in the integrated resource planning proceedings 05:38:29.650 --> 05:38:32.567 does not even let the models select 05:38:34.032 --> 05:38:36.559 in front of the meter clean energy. 05:38:36.559 --> 05:38:39.336 The options are behind the meter PV 05:38:39.336 --> 05:38:42.404 or utility scale in the desert, 05:38:42.404 --> 05:38:45.838 which of course requires transmission. 05:38:45.838 --> 05:38:48.666 This oversight needs to be corrected. 05:38:48.666 --> 05:38:50.714 Finally, we mentioned the TAC, 05:38:50.714 --> 05:38:55.010 and that was wonderful to recognize how important this is, 05:38:55.010 --> 05:38:57.402 the transmission access charge, 05:38:57.402 --> 05:39:02.152 but the way it is currently built charges the same amount 05:39:04.154 --> 05:39:06.630 if the energy is generated locally, 05:39:06.630 --> 05:39:10.910 or if the energy is generated in the desert. 05:39:10.910 --> 05:39:12.242 That's crazy. 05:39:12.242 --> 05:39:16.659 We are basically disincentivizing local clean energy, 05:39:18.897 --> 05:39:22.292 which could help us meet our affordability 05:39:22.292 --> 05:39:24.542 and our clean energy goals. 05:39:25.463 --> 05:39:29.546 So I hope the Commissioners and CAISO and the CEC 05:39:32.839 --> 05:39:36.729 will pay attention to removing the barriers. 05:39:36.729 --> 05:39:40.460 And I think actually this very much fits with the point 05:39:40.460 --> 05:39:43.247 that Anthony was making about clean, 05:39:43.247 --> 05:39:45.713 decentralized energy systems. 05:39:45.713 --> 05:39:47.380 Thank you very much. 05:39:53.509 --> 05:39:56.422 Thank you, Claire. 05:39:56.422 --> 05:39:58.589 Our next speaker is Tammy. 05:40:00.413 --> 05:40:03.120 Hi, how are you guys today? 05:40:03.120 --> 05:40:04.870 Can you hear me okay? 05:40:06.300 --> 05:40:07.545 Yes, thank you. 05:40:07.545 --> 05:40:10.914 Okay, I'm actually my issue I'm calling about 05:40:10.914 --> 05:40:11.822 is a little different, 05:40:11.822 --> 05:40:13.848 but it has to do with rates and pricing. 05:40:13.848 --> 05:40:16.741 I am an opt-out meter customer, 05:40:16.741 --> 05:40:19.236 and because I'm an opt-out meter customer, 05:40:19.236 --> 05:40:21.379 I'm charged extra each month, 05:40:21.379 --> 05:40:25.380 though they only read my meter every other month. 05:40:25.380 --> 05:40:29.324 So on the month they read my meter, my bill is accurate, 05:40:29.324 --> 05:40:31.413 but on the following month, they guess, 05:40:31.413 --> 05:40:33.715 and they just guess at a basic rate. 05:40:33.715 --> 05:40:37.340 So for instance, one bill, my meter that they read, 05:40:37.340 --> 05:40:39.962 was my bill is 300 some dollars. 05:40:39.962 --> 05:40:42.884 The following month, they only charged me $69, 05:40:42.884 --> 05:40:45.059 which I knew could not be a good guess. 05:40:45.059 --> 05:40:46.669 So because of that, the following month, 05:40:46.669 --> 05:40:49.293 my bill was 600 and something dollars. 05:40:49.293 --> 05:40:53.712 So what's happening is everything above what they charge, 05:40:53.712 --> 05:40:56.063 like so they estimate all of the kilowatts 05:40:56.063 --> 05:40:59.422 that I use above that, go to my next bill. 05:40:59.422 --> 05:41:02.687 So it makes my next bill look like I've used so much energy 05:41:02.687 --> 05:41:05.745 that it tends to put me in second and third tier. 05:41:05.745 --> 05:41:07.106 So I'm paying more for that energy, 05:41:07.106 --> 05:41:10.768 even though I actually used it in the month before. 05:41:10.768 --> 05:41:15.262 I contacted So Cal Edison, who is my electric company, 05:41:15.262 --> 05:41:19.500 and was told that they can't read the meter every month, 05:41:19.500 --> 05:41:20.946 and that that's the way they have to do it 05:41:20.946 --> 05:41:25.696 because there was a mandate from you guys, from the CPUC, 05:41:26.541 --> 05:41:28.493 stating that, and I was told that they would love 05:41:28.493 --> 05:41:30.421 to be able to read the meter every month 05:41:30.421 --> 05:41:32.677 because they're getting a lot of calls like me, 05:41:32.677 --> 05:41:34.830 from people who their bill is just way off 05:41:34.830 --> 05:41:37.659 and it's causing them to pay more each time 05:41:37.659 --> 05:41:40.102 on the non-reading month. 