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-: Welcome to the California Public Utilities Commission,
2022 Affordability Rulemaking En Banc:
Evaluating innovative proposals for cost containment
and customer protection.
Mr. Chang, you may begin.
-: Thank you.
And thank you for joining
the California Public Utility Commissions
Affordability Rulemaking En Banc.
We are excited about the next two days of discussion,
which will take a close look at innovative proposals
for Canadian containing costs
and protecting customers of both electric and gas service.
This discussion will build on the rates en banc
held by the CPUC about a year ago,
which highlighted more than two dozen electric service
affordability proposals.
We hope the discussion today and tomorrow
stimulates creative ideas about how California
can ensure both electric and gas service
remains affordable for all customers.
The launch En Banc,
it is my honor to introduce signed Commissioner for CPCUs
affordability proceeding Commissioner Darcie Houck.
Thank you, Commission Houck for your leadership
in this En Banc and in this proceeding.
-: Thank you Chang.
Good morning and welcome to today's 2022,
affordability rulemaking En Banc,
where we will be evaluating innovative for proposals
for cost containment and customer protection.
Again, as Jack said, I'm Darcie Houck,
the assigned Commissioner for this proceeding,
which is Rulemaking 1807006.
I wanna recognize and thank
the state agency leaders joining us today.
The honorable Eduardo Garcia,
assembly member and chair of the utilities energy committee.
Chair Liane Randolph, California Air Resources Board.
Our colleagues at the California Energy Commission,
Chair David Hochschild, Vice Chair, Siva Gunda,
Commissioner, Andrew McAllister
and Commissioner Patty Monahan,
all of today's panelists and my fellow Commissioners.
I also wanna thank Energy Division staff
for their excellent work, including today's work together.
This was a team effort,
a special thanks to Paul Phillips and Jack Chang
for turning the vision of this event into a reality.
I also wanna thank Simon Backer for his support
and recommendations on this phase
of the affordability proceeding
and our staff moderators today, Kathleen Yip.
Special, thanks again to Jack
for presenting and moderating today's event.
Grant Mark, Paul Phillips, Achintya Madduri,
Dorothy Duda and James Spencer.
I also wanna thank administrative law, Judge wasaga.
My advisors, Erin Sibert, Christie Chu,
Kathleen Yip, and Eileen Odel,
and of course my chief of staff to make afar in
for all of their work and preparing for this event.
Senate Bill 695 requires CPUC to prepare an annual report
addressing electric and gas cost and rate trends
as well as actions to limit or reduce utility cost.
Last year, CPUC decided to take a different approach
by holding an energy rates and cost Rn Banc.
That effort was led by Commissioner Shiroma
So thank you for getting us started with
what may become an annual En Banc.
The 2021 En Banc focused on the concepts raised
by a PUC-authored white paper.
The discussion at the En Banc last year
and the written public comments
were summarized and included in a final document
that was submitted as the PUC 2021 SB 695 Report.
This year, we take the assessment a step further
as this follow En Banc launches
phase three of our affordability proceeding,
where we will examine proposals presented today
and tomorrow in detail
and conclude the phase later this year
with recommendations to the Commission,
the Governor of the legislature and our sister agencies
on how to address the affordability crisis
that is looming before us.
It is critical that we engage in a dialogue on short
and long term energy affordability metric.
This discussion must include our climate goals,
such as transportation, electrification,
building decarbonization and greening, updating,
and hardening our great infrastructure
to address reliability and safety.
We must evaluate longer term system costs and policy risks.
We have cautioned in last year's SB 695 Report
that have handled incorrectly,
California policy goals
could result in rate and bill increases
that would make our policy goals more difficult to achieve
and could result in overall energy bills
becoming unaffordable for Californian.
Electrification goals and wildfire mitigation planning
are among the near term needs
that create upward pressure on electric and gas rates.
Another regulatory risk that has been identified
in our prior SB 695 Report
is a continuing increase in capital investments
that are recovered in rate
based by investor owned utilities.
While capital investments in decarbonized,
renewable generation, and a cleaner more efficient
greater necessary to meet California's energy
and climate policy goals.
These investments result in higher build for our customers
and create the risk of making energy bills,
becoming unaffordable for Californians.
Electrification goals and,
I apologize, my computer Jack.
So rate players are dealing with inflation,
which has increased the cost of food and other necessities.
On top of these increasing rising costs,
customers have recently seen significant increases
in electric and gas rates
creating further hardship for many customers.
This is evident in the increasing dollar amounts
in customer rearages for and gas bills,
which have worsened during the pandemic.
(indistint) Commission must carefully consider
whether and what rate payers can withstand
regarding further rate increases.
We need to explore innovative methods to help curb increases
and to protect the most vulnerable Californians,
including examining non rate payer funded proposals
for covering costs.
We have many challenges ahead of us this year
and affordability needs to be at the top of that list
along with safety and reliability.
Last year's on bank attendees included academics,
researchers, utilities, consumer advocates,
legislative staff, and other energy stakeholders.
For to today's follow one En Banc,
we have again assembled diverse panels of experts
to consider issues presented
in our affordability proceeding.
I look forward to hearing from the panelists
and speakers today and tomorrow.
And with that, I'll now turn back to Mr. Chang
to introduce my colleagues on the virtual dials
for additional opening comments.
-: Thank you, Commissioner Healthy for your comments.
Now I'd like to introduce CPUC present Alice Reynolds,
to do some welcoming remarks.
President Reynolds.
-: Thank you very much.
Good morning, I am really pleased to be here today
and I wanna thank everyone who made it possible
for us to have this dialogue
echoing Commissioner Houck absolutely deserved thanks
to all of the staff and others
who have contributed to this workshop.
I'm joined today by my colleagues
and fellow Commissioners
to think through innovative approaches
to one of the most central issues
facing the Commission, electric and gas affordability.
We're very fortunate to also be joined
by assembly member Garcia,
chair of the assembly utilities and energy committee.
Welcome chair Garcia,
and thank you for participating in today's discussion.
-: Thank you.
I hope everyone can hear me loud and clear.
Assembly member, Eduado Garcia,
chair of the utilities and energy committee.
It is my pleasure to be here with you today.
And thank you for discussing a topic
that is of extreme importance to all Californians
and say myself, given the area that I represent,
an area that is economically challenged in our state.
Some of our constituents, are listening in right now
and I'd be missed if I didn't recognize
that their interest on this subject, as it is mine,
given the rising costs of just the quality of life
that we all want our Californians to live under.
Things are getting costly.
And sometimes our constituents
and other Californians have to make decisions,
whether it paying the increasing costs of utilities
or for that matter,
making sure that they have the essential goods
that they need.
And that means food and medicine sometimes.
And occasionally, taking precedent is keeping the lights on
for some Californians.
And that's not the decision
or the options that we should be providing are constituents.
While our district is exclusively represented
by publicly owned utility
outside the jurisdiction of this Commission,
we do have some areas that are represented by the IOUs
that many of you get to see
when discussing the issue of rates.
But nevertheless,
I still bring this level of sensitivity to the conversation,
and I really look at things through those lens
as I make policy decisions in the state legislature
now as chair of the assembly committee on utilities,
energy as well,
I'm concerned about rate shocks and costs
that impact all Californians.
So I appreciate the fact that
you're holding this conversation today
and being able to build off of the work
that's happening in the various levels of government,
the agencies, including the legislature.
We know that rising costs
are a symptom also of our climate change activities.
It's unfortunate,
but it's true that we have seen this happen firsthand
in places like our district.
We're reactive in addressing climate change, it's expensive
as we see the rapid deployment of wildfire mitigation
and measures that are coming too late for some.
And if we're proactive in addressing climate change,
it's also expensive,
an early adoption of never before tri-technology
carries risks and often high costs.
So it's damned, if you're doing damned,
if you don't, I guess, is what the we conveying here.
It is our duty though,
to make sure that we can find that balance
and make this effort of affordable for all Californians,
particularly those who're economically challenged,
'cause we cannot eliminate the cost
of addressing climate change
and grid modernization requires a lot of investments.
Are we less this burden?
We must be honest in our assessments and think critically
about listening the burden first
for those that are already overburdened
by this climate crisis.
Like any of those in our district
and other parts of California
that I don't need to highlight to you all
and can clearly identify these workshops,
allow us to of the thick of things,
come up with creative solutions
and hopefully, find an affordable path.
We know these solutions won't come easy.
We know the solutions will be difficult
to deliberate in debate,
whether they be in the legislature
or in the agencies that you respect the leas you represent.
I look forward to working in collaboration with all of you.
And I also just want to take a moment
to acknowledge some news worthy of celebrate.
This last year, we were able to help many Californians
with an investment of over a billion dollars
to help people get back in line with the debt
that they accumulated over the course of this pandemic
and perhaps even further back.
And so that is much news worthy to celebrate
and acknowledge how all of us coming together,
we're able to prioritize the needs
of those most challenged in California.
I'll end with this.
We represent a very unique district in California.
One that has a tremendous amount
of renewable energy investments
and renewable energy opportunities
that lead to many of our goals and objectives
within the climate space and electrification.
I'm excited to see the work that's happening,
collaboration by many of you to advance the conversation
taking place today in the Salton Sea region,
known as Lithium Valley.
It is amazing to see how significant this discussion
has been and where it's going,
given the level of attention that it has received
over the last week and a half
by the highest office of government
and our executive office and Governor and everyone involved.
We have a unique opportunity to continue
to democratize our climate change policies
and bring more people along than ever before
by making these investments
in the right places at the right time.
And so with that, I just wanted to say thank you all
for the work that you've do.
And thank you so much for the opportunity
to say a few words this morning,
as you kick off this very important conversation.
Be well, everyone.
-: Thank you very much,
assembly member Garcia for your comments.
Now I'd like to introduce
California Air Resources Board Chair, the Randolph
to make a few comments as well.
Chair Randolph.
-: Thanks so much.
I just wanted to thank the CPUC
for convening this important conversation.
Last week at our Air Resources Board meeting,
we heard updates on two key planning efforts
we have underway.
The first is our state implementation plan
for the Clean Act 70 ppb ozone standard,
which must be met by 2037
and will require massive reductions in Nox emissions.
And the second is the AB 32 Climate Change Scoping Plan
which will assess the progress towards our 2030 goal
of 40% reduction of greenhouse gas emissions
below 1990 levels,
and assess how to achieve carbon neutrality
by 2045 or sooner.
And both of those planning efforts
are showing the urgent need
to transition away from fossil fuels
to meet our public health and climate goals.
And of course, a key strategy for decarbonization
is electrification of transportation,
off-road equipment, buildings, and other uses.
And as I talk to people about this transition,
the top two concerns I hear
are reliability and affordability.
As we move individuals to electric transportation in homes,
they wanna know that the system
will be there to meet their needs
and that it won't dramatically increase their costs.
And we know these things are interrelated.
We need fast and wide deployment of renewable energy
and dispatchable clean power,
which takes significant capital.
But we also know that
when you're working two or three jobs to stay afloat,
having affordable energy is just as important
as knowing that your health and community
are being protected by clean energy.
As Commissioner Houck noted in her remarks,
we need to be mindful of the long term affordability issues.
How do we meet the critical safety needs
of the fossil gas system
while at the same time reducing our reliance on that system.
And the agenda for this two day discussion
shows that there are many strategies
for how we can reduce costs as a whole.
And more importantly,
how can we think about the most equitable way
to distribute those costs?
So I'm really impressed with the panels
that you have all assembled
and looking forward to this discussion,
looking forward to learning more about these strategies
and most important looking forward
to working closely with our sister agencies and others
to implement these strategies.
So thank you very much
and looking forward to the discussion.
-: Thank you very much, Chair Randolph.
Now I'd like to introduce,
California Energy Commission chair, David Hochschild.
Welcome.
-: Thank you.
And welcome friends, good morning.
I'm David Hochschild with California Energy Commission.
Wanna thank my colleague Commissioner Houck
and her team at the PUC for bringing us together.
I really just wanna say, I feel like we're dealing
with multiple imperatives right now.
The imperative to decarbonize
and save off the worst impact of climate change,
the imperative to deal with some of the climate consequences
that are already upon us
and the imperative to deal with rising costs.
And we have to face all of those together
and there's not one we can leave off the list
and this is the challenge ahead of us.
I think the best path to solutions
is bringing together experts and having a dialogue
exactly like we're doing today and tomorrow.
So I'm so grateful to the POC for bringing us together
and look forward to working with everyone
on all these solutions.
And with that, let me pass it off
to my colleague Commissioner Patty Monahan.
-: Well, good morning everybody.
It's a pleasure to be here
and I too am really excited for this conversation.
And I wanna thank the CPUC for convening it
and for getting such a great list of speakers for today
so really looking forward to the conversation.
I've heard chair Hochschild say time and again,
that rates are climate policy.
And as I think about how we continue
to decarbonize our economy,
while making sure that we have a safe,
affordable, and reliable energy system,
I mean these issues really,
this is the challenge I think of our generation
is to make sure that we set the right rates and structure
to protect especially the most vulnerable in our communities
as we continue to decarbonize.
I think the struggle that Chair Randolph spoke about
in terms of electrifying transportation
is one that's near and dear to my heart.
And we did an analysis last year that indicated that at 2030
to meet our transportation electrification goals,
there would be up to a 21% increase
in electricity usage compared to today.
That's a huge, flexible load
that if we charge at the right times of the day,
we could literally be running our electric vehicles
on sunshine, but we have to make sure that
we have the right rate structures in place
and that especially lower income families
can benefit on the savings that they would incur
at the pocketbook by not paying so much for fossil fuels.
So really, really appreciate this conversation
and I will pass the baton,
I'm not sure who is next.
Jack: I can introduce the next speaker here.
-: Okay, thank you.
Jack: Sure, thank you very much for your comments.
I'd like to now bring on CPUC Commissioner,
Genevieve Shiroma to help introduce
our feature speaker at gasoline leads.
Welcome Commission Shiroma.
-: Thank you, Jack.
And thank you to Commissioner Houck
and all of our colleagues from the CPUC
and the Energy Commission, the Air Ressources Board,
the legislature to the energy division staff.
Our speakers over the next two days
for the tremendous efforts
in organizing driving this event and providing in insights.
The timing of this workshop is appropriate
as we have seen energy bill spike as natural gas prices rise
and customers begin to pay
for new infrastructure investments.
Along with these factors, we have seen a cold snap,
although today is predicted to be a very (indistinct)
set 93 degrees in Sacramento.
There has been a cold snap in Northern California
and through the United States,
which has been further driving energy use
among our most vulnerable customers.
So, with that context is my pleasure
to introduce Abigail Solis,
who will help us keep in the forefront and top of mind,
the needs and innovation of our disadvantaged communities,
our low income communities, our most vulnerable communities.
Abigail is the manager of Sustainable Energy Solutions
for Self-Help Enterprises,
A Visalia-based organization funded in 1965
that works with low income families to build
and sustain healthy homes and communities.
In her work, Abigail oversees several sustainable energy
and clean transportation initiative
in disadvantaged communities.
She leads the community energy navigator teamwork,
a network of community based leaders,
providing robust community engagements,
enrollment and technical assistance
for the CPUCs San Joaquin valley's
affordable energy pilots that demonstrate
how electric buy homes can reduce household energy costs.
Additionally, Abigail helped to launch meal cars.
The San Joaquin valley's first electric car share program,
which provides residents with affordable access
to electric vehicles and charging stations.
On top of that, Abigail is an elected board
and president of the Earlimart School Board
and advocates for underserved students.
And last December,
the California Energy Commission
recognized Abigail's dedicated and effective work
by presenting her
with 2021 Clean Energy Hall of Fame Awards.
She is truly a tireless advocate for her community,
our communities, disadvantaged communities across the state.
With that, please join me in welcoming Abigail Solis.
(clapping)
-: Thank you Commissioner, I appreciate that introduction.
And I wanna thank you and everyone on this panel
for the opportunity to be with you this morning here,
as we kick off the 2022 Affordability Rulemaking En Banc.
Affordability and energy access
are extremely important issues,
especially right now, as we enter this third
and hopefully final year of the Coronavirus pandemic.
During my time with you this morning,
I would like to share a little bit about my experience
working in low income communities with low income residents,
as well as my thoughts on the issue of affordability
and how the discussions that we will have
over the next two days have real life consequences
for millions of people across the state of California.
I often look at all of the wonderful
and highly capable panelists
that participate in events like this one
and often ask myself what I have to add
to these conversations.
And I think my,
what I bring to the table and hopefully to the discussion
is just the truth of how decisions made at a high level
impact those who have to live
with the decisions that are made
in settings like we are in today.
Throughout my career,
I've had the opportunity to work in low income communities,
alongside rare residents who are dealing with challenges
stemming from historic disinvest investment.
Many are dealing with bad air quality,
contaminated drinking water, bad roads,
high energy costs, and more.
These communities are made up of hardworking people.
Many who start work before the sun rises
and keep working until the sunset.
They do this week after week, month after months,
and ultimately year after year for their entire lives.
They do it to provide the best life possible
for their families.
And although they work so very hard,
they often cannot make meet.
Many families struggle to pay their monthly bills,
often having to choose between which expenses they'll pay
at the end of the month.
often having to choose between paying the light bill
or buying groceries, paying the gas bill
or buying gas for their car.
And we often often say things like this
people must choose between what to pay,
but I think a lot of times we don't consider
that these are the same families that have to decide
whether or not they're going to turn on the heat
when it's 30 degrees outside,
whether or not they're going to turn on the air conditioner
when it's 110 degrees outside.
Many families are choosing to be extremely uncomfortable
every day in their home because they cannot afford
to pay the high rates of energy,
of actually being comfortable in their homes.
And I think that's something that we have to consider
as we have these conversations over the next two days.
We know that many families are struggling
and we know that utility rates
are more unaffordable than ever.
We can see this by the amount of customer utility debt.
I often think about what causes utility debt to be so high
and how it's directly related to the fact that
low income families have higher household energy costs.
They spend a larger portion of their income
on their household energy needs.
And this is for different reasons.
A lot of it is due to the fact that
a lot of the homes are very inefficient, they're older.
They have old outdated inefficient appliances.
And most disadvantaged, low income communities,
lack access to reliable, renewable energy sources,
such as roof top solar, community solar,
and other programs that reduce the cost of the electricity.
This issue is one that I hope we consider
and talk about over the next two days,
because we must make renewable energy
accessible for everyone,
especially those that are most vulnerable.
In addition to the inequity
of not having access to renewable energy,
we know that the effects of greenhouse gas emissions
disproportionately impacts low income communities
and people of color.
Specifically here in the San Joaquin valley,
which is one of the most polluted air basins
for fine particles and smoke,
this is a huge issue across the San Joaquin Valley.
And although the issues are great,
we know that fewer disadvantaged community residents
participate in energy programs that are available to them.
And this is really for a couple of reasons.
One is lack of awareness.
They just don't know that the programs are available.
And the other is distrust.
For various reasons,
residents have trust issues with programs,
and we must work together with them
so that we can overcome those issues.
In disadvantaged communities,
we have very little access
to electric vehicle charging stations,
making it almost impossible to own an electric vehicle.
For many, the nearest charging station
is five, 10, sometimes 20 miles away.
So as a result, people decide not to have electric vehicle
to use their regular card
that are forced to pay high gas prices
and well added to the already polluted air.
And this in 2022 is simply unacceptable.
We must make electric vehicles
available and access for everyone,
especially the most vulnerable communities.
So, on top of an already challenging situation,
we know that COVID-19 has exacerbated the situation.
Many of our low income disadvantaged communities
sore illnesses, experienced job loss,
many were forced to use whatever savings they had.
And while thankfully many have returned to work,
some have returned to lower paying jobs
and others have not returned to work at all
because the cost of daycare is so high.
For some, it just makes sense to stay home.
All of these things need to be considered
as we think about rates and affordability
over the next two days.
We all know and are proud that the state of California
has aggressive clean energy goals,
especially around electrification and decarbonization.
However, as we work to reach these goals,
we must ask ourselves where do low income communities
fit in this transition?
If low income families are struggling
to pay their electric bills today,
how could we ask them to decarbonize their home
through electrification?
Many are already worry that their bills will increase,
and at this point they cannot make the commitment
to electrify, until there's assurances
that they will not see energy cost rise
and that they will ultimately see energy cost savings.
In my community and the communities around me,
we have the lowest utilization rate of renewable energy,
like I mentioned earlier.
It is rare to see a home with solar panels on top of it.
And when I think about asking families to electrify,
I know that we need to change that,
we need to do more to make sure that everyone
has access to renewable energy
so that they can afford to electrify their home.
And although this is a huge issue
that I know we will be working on for years to come,
I am hopeful that we can develop solutions together
as we work towards a more equitable future
around access to renewable energy.
So, I do think that
I should probably provide a few recommendations
of how we can do this.
And I think it all starts
by prioritizing vulnerable communities.
We need to create policies
and programs designed specifically
for low income communities,
that will provide real energy cost savings.
We must remove all barriers
to enrollment for existing programs,
and we can do this by considering things that are different,
like automatic enrollment options,
exploring creative outreach methods.
And also we need to make sure
that we explore various great structures,
making it more affordable
for families to pay their monthly bills.
We must increase access and awareness
of affordable energy for renters.
Many times renter are left behind,
especially low income renters.
They're overlooked and often have no idea
that they're even eligible for programs
that can help them save money on their energy bills.
In order to develop truly equitable energy program,
we have to consider non-energy benefits
and update cost effectiveness tests
to include things like health, wellness,
greenhouse gas reductions,
and most importantly, we must consider equity.
So important for us here today
to consider the importance of outreach and engagement.
Community engagement and education makes it possible
for residents to understand policies,
to build trust in programs,
and ultimately community engagement
can be the reason why a resident decides to participate
in an energy cost savings program.
We can see this in the San Jo valley pilot projects
where the CPUC authorized the first ever role
of the community energy navigator.
In this role, energy navigators
who are community leaders and community based organizations
act as the liaison
between the San Joaquin Valley pilot program administrators
and program participants.
CNS or energy navigators,
they provide robust community engagement, education,
and support to pilot participants.
As a result of this,
we took a very challenging endeavor
of trying to convince and test propane users
to go all electric.
And as a result of this effort,
we have enrolled just under 1000 families
across 11 pilot communities.
And I know that this would not have impossible
if it wasn't for true community engagement and education.
So, I often ask myself what's at stake
if we don't do these things,
because we cannot continue
to leave behind the most vulnerable communities.
Leaving them behind will cause catastrophic effects
on vulnerable communities.
And unfortunately, the people who are most impacted
by your decisions are often not in the room
when decisions are made.
And I will eventually say
that they are not online with us this morning.
This often means that their voices go unheard
that their experiences are not considered
and that their perspectives are left out
and we can no longer leave them out.
So today I urge you to consider them
as we strive for a path towards affordability.
I hope that you will spend the next two days
looking for creative solutions
to very real problems around affordability,
because the reality is
that the poorest people in the state of California
are paying more for their energy costs, and this is wrong.
It's inequitable, it's unjust,
and we must figure out how to change this.
Every single day, I think about this
and I try to change this,
and I ask you to do the same with me over the next two days.
I do think that it's possible that we change things
and we make access to renewable energy and affordable rates
possible for everyone in the state of California.
And I look forward to working alongside all of you
as we make that happen in the near future.
Thank you for the opportunity to address you this morning.
-: Thank you very much for your comments
and inspiring start to this En Banc and sets the priority,
the core priority of what this discussion is all about.
So thank you very much and thank you all everyone
who has delivered welcoming and introduction remarks.
I'm gonna outgoing described the six proposed criteria
that we're gonna use that we propose to use
to evaluate many of these proposals
that will be discussed during this En Banc.
So thank you for joining this En Banc
and I am a CPUC analyst
working with the electric retail rates team on phase three
of this affordability proceeding.
Next slide, please.
This En Banc builds on En Banc held last February,
discussing more than two dozen proposals to manage it
and mitigate residential electricity rates.
Next slide.
This En Banc seeks
to stimulate robust discussion about these proposals
and evaluate their effectiveness and feasibility
and ultimately help identify proposals deserve
the most attention in the rest of this proceeding.
Next slide, please.
This En Banc also as gas rates discussion
as directed by an amended scoping ruling
released in January, 2022.
Next slide.
This En Banc lay a foundation
for the rest of phase three of this proceeding
going forward a call for party affordable approvals
for customer classes is scheduled
to be included in the next couple months
and eventual proposed decision
on affordable strategies expected by early next year.
Next slide please.
I think we can go, keep going.
There we go, thank you.
So I wanted to review here six criteria
by which we suggested evaluating each of the proposals
that will be discussed throughout over the next days
and throughout the proceeding.
We seek your input on the appropriateness
of these evaluation criteria,
any suggested changes in how they're defined here
and any other criteria that should be added.
Next slide, please.
The first criteria affordability is a bottom line metric.
It measures the quantitative bill impacts
of affordability proposal on all customer bills
and essential use benefits.
Next slide, please.
These impacts or benefits can be measured
using the affordability rate metric or calculator tool
developed by energy division in phase one
and phase two of this proceeding.
Next slide, phase.
The second criteria, equity impact
examines how proposal affects
Socioeconomic Vulnerability Index Disadvantaged Communities
or SEVI-DACs.
These communities are defined with components
from the state's Cal's Enviroscreen 3.02
and include census tracts,
the top 25% of Chevy scores as well as tribal communities.
Next slide, please.
After defining these communities,
utilities could use the affordability racial calculator
to determine how much of household essential income
is used to pay for income for energy rates in SEVI-DACs.
Next slide.
The next criteria, environmental and social justice or ESJ,
measures or rate proposals impacts
based on two categories in CPUC's,
Distributed Energy Resource Societal Cost Tests.
Next slide.
This criteria first examines,
whether a rate proposal will disproportional impact areas
are already suffered from air quality problems.
Next slide.
This metric also examines whether the proposal
will result increase greenhouse gas emissions
possibly by incentivizing fossil based energy use.
Next slide, please.
Finally, this metric looks at
whether the rate proposal helps advance the CPUC,
the ESJ action plan 2.09 goals.
Next slide, please.
This is a list of all those
that I'll just highlight a few of them.
The goals include increasing investment
in clean energy resources to benefit ESJ communities,
increasing climate resiliency in those communities
and enhancing enforcements ensure safety
and consumer protections for all,
and especially for ESJ communities.
Next slide, please.
The fourth criteria, revenue requirement and rate impacts
looks specifically how a rate proposal impacts
IOU revenue requirements,
and whether it contains cost in a quantifiable way.
Next slide, please
Proposals can be evaluated coin its criteria
by using the cost and rate tracking tools
as well as the affordability metrics
developed early in proceeding
to measure cumulative rate impacts on essential usage bills.
Next slide, please.
The next criteria, economic impact takes a broader look
at affordability proposals impact on the larger economy.
At a basic level higher rates,
leave rate payers of less wealth
to spend in the larger economy
while lower rates preserve rate payer wealth
and spending capacity.
Next slide.
This criteria could also complement equity analysis
by examining whether good rate proposal results
in all transfers from one repair class
to another repair class.
Next slide, please.
The final criteria evaluates whether a rate proposal
requires regulatory and statutory forms
and how politically feasible such reforms might be.
Next slide.
This criteria is more challenging to measure,
but would contribute important practical data
in evaluation of these affordability proposals.
Next slide.
We encourage you to think about the following panels
with these six evaluation criteria in mind.
We also encourage to help us refine these criteria
and sentence for suggestions for improving them.
Is now my honor and pleasure to kick off our first panel.
And by design that is our,
environmental and social justice panel.
This discussion will emphasize
the core concern of this En Bank at the proceeding
protecting households are struggling
with the impacts of the pandemic
as well as of larger economic and social pressures.
Moderator Kathleen Yip, is an energy analyst, energy advisor
in the office of Commissioner Darcie Houck,
and previously served as the CPUC's equity analyst.
So thank you Kathleen for joining us today.
-: Thanks very much, Jack.
I just wanna make sure all of our panelists are on.
Okay.
All right, good morning everyone.
I'm Kathleen, as Jack mentioned,
I'm an advisor to Commissioner Houck.
For panel, welcome to panel one.
We're gonna be discussing equity,
environmental justice and social justice.
We've got four panelists joining us today.
First we've got Justin Bogda, legal fellow with CEJA,
the California environmental Justice Alliance.
Next we've got Jana Ganion,
the Director of Sustainability and Government Affairs
at the Blue Lake Rancheria.
We've also got Arjun Makhijani, President of the Institute
for Energy Environmental Research
and energy expert with the Just Solutions Collective.
And we've also got Tim O'Connor,
senior director and attorney with EDF
the Environmental Defense Fund.
We're gonna start with a few presentations today
and then move into Q&A
and discussion with the panelists following that.
So let's start it off with Tim
where he'll be presenting an overview
and high level summary of report,
aligning gas regulation and climate goal.
Tim.
-: Great, thank you.
And good morning to everyone.
My name is Tim O'Connor.
I am a Senior Attorney over
at the Environmental Defense Fund.
I've been with EDF for about 15 years.
And during this time I have had the pleasure
to participate before the Commission
in a number of different venues,
and really appreciate the invitation to participate today.
As Kathleen mentioned,
we have done some analysis and developed some reports
around things that public utility Commissions
and policy makers should consider
in things like natural gas planning,
but we've also done this on the electric side,
on the transportation side and in other venues as well.
And so speaking today,
I'm gonna start with four different themes.
Next slide, please.
The general urge is going to be to talk about,
I'll just wait for this slide to transition here.
So talk about electricity sector decarbonization,
and then into natural gas plan
to kind of give a high level overview
and then to talk about the importance
of sort of drilling down from the high level
to the locational and individual aspects,
and then bringing in at the end the importance of looking at
really sort of the topic of today,
social justice and environmental issues
and the non monetary benefits
and burdens they're from into these decision making.
Next slide.
Environmental Defense Fund about a year and a half ago,
started a process to look at economy-wide decarbonization,
something of course near and dear
to most of the folks on the call today.
And looking at the opportunity of course,
that faces California
in terms of the transition of our energy sector
also must come alongside an evaluation
of the costs and the challenges.
And so working with partners
at Princeton and Stanford and E3 and Clean Air Task Force
we did an assessment of what does the transition
to decarbonize electric grid look like
if you pursue different strategies?
Next slide, please.
And with a focus on costs,
we evaluated the cost of transitioning
using nearly all renewable sources
versus an array of zero carbon energy solutions
and evaluating the system wide costs for doing that.
And so at a big picture,
you can see how the large policy decisions
that we make in California can have large system-wide costs
as it relates to the overall transition.
And looking at energy models by the three institutions,
you can see that there's general agreement
that pursuing an all renewables approach
is a much higher cost than pursuing a build out
an array of resource and utilization of array of resources
that can provide clean firm power
to satisfy reliability and energy customer needs
while also reducing greenhouse gases.
So this is a broad theme,
the idea of how we engage in the broad transition,
impacts the overall system-wide costs.
Next slide, please.
You could take this forward to the natural gas sector
and you could see how individual decisions
of course ladder up into the economy-wide strategy
and what we decided to do in a document
sort of looking at the landscape
of public utility Commissions across the US,
try to identify a set of strategies
that can yield reductions in the natural gas sector
through improvements in planning
and the investments flowing there from.
And we can up with three broad strategies
of which the Commission here has already,
really sort of embarked on these strategies
and taken them on with sort of strategy one
step one being to establish an inclusive
and transparent decision making process,
you could see the long term gas planning cases
being part and part of that.
