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<ns0:Id>20250AB__208899INT</ns0:Id>
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<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-18</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>2088</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Papan</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Papan</ns0:Name>
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<ns0:Title> An act to add Section 25236 to the Public Resources Code, and to add Sections 236.5, 451.10, and 719.5 to the Public Utilities Code, relating to public utilities. </ns0:Title>
<ns0:RelatingClause>public utilities</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Public Utilities: gas corporations: duty to serve: thermal energy networks.</ns0:Subject>
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<ns0:DigestText>
<html:p>Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including gas corporations and heat corporations. Existing law requires every public utility to furnish and maintain adequate, efficient, just, and reasonable service, instrumentalities, equipment, and facilities, as are necessary to promote the safety, health, comfort, and convenience of its customers, its employees, and the public. Existing law authorizes a gas corporation to cease providing service if a certain pilot program has been implemented and the PUC determines that adequate substitute energy service is reasonably available for the energy end uses of affected gas corporation customers.</html:p>
<html:p>This bill would authorize a gas corporation to satisfy its obligation to provide gas service by providing thermal energy through a thermal energy
network, as defined, if the PUC determines that the network offers an adequate and reliable substitute for the thermal end-use energy needs of its customers. The bill would specify that a project for the construction, maintenance, or repair of a thermal energy network is a public work and would require a gas corporation undertaking the project to ensure that all contractors and subcontractors performing work on the project use a skilled and trained workforce. The bill would require to PUC to initiate a proceeding to establish a regulatory framework for the provision of thermal energy service by gas corporations, as provided.</html:p>
<html:p>This bill would require the State Energy Resources Conservation and Development Commission, in consultation with the PUC, to develop technical standards for thermal energy networks, as provided.</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 PUC is a crime.</html:p>
<html:p>Because the labor requirements for a thermal energy network project would be part of the act and a violation of a PUC action implementing those requirements would be a crime, this 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>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>YES</ns0:LocalProgram>
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<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
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<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_D7283FDA-DB95-402F-9761-E7BAE1C8D90A">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The Legislature finds and declares all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
California has adopted statewide climate and air quality goals that require substantial reductions of the emissions of greenhouse gases from buildings and industrial sectors, including emissions associated with heating and cooling.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Thermal energy networks and other nonemitting shared thermal infrastructure systems can provide heating and cooling services without onsite combustion of fossil fuels or water-intensive traditional evaporative cooling, while maintaining reliability and enabling a range of clean thermal energy sources, including geothermal and industrial waste heat.
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<html:p>
(3)
<html:span class="EnSpace"/>
Existing law authorizes investor-owned utilities to provide electricity or natural gas service, but does not expressly authorize those utilities to provide heating or cooling as a regulated utility service through thermal energy networks or similar infrastructure at a commercial or industrial scale.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The absence of clear statutory authority for gas corporations to provide thermal energy service creates legal and regulatory uncertainty that limits the development of thermal energy networks and inhibits investment in zero-emission infrastructure.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The Legislature has previously authorized new utility functions in response to evolving technologies and public policy needs, subject to regulation by the Public Utilities Commission.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
It is the intent
of the Legislature in enacting this act to remove legal barriers to the provision of thermal energy service by gas corporations, while preserving the Public Utilities Commission’s authority to regulate that service in the public interest.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
This act does not mandate the deployment of any specific technology, require a gas corporation to undertake a particular project, or alter existing obligations to provide natural gas service, except as determined by the Public Utilities Commission pursuant to its authority.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 25236 is added to the
<ns0:DocName>Public Resources Code</ns0:DocName>
, to read:
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<ns0:Num>25236.</ns0:Num>
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<html:p>The commission, in consultation with the Public Utilities Commission, shall develop technical standards for thermal energy networks, as defined in Section 236.5 of the Public Utilities Code, to ensure intersystem compatibility, energy efficiency, and the safety, and transparent operating and performance reporting, of thermal energy networks.</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 236.5 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
, to read:
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<ns0:LawSection id="id_228FA3DF-2A5D-4FD2-A623-C9979C2E0309">
<ns0:Num>236.5.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
“Thermal energy network” means a multiuser system of piped noncombustible fluids that are used for transferring thermal energy into and out of buildings or industrial processes for the purpose of providing zero-emission heating, cooling, or process heat.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
A thermal energy network may use diverse noncombustion thermal sources, including, but not limited to, geothermal energy, industrial waste heat, data center waste heat, wastewater heat recovery, or ambient heat from water or air.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
A thermal energy network shall not use onsite combustion for the primary generation of thermal energy within the network.
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 451.10 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
,
<ns0:Positioning>immediately after Section 451.9</ns0:Positioning>
, to read:
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<ns0:LawSection id="id_6129A5A5-E9F6-4866-9AD3-3C0113227394">
<ns0:Num>451.10.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A gas corporation may satisfy its obligation to provide service, as required by Section 451, by providing thermal energy service through a thermal energy network if commission determines the thermal energy network offers an adequate and reliable substitute for the thermal end-use energy needs of its customers.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The commission shall ensure that the substitution of thermal energy service for gas service is implemented in a manner that maintains system safety and reliability and does not disproportionately burden remaining customers on the gas system.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A project for the construction, maintenance, or repair of a thermal
energy network by a gas corporation for purposes of this section shall be deemed a public work.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A gas corporation shall ensure that all contractors and subcontractors performing work on a thermal energy network project use a skilled and trained workforce, as defined in Section 2601 of the Public Contract Code.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
To the extent feasible, the commission and gas corporation shall prioritize the use of the existing gas utility workforce for the transition to thermal energy network operations.
</html:p>
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<ns0:Num>SEC. 5.</ns0:Num>
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Section 719.5 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
, to read:
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<ns0:Num>719.5.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
On or before December 31, 2027, the commission shall initiate a proceeding to establish a regulatory framework for the provision of thermal energy service by gas corporations.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The objective of the framework shall be to enable the safe and reliable deployment of thermal energy networks that optimize the use of diverse, nonemitting thermal sources, including, but not limited to, networked geothermal and deep geothermal energy.
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<ns0:BillSection id="id_7130AA15-FF3B-4DE1-A340-39E16ABFF817">
<ns0:Num>SEC. 6.</ns0:Num>
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<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
<html:span class="ThinSpace"/>
B of the California Constitution.
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