05:41:40.102 --> 05:41:42.892 So yeah, I'm asking, just reaching out to ask that 05:41:42.892 --> 05:41:45.083 if you could change that mandate and make it possible 05:41:45.083 --> 05:41:49.159 for the utility companies to actually read the meter 05:41:49.159 --> 05:41:51.604 so that those of us that are on the opt-out 05:41:51.604 --> 05:41:54.881 aren't being penalized for having the opt-out meter. 05:41:54.881 --> 05:41:56.653 And I've tried the smart meter, 05:41:56.653 --> 05:41:59.156 so that's not an option for me because once I got it, 05:41:59.156 --> 05:42:00.673 I started getting massive headaches 05:42:00.673 --> 05:42:03.221 as well as my two daughters did. 05:42:03.221 --> 05:42:06.260 So we had to have it removed within a week. 05:42:06.260 --> 05:42:08.189 So I have tried that option. 05:42:08.189 --> 05:42:10.473 But yeah, just reaching out to see 05:42:10.473 --> 05:42:12.633 if you could consider changing that mandate, 05:42:12.633 --> 05:42:14.692 and making it to where the utility companies 05:42:14.692 --> 05:42:18.468 can actually read the opt-out meters every month. 05:42:18.468 --> 05:42:20.254 So just wanted to put that out there 05:42:20.254 --> 05:42:23.128 and just request that that be something maybe you consider 05:42:23.128 --> 05:42:25.487 or take up or can change. 05:42:25.487 --> 05:42:27.640 And I appreciate your time. 05:42:27.640 --> 05:42:29.473 And operator before we go on, 05:42:29.473 --> 05:42:34.473 if I can encourage this caller to go to the CPUC website 05:42:34.826 --> 05:42:37.435 and reach out to our customer affairs bureau, 05:42:37.435 --> 05:42:40.198 and give specific information. 05:42:40.198 --> 05:42:42.631 And we're happy to look in this 05:42:42.631 --> 05:42:45.306 and see what we can do to resolve the problem. 05:42:45.306 --> 05:42:47.236 Okay, so I did send an email. 05:42:47.236 --> 05:42:49.890 I was told to send an email and I'd have to be, I'm sorry, 05:42:49.890 --> 05:42:50.824 I'm not at home in front of my computer 05:42:50.824 --> 05:42:51.843 to know exactly to who, 05:42:51.843 --> 05:42:56.706 but you said look for the customer care department? 05:42:56.706 --> 05:42:58.567 Yeah, customer affairs bureau, 05:42:58.567 --> 05:43:02.982 and then more appropriate to have a separate conversation. 05:43:02.982 --> 05:43:04.386 So if we can get your contact information, 05:43:04.386 --> 05:43:07.490 we can reach out to your public advisor's offices, sorry. 05:43:07.490 --> 05:43:08.323 Right, yeah. 05:43:08.323 --> 05:43:09.606 I'm happy to leave my information. 05:43:09.606 --> 05:43:10.750 Conversation with you. 05:43:10.750 --> 05:43:11.583 Yeah okay, thank you. 05:43:11.583 --> 05:43:12.448 That'd be great. 05:43:12.448 --> 05:43:15.259 Thank you so much, have a beautiful day. 05:43:15.259 --> 05:43:17.029 Thank you, Tammy. 05:43:17.029 --> 05:43:20.696 Lauren Rosenberger-Hider, your line is open. 05:43:23.050 --> 05:43:25.657 Hello, you hear me? 05:43:25.657 --> 05:43:26.490 Hear me? 05:43:28.731 --> 05:43:30.357 You hear me now? 05:43:30.357 --> 05:43:34.103 Yeah, please increase the benefits of net energy metering 05:43:34.103 --> 05:43:37.839 with incentive for homeowners providing electric 05:43:37.839 --> 05:43:40.105 during times of high demand. 05:43:40.105 --> 05:43:43.310 And there is a large supply of used lithium car batteries, 05:43:43.310 --> 05:43:46.150 but I wish some expert would help the homeowner 05:43:46.150 --> 05:43:49.367 actually incorporate that into their house. 05:43:49.367 --> 05:43:52.264 We use lithium car batteries. 05:43:52.264 --> 05:43:55.514 Or their own car for storage of energy. 05:43:57.593 --> 05:44:00.676 And at the same time, give incentives 05:44:01.546 --> 05:44:04.985 for disadvantaged communities and low-income people 05:44:04.985 --> 05:44:08.075 and disabled people because they're the ones that kind of 05:44:08.075 --> 05:44:11.195 really need the air filters, and they're running off 05:44:11.195 --> 05:44:13.921 their electric, and the water purifiers the most, 05:44:13.921 --> 05:44:16.686 and they have more of a need for electric. 