WEBVTT

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(mid-tempo music)

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<v Operator>Welcome
to the California Public</v>

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Utilities Commission on this day,

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Wednesday, February 24th, 2021.

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This is the En Banc meeting

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of the California Public
Utilities Commission.

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Mary Claire Brown, you may begin.

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<v ->Thank you.</v>

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Good morning, everyone,

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and welcome to the California
Public Utilities Commission's

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En Banc hearing on
electric costs and rates.

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Can we afford the future?

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My name is Mary Claire
Brown, or MC, and coincidentally,

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I will be your emcee for today.

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I'm an interim energy advisor
to our new Commissioner,

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Darcie Houck, and until very recently,

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I was an advisor to
Commissioner Shiroma.

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We have a really great
agenda planned today,

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a very packed agenda.

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So I'm just gonna briefly
cover some housekeeping items,

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and then I'll hand it
over to President Batjer

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to kick off opening remarks.

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So all the materials for this En Banc,

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including the agenda,
slides, and the white paper,

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are available on the
CPUC En Banc web page.

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So for those watching
the webcast online,

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you can find the link to
that webpage right below

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the video window.

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And for the virtual dais members,

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I'll put a link to that in the chat.

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The structure of the day, we'll
begin with opening remarks.

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Then energy division staff
will present on the white paper

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that was released last week.

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Then we'll have three panel discussions

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with our panels of experts,

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one in the morning
and two in the afternoon,

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followed by closing remarks
from Commissioner Shiroma.

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And then we will have half
an hour for public comments.

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So during the panel sessions,

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only members of the virtual dais

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will be able to ask
questions of the panelists.

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So we will not be taking
questions from the public

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during that time.

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After the last panel and
after closing remarks,

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we will have half an
hour for public comments,

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that will likely start at 4:15 PM,

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and you'll be able to call in

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and we'll provide more
directions about how to do that

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closer to the end of the day.

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We've also created a dedicated
email inbox for this event,

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and members of the public can submit

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informal written comments
to that inbox at any time.

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The email address is
costenbanc@cpuc.ca.gov.

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And you can also find
that address on the agenda

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and our event webpage,

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and the webcast webpage
that you're watching now.

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And the last thing I'll say is
this event is being recorded

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and will be available
for viewing afterwards

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on the CPUC webpage.

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So with that, I'll hand it
over to President Batjer

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to begin our opening remarks.

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<v ->Thanks very much Mary Claire,</v>

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and good morning everyone.

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And thank you all for joining us today

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for the energy rates and costs En Banc.

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I would like to especially
thank my colleagues

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for joining me on the virtual dais

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for this important discussion.

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(mumbles), Mr. Chairman,

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Assemblymember Holden, Mr. Chairman,

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from the California Energy Commission,

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Chairman Hochschild,

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Commissioners Douglas,
Gunda, McAllister, Monahan,

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and the executive director Bohan,

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from the Cal ISO, chair
Galiteva, vice chair Bhagwat,

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Board members,
Borenstein, Leslie, Schori,

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and CEO Mainzer.

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From the California
Natural Resources Agency,

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deputy secretary of
energy, Matthew Baker.

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Thank you all very much.

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Oh, I'm so sorry, wait a minute.

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It's my fellow Commissioners,
Commissioner Rechtschaffen,

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Commissioner Guzman Aceves, (cuts out)

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Commissioner Houck.

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Thank you all.

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We begin this work
because we understand that

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meeting our state decarbonization
and electrification goals

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will depend on
maintaining electricity rates

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that are affordable for customers.

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We are working to move our
state's climate goals forward.

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We want to take a strong
look at the potential rate

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implications as we move
forward with these policies.

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The white paper prepared
for today's En Banc

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by the talented energy division team,

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found that some of
the concerns regarding

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rate crash pressures from our ambitious

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and critical policy goals
may not be as acute

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as some had feared,

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though, there are still
very real rate pressures.

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As the white paper shows,
energy spending in households

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more sensitive to rate
increases is forecasted to rise

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faster than inflation
over the next decade,

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which is a very troubling finding

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that we will explore further today.

