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<ns0:Id>20250AB__178799INT</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-10</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>1787</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Schultz</ns0:AuthorText>
<ns0:AuthorText authorType="COAUTHOR_ORIGINATING">(Coauthors: Assembly Members Irwin and Rogers)</ns0:AuthorText>
<ns0:AuthorText authorType="COAUTHOR_OPPOSITE">(Coauthor: Senator Stern)</ns0:AuthorText>
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<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Schultz</ns0:Name>
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<ns0:Legislator>
<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Irwin</ns0:Name>
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<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Rogers</ns0:Name>
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<ns0:Legislator>
<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Stern</ns0:Name>
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<ns0:Title> An act to add Section 729.3 to the Public Utilities Code, relating to electricity. </ns0:Title>
<ns0:RelatingClause>electricity</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Electricity: rates: optional dynamic rate tariff. </ns0:Subject>
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<html:p>Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. Existing law requires each electrical corporation to identify a separate rate component to fund certain programs that enhance system reliability and provide in-state benefits, and requires that the rate component be a nonbypassable element of the local distribution service.</html:p>
<html:p>This bill would require a large electrical corporation, if the commission approves the large electrical corporation’s request to upgrade its smart meter infrastructure and related information management and billing systems on or after January 1, 2027, to offer to each of its customers from
whom the incremental costs of those upgrades are recovered at least one optional dynamic rate tariff upon the upgraded smart meter infrastructure being placed into service and its costs being recoverable in rates, as specified. The bill would prohibit the commission from approving a request of a large electrical corporation to recover costs associated with a smart meter infrastructure upgrade and related information management and billing systems costs unless specified conditions are met. The bill would require the commission, if it orders a large electrical corporation to implement an optional dynamic rate tariff, to ensure, among other things, the large electrical corporation makes the same time-varying transmission and distribution rates available to both bundled customers and unbundled customers located in the same geographic area.</html:p>
<html:p>Under existing law, a violation of the Public Utilities Act or an order, decision, rule, direction, demand, or requirement of the
commission is a crime.</html:p>
<html:p>Because the above provisions would be part of the act and a violation of a commission action implementing this bill’s requirements would be a crime, the bill would impose a state-mandated local program.</html:p>
<html:p>The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
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<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
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<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>YES</ns0:LocalProgram>
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<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
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<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_A01BD598-3082-4DF5-A522-C178C5F72D58">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The Legislature hereby finds and declares all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The transformation of California’s electrical grid system to support the state’s decarbonization goals will be most affordable for the state’s businesses and residents through the improved use of grid infrastructure and demand flexibility.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Lowering electricity bills is critical to maintaining the competitiveness of California businesses and alleviating overall cost pressures on individual households.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The electrical grid supporting California’s economy is subject to dynamically shifting conditions due to
factors such as weather-driven electricity demand, variable generation output, and line capacity constraints.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Dynamic grid conditions often result in widely fluctuating wholesale electricity prices. The volatility of wholesale prices affects the overall cost of electricity that is ultimately borne by the state’s ratepayers.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Enabling greater demand flexibility through dynamic retail pricing, based on the conditions of the grid and the wholesale market, can minimize the short-term and long-term costs of electricity by reducing electricity demand during high-price periods and shifting demand to time periods when carbon-free and renewable energy is low cost and abundant.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
It is the intent of the Legislature to do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Ensure
the smart meter infrastructure investments paid for by the customers of the Pacific Gas and Electric Company, the Southern California Edison Company, and the San Diego Gas and Electric Company provide cost saving through the provision of optional dynamic retail rates.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Ensure that any customer of an electrical corporation who must pay for the costs associated with a smart meter has access to at least one optional dynamic rate tariff.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Ensure that customers who do not want or cannot participate in dynamic retail pricing have the right to continue to receive service under a flat or time-of-use rate.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Ensure participation in dynamic retail pricing does not create cost shifts between participating and nonparticipating customers.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Ensure
customers have real-time access to the electricity usage data from their smart meters to maximize the ability of participating customers to adjust their electricity usage in response to dynamic prices if they choose to take service under a dynamic rate tariff.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Ensure customers participating in a dynamic rate tariff do not bear additional burdens in terms of any fees or obligations that are not imposed on customers participating in other rate tariffs.
