Assembly oversight hearing spotlights backlog, timelines and financing options to curb California transmission costs

The Assembly Committee on Utilities and Energy convened an informational session on strategies to reduce California's transmission costs, concluding a two-part hearing day that began with bill testimony. Karen Haida, program manager for the energy infrastructure branch of the Public Advocates Office at the California Public Utilities Commission, provided a data-driven overview and said California faces a large, growing backlog of CAISO-approved projects that are not yet built.

"We calculate the cost of completing all of these ongoing projects that have been approved but not yet built at just a little over $19,000,000,000," Karen Haida said, and she told the committee the average transmission project timeline is roughly 8.2 years and that only about 11% of projects require CPUC permitting. She also warned that the transmission access charge has increased more than three-and-a-half times since 2009 and could rise further to meet clean-energy targets.

The first panel examined financing options to reduce cost. Denzel Hankinson, CEO of DH Infrastructure, and Neil Matuca of Net Zero California presented analysis showing public financing combined with competitive procurement could materially lower costs, principally by reducing capital expenditures and replacing expensive equity with low-cost public debt. Hankinson and Matuca cited modelled savings of as much as about 57% on certain projects when public financing, tax advantages and competitive delivery are combined; they recommended targeted use of public financing for lines that are economically important but financially unattractive to private investors.

Dan Adler, formerly of the California Infrastructure and Economic Development Bank (IBank), urged the state to consider revolving loan funds, bond allocations and modest public investments structured to be repaid so public capital can be recycled. He emphasized that to be catalytic, public financing must be risk-tolerant and be paired with policy actions that lower perceived project risk so private capital will supply cheaper debt.

PG&E's Bill Manheim told the committee utility-led efforts have accessed federal loan guarantees and grants and highlighted a partnership (Citizens Energy) that he said could return funds to low-income customers. Manheim cautioned that tax-exempt public finance reduces tax revenues that local governments currently receive from utility property taxes and that state ownership carries wildfire liability and operational complexity.

The second panel focused on delays and project delivery. SDG&E project manager Matt Huber and independent power producer representative Jack Wadley (EDP Renewables) described long lead times for major equipment and a growing backlog of approved but not-built projects. Wadley said long interconnection and construction timelines produce large carrying costs for developers: "Typically, you have about 7 years to get through the interconnection study, but we are seeing that starting to slip closer to 10." Ralph Armstrong, representing IBEW Local 1245, said labor and continuous work reduce costs because starting and stopping projects increases mobilization, demobilization and retraining costs.

Panelists and public commenters recommended several potential reforms: increase competitive procurement for transmission construction; pursue targeted public financing or loan guarantees to lower the weighted average cost of capital; create revolving public funds to underwrite early development costs; standardize equipment specs where feasible to enable bulk procurement; and improve permitting timelines and federal agency coordination on projects that cross federal land. Several speakers suggested piloting a state-backed financing vehicle (bond or revolving loan fund) or public-private lease/concession models for select projects.

Committee members asked about wildfire liability and operational consequences of state ownership. Panelists said risk allocation is central: lease-type PPPs can place operations and certain insurable risks with private partners while the public entity provides financing and ownership, but inverse-condemnation liabilities and eligibility for certain state wildfire funds vary depending on ownership and statutory design.

The committee did not take action on financing policy during the informational hearing; members and stakeholders said they intend to continue study and pursue follow-up work in subsequent hearings and policy briefings.