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The common mandate
across our agencies is to ensure

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Californians are served
by reliable electric grid,

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and that over time it is decarbonized

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at the rate needed to reach
our clean energy goals,

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and at a cost that
Californians can afford.

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Policies to mitigate climate change,

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while we are also in
the midst of experiencing

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and adapting to the
effects of climate change.

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Last week, the country
experienced yet another

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extreme weather related disaster.

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Our thoughts continue to
be with those who endured

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the impacts and suffer the personal loss

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due to the blackouts.

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As the situation in Texas,

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and the experience here
in California last summer

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have shown us, we must prepare the grid

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for more frequent and
extreme weather events.

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A changing climate means
that the level of reliability

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that we require for the power system

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will likely come at an
increasingly higher cost,

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which will be one more factor putting

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pressures on our rates.

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Here's the CPUC in our
climate adaptation proceeding.

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We are ensuring that the
utilities plan for climate change

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in a way that protects the
more vulnerable populations.

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Let me also be clear,

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California is not
combating climate change

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to the detriment of
affordability and reliability.

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The real and much more
important conversation

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is happening here today.

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That is, how do we as a state,

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continue with our essential
decarbonization work,

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while ensuring that the
communities who are more sensitive

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to rate increase are
not unduly burdened.

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Many of these communities
have historically shouldered

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a disproportionate impact of
pollution from power generation

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and who are now feeling
the effects of COVID-19

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more severely than the
other parts of our state.

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Increasing bills by a
few dollars a month

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each year may be absorbable
for some in the state,

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but for others, continued rate increases

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during challenging
moments in their lives

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could lead to undesired
sacrifices within a home,

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and a breakdown in confidence

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in the shared efforts
of our organization.

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And as our work at the
CPUC's affordability proceeding

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has shown, many households
are spending a larger and larger

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proportion of their annual
income on energy bills.

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But may we must also
recognize that there will not be

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a particular cost
metric that will trigger

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so-called rate payer shock or revolt.

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Rather, it will likely be caused
by an environment and mood

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we failed to see coming
and fail to respond to.

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Today's En Banc and
the work leading up to it,

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demonstrates that the CPUC's awareness

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of these potential conditions
and our readiness to respond.

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To me, this is the main
takeaway from the white paper.

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The CPUC must continue
promoting more equitable outcomes

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in our decision-making.

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I am very much looking
forward to the conversation today

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on potential options
to address the trends

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and the impact the energy
division has so well articulated

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in the white paper.

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My hope is that the conversation
today will be a catalyst,

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additional efforts that will
catalyze the additional efforts

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that continue to contribute
to our focus on equity

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as a central tenant in the PUC

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and all of us moves forward.

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Thank you all very much.

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I look forward to the
participation of all of you today,

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and I thank the public
who has joined us.

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Thank you.

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Mary Claire?

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<v ->Thank you, President Batjer.</v>

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Commissioner Shiroma, are you ready?

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<v ->Yes, thank you.</v>

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Thank you, MC.

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Thank you, President Batjer.

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And a very warm welcome to
all of our distinguished guests

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and colleagues here on the dais.

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As I look through the virtual dais,

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seems we have the who's
who of energy in California

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with us today.

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Thank you to the public who
are taking time out of their day

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to spend it with us.

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I'll keep my remarks brief
because we have a lot

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of great content to plan for today.

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As many of you read in the white paper,

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which is out for public
comment until March 19th,

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Pacific Gas and Electric
and San Diego Gas

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electric rates have
increased at more than twice

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the rate of inflation since 2013,

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and all three electric utilities rates

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are expected to continue
increasing faster than inflation

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over the next 10 years.

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We'll hear today about
the impact of these

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anticipated rising rates on some of our

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most vulnerable customers,

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for customers who are below the 200%

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of federal poverty limit.

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We do have in place CARE, which is the

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California Alternative
Rates for Energy program.

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It is the nation's most
generous bill discount program,

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which offers a 35%
discount on energy bills.

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However, this only partially mitigates

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the impact of rising rates,
and for customers who make

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just above the federal
poverty limits, these rising

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electric rates are going
to hit them the hardest.

