AB 1787

AB1787:v94#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 1787

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

LEGISLATIVE COUNSEL'S DIGEST

AB 1787, as amended, Schultz. Electrical corporations: rates: smart meter infrastructure: dynamic rate option.

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. Existing law requires that the rate component be a nonbypassable element of the local distribution service.

This bill would require the commission to require a large electrical corporation, if the commission approves the large electrical corporation’s request to upgrade its smart meter infrastructure relative to infrastructure in place on January 1, 2026, to offer all its customers eligible customer segments at least one dynamic rate option no later than one year 18 months after the upgraded smart meter infrastructure is anticipated to be placed into service, as specified. The bill would require the commission to ensure, in reviewing a request of a large electrical corporation to recover costs associated with upgrading its smart meter infrastructure, that specified conditions are met. The bill would also require the commission to ensure, among other things, the large electrical corporation makes the same time-varying distribution rates available to both bundled customers and unbundled customers located in the same geographic area, as specified.

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.

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.

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.

Digest Key

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

Bill Text

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) Lowering electricity bills is critical to maintaining the competitiveness of California businesses and alleviating overall cost pressures on individual households.

(2) 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.

(3) 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.

(4) Enabling greater demand flexibility through dynamic retail pricing, based on the conditions of the grid and the wholesale market, may minimize electricity costs for participating customers equipped with the necessary tools and information to follow grid conditions. Regulators developing demand flexible rate options should appropriately balance customer participation with adequate protections and safeguards.

(5) A significant number of customers take generation service from load-serving entities that are not large electrical corporations.

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

(1) 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 dynamic rate option.

(2) Ensure that customers who do not want or cannot participate in dynamic retail pricing have the right to continue to receive their standard service.

(3) Ensure participation in dynamic retail pricing does not create cost shifts between participating and nonparticipating customers.

(4) Ensure customers have near 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 option.

(5) Ensure that each large electrical corporation provides customer usage data to load-serving entities within their service areas on a timeline that is comparable to the timeline by which the large electrical corporation processes the data for billing and operational purposes.

SEC. 2.

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

729.3.

(a) (1) If the commission approves a large electrical corporation’s request to upgrade its smart meter infrastructure relative to infrastructure in place on January 1, 2026, the commission shall require the large electrical corporation to offer all its customers eligible customer segments at least one dynamic rate option no later than one year 18 months after the upgraded smart meter infrastructure is anticipated to be placed into service. If the commission later finds the dynamic rate option does not provide the expected benefits and does not further the policy goals specified in Section 8360, the commission may discontinue the dynamic rate option.

(2) The dynamic rate option, at a minimum, shall include all of the following components:

(A) A time-varying distribution rate that reflects dynamic distribution grid constraints in the distribution service area, if determined by the commission to be feasible, cost effective, and equitable for all customers.

(B) A time-varying generation rate for bundled customers that reflects day-ahead hourly wholesale market conditions.

(C) Nonbypassable charges.

(b) The commission shall consult with the Federal Energy Regulatory Commission to ensure implementation of a dynamic rate option is consistent with the Federal Energy Regulatory Commission’s transmission ratemaking authority.

(c) In reviewing a request of a large electrical corporation to recover costs associated with upgrading its smart meter infrastructure, the commission shall ensure all of the following conditions are met:

(1) If the smart meter technology includes wireless communications with near real-time data transmission functionality, the large electrical corporation shall provide to a customer the customer’s own near real-time energy usage data directly from the smart meter to a standards-compliant device or service selected by the customer at no additional charge to either the customer or the customer. The commission may determine whether charges apply to the qualified third-party provider of that device or service.

(2) The large electrical corporation shall provide accurate and timely customer usage data to a customer’s load-serving entity if authorized by the customer or as consistent with commission rules established pursuant to Section 366.2. The large electrical corporation shall provide the usage data to the load-serving entity on a timeline that is comparable to the timeline by which the large electrical corporation processes the data for billing and operational purposes and no later than 24 hours after meter measurement.

(3) (A) The large electrical corporation shall provide to each customer access to the customer’s energy usage data through a method that is secure, automated, and provides data in a standardized machine-readable format. The large electrical corporation shall also 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.

(B) The commission shall establish rules, consistent with the California Consumer Privacy Act of 2018 (Title 1.81.5 (commencing with Section 1798.100) of Part 4 of Division 3 of the Civil Code) and its implementing regulations, for the customer data management pursuant to this paragraph to ensure fairness and nondiscrimination among onsite energy management service providers, including the large electrical corporation’s own administrators, to develop cybersecurity and privacy standards applicable to all providers, and to ensure compliance with Section 8380.

(d) 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:

(1) Adequate electricity bill comparison information is provided by the large electrical corporation to residential and small business customers interested in taking service under a dynamic rate option to ensure participating residential and small business customers are aware of and informed on the potential price risks associated with taking service under a dynamic rate option.

(2) Rules or conditions are established for participation by vulnerable residential customers to ensure adequate protection for those customers, including, but not limited to, those customers served through rates established pursuant to subdivision (c) of Section 739, and Sections 739.1 and 739.12.

(3) Rules or mechanisms to ensure nonparticipating customers do not pay for the wholesale energy resources associated with designing the generation portion of the dynamic rate option.

(4) The large electrical corporation shall make the same time-varying distribution rates available to both bundled customers and unbundled customers located in the same geographic area as delineated, and determined feasible, by the commission.

(5) To address the risks to nonparticipating customers, the commission shall evaluate and mitigate any cost shifting from the dynamic rate option in proceedings, at least every four years, which may include the large electrical corporation’s general rate case. The commission shall adjust or modify adjust, modify, or discontinue any dynamic rate option found in its evaluation to create cost shifting from nonparticipating to participating customers to ensure no cost shifting occurs.

(6) To support accurate analysis and effective evaluation of any potential cost shifting from a dynamic rate option, the commission shall review information pertaining to customer adoption of the dynamic rate option, at least every four years, as follows:

(A) The total number or percentage of participants across applicable customer segments, including bundled and unbundled customer segments.

(B) The volume of energy sales for participating customers and nonparticipating customers on a time-differentiated basis.

(C) Total cost and revenue requirement changes, the large electrical corporation’s cost reductions associated with load shifts, and the estimated rate impacts on participating and nonparticipating customers.

(D) Any asymmetrical effect on vulnerable residential customers, including, but not limited to, those customers served through rates established pursuant to subdivision (c) of Section 739, Section 739.1, or Section 739.2.

(E) Any additional information required by the commission to protect against potential cost shifts from the dynamic rate option.

(e) A load-serving entity is responsible for setting the generation rate portion of a dynamic rate option for a participating customer and providing adequate bill comparison information, or other similar information about price risk, to its residential and small business customers interested in taking service under a dynamic rate option to ensure the interested customers are aware of and informed on the potential price risks associated with taking service under a dynamic rate option.

(f) 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.

(g) An eligible customer-generator may elect to take service under a dynamic rate option as an alternative to the rate established pursuant to Section 2827 or 2827.1. An eligible customer-generator shall not participate concurrently in both a dynamic rate option and the standard rate established pursuant to Section 2827 or 2827.1.

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

(1) “Eligible customer-generator” has the same meaning as defined in Section 2827.

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

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

(4) “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.

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.