As the California legislative session nears its conclusion, Governor Gavin Newsom is poised to introduce a new legislative proposal aimed at reducing the burden of soaring electricity bills, a move that aligns with broader efforts to enhance the state’s renewable energy infrastructure. This initiative, part of a broader strategy dubbed “California Made,” seeks to complement President Joe Biden’s Inflation Reduction Act by fostering clean energy projects and reducing reliance on fossil fuels.
Currently, California still sources approximately 40% of its electricity from fossil fuels, a significant gap from its ambitious target of achieving 90% renewable energy by 2035. Newsom’s plan, which remains under wraps, is designed to bridge this gap while also providing financial relief to Californians who have seen their electricity bills skyrocket.
The proposal includes several key measures: phasing out CalSHAPE, a state program funding school HVAC system upgrades; curtailing utility wildfire mitigation expenses; and reducing the costs associated with necessary grid infrastructure investments. These steps are expected to generate approximately a billion dollars in savings during the first year of implementation, although the impact on individual residential electric bills is anticipated to be modest.
The financial strain on California households is palpable, with residential electricity costs having increased by as much as 110% over the past decade. Customers of the state’s investor-owned utilities, including Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, have experienced bill increases of 20-50% in just the last three years. A significant driver of these increases is the expense involved in upgrading grid infrastructure.
In an effort to mitigate these costs, Newsom’s proposal suggests the use of securitization, a financial mechanism that allows utilities to secure low-cost debt for financing upgrades, rather than relying on more expensive shareholder funds. This approach is aimed at providing some relief from the escalating costs associated with energy infrastructure.
Michael Wara, director of the Climate and Energy Policy Program at Stanford University, commented on the proposal’s potential impact, noting, “the near-term savings of this proposal will be modest,” but emphasized that these are realistically achievable in a system without “a lot of excess fat.” Wara also highlighted the ongoing crisis of electricity affordability, stating, “Electricity affordability is a crisis, and California and the administration and Legislature have known that for the last several years and tried to figure out ways to address it.” He expressed approval of the governor’s focus, saying, “It’s really great to see the governor’s team focus on this issue.”
In parallel, Senate President Pro Tem Mike McGuire is advancing a legislative package aimed at streamlining environmental permitting processes to accelerate the development of solar, offshore wind, battery storage, and other clean energy projects. This initiative seeks to leverage federal investments and includes the creation of new tax credits and a “one-stop shop” for expedited environmental permits, along with a “master” environmental impact report for designated projects.
McGuire underscored the importance of these efforts, stating, “The Golden State has always been an economic and climate leader, full stop.” He expressed enthusiasm about the forthcoming details and the ongoing policy work.
As California continues to navigate the challenges of energy costs and climate change, these legislative efforts represent critical steps toward achieving the state’s environmental and economic objectives.
