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HomeMy WebLinkAboutItem 24 - Councilmember Requested for Southern California Edison Rate Affordability and State Legislative Reform CITY OF SANTA ANA a Councilmember Requested Item Report DATE July 7, 2026 TOPIC Southern California Edison Rate Affordability and State Legislative Reform COUNCILMEMBER-REQUESTED ITEM TITLE Discuss and Consider Directing the City Manager and City Attorney to Prepare a Resolution in Support of State Legislation to Lower Southern California Edison Rates and Protect Ratepayers and Evaluate Potential Intervention in California Public Utilities Commission Proceedings on Behalf of Santa Ana Residents DISCUSSION Background Southern California Edison (SCE) rates have more than doubled since 2016. Ten new SCE rate increases are currently pending before the California Public Utilities Commission (CPUC). Today, one in five SCE households is behind on their electric bill by an average of$829, reflecting a growing and unsustainable debt crisis across the communities SCE serves. In 2025, SCE's parent company, Edison International, reported $4.9 billion in profit, even as the utility was found responsible for the Eaton Fire, which killed 19 people and destroyed thousands of homes in Altadena and surrounding communities. The primary driver of these escalating bills is structural. Under the rate-of-return regulatory model, investor-owned utilities like SCE generate profit primarily by building and expanding physical infrastructure, including poles, wires, substations, and related equipment. State regulators allow utilities to charge ratepayers the full cost of construction plus a guaranteed return on investment of approximately 10 percent per project, for years into the future. This creates a perverse incentive: the more a utility spends, the more it earns. Critics and regulators have long noted that this model encourages "gold-plating": the practice of selecting more costly infrastructure solutions over more efficient alternatives because larger capital expenditures generate larger profits. This approach leaves ratepayers to foot the bill with no meaningful check on unnecessary spending. Santa Ana residents are directly and disproportionately affected by these structural problems. As a community with a high proportion of working families and renters, the burden of rising utility costs falls on the households least able to absorb them. The CPUC's own data confirm that utility debt and the share of customers qualifying for bill assistance programs have both grown significantly in recent years. CITY ATTORNEY CITY MANAGER CITY CLERK Sonia R.Carvalho Alvaro Nunez Jennifer L. Hall 20 CIVIC CENTER PLAZA-P.O. BOX 1988, M31 -SANTA ANA, CALIFORNIA 92702 TELEPHONE(714)647-6900-FAX(714)647-6954-www.santa-ana.org Councilmember Requested Item — Southern California Edison Rate Affordability and State Legislative Reform Page 2 State Legislative Reform Package The California Legislature is currently considering a package of bills during the active 2025-2026 regular session, with a floor vote deadline of August 31, 2026, that would address the structural causes of high utility bills. On June 16, 2026, the San Diego City Council voted unanimously to endorse ten of these bills (Exhibit A), making Santa Ana an opportunity to join a growing coalition of California cities formally on record in support of ratepayer reform. Collectively, the bills in this package are designed to: • Cap utility profits by tying allowable shareholder returns to objective benchmarks rather than open-ended rate-setting proceedings. • Curb overspending by requiring upfront CPUC approval before utilities draw on certain funding accounts, and mandating independent audits of wildfire mitigation expenditures before additional funds are approved. • Increase transparency by requiring public disclosure of the data and methodologies utilities use to calculate rates and fees, including the Power Charge Indifference Adjustment. • Protect families immediately by requiring large data centers to fund their own grid upgrades rather than shifting those costs to residential ratepayers. • Modernize the energy system by streamlining access to small-scale solar, enabling home batteries and EVs to function as virtual power plants, and supporting in-state manufacturing of grid components. Below are the 14 bills included in the legislative package. 1. AB 2338 (Ransom): Requires utilities to justify any General Rate Case increase that exceeds the annual Social Security Cost of Living Adjustment, placing the burden on the utility rather than ratepayers to demonstrate the need for above-inflation rate hikes. 2. AB 2463 (Petrie-Norris): Directs the CPUC to conduct a comprehensive review of the methodologies used to determine the cost of capital and authorized return on equity for electrical and gas corporations, bringing greater consistency and ratepayer protection to the rate-setting process. 3. SIB 905 (Becker): Reduces shareholder profits on safety investments, expands access to low- cost public financing of capital projects, ties executive compensation to reducing rate increases, and improves overall grid performance. 