Bill Text: CA AB1117 | 2025-2026 | Regular Session | Introduced

California Assembly Bill 1117

Introduced

Bill Title: Electricity: rates: optional dynamic rate tariffs.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2025-02-21 - From printer. May be heard in committee March 23. [AB1117 Detail]

Download: California-2025-AB1117-Introduced.html

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 1117

Introduced by Assembly Member Schultz

February 20, 2025

An act to add Section 729.3 to the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL'S DIGEST

AB 1117, as introduced, Schultz. Electricity: rates: optional dynamic rate tariffs.

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.

This bill would require the commission, through a new or existing proceeding, to develop optional dynamic rate tariffs applicable to each large electrical corporation for the large electrical corporation’s commercial and industrial customers on or before July 1, 2028, and for its other customers, including residential customers, on or before July 1, 2030. The bill would require each optional dynamic rate tariff to include, at minimum, specified components, including dynamic transmission and distribution rates that reflect real-time grid conditions and certain nonbypassable charges, as specified. The bill would require the commission to ensure, among other things, any overcollection of a generation-related revenue requirement from participating bundled customers is returned to the participating bundled customers and any undercollection of a generation-related revenue requirement is borne by those same customers.

Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because a violation of a commission action implementing this bill’s requirements would be a crime, the bill would impose a state-mandated local program.

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.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

The people of the State of California do enact as follows:

SECTION 1.

(a) The Legislature hereby finds and declares all of the following:

(1) 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 improved use of grid infrastructure and demand flexibility to exert downward pressure on electricity rates.

(2) Creating downward pressure on electricity rates is critical to maintaining the competitiveness of California businesses and alleviating overall cost pressures on individual households.

(3) 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.

(4) 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.

(5) Enabling greater demand flexibility through dynamic retail pricing, based on the conditions of the grid and the wholesale market, as a universally available option for all customers will 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 renewable energy is low cost and abundant.

(6) Increased customer adoption of dynamic retail electricity rates that reflect real-time grid and wholesale market conditions will allow the state to meet its renewable energy and carbon neutrality goals in the most affordable and reliable manner.

(b) It is the intent of the Legislature to do all of the following:

(1) Establish dynamic pricing options for all commercial and industrial customers by 2028 and all customers by 2030.

(2) Ensure that residential customers who do not want dynamic pricing have the right to continue to be subject to flat rates or time-of-use rates.

(3) Ensure participation in dynamic retail pricing options does not create cost shifts between bundled and unbundled ratepayers.

SEC. 2.

Section 729.3 is added to the Public Utilities Code, to read:

729.3.

(a) The commission shall, through a new or existing proceeding, develop optional dynamic rate tariffs applicable to each large electrical corporation for the large electrical corporation’s commercial and industrial customers on or before July 1, 2028, and the large electrical corporation’s other customers, including residential customers, on or before July 1, 2030.

(b) Each optional dynamic rate tariff shall include, at minimum, all of the following components:

(1) A dynamic transmission rate that reflects real-time transmission grid conditions.

(2) A dynamic distribution rate that reflects real-time distribution grid conditions.

(3) A dynamic generation rate for bundled customers that reflects real-time wholesale market conditions.

(4) Nonbypassable charges associated with commission-approved public purpose programs and other costs associated with legacy generation investments made on the participating customer’s behalf.

(c) To maintain the principle of cost causation, and to prevent cost shifts between bundled customers and unbundled customers, the commission shall ensure all of the following when implementing subdivision (a):

(1) Each large electrical corporation shall make the same dynamic transmission and distribution 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.

(2) Each load-serving entity shall be solely responsible for setting dynamic generation rate options for a participating customer based on wholesale market conditions faced by that customer’s load-serving entity.

(3) Any overcollection of a generation-related revenue requirement from participating bundled customers shall be returned to the participating bundled customers, and any undercollection of a generation-related revenue requirement shall be borne by those same customers.

(d) For purposes of this section, the following definitions apply:

(1) “Large electrical corporation” means an electrical corporation with more than 100,000 service connections in California.

(2) “Load-serving entity” has the same meaning as defined in Section 380.

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIII 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 B of the California Constitution.