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Study: public or hybrid financing could cut transmission costs by up to half
Summary
A Clean Air Task Force analysis presented to the Senate committee found that shifting eligible transmission projects to public ownership or lease‑style public–private partnerships could cut capital costs substantially, with potential savings in the tens of billions over decades.
Ashley Arex of the Clean Air Task Force presented a multi‑partner analysis assessing alternative financing and ownership models for transmission build‑out California will need to reach long‑term decarbonization and reliability goals.
The study used CAISO’s 20‑year transmission outlook as the investment baseline. CAISO estimated $45–$63 billion of new transmission development will be needed; the CATF analysis found roughly $39–$54 billion of that portfolio could be eligible for competitive solicitation and thus for alternative financing pilots. CATF’s economic scenarios compared an IOU‑led model to (a) wholly public ownership/financing, (b) a lease‑style public–private partnership (public financing and private developer/operator), and (c) concession‑style P3s.
"Both the wholly public model and the lease‑type P3 model have the potential for the greatest savings, with up to 50%–57% savings, or up to $123,000,000,000 over a 40‑year period for all eligible lines compared to the IOU model," Ashley Arex said, summarizing the analysis (results are model‑sensitive and depend on assumptions about debt costs, tax treatment, procurement competition, and permitting timelines).
The study identified the cost drivers that create the savings under public or hybrid finance models: lower-cost public debt replacing higher-cost equity, reduced tax burdens under public ownership, and competitive procurement for project execution. CATF recommended further study to prioritize which lines should be piloted under new financing authorities, and suggested options including creation of new public authorities or expanding bond/financing authority for existing institutions (for example, I‑Bank or Department of Water Resources).
Senators and stakeholders discussed the tradeoffs — public ownership could lower financing costs but requires new institutional capacity and statutory changes; P3 models can (in theory) capture some savings while leveraging private-sector execution but need strong procurement safeguards. The committee noted pending bills that aim to explore pilots and directed agencies to provide follow‑up materials on feasibility and projected rate impacts.
