SB 919

SB919:v97#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 919

An act to amend Section 399.19 of the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL'S DIGEST

SB 919, as amended, Grayson. Biomethane projects: investment costs. monetary incentive program.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms in regulating those emissions. The implementing regulations adopted by the state board provide for the direct allocation of greenhouse gas allowances to electrical corporations and gas corporations pursuant to a market-based compliance mechanism.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including gas corporations. Existing law requires the commission to consider options to promote the in-state production and distribution of biomethane, and that facilitate the development of a variety of sources of in-state biomethane. The commission has adopted 2 decisions implementing these requirements, the 2nd of which adopted a 5-year monetary incentive program effective June 11, 2015, for biomethane projects. Existing law requires the commission to modify the biomethane monetary incentive program in specified respects and to extend the program, as modified, until December 31, 2026, or until all available program funds are expended, whichever occurs first.

This bill would require the commission to extend the biomethane monetary incentive program until December 31, 2030. The bill would authorize the commission to authorize additional funding of $50,000,000 for the program program, of which no more than $10,000,000 would be authorized for dairy biomethane projects, using the revenues, including any accrued interest, received by a gas corporation as a result of the direct allocation of greenhouse gas allowances provided to gas corporations as part of the above-described market-based compliance mechanism. The bill would also require the commission to allow recovery in rates of the costs of gas corporation investments in interconnection costs for biomethane projects, subject to certain limitations.

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 provisions of this bill would be part of the act and because a violation of a commission action implementing its 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.

The Legislature finds and declares all of the following:

(a) Climate change is affecting California’s communities and economy with impacts including wildfires, sea level rise, extreme weather events, extreme droughts, and associated impacts to the global economy.

(b) California must continue to be a global leader in addressing climate change through effective state policy, while ensuring energy costs remain affordable for citizens.

(c) To displace fossil gas in our pipelines and save ratepayers money, we must remove cost barriers and reduce overall project timelines and costs for utilities.

(d)Authorizing California’s gas corporations to include renewable natural gas interconnections in their rate base investments will reduce interconnection costs for in-state renewable natural gas projects, reduce the costs for ratepayers, and help gas corporations meet their climate goals.

(e)Currently, renewable natural gas projects are subject to a 24 percent tax factor under the Income Tax Component of Contributions and Advances (ITCCA). The ITCCA does not apply to utility investments. Therefore, rate basing interconnections would result in a lower biomethane procurement price for utilities and save ratepayers money.

(d) The Public Utilities Commission, as part of Rulemaking 13-02-008, issued a Proposed Decision on March 6, 2026, Decision Implementing Changes to the Renewable Gas Standard Program and Modifying Renewable Gas Procurement Plans, which declines to ratebase biomethane interconnection costs. The proposed decision directs natural gas corporations to host a workshop focused on reducing costs and authorizes the natural gas corporations to file applications to ratebase certain interconnection costs after their proposal for reducing interconnection costs is approved by the commission.(e) If the Public Utilities Commission recognizes ratepayer savings from certain interconnection project costs through ratebasing, and those projects would result in a greater likelihood of attaining existing 2030 methane reduction goals, then the commission should act expeditiously in approving ratebasing of those specified biomethane interconnection project costs.

SEC. 2.

Section 399.19 of the Public Utilities Code is amended to read:

399.19.

(a) The commission shall modify, and extend until December 31, 2030, the monetary incentive program for biomethane projects adopted in Decision 15-06-029 (June 11, 2015), Decision Regarding the Costs of Compliance with Decision 14-01-034 and Adoption of Biomethane Promotion Policies and Program, as follows:

(1) Except for a dairy cluster biomethane project, the total available incentive limitation for a project shall be increased from one million five hundred thousand dollars ($1,500,000) to three million dollars ($3,000,000).

(2) For a dairy cluster biomethane project, the total available incentive limitation shall be raised to five million dollars ($5,000,000), which may be used for interconnection costs and costs incurred for gathering lines to help reduce the emissions of short-lived climate pollutants pursuant to Section 39730 of the Health and Safety Code. For purposes of this subdivision, “dairy cluster biomethane project” means a biomethane project of three or more dairies in close proximity to one another employing multiple facilities for the capture of biogas that is transported by multiple gathering lines to a centralized processing facility where the biogas is processed to meet the biomethane standards adopted by the commission pursuant to subdivisions (c) and (d) of, or updated pursuant to subdivision (e) of, Section 25421 of the Health and Safety Code and is injected into the pipeline of the gas corporation through a single interconnection.

(3) On and after January 1, 2027, the commission may authorize additional funding of fifty million dollars ($50,000,000) for the biomethane monetary incentive program program, of which the commission shall not authorize more than ten million dollars ($10,000,000) for dairy biomethane projects, using the revenues, including any accrued interest, received by a gas corporation as a result of the direct allocation of greenhouse gas allowances to natural gas suppliers pursuant to subdivision (f) of Section 95890 of Title 17 of the California Code of Regulations.

(4)(A)On and after January 1, 2027, the commission shall allow recovery in rates of the costs of gas corporation investments in interconnection costs for biomethane projects. The sum of gas

(4) Gas corporation interconnection investments and funding under the biomethane monetary incentive program shall not exceed the per-project incentive limitation described in paragraph (1).

(B)Each gas corporation’s annual biomethane interconnection costs eligible for rate recovery pursuant to subparagraph (A) shall not exceed 1 percent of the gas corporation’s total annual revenue requirement, as authorized by the commission in the gas corporation’s most recent rate case.

(b) This section shall remain in effect only until January 1, 2031, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2031, deletes or extends that date.

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.