And with step two,
being sort of the integration or excuse me,
the development of long term plans
that are commensurate with climate reduction goals
and step three, being the integration
of year term decision making with those long term plans.
Next slide.
And you can identify a series of strategies
that fit within each of these various steps.
I included these on here, but on the prior slide,
I included a link to the report in total,
and you can see that in a, in a laddering up process,
the coordination of near term decisions to long term goals
is really where the rubber hits the road
and identifying things such as new tariff decisions,
evaluating cost allocation and scrutinizing,
transactions to ensure that
they're in the best interest of rate rate payers
are sort of the core elements of the integration
of near term decision making into long term planning
that is based in transparent decision making.
Next slide.
And when we look at the sort of the bringing together,
of these natural gas initiatives,
you can see that they're quite important,
both in the near term and long term,
because what they prevent is us from investing in a system,
whether it be on the natural gas side
or really on the electric side, based on my prior slide,
that is a higher cost outcome than is necessary.
Here, in the transit in the gas side,
it takes the form of transit assets.
Of course, in the form of the electrics side,
it takes the form of energy system build outs,
which are uneconomic or unnecessary.
Next slide.
And so when we think about these economy-wide impacts
and benefits and opportunities,
you can also see that we need to be sort of drilling down
to really incorporate environment and social justice issues.
Appropriately, we be drilling down of course,
into the locational and individual affordability aspects.
And we identified here on this slide,
how this plays out in the transportation space.
And this is of course,
something that California's been very active in
that the importance of designing electric rates,
infrastructure investment, cost allocation
that it has obviously very locationally important
and class impact differences based on how it's done.
And of course the transportation electrification framework
that the Commission embarked on
and now the individual investment plan
coming up by the utilities will seek to do this,
but we can see that many of this is already,
of course, in thinking here.
And we identify, of course,
that regulators looking at the policy differences
between cars and trucks as being,
and buses being very important.
Thus we see electric rates for electric vehicles
versus being who do transport, having differences
and sort of approaching those differences with fresh eyes,
to ensure that the rate impacts
and cost impacts are distributed appropriately,
separately we seeing equity as a primary concern,
in the planning of easy infrastructure deployment and rates
maximizing the benefits of those EVs
as sort of the callouts.
You can think about this, of course,
in the realm of building electrification too,
that if you're sort of taking the words,
electric vehicles in turning this
into electrified buildings,
you can see of course that regulators
should be looking at the appropriate redesign
for all electric buildings
and ensuring that electrified buildings
and equity concerns are paired together
and maximizing the benefit of electrified buildings,
that are sort of transitioning off of gas.
And so these vocational individual affordability aspects
sort of run the various topic that we decide to pursue,
and that all of these should be taken into account.
Next slide.
And when we think about this as
where we should be looking at from the affordability aspect,
we can also see that of course affordability,
isn't just dollars and cents,
but it's whether people can afford to live in this economy
and not have to pay through their lungs
and through their hospital visits and incorporating equity
and the benefits of health and other non monetary benefits
associated with electrification,
it was so something that we should be striving
to achieve within our energy policy here.
Here we look at transportation
and this is a study we're presently conducting.
You can see in California through DMV data
and through federal motor vehicle safety data,
where vehicles are indeed registered up and down the state,
you can run analyses to see within ports
and in areas that service ports,
where vehicles are registered and located,
and you can start to identify
where prioritized deployment of electrified infrastructure
can provide some of the most benefits
on a non monetary basis as related to air pollution,
reductions and grid reliability as you look at integration
of those vehicles into the system.
Next slide.
And if you also think about this
from the science perspective,
not just on the transportation but on the climate side,
you can see things such as the incorporation
of methane reductions and the social cost of carbon
and social cost of methane reductions
from things like natural gas combustion,
reduction natural gas use, as well as indoor air pollution
associated with a transition from natural gas and buildings,
that these are all types of non-monetary benefits
that should be incorporated into Commission and policies.
And if we think about this solely
from an economic standpoint of what is going to be
the sheer dollar figure that will save rate payers the most,
as opposed to looking at an integrated system
of improvements where non monetary benefits
are incorporated into these decisions,
you tend to fall short if you're only looking
of course at the dollars.
Next slide.
So in conclusion, we see that at a high level, of course,
California has embarked on this transition
in a very, in a holistic way.
And there's many moving pieces to this challenge,
however, the incorporation just of these issues
at the big picture level,
the economy-wide level misses some key factors.
And of course my colleague Michael Coleman tomorrow
will be talking about really more specifics
on the natural gas sector side
and the fellow panelists
will talk about more about the specifics there,
but I think this was meant to provide
a broad level of context of the importance of broad,
long term sector planning in a corporation of locational
and societal benefits into the decisions.
Thank you very much.
-: Great, thank you very much, Tim.
All right, next we will hear from Jana
who will be sharing the unique challenges and impacts
to rural and tribal government.
Jana.
-: Great thank you, Kathleen.
Can you hear me okay?
-: Great. -: Yap, I can hear you.
-: Perfect.
So enormous thanks to the CPUC for convening this En Banc
and this important panel
and starting with it by the way is much appreciated.
I'm Jana Ganion, Sustainability and Government Affairs
Director for the Blue Lake Rancheria.
And in addition to that,
as part of my role with the tribe
I serve as the tribal representative
on the California Senate Bill 350,
disadvantaged communities advisory group
to the CPUC and CEC, I also serve on California's
Integrated Climate Adaptation and Resiliency Program,
the technical advisory count for that work.
And I'm current co-chair of the US Department of Energy,
Indian Country Energy and Infrastructure Working Group
or ICEIWG, where I have the great pleasure
of working with hundreds of tribal nations
across the country on exactly these kinds of issues.
Next slide please.
So when we talk about affordability, of course,
we know that climate change is expensive,
particularly where the impacts overlap
with the energy and infrastructure.
Weather volatility, extreme heat, extreme cold,
these are now core considerations
in our overall affordability calculus,
and this Noah image summarize some of the national vagaries.
Of course, we've seen all of these things
downscaled within California as well.
Next slide, please.
This is a photo from September 11th, 2020,
when large portions of the Western United States
were on fire simultaneously,
and power outages and hazardous air quality effects
from the wildfire smoke affected people for weeks.
These are the risks and impacts that are now the new normal
and are part of our affordability context.
Next slide, please.
On the rural remote coast,
I think it's important to take
a little bit of just a moment or two
to talk about kind of some specific contextual situations.
We are powered here primarily
by a coastal natural gas system
that fuels our sole anchor electricity generation plant.
The orange box there is bracketing
the one 10 inch natural gas transmission pipeline
that serves our region.
And it's vulnerable to size the risk.
As we think through how to reduce
our dependence on fossil fuels
and pruning the natural gas systems,
rural areas are likely candidates for pilot studies
for complete electrification.
And crucially by starting with rural and travel areas,
we can achieve broader electrification ecosystems
in these areas and hopefully achieve
some related equity metric improvements as well.
Next slide, please.
Our electrical grid here is connected to the larger grids
by one transmission line.
It has one redundant line,
but they're meant to be used one at a time.
We're import restricted to about 70 megawatts,
which is about half of our local use.
So if that natural gas plant,
the one plant that we have goes down, we are in the dark,
the green areas on this image
are what we call the Humboldt Island
and thanks to the CPUC, the CEC and PG&E
combining efforts.
This area can now stay energized
when not at risk for wildfire.
Prior to this Humboldt Island,
even though we had no wildfire risk on the coast,
the entire area grids needed to be taken down
during PSPS events.
So this more surgical approach to reliability
has made an enormous difference in the last years.
And people here are now more readily pairing affordability
with reliability in their thinking.
Next slide, please.
So I wanna make sure to be time sensitive
in this first overview,
but I do wanna bring in some afford ability considerations
into the greater discussion.
So what we've heard from our region,
which is rural and has a many tribal nations within it,
that we're all of the understanding that costs arising.
So make them count.
Make sure that we're getting something
for these increased costs, climate smart transitions,
lower greenhouse gas emission profiles, highest reliability,
because we know that if we can clean the climate,
we will have greater affordability
for our infrastructure and equity overall.
Yes, please continue to factor
in non-energy cost considerations.
The human health impact of reliability,
affordability climate crisis
is a central consideration for people
probably alongside an equal importance
to economic considerations.
And we don't need to get too complicated with it.
We can focus on strong data gatherings
and reducing emissions from the energy sector,
things like methane, particulates, the NOx,
and ratchet up the cost of carbon
build from the distributed energy societal cost metric
that we're already using
and establish a way to make sure that
we are getting the rates right
with the non-energy cost considerations factored in.
There's lots of people thinking about this.
It seems to me like it's never been more achievable
to be able to do that.
I would say that in our work around microgrids
and distributed energy resources,
we have found that desiloing, resource adequacy, blue sky
and emergency power
and quantifying the value on continuity
of operations and emergency service delivery
has been the key to an affordable investment strategy.
The PSPS events of the last few years, as I've said,
make reliability top of mind for people.
It certainly matters what the cost is,
but we don't need to overcomplicate it.
It can be sort of an economic formula
that includes a continuity of operation metric.
In terms of equity I would say that,
one of the basic points is that
business as usual power and emergency power
should not increase air pollution within communities.
Tribal governments may want
to exercise jurisdictional authority
and utility development and for affordability overall,
this is an important relationship,
set of relationships to keep fostering.
I would say that one
of the most important considerations for affordability
and one of the ways in which I see
to being necessary to incorporate rural
and tribal investment and leverage
into the affordability conversation and ecosystem
is to look at technical assistance partnerships
and O&M costs.
One suggestion we have
to spur scalability and affordability
is to build a network of technical assistance hubs
for the microgrid, grid segmentation and D&R space.
As the Blue Lake Rancheria tribe
has developed its microgrids,
the project teams, PG&E others
have worked incredibly well together
and learned a great deal from one another.
And this collaboration has led to front
of the meter microgrids as one example.
From my chair, many tribal governments, city, government,
other regional community scale entities
are excited about the possibility
of blending affordability with reliability,
particularly at the community scale.
So developing technical assistance hubs
to make sure that we have an avenue to properly vet
our designs and plans,
to be able to leverage the resources
that tribes in particular have to bring
to the affordability equation in funding
that is not other wise available in these regions.
All of these,
we need a way to be able to incorporate
the excitement and the optimism
around distributed energy resources in particular,
and the rather historic sources of funding
at the state and federal
and tribal levels into these projects.
And I think a network of technical assistance hub
is key to that acceleration and scalability.
So I'll leave it there.
And I look forward to the discussion, thank you.
-: Great, thanks Jana.
Next we're gonna hear from Arjun,
who will be discussing energy burden.
Arjun.
-: Thank you very much, Kathleen.
Can you hear me all right?
-: Yap, we can hear you.
-: Okay first slide, please.
You're gonna run my slides, right?
-: Yes, we'll run your slides for you.
-: Thank you.
I'm representing the Just Solutions Collective
and also the Institute for Energy
and Environmental Research.
My colleague at the Just Solutions Collective, Julie Walters
is also preparing a paper on obstacles
to reaching energy as systems
that I think will be useful to you.
It'll be completed next month.
And I'd be happy to connect you with her
if you would like to see that work.
Next slide please.
So I will go over the organizational questions.
I'm going to cover basically,
how to marry assistance through a percentage
of income payment plan with investments
in the energy transition, weatherization community, solar,
discounted rates, efficient electrification,
demand response.
And the reason to approach it this way
is not only ensure that bills are affordable,
but that investment systemically reduce bills.
My colleagues at PSE Healthy Energy and I
did a study recently,
for the Colorado State Energy Office
and some of the details I'll show you are from that study.
California, as you know better than me,
California's high rates mean that a prior enrollment in PIPP
is likely in percentage of income payment plan
will likely be needed to sure bills
don't rise on electrification,
and if there's on bill financing and so on.
So next slide, please.
So I look briefly at energy burden levels in California,
just to inform myself,
there are three quarters of a million families
that at income levels of less than 50% and in 32 counties,
the average energy burden is more than 30% of income.
Of course, with high housing costs in California,
this is truly kind, sort of define unaffordability.
There are a few counties
where energy burdens are even more than 40%
and of course rising rates will exacerbate these problems
even as the cost of discounted rates
increase along with that.
Next slide.
Hence their recommendation,
so you have quite high enrollment in your CARE program,
but I think a percentage of income payment program
will assure that energy burdens are affordable.
You are already doing pilots at 4% of of income.
We did evaluations of the more or usual 6%,
but whatever the level is,
it ensures that burdens are affordable
whereas with simply discounted rates, you don't assure that.
And so I'm very glad that you're experimenting with that
and I look forward to seeing the results of that,
but let me kind of give you the overview of how,
so I think percentage of income payment plan
with very high enrollment
is kind of the foundation for going forward.
And one of the questions that has been raised
by the Commissioner and by chairman Garcia and so on,
is that of course it's essential
to make sure that the most vulnerable are protected.
But one of the things that I've looked at is,
what about all the other non low income?
Are there benefits in it for them of reducing energy burden
and fully integrating low income households
into the energy transition?
And I think there are,
I don't think they've been thoroughly evaluated,
but for example,
as somebody who's done hour by hour
modeling of the electricity sector,
I did my doctorate in electrical engineering
long ago at UC Berkeley
and have very fond memories of that time.
Also studied energy efficiency
while I was a student in the early 70s there.
And are there benefits for non low income households?
And in my modeling of renewable variable, energy sources,
demand response and so on,
I think, as you all know,
we are going to have to change the business model
for utilities, real time rates are probably coming,
demand response is going to be extremely important,
aggregation is going to be important
of work issued a rule last year.
I think if these things happen
without assuring that energy burdens are affordable
for low income households,
than the conflicts that are already there
that have been referred to earlier
between food and medicines and so on.
And to give you a little personal vignette,
I'm from India, I've worked among the poorest people
in India, in rural areas,
but in studying the energy burden problem
and these conflicts with rent and utility bills,
I realized over the last decade
that so much housing insecure comes from these conflicts.
And even in the poorest areas, rural areas of India,
the housing insecurity,
I think is less than what it is in low income areas
for instance, in Baltimore, where I've looked at,
I live in Maryland,
I've looked at Baltimore pretty carefully.
So I think you'd be freer to design the energy transition
more efficiently, economically and technically,
if we don't have to worry about making people homeless,
because we're doing an energy transition
and they didn't get access to aggregated demand response.
Next slide please.
So if you have high in enrollment in PIPP,
it will reduce energy burdens,
but it will create high costs,
and then also doesn't do anything about CO2 emissions
or greenhouse gas emissions.
The implications of addressing those two
is reliance on rates as you all are realizing
is not a good idea for assistance,
especially as the costs will go up with a PIPP program
and that full integration of low
and moderate income households in the energy transition
should be designed
so as to systemically reduce energy burdens,
and that will take some design
because there's considerable difference
between those who are say below 50% or 100%,
and those who say between 125 and 200%
of federal poverty level,
and you've done so much work on metrics
that's very advanced in California.
So you could apply different metrics,
but I think the outcome will be more or less the same.
So let me turn to what we found in the study
we just published last month, next slide, please,
for the Colorado Energy Office,
a state of Colorado Energy Office.
So PIPP as I said, is the foundation,
but then there are investments.
So the investments would be inefficiency and weatherization
for the lower income households through grants,
discounted community solar, guaranteed to be discounted
substantially below utility were rates
and the cost of solar are declining,
and utility rates in California are relatively high.
This should be less difficult than it is in
or relatively more straightforward
than it is in other parts of the country.
At including low income households,
especially renters into the demand response,
I think is very important because demand response
for participating households will be an important source
of revenue in the new business model.
And it could systemically also reduce energy burdens
much more important as has been alluded to earlier
with electrification of vehicles,
beneficial electrification, of course, as you all realized,
and over time, what happens is you start out
with high enrollment PIPP and high costs of assistance,
but over time assistance costs decline.
Next slide please.
So here are some Colorado numbers
which we did in great detail by census track model.
So the energy assistance needs to reduce burdens to 6%
or calculated at 280 million a year,
most of it would go to households under 100%
of poverty levels, that distribution is shown on the right.
And here's what happens, next slide please
when you go to investments.
So initially this is kind of a very schematic calculation
we did assuming immediately you have 100% enrollment in PIPP
and that 200 the gray area is the cost of the PIPP program.
And so immediately I have a 280 million a year a cost,
but you can see that gray area comes down over time
because the assistance is going down.
But 6% energy bills are maintained throughout the schematic.
Of course, it's very schematic.
You assume 100% participation and enrollment and everything,
but it's a scenario that shows you in idealized way,
what can be accomplished.
And so at the right end after 20 years,
you basically have assistance levels that are less than
present assistance requirements in Colorado,
but universal 6%
or less energy bills
and the beige area there are the grants for weatherization
to the lower income households
and the dotted line are the loans for other households,
weatherization and electric.
Now I think this is going to be probably different
in California because electric utility rates
are for the most part, fairly low.
Next slide.
So we examine what happens when you electrify heating
and of course, propane heating and rural areas
and mostly natural gas everywhere else in Colorado,
electrifying propane heating
is a no-brainer basically you save money,
even when electricity rates are relatively high
as they are in some rural areas.
But it's not always a win
when you're converting from gas electricity as you know,
and here I think in California, since rates are higher,
the differential is greater than
in this particular analysis.
I think grants for electrification
for the lower income households, will probably be necessary,
that's obviously an educated guess,
but I think a foundational analysis of electrification
in terms of which household it will impact
and what utility areas
you need to focus the grants on and so on,
is extremely important to maintain,
to ensure that bills don't go up upon electrification.
Next slide please.
So those are the implications for California.
I think I fully integrating with PIPP and making sure that
electricity bills, energy bills go down once your electrify.
Here are my recommendations.
Next slide.
So all households should have zero emissions
within the period of the energy transition.
-: Pardon, sorry, can you pause for a second.
Robert, I think we might be on the wrong slide.
(indistinct)
-: Slide 13, slide 13.
I think we're one slide behind, need to-
-: You are running my slides, right?
Next slide.
-: I think this is your recommendation.
-: Yeah, that's yeah.
So basically,
my sort of foundational qualitative recommendation
is there should be a formal decision
to fully integrate low grand moderate income households
into the energy transition.
And that full integration
will mean in the lower income levels,
of course, there will be more grants,
but how you turn that into an economic model
will be specific to California.
But that full integration
should mean monotonically declining energy burdens
as you electrify, as you convert from gas,
as we go to a different business model,
as some people will have loans for weatherization
others will have grants
at least that's what we model for Colorado
that bills should monotonically decline,
they should not go up.
So verification will be very important
for instance of weatherization.
And so really, and one thing we found very difficult is
because in Colorado co-ops are not regulated
by the utility Commission.
So integrating co-ops into this
and municipal utilities into this model is very important.
If you use non rate-based revenue sources for PIPP,
I think it'll be less difficult to arrive at an agreement
because you can provide funds from those sources
without burdening rate payers of utilities in the IOUs.
And so that's another reason to have non rate-based sources
for the funds that are progressive
for the energy assistance.
Next slide please.
And so these are my final recommendations.
I think there should be some partition
between grants and low interest loans,
at least our calculations in indicated
that you could have declining energy burdens
at the higher side of the low income spectrum
if there were low interest loans
who were green bank, for instance.
And then I think it's important
to have prior enrollment in PIPPs,
especially in California
before you weatherize and electrify.
And the question of rental households has been mentioned.
I think this along with a question
of how you have PIPPs and co-ops and municipal utilities
is among the most difficult
of sort of institutional regulatory sort of question.
I think incentives for landlords to improve rental housing
and make them smart grid ready and demand response ready
with benefits going to low income renters
so they can participate in demand response
and electrification and weatherization.
That's very important.
This is an extremely complicated question.
It's obviously a very broad recommendation,
but yeah, this since most low income households are renters,
not only in California, but throughout the country
and especially important urban areas
where there are more renters than rural areas.
Thank you very much.
-: Thank you very much, Arjun.
All right, next we are going to hand it over to Justin,
who's gonna make some brief remarks
about the importance of PIPP and vulnerable communities.
And Justin does not have any slides.
Justin.
-: Great, thank you, Kathleen.
Thanks everybody for having me.
My name's Justin Bogda,
I'm a legal fellow with Communities for a Better Environment
and we represent
the California Environmental Justice Alliance
in proceedings before the public utility Commission.
Today I just would like to briefly comment a bit
on Arjun's presentation and his recommendations
for a percentage of income payment plan.
As we respond to the climate emergency,
it's essential that customers
are protected from rising energy bills through programs
like a percentage of income payment plan
that caps a households monthly payment
because guaranteeing affordable energy
is essential to both reducing public health costs,
achieving equity and addressing historic harms
as well as enabling households
to make investments that will be necessary
to achieving emissions reductions goals,
and in order to accrue savings
within these low income communities.
Bill assistance programs
that only provide discounts like CARE
don't consider communities
that are most vulnerable to climate change.
For example, in the energy Commissions,
energy equity indicators report,
the upper range of summer care bills
is more than $300 in five of the CC16 climate zones,
which includes parts of the Central Valley,
Los Angeles Basin and the Coachella Valley for example.
In these regions with increasingly extreme weather
CARE assistance isn't sufficient
to make the bills affordable.
These bills must be capped to ensure affordability
in the near term
while investing in efficiency and weatherization
to decrease usage in regions
where electricity is quite literally a life saving resource.
From an equity perspective,
communities that are most impacted
by increasingly severe extreme weather
should not so have to suffer from increased electric bills.
And as Arjin demonstrated throughout his presentation,
maintaining affordability while investing
in energy efficiency and resiliency in these communities
is the most efficient way
to respond to the climate emergency,
both in terms of public health of benefits
and real dollar spent.
These communities shouldn't be penalized
for utilizing essential services that are life saving
and low communities already sacrificed
much of their energy use by lowering their energy bills
and also suffering from public safety power shutoffs.
As Abigail also at least pointed out,
many low income households
already choose to not utilize the power that they need
to be comfortable during,
especially fluctuating weather patterns
and increasingly extreme weather events.
And finally investing in resiliency
and efficiency in the most vulnerable communities
will have the greatest impact
in terms of lowering energy demand,
greenhouse gas emissions and public health costs.
So an energy affordability guarantee
really is a necessary first step
to ensuring that these efforts are truly
inclusive of low income communities
and communities' (indistinct).
Thank you.
-: Great, Thanks very much, Justin.
Thanks everyone for your presentations.
We are super ahead of schedule.
So we have lots of time for questions.
So I will start with the few
and then we'll hand it over to the Commissioners,
hand it over to the Commissioners
and overt for questions following.
So we have lots of great information,
lots of technical detailed information in the presentations,
but I do just wanna take a step back
and start our questions this morning,
highlighting the importance of the work we are doing
to create programs that move us
towards greater equity.
With that, I wanna discuss us racial equities specifically.
So for the panelists, all the panelists,
it's a little bit of a three part question.
First, what historic barriers have there been
that have prevented racial equity to exist in this sector?
Second, what successful effort have you seen
to start dismantling these systemic barriers?
And finally, how do we create programs purposeful
in moving towards greater equity?
Does anybody wanna start?
-: This is Jana, I'll start.
So I think what historic barriers have there been
that have prevented racial equity, tribal nations,
and particularly rural tribal nations
from the rural electrification investments
of the last century.
So, to overcome some of these barriers tribes
are working with the state,
working with the federal government
to exercise jurisdictional control
and solutions that help them accelerate their energy access
and improve reliability and affordability at the same time.
I think one of the ways in which we have seen
a couple of the state programs that have been key to this
in the last few years
have been the California Energy Commission's EPIC program
and the CPC authorized Self-Generation Incentive Program.
So, when we look at the setting aside for one minute,
how these programs are funded, where they're funded from,
I think what we've seen is that
both programs have engendered incredible success
in equity and resilience metrics
that have also worked to reduce the cost of energy
in some of these disadvantaged rural and travel communities.
And so we see the continued need for R&D programs
R&D funding projects.
And we'll talk a little bit about
how to scale and maintain those in a minute,
but that's the way we have seen the state government,
tribal governments, leverage federal resources
to overcome racial equity barriers
in real terms with real energy reliability.
Thanks.
-: Thanks, Jana.
-: Could I say a couple things?
So first of all, the access to assistant is very important.
There are lots of obstacles.
One of the barriers of course
is when they're the question of documentation,
many households are mixed status,
some have documents, others don't,
and they have very hard time accessing.
I think removing that one barrier
would do an enormous amount of good,
then of course there's historic housing discrimination
redlining and so on.
So more African-Americans for instance are renters
than would otherwise be the case.
And one study here in Baltimore, like I said,
have studied a lot.
The number one obstacle to weatherization in Baltimore
during a pilot program was refusal
of landlord access to the property.
Of course,
if your landlord doesn't allow you to do an audit,
you can't weatherize.
That's the end of the story right there.
So you're stuck with a high energy burden
before you get started on an energy transition.
So I think a systemic removal of obstacles,
all of these obstacles, very difficult,
focusing on the energy side.
I think there are lots of obstacles to high PIPP enrollment.
Colorado for instance has a PIPP program,
but only 8% enrollment than the are aware of it
of course, they Commissioned a study.
What's the problem?
What are the obstacles?
That's why I mentioned we're doing a special study
on my colleague, Julie is doing a special study on that.
But I think there are more obstacles in rural areas
to actually accessing the energy transition
than not many installers,
if an installer has to go in their pick up truck
with their tool for a hundred miles to do one installation,
it's going to be very costly.
So, I think really looking at the specific obstacles,
not only for energy assistance,
which I think are better known,
but are fully integrating into the energy transition
is very important.
For instance, we looked at this question
of increasing capacity for weatherization
and electrification in rural areas,
which in Colorado,
most of the rural areas are primarily Whites.
That is not application California.
So automatically has an equity component,
a racial equity component
when you increase capacity for weatherization.
And let me mention mobile homes.
And there are more in rural areas
and priority to propane heating conversion with more common.
So there are many obstacles that are specific
that have racial explicit or implicit biases.
And I would call attention to two specifically.
One is documentation and the other is being a renter,
I think those have very, very high racial biases
and they need to be addressed.
-: Thanks Arjun.
-: So this is Tim from EDF.
I think one of the historic challenges
that we have faced of course,
is that the tools that have been available
for addressing some of these challenges
have been somewhat crude insofar as bill relief
or sort of generalizable sort of targeted programs.
And of course, where California has gone
is sort of the expansion of the and Enviroscreen
and investment programs to start targeting
more geographically, where some of these investments can go,
but we still have a lack of data that is quantifiable
as it relates to the emissions reductions benefits
and the value of those benefits
at the locational and community level.
As we've done analysis on the impact,
for example, of the transportation system,
in various locations, you can see in places like Oakland,
you have really different benefits or the electrification,
even almost within the same zip code
and the targeting of the improvement in the data
that can then create quantifiable,
emissions reductions assessments,
and then translatable economic benefits
so that we can sort of have more prioritized systems
based on sort of the actual, the value of those
is I think one area where we could improve,
similarly you look at, for example,
the building electrification space,
where we know most of the research coming out now
is demonstrating that the use of natural gas in buildings,
contributes to localized indoor air quality impacts
as well as regional air quality degradation
and the use of that new data
to quantify the locational benefits
of moving towards electrification
and then to start to embed those into the improvements
in cost benefit analysis
that goes alongside investment programs
can start to drive better investment
in the types of solutions
that can have more value in communities
that are traditionally overburdened with pollution.
-: Thanks, Tim.
-: Yeah, I would add that like,
at a high level, historic barriers include all of redlining,
a history of disinvestment in communities of color,
racist land use and zoning practices that have resulted,
which has determined really where communities live
and the resources that communities have access to.
And this determines who suffers
from poor public health outcomes
due to proximity to extractive industries
who lives in regions most vulnerable
to extreme weather events and wildfire damages,
and who has access to programs in energy efficiency
and renewable energy,
which results in reducing energy bills.
So, address addressing the climate situation,
we're addressing an expensive situation,
but one that has been subsidized
by low income communities of color.
So we really need
to begin targeted investments in these communities.
And I think that those marching orders are pretty clear.
But in terms of access and how that is racial equity issue,
a lot of these programs aren't accessible
to low income communities of color,
communities that aren't English speaking
as their first language.
And so we really recommend that greater technical assistance
in terms of creating microgrids
or in terms of having a one stop shop
where customers can really understand what programs
they're eligible for and be connected to all other,
the suite of programs that the CPUC has
is something that's really important to reach customers
that have the least amount of access.
And I would echo Arjun's points that,
a lot of the eligibility criteria in these programs
are very limiting, especially to low income communities
and undocumented community.
-: Thanks, Justin.
All four of you talked a little bit about,
targeting communities, prioritizing communities.
I'm wondering if we can kind of draw
on that a little bit more
because right now the PUC, the definition that the PUC
uses to identify these priority frontline communities
kind of encapsulated under the umbrella
of what we call environmental
and social justice communities, ESJ communities,
which it includes low income census jobs,
low income households, disadvantaged communities,
tribal communities and predominantly communities of color.
It's a great definition to start with.
However, the challenge we have Austin is that
this definition, it includes the majority of the state.
And there are times when we need
to be a little bit more focused
and targeted in our prioritization.
And we are thinking through what sorts of metrics
and data sources we should be using
and helping in that prioritization.
So starting with Arjun,
I'm wondering, what do you think
about the affordability metrics
do you think we should be using the affordability metrics
and tools in conjunction with some
of these other aspects of the definition
to help us target communities?
-: Yeah, I personally do think that income
is the most important single metric gross income.
I have taken a look at all the metrics
that California has developed.
I can't say I've fully digested them,
it's really complicated (laughs), but-
-: There's so many of them.
(laughing)
-: So many, I was actually surprised how many there were.
But I think gross income without taking any of the benefits
and so on into account is a very good metric.
I think California 4% of gross income.
And then in the analysis we did in Colorado,
really a dividing line of 100% of federal poverty low,
whether you want to use area median income, I don't know
some dividing line below
which you are going to give grants for.
And you have a self declaration of income
in your CARE program that I think should go over,
I know there are problems when a lot of people audited
and people fall off
and I don't have a ready solution for you on that.
But I think self declaration of income
is a very good way to start.
I think, I hesitate to say
whether you can use your income tax,
anonymized from income tax transfer to a PIPP program
or energy transition programs,
some way to use that income hook,
to get people into both the energy transition
and a percentage of income payment program
would be a very, very good thing.
Very hard to do, yeah.
Maybe knocking on doors as if it were an election.
(laughing)
-: Yeah I mean, actually one thing that we have heard
in some other discussions around this is,
how do we use the income tax without violating
all of the privacy issues around that?
So, that's an interesting perspective there.
-: Yeah, that's why I hesitated to say that
so that's obviously a non-lawyer,
a non-privacy expert perspective.
I hesitate to say of course privacy is very important.
Yeah, very simple.
-: Yeah.
Next I wanna kind of Jan, you had mentioned in your slides,
you're talking about non-energy metrics.
I'm wondering if you can talk a little bit more about that.
If we should be bundling
some of these definitions we have with
what you talked about reliability and access
and things like food insecurity.
-: Well, we know that as Arjun and you
were just talking about,
we know that some of these metrics
can get super complicated.
So we wanna make sure that
we don't try to do too much with these quantifications.
We've really seen where the clear overlap is
is in terms of toxic hot spots and air quality
as it relates to the energy generation grids.
So looking at immediate pollution in communities,
which in some ways is already being done under Envroscreen.
But I think what Enviroscreen doesn't do
is solve for sort of toxic hot spots
downscaled around particular sites
that are not in urban environments
or in environments that aren't already
a part of Enviroscreen.