05:44:16.686 --> 05:44:19.318 But also give incentives for those who 05:44:19.318 --> 05:44:20.544 just turn off their electric 05:44:20.544 --> 05:44:22.926 when they know when the demand is high, 05:44:22.926 --> 05:44:26.509 and actually save money and put that money, 05:44:27.695 --> 05:44:31.695 save money toward to getting something electric, 05:44:32.581 --> 05:44:34.358 electric equipment for their home 05:44:34.358 --> 05:44:36.858 and improving their home with. 05:44:38.758 --> 05:44:42.946 Actually net energy metering benefits will conserve 05:44:42.946 --> 05:44:47.288 natural resources and avoid the social cost of carbon, 05:44:47.288 --> 05:44:49.575 and expenses like uranium in people's hair 05:44:49.575 --> 05:44:52.726 after Aliso Canyon blew increasing the cancer rates 05:44:52.726 --> 05:44:55.962 and emergency room visits in Culver City, 05:44:55.962 --> 05:44:58.634 larger than usual number of asthma cases 05:44:58.634 --> 05:45:00.734 every time the oil wells leak, 05:45:00.734 --> 05:45:05.734 and the high radioactive scale, high reading radioactivity 05:45:05.860 --> 05:45:10.493 and the scale on oil and gas pipes that can harm workers. 05:45:10.493 --> 05:45:12.477 But the benefits of rooftop solar 05:45:12.477 --> 05:45:15.774 is also closer to where electricity is used, 05:45:15.774 --> 05:45:18.510 and there will be less transmission cost, 05:45:18.510 --> 05:45:20.260 saving the TAC funds. 05:45:22.267 --> 05:45:25.342 Also the solar panels for electric vehicle charging stations 05:45:25.342 --> 05:45:27.527 should be positioned along the highways, 05:45:27.527 --> 05:45:28.857 then people can charge their cars 05:45:28.857 --> 05:45:31.440 during power outages elsewhere. 05:45:32.695 --> 05:45:36.648 And also I liked your fire prevention technology, 05:45:36.648 --> 05:45:40.898 new technologies, to make it do a better job at it. 05:45:42.565 --> 05:45:44.698 And there'd be less fires due to climate change too, 05:45:44.698 --> 05:45:47.385 with mid-energy metering. 05:45:47.385 --> 05:45:49.052 Thank you very much. 05:45:56.640 --> 05:45:57.473 Thank you. 05:45:57.473 --> 05:45:59.986 And our next speaker is Michael Alcantar, 05:45:59.986 --> 05:46:01.486 your line is open. 05:46:03.042 --> 05:46:03.875 I believe that's Alcantar, 05:46:03.875 --> 05:46:05.429 which many of you know, 05:46:05.429 --> 05:46:08.562 I've represented a number of industrial customers 05:46:08.562 --> 05:46:11.433 before the Commission for decades. 05:46:11.433 --> 05:46:13.778 I'm going to try and fit into my two minutes 05:46:13.778 --> 05:46:15.015 as much as I can, 05:46:15.015 --> 05:46:18.364 but this is such a broad topic and such an important topic. 05:46:18.364 --> 05:46:21.319 I wanted to try and touch it well. 05:46:21.319 --> 05:46:24.594 Western State Petroleum Associates, who I represent, 05:46:24.594 --> 05:46:28.421 operate a number of critical infrastructure facilities 05:46:28.421 --> 05:46:30.908 and operations throughout the state. 05:46:30.908 --> 05:46:33.850 And it is both a supplier and a major consumer 05:46:33.850 --> 05:46:37.125 of natural gas and electric generation services. 05:46:37.125 --> 05:46:39.499 We sought but we were denied a panel position 05:46:39.499 --> 05:46:41.908 for this En Banc, which disappointing, 05:46:41.908 --> 05:46:45.408 but we understand given the range of views 05:46:46.279 --> 05:46:48.631 that you wanted to hear, 05:46:48.631 --> 05:46:50.721 there were limitations necessary. 05:46:50.721 --> 05:46:52.966 We will provide written comments to address 05:46:52.966 --> 05:46:55.806 some of these issues that are of concern, 05:46:55.806 --> 05:46:57.734 but I wanted to make a few key observations 05:46:57.734 --> 05:47:00.235 to the Commission at this point in time. 05:47:00.235 --> 05:47:02.013 While the white paper is I think, 05:47:02.013 --> 05:47:06.932 properly lauded within its alley of work, if you will, 05:47:06.932 --> 05:47:08.325 and it's a most informative tool 05:47:08.325 --> 05:47:10.750 for residential customer interests, 05:47:10.750 --> 05:47:13.611 there is a missing aspect in the scope. 05:47:13.611 --> 05:47:16.135 It doesn't address the affordability and costs 05:47:16.135 --> 05:47:17.902 for all rate payers, 05:47:17.902 --> 05:47:21.169 and the implications of elections by commercial 05:47:21.169 --> 05:47:23.668 and industrial customers who can make 05:47:23.668 --> 05:47:28.241 alternative energy choices, can be profoundly negative 05:47:28.241 --> 05:47:30.632 for residential and other customers 05:47:30.632 --> 05:47:33.344 who don't have alternative choices. 05:47:33.344 --> 05:47:36.142 Alarms are being sounded by this new report 05:47:36.142 --> 05:47:39.142 from Severin's group at UC Berkeley, 05:47:41.178 --> 05:47:43.916 noting that the affordability of California electricity 05:47:43.916 --> 05:47:47.877 natural gas is a current and expanding crisis 05:47:47.877 --> 05:47:50.195 that will impact the capacity 05:47:50.195 --> 05:47:54.014 to meet emission reduction goals by the state. 