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This underlines one of my key
takeaways in the white paper,

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and that is, we as a Commission,

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cannot continue to
approve larger and larger

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revenue requirements while
relying on programs like CARE

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to shield customers from the worst.

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We must make adjustments
to slow the increase

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in utility revenue
requirements for all customers.

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And many of these
adjustments need to come from

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Commission itself.

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We need to do a
better job of considering

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the cumulative impact
of the rate increases

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we approve in individual proceedings,

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and we need to be
diligent in ensuring that

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when we approve new spending,

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it is only for programs where
we have strong evidence

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that the benefits will
outweigh the cost.

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We need utilities to
be our partners in this,

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and aggressively look
for cost cutting measures.

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And I'm very much looking
forward to hearing their ideas

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in a panel after lunch.

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Lastly, we need
support and collaboration

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of the legislature, our sister agencies

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to assist us in this endeavor,

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as many of our programs
are legislatively mandated

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or related to the purview
of other agencies.

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I'm thrilled that we have all
of these STH representatives

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on the dais with us this morning.

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And before I turn this
microphone back to our emcee,

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Mary Claire, I want to
take a moment to thank

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the many CPUC staff
who've made this day possible,

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Paul Phillips, Ankit
Jain, Alireza Eshraghi,

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Simon Hurd, Julia Ende,
Bridget Sieren-Smith,

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Josh Huneycutt, and a
number of other position staff

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who've been working
tirelessly these past months

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on the white paper.

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And thank you to Franz
Cheng, David Zizmor,

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Joe Haga, and Robert
Stanford for handling the planning

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and logistics of this very
complicated event today.

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It's truly been a Herculean task,

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and I thank them for the great work

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in a very short period of time.

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And I'll now turn the
microphone back to Mary Claire.

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Thank you.

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<v ->Thank you,
Commissioner Shiroma.</v>

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Assemblymember Chris Holden,

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are you ready to give
some opening remarks?

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<v ->I am.</v>

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Good morning everyone.

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And thank you, President
Batjer, Commissioners

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for inviting me to be a
part of the meeting today.

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Let me just thank you
for discussing a topic

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that is of great importance to me.

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And that is how we
ensure our energy future

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is not only cleaner and
safer, but still affordable.

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Our committee held a hearing
around this time last year

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to discuss rates and affordability,

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which remains critical, and
critical importance to me.

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I appreciate the
Commission's raising the topic

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and I recognize solutions
to rate affordability

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is a tight rope we must walk.

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There's not a matter of whether or not

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we can afford the future,

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we can't afford to do nothing.

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Climate change is the reality,

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and we are bearing our
response to the changing climate

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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
<v ->Thank you, Assemblymember.</v>

00:17:19.507 --> 00:17:22.007
Next we have Senator Ben Bezo.

00:17:23.831 --> 00:17:25.464
<v ->Hello, good morning, everybody.</v>

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
<v ->Thank you Senator.</v>

00:23:10.859 --> 00:23:14.276
Next we have CEC
chair, David Hochschild.

00:23:16.201 --> 00:23:17.317
<v ->Good morning friends.</v>

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
<v ->Thank you.</v>

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
<v ->Good morning, everybody.</v>

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
<v ->Thank you, Mr. Mainzer.</v>

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
<v ->Yeah, that's the
first snafu of the day.</v>

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
<v ->Everyone.</v>

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&amp;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&amp;E to SDG&amp;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&amp;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&amp;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&amp;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&amp;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&amp;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&amp;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
<v Nathan>Thanks very much, Paul.</v>

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&amp;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&amp;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
<v Elaine>Thank you, Nathan.</v>

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&amp;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&amp;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&amp;M, and A&amp;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
<v ->This is Paul Phillips.</v>

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
<v ->Great, thanks Paul.</v>

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
<v ->This is, I apologize.</v>

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
<v Mary Claire>Of course.</v>

01:11:25.157 --> 01:11:26.020
<v ->Okay, thank you.</v>

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
<v ->For sure, this is
Nathan, great question.</v>

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
<v ->[Commissioner
Shiroma] Thank you,</v>

01:12:37.753 --> 01:12:41.336
we'll look forward to
that future analysis.