So for example,
there are tribal nations up here
in the North Coast of California
that have elementary schools being run by diesel generators.
That's all they've ever had (chuckles).
And without some good work,
that's all they're ever going to have.
And so I think cleanliness access and reliability
and as Arjun was saying,
income has a centralized place in all that,
but certainly with respect to focusing
in on the energy sector,
those are the things that we think about a lot up here.
And I think,
I wanna get to sort of how we do that,
but I think those are the things
that if we do a good job of thinking those through,
we can take advantage of the motivations
that people already have in those areas
to make things more reliable.
So, I get calls every day from tribal nations
wanting to improve their energy sector,
improve the cleanliness of their energy sector,
the reliability of their energy sector,
hook up areas that don't have access
where reliability is just so poor.
And I think that those are some clear priorities
that we can use to inform equity
and affordability strategies going forward.
-: Thanks, Jana.
And I think it's a really good point
that you make of not trying to overcomplicate it
and not or try to over quantify
'cause I think that a lot of times in government
we're like these data nerds and we try to figure out
how to get it all on just the numbers.
And Justin, I wanted to ask you used specifically with,
many of the tools that we have,
they're built using census data,
or kind of these government data portals.
And we know a lot of rural communities, tribal governments,
they don't necessarily show up in all those data sets.
And I'm wondering do you have any recommendations for us
and how to target some of those communities
get more information from those communities.
-: Great, thanks Kathleen.
So first I'll just start out talking about prior
by about targeting in general, say has very important,
it is very supportive of Cal Enviroscreen
believes that it's one of effective tools that we have
to identify communities that are experiencing
a disproportionate burden of environmental pollution
and related health problems And so it's been very useful
in targeting clean energy investments.
But in terms of targeting investments to communities
it might not show up in our current data sets.
We believe that you can use additional tools
that might consider income in affordability,
pollution reduction, as well as resiliency planning
to add layers of overlapping criteria
that Cal Enviroscreen already provides us
in order to identify and target communities
based on the specific goal of the program.
And so when we talk about
trying to include more rural communities,
we don't necessarily, I would agree with Jana
that we don't wanna overcomplicate the number of metrics
that we're bringing in,
and we don't want to reinvent the wheel either.
There are many community based organizations
that already have deep ties within these communities,
and we know which communities these are,
that don't show up in the census tracks.
And we should be better utilizing these networks,
these already existing networks
to ensure better more proactive and targeted outreach.
There's no single metrics that captures communities
that are traditionally overlooked.
So CBOs can provide a more holistic and diverse
kind of array of connections that are necessary
to fill these gaps within our data.
And we would recommend as well, a rural carve out
or tool that specifically breaks down communities
based on outreach to CBOs and feedback in this tool
with community based organizations
that are based in those rural communities.
-: Great, thanks Justin.
All right, let's just gears a little bit
and talk about some of the rate payer subsidy
and percentage of income payment plans, PIPP
that Arjun had mentioned earlier in his presentation.
This question, let's start with Tim.
At the PUC, we have a disconnections
PIPP percentage of income payment plan,
and that's just started.
So, we don't have a lot of good data on that quite yet,
but we do have the arrearage management program,
which is in response to COVID.
And we are seeing that even with the high amount of subsidy
that comes with the AMP,
many customers are unable to make their AMP payments.
Just for a little bit of background
in the arrearage management program, the AMP
customers are entitled to,
if they pay one month of their bill on time than one 12,
so part of their bill over time is forgiven.
So I guess the question is,
how do we design programs that are better able
to help folks particularly low income rate payers
since we're seeing in the AMP example
that a lot of people aren't even able
to make those payments?
-: Yeah, I think that it's obviously important to note
that a number of states
through the the federal (indistinct) efforts
have developed assistance programs,
you can look at Illinois or Wisconsin or Missouri,
through the Midwest Europe, Ohio,
they're doing things while like this.
Specifically with Ohio and Illinois having PIPP programs,
I think Ohio dates back to the early 1980s.
And you can see Pennsylvania having a assistance program
that's like a PIPP.
It's common that,
and I think what we've heard already is that the data
about the effectiveness of these programs,
is really mixed on a state by state basis.
And especially when it comes to PIPP performance,
it's challenging to find data that's out there
that you don't have to go generate yourself.
But there are some strategies like in Illinois
where they have an Arrearage forgiveness program,
up to $5,000 per family.
And so in some case,
it may be just that we need to be putting more
towards families that are in dire straits
to help them with their arrearages
so that we're not putting them out on the streets,
as it relates to sort of being unable
to sort of pay their bills.
And so I think that there's certainly
is just gonna have to be
more that is put into programs and direct assistance
to families that can't afford it.
Second is, I do think that there is some important,
additional lenses that we can put on,
so the broad scale investments that can help
to reduce the energy burden of some of these families.
And, you can see the data that is being generated.
And I think the affordability metrics are important
for identifying sort of the cost of the overall program.
But if you were to try to go online
or to try to evaluate the effectiveness
of individual utility programs in communities
where they are going, where electrification is happening
with specificity, you would have a hard time,
looking at the California data and seeing much usability
from a perspective of identifying
sort of as an external, like non-expert advocate,
sort of generalizable sort of transparency initiative
that looks at the level of investment
that's going into these communities on a census track basis
could be helpful for targeting this at the community level.
And so I think that there's more that can be done
in terms of data transparency to help this out.
But I think at its core,
we look at some of these other states
where they're providing large pots of money
specifically for overcoming arrearages,
and it may be necessary to add a higher amount of dollars
to the arrears forgiveness pot.
-: Thanks, Tim.
That was very insightful.
I have some more questions,
but maybe let's open it up first
to see if any of the Commissioners
or anybody else wants to ask a question to our panel.
(laughing)
No takers.
Commissioner Rechtschaffen.
-: Well, I'm gonna yield to Commissioner Houck,
and then I'll go after her.
-: I just wanted to thank all of the panelists
for the information and the slides
and your thoughtful consideration of these important issues,
as we're thinking through
how to deal with the affordability issues.
And then I will turn this over to Commissioner Reynolds
who I just wanted to mention was,
one of the Commissioners that really felt strongly
about own opening this proceeding on affordability,
given all of the issues that we're dealing with.
And so I will now turn this over to him.
-: Thank you and Commissioner Houck and I
were having a exchange on our own
and I just to reset the stage,
I think a lot of what was said here,
underscores why we did this,
why we opened up the affordability proceedings.
We know that low modern income consumers spend
a disproportionate share of their income on utilities
and this is particularly challenging in California,
given housing costs or high poverty rate,
subsidies do not equate with affordability.
I think that's very clear and very well stated.
The real world experience of consumers
is not one utility bill at a time,
but it's the whole package of utility bills
along with housing costs that they face,
rate pressure is extraordinary in getting more extreme.
And at the same time, we face increasing pressures
to deal with climate change.
And we also felt like we were making
a lot of individual decisions
that had a cumulative effect on rates,
but we weren't taking a holistic view
at what we can do to tamp down those rates.
So, those were some of the motivating forces
behind opening this up in 2019,
or 2018 I believe we opened it up
and they're all present in greater force right now,
as many of the speakers mentioned.
I had a question for Jana.
You mentioned,
you thought that rural areas and tribal areas
are very good candidates for electrification.
And as we'll hear about tomorrow
and as Tim mentioned in his presentation,
one of the issues confronting us
is we transition to a clean energy future
is how to select prune our infrastructure system
and how to do that in an affordable way.
So my question for you is,
could you elaborate a little bit more
on why you think rural and tribal areas
are good candidates for electrification?
And if I could ask a second question, I was gonna ask,
Tim, if you have any data that you can share with us,
even emerging data that quantifies
the pollution reduction benefits,
the other non monetary benefits
of replacing gas with electrical.
So how's that a speech and two questions.
-: I like it.
(laughing)
Yeah, I'm happy to expand on that.
So, just as a practical matter,
when I look at that natural gas transmission ecosystem,
and you see that transmission pipeline
stretching out to the coast over rough terrain,
it's gotta be pretty expensive to maintain,
it's at risk from seismic rupture,
and it's serving 140,000 people here on the coast,
just as a practical matter, that seems like,
the cost of benefits might come into view there
for pruning that limb.
No one's talking about that directly,
but there's number of natural gas transmission line
that go off into rural areas
that are serving a relatively small populated areas
and that might be good places
to start this full electrification strategy.
I'm not advocating for abrupt
removal of natural gas systems,
but like on the coast out here,
our natural gas power plants
is also vulnerable to sea level rise
and that's gonna happen in the next three decades.
So, it seems to me
that we can help bridge the equity issue
around the deployment divide in rural areas
by also starting with rural areas
to really support a managed transition to electrification.
And I think there's a couple of key elements
that are important to that.
One is as I mentioned before,
rural areas, tribal areas need technical assistance.
We have seen this work very well project by project
in our microgrid projects as an example.
So we've been able to AMAP this incredible
sort of technical team.
And this gets into the for pilot projects,
the need for analysis and learning from those projects.
But if we had
strategically located technical assistance hubs
for microgrids distributed energy resources
and this natural gas to electrification transition,
it would help us learn from one another,
it would build on the eagerness to include more solar,
include more electrification of buildings
for greater efficiency and lower pollution.
It would help us implement the upcoming investments
and funding that's coming down from the federal government
and the state government and climate.
It provides a vetting space for design
and consultant choice and tech and economic strategies.
And importantly, like these systems are now very smart,
so we can collect and use the data.
There's so much data available,
but there's no structural resources to analyze it,
to improve efficiency and affordability.
So technical assistance hubs that blend research,
deployment, utility ecosystems
and regional governments and communities,
we can leverage each other's strengths
and investment willingness
to improve this reliability affordably.
And if done in a coordinated way,
we'll make good use of these investments
that crucially avoid (indistinct) of the market.
And lastly, I'll just say that,
I think there's a need as we've been talking about,
and other panelists have said,
we need to support the contractor installer warranty
and O&M technician ecosystem, particularly in rural areas,
by increasing product knowledge and training opportunities,
technical assistance hubs could have that as well.
We need it in rural and tribal areas,
particularly due to that deployment divide.
Scalability and affordability,
particularly in rural tribal regions,
depends on this piece.
When the first SJ incentive as an example came out
for residential battery storage,
this region had no access to either the batteries themselves
or certified installers.
So there was a willingness to adopt and implement,
but there's as a practical matter,
no contractor ecosystem to be able to do that,
nor was there a sales channel to be able to do that,
that's changing,
but rural environments, tribal environments
are often the last to take advantage
of these kinds of programs,
because the ecosystem isn't built.
We right now are struggling
with implementing heat pump HVAC systems
because of the lack of product knowledge in our areas.
We're fighting this really
like incredible amount of expertise,
but for that's limited to outdated systems
and more inefficient systems and fossil based systems.
So when we think about the ways
in which we need to transition,
there's a lot of optimism,
there's a lot of motivation out here
to improve our utility infrastructure.
And by focusing on these kinds of structural supports,
we can meet in the middle and we can leverage real dollars,
real motivation, real expertise out here
to create affordability in places that need it most.
-: If I could respond just quickly before answering
or asking Tim to respond to my second question,
we will take it at the PUC to follow up on your idea
of these regional hubs of technical assistance,
because it cuts across our various proceedings.
I know we heard from Angelina east list
on last week at our Commission meeting
when the disadvantaged community's advisory group reported
on current priorities, that this is a priority
for that group as well.
And I don't know if you're part,
this is an advertisement,
I don't know if you're part
of our long term gas OIR proceeding
where we are trying different approaches
and really seeking the broader set of input
about how to get communities involved
in these very, very difficult
and highly technical questions.
This is very germane to that discussion.
So thank you for those insights
and we're working on our end,
and I would encourage you to help us
by continue to flesh out what that might look like,
instead of these regional hubs.
and Kathleen if it's okay to ask Tim answer my questions.
-: Excellent.
Yes, there's a number of streams of data,
of course that exist today,
and that are sort of increasingly
becoming an area of focus.
The range non monetary benefits
associated with the transition,
off of gas or off of a heavy reliance on gas
in a building sector, of course take the form
of a couple of different pots.
One being of course, the climate concerns.
And I think that the data is pretty clear
in terms of the size and scope of the climate impact,
from utilizing natural gas in homes and businesses.
One of the various pieces that we often overlook of course,
is not just the emissions of leakage associated,
at the home or at the direct combustion,
but also in the whole value chain
that's associated with bringing the gas
from the oil field or from the gas field to the end use.
The EDF data from our scientific assessment
showed that roughly about 2.3% of the gas
is lost from the point of production
to the point of end use.
California actually did some quantification
of what that looks like
in terms of the gas that we utilize in California.
And that's about adding an extra 25 million metric tons
of carbon dioxide equivalent gases
on top of the direct combustion and in-state emissions
associated with all that gas that we import.
So, if we look at the transition off of gas
in the built environment here in California,
we certainly should be looking
at a reduction in the associated leakage
that is accompanied by a reduction in gas imports,
because it will indeed reduce the overall demand for gas,
which should have a commensurate reduction
in the amount of production needed
to meet the California demand.
Second is of course that the in basin and instate,
emissions associated with combustion
localized NOx emissions,
carbon monoxide emissions and others,
there is an increasing amount of data.
In fact, the studies that have come out
just in the last month or so,
they get clear about the contribution of this data,
of these emissions to degraded health endpoints.
I'd say that we know just like in the transportation sector
that reducing gasoline and diesel use,
doesn't impact everybody the same,
just like reducing natural gas use in homes,
buildings doesn't impact everybody the same
if you already have preexisting health conditions,
or you a home which has less ventilation
or a higher amount or less efficient combustion,
you're gonna have higher impact in those places,
just like you are gonna have in a neighborhood
that is on a major transportation artery.
And I don't think yet we have
the kind of granularity that exists
to differentiate the types of homes and businesses
that are going to experience the highest impacts
and the ability to quantify those impacts
but we do know that there are communities and individuals
that have higher impacts than others,
and that we need to be focusing on those individuals
alongside the broad scale transition
so that we can focus our efforts
that deliver the highest benefits first.
And then finally,
if there's of course a whole body of literature
that talks about the non-economic benefits,
the non quantifiable sort of direct payer benefits
associated with the broad scale transition
that emerges from things such as improvements
in infrastructure deployment and development of industries,
In California we've seen, of course
labor market and job generation benefits
associated with the investment in clean energy
and intermission reduction activities for years.
And we would be remiss
to lose out on the quantification of those benefits
alongside this transition,
because of course they are real
and they impact communities where they're located.
So in short, I would say there's multiple categories.
Some we have better data than others.
And the emerging data does demonstrate
that there are communities and individuals
on the health benefit side that are experiencing
these benefits first and worst.
And I think that we should be prioritizing investments
in those communities and those individuals
so that we can deliver those benefits
as quickly as possible.
-: Thanks, Tim.
Any other Commissioners have a question?
I can ask one final one, oh, Commissioner McAlister.
-: And I think Commissioner Monahan
-: Oh, by Commission Monahan (laughs).
-: Also has a question.
-: Okay, can you hear me?
Great, well, there are so many great themes brought up here,
I just wanna congratulate you
both putting the staff that put it together,
very complimentary all your presentations,
and also just way too many themes to ask questions about.
But I do have a very quick comment
just about come of overarching and really I think,
we have these sort of complimentary goals,
maybe conflicting in some ways, right?
We really want to optimize the use of all the funds
that we have access to, whether that's rate payer funds,
general funds, federal funds,
we really need to make sure that we utilize those funds
to do many of the things that you're talking about,
most effectively in a targeted way, right?
Where we go and where the greenhouse gas reductions
and the bill savings and all the other benefits
that Tim just talked about,
where those are gonna be most,
where those funds are gonna be most effective
and have the biggest impact.
And we also know, that there's a lot of new technology
that needs investment, that needs market development,
and many of the things you've brought up as well.
So I just, in particular, I think Arjun and Jana's comments
sort of along a lot of these lines, thanks for those.
So, and I completely agree that efficiency, demand response,
smartness in our building and load management standards,
sort of rates that incentivize behavior,
all of those are key tools in our toolbox
that we have to bring to this across the board,
across the marketplace,
not just with frontline disadvantaged communities
under resource communities.
So kind of with that background,
I have a couple of questions.
We now have access to data, a couple of you brought that up.
We have amazing access to data that including,
interval data and very, very granular data
that we are increasingly able to use
to determine where those savings actually are,
where those positive impacts are feasible.
Even if you have identical,
if you have a community,
it's got a whole bunch of different customers in it,
actually looking at the load shapes
the sort of patterns of use to, to be able to say,
hey, here's where we should be targeted,
here's where the savings are and here's where they're not.
And so I think those questions we can ask
from a technical perspective,
okay, well, this family, this house
actually has a huge seasonal load,
it looks like they have
a very inefficient mechanical system,
it looks like there's massive benefits
to insulating and replacement of the mechanical,
we should go to there.
And there are other people in that same community,
maybe it's smaller loads, one person in a home,
it might be identical homes.
So I guess I'm wondering, sort of this can be pretty touchy
when you're talking about equity,
because you don't wanna go maybe too far down this road,
but I want to just ask you,
ask whoever wants to respond,
do you see kind of equity concerns with such an approach?
We've gotta take care of our money,
there's just not enough to go around for the whole state,
and so we really need to, to optimize that.
So that's one question.
And second one is,
so along the lines of keeping it real,
and several of you have commented on the need
for effective community engagement.
And I just wanna command Abigail and Jana,
you're doing this every day and you've got really think
on the pulse of your communities.
What models exist for the state
to really effectively cultivate community relationships,
relationships with actual,
relatively smallish communities likely across the state?
There are often thought leaders,
say the schools or in the community, elected officials,
and that requires real resources, right?
And independent from project resources
and mechanical and all that,
like actual building investments.
Going from the state
down to the local down to the community,
those are key aspects of this sort of supply chain
for services that we need to provide
to move our buildings into the carbonized future.
I get nervous when we talk about sort of communities
in the generic sense, because I feel like these are actual,
incredibly diverse communities in the state.
And I just wanna throw that out there as a kind of a problem
that I still not that
I don't think we've really cracked at the state level.
And so, what are the channels we can work
to get resources really where they need to be
in a way that they're effective
and the community actually buys into?
So two very different questions.
-: Well, I'll speak from what we're doing on the North Coast.
So there is a new community convening,
climate and community resilience hub
that formed a few years ago
that is attempting to bring the thought leaders together
from various constituencies,
with inequity lens and desiloing
between local government, tribal government,
and then building and strengthening relationships
with state and federal counterparts.
So in our region, I've been a part of this effort.
It's the Redwood Region Climate
and Community Resilience Hub,
or the CORE Hub as we call it.
And it's been effective in really catalyzing
and accelerating the conversation
around climate resilience
and particularly around natural
and built infrastructure resilience.
So we need, I think the simple answer is,
we need dedicated forums for this on a regional basis
that are desiloed, that are working to desilo
and bring voices to the table
that have been left out of the decision making to date.
We've heard people talk about that today
and that cannot be overstated in terms of its importance.
I'll say that in the short time
that we've been up and running,
the thing that we run up against
is we need that trusted data and analysis.
So that's where these that's where the technical assistance
and research hubs come in.
In the best light, it works scaled up
from how we've seen it work in our microgrid projects,
which is we have our state energy infrastructure ecosystem,
the CPUC, the CEC, our utilities,
the regulatory and research and deployment bodies
that are working together.
And then in the community,
you have a bunch of capacity building that's going on,
people who understand how to do these kinds of systems,
but that are working on the leading edge
of deployment and making them better.
We think that that model is replicable
and that, that technical assistance support
within the region has made all the difference,
both in terms of regional resiliency and affordability,
but also the just general learning
that's happening across the state.
So, the microgrids that were developed up in Humboldt County
were some of the first
sort of clean energy microgrids in California,
and now there's dozens of projects
and hundreds more in the queue (laughs).
That's the way that this is supposed to work.
And that's happened in the last seven years
that hasn't been like a 20 year effort.
Microgrids launched by thought leadership
at the CPUC and the CEC
with appropriate amount of pilot scale funding,
and now we're scaled up across the state.
We can do this with our energy sector more broadly
and improve equity in the process.
But I can't overstate the importance
of these technical assistance and data analysis hubs.
We also need to make sure that we are gathering data,
not just on, as you were saying,
what the electrical grid is doing nanosecond by nanosecond,
but what our emissions are.
So we've seen a lot of improvement
in the methane emission quantification in carbon monoxide,
in NOx and other emissions.
We need to make sure that
that is a source of data gathering that is not jeopardized.
That is in our view,
the tribal government's responsibility,
the state government's responsibility,
agency responsibility, we need to really protect that
because that gives us, of course, this underlying data
for all of our decisions that we're making.
-: Hi, I'd also like to respond
to the Commissioner McAllister's question
about how we realistically
can reach all of these small communities.
I know it seems like an unbearable task,
but what is comforting to know that,
there are community based organizations
that have been working with these communities for decades.
For example, our organization stop help enterprises
that's been in the communities for over 60 years.
And when you work with the CBO like this,
which you have is already established relationship
with these communities, you have previous work history,
previous projects that have been worked on
together with the CBO and with the communities.
So, one thing that might be helpful is
for the CPUC and the Energy Commission
to begin to gather a list of who these trusted
community based organizations are a across the state,
perhaps on a regional level,
because what I can envision happening
is similar to what happened in the drinking water world,
when the state water resource control board decided,
to figure out how we can help these thousands of communities
that we're dealing with contaminated water
and how we could provide technical assistance,
they needed to create
a list of technical assistance providers
that can provide this resource to these small communities
with the criteria was, do you have existing relationships?
Do you have the staff capacity to do this work?
So, I can envision something like that happening
for the work that is in front of us here today,
around equitable access to energy, to affordable energy.
So that is one thing that we need to do,
and to your other question,
the first part of your question was about,
funding and how to get that,
I believe is how do you get that out?
One thing that worries me a lot is,
the state does have a lot of money available for this
it's not unlimited.
But I often worry about
how those most vulnerable communities
will really get to access that funding,
because there is still a huge disconnect
between the communities that need the money the most,
and their ability to apply for this funding
or to get to have it actually come down to them, right?
So again,
if you have the right technical assistance providers,
you can make that connection.
But the reality is that most of these small communities
will never get these resources,
unless someone's to help them make the connection, right?
Because we're talking about rural unincorporated communities
and unfortunately, they are not the first priority
for the county elected officials who represent them,
they don't have a mayor or city council that thinks
about these rules from all communities, right?
So they're essentially left alone.
But if you can find the right organization
whose job it is or whose mission it is
to help tho these types of communities,
that's where you'll make the connection,
is not what will ends up happening is
the resources are gonna go out to the same cities
or communities that have been helped in the past.
And we're not actually going to reach those
that have not been able to participate previously.
So again, I think starting to actively identify
who will partner can be,
who can partner with the CPUC and the Energy Commission
to help you reach those
that are just historically hard to reach
and think about a way that makes sense
for these community based organizations,
where usually nonprofits, have it make sense for them
to help you do this, right?
Because we all know that a lot of times
nonprofit organizations are underpaid
and often don't have their resources to do this,
but they can be a huge resource to you if you the right way.
-: Thanks you Jana.
-: Can I jump in?
-: Address the first part
of Commissioner McAllister's question about efficient-
-: It will be brief I want give give-
-: No, go ahead. (indistinct)
-: No, go ahead.
But just, if you could be brief (indistinct).
-: Yeah, one thing I was going to suggest
on the technical side complimenting what has just been said
is to target the metric of energy use intensity
for gas and electricity.
So then you don't have to worry
about how many people there are on the house and so on,
and you can infer energy use intensity
through American community service,
you know all that you have all the tools
and that might be overlaid with the racial
and rental property owning characteristics
might provide a very powerful way to make priorities.
-: Kathleen, I think Commissioner-
-: The question.
-: Go ahead Commissioner Monahan.
-: Thanks Commissioner Houck.
I'm curious about this issue about data transparency.
And I was also struck
by something Jana said around schools
using diesel generators for electricity,
which is so disturbing on so many different levels.
And I'm just curious if there are any best practices
on data transparency when it comes to environmental justice
or environmental equity.
-: I would leave it to my fellow panelists
to talk about maybe best practices that they're aware of,
but the ways in which I've seen data be really effective
and what we get requests for data about all the time
is just kind of the bare bones about, okay,
so you have this fancy microgrid with solar and batteries
and you're dispatching these things all around
and trying to make sort of optimized use of everything.
What percentage of your annual electrical use
is actually solar while you're connected to the grid
or in cases where you're disconnected
from the grid, then how much is?
So we're getting asked for sort of analysis
around the cleanliness of these systems,
the cost effectiveness of them, the affordability of them.
And that is something that we try very hard
to respond to these information requests, but it is
for a very small tribal government and a very small system,
it's difficult to sort of feel the volume of requests.
If we were able to provide data feeds
and we've been working on sort of telemetry pilots
to be able to see how we might do that,
but we know that we have the data
that can be very instructional
to figuring out how to do grid segmentation,
to build sort of these connected communities
that at the end of the day may help affordability
by avoiding altogether
or at least delaying large transmission upgrades
if we can get hyper efficient on a segmented level,
maybe we can avoid some of these big transmission upgrades.
But we see the need for
basically an R&D technical assistance hub
to be the repository of that,
to have people sort of working on the data analysis
and the reports out that we need to do
to guide these efforts into the near future.
-: And I wasn't very trying about
what I was thinking about with data transparency,
which was actually more in terms of say,
number and placement of schools
that are still using diesel default generators,
or how many homes they're using propane
for meeting their basic needs.
So there's like a basic needs cut, which I think right,
would be helpful to have sort of statewide data on that
so that then we can track,
are we making progress in meeting basic needs
and also cleaning up the electric or energy supply.
-: Some of that data's being done
on a project by project basis,
we're working with a number of the tribes
on the North Coast to tease out the exact data sets
you're talking about.
So it's really, in tribal nations,
I've seen that best handled through self-reporting.
And when it's in the context of reliability improvement,
generally, tribal governments
are motivated to provide that data
and I'll turn it to my fellow panelists
for other other ideas on this one.
-: Well, in terms of your question
about data for propane users,
I agree it is being done project by projects
that work started in the SJ pilots proceeding
or the proceeding that led to the SUV pilots,
where we identified about 170 communities,
some are partial that are disadvantaged
and are in the San Joaquin valley
and do not have access to natural gas.
So the list is already starting,
but we would need to collect that information
for the other parts of the state.
-: Is there any other other panelists wanna respond?
Right, maybe we'll just turn it to Commissioner Gunda
for one quick comment.
-: One thing that came up in regard to propane,
particularly of course, more common rural areas,
but mobile homes, I think the type of home
is more easily identifiable perhaps,
and mobile homes will tend to have more propane.
And of course there's a sense of tract analysis
that's also available to try to hone in on,
which are the areas with great density of propane heating.
-: Yeah, thank you, Kathleen.
I just wanted to first just say thank you
to this amazing panel and Kathleen to you
for moderating this group
and just the CPUC leadership Commissioner Houck
and the entire of this CPUC's that and the Commission
for really having this extremely important conversation.
I mean, every time we come on the late thing,
or you go to the reliability or resource planning,
it's all field so integrated and so hammered,
we have the latest IPCC report today
and the urgency of this, the climate change impact
is also upon us.
So I just wanted to make a quick comment in kind of
Abigail kinda mentioned early on today,
that a couple of key things that she's looking at
is really the ability to have trust with the communities,
that's something that she sees as a barrier.
And I think so much of the conversation today
was around that awareness trust building
and ability for all of us to collectively move forward
with a clear solution step.
And I think, I want to end with Jana's us kind of call
for these technical assistance hubs.
I think we've heard,
there's a need for technical assistance,
historically Backer kinda mentioned
the need for resiliency and the reliability hubs.
And we've also talked today
about the facilitative need for dsiloing.
So I really like that Commissioner Rechtschaffen
and requested Jana to you to
kind of explore that idea and flesh that out better,
and just wanted to kind of ask you and the rest of the panel
to really consider that idea of a hub,
whatever that is that is required for regional integration,
really thinking to regional clusters of kind of leadership
and input improve both procedure equity,
but also helping us take the thoughts
that we have today into actions.
So if we can help with that again,
thank you to each of you and all the wavering commitment
to solve this climate issue
and do it in an equitable fashion.
So I just wanna thank all of you
and she had my gratitude for that team.
-: All right, thank you very much everyone.
For the great panelists,
thank our panelists for the great discussion today
and I hope that that sets up well
for the rest of the workshop.
We'll pass it back to Jack.
-: Thank you.
That was a great start a great morning through this En Banc.
We will break for lunch.
Come back at 1:00,
we have a stop provoking amazing two panels
on non paper sources of funding at 1:00
and electric rate making at 2:30
and public comments following that,
and then closing comments.
So, thank you again, we'll see you at one o'clock here.
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Operator: By today's conference has resume,
you may (indistinct).
-: Thank you.
Welcome back to CPUC Affordability En Banc,
I'm Jack Chang analyst, working with the retail rates team
to help organize this En Banc.
We just heard a great morning session
and we have two excellent panels
scheduled for the afternoon.
One on non rate payer resources funding,
another on electric rate making reforms.
So now I would like introduce Grant Mack,
Director of CPUC Governmental Affairs
who will moderate our non rate payer resource funding panel.
Welcome Grant.
-: Great, thanks Jack.
And good afternoon Commissioners.
Thank you for giving me the opportunity
to serve as a moderator for this panel.
I'm really excited about the topic
of identifying and utilizing non rate payer funding sources
to advance our clean energy efforts
while mitigating increases in electric and gas rates.
This discussion comes at an opportune time
when the general fund, the state general fund, excuse me,
is experiencing a large one time surplus
in the tens of billions of dollars.
Specifically last year,
there was roughly 76 billion identified in surplus funding
for this current fiscal year,
and it estimated 46 billion in surplus funding available
for this upcoming fiscal year.
In addition, the state has received about 25 billion
for this current fiscal year and one time funding
from the federal American Rescue Plan Act.
Not only that,
but there was around $58 billion appropriated last year
under the federal Infrastructure Investment and Jobs Act
for clean energy development,
energy efficiency, and weatherization retrofits for homes,
buildings, and communities,
and for clean energy manufacturing
and workforce development.
In recognition of the significant amount
of available public monies,
it is great to see that Governor Newsom
has proposed to allocate a little over 2 billion
in state general fund monies this year
towards clean energy development
and equitable building decarbonization.
This includes everything from long duration,
energy storage, demonstration projects,
and green hydrogen per reduction
to the electrification of existing buildings
and industrial processes.
With that introduction,
I'd like to now turn it over to our esteem panelists,
to discuss their ideas
for accessing non repair funding opportunities,
as well as discuss policy trade offs, barriers,
and challenges to these approaches
that could ultimately help offset the incremental increase
in electric and gas IOU rates.
With that, I'm gonna turn over to Mark Tony from TURN.
Mark, the floor is yours.
-: Thank you.
TURN appreciate the attendance
of CPUC Commissioners and their staff
at today's part two of the energy affordability En Benc.
I'd like to start off by reminding you,
that the Commission for affordability proceeding
is not limited to energy services.
TURN and other organizations across California,
eagerly await part one of the broadband
and water affordability En Banc
and stand ready to offer input
on the affordability of those services,
including disconnections, the arrearages,
safety and reliability.
What rate payer want,
is the most green for the least green.
The cost greening,
the grid should not cutting off black brown, indigenous,
or any low income community from the grid
because the places our two do gone high.