05:47:54.014 --> 05:47:58.006 The legislative report that's to come from this white paper 05:47:58.006 --> 05:48:01.741 should not be limited solely to residential focus. 05:48:01.741 --> 05:48:06.574 It needs to be not isolated from all rate class interests. 05:48:07.671 --> 05:48:12.221 When you look at the most recent data submitted by 05:48:12.221 --> 05:48:15.346 the Energy Information Administration, 05:48:15.346 --> 05:48:20.151 there is a almost 50% of the utility revenues 05:48:20.151 --> 05:48:23.917 provided in California through 2019, 05:48:23.917 --> 05:48:26.349 come from commercial and industrial customers. 05:48:26.349 --> 05:48:29.511 If those customers continue to decline 05:48:29.511 --> 05:48:32.678 at the same deep, steep loss of words, 05:48:33.753 --> 05:48:36.540 there will be negative implications for others. 05:48:36.540 --> 05:48:38.132 We're going to seek and will seek, 05:48:38.132 --> 05:48:40.700 and I know the Commission seeks and shares the view 05:48:40.700 --> 05:48:42.494 that there are three objectives here 05:48:42.494 --> 05:48:46.097 we're all trying to reach, optimizing our reduction 05:48:46.097 --> 05:48:48.656 in emissions, dealing with costs 05:48:48.656 --> 05:48:52.504 to make things affordable, and have a reliable grid. 05:48:52.504 --> 05:48:56.737 We're failing to get all of those three competing principles 05:48:56.737 --> 05:48:59.542 successfully accomplished. 05:48:59.542 --> 05:49:04.375 And thank you for the opportunity to speak with you today. 05:49:08.324 --> 05:49:09.157 Thank you. 05:49:09.157 --> 05:49:12.240 And our next speaker is Bruce Vaegle, 05:49:13.105 --> 05:49:15.132 your line is open. 05:49:15.132 --> 05:49:18.215 Thank you, can you hear me? 05:49:20.214 --> 05:49:24.529 I assume that's a yes, that was kind of noisy. 05:49:24.529 --> 05:49:25.985 Yes, we can hear you. 05:49:25.985 --> 05:49:27.212 Okay great, thank you. 05:49:27.212 --> 05:49:30.663 I want to thank you for this very comprehensive look 05:49:30.663 --> 05:49:34.163 at the situation and the utilities market. 05:49:35.226 --> 05:49:38.492 And I especially want to thank you for mentioning 05:49:38.492 --> 05:49:41.365 at least a number of times, the low-income challenge 05:49:41.365 --> 05:49:43.837 that we're facing and how do we address that? 05:49:43.837 --> 05:49:46.406 I don't think we came up with any answers today, 05:49:46.406 --> 05:49:47.466 but we at least have people 05:49:47.466 --> 05:49:48.703 that are trying to think about it. 05:49:48.703 --> 05:49:51.564 It's a great concern to me that when we move people 05:49:51.564 --> 05:49:53.363 to renewable energy, 05:49:53.363 --> 05:49:55.517 we need to be able to do it in a way that 05:49:55.517 --> 05:49:58.283 does not cost them more because if that happens, 05:49:58.283 --> 05:49:59.198 they won't change. 05:49:59.198 --> 05:50:03.418 And if we don't get the people who are on gas, 05:50:03.418 --> 05:50:05.918 moving towards electricity for those 05:50:05.918 --> 05:50:10.034 who will be able to do that, gas prices will go very high 05:50:10.034 --> 05:50:13.117 and we'll be at a great disadvantage. 05:50:14.434 --> 05:50:17.876 I wanted to also comment about the fact that there is a 05:50:17.876 --> 05:50:20.589 piece of this that really didn't get mentioned today. 05:50:20.589 --> 05:50:23.024 And Michael Colvin, who is one of your speakers, 05:50:23.024 --> 05:50:24.784 is an expert on part of this, 05:50:24.784 --> 05:50:27.175 and another person is Greg Harris, 05:50:27.175 --> 05:50:29.193 and that's the cost of transition. 05:50:29.193 --> 05:50:32.872 And the cost of transition imply involves things like 05:50:32.872 --> 05:50:35.539 the actual cost of the equipment 05:50:36.543 --> 05:50:38.529 that will no longer be useful. 05:50:38.529 --> 05:50:40.859 And there's a human cost that Greg Harris goes through 05:50:40.859 --> 05:50:43.618 in his white paper that explains 05:50:43.618 --> 05:50:46.154 the fact that we have to find new jobs for people. 05:50:46.154 --> 05:50:50.404 And this became especially true, as I was at a time 05:50:53.069 --> 05:50:54.844 where that specific issue was mentioned. 