After pushback, Gavin Newsom cuts much of his electric bill affordability plan. What’s next?

It appears increasingly likely that the mad dash to finish this year’s legislative session in the state Capitol will not produce meaningful relief for Californians from their sky-high electric bills. That’s after Gov. Gavin Newsom walked back from what experts consider the most significant piece of his initial energy affordability plan, according to two sources familiar with closed-door negotiations without authorization to speak publicly.

Newsom proposed to lower monthly bills through a financial process that faced opposition from major utilities and their workers. Called securitization, it would lower interest rates on utilities’ long-term capital investments and cut shareholder profits in the process. Consumer advocates called the negotiations on electric bill affordability an “epic battle” between the consumer advocates pushing for ratepayer relief and utilities backed by Wall Street. The Utility Reform Network (TURN) recently released polling data that found 53% of California voters support stricter government regulation of utilities and 84% support limits to how much utilities can raise prices on ratepayers per year

“The public is on our side,” said Mark Toney, executive director of the organization. “I expect policy makers will have renewed courage to do the right thing and release a package that is significant... has immediate bill reductions and can stand up to the utilities.” An earlier version of Newsom’s plan reported by The Bee this month sought to sunset a state program funding upgrades to school HVAC system, reign in utilities wildfire mitigation cost and lower the price of grid infrastructure investment through securitization. The governor’s office was seemingly set to negotiate his plan into a package with Assembly Utilities and Energy Committee Chair Cottie Petrie-Norris, who previously sought to reduce monthly electric bills by $10 a month. Her office did not respond to requests for comment.

A host of environmental groups sent opposition letters to the governor urging him to preserve incentive programs such as CalSHAPE at schools, a program that helps fund solar for multi-family affordable housing and another that supports battery storage for vulnerable communities. All of these programs are currently funded by ratepayers, so the governor’s administration hoped to prompt short-term bill savings by sunsetting one or more. The governor’s final proposal has not been released publicly. The Newsom administration declined to comment when asked about changes to the plan, including walking back the securitization piece, saying negotiations are ongoing. Utilities including Pacific Gas & Electric also declined to comment.

The state is relying on its investor-owned utilities to invest in renewable energy, spend billions undergrounding power lines to help prevent wildfires and upgrade infrastructure to accommodate demand. Between those costs and growing demand for air conditioning during hotter summers, sky high summer electric bills for customers of those utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — are reaching new heights. Residential electricity bills in California have increased by as much as 110% in the last decade, according to the public advocate’s arm of the state Public Utilities Commission. In just the past three years, bills for customers of the big three IOUs have seen increases in their bills by 20-50%.

Throughout this legislative session, the governor and state lawmakers have pledged to prioritize this problem but proposals keep running into fatal opposition — primarily from utilities and electrical workers. Another securitization bill, AB 3263, would temporarily lower electricity rates by allowing utilities to effectively take out low-interest bonds for yearly expenses such as vegetation management to prevent wildfires. That one is supported by Pacific Gas & Electric Co., which has a similar measure before the Public Utilities Commission, but is opposed by consumer advocates.

Another bill, Senator David Min’s SB 938 inspired by a Sacramento Bee investigation on SoCalGas’ use of millions in customer money to fight electrification, sought to keep marketing and politics out of ratepayer expenses but died in committee when lawmakers abstained from voting after PG&E opposed it. With deadlines looming, the future is more clear for another legislative package aimed at making it easier to permit and pay for manufacturing and clean energy projects in California. Although it has yet to be officially released, it is backed by labor groups. Called “California Made” and backed by Senate Pro Tem Mike McGuire, the package aimed to create a “one-stop-shop” to permit renewable energy projects by streamlining the environmental review process and provide tax credits to support projects.