Today, I offer two rate payer free revenue (indistinct)
to meet climate gold and I sound the alarm
for the CPUC to stop talking about cost containment
and start containing cost.
When it comes to transportation electrification,
it is time to replace rate payer revenue
with points of sale revenue.
Let me tell you how the term proposal works.
Now the other type of a new car is about $50,000 these days.
Now, if you have a 2% car rate fee,
that's a average of about a thousand dollars per vehicle.
Now there's 1.5 million gas vehicle
sold in California each year.
Times by the 1000,
you get approximately $1.5 billion annually
to buy down the cost of Evs, okay?
But you could also car dealers will at the point of sale,
get to direct customers to EVs with lower sticker price
than the comparable gas high hour car
that they're looking at.
Now, there will be enough funds
to also allocate the charging station, light duty trucks,
public transportation relocation,
and the proposal I'm talking about
does exempt Tesla vehicles from the subsidies.
Couple of reasons one is,
Tesla already represents 80% of all increase sales.
The proposal I am talking about
focuses on out of dealership, where people come in
and have a variety of cars to choose from.
On such a proposal,
when it comes to building electrification,
it's time to replace rate payer revenue
with point of sales revenue.
14 million homes in California
account for 7% of all carbon emissions.
Now another way of saying this,
you need to electrify 2 million homes
to achieve a 1% reduction in carbon emission.
So that's why when it comes to building electrification,
I say go big or go home.
There's just no point to,
spending hundreds of million of dollars a red payer of money
on 10,000 homes here and there.
So here's a number, there's about 400,000
existing single family homes
that are sold annually in California.
Now many okay,
so the proposal, the TURN don't be proposal
is to require the hot water, cooking and feeding
deconverged to electricity for all single family homes
as a condition of closing at growth, okay?
As I said, the big proposal,
'cause we're talking about 400,000 homes annually.
Now, many cities encounters already require electrical
and earthquake inspections and upgrades
as a condition to close that (indistinct).
So this is not a brand new idea.
Now the convergence to electricity can be financed
by at low mortgage interest rates
and be paid as part of closing costs
without out of pocket expense.
So these two part of sale revenue,
point of sales proposals, revenue proposal
for transportation and building electrification,
that two such and similarities.
One, they rely on zero rate paid dollars
and zero taxpayer dollars.
Yes we have a surplus last year and this year,
I guarantee we will not have a state budget surplus
year in and year out.
So that's what's attractive about these proposals.
The other similarities, they are long, long shots,
unless the CPUC shows it is serious about containing costs.
(indistinct) is here today to declare a state of emergency
and affordability state of emergencies,
residential customers that the afford big utility
have rear exist right now nearly 2 billion
and hundreds of thousand of black (indistinct) indigenous
and other low income families are in danger of being set off
in the next few months.
The Commission has lack, Edison customers
with a 20% increase in the last 12 months
by approving $2.1 billion in rate increase.
TURN profoundly disappoint
that Commission overruled a recent ALJ proposed decision
and gave medicine an extra 1 billion for carbon conductors
to reduce wildfire risks by only an additional 2%.
The Commission mission land, PGD customers
with the 20% rate increase
in the first three months of 2022 alone
on top of double digit increases in 2021.
This 20% increase of just tip of the iceberg.
It does not include the 30% 2023 GRC increase.
The $5.5 billion already spent on welfare mitigation
and yet to be approved or the $10.5 billion proposed
for 3,600 miles of underground.
If it sounds like I'm using strong language,
you're absolutely correct.
Sky rocketing rates just don't happen by themselves.
Sky rocketing rates happen
because they are approved by the Commission.
Now, lemme talk about innovative cost payment proposals
that the CPUC has the power to implement.
One is that the impact on affordability
and the impact on environmental and social justice
should be required as a component
of every breaking proceeding,
advice letter, memos (indistinct)
or any other utility request to raise rate.
Two, allocate zero rate payer dollars
for the Edison proposal to electrify 10,000 homes,
zero rate payer dollars for the PG&E,
charge (indistinct) EV proposal and zero rate payer dollars
for so count gas proposals
for allegedly green hydrogen pipeline.
Directing utilities to seek funding
from non rate payer sources for these proposals.
Invite them to go to the legislature, to go to the Governor,
to speak with the president,
to find some angel investors or each divine intervention.
Another idea is to hire an independent auditor,
to refuse to review management,
staffing ratios and expenses,
or I serve with the Commission would apply the same scrutiny
to utility management and legal expenses
that you apply to interveners requesting compensation.
Another idea is to adopt an inflation cap on great increases
as a solution for affordability.
Commissioners, you have to power to moderate inflation
by containing energy costs.
According to the bureau of labor statistics
before 0.2% electricity cost in January, 2022
was the second largest contributor after fuel oil
to the 7.5% consumer price in that increase.
Remember, that increases in energy costs
also hit the same consumers with increased food,
commodities and other CTI elements.
Time out, we need a time out on rich increases
the Commission just to all the time out
on the biggest rate relief proposal in years
because of political pressure, but guess what?
It's time to call it time out our rate increases,
we cannot continue to let God be the limit
on how many times a year
that utilities can request rate increases
and how much utilities send request in increases
each single time.
We can't continue to let the sky the limit
on how many times in a year
and how much the Commission can grant in rate increases.
Take a time out to implement
an inflation cap on rate increases,
nobody, but nobody is going to pay allow
to fee fee year fee.
Not legislation, not the Governor,
not anybody else until you get serious
about holding the lie on rates increases.
President Reynolds, Commissioner Rechtschaffen,
Commissioner Shiroma,
Commissioner Houck, Commissioner Reynolds,
we are in a state of emergency
when it comes to affordability.
Right here, depend on you for leadership
to make the hard decision to stand up
and set limits on rate increases
so they can continue to keep their lights on.
It's time to stop talking about cost containment
and trying start taking action to contain costs.
-: Great, thank you, Mark,
executive director of Utility Reform Network.
I'm really looking forward to questions later,
but before we go there,
I'd like to turn it over next to our panelist Michael Wara,
who serves as Director of the Climate Energy Policy Program
at the Woods Institute for Environment
at Stanford University.
Michael, the floor of yours.
-: Thanks so much.
And I'd just say thank you to the Commission
and also the energy Commission
for welcoming me on this panel.
It's a pleasure.
I'm gonna speak today in my personal capacity
and not as a representative of Stanford,
or I also sit on the Marin wildfire management protection
anyway, the Marin WMPA
and as a citizen oversight council member,
and I'm speaking my personal capacity there as well.
So I think I've been asked to talk
about non rate payer sources of funding
in the wildfire space.
And I think it's important to recognize
in the first instance,
where wildfire risk comes from in a holistic sense,
because we don't generally do that at the utility Commission
in order to then have a conversation around,
how to ideally reduce the rate payer costs
associated with that effort.
Obviously, wildfire risk comes from ignitions,
particularly ignitions during dangerous moments in time.
And we've all lived through the last five years
of terrible fire seasons.
Many of which have been utility caused,
but also in other years have been caused
by other factors, natural forces,
but ignitions certainly matters,
especially ignitions that occur during dry fall wind events.
Reducing ignition risk is therefore an important strategy,
especially if we can reduce ignitions
that occur at the most dangerous moments.
However, wildfire risk also comes
from spread how wildfire and that's an important factor.
It's been an important factor
in many of the utility cause fires.
For one example,
the rapid spread of the campfire post ignition
toward paradise.
Another example this summer,
the spread at various times,
quite rapid of the Dixie fire fire after ignition
followed by periods where the Dixie fire burned
at low to moderate intensity backing down slopes,
not causing much harm.
And so how we manage fire spread.
And if there are interventions we can take
to reduce the dangerous spread of wildfires
can be extremely important as well in reducing risk.
Similarly, issues in terms of the consequences of wildfires,
as we think about investment around communities,
and these are things like shaded fuel breaks
that are going in and lots of places in the state right now,
in addition investments that are targeted
at reducing the chances of structure ignition
are very important to reducing the consequences of wildfire
that we care most about, right?
People's lives being destroyed by these catastrophic fires.
And lastly, I just add another element
of the wildfire risk picture that we need to think about
is public health impacts.
And, PG&E is in court right now on a claim from the DA,
the Sonoma county DA around smoke impacts
from the Kincade fire, whether or not that claim holds up
I think there's broad agreement that wildfire
has become a major air pollution problem in California.
It's a public health crisis, the smoke impacts,
and we need to figure out how to address them.
And those may or may not be well managed
by reducing utility ignition.
So how do we manage it today?
We basically have a utility ignition prevention program.
That's very significant in scale.
We spend on the last set of wildfire mitigation plans.
I haven't looked and tried add to the current ones up,
but last year it was eight and a half billion dollars
in wildfire mitigation plan expenditures
across the investor owned utilities
that are regulated by the PUC.
My assumption is that the non CPC regulated utilities
are also investing significant resources
in wildfire mitigation as well.
In addition, we spend 1.5 billion in taxpayer funds
on fuels management and community protection.
So that those other, how does the fire,
can we do things that affect fire spread?
And can we do things that reduce the chances
that a community as a whole
or individual homes in particular
will be impacted by a wildfire if it does ignite?
And lastly, we spend four to 5 billion
in state and federal dollars on fire suppression,
mostly in California, that's a state expenditure,
but and it's a little bit hard to tease out
what the California share of the federal
fire suppression expenditures are,
but it's on the order of $5 billion for the state
close to four of which comes
directly from the Cal fire budget.
So that's an interesting outcome, right?
We're spending eight and a half billion
to prevent a particular kind of ignition,
one and a half billion to prevent the spread
of that ignition to form a catastrophic wildfire
and then 4 billion or so of state dollars
to try to put fires out.
That's not a huge surprise for folks
that work in the area of utility wildfire partly
because of the liability regime issue,
you know that we all know have thought at times
about the inverse kind of nation regime
that applies to investor in utilities,
I think is not gonna change at any point in the future,
but that would be a way to potentially modify the pressures
to spend ends money.
It's also not a surprise
because it's much easier to raise rates than to raise taxes.
And it's a less, perhaps less visible,
although no less real and certainly more regressive form
of raising revenue for public objective.
So I guess I have two ideas
that I think are worth considering.
One is to take a look at the basic issue of cost causation.
And I want to just,
I think it's important to be careful
when we speak about this idea,
but it is certainly the case that it is more expense
to serve customers that live in high wildfire threat areas
than it is to serve customers
that live in low wildfire threat areas.
We cannot feasibly charge the high threat areas
for the full cost of their service right now,
part of that has to do with the fact that
we should have invested more in earlier times,
and we didn't,
but I think it's also raises fundamental questions
around affordability and access
that would preclude fully charging
for the cost of wildfire hardening of the grid.
However, I think it is possible to conceive
of some sort of a fixed bill charge
that would defray some of the costs.
And I would just reference
as a potential precedent for this,
the state responsibility area, fire suppression fee.
It was about $130 that was in effect for several years,
leading up to 2017,
just prior to the Napa Sonoma firestorm
and the Thomas fire,
the legislature and the Governor's team
reached a deal to stem cap and trade,
part of that deal was repeal of this SRA fee.
And it was a necessary compromise
to get the Republican votes that were needed
to get the two thirds majority.
But I think it points out
that there is an aspect of firefighting costs
that's associated with having people
living in these rural areas that is different than,
and I think it's a potential model,
there was no way that $117
was gonna pay the full cost of Cal fires budget,
that wasn't the expectation.
The expectation was some form of cost share.
And I think a similar approach
might be taken in the utility context
to at least reduce the impact to some degree
of the cost of utility wildfire,
particularly on low income residents
that do not live in the high risk areas, right?
And that's a set of people that I'm most concerned
about in terms of rate impacts from this issue.
Another approach,
which I think is frankly urgent for the state of California,
is to make sure that the allocations
into the taxpayer funded silos of our wildfire response
and the rate payer funded silos of our wildfire response,
maximize risk reduction and cost effectiveness.
I'm forgetting fascinating say,
the office of electricity infrastructure safety,
which used to have a different name,
the Wildfire Safety Division at the PC
before it moved to CNRA
has become, one of the real experts,
certainly expert within state government
of doing quantified risk assessment of wildfire expenditure.
They use and the utilities
that submit wildfire mitigation plans
for review and approval by the OEIS,
use the technosylva model
which is the same model that Cal fire uses
when it tries to estimate wildfire spread
and it's planning operationally.
So everyone, the state government and the utilities
are using the same quantification approach
to wildfire risk at this point.
What's not happening is that,
the state is not thinking about its expenditures,
using a quantified approach to risk management,
where they set a baseline level of risk,
present a set of actions,
and then estimate how much those actions will reduce risk
and what the residual risk might be.
And then also quantify the cost
of the risk reduction, right?
The state is not doing that.
And that also means that utility expenditure
and state expenditure are not coordinated, right?
So we might be doing lots in a particular area
at the state level,
and also doing a lot in the utility space
that maybe is duplicative.
We might be doing too little in both areas
in other parts of state, we don't know.
And the current framework for distributing state funds
is largely grants that are driven
by who comes in the door asking for money
more than who needs to be spending money
to maximize the safety of communities within the state
and especially a vulnerable populations within the state.
So I think there's broad agreement
of about how to assess this risk
within state government and within the utilities
and at the PUC, but we're not doing it, where we might.
And that I think is probably has the greatest potential
to generate resources and a reduced need
to spend on the utility side.
The reason is that,
it's very expensive to reduce utility ignitions to zero.
To do that, we need to do things like bury all the lines
as Mark and Tony just mentioned,
spend large amounts of money on covered conductor.
We can only do that so quickly, and so we, in the meantime,
we're also spending money on all the other steps
we have to take in order to reduce wildfire.
But if we could get to a place
where we can tolerate ignitions safely, right?
Which we're not in now to be clearbut we could be,
it might mean that we don't have to make
some of these incredibly costly
long run infrastructure investments
because we're managing the landscape
in a way that creates safety.
So I guess my argument would be that,
actually there is a solution
to reducing rate payer expenditures
that involves better planning than is occurring now
that in order to effectuate that
I think we would have to probably have legislation
that would create a mechanism
to create this sort of state planning,
similar to what goes on at OEIS right now
in review of the wildfire mitigation plans,
but it is possible.
And I think it's something that the PUC
and the Energy Commission
should be thinking about as they seek to reduce risk,
because as we're all discussing today,
reducing the cost of adapting to climate change
is key to affording the cost of mitigating climate change
to affording the cost of the energy transition
and keeping our covenant with all of California,
that energy access will be plentiful and affordable for all.
I think that means working across silos,
that means getting out of the utility energy wildfire silo,
and starting to have a much broader conversation
about how to create community resilience and safety
from this growing threat.
And I think looking outside the window
this February day, right?
As we see a wildfire season developing in front of our eyes,
that is going to have tremendous risk,
potentially of a scale
as the 2019/2020 bushfire season in Australia, right?
Where there really hasn't been a rain season.
I think this kind of planning and thinking
is even more urgent.
So I'm happy to take questions
and I hope that that inter objection was helpful.
Thank you.
-: Great, thank you, Michael.
And we're definitely gonna unpack
a little bit more of that later on in this panel.
But next I'd like to turn
to our third panelist, Melissa Brandt.
She serves as the vice president of public policy,
and it's the deputy to general council
for the East Bay Community Energy.
Melissa welcome,
and I believe you have a slide deck to share with us today.
Robert, could you bring that up?
Perfect, hey Melissa go right ahead.
-: All right.
Well, thank you very much for inviting me
to take part on this panel today.
I would like to introduce the East Bay Community Energy.
We are a CTA serving
approximately 1.5 million residents in businesses
throughout Alameda county and the city of Tracy
in San Joaquin county.
We have a very diverse customer base.
Over 20% of our customers are enrolled in CARE.
And we have a number of disadvantaged communities
as defined by Cal Enviro screen
in our service territory as well.
And I think it was both this concern for our customers
who are very much struggling to pay their bills
as well as our desire
to support our communities and the state
on the transition to electrification
that had led us to develop the proposal
that I wanted to talk with you today about
which we have named Equitably Electrifying California.
Now I'll start by saying,
it's a very simple concept with those words, right?
Who doesn't love equitably electrifying California.
Of course, it becomes much more difficult
when you dig down into the details.
So today I'm gonna walk you through
kind of the what and the why
along with some of the challenges that we've seen
and discussed some possibilities.
I'm also very much looking forward
to the question section of the panel,
so that we'll be able to dive a little bit deeper
into what we're doing and what we're thinking.
So with that next slide, please.
So what is this proposal that we're discussing,
it's essentially a proposal to fund the costs
of public purpose programs with state tax revenues
instead of electric utility rates.
And I will refer perhaps throughout this presentation
to some of the public purpose programs
as social policy programs,
that's typically how we've been describing them at EBCE
as they are really programs that are meant
to further social policy of the state.
So what would this proposal accomplish?
Well, a couple key points.
It supports our electrification goals
by reducing the rate of utility bill increases
and notice, I didn't say reducing utility rates,
it doesn't go that far
just because the rate increases are so dramatic,
but we would hopefully reduce the rate of those increases
essentially to prevent it reaching up thresholds
where electrification become disincentivized.
It also pays for social policy costs
in a more progressive way,
reducing the burden on our lower income customers.
It's been talked about several times today
about the mass of arrearages that our customers have faced
with COVID particularly,
we have gotten some from the legislature
in last year's budget.
However, this continues to be a problem
to the extent that you can shift how these costs are paid.
You can also potentially reduce disconnections.
And then, so what is this cost?
Our backup, the envelope estimate is that
the programs in public per this program
for the three utilities including CARE
is about 2.7 billion a year.
So that's the dollars that we're talking about.
Next slide, please.
So why is it important?
As we've been talking a lot about today,
equity, utility rates today are not equitable.
We also have an number of customers
who are not CARE or FERA eligible,
but they're nevertheless lower income.
And we see that a lot in places like the Bay area,
where the cost of housing, the cost of living is very high.
And so our lower income customers who are not CARE
or FERA eligible are paying just as much as customers
who have much higher income.
So this regressive rate structure is really at odd
with the state policy,
which is to have a progressive tax system.
We also have looked at our own customer programs
and expanding eligibility for those programs
using area median income AMI,
instead of federal poverty level or FPL,
which has increased the eligibility for our customers.
And again, these are the customers
that are really struggling the most
to bear the cost of the public purpose programs today
because they get no release.
Next slide, please.
And again, why is it important?
Electrification, we've had a vision of putting up billboards
near our publicly available charging stations
in the East Bay on the side of the freeway
that look very much like what you see for the gas,
only it shows kind of an electric equivalent
of filling up your tank.
I found a little photo here from Australia
because I don't think
that we have these billboards yet in California,
but this has been our vision folks drive by every day
and they say, oh wow,
if I switched to an electric vehicle,
I can fill my tank for much less
than what I'm seeing as a gas pump.
That's not going to be the case.
If electric rates continue to rise the way they are.
In fact, my nightmare of this vision is that
customers drive down the freeway
and they notice the electric rate
is higher than the prices gas.
So it's really vitally important
that we keep electric rates with threshold
to incentivize the fuel switching to electric.
I will point out that this proposal
is certainly by no means comprehensive.
It's just a smaller piece of a larger multifaceted solution,
but to really address rates,
we're going to have to look at many different solutions
to these problem and combine them.
So again, we think that electrification
could be really harmed
if we can't get a hold of our electric rates.
Next slide please.
So some of the challenges.
Obviously, we would need some legislative action
and it's very important too,
that we have a long term funding source
if we're gonna try to switch
some of these programmatic funding
out of utility rates and into state funds.
The legislative action clearly would be needed
because the legislature would have to decide
how to fund these programs.
Longterm funding is particularly important for CARE.
We wouldn't want to see a solution implemented
that somehow eroded care for our customers.
It's vitally important
for some of our lowest income customers,
and we need to make sure that that stays.
And so, we have a couple options.
There's the state general fund, certainly,
we've been talking today about surplus dollars.
Surplus dollars aren't as easy as it sounds
because they have to be used in certain ways,
such as infrastructure education, which we are not,
or even tax refunds when you have too large of the surplus.
So it hasn't really been easy
to find surplus dollars available
to fund these kinds of programs that we're talking about
as these energy kind of social policy programs.
And then I think the other challenge is ensuring
that long term budget availability especially for CARE
since the legislature can change its mind
about the budget year to year.
The other potential source that we've been talking about
is the greenhouse gas reduction funds.
And that too may have some additional funds
in the near term,
but those funds are also largely accounted for.
And the state has yet to make some policy decisions
about how some of the remainder is to be spent.
So I think those are the areas
that we have been examining and targeting,
but I wouldn't say at this point,
the funding source and the funding solution is obvious.
So again, just to emphasize that
this concept of doesn't really solve
our problem in its entirety,
it merely alleviates some of the right pressure
that we desperately need many solutions to solve for.
Next slide, please.
So we also just tried to think,
okay, we have the challenges that we discussed
with finding the funding for EEC,
what else could we do to try to address affordability?
And so some of the things that we've been thinking about are
more effective use of incentive dollars.
And what I mean by that is that
in certain instances incentive levels
are not necessarily match to market demand
and so we see incentives being scooped up
very, very quickly once offered,
can we lower incentives when they are offered
in order to provide those funds to more recipients
and therefore get more private sector investment.
So that is one idea of how we could make
more effective use of those dollars,
make those dollars go farther.
Another idea is the cap trade customer rebates.
Today, we could change how those are distributed
when we're thinking about affordability in a way
to make rates less regressive
could we distribute those rebates
to our lower income customers and a higher portion
to help alleviate the regressive nature of rates.
And then finally looking at qualification criteria
for programs that benefit lower income customers
and moving from the federal poverty level
that is used today to qualify for CARE
to an area median income metric,
which then enables customers
who are living in high cost areas,
but still have a very small budget
after you've taken rent out of the equation
to also benefit as they are very much struggling today.
So this is all I have for you at the moment,
but happy to engage further conversation.
-: Great, thank you, Melissa.
Appreciate the ideas and looking forward
to tackling some of these later on in the panel.
We're gonna move to our next panelist Scott Crider,
who is the senior vice president of customer services
and external affairs at San Diego gas and electric.
Scott, thank you for joining us.
Go ahead.
-: Great, and thank you Grant
and thank you Commissioners for the invitation today.
This is a really important discussion
rates and affordability,
this could not come at a better time
because quite frankly,
our customers are demanding action and solutions.
Recently we've seen pretty significant increases
in natural gas prices a across the country,
coupled with some unusually cold,
at least by San Diego standards,
weather contributed significantly to high bills recently.
In really while natural gas
hasn't been a driver of higher SDG&E bills,
customers are understandably frustrated with rising gas
and electricity costs overall,
and SDG&E is not the only utility facing this challenges.
And that's why we're all here today.
And maintaining affordability,
while investing in clean energy infrastructure,
to improve wildfire safety
and to reach the state's clean energy goals,
all while preserving reliability by the way
is really a statewide challenge
that's gonna require a lot of statewide
creative problem solving and funding sources
and that's ultimately why we're all here today.
To us though at SDG&E one thing that's very clear
and that's that we are gonna need
more state and federal resources
to be able to reliably support the clean energy transition.
We simply cannot do it on the backs of our customers alone
using only the gas and electric bill
to fund all required programs,
the mandates, the subsidies, the fees,
the infrastructure investments in the state.
So, what are I ideas?
And Melissa, we did not coordinate this obviously,
but Melissa, stole a little bit of my thunder.
So, but I think it's because this is such an idea
that you've got a CCE Northern California
and a utility from Southern California
with precisely the same idea.
And that is we're calling on the state legislature
to immediately pass legislation,
to remove the cost of state mandated public purpose programs
from electric rates.
And instead finance those important programs
through the state's general fund.
We actually believe this is a common sense idea
that can provide near term bill relief for customers.
And this was a real surprising fact to me.
The revenue requirement for PPP
has increased 140% over the past decade for SDG&E
or about 9% a year.
And we estimate that by taking this action,
we could remove more than 350 million in annual costs
and reduce our system average rate by about 6%.
And so what does that mean
for the average family here in San Diego,
we could actually save about $90 a year in bill savings.
And, we've heard many San Diego area legislators
in recent weeks
raising concerns about higher SDG&E energy bills.
So we think this is a fantastic chance
to stand with our customers and their constituents
to do the right thing and help support again,
this common sense idea.
And again, having a CCA Northern California
and a utility in Southern California with the same idea,
I think that there must be some merit to it.
And then number two too, is we look at other ideas,
like other utilities,
we're gonna be aggressively pursuing federal funds
from the recently past infrastructure package,
an infusion of federal support
for infrastructure improvements,
such as EV infrastructure clean hydrogen.
It's certainly gonna help relieve some rate pressure,
but we're gonna need more help.
And it's amazing to say
that a trillion dollar federal infrastructure bill
is just a down payment for what not only California,
but the country's gonna need,
but that really is the case
as we look at the scale of change and transition,
just in the energy sector alone,
that's gonna need to take place
over the next couple of decades.
And then finally,
we need comprehensive electric rate reform in California.
I recognize that the next panel is gonna discuss this topic,
but I wanna highlight it because
it is the most consequential action that must be taken
to encourage electrification
and enable more investment in climate resiliency
while preserving affordability.
The general rate design philosophy
that's in place now, which is volumetric rates
simply doesn't reflect the energy needs
or challenges of today and certainly not tomorrow.
Customers are gonna hesitant to add more EVs
or electric and space heating.
If they're punished with higher bills
after they were encouraged to use more electricity
for appliances and transportation.
Now don't get me wrong,
efficiency is gonna still be important.
But when we are asking customers
to really adopt more electrification
for buildings in their homes,
the current structure is just not sustainable.
And really instead we agree with sever Bernstein
and as colleagues from UC Berkeley,
that California should move
to a cost based fixed charge rate model
that could be designed to address equity concerns
could help to stabilize bill
and enable to move toward electrification,
but maintaining the status quo
is simply not practical nor affordable for customers.
Now let me briefly turn to one eye idea that we oppose.
And I know my colleague on the panel, Michael,
where I just just raised this issue
and he makes a lot of very, very good points,
but we'd have a lot of concerns about adding a surcharge
to customers who live in the high fire threat district
for tier three to help pay for wildfire safety measures.
And there's a couple of reasons why.
Number one, at least,
and I'm gonna speak just for the SDG&E territory.
Wildfire safety is a regional asset.
All of our customers and our territory substantially benefit
from wildfire safety in the form of cleaner air
and fewer greenhouse gas emissions released by wildfires.
And we've touched on that today already.
But also residents on the edge
of the urban wildlife interface,
benefit from wildfire safety improvements.
And this includes my own neighborhood
in the city of San Diego that was devastated in 2003
from a fire that started 25 miles to the east
and the HFTD tier three.
And I just don't think that it's fair for me and neighbors,
to benefit from wildfire safety while more inland customers
are ultimately paying more fees.
Number two, a lot of our customers
in the tier three HFTD are lower income,
and they would be disproportionately harmed
by yet another fee on their bill.
And then finally, and again, this may not apply
to the other electric utilities in the state,
but we have very few customers in tier three,
matter of fact,
only about 32,000 of our 1.4 million electric customers
live in these areas.
And so the amount of revenue from a surcharge
would be so small
and do so little to off-state rate increases
stemming from wildfire safety improvements
that it just wouldn't really make a lot of sense,
again, at least for our service territory.
So with that, again,
looking forward to the discussion today,
really thank you for the invitation
and look forward to hearing
from the remainder of my colleagues.
Thank you, back to you Grant.
-: Great, thanks Scott appreciate your comments on that.
And we'll definitely dive into that a little bit more.
Last and certainly not least
I'd like to turn to Catherine Yap
she's a Principal with Barkovich & Yap,
and she represents
the California Large Energy Consumers Association.
Catherine, thanks for joining us
and I believe you have a slide deck
to share with us today too.
Perfect, and there it is.
Go right ahead.
-: Yes, I do.
Thank you, President Reynolds and Commissioners
for giving me the opportunity to speak today.
I represent
the California Large Energy Consumers Association
and we should probably move to the slide deck.
I prepared a few bullets and a few graphs
I hope to help illustrate some of the issues.
So next slide, please.
So the question is who is CLECA as we refer to it.
And it's a group of large high load factor
industrial electric consumers.
And they can be bundled, they can be CCA customers
and they can be direct access customers.
And they're located throughout the state.
These companies are steel, cement, industrial gas, pipeline,
minerals, processing, cold storage, beverage industries,
and also, well, the pipeline is transportation industries.
And they share a common factor
that electricity constitutes
a very significant portion of their cost of production.
So these customers are in what would be termed euphemistic
as manufacturing or industry,
and they have to watch their bottom line.
They're also very large users of electricity.
They're very large consumers.
The CLECA members also are PIP customers,
they in the base interruptable program
and they constitute a very large fraction of the load
that was interrupted during 2020 and 2021
in order to keep the grid stable in California.
So these cut customers have for decades
participated in this program, they're reliable participants,
and they've done this both to promote grid stability,
and also help mitigate the high cost
of electricity in California,
because it has an impact
on the competitiveness of manufacturing.
Next slide, please.
So we were asked today to talk about
non-rate payer sources of funding,
and we see them as being critical
to keep electricity rates affordable for all rate payers.
And they are to the survival of manufacturing in California.
And we think non rate payer sources funding
are completely reasonable
since Californians will understand,
they'll understand that reducing emissions
from transportation it's something it's a trans issue,
it's not an electric utility issue.
And that converting homes to electricity is a housing issue.
It's not an electric utility issue.
We've hidden a lot of these issues
within the utility industry for a long time,
but Californians smart and they understand how important,
alleviating climate, the impact of climate change
of trying to reverse as much of it as possible,
they do understand, and we be able to educate them
that it doesn't have to be swept under the rug
it's hidden in people's electricity bill,
not that it's being well hidden anymore
given the kind of changes
in electricity costs that we've seen,
but by informing Californians
and letting them, reminding them
that when they make a decision as Mark Tony pointed out
at the point of sale for a new car,
that they're making a choice
and by making a petroleum based car more expensive
with a climate change charge,
it helps balance out their decision to purchase.
I also like that particular model,
because it's not regressive.
If it's a percentage of the cost of the car,
you pay more as the car gets more expensive,
it's not a regressive tax, it tends to be the reverse
and it actually could be designed
so that it was even less regressive.
Next slide, please.
Okay, so now we're in the pictures.
And this is just a reminder to the Commission
that we we've done pretty well,
this has started in 20, the graph starts in 2016,
But the last three years,
we've seen just an extraordinary rate.
So compared to inflation,
you can see that the electricity increases
are in fact accelerating,
even though inflation itself has increased
the electricity increases
are just their blasting off like a rocket.
Next slide, please.
Okay, this is the same kind of graph for PG&E,
the first graph was for Edison, and this is for PG&E.
So both Northern and Southern California
are experiencing the same kind of acceleration in costs,
the last three years and we're looking forword
as Mark recited in his presentation,
we're looking at more
even greater extraordinary increases in cost potentially.
Next slide, please.
Well, why does manufacturing care?
Well, you pay big bills and,
electricity costs in California are twice the average
in the surrounding states.
And these are states that are not far,
we're talking about all the immediate states
and states that are one or two states away.
So increasing already high electricity prices,
just compounds and a bad situation for manufacturing.
Next slide, please.
Industrial customers in California,
they have to compete to survive,
and they compete in national and international markets.
So you can't just assume that they can turn around
and pass those costs on it depends on what's going on,
what their competitors are doing.
Electricity costs make up a large share
of industrial costs.
For our members,
the electricity is in one of the two highest costs,
labor being the other high cost.