05:50:54.844 --> 05:50:59.049 So I think it becomes important that we start to think about 05:50:59.049 --> 05:51:01.848 more of the pieces that are outside of what you guys did 05:51:01.848 --> 05:51:05.444 as part of a holistic view of this. 05:51:05.444 --> 05:51:09.047 I think the view on TAC is important. 05:51:09.047 --> 05:51:12.103 And the other part that was implied, 05:51:12.103 --> 05:51:15.428 but not stated is, it affects reliability. 05:51:15.428 --> 05:51:18.397 If we build more micro grids, we'll be in a better position, 05:51:18.397 --> 05:51:22.730 (cuts out) services up and running, 05:51:23.726 --> 05:51:25.918 and that's an important issue for us. 05:51:25.918 --> 05:51:28.918 Thank you for the good presentations 05:51:31.446 --> 05:51:34.113 that you guys have put on today. 05:51:38.337 --> 05:51:39.470 Thank you, Mr. Bruce Vaegle. 05:51:39.470 --> 05:51:43.553 And our next speaker is Mohit, your line is open. 05:51:45.462 --> 05:51:46.858 Good afternoon, I'm Mohit. 05:51:46.858 --> 05:51:47.989 I'm a senior scientist with 05:51:47.989 --> 05:51:50.737 the Natural Resources Defense Council. 05:51:50.737 --> 05:51:54.562 Thank you for having this timely conversation. 05:51:54.562 --> 05:51:56.839 Clean electricity must have remain affordable 05:51:56.839 --> 05:52:00.041 in absolute terms and relative to other fuels, 05:52:00.041 --> 05:52:02.237 to equitably decarbonize the economy. 05:52:02.237 --> 05:52:04.535 And I want to focus my comments on two things. 05:52:04.535 --> 05:52:07.001 First is the need to make prudent investments. 05:52:07.001 --> 05:52:10.132 And the second is the policy evolution necessary. 05:52:10.132 --> 05:52:14.092 Both of them were somewhat touched upon by the speakers. 05:52:14.092 --> 05:52:18.738 Prudent investments, including beneficial EV demand response 05:52:18.738 --> 05:52:20.526 and investments in electrification that cause 05:52:20.526 --> 05:52:25.123 incremental uptake, reduce bills and rates for rate payers. 05:52:25.123 --> 05:52:27.796 And prudent investments also means taking a look at 05:52:27.796 --> 05:52:30.583 existing investments, like net energy metering, 05:52:30.583 --> 05:52:34.583 that need to evolve to meet, to better equitably 05:52:35.552 --> 05:52:38.244 help meet climate goals. 05:52:38.244 --> 05:52:41.115 In evolving policy, I'd like to reiterate 05:52:41.115 --> 05:52:44.143 the importance of co-funding policy climate policy goals, 05:52:44.143 --> 05:52:45.565 where possible. 05:52:45.565 --> 05:52:48.301 Electricity really is the engine for decarbonization, 05:52:48.301 --> 05:52:50.852 and we can't make it unaffordable. 05:52:50.852 --> 05:52:55.240 One good example is the federal tax credits for renewables. 05:52:55.240 --> 05:52:59.835 That's a good example of co-funding climate policy goals. 05:52:59.835 --> 05:53:02.705 Agree with the need to evolve rate design 05:53:02.705 --> 05:53:06.302 and some of Professor Borenstein's great work. 05:53:06.302 --> 05:53:09.098 Also would like to remind everybody that 05:53:09.098 --> 05:53:11.535 such change needs to be managed carefully 05:53:11.535 --> 05:53:14.406 through policy action, to make sure that all customers, 05:53:14.406 --> 05:53:16.556 especially vulnerable customers, 05:53:16.556 --> 05:53:18.329 have the ability to make the most 05:53:18.329 --> 05:53:21.851 out of the evolving tariffs, through customer education 05:53:21.851 --> 05:53:24.482 and programs and working with those customers 05:53:24.482 --> 05:53:27.902 to make sure they can avail of those. 05:53:27.902 --> 05:53:32.220 Finally, understanding how we can take advantage of 05:53:32.220 --> 05:53:35.123 why the grid integration to lower costs for everybody 05:53:35.123 --> 05:53:37.357 is another thing that should be considered. 05:53:37.357 --> 05:53:40.269 Thank you for giving me the chance to speak. 05:53:40.269 --> 05:53:42.703 California doesn't have a choice, it has to do both, 05:53:42.703 --> 05:53:45.730 need as clean climate goals, and do so affordably, 05:53:45.730 --> 05:53:47.028 and we need to prioritize investments 05:53:47.028 --> 05:53:49.055 in vulnerable communities while doing so. 05:53:49.055 --> 05:53:49.888 Thank you. 05:53:52.139 --> 05:53:54.378 Thank you, Mr. Mohit. 05:53:54.378 --> 05:53:57.417 Our next speaker is Dr. Hari Lamba, 05:53:57.417 --> 05:53:58.917 your line is open. 05:54:03.400 --> 05:54:04.918 Hello? 05:54:04.918 --> 05:54:06.251 Can you hear me? 05:54:08.267 --> 05:54:09.100 Hello? 