Senate committee hears CPUC, CEC annual updates as electricity bills rise

Chair Becker convened the Senate Committee on Energy, Utilities and Communications for its first hearing of the 2025–26 legislative session to receive annual updates from the California Public Utilities Commission and the California Energy Commission and to focus on rising electricity bills.

The meeting opened with Alice Reynolds, President of the California Public Utilities Commission, and David Hochschild, Chair of the California Energy Commission, presenting data and analysis on why residential and commercial electric rates have climbed and what the state and regulators can do in the near and longer term to ease bills while meeting clean-energy goals.

"The largest driver in recent cost increases is ... distribution costs, including wildfire mitigation costs, like vegetation management, installing covered conductor, undergrounding, and other measures," Alice Reynolds told the committee, summarizing CPUC analysis of investor-owned utilities' revenue requirements. Reynolds said wildfire-related requests have been substantial: "In the five years between 2019 and 2023, the investor-owned utilities collected approximately $27,000,000,000 from ratepayers to pay for wildfire mitigation and insurance premiums." She added that some large wildfire-related costs are now starting to roll out of the rate base, which can cause rates to rise and later fall as collections end.

David Hochschild emphasized California's progress on clean energy and how investments affect bills. "Fifteen years ago our grid was not very clean. Today, we're almost two-thirds of our power coming from clean sources," he said, while also drawing attention to the substantial cost pressure that followed catastrophic wildfires beginning in 2018 and the large, persistent spending on vegetation management and other wildfire measures.

Both agency leaders pointed to three broad drivers behind the increase in retail rates: (1) distribution costs and wildfire-mitigation spending, (2) expanded transmission and distribution investment, and (3) incentive and subsidy programs embedded in rates. Reynolds urged greater coordination of wildfire-mitigation planning and scrutiny of non‑rate‑effective programs; Hochschild highlighted energy efficiency and more efficient procurement as moderating forces.

Witnesses and committee members pressed the agencies on near-term relief ideas and longer-term reforms. Options discussed included moving more wildfire-related spending into integrated planning and general rate case scrutiny, pursuing lower-cost public financing or securitization for major capital projects (including undergrounding and transmission), reconsidering how the California Climate Credit and other subsidies are targeted, and improving demand flexibility to reduce peak-driven costs.

Several agency and stakeholder speakers stressed that while clean-energy investments and efficiency lower long‑run fuel risk, many costs being collected now are fixed and were incurred to make the grid safer and more reliable after recent major fires.

The committee did not take formal votes on legislation at this hearing, but senators asked for follow-up information and signaled interest in a multi-pronged approach that could include targeted use of state and federal funds, tighter scrutiny of utility spending, rate-design adjustments, and pilot financing or ownership models to lower capital costs.

The hearing continued with a detailed presentation from the Public Advocates Office, followed by invited stakeholders discussing alternative transmission financing, utility testimony and shareholder returns, net-metering impacts, and consumer and industry perspectives.

For lawmakers and ratepayers, the hearing framed a policy trade-off: funding aggressive wildfire and reliability measures will have near-term rate impacts if collected from ratepayers, while some of the proposals discussed (public finance, targeted cap-and-trade allocations, revising subsidy structures and rate design) would shift the burden or reduce rates over different timelines.

The committee requested additional written materials from the CPUC, CEC, the Public Advocates Office, utilities and consumer groups to quantify near‑term and medium‑term impacts of the options discussed.