And in some of our members it's by far the highest cost
just depends on the manufacturing industry
that we're talking about.
Keeping the production of cement and steel
and minerals and industrial gases
and beverages in California,
keeps the manufacturing where the energy is the cleanest.
If the customers do leave the state, not only do you leave,
they'll no longer make their contribution to fixed cost.
They won't be there paying the fixed cost for the utilities.
Those fixed costs will flow to other customers.
And if these companies locate outside the state,
you also lose jobs, you lose tax space
and their product is produced
using dirtier sources of electricity,
and you compound your emissions problem
because the product's gonna be trucked back into California.
So you really shoot yourself in the foot
if you drive these customers out
because electricity rises to the extent
that they just can't compete.
And we are losing customers to high electricity cost.
Thank you, that's the end of my presentation.
-: Great, thanks you.
Thank you, Catherine appreciate that.
And I think that covers all of our panelists.
So we have a little over 30 minutes left
before we move into our next panel.
So this is the fun part, this is the Q&A portion.
I have a few questions that I'd like to dive in.
Some of them I'm gonna ask generally
for all the panelists
and then I have more individualized questions
for some of the panelists.
Then from there, I'll turn over to our esteem Commissioners
to ask whatever questions they would like.
So first question, and this is for all the panelists,
how can the CPUC further leverage and target payer funding
to attract non-pay funding such as private capital?
And I'll leave that open to anybody that like to answer.
(indistinct) (laughing)
Go a head Melissa.
-: All right, I'll just reiterate the point
that I think I made earlier that it's important
to align incentive levels with market demand,
to prevent providing incentives
that are richer than required
to meet the targets that's being incentivized.
-: Great, appreciate that.
Michael, did you have anything to add there or Mark,
go ahead.
Oh, Mark you're on mute.
-: Thank you.
The problem with private capital is that
it effects of profit, okay?
And so you gotta be very careful bringing private capital
because you can end up increasing costs for the customers
that take advantage of the private capital.
This is part of why TURN is recommending the point of sale
that is in fact, a form of consumer, if you will,
that is not great payer money, but it fines the cost,
the whole cost causation principle,
people like to talk about, well, guess what
the costs are absolutely fine to the people
who are tubing to increase the emission
buying gas power vehicles.
We're not having them from doing it,
but we're saying, hey, you got pay price for it, okay?
So I I'd rather go that way
than look to bring these wall street investors in
who are looking to make huge process.
I don't think that solves anything.
-: Michael, go ahead. -: After you.
Okay, I was just gonna say,
this is not really within the purview of this conversation,
but because it involves issues related to folks,
but I think the greatest opportunities for improving,
or potentially reducing rates by including private capital
come from greater competitive procurement
in the transmission system.
And there, I think there are opportunities.
There are very good reasons
why utilities sometimes are opposed
to competitive procurement process and transmission
but I think it's something
that we need to look for opportunities
where we can do more of that.
It can't be everywhere, but it could be more than we do now.
-: Great, thank you, Michael
and Catherine your hand up.
-: Yeah, I just wanted to follow Mark's comments
and point out that when you're thinking about
behind the meter issues,
which come up in the building electrification context
and also in the transportation electric context,
I think it's fundamentally unfair
to be requiring rate payers,
to be paying for utility programs behind the meter,
that is inherently not a natural monopoly context
or a market context.
You don't need a utility involvement
in selling heaters for customers
or selling electric cars versus gas fired cars.
Those are competitive industries that drive that
and the utilities should stay the hell out of it,
in my opinion, they just stay out of it.
The Commission should not be approving these proposals
for the utilities to get involved behind the meter.
It's not a natural monopoly.
When you talk about the TND system, it's very clear.
That's a natural monopoly.
It's inefficient to have more than one provider.
That's why you want one set of wires
running down the street or running under the street,
one set of pipes.
So of course you want a utility
and you regulate that utility,
but when it comes to the electricity,
you've gotta market.
And when it comes to buying it
and having the appliances or the car,
which is effectively now becoming another appliance,
that's not a natural monopoly.
That's a competitive market.
Utilities should not be in that market.
-: That's actually a perfect segue
to my next set of questions.
And Mark, I think I'm gonna go back
to the kind of point of sale idea you had
regarding building and transportation electrification.
So the point of sale idea,
I know is not necessarily a novel concept,
especially in the context of energy efficiency.
And one of the barriers that's been debated in the past is,
how do you address the concern of
whether it's energy efficiency or cost of electrification
and home sales price,
especially in a state like California,
where we're experiencing
incredibly high sales prices for homes,
going up exponentially, even in the last couple years,
are there other types of policy mechanisms
we can be looking at maybe like cost sharing
between seller and buyer of homes
rate payer and private financing,
what are some options that kind of effectuate that change,
regarding point of sale for building electrification?
-: Well, the idea is not new.
I talk to a lot of people and a lot of people have said,
yeah, this interesting about that for years,
it's not easy to figure out
and I don't pretend to have all the answers.
To me, if there are a lot of details like that I can work.
First of all, I would echo my colleague Cathy Yap point
that the right number for rate payer dollars
for building electrification is zero, okay?
That's the right number.
So that's the starting point.
Now, is there the opportunity
for some money from the tax payer sure,
but I just don't see that that's sustainable.
You remember 10 years ago or so we were in the dark day
of the California state budget
year after year of deficit, it was brutal.
I mean, public education took such a hit,
housing development took such a hit, it was awful, awful.
And so, that's why I'm looking for sustainable models
that don't require.
Now, is there an opportunity for private investments,
I'm skeptical, but maybe, but here's my point,
right now when I bought my house (indistinct)
and this is part of how I independently came up
with the same idea other people had years ago.
But when I bought my house in Oakland,
in order to close escrow,
we had to have our electrical upgraded to 200 a third, okay?
A house is built 1941 had original wiring, okay?
And we had to get an earthquake inspection
and we had to install shearer walling in our (indistinct),
underneath the living room in order for the escrow to close.
So this concept is not a new concept by any stretch.
I'm only suggesting that we expanded
to electrification of cooking, hot water and heat,
and to say, wrap up the cost in escrow
so that the contractors get paid when escrow,
when the home closes, so it's part of the escrow,
they know they're guaranteed to get paid
that's why contractors will work for the money
because they know that the escrow officer have the money
and they will pay it,
before it can be recorded they get paid.
So there's a certainty to that lot of other obstacles.
I know, but that's the essence of the concept.
-: Great, thank you Mark.
And I'm gonna bounce over to a different topic
'cause it came up quite a bit
in many of the opening remarks you talked about taxes.
And Melissa, I think this question is for you.
So given the procedural and political barriers
that come with passing taxes, especially at the state level,
couldn't one decision making pathway
for moving costs of programs,
Let's just say like the public purpose programs
be through like direct democracy instruments,
such as state and local ballot initiatives.
And the reason I mentioned this
is that we did see something very similar in 2012,
with the Prop 39 Clean Energy Jobs Act
that did suggest collecting billions of dollars
what was then a corporate tax loophole so it was claimed
and then divert some of that money,
to a K through 12 schools and community colleges
for distributed generation energy efficiency upgrades.
I mean, are these other types of mechanisms
either the legislature should be exploring
or kind of local stakeholder groups
should be exploring to find
these kind of alternative tax pathways?
-: Yeah, I would say that I think all options
should be on the table.
And certainly that could be a great option.
I think it would be wonderful if legislators
take the initiative to lay out that option
and what it could look like,
and that could perhaps provide the longevity
that we need in the budget.
I think valid initiatives are expenses.
They're tough to get passed.
It's tough force stakeholders to come together to run one.
It's not gonna get off the table without a broad coalition
and that would need to finance this.
And personally, I haven't heard support
among kind of grassroot stakeholder groups
for a valid initiative on this topic.
So am I opposed?
Absolutely not.
Is EBC gonna be the one to run it?
No, I'm afraid not.
I do think that there are some risks though to be aware of,
which is, for example,
you could have special interest funding
and corporate lobbying starts to erode
at some of the benefits to lower income customers
in the ballot initiative depending on how it's designed.
And of course our vulnerable communities
are the ones that stand to benefit
the most far from these initiatives.
So we'd have to guard against that.
And then I think we just have to be really prescriptive
so that where the funding is allocated is very clear
and laid out for the long term.
-: Great, and Melissa, just to kind of follow up on that too,
since EBCE and other CCAs are public agencies,
how has EBCE kind of leveraged that status
either buy down or reduce power procurement cost
for your customers?
-: Yeah, so one of the things that we read recently did
was undertake our first energy prepaid transaction
to lower our power procurement costs for customers.
So essentially we had tax exempt bonds issued
to raise revenues to P prepay for PPAs
and our tax exempt status
gets us lower interest rates on the bonds.
So then working with a prepay supplier,
we received a discount on our PPAs.
And I think with our initial transaction,
we're looking at a 1.2 to $1.6 million annual savings
for our cost customers.
So that is an example
of how we've been able to leverage that status.
We also achieved an FMP credit rating recently,
which enables us to lower our borrowing costs
since our counterpart see
that we're on solid financial footing and we're lower risk.
And then we're constantly pursuing
non-pay resources of funding,
such as state and federal grants
to fund our program offerings.
We received a few hundred thousand dollars from the USEPA
and a Brownfield Grant for looking
at converting brownfield to EB charging hubs.
We received 14 million from Cal EVIP.
We are very engaged in looking at money it is available
from the federal government at the moment.
And so we're really looking for any and all opportunities
to fund programs for our customers
without needing to do that on the rate payer bill.
-: Great, thanks Melissa.
And Scott,
I didn't wonder to leave you out of this conversation.
So I'm gonna kind of pun over to you really quick.
What are the items that you had mentioned it's fixed charge
and I'm hoping you could talk a little bit more about that
and maybe discuss some of the statutory barriers
to the extent that there are some regarding fixed charges.
What is then kind of the concerns in the past
and what are the benefits of a fixed charge?
-: Yeah, no, thanks to that Grant.
Look like, statutorily, any mandatory rate
that we would file
there is a statutory limit of a $10 fixed charge.
So we were to look beyond that,
that would be something that the legislature
would have to pass a bill in order to lift that cap.
But putting that aside, we do have some voluntary rate.
It's like an EV rate that does have a higher a fixed charge.
We have an EV rate, the $16 fixed charge for instance,
but what the benefit of a higher fixed charge does is that
we can lower the volume metric rate.
And why that's so important for us is that
as we begin to add more and more EVs,
more space heating, more water heating,
having a volumetric paradigm here in the state
it is just not compatible
with adding that much electrical load
customers just simply can't afford it.
And so, by putting the fixed costs into a fixed charge
and you could take into consideration equity, income levels,
there's all kinds of ways that you could slice this up,
but to put those fixed costs into a fixed charge.
And the question I always get first, though,
is what about energy efficiency?
Don't we need a price signal
in order to encourage conservation.
And the fact is that in California
as the CCAs continue to grow and expand,
and in our service territory, probably by 2023,
we're gonna have more than 80% of our customers departed.
So we're gonna be almost a full CCA region
and the CCA still have a price signal in the commodity.
So you could look at the utility fixed costs
into a fixed charge and then you're still getting
that benefit of a price signal from the CCA
on the commodity piece.
So we really think the experience
that our customers have had with higher fix charges
again, for EV charging, it's wildly successful.
Our customers love it because it's more predictable.
You get less volatility in your bill
and the customer reaction has been really, really strong.
-: Great, thanks Scott.
And I'm gonna ask one more question,
I think this will be for Michael.
Then I'm gonna turn over to our Commissioners.
Michael, this has come up quite a bit,
undergrounding electric infrastructure,
though it may be incredibly expensive in the near term.
Is it really the only long term option
for addressing utility wildfire risk in these areas?
I'd like to hear kind of your thoughts on that.
Oh, I think you're on mute Michael.
-: I think undergrounding may be an tool in certain places,
but what's really critical is evaluating the cost
and benefits of undergrounding
as compared to a suite of other alternatives, right?
And until we have a really thorough going analysis,
we can't answer the question,
is undergrounding the right way to go
at pick your mileage per year.
And I think that part of that analysis
needs to be evaluating interventions
outside of the utility space,
because when you go into the wildfire community,
the fire science community, the forest ecology community,
and this is not so much Scott's jurisdiction in San Diego,
but as we go to Northern California certainly,
and into the Sierra
where so much of the really high risk terrain is
there are alternative approaches that foresters can take
that require a lot less skill, a lot less coordination
with other pieces of infrastructure like owns the street,
and when was it last paved and what else is in the street
and who else is on the power line, right?
That's no longer gonna be there,
the poles that aren't gonna be there anymore.
All of that coordination,
doesn't have to happen if we have better fuels management,
like the fuels management
and I highlight this in my conversations,
the fuels management that Southern California Edison does
and has done on a routine basis on its its land
in the Southern Sierra, right?
That's a model for what needs to happen in many places.
That model per acre is cheap in comparison to undergrounding
it's cheap, maybe even in comparison to cover conductor,
but that doesn't mean that undergrounding
won't have an appropriate role in certain places.
They're gonna be places where we need to do it.
But I think until we have a much more fullsome conversation
around risk management for the state,
it might be premature to commit
to a large amount of underground.
Now, this is not to weigh in on any particular proposal
'cause I don't have the expertise to really say,
but I think what I can say is,
we need to have that broad risk assessment.
OEIS is the agency within state government
that has the expertise to start to do that
but they don't really have the authority right now.
And I think it could be highly cost effective for the state
and more than being cost effective
is gonna create the kind of safety
that we all really want and need.
We need to avoid more green bills
and doing that is gonna require
both reducing utility ignition,
but also making sure that
when utility ignitions inevitably occur,
that the environment in which they occur
is much less dangerous.
And right now, we have a very dangerous environment
in many parts of the state.
And so the question is how much of one
versus how much of the other,
what's the optimal spend?
We don't know.
And I think we need to figure it out.
-: Great, thank you, Michael.
Appreciate your comments on that.
I'm now gonna open it up to our Commissioners.
Commissioners, any questions for a panelist today?
Commissioner Rechtschaffen?
-: So Michael, to follow up on what you just said
in an ideal world,
you would have one state agency may be OEISs
or some agency like that
doing a comprehensive comparative risk
or risk spend de efficiency analysis
of both utility investment and land use investments
or as management practices and so forth to decide,
which is most cost effective.
Is that the gist of it?
-: Yeah, Commission Rechtschaffen,
I think that's exactly the gist of it.
It's applying the models that have been developed by the PUC
to evaluate utility wildfire mitigation,
to a broader scope of activities
that are also important to reducing wildfire risk.
-: Great,any other questions from our Commissioners?
If not, I have a couple more I can throw out there.
Oh, Commissioner Monahan.
Oh, Commissioner I think you're on mute.
-: I sure am on mute (laughs), thank you.
I'm curious about,
I mean, I've heard FERA amount of concern
around utilities investing
in electric vehicle charging infrastructure
and what the appropriate role is of utilities vis-a-vis
the state goals of veering out polluting
from our transportation system.
I'm curious about the focus on low income families
and families that live and apartment buildings.
And whether this panel sees a role in utilities,
supporting communities that otherwise
would have a difficult time getting access
to charging infrastructure.
That really specific focused on people,
mostly who live in rental units,
whether there's any thoughts
about what the appropriate utility role would be.
-: Commission I appreciate you bringing that up
because it is so important when we talk about access
to look at people particularly in multiunit apartments
who can't put a charter station in their garage
'cause they don't have a garage, right?
And I will say that that has been the one exception
that TURN has made in terms of our electric vehicle
charging station policy.
We have seen a (indistinct) for a focus,
not on the individual homeowners
who live in single family residents.
We think it's their responsibility
to put in a charging station in their garage, okay?
Charging port, it's actually pretty cheap,
I've done it myself, 300 bucks, okay?
A licensed electrician.
I don't know where people come up
with these thousands of dollars estimate.
But people who are in the apartment building
don't have that option.
I still believe that there are other revenue sources
and that that's exactly what part of the point of sale.
the proposal I have some of the money should go
to exactly the multiunit (indistinct),
but that is the one area in which TURN
has selectively been in supportive.
-: Right, thank you.
Just to follow up,
I would urge the strong consideration of other approaches
to incenting landlords to make an investment,
I mean, if your target is apartment building,
then tax incentives for landlords,
for adding EV stations in their apartment buildings
that's the appropriate approach,
leave the utilities out of the equation
and the state can put some of that surplus funding
toward incentivizing the construction of EV stations
in apartment buildings.
I mean, landlords are sensitive to opportunities
to get money, to help them do things
that will make their apartments more appealing.
And having EV charges is something
that might make their apartment building more attractive
than the one down the street.
So again, it's not a natural monopoly situation,
we're in a market.
There's no reason that the utility
should be involved in this, no reason whatsoever.
The state absolutely provide incentives,
provide tax breaks or whatever.
I mean, there are different ways things can be fashioned,
but it's not a public utility issue.
-: Scott, go ahead
and then we'll go to Michael and then Melissa.
-: Yeah, so Commissioner,
obviously gets a lot of response from this question.
So yeah, look, it's always a delicate balance.
And so, we're obviously concerned about affordability
and continue rate increases.
The other thing though, that we're equally concerned about,
I think both the energy Commission and the PUC
is as we go through this transition,
that there is a serious equity issue.
We're seeing it in solar today.
We're gonna see it.
We see it in EV infrastructure.
We see it in EV vehicle purchases.
We're gonna see it probably as we start to transition
from gas more to electrification of homes,
it's those customers who can afford it,
are going to pay for it.
And those who can't are gonna struggle,
and a lot of them are gonna get left behind.
That's a long way of saying that,
I do you think that there is a role for the utility
especially in supporting underserved communities
and it's something that we've had great success on
with our EV programs today.
-: Great, we'll go Michael and Melissa,
and then question from Commissioner McAllister.
Go ahead, Michael.
-: I'll just know quickly, I think it's really important
to consider when EVs are charging.
And I think about the need to invest
in charging networks that are where people work
or at least where they are during the day
and being very systematic about that
and making sure that folks who are low income in California
have a place to charge at work if they drive to work
so that we can reduce system loads
and better manage the solar peak,
'cause it's better if we want to achieve our goals,
what we really want people to do
is charge their car during the day.
And most people in California,
were barely affording to live here
because it's so expensive
are out working their tails off during the day,
they're not at home.
And so I think it's really important
to emphasize that goal as well.
Thank you.
-: Thanks Michael.
Melissa.
-: Yes, so I just wanted to mention that
in coordination with the CEC,
we gave out 17.3 million in incentives
as part of the Cal EVIP program.
A minimum of 50% of the funding
is invested in disadvantage and low income communities.
We are installing a number of fast chargers
and half of those incentives
have been allocated for projects
that are being built near dense concentrations
of multifamily housing to help renters
who don't have access to home charging,
make the transition to EVs.
So there are options in addition to workplace charging
for renters that we are exploring in our territory.
I would agree with the sentiment that's been expressed here
that this doesn't have to be on the utility bill, right?
So we're using Cal EVIP,
we're looking for other funding streams,
there's more EV and transportation electrification money
being made available through the state budget.
If funding is made available through the utility bills,
then that's something that EBCE would like to share
with all of the other load serving entities
that are doing building
or transportation electrification program.
But isn't it better to just not put it there,
to begin with for all of the reasons
that we've mentioned utility rates going up,
trying to find a more equitable solution
is much better if we can keep it at the state level.
-: Great, thank you, Melissa.
Commission McAlister you had a question?
-: Yes, well, I actually just kind of wanted
to inject a thought into this conversation
that we've been having.
And this idea that behind the meter investments,
the utility just should keep out of it.
And I just think that's a little bit of a false economy,
the rate making is in it.
And so the the incentive
that a customer may or may not feel,
to electrify and whether they want,
whether they have the capital
or whether they're gonna go from financing
that value proposition fundamentally revolves
around the rate structure that apply to that customer
and the relative cost gas that they would be displacing.
And so I guess I'm kind of wanting
a more integrated conversation here
as we are really looking at this more intimate.
I know tomorrow is the gas piece,
but at this more intimate relationship
between electricity and gas
and Mark Tony you mentioned,
private capital isn't part of the mix.
Well, I also kind would push back on that
because yes, we have a budget surplus
and yes, we're gonna have some number of billions of dollar,
likely from federal state,
funds in the near term invest in building decap.
I agree with Michael, that load flexibility
is equally important on the building side as on the EV side,
but that's just a drop in the bucket
in terms of the overall investment
that's gonna have to be made
and our building's going forward for next up with decades.
And so private capital's gonna have to come in
at some level.
And so again, the value proposition
for the customers gotta be there.
And so I guess I'm kind of just wanting
a little more integrated conversation here about
the customer's view and how we make it going forward
with rate design and all the other tools in our toolbox
valuable for the customer
to make the climate solution type of decision.
-: Mark or Catherine, would you like to respond (indistinct)?
-: A quick response, thank you Commissioner McAlister.
So, my problem is friends tell me that
when you want people to use a new product,
to shift their use to a different product
from what they're using now,
that you should reduce the cost and not increase it.
And that increasing the cost is absolutely the worst thing.
So I will lead with what is question,
a granddaughter and I watched
"The Stinky & Dirty Show" with her.
And if you haven't seen it, great learning,
great problem solving show.
And they always ask what if we were able
to cut the price of electricity by half?
What if I guarantee that cutting the price
of electricity by half
would do more to generate people's interest
more electrifying everything
faster than anything else on the table.
So I'd like to leave this panel with that question.
What if and what could we to cut electricity crisis in half?
-: Great, thank you, Mark.
And that actually brings us to the conclusion of the panel.
So you get the last word.
Jack, I think that concludes it for this panel.
I appreciate all the panelists for joining,
a lot of sensitivity in this,
I had a lot more other questions talked
to about underperforming programs
and things like that that we may should focus on,
but this is a great conversation,
I think there's a lot to unbundle here.
I'm really excited to see the tremendous amount of state
and federal funding flowing either to California,
directly to the state or to end use customers.
And so a lot of opportunity here,
but obviously there's a lot more to look at
in terms of long term, more sustainable,
non rate payer funding sources.
So thank you for your time
and Jack, I'm gonna hand it back to you.
-: Thank you, Grant, and thank you all the panelists.
I don't know about you,
I feel able to do that for another hour
and there's so much discussion there we had.
We have another amazing panel here,
I know it's gonna be a lot of discussion,
but our next panel is electric rate making reform proposals
in considerations.
We have I'll bring on Paul Phillips,
who is the supervisor of CPUC Retail Rates team.
Achintya Madduri,
also the Retail Rates team to lead this panel.
So welcome Paul, and Achintya.
-: Good afternoon, hopefully everyone can hear me.
Good.
Well, let's get started here
and hopefully we'll have time to take
a little bit of a five minute health break
somewhere in the middle of this very long panel.
I wanted to start with a few remarks
and then begin turning it over to our panelists,
which we will introduce in a moment.
Just one moment here.
And so first, my co-moderator of the day is Achintya Madduri
as a senior analyst with energy division
of a Retail Rates group,
and will be helpful to ask some provocative questions
when we get to that part of the program here today.
But before we get there,
I wanted to thank everyone for participating
in this great event.
It's been a lot of planning and a lot of time
put into interviewing folks and getting people ready for it.
And in particular wanted to thank our leaders
from the CCPUC, Energy Commission,
ARB legislators and their staff,
and everyone else that's listening in today.
So thank you for being here.
Secondly, let me just take a quick moment
to acknowledge the tremendous amount of work
that Jack Chang has put into this event
to not have done that been amazing amounts of work
and time and extra hours and (indistinct) efforts.
And so, just a big kudos to Jack
for an incredibly well done job on all of this.
So in reality, we could spend probably a whole day or two
talking about rates and costs
and all the affordability challenges
that are stemming from this area
and all the challenges that are facing
our customers and our constituents.
But unfortunately we only have two hours here,
which seems like long enough,
but just wanted to say this is a pretty serious time
for many of our low income and vulnerable customers.
We are on the heels of an unpredictable pandemic,
a lot of inflationary concerns on our economy
rising customer rear just as Mark Tony pointed out
to the tune of almost $2 billion
before cap funding was distributed.
Higher rates,
large rate increases coming in here in the first quarter,
deepening housing crisis for our customers
and ever widening inequality in California.
So these issues are funding center,
they exacerbate the urgency for discussing affordability
while we also discuss investments in electrification,
while our mitigation gas and safety matters
and transition costs, which are an essential part
of our climate strategies going forward.
So areas of affordability concern in the Central Valley,
mainly through the spine of California
are growing in size and severity.
We know this from the excellent measurements
that we've been putting into place
in the affordability proceeding phases one and two,
while our IOU rate increases are accelerating
as was well noted in Grant's panel just now.
So IOU revenue recovery and rates models
will always be biased towards rate-based growth
via capital expenditures.
And we have to look out for that.
We have to be thinking out of the box
about how we can mitigate some of this.
Every policy choice that we make closes the tradeoff,
every program budget and rate design
has a range of affordability impacts.
And that's what we're here to explore today.
So all this conversation might get a little bit wonky
and maybe a little bit controversial or heated at times
I think the objectives and our mission
couldn't be more straightforward or clear at this point.
We are trying to create some alignment here,
I think between industry leaders,
decision makers about the innovative cost
and great solutions that will be required of us.
And that will hopefully in some measure stem
the tide of rising inequality,
and protect essential services for California.
We have an excellent panel of speakers
from our utility and solar industry,
our consumer and environmental advocacy groups
and from Academia as well.
So if we could advance to the next slide
and we'll introduce these folks.
I've broken up the panel,
we have a number of people to hear from today,
but with our nine folks that are on this panel,
I thought it made sense to break it up
into a series of panelists with short presentations,
to give each followed by some discussions
that are gonna be responding with five minutes piece
over a 20 minute period hopefully
to those folks with slides.
And so we have Mohit Chhabra
who will kick us off with a larger presentation
on some great work that NRDC has done
with (indistinct) consulting on looking
at a number of these proposals
in combination with each other
and how they impact rates and build over the long haul.
We'll be eager to kind of hear about that,
how that sets the table for the conversation
for the rest of our panel.
We have Jennifer Dowdell,
as a senior policy expert from the Utility Reform Network
who will be talking a little bit about
some rate case reforms that she has in mind.
Mark LeBel, an associate with Regulatory Assistance Project.
Glad to have him here to speak to import export charges,
what's fair for compensation in the future of rates.
Meredith Fowlie will be joining us
as director of the Energy Institute of Haas, Berkeley
to speak to income-based fixed charges.
Long in the making lots of research done here
and we're eager to hear more about that.
And Frank Wolak, director of the Program
on Energy and Sustainable Development at Stanford,
an economics professor.
And will be joining to speak on some of the same issues
that Meredith and Mark LeBel will be discussing around.
What's fair with regard to fixed cost recovery
in the system going forward,
and how can we protect low income customers
through better rate designs?
And so our discussions will be,
after these presentations are made,
our discussions will be Brad Heavner, our policy director
of California Solar and Storage Associated.
He will have a few slides to present
in his response to our panelists.
Mike Campbell, from program manager from Cal Advocates,
will be here as well.
Robert Thomas,
director of pricing strategy for Southern California Edison
and Robert Kenny, senior vice president
of regulatory and external affairs for PG&E.
Glad to have all these guys.
We had many more that were interested
in speaking on this panel.
We had the turn away, it's an interesting group
and let's move to the next slide please.
And so this is really just kind of a quick illustration
of the four pieces that we're looking at
through the two days
that we are together here in the En Banc.
And right now we're focused on electric rates, reforms
and other considerations around that.
Quite clearly, we have some broad topics
within the electric rate making strategies area,
note the least of what to be general rate case
administration revenue management improvements,
progressive fixed cost recovery mechanisms,
as we just mentioned,
and advance rate designs and improve grid utilization.
So we wanna probe that a bit more,
all of these directed toward enhancing affordability
for our most vulnerable customers in California.
Next slide, please.
And so we have some key themes and questions
that we wanna kind of probe into and answer here today.
And the two hours will be together.
You can read them here,
but generally just to summarize what are the net impacts
of our revenue management rate design proposals
for low income customers
and areas of affordability concern?
How feasible are these proposals?
I mean, what are the implementation barriers and timelines?
What procedural or statutory changes
might be required of us?
What tradeoffs exist between say,
securitization is a strategy
versus a more deliberate look at revenue budgeting
or cost team in portability strategies?
And then how might these rate making proposals
by themselves independently
or in combo with non rate payer funding strategies
work together to impact IOU earnings
and/or their risk profile up or down,
we should kind of talk about that,
that's something we don't really get into very often.
And then finally, what other rate making reforms
and legislative interventions do you think
will improve equity
without making other customer segments force off,
particularly the customer segment
that right above the CARE line in terms of vulnerability
and increasingly vulnerable in this economy that we're in.
So we'll be really eager to hear from you
as you think through and present
and react to presentations.
And for now, so we will start with Mohit
wanna get Mohit Chhabra started from NRDC
on his presentation on synapse scenario analysis.
-: Good afternoon.
I have a presentation that you're gonna pull up right now,
I'll introduce myself in the meantime.
I'm Mohit Chhabra, I'm a senior scientist with NRDC,
and I'm gonna be presenting on an empirical analysis
on the impact of some policy levers
many of which are being discussed today on rates and bills.
Next slide, please.
Affordable decarbonization,
it's important to manage both, bills and rates,
bills impact total households budget,
and are a particular concern for low income households
as customers electrify electricity bills
are closer and closer to total household energy bills.
Rate on the other hand need to provide the correct signal
for marginal choices, how much to consume, when to consume,
what do you choose and so on.
Next slide, please.
What we did here was examining the impact
of three different types of policy options.
First was reducing total revenue requirement.
Second modifying rate design.
So once the revenue requirements set,
how do you best collect it
to make revenue collection progressive
and give the right rate signals
aligned with our policy goals and equity goals.
Finally, increase grid utilization as we electrify more,
what are the impact of getting the most out of our grid
while minimizing infrastructure investments on grid?
This presentation aims to describe each approach
and estimates impact.
We don't prescribe recommendations here.
The hope is this will make the discussion more targeted.
Folks can analyze is the effort required
for each policy proposal against the expected impact.
Next slide, please.
This is limited to PG&E,
to be able to finish this work on time
and on budget, we went with one utility PG&E's rates
are somewhat in the middle of three IOUs in California.
The results from this analysis
may not directly port over to the other IOUs
but provide an indication of the directional
kinda of order of magnitude different policy proposals
will have for other IOUs
is a screening level analysis
to understand order of magnitude of impact.
So take it as percentage decreases
on the order of magnitude of two to 3 cents,
as opposed to 2.70 cents or something like that.
Analysis was conducted by synapse
and used best publicly available data
to develop this analysis
and did get it checked ground truth,
to make sure that the results are reasonable.
Next slide, please.
This is an introduction
to PG&E's bundled revenue requirement today,
it's around 7 billion and bundled sales
of around 27 tailored hours.
That translates to a 25 cents per total hour rate
across all customer classes,
27 for residential only on average.
And then you par that out among CARE and non-CARE
you get 31 cents and 19 cents approximately.
The figure on the left is one way
to categorize this bundle revenue requirement.
There are quite a few ways to do so,
but gives you an idea how much of the revenue requirement
stems from purchase power O&M depreciation of assets,
shareholder returns and so on.
The percentages on the left add to 100%
as any percentages on the good graph should.
And the cents value on the right
add up to the total average bundle rate of 25 cents.
So gives you an idea of how much of the rate
is going towards what?
Next slide, please.