05:54:10.607 --> 05:54:11.940 Can you hear me? 05:54:13.467 --> 05:54:16.816 Yeah, we can hear you. 05:54:16.816 --> 05:54:20.983 I am a resident of East Richmond Heights, 05:54:21.932 --> 05:54:26.388 and I'm an author of a recent book on climate change, 05:54:26.388 --> 05:54:27.895 called "Brighter Climate Futures, 05:54:27.895 --> 05:54:32.478 A Global Energy, Climate and Ecosystem Transformation." 05:54:33.447 --> 05:54:36.114 And it's still this white paper, 05:54:38.659 --> 05:54:43.576 I read significant parts of it, it's an excellent document. 05:54:44.880 --> 05:54:49.131 The points that I wanted to make were as follows, 05:54:49.131 --> 05:54:52.381 that we are at a stage where federally, 05:54:55.565 --> 05:54:59.976 we are finally getting support for decarbonization 05:54:59.976 --> 05:55:01.546 and the clean energy and things, 05:55:01.546 --> 05:55:02.659 so we should be taking advantage 05:55:02.659 --> 05:55:05.159 of all of those opportunities. 05:55:06.694 --> 05:55:10.293 We need to be proceeding with a total decarbonization 05:55:10.293 --> 05:55:14.762 of each, of electrical energy by replacing all 05:55:14.762 --> 05:55:18.840 the fossil fuel power plants we have with renewable energy. 05:55:18.840 --> 05:55:23.181 And I have proposed solar plus battery plus hydrogen 05:55:23.181 --> 05:55:25.014 power plants for that. 05:55:26.499 --> 05:55:29.857 And locate it as close to the original natural gas 05:55:29.857 --> 05:55:31.857 power plant as possible. 05:55:32.796 --> 05:55:37.340 As we electrify everything that we can electrify, 05:55:37.340 --> 05:55:40.341 we need the additional energy to be produced 05:55:40.341 --> 05:55:43.502 in the same work, but all of this energy should be 05:55:43.502 --> 05:55:44.991 as distributed as possible, 05:55:44.991 --> 05:55:47.932 so as to reduce the chance for 05:55:47.932 --> 05:55:50.449 the transmission excess charges, 05:55:50.449 --> 05:55:52.238 so that those don't get out of control, 05:55:52.238 --> 05:55:54.120 and those are. 05:55:54.120 --> 05:55:58.953 We should make any effort to encourage distributed energy. 05:56:00.041 --> 05:56:03.348 So the NEM process really needs to be strengthened. 05:56:03.348 --> 05:56:06.931 Any weakening of NEM is going to be hitting 05:56:10.066 --> 05:56:13.974 renewable energy development and its needs. 05:56:13.974 --> 05:56:16.927 And then as the point, which Ms. Broom, 05:56:16.927 --> 05:56:18.020 Claire Broome pointed out, 05:56:18.020 --> 05:56:22.020 we need to be encouraging in front of the meter, 05:56:23.667 --> 05:56:26.500 that's good power generation also. 05:56:31.635 --> 05:56:36.530 I just wanted to add that aspect of energy democracy 05:56:36.530 --> 05:56:39.920 needs to be there so that as solar energy, as you know, 05:56:39.920 --> 05:56:42.920 it's just a cost fuel, we need to be 05:56:45.900 --> 05:56:49.145 so energy democracy makes plenty of opportunities available 05:56:49.145 --> 05:56:52.493 for disadvantaged communities, for businesses, 05:56:52.493 --> 05:56:57.243 for local energy businesses, and for congenital benefits. 05:56:58.980 --> 05:57:03.980 And we are to consider alternative models for utilities, 05:57:04.302 --> 05:57:05.810 such as municipal utilities, 05:57:05.810 --> 05:57:09.227 or even follow marketing administrations. 05:57:10.722 --> 05:57:12.833 But my other key message would be please 05:57:12.833 --> 05:57:15.631 let's strengthen them and not weaken it. 05:57:15.631 --> 05:57:16.464 Thank you. 05:57:18.607 --> 05:57:20.696 Thank you, Dr. Lamba. 05:57:20.696 --> 05:57:23.279 Our next speaker is Ed Snowoff. 05:57:26.240 --> 05:57:27.779 Greetings everyone. 05:57:27.779 --> 05:57:31.612 I wanted to really congratulate the organizers 05:57:33.625 --> 05:57:38.625 of this En Banc discussion for the wonderful information 05:57:38.829 --> 05:57:41.967 that was provided, particularly from the final panel, 05:57:41.967 --> 05:57:44.627 which was very thought provoking. 05:57:44.627 --> 05:57:48.945 I also commend the Commission and the Commission staff 05:57:48.945 --> 05:57:51.275 for the excellent white paper. 05:57:51.275 --> 05:57:55.240 When I read the white paper, I was drawn to figure 38 05:57:55.240 --> 05:58:00.240 on page 77, which I think makes two really important points. 05:58:01.560 --> 05:58:06.268 One point is that we really do need to think holistically 05:58:06.268 --> 05:58:11.215 about energy across sectors, electricity, natural gas, 05:58:11.215 --> 05:58:12.482 and gasoline. 