On October 14, 2022, the assigned Commissioner (Rechtschaffen) issued a proposed decision (PD) on Transportation Electrification Policy and Investment in the pending rulemaking (R.) 18-12-006 before the California Public Utilities Commission (Commission). Commission approval of the PD would adopt a new Transportation Electrification Framework (TEF) to guide utility investments in electric vehicle (EV) charging infrastructure and would authorize $1 billion in ratepayer funding for the first five years of the TE program, known as Funding Cycle 1 (FC1). In recognition of the rapidly evolving EV landscape, the PD proposes to cap spending during first three years of FC1, which is a five-year funding cycle, at $600 million, and access to the remaining $400 million budget is held until the Commission issues a “Mid-Cycle Assessment” decision to determine whether modifications to or termination of the program budget is warranted. Notably, the Commission would prohibit Fortune 1000 companies from receiving any FC1 rebates, regardless of whether they propose to operate in a disadvantaged community.
The Commission may vote to adopt the PD, at the earliest, during its November 17, 2022 business meeting. Interested parties may submit comments on the PD by November 3 for the Commission’s consideration of whether to modify, adopt, or reject the PD.
Procedural and Legislative Background
In February 2020, the Administrative Law Judge assigned to the proceeding entered a draft TEF, prepared by Energy Division staff, into the record and invited party comment on the proposal. From March through September 2020, parties submitted comments on different chapters of the TEF.
On September 30, 2020, Governor Newsom signed Assembly Bill (AB) 841 into law (Stats. 2020, ch. 372). AB 841 represented a significant policy shift from existing California practice in that it required the Commission and the utilities to establish new rules, known as the “EV Infrastructure Rules,” that would allow for cost recovery of electric distribution infrastructure on the utility side of the customer’s meter when customers (other than those in single-family residences) installed separately metered infrastructure to support EV charging infrastructure.[1] Previously, the Commission approved TE investments on a one-off basis for both the utility-side and the customer-side infrastructure investments, and cost recovery was tracked through balancing accounts associated with specific TE programs implemented by each investor-owned utility (IOU). In effect, AB 841 establishes a California policy to socialize the costs of EV infrastructure build-out (e.g., service line extensions, electrical distribution infrastructure) on the utility side of the meter across all California ratepayers. Costs borne under the new EV Infrastructure Rules are tracked and the IOUs may seek recovery of these costs in their general rate cases before the Commission.
On October 13, 2021, the Commission convened an en banc session with other state agencies to discuss the role of ratepayer funding in accelerating TE. The en banc considered other possible funding sources to promote TE and whether that level of investment would help California achieve its goals for EV adoption.
On February 25, 2022, assigned Commissioner Rechstschaffen issued a ruling (the assigned Commissioner’s ruling (ACR)) attaching a revised TEF Staff Proposal, which Energy Division staff had updated to reflect the changed TE landscape and significant interim developments (e.g., legislative enactments, several TE-related Commission decisions and resolutions,[2] in addition to changed driving patterns stemming from the COVID-19 pandemic). Most notably, the revised TEF pertained only to customer-side (i.e., behind-the-meter or BTM) costs, now that AB 841 deemed utility-side TE costs subject to rate recovery. Parties submitted opening and reply comments on the ACR in April and May of this year.
Staff Proposal: the TEF
The Staff Proposal recommended that FC1 begin in 2025 to allow for exhaustion of currently approved TE funding. FC1 would consist of a statewide, third-party administered rebate program for BTM make-readies and electric vehicle supply equipment, as well as marketing, education, and outreach and technical assistance (TA) programs. The FC1 rebate program would provide support to multi-unit dwellings (MUDs), MUD-serving public locations, and medium- and heavy-duty sectors. As proposed, Funding Cycle 2 (FC2) would start in 2030, after FC1 completes at the end of 2029, and would be based on an assessment of FC1 and further analysis of the policy and market needs at that time.