The first category of policies we investigated,
reduced revenue requirement.
The idea is to decrease the full amount of money
that's collected across all bills
through different policy actions
and understand the impact on rates and bills
for residential customers.
Next slide, please.
The first policy we looked at was,
how about we fund social policy costs
from outside the rate-base.
There are costs in electric bills
that aren't directly caused by consumption,
but we collect them on the basis of consumption.
Most of these are under the non-viable charges,
include public purpose program charges, CARE, and so on.
So we separately analyze the impact
of the wildfire, fund charge, CARE and FERA programs,
and then all other non-(indistinct).
Next slide please.
So you see if you're able to fund them
from an outside source, but still maintain these programs,
you'll see around a 7% total decrease
in the residential rates and bills for non-CARE customers.
So around $140 per year for all of them put together
and a two cent decrease.
Most of these aren't levied on CARE customers.
So CARE customers see a very tiny benefit from the shift.
They don't pay for their own CARE program and such.
So they'll see a much smaller benefit.
Next slide, please.
The second policy in this category was
what if the transmission system
was owned by a public entity, not ministry-owned utility.
So what that does is it reduces costs
in exchange for risk that gets transferred
from shareholders to the public.
And this requires changing PG&E capital structure,
no mean fit,
but you have to buy out the transmission system,
$11 billion or so, and get it funded through bond.
And we've estimated that those bonds would be at 3%
sort of an average rate for long term state bond.
And because this entity is nonprofit or governmental,
their savings on tax as well.
Next slide please.
And the impact of doing this,
you see around a 4% reduction in rates and bills
slightly higher for CARE customers,
because that way discount works for CARE customers.
And the graph below,
this slight presentation is there for your records,
it shows you the economically what categories of costs
are getting reduced and getting transferred,
especially return to shareholders, to debt cover and bonds.
Next slide, please.
The third policy we investigated in this category is,
what if you decrease the return on equity, ROE?
Currently PG&E and ROE exceeds national average,
but the percentage of equity they own is average or higher,
and the lower rate of return would reduce both profits
and associated taxes.
The current ROE is around 10.25%
and equity is 52% of the total rate-base.
I analyze two scenarios.
One is reducing the ROE to nine and a half percent,
which is the national average
while maintaining the totaL amount of equity
on the rate-base.
Second scenario was what if you were
to reduce the ROE even more
but compensate by increasing the amount
of equity share holders own?
So the total flow of monies to shareholders in the year
would be the same,
but the per unit earnings on a share would decrease here.
Next slide please.
And we see that just reducing ROE to national average
has a pretty small impact around 1% to 2% impact
on rates and bills.
But if you were to reduce it to 7%,
which would be a much bigger change,
even though you increase the percentage of equity,
you see a much larger savings on rates and bills.
Next slide, please.
The second set of categories we looked at
was modifying rate designs.
So, once you've made the changes you need to make
on total revenue requirement,
how do you collect it in a better fashion?
So it doesn't increase the total amount of bills
in some customers pay, but how you recoup that changes.
Next slide please.
And the theory is that if part of the revenue
is raised through a fixed charge
could be demand based or otherwise,
then less needs to come from variable charge.
So the amount to charge for consumption is lower.
Lower volumetric charges
are more in line with social marginal costs,
which means how much does it cost
to generate this electricity and the environmental
and other externalities associated with it
than rates currently.
So it would be economically more efficient.
The one challenge with having fixed charges is
how do you make them more progressive?
How do you structure them such that lower income rate payers
or customers that use less electricity
don't settled with fixed monthly charges?
One more point I'll note here is
when you make electricity cheaper,
you encourage people to better utilize the grid
through managed electrification.
So the idea is if this were to be,
then people would use more electricity,
and if you provide them the right signals
in a well managed way without making more investments
to the infrastructure thereby increasing per unit utility.
Next slide please.
So we modeled three possible approaches to fix charges.
Low, medium, high.
The low is around $11 a month.
And this comes from PG&E's general rate case cost of service
filing it's marginal cost to connect the customer
and to serve them on a monthly basis
through meter readings, account setup and so on.
The medium case around $20 a month,
replaces a marginal cost to serve a customer
with the average edge cost to serve all customers.
And then we had a high case, which is around $74 a month.
We back into this amount of fixed charge by assuming that
only the avoided costs or the social marginal costs
are variable and the rest is all fixed.
And this estimate was taken directly
from Next 10 research conducted last year
on designing rates for an equitable energy transition.
So think of this as a high (indistinct).
Next slide please.
So the impact on rates 'cause bills on average,
if folks, people don't consume our electricity
would remain the same are presented here.
You see a pretty hefty decrease in rates,
the higher the fixed charge gets.
But gives you an idea for $11 a month
you'll see around a 7% decrease, $20 a month, 13% decrease.
And for $74 a month between 46 and 55% decrease
depending on customer types.
Next slide please.
And you can stack these policies together
to see what the cumulative impacted me.
And this is an example,
and of course we could analyze
other examples for these same policy categories.
And this just shows that you could stack.
The first four policies discussed
we looked at the $20 per month
and decrease average blended residential rate
from 27 cents to less than 20 cents if you were to do so.
Next slide please.
We analyze the impact of making fixed charges progressive
because fixed charges can be regressive
as they could increase the bills
for lower consumption customers.
We try to overcome it by again,
following this logic was laid out in the Next 10 report
using income tax based categories
and income tax based scaler
to redistribute the fixed charges more progressively
across five household income categories.
So next slide please.
And this shows the impact and aggregate.
What you see is that,
the bottom three income Quintiles phase,
in all instances, the top two pay more,
but specifically it's the highest income Quintiles
that pays the most.
So that's usually what the impact gets concentrated.
And this shows you,
if you take the low, medium or high case,
what is the monthly fixed charge on a customer
in each income Quintile and then their annual bill change?
So lower income customers would see depending on the case
between $100 and in the most extreme case,
$660 a year in bill savings
and the highest income customers,
those who earn more than $150,000 or more
see upwards of $200 a year in bills.
Next slide, please.
We also looked at the impact
of setting up electricity burden limit.
So what if for CARE customers,
you set a limit on how much they pay via bills
at 5% of total income.
The way this was modeled was CARE customers pay a CARE rate
until they reach 5% of their energy burden limit
in their bills, and then they don't pay anything additional.
And this on average would require 300 million
in additional support assuming that consumption
across CARE customers on average
stays the same as it is today.
So currently around 800 million is the CARE budget,
and this will increase it by 35% or so.
Next slide please.
And you see that on average CARE customers save
around 20% on their bills.
Keep in mind that depending on the ratio
of a customer's bill to household income,
a lot of customers see a decrease,
some customers may not see the benefit
because they just never hit their threshold
depending on what their energy use is
and what their income is.
So there are some distributional impacts here,
but on average, a 20% decrease.
Non-CARE customers,
if you spread the cost only amongst residential class,
see a 5% increase in rates and bills,
but if you were to spread it among all non-CARE customers
include rates and non-rates,
then the impact gets a lot smaller
to less than half percent kilowatt hour.
Next slide please.
The final policy academy we looked at was
increasing the utilization of electricity infrastructure.
So next slide.
Get the most out of the current grid
by manage electrification
is spread out the cost of the grid over more kilowatt hours,
but you don't make proportional infrastructure investments
on the grid because you're managing
how the electricity is consumed.
To do this, looked at a hypothetical scenario
where we compared a low electricity use case
and a high electricity use case
from the CEC demand forecast.
And assume that you are able to manage
the high electricity use case
in a manner that you don't need to make infrastructure
additions for higher load and remodel,
just the non generation portion of the rates here,
this is the TND portion.
Next slide.
And we saw that if you hypothetically are able to do this,
then by 2030, you'd see a one and a half cent
per kilowatt hour decrease in rates,
which translates to $100 a year in savings
if usage is the same,
but do note that the idea is that you're increasing usage.
So the total benefit that customers get
would be higher than that
because they're getting more utility
out of their electricity spending on rates and bills.
Next slide.
To sum up, most of these track strategies require
both legislative and regulatory action.
You need legislative action to raise money,
to fund social policy goals from outside their rate-base.
You need legislative action to rule the cap on fix charges.
Then you need regulatory action
to actually structure redesign,
structure fixed charges more progressively and so on.
And to spread costs with electrification
requires action by the regulator,
but also responsiveness from LSEs
and then customers.
And that would include customer education,
making sure they have the equipment
to avail these benefits and so on.
And final slide just has our contact information
in case you have additional questions, thank you.
-: All right, thank you Mohit, I really appreciate that.
It's a great presentation on multiple interventions,
multiple leverage to pull,
to try to look at rate and bill impacts.
And so now we're gonna turn to Jennifer Dowdell turn
to lean into some of the GRC related
and revenue management reforms.
(indistinct)
-: Okay.
Good afternoon.
I wanna thank the Commissioners
and staff for putting together this program
and allowing so much time for it
and for inviting me to speak today.
First slide, please.
A lot of the heavy lifting has been done
by panelists who came before me.
I think Cathy Yap made this point very well,
but I think the upshot of this slide is
that it's not just low income customers
that are facing an affordability gap right now,
and there's more to come.
So when we look forward over the next two years,
we see something in the neighborhood of pending requests
of about 4.8 billion from PG&E,
about 1.8 billion from Edison
and about 400 million from San Diego gas and electric.
So I think the affordability crisis is here
for many Californians.
Next slide, please.
Melissa, Brad said it very well in the prior panel,
we are gonna need everything in the toolbox to address this.
And on this slide, I just wanna speak to a few points.
The first being,
TURN has not been a strong advocate for securitization
and we still aren't,
but it's something in the toolbox
and we're gonna need everything.
Additionally,
I want to point about the percent of income pilot program
recently approved for the Commission,
which I think is gonna be extremely important
in understanding more about how these programs can work.
And I think other earlier panelists have talked about this,
but I just wanted to highlight it.
And the next thing I'd like to say is that,
next slide I'm gonna talk about in my remarks,
basically two old ideas, which is what you're seeing here.
These are immediate no regret actions
that the Commission can take now.
That TURN believes
and I believe will enhance and inform
the affordability discussion.
The first is the Commission has spent 10 years
developing robust risk spend deficiency models.
I think Michael Wara talked about,
how they could be integrated, but it's very important
that we start leveraging them more and more
because we are dealing in a budget constrained environment.
And it's important to know
how we're gonna get the biggest bang
for rate payer bucks in that environment.
The next point is the Commission has,
not next slide, back thank you.
The Commission has developed affordability metrics
and the best thing that we can do in terms of learning
about affordability and learning where we are
and developing a baseline is to begin using them widely.
We cannot hope to impact what we do not measure,
and we need to start measuring affordability
in order to create a timeline and know where we are now.
Next slide.
So this isn't a new idea,
and I wanna spend most of my time talking about
what this idea is and what it isn't?
TURN proposes that we look at in the GRC process,
an inflation constrained alternative proposal.
Traditionally, utility, advances their wishlists.
And I've talked about it before,
I think others have talked about it before,
there's a single data point that creates an anchor bias.
And I think it would be beneficial
if we created a linkage
between consumer budgets and utility rate requests.
And so TURN proposes that we look
at a CPI constrained proposal.
Now, what we're not proposing is a cap on utility spending.
What we're proposing is a context
for what is re reasonable for rate payers to fund
and we are encouraging, in fact,
we would support the Commission requiring
the risk spend efficiency, being brought to bear,
to inform such a proposal,
because then we've got a ranking
of what provides the greatest safety
and reliability benefit for each dollar.
And we can look at funding,
lower priority work outside of break.
Next slide.
The last thing I'd like to say about this,
I'm not gonna read this slide,
but I am gonna reference what Jack put forward, excuse me,
I gotta telemarketer, I'm sorry about that.
I'm gonna reference what Jack put forward
at the beginning of this program which is,
we need to look at these proposals
in the context of the CPUC six point criteria
for evaluating them.
And the point I would make is that,
by creating an alternative that is inflation constrained
in addition to what the utility proposes,
we promote affordability by book ending, utility requests
as I've said before, connect requests to the increases
that we're seeing in household budgets.
So everybody's gotta stay within a budget.
And this simply brings that reality into the GRC process.
Finally, I think that this proposal addresses
equity and economic impact.
Equity because rates are essentially a regressive tax,
and if you reduce the volume of a regressive tax,
it is less harmful to the people
at the bottom of the economic pyramid.
And economic impact
because it makes sure that rate payers get the highest value
for the dollars that they are contributing.
Finally, in terms of feasibility,
this is something the Commission can require
as supplemental information in filings right now.
So it could be a unilateral action
that basically increases the quality of the record.
Next slide.
Okay, final thoughts.
We have a lot in California ahead of us.
We have climate change goals.
We have wildfire mitigation,
we have additional infrastructure
and all of that with the framework of affordability,
layered over it.
Consequently, we're gonna need everything available
and probably some things we haven't thought yet,
but We have some tools that are available to us now
and we should leverage and maximize them.
And so we should leverage risks and efficiency,
in rate setting proceedings.
We should measure affordability
and use those metrics wisely and widely
to help us understand precisely where we are
and what we're facing.
And we should introduce supplemental
alternate proposals in GRCs that show
what work would be done if here was an inflation constraint
on the growth of revenue?
That's what I've got today.
Thanks for the opportunity.
-: All right, thank you, Jennifer.
Appreciate that very much.
We're now gonna turn to Mark LeBel
from the Regulatory Assistance Project
to speak to his proposal.
Thank you, Mark.
-: Thank you, Paul
and thank you for Commissioners for the invitation today.
This has been a great event so far and a lot of great ideas
it's very valuable to do this.
As I said, my name is Mark LeBell.
I'm an associate with the Regulatory Assistance Project.
Rap is a national international nonprofit
that among other things works with regulators deal
with thorny regulatory issues,
just like these that we're discussing today.
Many of our senior leaders
or former state utility Commissioners
or other energy and environment officials.
So we can go to the next slide, please.
So just to start off with
some higher level regulatory level setting,
what are we trying to accomplish
when we're doing rate making,
particularly for electric utilities,
there are a lot of different ways to put this all together.
This is my best shot at it.
We have higher level public policy goals,
efficient competition, and control of monopoly behavior.
We have all of our environmental public health requirements.
Societal equity has always been there,
and that's a focus today.
Historically, that was things like universal access,
rural electrification.
Affordability's been a longstanding
utility rate making goal,
but as we evolve into a quite different future
there's new societal equity metrics
that we're looking at as we well.
And then we get into the detailed setting
utility prices lead to recover the revenue requirement,
revenue availability, customer understanding,
equitable allocation of costs,
efficient forward looking price signals.
All of these do put in the blender
to create one set of waste for all customers.
Next slide please.
So if the previous list was sort of like motherhood
and apple pie, everyone sort of loves it
and can't rely against it.
These are a few more perhaps guiding principles
that might engender debate with my fellow panelists.
I believe that long run marginal costs
are an important part of the picture.
As a practical matter,
when we're doing electricity regulation
and wholesale markets,
we don't really let short run marginal costs,
go that high to do what the other might be able to do.
So the practical at including long marginal costs,
which is the way we plan the grid
is a very important feature.
Time-varying rates are important.
California has default time bearing rates
already for all customers,
but it makes these comparisons very tricky.
So talking about an average rate can be misleading.
There is no one average customer.
All customers are different low profiles,
and will pay a different effective rate.
One of the primary policy purposes of utility regulation
is to protect customers from price discrimination,
if they don't have other choices.
And that makes looking at things like willingness to pay
a little bit tricky.
You wanna make sure you're not inadvertently violating
some key public policy principles.
Gradualism is a key principle across all these scenarios
and then every option involves tradeoffs.
My ideas have downsides everyone's ideas have downsides.
It's important to vet those seriously,
putting forward an ideas a lot like first date,
everyone's gonna emphasize their best qualities,
but what you're thinking about adopting a proposal,
that's like a marriage and you really wanna understand
what they're getting into.
Maybe you can have a divorce, but it could be a little ugly.
So next slide, please.
Look, there's a lot of things that are happening
in the electric sector and the energy sector right now
across the country
and California is the epicenter are a lot of these changes.
When solar storage, everyone knows that that solar
has a high penetration rate in California,
particularly customer side solar demand response
is a much more important feature of the grid going forward.
We have a smarter grid with a lot more data
that we can use for all sorts of purposes.
And then we have electrification
of transportation and heating.
So we just think about all of these things at the same time.
Next slide.
And then the so-called duck curve,
this is a very mild example of that,
but this is just an important feature
of the modern grading California.
And we'll get to my particular reason
for bringing this up in a minute.
Next slide please.
So here are my proposals.
We have three cost based reforms for California
that we would recommend.
The first two are slam dunks
and the third one is the one that gets a little more tricky.
So first is the daytime hours and time of use rates
should be off peak or super off peak
with the lowest kilowat hour prices.
A site infrastructure charge for line transformer
and secondary voltage network costs,
we can get into more details of that.
And then a distribution flow charge
that would be a charge in both imports and exports
to cover what I call distribution backbone costs.
Next slide please.
So, one thing that seems clear going forward in California,
as you keep adding more solar to the grid,
we have a distinctive cost pattern that's emerging,
and that shows up in the E3 avoided cost calculator.
The daytime hours have the lowest avoided cost,
and you need to start reflecting that
in your time of use rates sooner rather than later.
Hawaii is already doing that, and several time of use rate,
and that's just illustrated in the bottom right here.
You'll see the lowest rate
is approximately from nine to five.
Doesn't have to be exactly those hours.
And then the overnight hours and the evening hours
have a much higher time of use rate.
Next slide, please.
The idea behind the site structure charge,
but there's much overload diversity
at the customer end of the distribution system.
The service drop the secondary networks,
and then the line transformers
that only serve either one customer
or a large handful of customers,
sometimes a transformer bank
to serve an entire apartment building,
which can have a lot of customers
or an office building, which can have a lot of customers.
But for the most part,
this infrastructure at the end of the distribution system
has much lower diversity
and only has a much lower number of customers that use it.
That justifies a different kind of a rate structure.
And this name site infrastructure charge does come from SMU,
originally their CNI rate
had to prepare of a small demand charge
to cover these costs.
It's gotten a lot bigger over the years.
I think it's straight
a little bit from its original purpose,
but you could do it as a demand charge
you could do it like we show in the next couple slides.
Next slide, please.
At the Burbank visible electric utility,
they have a service size charge
where they have a basic customer charge
where all customers pay about $9 a month.
And then there's a tiered service size charge.
If you're a multifamily, you have a small Atter,
if you're a single family home with a 200 a panel,
you have a medium size atter.
And if you're a big house with a big panel,
you have a big atter.
Next slide.
In France, they do a more sophisticated version of this,
where they have a KVA Subscription.
I believe they actually enforce this a circuit breaker.
So if you go over your KVA subscription level,
you get shut off, which might be a little bit drastic,
but there's different ways to enforce the cutoff.
And the way the math works for this French tariff,
if there's approximately a six Euro based customer charge,
and then it's about one Euro per KVA.
So there's no magic to that formula,
but that seems to be about a cost based rate in France.
Next slide.
So here's where things get a little more tricky.
The modern grid,
everyone talks about how it's gonna be different
than the old grid.
And one of the key ways,
it seems like it's gonna be different
is that they're gonna have a lot more customers
with distributed generation and storage,
and that we're gonna have electricity flowing both ways
at different times of day.
And while there's a number of engineering,
things that you can do to account for that
to enable exports to flow out through line transformers
and out through substations and protect both it is
and all the other things you need to do.
How and whether you start to think
about rates in that context,
I think is an interesting question
and gets us to where we are in this proposal.
You go to the next slide.
So instead of talking about sales or delivery,
since that's not how the grid works anymore,
we can talk about flows.
And maybe on the supply side,
you still have sales and deliveries,
but on the distribution system, we have flows.
So what we're proposing here
is that there's a specific category
of what I call distribution backbone costs,
but it's really the basic polls and wires
that we see on our streets.
That if you are having customers
that are exporting electricity out through those wires,
they should be paying for those wires
in the exact same way that they're paying for their imports.
And in that way, it's non-discriminatory,
the rate can be the same both ways.
I mean, this has a number of different consequences.
So for a customer with distributed generation of storage
or an EV that that's exports,
this is a natural method to design a pricing system
that has a higher import kilowatt hour price
than the value of the export kilowatt create.
So whether you call that net billing
or some other type of label,
this is one way to have separation
between the import rate and the export credit.
And that helps with cross up the issues among other things.
And then as a level of aggregate rates,
what you end up with is higher billing determinants overall
for all residential customers
and for the same lump sum category of costs,
the effective rate ends up being lower.
So once time I was talking to a Michigan staffer
and he said, what we do when we separate
is we take one big number
and we divide it by another big number
and we come up with a rate.
So basically here, the bottom denominator number,
we have a bigger number.
So the overall rate we have will be lower.
Next slide.
So the question is,
how does this all fit together into a rate design
that might lead to more affordability?
So having a more advanced time of use
or time bearing rate structure
should help efficiently size the system,
and it contentized better customer behavior.
The low daytime rates are,
how do you get storage charging at the middle of the day?
You be charging at the middle of the day,
all sorts of load ships in the middle of the day.
The every time you take a cost out of volumetric rate
as discussed by many people earlier today
and put it into a different type of charge,
you're lowering the volume rate
so that enhances the affordability.
And then just the overall way
you are spreading this cost is important.
So putting it all together here,
I'm gonna throw one more idea at you at the end.
What I would suggest actually
is to segment the residential rate class into two.
So that way you can have distributed generation customers,
EV customers and large users
deliberately put onto a more advanced rate design
and that low income and low users
can be shielded from some of these rate structures
that are more efficient, but have risks.
So if you do a site of charge based on demand,
there are no risks to low income customers.
So this is one way to package all these rates together.
When you have a distribution flow charge,
the way I've shown it here is you do it on both sides
of the symmetric rate at the bottom.
So the way that this would work,
if there would be in the daytime,
there would be a 12 cent rate on imports
and an 8 cent credit on exports.
There's no perfect way to show this,
but I thought this was the most intuitive.
So thank you for letting me present again.
And I'm at the end of my time and at the end of my slides.
-: All right, thank you, Mark.
Appreciate that very much.
We are now going to transition to Meredith Fowlie
to talk to us about income charges
and the research that she's done there.
Meredith it's over to you.
-: Great, and so I think there are some slides.
Can you hear me?
You can hear me.
Okay, so I think there'll be slides coming up in a minute,
thanks to the organizers for the invitations
to participate in this conversation.
And thanks to all of you who are still
around for this last session,
you're all busy and important,
and I appreciate your attention.
My name is Meredith Fowlie,
and I'm a professor at UC Berkeley,
faculty director at the UC Energy Institute at Haas.
And today I'll be using my 10 minutes
to talk about some ongoing work
that's in collaboration with Berkeley colleagues,
Severin Borenstein and Jim Sallee.
And I should note that this work
is being supported by Next 10,
which we very much appreciate.
Next slide, please.
So we're here today because California's electricity rates,
our retail electricity rates are really high,
but if we're gonna talk concretely about what to do
about these high prices,
I think it's important to think precisely
about the extent of the problem.
So how high is too high
and high relative to what benchmark.
So with this in mind, I wanted to start with this picture,
which I'm taking from a report that Mohit reference.
Thank you, Mohit.
That we released last spring.
And what we're doing in this graph is
we're comparing average residential electricity prices
paid by California households
against our favorite are being a economist benchmark
of what tic price would look like.
And so following over his leads,
we're focusing on PG&E here
as part of the middle of the road utility
when we're thinking about rates
but the report does look across all three major IOU.
And so what you're seeing is the average
retail price paid by non care households
in yellow over time, care households in greens.
And what the red line represents
is our estimate of the social marginal cost.
And if economists were setting rates,
the social marginal cost is the efficient price to choose
because it's intended to capture
the incremental cost of society
of incrementally increasing electricity demand
and production in California by a kilowatt hour.
So what this is conceptually including
is the cost of the fuel burn
when I consume one more kilo watt hour,
the environmental impact of any associated emissions,
marginal capacity, investment costs, et cetera.
And so, as you can see
that our estimate of the social marginal cost
that red line is squint at, it is fall in recent years.
And the main reason is that
we're reducing the greenhouse gas and intensity of the grid.
So the climate costs are on the decline
this is good.
But over the same time period of retail electric price
have been arriving for all the reasons
we've been talking about today,
we are increasingly relying on retail electricity rates
to raise revenues, to cover conducting grid,
infrastructure, wildfire risk mitigation,
and public of purpose programs
and all the costs you've been discussing.
So the point I wanna make with this graph
is setting that price well above social marginal cost
to raise these revenues amount
to tax on electricity consumptions,
there are lots of packages we could use
to raise these revenues.
And the point you made in our earlier report
that has been made so effectively
by so many of the (indistinct) today
is that tax electricity consumption
is problematic with two reasons.
The one is that when we make electricity consumption
with more costly than it actually is,
we're slowing progress on electrification,
like who wants to electrify when electricity prices
are so high.
And the second concern is that,
tax on electricity consumption is a really perspective tax
that loads the substantial cost recovery burden
on household that afford to pay.
So I know our focus today is on affordability,
that's an important focus,
but really important to keep in mind that
there's no equity efficiency trade off here,
whether you're concerned about economic efficiency
and efficient electrification
and/or you're concerned about affordability and equity
will pay energy transition,
both concerns point in the same direction
and that's what you bring retail rates
for electricity in California.
Next slide please.
So I wanna spend my very limited time
summarizing some preliminary results
that build on that earlier Next 10 reports.
Thank you, utilities,
we now have access to really household level billing data
from millions of California households
that allow us to construct a clear picture
of how this electricity tax burden is being shared
across different types of households.
So what I wanna do is start
by characterizing the distributional implications
of how we're doing things now,
how we're recovering revenue fee rate,
and then talk more about this proposed alternative
that will tension,
that we argue would provide a more efficient
and more equitable views of raising them.
The next slide, please.
Before I jump into the pictures,
I wanna clarify jargon a bit.
I'm gonna be talking about cost recovery burden
or electricity tax burden.
I'm gonna use those jargony terms interchangeably.
What am I talking about?
So for each household and our data,
does that include you?
If you're a customer of one of the three major utilities,
we look at your electricity bill in a given year,
and then we subtract from that the bill you would've paid,
if you were paying efficient electricity price,
if you're per kilowatt hour charge was set
at the social marginal cost.
And that difference between the bill pay
versus the bill to pay at prices
were set at social margin cost
is your contribution to the raising of revenues we need
to cover non incremental costs.
And when we think about affordability,
we're particularly concerned about the costs
that are born by low end household.
It's notoriously hard as we've heard about construct,
accurate income measures at the household level,
we are developing a post that leverages census data
and last data and household level billing data
to come up with better estimates.
I'm gonna show you some preliminary results today,
but not dive into the details given time constraints,
slide by.
Next slide please.
Thank you.
So there's a really quick summary
that says preliminary results.
There's a lot going on here late in the day.
So let me walk you to see the key details.
So what this graph is showing you
is this a summary of our estimates
of household level cost recovery burden
divided by income category.
And again, we're so looking on PG&E in 2019,
that there's a place to start.
So if you're a PG&E customer bundled
or unbundled year to year.
And each box is showing you
the 25th to 75th percentile range,
that annual tax burden for each income category
and the horizontal line in boxes of immediate.
So if you squint at it,
you're looking at $400 per year
for the lowest income category,
upwards of 900 for the highest.
So I wanna make three points about this,
and I'd be happy to talk more and dive
into the details and then Q&A.
The first thing you'll notice is that the medium expenditure
that medium annual electricity consumption tax bill
is increasing the income.
And that's surprising these cost calculations
do account for the care discount
that reduces bill for many low income households.
So care is helping to mitigate
the impact of current rate structures
on the lowest income household.
Second point care, notwithstanding the cost burden
on low income households is substantial,
essentially when you measure the contribution
of the shared income and that's what they red line doing it,
doing the dash red line of new annual burden
of the share of income
is that just like drive home,
I think we already grasped is that this electricity tax,
because for a much larger share of income
among the lower income households.
And finding it's worth building the (indistinct),
even the same income group,
there's a lot of variation in household level contribution
to non incremental cost recovery,
particularly true in that high 10 category
where you have some large consumers,
but you have an increasing number of consumers
putting these top solar on their roof,
which is gonna a significantly reduced
their cost recovery burden
or their contribution to non incremental costs.
Next slide.
So my remaining time, I know I don't have much time,
I wanna talk about this alternative rate design proposal
that we sketched out in an earlier report
that could raise needed rather in a more efficient
and less regressive way.
And I should just mention that
there's been lots of important discussion today,
urging up to find other ways,
to pay for these non incremental costs,
such the living cost into the state budget,
and we totally support those arguments,
but I've asked to talk about
what I see as a complimentary reform,
which is assuming there's still gonna be substantive
non-incremental cost coverage from electric consumers.
Can we recover those costs differently
in a way that's more efficient, more equitable.
And so in our early report,
thank you Mohit for setting mistake,
we picked this idea of an income based discharge,
and we did a great job
of introducing the basic concept with tables
when we add a few more details
and showed you the basic idea and a graph.
So we've soon updated the analysis meeting
where detail has billing data, better income data,
(indistinct) is the same.
What we're doing here is we're saying
supposed we set the electricity price
at the efficient social marginal cost,
which in 2019 PG&E, which is what we're looking at here,
we got eight or nine of whatever.
If that add is the price we set
and here we're assuming analogic demand
for the purpose of 10 minute presentation,
we have to make of the revenue collected,
which fall short of the revenue requirement in 2019
by about 3.6 billion for PG&E in that year.
So principal,
we can recover that additional revenue in a fixed charge.
If the fixed charge did not vary across households,
all households paid a six monthly charge,
and that's the red line.
It would address the efficiency concern,
but not affordability.
So alternatively, what we can propose is that
the fixed charge increase with income
to shift the cost recovery burden
away from low income household.
And what that green step function is doing
is how calibrating fixed charge that increases with income
in a way that's as progressive as the sales tax,
we could choose other taxes,
we could choose that tax income taxes,
but here we're looking at something
that's commensurate with the sales tax in California.
And there you see this
the monthly charge ranges from Euro
to the lowest lowest in categories,
all the way upwards of $160 per month
for the highest same income category.
So by design,
both of these six charge schedules in the single picture
raise the same revenues of the current regime,
but we're arguing with have a six charges are more efficient
and much less aggressive approach than the current system.
Next slide, please.
So hopefully I convince you,
or it makes sense that this income based six charge
could deliver real agreements over the current regime
in terms of efficiency and equity,
but there are forces of equity or implementation challenges
that we've already talked about a little bit today
and chief among these information related.
So to implement this approach,
we need to find is households to an income category.
Next slide please.
If you're thinking about 100 or $160 per month charge,
high income households have an incentive
to under care for their income to avoid that fixed charge
that's real problem.
And as we talked about today,
utilities don't, right now have good quality information
about how level income but other entities do.
So we've been thinking through
how this information problem might be packing.
One option you might think
is just to calibrate the fixed charge
on the basis of like a neighborhood average income.
The one thing that's really striking
is when you work with individual
or household level income data,
is there is quite a bit of variations
even within census block grids around that average.
So that would be a fairly course
sort of blood approach
to targeting the incentive fixed charge.
If we go to the next slide
here's our brief stats are an approach that we think at work
that we would love to get feedback today or later on,
we'll share our email and contact information.
So the basic idea,
if you could give electric consumers three options.
One, they could provide their utility
with the documentation needed to verify their income.
Two, they could authorize utilities,
those paying information from the franchise tax board
about their category, the way we're envisioning it.