01:12:42.495 --> 01:12:45.038
<v Paul>Okay I'm gonna
call on Severin Borenstein,</v>

01:12:45.038 --> 01:12:46.705
who has his hand up.

01:12:48.378 --> 01:12:51.244
<v Severin>Thanks, can you hear me?</v>

01:12:51.244 --> 01:12:52.484
<v Paul>Sure can.</v>

01:12:52.484 --> 01:12:54.147
<v ->Okay, great.</v>

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
<v ->That's a good question.</v>

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
<v ->This is our Ari
Gold-Parker from E3.</v>

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
<v ->Okay, I would just say
those are certainly not</v>

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
<v ->Yes.</v>

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&amp;E

01:16:09.683 --> 01:16:11.183
and SDG&amp;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
<v ->Okay just to be clear though,</v>

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
<v ->Assuming efficient
heat pump, HVAC,</v>

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
<v ->But that's not at all
consistent with our calculations,</v>

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&amp;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
<v ->So I'm gonna let Simon
Hurd, who's my PG&amp;E person</v>

01:17:54.800 --> 01:17:56.550
answer that question.

01:17:57.559 --> 01:17:58.451
<v ->That's a great question.</v>

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&amp;E.

01:18:14.926 --> 01:18:19.370
PG&amp;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&amp;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
<v Severin>So just to be clear,</v>

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&amp;E.

01:19:22.924 --> 01:19:24.091
Is that right?

01:19:25.221 --> 01:19:28.807
<v ->Yes, those TAC numbers are
actually the high voltage TAC.</v>

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&amp;E's low voltage,
anything under 200 KV

01:19:54.881 --> 01:19:59.881
in transmission system,
that stays in PG&amp;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&amp;E's revenue
requirement is low voltage.

01:20:22.365 --> 01:20:26.075
It stays being billed to
folks in PG&amp;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
<v ->That's incredibly helpful.</v>

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
<v ->It certainly makes sense,
it certainly makes sense,</v>

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
<v ->Thank you.</v>

01:22:16.242 --> 01:22:17.592
<v Simon>Thank you.</v>

01:22:17.592 --> 01:22:19.133
<v ->This is Paul Phillips,
just jumping in here</v>

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
<v ->Okay, thank you.</v>

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
<v ->That's a good question.</v>

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
<v ->So the CPUC advocates
at FERC for these rates,</v>

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
<v ->Thank you.</v>

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
<v ->And Mary Claire, just this
is Commissioner Douglas,</v>

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
<v ->Great, well, I don't see
any other raised hands,</v>

01:26:02.329 --> 01:26:04.169
so why don't you go ahead.

01:26:04.169 --> 01:26:05.872
<v ->[Commissioner
Douglas] Thank you.</v>

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
<v ->So, the first question
really is to answer that</v>

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
<v ->[Commissioner Douglas]
Just to understand that.</v>

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
<v ->That's projected.</v>

01:27:39.111 --> 01:27:41.390
<v ->This is Simon Hurd.</v>

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
<v ->This is Ed Randolph
to build on that.</v>

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
<v ->[Commissioner Douglas]
That makes a lot of sense to me.</v>

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
<v ->And that can definitely
be a factor if you go back</v>

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
<v ->[Commissioner Douglas]
Yeah, that's really helpful.</v>

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
<v ->Some insight.</v>

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
<v ->[Commissioner
Douglas] Okay, thank you.</v>

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
<v ->Simply put, the
self approved projects</v>

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
<v ->So just to add,
there is no dollar limit.</v>

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
<v ->Hi, this is MC, I'm
so sorry to cut in here.</v>

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
<v ->Absolutely, thank
you, Mary Claire.</v>

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
<v ->Thank you, Dorothy.</v>

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&amp;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&amp;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&amp;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&amp;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
<v Dorothy>I'm just
gonna break in line.</v>

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
<v Mike>Oh my goodness, I
even did a readthrough.</v>

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&amp;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&amp;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
<v Dorothy>Now, Mike.</v>

01:51:16.008 --> 01:51:18.078
How many can you wrap up?