The PD adopts this framework but leaves many of the program details, such as rebate levels, open for stakeholder input through the development of a Program Handbook, and the PD proposes the Commission adopt the Program Handbook via a decision scheduled for Q3 2024. The PD also creates opportunities to adjust the Funding Cycle program design and implementation through annual roundtables and stakeholder workshops that it states “will provide sufficient flexibility for the FC1 program, while not overburdening stakeholders, the IOUs, and the Program Administrator. An annual roundtable will provide program flexibility by creating a venue for stakeholder input and review of data/evaluation results to inform adjustments and updates to the Program Handbook, including modifications to rebate levels and changes to better reach underserved communities.”[3]
Proposed Decision – Significant Findings, Orders, and Conclusions
The proposed decision, which is over two-hundred pages, can be reviewed in full here. This alert highlights the below findings and conclusions.
The PD:
- Declines to adopt a TE Plan (TEP) framework, which would have required that IOUs develop a ten-year TEP for portfolio and grid planning, and instead concludes that the ten-year planning framework is inconsistent with the rapid development of the TE landscape and that other proceedings (e.g., Integrated Resource Planning, Integrated Energy Policy Report, Transmission Planning Process, and the High Distributed Energy Resources proceeding) are already working across state agencies towards this end;
- Approves $1 billion budget for FC1 and requires each IOU to contribute its proportionate share, based on its percentage of electric sales for 2024, towards this funding allocation;
- Adopts a five-year schedule FC1, which is set to begin on January 1, 2025, with FC2 scheduled to begin on January 1, 2030;
- Caps the rebate funding in each IOU’s service territory at the percentage it contributed towards the funding allocation and, for the first three years of FC1, caps program administrative costs (including both IOU costs and the PA’s administrative costs) at $48 million, or eight percent of the utilized portion of the approved FC1 program budget of $600 million, whichever is lower;
- Directs the IOUs to host annual roundtables in July of each year to convene with the Program Administrator, stakeholders, and Energy Division staff to identify possible program modifications that should take effect (via the filing of a Tier 2 Advice Letter) by January 1 of the following year;
- Directs the IOUs to host annual vehicle-grid integration forums in conjunction with Energy Division staff and to file workshop reports and to implement any identified changes via a Tier 2 Advice Letter;
- Declines to consider alternative financing programs since the Commission is addressing that topic in R.20-08-022, which focuses on the investigation and design of alternative financing programs for all clean energy technologies;
- Eliminates all IOU ownership of BTM charging infrastructure beginning with FC1; (this proposal was widely supported by ratepayer advocates; TURN states that the move away from “unnecessary, costly, and risky utility ownership of BTM charging infrastructure assets [and moving toward a rebate structure is] ‘the most important ratepayer protection provided in the proposal.’”[4]);
- Sets a minimum scope of issues for stakeholder development in the Program Handbook;
- Establishes that IOUs, rather than Community Choice Aggregators, should administer TA programs on behalf of both bundled and unbundled customers to limit customer confusion; and
- Establishes a schedule for the remaining TEF milestones through January 1, 2030, which is the tentative start date for FC2.
[1] AB 841 is codified as Pub. Util. Code § 740.19.
[2] See, e.g., Executive Order N-79-20 (requiring all new light-duty vehicle sales to be zero-emission vehicles by 2035 and all new medium-and heavy-duty vehicle sales to be zero-emission vehicles by 2045); AB 841; D.20-09-025 (clarifying that electric vehicle service providers are not public utilities); D.20-12-027 (concerning the low carbon fuel standard holdback revenue utilization); D.20-12-029 (implementing SB 676 and vehicle-grid integration strategies); D.21-07-028 (setting near-term priorities for TE investments by the IOUs); D.21-12-030) (clarifying near-term priorities for TE investments); D.21-12-033 (extending the interim policy on common treatment for excess plug-in electric vehicle charging costs); D.20-08-045 (authorizing Southern California Edison to recover $436 million related to its Charge Ready 2 infrastructure and EV market education programs); D.21-04-014 (authorizing San Diego Gas & Electric Company’s recovery of $43.5 million for its Power Your Drive Extension program), in addition to various Resolutions by the Energy Division implementing the requirements of Pub. Util. Code § 740.19 (e.g., Resolutions E-5167, E-5168, and E-5175).
[3] PD, p. 152.
[4] PD, pp. 94-95 (citing TURN Opening Comments at 1).