And please like push back
and tell us the problems that you see
it's your name, address, maybe facility information
through a secure interface
and then the franchise tax board
will transfer only their category
in some category for the utility,
for the purposes of finding the fixed charge.
Apparently, consumer go like either the choices
they can accept the default charge,
for example, the maximum fixed charge for this team.
So interested in your reactions and I know about time.
The next slide.
One more idea I wanted to introduce before I conclude.
There is another alternative proposal
that's been getting some corrections.
And the idea is to charge enormous bills to all customers.
So, if your bills above the minimum,
you're not effective, but if you're paying a low bill,
you'd be brought up to the minimum bill.
So $30 per month is a proposal that's been out there.
We looked at the data and said,
how much revenue would that really generate?
And it's only operating on those Teslas
for who that constraint buy.
And we calculated that as PG&E,
a 30 month minimum would raise about 0.1 billion,
60 month minimum bill raise about 0.5 billion
sort of a drop in the bucket of the revenue requirements
you've been talking about.
So to conclude finally, last slide.
California electricity rates are high
because we're using vehicle to pay for lots of things
that are not part of the incremental cost
of providing electricity.
Looking at 2019,
the actual avoidable cost of electricity supply
is like a third to a half a retail price.
It's a month to tax an electricity consumption.
Lots of important alternatives being discussed
based-budget is an important option.
Income-based fixed charges could help cover costs
in a less aggressive, in more efficient way.
The minimum bill would not raise much revenue
and would likely be regret.
So I'll stop there.
Thank the organizers again for all the work
that (indistinct) into convening this conversation
and I look forward to the Q&A.
-: Okay, thank you, Meredith.
That was fantastic, really appreciate that.
We're gonna turn to one more presentation
before we take a very short break.
So I'm gonna introduce Frank Wolak from Stanford
to discuss similar things to what Meredith just discussed,
but in a slightly different way.
Frank let's have you take it away, thank you,
Frank, I think you're on mute on your phone.
-: Am I unmuted?
-: There you go, yap.
-: Okay.
So thanks very much.
Next slide please.
Okay, so I'm gonna talk about two problems
that I least see with retail pricing in California.
The first I will characterize
it is average cost-based pricing,
which means that what we're doing is
we're essentially taking,
I think as one of the previous speakers said,
the total cost dividing it by the total volumes sold,
and that's what we're gonna set as the price.
And this mechanism to infers approximation
is what we're doing in setting the prices
on the increasing block price schedules
that virtually all California customers
of the investor utilities pay.
The thing about this mechanism is,
is historically it really didn't lead
to what we would like to think of as inefficient behavior
in the sense that, and simply because the customer
had the choice of buying electricity from the grid
or not getting electricity.
But now there's competition for this electricity
and it comes in the form of distributed solar.
And so the customer essentially only pays for the price
for what he withdraws from the grid.
And so what this means is that what we can get
is things that increase the cost of all consumers
that are privately profitable for the individual,
but raise, if you like the total cost
of serving demand in California,
contributing to the increasing cost of California consumers.
So next slide, please.
So just as was discussed earlier,
the at least taking from the EIA data
average residential price in California is 23 cents,
all the investor on utilities
have these increasing block price schedules,
a highest marginal price for the PG&E is currently 44 cents.
Basically a $3 and 50 cent watt installed
a rooftop solar system,
looks very good in terms of effectively
allowing the customer to avoid paying for 44 cent power,
but instead getting 15 cent power.
But the difficulty is as has been alluded to,
is that most of the cost of the electricity
is recovering cost-unrelated
to the cost of supplying the customer with electricity.
And in particular,
the average cost of wholesale energy in 2020
it was roughly about 4 cents per kilowatt hour.
So what we have is a situation
where it's essentially socially unprofitable
to invest in rooftop solar,
but it's much cheaper for the customer
to get their electricity from the rooftop solar system
relative to paying
this average cost-based price for electricity.
And so this creates a divergence
between the privately optimal decision
and the socially optimal decision
that essentially raises the cost to all consumers
of a consuming electricity.
Next slide please.
So essentially,
just to give a simple example of this is that,
a customer that install a solar avoids the 23 cents
buys essentially 15 cents the utility
no longer receives essentially 19 cents per kilowatt hour
for what the customer consumes,
and so if we take this, the simple example
as the customer in this case saves
essentially 8 cents per kilowatt hour
by installing the rooftop solar system,
the difference between essentially the 15 cents
that he would pay from the rooftop solar
and the 23 cents that he would pay from grid supply,
but the utility no longer receives 19 cents
times the thousand megawatts from him,
and so what we have is societal cost
increases by $110, but in particular
the customer essentially benefits from this insulation.
So next slide.
So what's the other problem that we face?
The other problem that we faced is a re fixed retail price
that provides no incentive for customers to reduce demand
during a stress system condition.
So what this means is that we are telling the incentive
for customers to invest in storage
and other load flexibility technologies.
And if we can expose customers to real retail prices
that vary with real time system condition,
what will dynamic pricing meaning,
prices move with the hourly price of wholesale power,
we will likely expose those customers
to bill risk volatility.
This is not something that we'd like to see,
this is what exactly happened to the customers
of the retailer Griddy in Texas during February, 2021,
they ended up paying for all their consumption
at the hourly real time price,
which was $9,000 per megawatt hour.
So the question is how do we capture the benefits
of dynamic retail pricing,
meaning getting customers to invest in storage,
load shifting technologies
yet still protect them from significant bill risk.
Next slide.
So what is the solution to problem number one?
The solution to problem number one
is similar to what was discussed by Meredith
and number of other speakers is essentially,
charge for the marginal cost of grid supplied electricity,
Meredith number include a social cost of carbon.
The number that I came up with is
it does not include that,
which is explains the difference between them
and recover the remaining cost
through customer specific fixed charges.
How do you allocate those fixed charges?
The argument that I would make is that,
we can use information based upon
what the economic benefits the customer gets
from consuming electricity from the grid.
This is essentially a methodology
that's outlined in the paper that I cite.
But the basic idea is you're essentially using information
about the customer's consumption of electricity
throughout the year to get an index
of their essentially economic benefits
or willingness to pay to consume at marginal cost.
So customers who have
typically lower average consumption levels,
hourly consumption customers
that have less volatile consumption
across hours of the year
will typically pay lower fixed charges
than customers with higher hourly low average loads,
and more volatile loads under this sort of scheme.
And so, as you can address the equity concerns
that were discussed in terms of low income in two ways,
number one, we're charging customers, all customers,
the marginal cost of grid supplied electricity,
which is on the order of say five to 6 cents
on almost 75% reduction in that marginal cost,
but to the extent that there's concern
about the need for further addressing these concerns,
you can reduce the fixed charge, zero the fixed charge,
or even have a negative fixed charge.
And the other nice thing about this mechanism is that
distributed solar customers would now essentially be free
to inject as much energy as they want to the grid,
it's just that they would receive
this marginal cost of grid supplied electricity
as the payment for the electricity they inject,
and they would also pay that cost for the electricity
that is withdrawn from the grip.
Next slide.
So solution number two.
How do we address the issue of customers
getting actively involved in being flexible
to manage their demand as well as to provide an incentive
for onsite say, investment in storage
is that we have effectively,
we have customers purchase a fixed load shape
at a fixed cost.
So the idea would be is that
if you're above your fixed load shape,
you're essentially paying at that marginal cost
of grid supplied electricity in real time,
if you're below that load shape,
you're essentially selling back
what you purchased on the fixed load shape
at that hourly cost.
And essentially this significantly
limits the bill volatility,
and moreover can completely ensure the customer
against any upside increases in their bill.
You simply are purchasing a load shape
that's higher than your expected consumption,
and most of the time selling back.
Next slide.
So, this is analogous to,
like a cellular telephone calling plan
where you effectively would purchase say
a flat load shape of 24/7 hours at 1.50 cents six by 16,
getting the peaks and then getting the super peaks
for five days a week for four hours,
this gives you a essentially that fixed load shape
at an average price, in this case of route 4.66 cents.
And next slide, please.
So what you would get is that the customer
has purchased this load shape in red,
and if the customer's actual consumption is the blue shape,
then sometimes the customer's purchasing
the additional energy at that hourly cost.
And other times the customer's selling back
to the extent that the customer
would like to get certainty on their bill
on their maximum bill,
the customer can effectively buy a red load shape
that is most of the time above the blue load shape
and essentially they're selling back most of the time.
And essentially ensuring
that they've effectively got their bill volatility,
at least in the upward direction covered.
Next slide.
So just to finish up, the idea is transitioning
to a more marginal cost-based of grid supply electricity,
approach to pricing customer-specific monthly fixed charge
based on willing this willingness to pay
to purchase at marginal cost that will naturally build in
the progressiveness that is inherent
in a income-based approach,
but does not require information on income
and simply uses information
on the customer's hourly consumption of electricity
throughout the year.
And you could address with low income customers
they now have access to purchasing at marginal cost
at a significantly lower variable charge.
And can essentially if further,
can reduce the monthly fixed charge to small level.
There's actually an example of this procedure
we implemented in a study we did in Columbia
looking at essentially
how we could address the same sorts of issues
and showing how we could effectively,
replicate beneficial outcomes to virtually all income groups
through kind of procedure.
And then the final,
increasing the incentive for customers become involved
is that they could just simply be purchasing
a significant fraction of their expected demand
at a fixed load shape at a fixed price
and now on the margin in the market,
if you like for the deviations from that load shape,
this would then provide incentives for load flexibility,
storage and the like to manage the intermittency
associated with a larger share of renewables on the system.
So thank you.
-: All right, thank you, Frank.
Thank you to all the panelists
that have spoken over the past several,
well, it's been about 45 minutes or so to an hour.
I would like us to take a quick help break
for a break between panels.
I think we could all probably use it.
There was a very substantive discussion.
So let's take five minutes and cleans our pallets
and come back at about 3:51, if that works for everybody.
And then we'll start with the chance here
to announce the discussions.
Thank you.
-: There will be a five minute break
and the call will resume at 3:51.
The time you'll hear music
until the conference resume.
(upbeat music)
-: Patience.
-: Such that it does not increase
distribution system expenses.
Going to the next slide.
It's just for an example,
the distribution why are rates where they are,
distribution system costs are number one.
Here is just one snapshot se their current rate case
from a work paper's $1.1 billion here
for system augmentation of load growth.
There has not been load growth,
there was not load growth, but this is 1.1 billion proposed
to expand the distribution system, to manage load growth.
And it's based on a projection, that's not real.
If you go to the next slide,
the projections are all over the place,
and the one that was presented to justify the expense
is greatly increasing at the same time
as the actual load was not.
And you can see directionally,
the CAISO kind of starts in a different place,
but it's a downward trajectory well,
SCE is an upward trajectory on its projected load.
And that orange curve is just out of step
with our common understanding
of what has happened with load recently.
And we can also see here
that the sum of individual customer loads is lower
than the sum of the aggregated circuit loads,
which is mathematically impossible,
but this spending request was approved
for medicine based on this seemingly way out of step
projection of growth.
And this is what happens and we're regulating utilities
that have a shareholder profit motive,
and we don't have enough visibility and accountability,
it's a recipe for bringing to where we are today.
TURN's idea for an inflation strained alternative
is an excellent one.
I would go one step further
and say that the Energy Commission
should intervene in the GRC
and create the base case, right?
We need to get in there and really have accountability
and details look at where the money is needed
and where it's going.
So for the Energy Commission
to start this whole new thing is no small task,
but they are planning entity, they're good at it,
they could manage this hiring the engineers
and the analysts to intervene in the GRCs
would be no small task, but these are big dollar numbers.
There's big potential savings,
we're getting taken for a ride and we need to stop it.
So that's the, the proposal there is to have
the utilities Commission with the arbiter.
But the Energy Commission is an intervener
and a creator of the base case.
On the next slide,
this is similar to what Mr Chhabra was saying
about increasing grid utilization.
And we know know this, right?
There are some circuits that get overloaded,
you have to upgrade them.
And it's really regional
because circuits are getting reconfigured all the time.
So there's some areas where there's load load growth
and the distribution system is getting increased.
We can see that coming and avoid it.
We absolutely can avoid distribution expansion
by treating local resources,
mainly storage as a grid resource.
And we've been trying to do this
through the distribution deferral framework, unsuccessfully,
because that is targeting expenses
that are already baked in.
It's a distribution upgrades that are already planned,
and there's a small sliver of time
for those solicitations and they're not happening.
But we still know the distribution system expenses
are gonna happen if we do nothing.
So we can see that coming
and contracts are a capacity to avoid it
and to manage peaks and an hourly basis.
This would be similar to the capacity bidding program.
We currently have capacity bidding program
to target statewide system peaks, right?
It's not vocational it's statewide system peaks.
And the utility chooses whether a proposed portfolio
is in the program.
Aggregator proposes to enter the program
with a set of resources, you utility pick some.
And if you're a part of the program,
when you're called on, you have to deliver
and you're called on during statewide system peaks.
We can do the same thing with an IOU-led program
that is different for every circuit.
The circuits are all unique
and we can target those circuit peaks with a export program
that's similar to CBP, but run by the utilities.
Next slide.
On the undergrounding,
PG&E has proposed underground 10,000 miles of transmission.
Some people are saying that
that is a price of upwards of $40 billion.
That's a big number, $40 billion.
So there are many cases a where microgrids
can be done cheaper,
in sparsely populated remote areas mainly.
M Cubed Research Firm has this data on,
that you can find online,
a methodology for systematically looking
at when microgrids are cheaper than undergrounding,
We should take a careful look at that.
And then on the final slide.
Hang it together, we need a comprehensive independent audit
of distribution spending past and future
and closer scrutiny of that spending.
And then on the price signals,
to get at the increased grid utilization,
we've paid that grid capacity.
It is built and paid for.
We need to make maximum use of it on an hourly basis
and shave the peaks circuit by circuit.
And we can do that both in real time pricing rates,
which are just time bearing, not location varying,
but we can have very targeted time bearing rates.
There's a proposed settlement from PG&E
on the table currently,
it's under discussion other two utilities.
So let's get that up and running
and make it real and scalable.
And then the targeted energy dispatch program
is similar to the CBP and targeting circuit peaks.
This is locate specific and time specific
and similar to a demand response,
but it's with targeted energy dispatch.
We should really get that going.
It's been a very big challenge
integrating TEDs with CAISO market.
We don't have to, we can do it with an IOU led program
and then alternatives to undergrounding as well.
So those are my quick thoughts, thank you very much.
Thank you, Brad.
Next, we have Michael Campbell from Cal Advocates.
-: Great, thank you.
I really appreciate being able to be here.
I'm program manager with Public Advocates Office,
and I really appreciate the opportunity to follow up a talk
that I was a part of last year regarding the rates En Banc.
What I've been taking a ton of notes.
If you could see the workspace
around me I've got piles of paper
with notes from all the speakers.
And what we're really seeing here is how rates,
are increasing, they're expected to increase.
And lots of speakers have specifically emphasized
the importance of prioritizing rate payers
and investments and considering unintended consequences.
So in discussing all that's come before,
I'm gonna try to touch upon those themes.
First off, it's really good to be talking
about a affordability 'cause we've seen rates.
Outpaced inflation, largely for two reasons
they've been talked about here.
One is the utility costs
that are being authorized to be collected as going up.
Also since 2014, residential sales have been declining,
but they've not been declining uniformly.
There are some customers who have been,
having less sales from them,
whereas others from the overwhelming success
some of the programs has led to this versatile a trend
that's helped with some of our abilities
to offset increasing rates.
Historically, we could expect increasing sales
in terms of the number of kilowatt hours to go up a bit
to offset half more of the overall utility rate increases.
That's not the case anymore on the residential side.
So one of the key things I wanted to leave you with is that
we cannot use rate design to solve problems
of high revenue requirements.
We just can't having said that,
there have been a lot of proposals raised here
that look at rates might be changed
to avoid unintended consequences,
look at bill impacts and try to address places
where we may be creating unsustainable subsidies
that unfortunately exacerbate inequality.
So in terms of looking at solutions,
I wanna emphasize what Dr Fowlie was raising,
which I think is important in her charge showing
the bins of usage versus economic impact.
I wanna highlight we should not consider usage
as an indicator of income.
So things that target trying to provide more benefits
for lower usage customers won't necessarily mean
that you are getting a targeting anything
for low income customers.
And this least, Mrs Solis, her presentation provide
a lot of good examples for that, so I won't get into that.
Having said that there's a lot of room
for rate design changes
and all the tools that are out here should be considered.
This form is a great way to get that conversation started.
And I'll note that we are ourselves,
Cal Advocates is doing our own research
and looking at part of the affordability per and elsewhere.
So when we look at the various proposals
that we're considering just we're in the
just in the research phase currently,
but what we have to keep in mind is kind of similar things
when if you all remember the efforts of reducing
the undoing the tenure freeze on rates,
follow AB1X and the energy crisis.
We've gotta look at the rate shocks
associated with making changes to customers.
And we need to look at what unintended consequences
might come up.
One unfortunate consequence of rate design is that
often the rate changes get concentrated
on one segment of the customers.
And unfortunately, often it winds up being those
that have the least ability to respond one way or another,
and that can create additional inequities
for customers that are vulnerable.
So in terms of affordability,
we're very grateful that the Commission been looking
at various metrics on affordability.
There's one simple metric
that some folks have talked about here,
just in terms of comparing rates to inflation.
If customers are feeling the pinch,
they're right to feel the pinch,
rates have been far outpacing inflation,
but a number of charts people have put up
associated with that.
We have been recommending that the Commission
just look at tracking where rates are
and where they've been going
compared to inflation, just as a simple benchmark.
The other piece in terms of equity,
I think we just have a basic,
simple analytical exercise when we're considering things.
So it's not cost effective.
There's a really big likelihood going to increase rates
and often it's going to do that equitably.
If there are public policy reasons for doing that,
then we should look at all the various investment options
really for those funds.
As Ganion of Blue Lake Rancheria said this morning,
cost are rising, let's make them count.
We couldn't agree more.
If some of customers don't have ability
to access some of these programs,
especially those vulnerable and lower income,
we're gonna have inequitable results just by definition.
Regarding comments about utilization,
we need to keep in mind that we can't just presumed
increasing the amount of kilowatt hours
will always result in lower overall costs.
The timing is important, for example,
we've seen the duck chart earlier today,
just adding load during that fast ramp rate
is going to be counterproductive.
Having said that,
there are definitely benefits for trying to use more energy
when we have more renewables and when rates are lower.
Regarding adding a fixed charge, we need to think about,
again, looking through the lens of the rate shocks.
We need to see how they're essentially not felt equitably
and how they might be structural winners and losers.
We're gonna continue also to evaluate access
that have been discussed in the mother morning
about access to income support programs like CARE and FERA
Cal Advocates has long been supportive of approaches
to reduce the paperwork burdens for those customers
we're gonna continue to work with stakeholders on that.
Some potential methods to increase automatic enrollment.
Some of method may be similar to what Dr Fowlie
was describing in terms of how we can look at
figuring out who would be qualified for different levels
of payment for a fixed charge.
So I think there's some synergies there.
So the core message here, there is a rate in bills crisis.
There increase recent bills,
not only threatens our climate goals,
they're burdening our most vulnerable customers.
Electricity is an essential service needed
to assure public health, safety and comfort,
so we need to look at all methods to reduce rates,
and we should see rate payer funds as an investment,
prioritizing those on those,
have the greatest bang for the buck, that's critical.
The second is we support efforts
to look at additional sources for funding, other than rates.
If you're charging for programs,
through rates as been discussed,
that is one of the more regressive ways
we could consider doing that.
And lastly, we should have rates that align
with utility cost profiles.
It doesn't mean any to be exactly the same.
There's a lot of research that shows like for time of use
periods just simply having there be a price differential
is important for customers to change their behavior,
making those too big can just be punitive,
'cause there is a limit to how elastic that demand would be.
So lastly, just with an immediate action,
the Commission can take here is to require the utilities,
to include information on approved and pending data requests
with their rate tracking tool in those proceedings
where they're expected to have that
have a greater than 1% increase
on the given utilities revenue requirement.
That way we could have the overall impact of any request
to be considered along with all other pending requests.
We think that would help make
the decision making bit more informed,
like Jennifer Dowdell said,
this is something the Commission can do now,
it will help improve the record.
And in closing, I would just say,
I don't wanna get virtually kicked under the table
by my colleagues in Cal Advocates
on the telco or water side,
so I wanna to make a plug that,
requiring that rate tracking full tool
for all the types of utilities,
the CPUC regulates is really important
because as it's been noted by several speakers here today,
the other utilities are a substantial portion
of the various rate burdens
that customers feel here in California.
So sorry, I went so quickly,
but I did promise I was gonna try to keep under five minutes
and I hope I did so.
Achintya: Thank you very much, Michael.
Next we have Robert Thomas from California (indistinct).
-: Okay, can you hear me?
Achintya: Yes, we can.
-: Okay all right thank you.
So thank you Commissioners for having me here
on this discussion.
And I wanna also thank the staff for all the organization
and help you provide it along the way.
Today, I'm gonna cover income based fixed charges
and also targeted securitization.
So conceptually,
we agree with the structure of income
based or graduated fixed charges.
And in fact, a general application of fixed charges
in the residential class,
will greatly benefit affordability
and has the added benefit of facilitating
our path towards our GHG goals.
Spectrum structure will address affordability concerns
across the spectrum of customers.
As the lower volume vector charges
will be felt by all customers within the class
with the income graduated charges,
making the structure more progressive
and staying in line with affordability
and rate stability goals that we have
as well as the lower volume metric charges,
making electrification more affordable for everyone.
As an initial step (clears theoat),
the Commission should consider
a three level income-based fixed charge approach, right?
This approach would have a non care fixed charge
initially set at statutory level of $10
and then use the CARE and FERA discounts
for the income graduation.
As we progress down this road with this initial application,
additional adjustments can be made, it's necessary.
One advantage of this is that
because CARE and FERA exist today,
and there are processes in place today
for customer care and so forth like that.
You have already a structure with income-based designations.
A fourth fixed charge level
could be included and applied to electrification rates.
And electrification rates
are rates that are specifically designed
for electrification technologies like heat pump,
water heaters, heat pump, split systems DERs.
And these rates are designed time of use volumetric charges
that take the duck curve into consideration,
I know one of the panelists discussed that earlier,
but they take the duck curve into consideration
and they take system constraints into consideration.
So the fourth level of fixed charge
then applied to the electrification rates
could include in addition to a basic charge,
it could include such elements as coincident
and non coincident peak charges.
This type of structure would be appropriate.
We feel for this application, given that in the future,
we will be seeing more bidirectional flows,
and more flows that'll be managed by customers.
This ensures that those who use the system
will pay for the system.
Because CARE and FERA customers are also eligible
for service on electrification rates.
This framework gives the benefit
of the graduated fixed charge structure,
having a broader reach
through the potential of reducing energy burdens
in the low income segment,
as electrification technologies are adopted.
The optional electrification rates
would incorporate fixed charges
that are better aligned with costs
and for the expected prosumer usage profiles.
As customers electrify,
we expect that they'll change their usage behaviors
and be more prosumers, instead of simply customers
who are receiving power from the utility.
Customers will be more active
in the technologies they adopt
and definitely more active
in the way that they manage their loads.
This will result in flatter more high volume profiles,
similar to what we see in the non residential classes.
And just like non customers,
as these customers flatten their load profiles
and use more volume, they will actually benefit
from having some level of fixed charge
within the rate, right?
Just in general, it doesn't matter what the commodity is
if your high volume or lower volume metric charge
is more favorable with some level of fixed charges.
The lower volume metric charges
can also create the opportunity
for us to take bigger steps towards our GHC goals
and reducing whole house energy burdens,
especially when one considers fuel switching
associated with vehicles.
We know that the transportation sector produces 40%
of overall GHC missions
and that gasoline can comprise approximately 30% or more
of a household energy budget.
So taking the SCE values for energy budget in the May, 2021
SB 695 White Paper,
I put together this example for you here.
So if we look at the year 2022,
I believe it was their gasoline prices
are probably lower than what they are today,
but IOUs that example and you can do the math.
So, but if you take that example,
a customer can save approximately 50%
on vehicle fueling costs, right?
And that 50% savings on vehicle fueling costs
translates to about a 60% savings,
once again, using gasoline prices from 2021.
I recognize electricity prices have also gone up since then,
but in my rough mass the spread is still about the same.
By then connect policies and programs
to expand the availability of Evs
across various income levels,
these similar savings can be expected
in the low income segment.
And an added benefit is that this type of structure
would then extend the CARE or FERA discounts
to vehicle fueling.
And as noted in the white paper,
currently vehicle fueling on the gassing side
has no benefits for the low income.
So this would be a little bit better.
(clearing throat)
Okay.
So we recognize that their existing statutory requirements
that limit the ability for us to reach this goal.
As we saw in the proposal, some of the fixed charges
for what we assume to be default rates
reach levels of over a hundred dollars a month, right?
So statutory limits that specified the level
and the application of fixed charges
and the residential default rates would need to be changed.
These changes include,
but are not limited to a movement towards a true cost basis
for determining fixed charges
and the residential default rate
that would mean the elimination of the $10 per month cap,
as well as the removal of language
and the definition of fixed charges.
That includes the much things as demand charges
in quote, other charges,
not based upon the volume of electricity consumed.
The fact that the statute limits any type of recovery
other than volume electric charges to $10,
Really shows that that this statute
has reached the end of its of its stated
or it reach the end of its life.
The statute basically flies in the opposite direction
of California's current GHG goals.
So given the potential benefits
of the graduated fixed charge framework
with respect to affordability and GHC reductions,
we think these changes of statute
should be made in our work pursuing.
So in summary,
this graduated fixed charge framework
could be in place until the necessary statutory,
data integration and system changes are made
to accommodate a more refined approach.
This framework would ease implementation
and simplify customer care,
as well as billing and maintenance issues.
Some of the frameworks that were discussed earlier today
would require an extensive amount of coordination
between the utilities and other entities
that are associated with the government or other.
And that would be very complicated
from a service perspective and customer care perspective.
We would still be able to provide similar benefit
through this framework,
as described by the HOAs Institute.
This framework would also bring residential rates closer
to cost causation while still adhering
to the stability and affordability priorities.
Once the Commission and the IOU
gained experience with income-graduated fixed charges
and residential fixed charges in general,
then it's necessary the process
or the structure can be refined as we go along.
Ultimately, we'll need to balance the competing priorities
and opposing constraints regarding affordability
and these solutions.
So I also wanted to cover, put down my notes.
So I also wanted to cover securitization.
Securitization of O&M cost is another tool
that the Commission should consider
for reducing near term near term
or short term cost pressures on customers.
Securitization can benefit customers
when used in a very targeted approach.
And in other words, when used for such items
such as wildfire, capital and wildfire, O&M,
we recognize that the Commission has approved
wildfire capital securitizations under AB 1054,
and we believe the Commission should use this tool
also for O&M
The securitization O&M provides an affordable benefit
to help these pancaking,
you could say of revenue requirements that occurs
when wildfire revenue requirements are placed in the rates
by creating a near term build relief
that'll spread these O&M costs
over longer recovery periods.
And by using financing tools
that align with the cost of service principles
that are fundamental to a utilities regulatory model.
Now in using this targeted tool,
the Commission would not need
to approve a real long term securitization,
but could approve a short term five year securitization
that would limit the overall rate adjustment
while at the same time maintaining the cost
with the customer base,
with the appropriate customer base.
This would also provide significant relief
relative to a traditional O&M recovery mechanism.
So once again, I wanna say thank you for having me here.
And that's all I have.
Achintya: Thank you very much.
And we last have Robert Kenny from PG&E.
-: Thank you, let me first confirm that you can hear me well.
Achintya: Yes, we can.
-: The heads nodding, thank you very much.
And let me just say thank you to the Commissioners,
all the Commissioners, CPUC and CEC and to all the staff
for convening this very important discussion.
I was very honored and privileged to participate last year,
and I'm very pleased that I've been invited again
to attend this year.
I wanna be mindful of time,
so I'm going to comment on a few areas
where I've seen significant agreement
and few areas of disagreement.
And let me just start by saying,
I see and hear more with which I think we can all agree
than with which we can disagree.
And so it's just really important that this conversation
has being convened at all.
When we talk about affordability,
I think it's important to recall about whom we are talking.
And I know that several of the presenters
have spoken earlier about the need to be focus on
low income, moderate income customers.
As we heard this morning,
people are making choices between food, medication
and running their AC on dangerously hot days.
People should not be placed in the position
of having to make these choices.
So just very supportive of the fact of this conversation
and the areas where we can work to find relief
for customers, particularly vulnerable customers.
I do wanna agree and associate myself
with one of the comments Mike Campbell made.
It's important to remember that rate design is a tool
to make customer rates and bills more affordable,
but it's not the sole tool.
Other tools that we're very supportive of include,
removing items from the bill,
like we talked about those societally beneficial items
that would be more appropriately funded
through dollars other than the customer dollar
pursuing alternate funding sources
like the federal one, infrastructure dollars
and other measures
to decrease the overall utility revenue requirement.
We're support of examining rate reform measures generally.
And more specifically,
we are very supportive of studying
and implementing a fixed charge,
whether that's income graduated or otherwise.
Current default residential rates
with tier and no fixed charges create artificially high
and inefficient price signals.
And aren't structured to maximally promote electrification
to fright climate change.
We're very encouraged by the ideas
that seek non-traditional
and in some cases non-energy bill funding costs
for benefits that go customers role as energy consumers.
And I think as I said,
programs or initiatives that are societally beneficial
should not be born by utility customers alone,
instead they should be born more broadly
by all Californians.
Couple of areas of disagreement,
and then I'll talk a little bit more particularly
that we're not supportive of proposals
that are counter to traditional rate making principles.
And I heard RAP really
go through some traditional rate making principles
that we're supportive of
and those rate making principles remain sound
particularly those that ensure fairness,
economic efficiency and transparency.
We should resist the urge
to reflexively abandon traditional rate making principles
without fully understanding why we're doing it,
and any potential unintended consequences.
Here, I'm thinking about proposals
to reduce IOU balancing accounts,
the GRC phase one anchor bias reduction in
with a proposed test year CPI based cap
and reducing IOU's authorized rate of return.
So let me just say a little bit more detail
about the ideas that we are very supportive of
the income graduated fixed charge.
And one idea that we're not particularly supportive of
is the CPI-based cap.
First, I wanna say that the rate design,
I think we talked about faces some limitations,
in the phase of increasing costs
and can function to basically squeeze the balloon
or the revenue requirement for some customers
at the expense of others
and can potentially further deviate from cost-based rates.
And so to the greatest extent possible
rates should be set to refer lack the cost
of providing service.
Costs from promoting policies and technologies,
or from incentivizing behaviors, should be transparent
to enable meaningful discussion about policy priorities
and how, if at all those costs
should be shared with utility customers.
So we agree that major changes are needed
to start recovering significant portions
of our costs and fixed charges.
And we think fixed charges for residential customers
are long overdue.
Approximately half or more of our costs are fixed,
but our rates are disproportionately recovering
those costs through volumetric rates.
And we are very interested in getting more discussion
about the income-based proposals
that Meredith discussed earlier.
We do see some challenges,
but absolutely want to continue that discussion.
We think that a universal or a uniform rather fixed charge
is not necessarily regressive.
It would potentially benefit higher users,
particularly higher users in the Central Valley.
Somebody also noted earlier that there's not necessarily
a correlation between high usage and high income
and so that's important to note.