01:51:18.078 --> 01:51:20.064
<v Mike>I think I can
actually wrap up there.</v>

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
<v ->Thank you, Mike.</v>

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
<v ->Wonderful, good
morning, everyone.</v>

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
<v ->Thank you so much, Mad.</v>

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
<v ->Oh thank you, Dorothy,
and members of the dais,</v>

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
<v Dorothy>Right, can we get
Michael's slides pulled up?</v>

02:03:39.651 --> 02:03:40.984
Oh, there we go.

02:03:43.321 --> 02:03:45.061
<v ->While we are doing that,</v>

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
<v Dorothy>Michael, I'm
just gonna break in</v>

02:10:46.785 --> 02:10:48.495
with a time check.

02:10:48.495 --> 02:10:50.267
<v Michael>I've gotten
the last up in this slide,</v>

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
<v ->Thank you, Michael.</v>

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
<v ->Thank you, Dorothy.</v>

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&amp;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
<v Dorothy>And David,
just to ask you to wrap up</v>

02:24:15.246 --> 02:24:16.556
if you can.

02:24:16.556 --> 02:24:18.351
<v David>This is my last slide.</v>

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
<v ->Thank you so much,
Professor Rapsom.</v>

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
<v ->Yes, thank you.</v>

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
<v ->Well, thank you so
much for the question,</v>

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
<v ->Great, thank you.</v>

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
<v Dorothy>We can
try, you're asking for.</v>

02:33:36.243 --> 02:33:37.947
<v ->Well, I can ask my
question whether or not</v>

02:33:37.947 --> 02:33:38.780
we go back to that.

02:33:38.780 --> 02:33:41.170
<v Dorothy>Well one of the
slides from David Rapson,</v>

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
<v ->Shocking number, I gotta say.</v>

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
<v ->Yes, that's right.</v>

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
<v ->I'm a little confused
about the 15 to 25,000,</v>

02:35:01.113 --> 02:35:03.254
where did that come from?

02:35:03.254 --> 02:35:07.171
<v ->So we estimated the
sensitivity of EV demands</v>

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
<v ->Yeah, I mean, it
looks like according to</v>

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
<v ->Well, I think there are
a few different marks.</v>

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
<v ->I hate to cut you off
Commissioner Monahan.</v>

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
<v ->Well, first I just want
the record to reflect that</v>

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
<v Mike>Mad, I think you were first.</v>

02:40:07.899 --> 02:40:09.898
<v ->Sorry, phone computer.</v>

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
<v Dorothy>And let me
let Mike Campbell</v>

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
<v ->Yeah, I'll save the two hour
answer for a different day.</v>

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
<v ->Thank you, Mike.</v>

02:44:13.266 --> 02:44:14.514
<v ->Thank you, Mike.</v>

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
<v ->Great, thank you
so much, Dorothy,</v>

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
<v ->Thank you, MC.</v>

02:45:22.145 --> 02:45:24.635
<v ->Great (mumbles) put
me on speaker view.</v>

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
<v ->Thank you, Mary Claire.</v>

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&amp;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
<v ->Good afternoon.</v>

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&amp;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
<v Leuwam>Two minutes left.</v>

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
<v Robert>Thank you.</v>

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
<v ->Thank you.</v>

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
<v ->Thank you, Leuwam.</v>

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
<v ->Thank you, Carla.</v>

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&amp;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&amp;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
<v ->Well, thank you very much.</v>

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&amp;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&amp;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&amp;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&amp;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
<v Leuwam>Two minutes
left, two minutes left.</v>

03:09:03.972 --> 03:09:05.793
<v Scott>Because of the
success of efficiency</v>

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&amp;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&amp;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&amp;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
<v ->Thank you, Scott.</v>

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&amp;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
<v ->Thank you.</v>

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
<v ->Great, thank you Jennifer.</v>

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
<v ->Yeah, thank you.</v>

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
<v Leuwam>You have about
two minutes, Betony.</v>

03:21:23.053 --> 03:21:26.600
<v Betony>Thank you, of those
household spending patterns.</v>

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
<v Leuwam>And if you
could wrap up, Betony,</v>

03:23:07.004 --> 03:23:08.776
you're at time.