05:58:12.482 --> 05:58:16.781 That's the burden of those combined uses of energy 05:58:16.781 --> 05:58:20.679 is the burden that Californians have with energy. 05:58:20.679 --> 05:58:25.505 And the white paper shows that we can reduce that burden 05:58:25.505 --> 05:58:28.529 significantly through electrification, 05:58:28.529 --> 05:58:31.962 by moving away from gasoline and natural gas, 05:58:31.962 --> 05:58:35.130 to use electricity for buildings and transportation. 05:58:35.130 --> 05:58:39.497 In fact, it shows that we can save on a monthly basis, 05:58:39.497 --> 05:58:43.247 about $128 per month for a customer who lives 05:58:44.333 --> 05:58:47.166 in a hotter climate in California. 05:58:48.224 --> 05:58:51.780 The other point that this table points out is 05:58:51.780 --> 05:58:56.530 that the difference between a 46 million metric tons 05:58:56.530 --> 05:59:00.407 resource portfolio, and a 38 million metric tons 05:59:00.407 --> 05:59:02.832 resource portfolio is diminimous. 05:59:02.832 --> 05:59:06.409 In 2030, the difference is $9 a month. 05:59:06.409 --> 05:59:10.709 So we really do need to promote electrification. 05:59:10.709 --> 05:59:12.852 That's going to require the procurement 05:59:12.852 --> 05:59:16.096 of an enormous amount of new electricity. 05:59:16.096 --> 05:59:19.789 Your procurement plans has seven gigawatts to 10 gigawatts 05:59:19.789 --> 05:59:21.796 just to replace the Diablo Canyon 05:59:21.796 --> 05:59:24.233 and the ones through cooling plants. 05:59:24.233 --> 05:59:26.656 So we to begin to do that. 05:59:26.656 --> 05:59:30.900 To do that, we're going to need to invest in transmission. 05:59:30.900 --> 05:59:33.603 Transmission is going to need to be firm 05:59:33.603 --> 05:59:37.213 to deliver the electrification centers. 05:59:37.213 --> 05:59:39.073 And I will point out one new idea 05:59:39.073 --> 05:59:42.131 because we do need to lower the cost of transmission. 05:59:42.131 --> 05:59:44.554 President Biden and the federal administration 05:59:44.554 --> 05:59:46.832 is considering an infrastructure bill. 05:59:46.832 --> 05:59:51.832 And one idea would be to extend the investment tax credit, 05:59:52.258 --> 05:59:55.448 which now applies to renewable technologies, 05:59:55.448 --> 05:59:58.641 to high voltage transmission projects 05:59:58.641 --> 06:00:01.199 that are needed to deliver that electricity. 06:00:01.199 --> 06:00:03.092 Thank you, and I really appreciate 06:00:03.092 --> 06:00:05.759 the opportunity to speak to you. 06:00:07.663 --> 06:00:09.433 Thank you, Mr. Snowoff. 06:00:09.433 --> 06:00:13.100 Our next speaker is Jose Trinidad-Castanera. 06:00:14.913 --> 06:00:17.565 Good afternoon chair, Commissioners, and panelists. 06:00:17.565 --> 06:00:19.728 My name is Jose Trinidad-Castanera. 06:00:19.728 --> 06:00:21.417 I am the Orange County policy manager 06:00:21.417 --> 06:00:23.413 with the Climate Action Campaign, 06:00:23.413 --> 06:00:26.323 and our mission is to stop the climate crisis. 06:00:26.323 --> 06:00:29.192 So very briefly, my comments today are regarding 06:00:29.192 --> 06:00:31.649 the content of the white paper. 06:00:31.649 --> 06:00:35.239 From what I understand the CPUC's narrative 06:00:35.239 --> 06:00:39.203 and framing of DER is that residential and commercial 06:00:39.203 --> 06:00:43.289 rooftop solar plus battery storage is the problem, 06:00:43.289 --> 06:00:45.727 and not part of the solution to addressing the need 06:00:45.727 --> 06:00:49.394 for climate resilience and equitable sustainability. 06:00:49.394 --> 06:00:52.963 And as we all know, the frequency and severity of wildfires 06:00:52.963 --> 06:00:56.052 changes in atmospheric river behaviors, Santa Ana winds. 06:00:56.052 --> 06:00:59.098 Other climate changes are huge risks to the long-term 06:00:59.098 --> 06:01:03.133 maintenance of investor owned utility poles and wires. 06:01:03.133 --> 06:01:06.107 And we at Climate Action Campaign know that in order to stop 06:01:06.107 --> 06:01:08.645 the climate crisis in an equitable way, 06:01:08.645 --> 06:01:12.722 we need the CPUC to take greater efforts in local power 06:01:12.722 --> 06:01:16.228 and net energy metering, in addition to utility scale 06:01:16.228 --> 06:01:19.950 plus long distance transmission lines. 06:01:19.950 --> 06:01:22.698 These are not mutually exclusive for boosting 06:01:22.698 --> 06:01:25.461 the cost savings we need as rate payers. 