Gavin Newsom has a plan to lower California electricity bills. Here’s what it would do

As summer recess comes to a close, California’s Capitol is abuzz with yet-to-be released plans that would help ramp up renewable energy development and make electric bills more affordable.

Gov. Gavin Newsom is working on a legislative proposal to modestly lower electricity bills, especially in the short term, according to two sources familiar with the plan but unauthorized to discuss details.

His proposal compliments a separate legislative package under negotiation with state lawmakers to streamline clean energy projects. Nicknamed “California Made,” it dovetails with President Joe Biden’s signature climate law, the Inflation Reduction Act.

All together, the under-wraps proposal signals a new push toward achieving California’s clean energy targets. Today, the state still procures roughly 40% of its electricity from fossil fuels — far from a goal set in 2022 to reach 90% renewable by 2035.

To achieve electric bill savings, sources said, the administration’s proposal:

Sunsets CalSHAPE, a state program that funds upgrades to school HVAC systems.
Reins in utility wildfire mitigation costs.
Lowers the price of needed grid infrastructure investments.

The governor’s electricity bill affordability plan aims to create short-term savings of roughly a billion dollars during the first year of its implementation, according to sources, although dollar impacts to the average residential electric bill will likely be modest.

California households are feeling the pinch of rising energy costs. Residential electricity bills are high and growing, by as much as 110% in the last decade, according to the public advocate’s arm of the state Public Utilities Commission.

Bills for customers of the state’s investor-owned utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — have seen increases in their bills by 20-50% in just the last three years.

Grid infrastructure upgrades are a key reason for rising energy costs long term.

Along with the other pieces, sources said, Newsom’s proposal hopes to lower costs through securitization, a financial process that allows utilities to acquire low-cost debt rather than use expensive shareholder money to finance upgrades.

Governor’s office spokesperson Alex Stack said the administration has no comment on pending or hypothetical legislation.

Michael Wara, director of the Climate and Energy Policy Program at Stanford University, said the near-term savings of this proposal will be modest. But they are realistically what can be achieved in a system without “a lot of excess fat,” he added.

“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,” Wara said. “It’s really great to see the governor’s team focus on this issue.”

It’s increasingly typical for lawmakers and the governor to propose significant legislation at the end of California’s legislative session, which concludes Aug. 31.

Separately, a draft legislative package of bills spearheaded by Senate President Pro Tem Mike McGuire, D-North Coast, would trim environmental permitting requirements to help build solar, offshore wind, battery storage and other clean energy projects more quickly.

Sources said draft proposals of the legislative package, first reported by CalMatters, is aimed at taking advantage of federal investment in clean energy development across California.

To smooth the permit and approval process, the draft proposals would form new tax credits, create a “one-stop shop” for expedited environmental permits and form a “master” environmental impact report for designated projects.

McGuire said the package is aimed at bolstering grid reliability while meeting growing demand as more households adopt electric vehicles and appliances.

The goals of the package are “four fold,” he said: to help achieve climate goals, supply the state with enough energy to meet growing demand, create jobs, and boost the clean energy economy.

“The Golden State has always been an economic and climate leader, full stop,” said McGuire. “And we’re looking forward to sharing more details in the coming days, and continuing our critical work on these policy efforts in the weeks and months ahead.”