03:23:08.776 --> 03:23:10.547
<v Betony>I'm finished, thanks.</v>

03:23:10.547 --> 03:23:13.109
<v ->Perfect, thank you.</v>

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
<v ->Great, thanks Leuwam.</v>

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
<v Leuwam>Rick, you
have two minutes.</v>

03:27:26.175 --> 03:27:27.425
<v Rick>Great.</v>

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&amp;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
<v Leuwam>And you're at time,
so please try and wrap it up.</v>

03:29:34.423 --> 03:29:35.256
Thank you, Rick.

03:29:35.256 --> 03:29:37.368
<v Rick>Sure, I'll just leave
you with this last slide,</v>

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
<v ->Very good.</v>

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
<v ->It is from earlier,
I'm sorry about that.</v>

03:30:41.546 --> 03:30:43.477
I'll take it down now.

03:30:43.477 --> 03:30:45.598
<v ->Not a problem.</v>

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
<v ->I'm happy to defer to others</v>

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
<v ->I was going to say,
let's have Robert start.</v>

03:31:43.975 --> 03:31:45.226
<v ->Sure, thank you
for the question.</v>

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
<v Leuwam>Thank you.</v>

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
<v ->Duly noted.</v>

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
<v Leuwam>Thank you.</v>

03:34:43.939 --> 03:34:46.816
Scott, can you provide a
response on that for SDG&amp;E?

03:34:46.816 --> 03:34:47.649
Thank you.

03:34:47.649 --> 03:34:50.386
<v ->Thanks for the
question, Commissioner.</v>

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&amp;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&amp;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
<v ->Great, thank you, Scott.</v>

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
<v ->Thank you everyone,</v>

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
<v ->Thanks Commissioner.</v>

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
<v ->Yeah, if I understood
the question correctly,</v>

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
<v ->Yes, thank you.</v>

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
<v ->Thank you, Leuwam.</v>

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
<v ->And I want to maybe send
that over to Robert Kenney.</v>

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
<v ->Commissioner,
thanks for the question,</v>

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
<v ->Begin in FERC proceedings,</v>

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
<v ->Very good, thank you.</v>

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
<v ->Yes, great, thank you.</v>

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
<v ->I'm happy to start off
with just a comment on this.</v>

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
<v ->Thanks, I see that
Jennifer Dowdell's hand is up.</v>

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
<v ->No, I sure did.</v>

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
<v ->Yeah, thank you.</v>

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
<v ->Sorry, thanks.</v>

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
<v ->Thank you.</v>

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
<v ->Thanks.</v>

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
<v ->Great, and Severin, I
think you want us to focus on</v>

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
<v ->Yeah, I mean, I think
this also applies to FERC,</v>

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
<v ->Okay, so for this question,</v>

03:52:07.891 --> 03:52:10.558
I wanted to maybe turn to Carla.

03:52:11.792 --> 03:52:12.625
<v ->Sure.</v>

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
<v ->Hello Carla.</v>

03:52:19.497 --> 03:52:21.268
<v ->So first of all, to your point
about having them (mumbles)</v>

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
<v ->Thanks.</v>

03:53:18.441 --> 03:53:20.395
I wanted to turn to Scott.

03:53:20.395 --> 03:53:22.849
<v ->I'm actually going
to ask Bruce Folkman,</v>

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
<v ->Can you hear me okay?</v>

03:53:33.124 --> 03:53:33.957
<v ->Yes.</v>

03:53:33.957 --> 03:53:35.258
<v ->Thank you, thank you.</v>

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
<v ->Great, thank you.</v>

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
<v ->Yeah, thank you Leuwam.</v>

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
<v ->I'll start off and just say</v>

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
<v ->Thank you.</v>

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
<v ->Yeah, Carla said much
of what I was going to say,</v>

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
<v ->Thank you.</v>

04:01:45.160 --> 04:01:47.293
Do we have a response from SDG&amp;E?