We're particularly thoughtful
about low income and moderate income customers,
particularly those in the Central Valley
that would benefit from the implementation
of a fixed charge.
Any approved fixed charge would already have three levels
based on income, non-CAREe, non-FERA, CARE and FERA.
And we think that there are other ways
to differentiate fixed charges
that are based on cost of service.
For example, based on connection costs or service size,
or even dwelling size.
Let me briefly turn to the CPI-based proposal.
We wanna be careful about some on thing like that
for a couple of different reasons.
We don't believe that it is consistent
with infrastructure needs
and would potentially place constraints
on needed investments for reliability and safety.
And so we think it's really inconsistent
with principles of forecast rate making,
and would potentially undermine our obligation
to provide safe and reliable service.
Secondarily, risk scores are already provided in GRCs
to allow parties to prioritize requests.
A couple of other points that I wanna make
regarding state ownership of transmission assets.
I know that there has been significant increased scrutiny
on transmission spending.
We've been very supportive of creating
a stakeholder review process
that provides greater transparency
into our transmission planning.
But we do think that it's really unclear if we reliability
or operational concerns would be addressed
at the state of California,
where to own transmission assets,
and whether those transmission assets
would continue to be subject
to (indistinct) regulation for interstate commerce purposes.
We think there also may be negative impacts
on the expansion of the CAISO market
and would deter PTOs and other states from participating.
In a regional transmission organization or ISO,
that is in essence state operated transmission system.
Let me conclude by saying that,
we support the exploration implementation of a fixed charge.
We support funding,
societally beneficial programs off the bill
to be funded more broadly.
And we're very supportive of a general discussion
to continue to explore all the different ways
in which we can decrease revenue requirements
and in which we can use rate design
as a tool of affordability.
Thank you for the opportunity to speak,
and I look forward to continuing the discussion.
-: Thank you very much
and thank you to all the presenters
and discussants for their remarks.
So Paul and I do have some prepared questions.
We're gonna start with a couple of those
before turning it over to the Commissioners
for any questions they may a have.
I did want to maybe go back to the top
where we started with NRDC
and talk through the transmission
state own transmission system proposal
that they had put forth.
It appears that there might be quite a few challenges
from an operational and political perspective
that were mentioned by Robert Kenny from PG&E,
but it does seem like there could be quite a few savings
in terms of share reduced shareholder returns
or savings on shareholder returns and tax expenses.
Mohit could you walk us through the rate payer impact
of this sort of longer term proposal and how that compares
versus to the rate-base and IOU impact?
-: Yeah, I can answer that question partially.
So our results showed that if you were to date
on all existing PG&E transmission,
then you could reduce rates by around 4%,
for non-CARE customers, slightly more for CARE customers.
But as we build more transmission
that would potentially increase.
Now note that this isn't a all or nothing solution,
there's also the option of identifying
certain riskier transmission lines
and then identifying how to own that publicly.
And of course, buying all the transmission assets
would require a lot of money.
And the savings really are,
the data between the rate you pay now
versus the rate you would pay later.
And I guess some opportunity cost of coming up
with all that funds to buy it, right?
So that's how you wanna think about it.
And, yeah, I'll pause back.
-: Thanks and I did wanna give others on the panel a chance
if they wanted to follow up on any of those comments
or if they had any follow up questions on that,
and then I'll turned over to Paul for his next question.
Okay, seeing none I'll turn it over to Paul.
-: Thanks Achintya.
So Robert Kenny, I heard you mention a moment ago,
and I think you agreed with Mike Campbell from Cal Ad
because that we can't really rate designer our way
outta of revenue management,
out of rising revenue requirements and such,
but you were supportive of fixed charges,
you're supportive of continued opportunities
in redesign changes.
With a little more backdrop, to what I'm about to ask
I noted that in PG&E's fourth quarter earnings report
that about 35 billion in capital expenditures
have been accrued over the past four or five years
and that PG&E is hoping for another 53 billion
between now and 2026.
And that the utility sectors had about a 13% growth rate
over the past year in general.
I wonder if you could share concerns
with shareholder impacts of some of these proposals,
not the least of which would be shaving of the ROE
down to a national average
when it appears to me that PG&E stockholders
are doing quite well in a pandemic year
and that the utility sector in general does quite well
and seems almost Bulletproof and impervious
to shareholder health.
-: Thank you for the question.
So I wanna talk a little bit
about the notion of reducing ROEs
down to the national average
and I think there was a proposal to reduce it
even further to 7% while increasing the capital structure.
And I'll just, couple of things to say about that.
As a practical matter, as a threshold matter,
rather the ROEs intents to compensate investors
for the risks that they incur
by placing their money into the state of California.
And so there's two points to keep in mind there.
First of all, we are competing increasingly
not just with other California utilities,
but with utilities from around the country,
and we're competing
for other capital investment opportunities
around the world world.
And so investors have choices
about where they put their money.
California utilities do have higher risks
as compared to those in other states.
And so the notion of the national average
being an appropriate proxy for California,
I think isn't born out
just by the comparatively different risks that we face.
I'd also note that the credit rating agencies
view California's political and regulatory environment
as unique and relatively or comparatively complex
as compared to other states.
California does have a long history of big and bold
and innovative energy policies,
but those policies do who come with risks
such as the California energy crisis in 2000,
and investors recall that,
and they take that into account when making decisions
about where to place their capital.
Legislation such as AB 1054,
has served to reduce that risk to a certain extent,
but until the cost recovery work is completely tested,
some of that risk still remains.
We are very supportive of cost recovery mechanisms,
such as decoupling and forward test years
and above average rates of return
on equity contribute to the more favorable view
of California regulation by regulators
or by investors rather.
We are, in fact, as you pointed out correctly,
investing billions of dollars
in infrastructure in the coming years,
we do need to be able to attract the capital to do that.
And we need to attract that capital
at the lowest possible cost,
which ultimately inures to the benefit of customers.
And so we are very understanding
and appreciative of the notion that,
we're gonna continue to make capital
and that investment's gonna need to continue to be made.
And that's why we're very interested
in exploring other options
that will allow us to help mitigate the impact on customers.
But we don't think that reducing the ROE
is one that we would support.
-: Thanks, I appreciate that.
And I just have a quick follow up
that I wanted redirect to Jennifer
to correct something on the record real quickly
regarding your presentation.
Go ahead, Jennifer.
-: Thank you, Paul.
I noticed that Robert referred to the inflation constrained
alternative proposal as a cap on utility spending.
And I wanna be very clear,
that is not what TURN is proposing.
TURN is proposing that the record be improved
by using the risk spend deficiency
by the utility using the risk spend deficiency
to show what work it would perform
based on risk spend deficiency
should it be constrained by CPI.
And I probably wasn't clear in terms of our proposal,
but I do think that's a very important distinction.
TURN does not encourage a hard CPI driven cap
on utility spending.
We only encourage the Commission
to make the record for that spending as strong as possible,
and to ensure that the 10 years
that we've spent developing a robust ramp
and risk and deficiency scoring be reflected,
that's all.
-: Paul, can I respond to what you stated
at the beginning of the question referencing two comments
that rate design is not a tool
for reducing revenue requirement.
I find it kind of shocking that people would say
that rate design is not an important tool
to reduce utility expenses.
And if we don't use rate design to steer customer behavior,
those expense are only gonna grow.
And so fundamentally,
to say that utility costs are high, they're gonna be high,
we can't do anything about that
so let's assess those costs in a way
that minimizes the impact on low income rate payers.
Is not the only answer, can't be the only answer, right?
That's certainly, we need to think about that.
How the cost recovery happens of course,
but rate design is a tool.
And if we don't use it to steer customer behavior
in ways that reduce utility expenses,
then we're ignoring a very important tool.
-: And I wanted jump back in on, thank you for that.
And I brought it up as a really to kind of redirect back
to the revenue requirement question,
not so much to agree
that we can't use redesign to manage behavior
and therefore manage bills.
I wonder if you could expand on that a little bit though
about system utilization, load factors,
how advanced rates can kind of bring us back
to better bill management around,
the very concepts you just discussed.
-: Yeah and historically,
we've built the transmission distribution system
based on annual peak, right?
And it's partially because we've didn't have the data
that was granular and hourly and it partially
because we didn't have the modeling tools
to really model out or the computing capacity.
Computing capacity itself was a limiting factor.
Now we can run models that have five minute increments
every year for the next 25 years and use scenario planning.
So we need to do that and manage things to maximize
to stop planning based on annual peaks
and to start planning based on location specific,
time specific, very granular loads.
And so first off we paid for a lot of excess capacity,
and I think we're seeing that,
that the CAISO long term transmission plan is,
doesn't have a lot of growth in the next 10 years
because they are starting to think hourly, and that's great.
The capacity is there and we can use it.
The fact that the new IRP says
we can do better on greenhouse gas
without a lot of new transmissions spending
through 2032 is great,
but after 2032, we still need to think about that.
And we need to start thinking about that right now,
'cause there, there will be needs.
And the same is true on the distribution system that,
that thank hopefully the overbuilding that we've done
will become useful.
And as we manage it more dynamically,
we can avoid capacity additions in the coming years.
-: Thank you and I think Mike Campbell
wanted to respond to that.
Go ahead Mike.
-: Yeah, thanks.
I just wanted to,
I'm gonna agree with everyone to start using that tactic.
When I was trying to say
you can't rate design your way out to high bills
or high revenue requirement,
it's simply to note that there's limitations
as pointed out at the last rates En Banc,
we're concerned that
as the overall revenue requirement goes up,
there's limitations to how much we can design rates
to make things like electrification
and those types of things effective.
So the example that we gave at the rates En Benc
was comparing the X per vehicle mile fueling cost
for EVs versus rates.
So we can push costs down to a certain level
to make it effective, but once we get too low,
we wind up having there be a set where we are losing money,
the utility's losing money in every kilowatt hour
that they sell to encourage that,
which therefore will create rate pressures
for everybody else who doesn't have the privilege
to own electric car,
straight equity per problems and other things.
So that's something we need to keep very close in mind.
Similarly, I don't think we should be,
I tried to point out we shouldn't be too simple in thinking
about more load necessarily equals less cost
whether customers will always respond to the price signal,
customers may have just times
when they need to do their business,
whether that's charging electric vehicle,
doing things at their home.
So we should keep those things in mind.
I do appreciate the thoughts about
that Mr. (indistinct) is raising
about location value and timing,
because that's true,
there is different vocational value and different timing,
but then we start to address
just complexity and challenges, right?
And are we creating systems where we're violating statute
of having similar situated customers
be getting different treatment?
How do we address that?
And at some point,
anybody who's tried to do these complex modeling things
you can realize that,
you can have the perfect be the enemy of the good,
so it needs to be understandable effective
and not create long term situations
that you can't get yourself out of
where you're driving an equities
and creating a system that is very hard to change.
So that's really the points I was trying to make.
So I appreciate folks giving me an opportunity
to get back on my same box.
Thanks.
-: Okay, thank you, Mike.
And I just wanted to note the time
we are quite a bit over our scheduled time here,
but I do wanna open it up to Commissioners for a minute.
We can, of course open up afterwards,
just when we're done with this discussion,
we wanna open it up to the public comment period.
If folks can stick around past 5:00,
we can of course continue this discussion
for a little while longer,
but I just wanted to note that to be fair to everybody.
So Commissioners, what questions do you have?
Go ahead.
-: Commissioner (indistinct),
I have have a couple of quick comments
and two quick where will hopefully be two quick questions.
First of all, I wanna note on the rate tracker
and Paul I think you should correct me if I'm wrong,
we are in the process of implementing
that for water utilities as well as energy utilities, right?
That's been built into our affordability proceeding.
So that's number one.
Secondly is (clears throat),
the PUC has probably been one of the leads,
if not the lead in the country,
in arguing at facts for greater competitive bidding
of transmission projects
and we're engaged right now in a lot of comment
on that as fur considers
how to reform its current transmission process.
That's obviously transmission rates are set by FERA
not by the PUC, but we've been a very active advocate there.
The most exciting proposal I heard,
I think it was that the CEC
will do half of our general rate cases.
So I think that's a really good idea.
And I'd like to have that implemented as soon as possible.
I actually, I have a question for Jennifer
and one for Dr. Fowlie.
So Jennifer the question is,
and there's similar questions.
The CPI constrained in option
that you've proposed without a cap,
is that do any PUCs do that around the country right now?
And then for Dr. Fowlie the question is,
are there other PUCs
that have implemented income-based fixed charges?
-: Should I go?
I am unaware of whether there are other Commissions
doing this around the country, I think probably not.
What I will say is that,
the California Public Utilities Commission
has prided itself on being a vanguard.
And I do think that the stronger the record,
the better the decision.
So TURN proposes this simply
as an additional piece of information to help inform
what will give rate payers the biggest bang for their buck.
And also as we begin to think
about these other funding outside of rates,
this kind of prioritization lets you know
where to make the cut between what rate payers ought
to fund and some lower priority work
that might be beneficially funded through other needs.
And so to me, this is a no brainer.
It also leverages the utilities own ability
to use their ramp frameworks
and they are risk and deficiencies
as well as their own forecasting.
So, this is something utilities know how to do.
And all we're asking is that,
we incorporate some of their core competencies
into a stronger record to inform affordability.
And then that we measure where our affordability is now
and basically use the metrics that the Commission
has began to put in place
to create a time series where affordability is
and where it's going.
That was long winded, so I'll stop now.
Thank you.
Did that answer the question?
-: Yes, thank you.
-: Okay.
-: Okay, any other Commissioners or anyone else?
-: Okay, could Dr. Fowlie answer the second question,
Paul if that's okay.
I think you were muted Dr. Fowlie.
-: I think you're muted Dr. Fowlie.
-: Yeah, (laughing).
-: Okay, there you go.
-: Is that working, is that working?
Great.
Okay, I was getting an option is not available precisely
when I wanted it to be available.
So thanks to the question.
And I guess it's a great question
that I can't answer immediately I know of course
that better than I do that there are plenty of
public utility Commissions that do you use fix charges.
We had looked into whether there was any precedence
for an income-based charge.
And I think we maybe had found one example
where it was paired with a low income type program.
So there was a different radiation
between the CARE equivalent to non-CARE.
Again, one thing that I wanted to raise
and I thought Robert Thomas
has some really interesting ideas,
one concern we have about using sort of CARE and FERA
as a basis for assigning income-based fix charges is that
this will be a much more salient,
potentially much more economically significant difference
that we're talking about
in terms of income-based fix charges.
So relying on the current approaches we have
for their buying CARE and FERA,
might not be so strong or rigorous enough
to get accurate targeting of fix charges,
but I will get back to you a specific example.
So on my recollection,
it was small fixed charges in one state
or another costly targeted at lower income programs.
-: Thank you.
-: Okay, anyone else, final call.
I could ask questions all day,
but I think we need to wrap this up here
and get to our public comment period,
if nobody else has anything to request.
Okay.
(indistinct)
-: Paul, I saw Commissioner McAllister say
that he was gonna wait
after the public comments for questions.
-: Commissioner McAllister would you like to wait
or do you wanna go now?
-: Yeah, I'll just save comments to the wrap up
like the agenda says.
-: Okay, great.
All right, well, I guess Robert from Stanford,
we can now switch over to the public comment period.
And I think we're adhering to a 30 minute period, correct?
And I understand that we have about seven questions
in the queue from the public.
-: Yeah, we have seven questions,
senior operator turn on the public comment line,
the Spanish translation as well.
Operator: Thank you, and this is the operator.
The public comment line are open,
if you wish to speak during the public comment period,
please press star one,
unmute your phone and clearly record your full name
and organization one prompted.
Our first comment is from Nora sheriff.
You may go ahead.
Nora: Thank you, this is Nora sheriff.
Can you hear me?
-: Yes, we can hear you.
Nora: Okay.
I represent (indistinct)
as well as EPC and the indicated shippers
all large power industrial customers.
And I just want to reiterate
what my colleague Cathy Yap said along with Mark Tony,
Jennifer Dowdell and Mike Campbell,
California rate payers, all classes of rate payers,
electric and gas are in a house of pain right now
rates have increased to the point
where they are no longer affordable.
There is real concern about the justice
and the reasonableness of the rates.
And I implore you Commissioners
to every time you have a decision
before you look for ways to reduce the impact
of that specific decision on customer rates,
whether that be a slightly longer amortization period,
two to three years to get us through this timeframe
of intense revenue requirement increases,
particularly if we cannot find
decent alternative sources of funding,
but it is untenable, the rate increase
that we have seen in the past three months,
I never would've imagined being adopted and approved.
And I've been practicing before the Commission
since the energy crisis.
And it is simply shocking.
So that is my plea to you, I appreciate your time today.
And I appreciate the effort that staff has put into this.
Thank you.
-: And our next comment comes from Deborah Howard.
You may go ahead.
Deborah: Thank you.
Hi, this is Deborah Howard.
I am a volunteer board member
with the California Senior Advocates League.
We are a nonprofit advocacy organization
who sometimes engages in issues
that are not necessarily senior issues,
but that impacts the economic health of seniors,
their families and their community.
So I wanna start off by thanking you both
for the opportunity to comment today
and also to focus on the annual focus on the affordability
of the components and the cost of electricity
for small consumers, homeowners.
I want to highlight aside,
I have owned two homes in California
with solar panels on their roof.
So I am definitely not an anti-solar person
or even anti-roof solar person.
I would love to see the expansion of solar,
just not at the expense of cost shifting.
And that is the core of my comment today
that the current structure unfairly charges homeowners
without solar often low income Californians,
and sometimes seniors to subsidize those with solar
at the point at which that policy was put in place,
it made sense it no longer does.
And so I would like you to meaningful reform
that requires all electricity users
to pay for the maintenance of the state,
California's electrical grid
and its maintenance programs, mandated programs,
so that all customers, even those with solar
pay a fair and equitable rate.
That's my comments
and again, I just appreciate you tackling this issue
with the consumer, the small fee consumer in mind.
Thank you very much.
-: And our next comment is from Elizabeth Kelly.
You may go ahead.
Kelly: Thank you.
My name is Beth Kelly
and I represent Bay REN and 3C-REN.
The CPUC has authorized the regional energy networks
to be administrators of energy efficiency funds.
And so I think there's been a lot of discussion
about environmental and social justice and equity.
And I just wanna say that there are programs
that are really effective and are working,
including REN programs, which they're there to fill gaps
where IOU's don't serve customers, piloting programs
and also critically serving hard reach customers.
So just a couple of examples.
One is deep energy efficiency upgrades,
including heat pumps of farm worker housing,
deep energy efficiency upgrades
of SRO here in San Francisco
and also bringing workforce education and training
to the central coast
where there weren't opportunities before.
And so, there are areas where things
are going well at the Commission
I just wanted to have that highlighted for you.
Thank you.
-: Thank you and our next caller is John Kennedy with RCRC.
You may go ahead.
John: Hi, good afternoon.
My name's John Kennedy.
I'm with the rural county representatives of California.
We're an association of 38 rural counties.
I just wanted to say, and I'll try to be brief.
RCRC is very appreciative of the Commission's attention
to energy affordability.
Our member counties,
many of whom have meeting household incomes
far below the statewide average
are really sensitive to rising energy prices.
We've born the majority of destruction cost by wildfires
and experienced sharply declining electrical reliability.
So we recognize the need to focus significant investments
on improving grid, reliability and safety.
We support shifting significant wildfire mitigation costs
from rate payers to the general fund
while the state flush with cash.
At the same time,
we are deeply troubled by several of the suggestions
and believe will have an extremely regressive impact
on the individuals upon whom they're imposed.
RCRC opposes any efforts to impose new taxes or surcharges
on customers in high fire threat areas.
Rural Californians would be subject to these taxes
are also an increased risk of utility
caused wildfire from transmission lines
that provide electricity to urban customers
and who would not pay those fees.
Furthermore,
the state abandoned the similar wildly unpopular
and unwidly program,
the RCRC fee referenced earlier several years ago.
So we hope the CPUC wouldn't repeat the same mistake.
And then finally, we're also concerned
about imposing new taxes on gasoline and vehicles
to pay for transportation electrification.
Our communities have some of the greatest need
for electric vehicle charging infrastructure.
However, we're deeply concerned that this approach
would be very regressive
for those who can't afford to purchase an electric vehicle,
and those who live in areas
with the lowest number of chargers.
So again, we sincerely appreciate
the CPUC's attention to affordability.
We really look forward to thoroughly engaging
on these proposals in the coming months.
Thank you very much.
-: Thank you.
And our next caller is Beth Olaso.
You may go ahead.
Beth: Thank you, good afternoon, almost evening.
This is Beth Olaso
with the Agricultural Energy Consumers Association.
Just wanted to start,
we're a little disappointed that our request
for representation on a panel
from the agricultural class is not permitted.
Like you've heard affordability is a major concern
for many rate payer groups,
as well as the ag and food processing sector
as we too have to be competitive
in national and international markets.
And really, don't have the opportunity
to just absorb increases like some other classes do.
We wanna echo the concerns of other rate payer groups,
especially earlier comments of Ms Yap
and the recent comments of Ms. Sheriff from (indistinct).
As you know, rate increases are wildly out of control
and IOU rate payers cannot be the bank
to implement the state's climate policies.
The CPUC must rethink adding these rates,
these charges into rates,
especially when it comes to EV charging.
It's imperative that when easing the burden
on residential rate payers, which we agree is necessary,
we just don't wanna see that revenue requirement
pushed off onto other rate classes.
It's a really big concern.
So the PUC really needs to focus
on reducing pressure overall in any additional mandates
on already sky rocking rates.
We firmly believe that PG&E and other IOU shareholders
should bear more of the burden on system hardening.
Shareholders have benefited of massive profits for decades
while sure responsibility to properly maintain
the backbone of the infrastructure.
It's now time for these shareholders
to pay the bill for years of neglect.
We appreciate this ongoing conversation.
We look forward to participating
in this next phase of the affordability proceeding,
and we're glad that that other classes
beyond residential rate payers are gonna be included.
We've been waiting and watching for years.
So we are happy that we are able to participate,
and we look forward to this broader conversation
that includes all rate payers.
Thank you very much.
-: Thank you.
And our next comment is from Claire Broom with 350 Bay Area.
You may go ahead.
Claire: Thank you.
This is Claire Broom,
I'm a professor public health
and represent 350 Bay Area at the CPUC
on a number of issues of concern
to the environmentalists and to rate payers
and to low income rate payers particularly.
This has been an outstanding day
and I really wanna thank the Commissioners
of all the agencies for putting this together
and their thoughtful consideration.
Commissioner McAllister earlier today,
framed the issue as conflicting benefits.
In fact, we have the opportunity
to both decrease emissions and to increase affordability.
And I would strongly urge the energy division
and all of our collaborators to focus on optimal outcomes
that accomplish both of our objectives.
First, I'd like to say explicitly
that distributed energy resources
behind the meter and in front of the meter,
including solar, storage, electric vehicles
are public benefits potentially
as well as per private benefits.
For example,
if electric vehicles are strongly incentive
to charge at midday, they can decrease peak load,
all rate payers can benefit.
If we do this right, we'll all come out ahead
and California will continue to lead.
I'm not using just one example,
vibrant clean energy,
Princeton and Mark Jacobson at Stanford
have done detailed modeling.
When you optimize distribution grid resources,
electricity (beeps) down,
we should focus on decreasing the revenue requirement,
transmission costs, distribution grid costs and wildfire.
Those 40 billion for undergrounding.
The utilities need to be accountable
and have performance-based rate making,
and we need fair benefits to distributed energy resources.
Thank you.
-: Thank you.
And our next caller is Sam White.
You may go ahead.
Sam: Thank you, I'm Sam White,
I'm a consultant for several nonprofit rate payers
in environmental organizations.
I'd like to say we heard many excellent proposals today.
I'd like to in particular,
highlight the attention given by NRDC
to the potential for rate payer savings
through public bond financing
of transmission infrastructure investments.
I'd just like to note that the investor on utility costs
and return on equity for capital investment
result in rate payer savings.
Rate payer is paying actually nearly double,
the base capital cost after that return is incorporated.
Because of that public financing
or even ownership of grid infrastructure
offers large opportunities for rate payer savings
with IOU role focused on grid operation and maintenance,
along with performance based incentives
for rate payer efficiency.
I'd also be remis, if I did not note the need
for interagency review and reform
of transmission cost allegation
in order to recognize reduced peak needs
potentially realized
through distribution level mitigation of transmission load,
which can result in substantial reductions in needs capacity
as was shown in Cal's presentation earlier.
Lastly,
I'd just like to note that electric vehicles represent
an enormous quantity of deployed energy storage
over 40 gigawatts already today and rapidly rising.
They can be leveraged for rate pair benefit,
and for good operation.
These opportunities have not received sufficient attention,
and I appreciate the opportunity to bring them up.
Thank you.
-: Thank you.
And our next comment is from Karen Mills.
You me go ahead.
Karen: Yes, thank you very much.
I appreciate it.
Yes, this is Karen Mills for the California Farm Bureau.
We represent farmers and ranchers
throughout the state of California.
Our members predominantly take service
on agricultural schedules
from the investor on utilities in the state
and affordability of racism, important issue.
So we appreciate the conversation.
Our members own and operate their businesses
in rural areas of California.
And as you've heard today,
it raises unique challenges for many of the programs
that are in the process of being implemented.
We support those who have raised the need to fund programs,
such as undergrounding utility lines,
electrical vehicle expansion,
and building electrification to resources
other than by rate payers.
The Commission and the utilities
need to exercise their leverage and support such an effort.
And finally, I would like to point out
about the concept of transitioning
transmission infrastructure from the IOUs
to state or public ownership that such a change
would have more than just right implications.
The lines traverse thousands of miles of private property,
and it would impact the landowner
to change the ownership structure.
We don't support that type of a change in ownership,
but recognize that new transmission lines
might be appropriate for competitive solicitation.
Thanks very much.
-: And I have no additional callers on the line at this time,
but again, if you would like to make a comment,
please unmute your phone, press star one,
and record your full name and organization
slowly and clearly one prompted.
-: So this is Paul Philips,
I wanted to it back over to Commissioner Houck
if we do get other calls coming in
during this time please let us know
we can of course field them,
but in the absence of calls,
it might make sense to transition out to the Commissioner
and Commissioner McAlister as well, for final comments,
I did wanna say thank you to all the panelists
for fantastic discuss obviously we could keep going.
I think that we've left room for more discussion tomorrow
during Commissioner Houck's round table perhaps,
but once again, thank you for everyone's appearance
and for robust discussion.
And with that, I will turn it over to Commission Houck.
-: Thank you, Paul.
Commissioner Shiroma has asked me to step in for her
to make some closing comments on behalf of the PUC today.
So I wanna thank everyone,
all of the panelists, moderators that presented today.
I also want to thank energy division staff,
my colleagues at the PUC, the California Energy Commission,
California Air Resources Board,
and the state legislature for joining us
to discuss this important topic.
We appreciate hearing
from such a broad range of stakeholders and the public
on the challenges we face
on how to ensure electric and gas rates
are affordable for Californians.
Despite the challenges we face,
we've heard ideas today that present us with opportunities
to minimize cost impacts.
We're committed to actively engage with all stakeholders
to find innovative paths forward
that address affordability
for all rate payers in California.
And with that again,
I just wanna thank energy division staff
for all of their work and putting this event together
and today's panelists for their thoughtful discussion.
And I look forward to tomorrow's panel discussions
and we'll turn over the mic, the virtual mic
to Commissioner McAllister to conclude today's event.
-: Well, great.
Thank you, Commissioner Houck.
And I'll just not reiterate,
but just a second the thanks to all involved
in putting this together.
This has been a really enlightening and insightful day,
hugely a very high quality of the presenters
and the discussion.
So lots of food for thought obviously,
and complex issues that we're working through.
I kind of wanted just to quickly,
I know I'm the last speaker here on a long day,
but I kind of have been trying to bucket some of the issues
and I'm gonna just make a little stab at that.
Essentially for kind of topics
or process for getting to rates
that might serve California's purposes going forward.
So we heard rough consensus,
I think on the following issues.
First that we need active management
of the revenue requirement
and that's good governance and good management.
And I think we're all in agreement on that.
Next, priority has to be equity.
And I think we have broad consensus on that as well.
And that means anchoring rates in some appreciation
of income or proxy for certainly taking care
of lower income and rural customers, so number two.
And then number three is,
this is where it gets a little more complicated,
restructure rates to get back to a cost-based
sort of more explicitly back to a cost-based approach.
And that is the sort of traditional good rate making
kind of arena, but obviously it's complicated.
But getting back to some kind of fixed charge
or proxy demand based type charge
to take on the burden of much more
of the revenue requirement than currently is in volumetric
and deemphasize pure volumetric charges.
And also I appreciated, I think it was,
I wasn't sure Robert or Kenny,
maybe who was a gentleman from Edison made the point
that there are some precedents here
for all electric customers do get a different rate
and maybe there's some way that
that kind of approach could be used.
All their customers have a different baseline
they have different application of volumetric charges.
So I just wanted to highlight that.
And then finally,
to kind of optimize the system overall
and particularly agree with those who've said
we have this opportunity when as load rises overtime
with electrification of transportation
and buildings that in optimizing,
I think we have a lot of tools in our toolbox
to do that well in ways that we really never had before.
So that's developed flexibility value.
We're doing a bunch of the energy Commission on that front
with low management standards
and flexible demand appliances.
We're doing a lot of joint work with the PUC
on supply side demand response.
And in particular,
as Commissioner Monahan said this morning,
transportation as well, that's a huge opportunity
to optimize the active management of the grid in real time
to improve load factors
and therefore optimize the investment as we go forward.
So I wanted to just sort of lay out those four buckets.
I think in different ways we've heard their relevance
from almost every speaker throughout the course of the day.
And one thing I'll just bring up as well as
is trying to figure out how to best view
all of these issues from the customer per perspective.
And as we do a fair amount of increasing fuel substitution
from gas to electricity,
and sort of trying to understand the pocket look impacts
of those transformations on customers
and these different segments that we're concerned about.
So hopefully,
we can have of an integrated conversation going forward.
And that would be relatively
I think unique if California can manage to do that
and very proactively in kind of with care
toward our customers in our residents.
So I want again just lay those kinds of ideas out there,
lots of food for thought today.
I think a lot of us, our heads are spinning
with all the discussion to have so many smart people
giving us different perspectives on this issue.
And just again, wanna thank everyone
at the Public Utilities Commission,
primarily who put this together,
Commissioner Houck, chair Reynolds,
Commissioners Rechtschaffen and Shiroma
and new Commissioner Reynolds (chuckles),
and as well as my colleagues at the Energy Commission
for staying on all day
and really giving us the deep consideration that it deserves
looking forward to working together with the PUC,
with all of my colleagues on these issues
and try to find solutions that work for California
and help us in our decarbonization journey
at the same time managing costs
and sort the impacts on our residents.
So with that, Commissioner Houck
I am adjourning the proceedings for today.
(laughing)
-: (indistinct) staff.
-: Back over to staff
and Jack's gonna give us further information for tomorrow,
but thank you, Commissioner McAllister,
and I'll turn it back over to Jack.
-: Thank you to all the panelists, moderators and speakers
for very productive day.
We'll be back here at 10:00 AM tomorrow for gas day,
we'll have some local remarks then panel
led by Dorothy Duda and James Spencer of that institution.
And the afternoon will be a round table discussion
led by Commissioner Houck.
So thank you again,
and we will see you tomorrow hopefully.
Take care.
Operator: And this concludes today conference,
thank you for participating.
You may disconnect at this time.