Assembly committee gives 'do pass' to bill to create state power fund to shift energy policy costs from rates

The California State Assembly Committee on Natural Resources voted to give a “do pass” recommendation to the Appropriations Committee on a bill by Sen. Becker that would create a state “power fund” to move some state-mandated energy-policy costs out of utility rates, the committee said at a hearing.

The bill would direct the state to set up a dedicated fund to pay for specified costs now borne in electric rates, change how the cap-and-trade–derived Climate Credit is allocated and timed, increase credits for low-income CARE customers, and authorize programmatic environmental impact reports for categories of utility projects to speed review. Supporters told the committee the measure could reduce regressive rate impacts and target credits to customers in higher-need periods; opponents said it shifts budgetary risk to the general fund, could unsettle investors and credit markets, and does not guarantee stable funding for mandated spending such as wildfire mitigation.

Sen. Becker, the bill’s author, told the committee that the proposal contains multiple parts: a power fund to take policy costs out of rates when the Legislature appropriates money; a change to the Climate Credit so “100% of that money that electric utilities get from the Cap and Trade program will go to customer credit as opposed to 85% in the past”; targeted larger credits for low-income CARE customers; adjustments to rate‑setting provisions; and streamlining for projects through programmatic environmental impact reports. Becker said the bill also includes provisions to focus wildfire spending on projects that deliver the best return for public safety and reliability.

Supporters at the hearing included the California Municipal Utilities Association, the California Community Choice Association, the Union of Concerned Scientists and the California Environmental Justice Alliance, which told the committee they want to work with the author on future amendments. Trent Smith of the California Municipal Utilities Association said his group supports the bill and looks forward to working on amendments. Michelle Canales of Union of Concerned Scientists and Raquel Mason of the California Environmental Justice Alliance registered support as well.

Opponents — including the California Chamber of Commerce, investor-owned utilities and some labor representatives — warned that without a reliable, dedicated funding source the proposal risks creating “rate whiplash” and could be viewed negatively by credit markets. John Kendrick of the California Chamber of Commerce (identified on the record as a primary witness in opposition) cited a study by Blue Sky Consulting Group and said, “State mandated policy costs are the single largest component of the average residential IOU customer's bill. They are 36 and a half percent. It's about $69 of the average $188 bill.” Kendrick added that $15,000,000,000 in mandated expenditures that utilities cannot earn a return on presents investor and credit risks if funding is not stable.

Other opponents who registered opposition or opposition unless amended included Connor Gussman on behalf of the Utility Workers Union of America, Horacio Gonzalez for the California Business Roundtable, Valerie Turell for Pacific Gas and Electric Company, Joe Zanzi for San Diego Gas & Electric Company and Southern California Gas Company, and representatives for Ellis Power (via Axiom Advisors). Allison Hilliard of the Climate Center arrived late and registered support.

Committee members asked about specific design choices. One member asked how placing wildfire mitigation costs in the power fund rather than in rates would affect affordability and climate goals; Becker said the fund is intended to be funded when the Legislature has surplus dollars so that those costs are not passed directly into rates. Becker also described the bill’s proposal to use programmatic environmental impact reports to avoid duplicative review of similar projects, saying the approach would let project‑level reviews focus on site‑specific issues instead of rehashing the same questions for each wind or storage project.

On the question of the Climate Credit, Becker said the bill proposes making 100% of the cap-and-trade proceeds allocated to electric utilities go to customer credits (up from 85%) and to time those payments to better match when customers need them, with larger allocations for low‑income households.

After public testimony and questions, the committee voted to refer the bill to the Assembly Appropriations Committee with a due-pass recommendation. The roll call on the record showed 10 members voting yes, 4 voting no and 1 not voting; the committee clerk recorded the motion as a do-pass to appropriations.

The measure will move next to the Appropriations Committee, where budget and funding questions — including whether the state’s Greenhouse Gas Reduction Fund (GGRF) or other appropriations would be used to seed the power fund — are likely to be central to further negotiations.