04:01:47.293 --> 04:01:49.377
I see Bruce, please go ahead.

04:01:49.377 --> 04:01:52.037
<v ->Yeah, thank you, Leuwam.</v>

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
<v ->Thank you.</v>

04:03:14.935 --> 04:03:17.381
(crosstalk)

04:03:17.381 --> 04:03:19.501
<v ->One quick nerdy
comment about rate base.</v>

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
<v ->Thank you for that.</v>

04:03:57.234 --> 04:03:58.319
<v ->Thank you.</v>

04:03:58.319 --> 04:03:59.856
<v ->Of course,
Commissioner Shiroma,</v>

04:03:59.856 --> 04:04:02.598
I think you had a question.

04:04:02.598 --> 04:04:03.962
<v ->Yeah, thank you.</v>

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
<v ->Yeah, I wrote a couple papers,</v>

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
<v ->Yeah, thank you.</v>

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
<v ->Earlier, I saw Commissioner
Gunda's hand up,</v>

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
<v ->Yeah, I'm just say, I'm
good, thank you so much.</v>

04:09:05.911 --> 04:09:07.305
<v ->Okay, of course.</v>

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
<v ->Thank you.</v>

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
<v ->Thank you.</v>

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&amp;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
<v ->Yeah, that specific strategy,</v>

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
<v ->Great, thank you.</v>

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
<v ->Great, thank you.</v>

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
<v ->All right, thank
you, Mary Claire.</v>

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
<v ->Thanks Ed.</v>

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&amp;E.

04:18:06.636 --> 04:18:08.084
PG&amp;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&amp;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&amp;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
<v Ed>Severin, two minutes.</v>

04:23:19.924 --> 04:23:23.353
<v Severin>Or as progressive
as the income tax.</v>

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
<v ->Perfect Severin, thank you.</v>

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
<v ->Great, thank you very much, Ed.</v>

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
<v Ed>Two minutes.</v>

04:32:02.210 --> 04:32:04.289
<v Mark>From current rate results.</v>

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
<v ->All right, perfect Mark.</v>

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
<v ->Thanks very much, Ed.</v>

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&amp;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
<v Ed>Michael, I actually got
so enwrapped in your thing,</v>

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
<v ->Done.</v>

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
<v ->Thank you, Michael.</v>

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&amp;T, A&amp;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
<v ->Well, thanks Ed.</v>

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
<v Ed>About two minutes.</v>

04:52:40.375 --> 04:52:41.281
<v Anthony>Perfect.</v>

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
<v ->Thank you, Anthony.</v>

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
<v ->Thank you very much, Ed.</v>

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
<v ->Okay, thank you, Mark.</v>

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
<v ->Thank you Ed, I have a
comment and a question.</v>

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
<v ->Well, no, not
in this structure,</v>

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
<v ->Ed, you're muted
if you're talking.</v>

05:07:40.371 --> 05:07:42.144
<v ->My second error on that today.</v>

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
<v ->I quickly wanted
to touch on what</v>

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
<v ->Other questions from the dais?</v>

05:09:05.506 --> 05:09:07.256
Commissioner Shiroma?

05:09:08.813 --> 05:09:10.553
<v ->Thank you.</v>

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
<v ->What I meant to say is
that it's important to link</v>

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
<v ->Okay, thank you.</v>

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
<v ->Thank you,
Commissioner Shiroma.</v>

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
<v ->All right, thank you.</v>

05:13:36.420 --> 05:13:40.456
I'll relinquish the microphone for now.

05:13:40.456 --> 05:13:41.821
<v ->Thank you, Commissioner.</v>

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
<v ->Thank you.</v>

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
<v ->Well, I don't
mind starting out,</v>

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
<v ->If I could just respond
briefly to the wildfire question.</v>

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
<v ->If I can jump for a second.</v>

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
<v ->I will jump in after that.</v>

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
<v ->Okay, thank you.</v>

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
<v ->Mary Claire, you're muted.</v>

05:27:11.899 --> 05:27:12.847
<v ->Thank you.</v>

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
<v ->[Commissioner Shiroma]
Yes thank you, Mary Claire.</v>

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
<v ->Oh my goodness, Genevieve,</v>

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
<v ->[Commissioner
Shiroma] Thank you.</v>

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
<v ->Great thank you,
Commissioner Shiroma.</v>

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
<v Operator>The public
comment line is now open.</v>

05:36:33.576 --> 05:36:36.493
Our first speaker is Claire Broome.