</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 729.3 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
, to read:
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<ns0:Num>729.3.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
If the commission approves a large electrical corporation’s request to upgrade its smart meter infrastructure and related information management and billing systems on or after January 1, 2027, the commission shall ensure that the large electrical corporation shall offer to each of its customers from whom the incremental costs of those upgrades are recovered at least one optional dynamic rate tariff upon the upgraded smart meter infrastructure being placed into service and its costs being recoverable in rates.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The optional dynamic rate tariff, at a minimum, shall include all of the following components:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A time-varying distribution rate that
reflects dynamic distribution grid constraints in the distribution service area, if determined by the commission to be feasible.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A time-varying generation rate for bundled customers that reflects day-ahead hourly wholesale market conditions.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Nonbypassable charges.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
An electrical corporation is not required to offer an optional dynamic rate tariff to a customer who does not have a newly installed smart meter on or after January 1, 2027.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The commission shall consult with the Federal Energy Regulatory Commission to ensure implementation of an optional dynamic rate tariff is consistent with the Federal Energy Regulatory Commission’s transmission ratemaking authority.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The
commission shall not approve the request of a large electrical corporation to recover costs associated with upgrading its smart meter infrastructure and related information management and billing systems costs unless all of the following conditions are met:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Each customer who is required to pay for costs associated with a smart meter installed on or after January 1, 2027, and related information management and billing systems shall have access to at least one optional dynamic rate tariff and the right to take service under a flat or time-of-use rate.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If smart meter technology installed on or after January 1, 2027, includes wireless communications functionality, the large electrical corporation shall provide a customer with access to the customer’s own energy usage data directly from the meter via a customer-owned device as that data is generated to maximize the customer’s
ability to make energy usage adjustments under an optional dynamic rate tariff.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The large electrical corporation shall provide accurate and timely customer usage data to a customer’s load-serving entity if the customer’s load-serving entity is not the large electrical corporation.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The large electrical corporation shall provide to each customer who is required to pay for costs associated with a smart meter installed on or after January 1, 2027, and related information management and billing systems owned by the electrical corporation access to the customer’s own energy usage data through a secure application program interface to allow the customer to authorize a qualified third-party service provider to access the data on behalf of the customer for the purpose of managing the customer’s onsite energy demand.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The commission shall ensure the electrical corporation does not favor its own customer program administrator over a qualified third-party service provider contracted by the customer to provide onsite energy management services if the qualified third-party service provider meets the same standards for applicable cybersecurity and privacy requirements as the electrical corporation’s customer program administrator.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
To protect customers, maintain the principle of cost causation, and prevent cost shifts between bundled customers and unbundled customers, and between participating and nonparticipating customers, the commission shall ensure all of the following if it orders a large electrical corporation to implement an optional dynamic rate tariff:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The large electrical corporation shall make the same time-varying
delivery rates available to both bundled customers and unbundled customers located in the same geographic area as delineated by the commission in consultation with the Independent System Operator. These time-varying rates shall be the same for customers with the same level of electrical demand regardless of whether the customer is an eligible customer-generator.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
To address the risks to nonparticipating customers, the commission shall periodically evaluate and mitigate any cost shifting from the optional dynamic rate tariff in proceedings, which may include the large electrical corporation’s general rate case. The evaluation shall consider costs and benefits borne by participating and nonparticipating customers and the associated short- and long-term impacts across a set of forecasted scenarios.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
To support accurate analysis and effective evaluation of any potential cost
shifting from an optional dynamic rate tariff, the commission shall periodically review information pertaining to customer adoption of the optional dynamic rate tariff as follows:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The total number or percentage of participants across applicable customer segments, including bundled and unbundled customer segments.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The volume of energy sales for participating customers and nonparticipating customers on a time-differentiated basis.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Total revenue changes, the large electrical corporation’s cost reductions associated with load shifts, and the estimated rate impacts on participating and nonparticipating customers.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Any additional information required by the commission to protect against potential cost shifts from the optional dynamic rate
tariff.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
If a large electrical corporation offers an energy subscription option as part of the optional dynamic rate tariff, the participating bundled customers shall be responsible for the costs associated with the wholesale resources used to provide that subscription option. The costs associated with providing the subscription option shall be tracked and managed separately by the large electrical corporation to prevent cost shifts to nonparticipating customers.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
A load-serving entity is responsible for setting the generation rate options for a participating customer based on wholesale electricity market conditions faced by that customer’s load-serving entity.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
This section does not authorize the commission to regulate the rates or terms and conditions of service offered by a community choice aggregator,
consistent with Section 366.2, or an electric service provider, consistent with Section 394.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
For purposes of this section, all of the following definitions apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Eligible customer-generator” has the same meaning as defined in Section 2827.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Energy subscription option” means a fixed quantity of electricity at a fixed rate to allow a participating bundled customer to hedge a portion of their retail price risks when taking service under a dynamic rate tariff.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Large electrical corporation” means an electrical corporation with more than 100,000 service connections in California.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“Load-serving entity” has the same meaning as defined in Section 380.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Qualified third-party provider” means a provider meeting National Institute of Standards and Technology cybersecurity certification requirements and all applicable energy data privacy requirements established by the commission and that is contracted by a customer or a customer’s load-serving entity to access and process the customer’s energy usage data for the purpose of enabling onsite energy management.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
“Smart meter” means a device that can measure energy consumption and other attributes related to an electrical current and is capable of transmitting the measurements to an information system owned by an electrical corporation or to an onsite device owned by a customer of the electrical corporation.
</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
<ns0:Content>
<html:p>
No reimbursement is required by this act pursuant to Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII
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B of the California Constitution.
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