The California Legislature adjourned for the year on Sept. 13 after passing bills in recent months to help utilities recover from wildfires, enforce compliance with wildfire safety measures and ensure that customers will continue to have power even with a rapidly changing retail energy supply structure.
Perhaps the most prominent success story with respect to legislation impacting electric utilities thus far this session was when Gov. Gavin Newsom on July 12 signed wildfire damage recovery legislation, or Assembly Bill 1054. Newsom invested substantial political capital in pushing for the measure, which secures billions of dollars to pay for utility-caused wildfire damages and was seen as a crucial means of bolstering the threatened financial health of the state's investor-owned utilities. The law provides for a $21 billion fund that will rely on equal contributions from utility ratepayers and shareholders.
The law helped stabilize the financial ratings outlooks for PG&E Corp. and its subsidiary Pacific Gas and Electric Co., or PG&E; Edison International and its subsidiary Southern California Edison Co., or SCE; and Sempra Energy and its subsidiary San Diego Gas & Electric Co., or SDG&E. However, the new law requires PG&E, which is in the midst of bankruptcy proceedings, to resolve liabilities and exit Chapter 11 reorganization by June 2020 in order to access the insurance fund that would help pay future claims against the utility, which are estimated to be in excess of $30 billion.
While PG&E likely will need more help, the legislature failed to pass A.B. 235, an 11th-hour measure that would enable the state's largest investor-owned utility to obtain up to $20 billion in tax-exempt wildfire recovery bonds to compensate victims of wildfires linked to its utility infrastructure. The measure was shelved until 2020 after the bill's author, Assemblyman Chad Mayes, R-Yucca Valley, determined that he did not have the time or support needed to push the measure through in the final days before the recess.
In a statement in which Newsom thanked the legislators for their work so far this session, the governor called for passing "a wildfire resiliency bond" measure. But detractors have called the measure a PG&E bailout bill.
The legislature also recently passed, and Newsom subsequently signed, A.B. 111, which created the California Catastrophe Response Council to oversee the wildfire fund created by A.B. 1054 and appoint a wildfire fund administrator. The new law also requires the California Public Utilities Commission to create a Wildfire Safety Division for overseeing and enforcing utility compliance with related regulations. Further, the law established the Office of Energy Infrastructure Safety within the Natural Resources Agency to work on electric infrastructure safety issues with the CPUC's Wildfire Safety Division.
Other bills address changing utility landscape
One measure that will be taken up again next session would designate the California Alternative Energy and Advanced Transportation Financing Authority to undertake backstop procurement of electricity to meet California's climate, clean energy and reliability goals that are not satisfied by utilities and other load-serving entities. Authored by Assemblymember Eduardo Garcia, D-Coachella, A.B. 56 was approved by the Assembly, but supporters in the Senate Energy, Utilities and Communications Committee could not muster enough votes to pass it this year.
Community choice aggregators, or CCAs, and many municipalities lobbied against A.B. 56, saying it would create a new central procurement bureaucracy with overly broad powers and raise customer costs. SCE also opposed the measure, but the bill originated at the request of SDG&E, which wants to get out of the business of supplying power to its retail customers.
Still, concern over which entities ultimately will be responsible for providing electricity to customers if CCAs or other competitive load-serving entities fail to do so prompted the legislature to pass S.B. 520 on Sept. 11. That bill has been sent to the governor.
While PG&E, SCE and SDG&E traditionally have been the electricity providers of last resort, their status as such is in question because CCAs now serve about a quarter of the state's electricity load and customers continue to depart the investor-owned utilities' service for these alternative energy suppliers. Sponsored by Senate Majority Leader Robert Hertzberg, D-Van Nuys, S.B. 520 most likely would require IOUs to continue serving as providers of last resort if alternative providers, including CCAs and direct access energy providers, fail in their service obligations.
The utilities would be required by law to fulfill that obligation because the bill requires any load-serving entity to be regulated as a public utility and be subject to oversight of rates, design and program offerings. The California Community Choice Association, or Cal-CCA, which represents aggregations in the state, opposes the measure, arguing that it elevates the CPUC and investor-owned utilities to roles that naturally should fall to the CCAs and their governing bodies. Cal-CCA said locally elected CCA boards are the primary governing bodies responsible for public oversight of CCA operations so they alone should be responsible for the aggregators' customers.
The state legislature will reconvene its two-year session Jan. 6, 2020.