05:36:39.965 --> 05:36:43.548
<v Claire>Good afternoon,
can you hear me?</v>

05:36:45.208 --> 05:36:47.904
<v Operator>Yes, we can hear you.</v>

05:36:47.904 --> 05:36:50.587
<v Claire>Wonderful,
thank you so much.</v>

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
<v Operator>Thank you, Claire.</v>

05:39:56.422 --> 05:39:58.589
Our next speaker is Tammy.

05:40:00.413 --> 05:40:03.120
<v Tammy>Hi, how are you guys today?</v>

05:40:03.120 --> 05:40:04.870
Can you hear me okay?

05:40:06.300 --> 05:40:07.545
<v Operator>Yes, thank you.</v>

05:40:07.545 --> 05:40:10.914
<v Tammy>Okay, I'm actually
my issue I'm calling about</v>

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
<v ->And operator before we go on,</v>

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
<v Tammy>Okay, so I
did send an email.</v>

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
<v ->Yeah, customer affairs bureau,</v>

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
<v Tammy>Right, yeah.</v>

05:43:08.323 --> 05:43:09.606
I'm happy to leave my information.

05:43:09.606 --> 05:43:10.750
<v ->Conversation with you.</v>

05:43:10.750 --> 05:43:11.583
Yeah okay, thank you.

05:43:11.583 --> 05:43:12.448
<v Tammy>That'd be great.</v>

05:43:12.448 --> 05:43:15.259
Thank you so much, have a beautiful day.

05:43:15.259 --> 05:43:17.029
<v Operator>Thank you, Tammy.</v>

05:43:17.029 --> 05:43:20.696
Lauren Rosenberger-Hider,
your line is open.

05:43:23.050 --> 05:43:25.657
<v Lauren>Hello, you hear me?</v>

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
<v Operator>Thank you.</v>

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
<v Michael>I believe
that's Alcantar,</v>

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
<v Operator>Thank you.</v>

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
<v Bruce>Thank you, can you hear me?</v>

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
<v ->Yes, we can hear you.</v>

05:49:25.985 --> 05:49:27.212
<v Bruce>Okay great, thank you.</v>

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
<v Operator>Thank you,
Mr. Bruce Vaegle.</v>

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
<v Mohit>Good afternoon, I'm Mohit.</v>

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
<v Operator>Thank you, Mr. Mohit.</v>

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
<v Hari>Hello?</v>

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
<v Operator>Yeah, we can hear you.</v>

05:54:16.816 --> 05:54:20.983
<v Hari>I am a resident of
East Richmond Heights,</v>

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
<v Operator>Thank you, Dr. Lamba.</v>

05:57:20.696 --> 05:57:23.279
Our next speaker is Ed Snowoff.

05:57:26.240 --> 05:57:27.779
<v Ed>Greetings everyone.</v>

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
<v Operator>Thank you, Mr. Snowoff.</v>

06:00:09.433 --> 06:00:13.100
Our next speaker is
Jose Trinidad-Castanera.

06:00:14.913 --> 06:00:17.565
<v Jose>Good afternoon chair,
Commissioners, and panelists.</v>

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
<v Operator>Thank
you, Mr. Castanera.</v>

06:02:22.364 --> 06:02:25.447
And our next speaker is Ben Schwartz.

06:02:28.498 --> 06:02:30.485
<v Ben>Hi, my name is Ben Schwartz.</v>

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
<v Operator>Mary Claire,
there are no more speakers</v>

06:03:39.642 --> 06:03:42.725
in the public comment telephone line.

06:03:44.931 --> 06:03:47.562
<v ->Great, thank you so much.</v>

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
<v Operator>Thank you.</v>

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.