06:01:25.461 --> 06:01:27.865 And just to share a quick story about my community, 06:01:27.865 --> 06:01:30.028 which we're talking about equity. 06:01:30.028 --> 06:01:33.445 This is my community we're talking about. 06:01:34.542 --> 06:01:36.237 Our homes were built in the 50s, 06:01:36.237 --> 06:01:40.367 and we have few functioning streetlights. 06:01:40.367 --> 06:01:43.142 We are in the 95th percentile 06:01:43.142 --> 06:01:45.384 of environmentally burdened communities. 06:01:45.384 --> 06:01:47.514 And last year and the year before that, 06:01:47.514 --> 06:01:51.069 we've had so many blackouts that I lost count. 06:01:51.069 --> 06:01:53.334 Vulnerable neighbors are asking me what they can do, 06:01:53.334 --> 06:01:57.584 and I know that the only way is really if they have 06:01:58.920 --> 06:02:01.366 rooftop solar plus battery storage. 06:02:01.366 --> 06:02:03.168 And so I'll end with the fact that 06:02:03.168 --> 06:02:06.176 at the Public Policy Institute of California 06:02:06.176 --> 06:02:07.800 at their conference last year, 06:02:07.800 --> 06:02:10.783 Governor Gavin Newsom said it best, 06:02:10.783 --> 06:02:14.800 we must invest in more local solar plus battery storage. 06:02:14.800 --> 06:02:16.300 Thank you so much. 06:02:20.420 --> 06:02:22.364 Thank you, Mr. Castanera. 06:02:22.364 --> 06:02:25.447 And our next speaker is Ben Schwartz. 06:02:28.498 --> 06:02:30.485 Hi, my name is Ben Schwartz. 06:02:30.485 --> 06:02:33.127 I'm the policy manager for the Clean Coalition. 06:02:33.127 --> 06:02:36.210 And I just wanted to take a moment to thank everyone 06:02:36.210 --> 06:02:38.185 who contributed to the white paper, 06:02:38.185 --> 06:02:43.153 and then to expand a little bit about what Claire Broom 06:02:43.153 --> 06:02:46.754 mentioned on transmission access charges. 06:02:46.754 --> 06:02:49.373 One of the most important things we can do for 06:02:49.373 --> 06:02:53.206 net energy metering and, well properly valuing 06:02:54.361 --> 06:02:57.793 infrastructure, is to ensure that the resources we use 06:02:57.793 --> 06:03:01.070 are valued properly, and there's not a cost shift. 06:03:01.070 --> 06:03:04.056 And the way that transmission access charges, 06:03:04.056 --> 06:03:06.949 which were mentioned today are currently assessed, 06:03:06.949 --> 06:03:10.578 does create a cost shift to the tune of about 3 cents 06:03:10.578 --> 06:03:12.078 per kilowatt hour. 06:03:13.173 --> 06:03:15.506 And so properly valuing that 06:03:16.619 --> 06:03:21.173 will increase the value of DER's, and ensure that 06:03:21.173 --> 06:03:24.116 people who have rooftop solar 06:03:24.116 --> 06:03:26.206 are not paying more than they need to, 06:03:26.206 --> 06:03:28.143 to develop and deploy that. 06:03:28.143 --> 06:03:28.976 Thank you. 06:03:37.625 --> 06:03:39.642 Mary Claire, there are no more speakers 06:03:39.642 --> 06:03:42.725 in the public comment telephone line. 06:03:44.931 --> 06:03:47.562 Great, thank you so much. 06:03:47.562 --> 06:03:49.759 So that brings us to the end of our agenda. 06:03:49.759 --> 06:03:51.659 And before I let you all go, 06:03:51.659 --> 06:03:53.854 I just want to do a final thank you 06:03:53.854 --> 06:03:57.453 to everyone who was involved in organizing today's events. 06:03:57.453 --> 06:04:00.032 There were so many people, but I really, 06:04:00.032 --> 06:04:01.977 I want to make sure to highlight a few people's 06:04:01.977 --> 06:04:05.981 contributions, David Zizmor, Franz Cheng, 06:04:05.981 --> 06:04:08.529 Robert Stanford, and Joe Haga, 06:04:08.529 --> 06:04:11.430 they have been working tirelessly behind the scenes 06:04:11.430 --> 06:04:14.581 to organize this very complicated event, 06:04:14.581 --> 06:04:17.673 and they have pulled it off with flying colors, 06:04:17.673 --> 06:04:19.906 and really just not thank them enough. 06:04:19.906 --> 06:04:20.989 So thank you. 06:04:22.215 --> 06:04:25.382 And with that, our agenda is finished. 06:04:26.469 --> 06:04:29.967 And I hope you all have heard a lot 06:04:29.967 --> 06:04:33.262 to give you food for thought, and have a great evening. 06:04:33.262 --> 06:04:34.095 Thank you. 06:04:36.601 --> 06:04:37.434 Thank you. 06:04:37.434 --> 06:04:39.085 That does conclude today's conference. 06:04:39.085 --> 06:04:40.946 We appreciate your participation. 06:04:40.946 --> 06:04:42.863 And you may disconnect.