4. AB 1677 (Boerner): Caps the return on equity that investor-owned utilities may earn by tying the allowable shareholder profit limit to the long-term U.S. Treasury bond rate plus four percent. 5. SIB 1098 (Perez): Limits the use of balancing and memorandum accounts—funding mechanisms that allow utilities to spend now and seek ratepayer reimbursement later—by channeling more spending decisions into the General Rate Case process where they are subject to public scrutiny. 6. AB 1774 (Boerner and Harabedian): Requires independent audits of utility wildfire mitigation spending before the CPUC approves additional wildfire-related expenditures, ensuring funds previously allocated have been properly spent and accounted for. 7. SIB 868 (Wiener): Eliminates regulatory barriers for small plug-in and balcony solar devices by reclassifying them as household appliances exempt from utility interconnection requirements, making clean energy more accessible to renters and those without rooftop solar. 8. SIB 943 (Becker): Directs the CPUC to develop a more equitable methodology for calculating high-voltage transmission charges and authorizes rate adjustments for industrial customers who switch to clean electricity, supporting decarbonization while controlling costs. 9. AB 1761 (Rogers): Requires the CPUC and investor-owned utilities to publicly disclose all data and methodologies used to calculate the Power Charge Indifference Adjustment (PCIA), CITY ATTORNEY CITY MANAGER CITY CLERK Sonia R.Carvalho Alvaro Nunez Jennifer L. Hall 20 CIVIC CENTER PLAZA-P.O. BOX 1988, M31 -SANTA ANA,CALIFORNIA 92702 TELEPHONE(714)647-6900-FAX(714)647-6954-www.santa-ana.org Councilmember Requested Item — Southern California Edison Rate Affordability and State Legislative Reform Page 3 a fee charged to customers who switch to community or self-generated power, to identify billing errors and improve accountability. 10. SIB 1138 (Padilla): Gives load-serving entities flexibility to meet up to 25 percent of their resource adequacy obligations through short-term market transactions rather than costly long- term contracts, reducing unnecessary procurement costs that are otherwise passed to ratepayers. 11. SIB 1359 (Stern): Directs the CPUC to create a standardized methodology for forecasting gas demand to support the managed wind-down of unnecessary gas infrastructure, and prohibits utilities from charging customers for avoidable gas leaks. 12. AB 2516 (Petrie-Norris): Establishes the California Grid Manufacturing Initiative to aggregate state demand, coordinate procurement of critical grid components such as large transformers, and incentivize in-state manufacturing—allowing bulk purchasing savings currently foregone by utilities acting independently. 13. SIB 886 (Padilla): Requires data centers to bear the full upfront cost of new transmission and distribution infrastructure and energy procurement needed to serve their operations, preventing those costs from being shifted to residential and small commercial ratepayers. Proposed Resolution This item requests that the City Council direct staff to prepare and agendize a resolution of the City Council formally supporting this legislative package. A formal resolution would place the City of Santa Ana on record in support of ratepayer protection before the Governor, the Legislature, and the CPUC, and would signal the City's legislative priorities on utility affordability and oversight. Transmitting the resolution to State representatives and the Governor's office, as similar to how the City of San Diego's resolution directed, would ensure it is made part of the official record of support for these bills during the critical remaining months of the legislative session. Potential Intervention in CPUC Proceedings Cities may seek party status in CPUC proceedings pursuant to the Commission's Rules of Practice and Procedure and are expressly recognized as potential participants under the Public Utilities Code's intervenor framework (see Pub. Util. Code §§ 1701, 18O2(d)). While SCE's 2025 General Rate Case (Application A.23-05-010) was resolved by CPUC decision in September 2025, authorizing base revenue requirement increases of$544 million in 2026, $522 million in 2027, and $447 million in 2028, increases that are now being passed through to Santa Ana residents' bills, SCE has continued to file additional rate increase applications before the Commission since that decision. Those subsequent proceedings represent potential opportunities for the City to seek party status and formally advocate for Santa Ana ratepayers before the CPUC. This item requests that the City Attorney evaluate which active SCE proceedings, if any, would be appropriate for the City to join; assess the applicable procedural requirements and deadlines; and report back to the City Council with findings and a recommendation, including the resource implications of participation. Conclusion Rising electric utility rates represent a direct and growing burden on Santa Ana families. While this item focuses on SCE as the primary electric utility serving Santa Ana, many of the structural reforms in this legislative package—including those addressing CPUC rate-setting methodology, utility overspending, and ratepayer accountability—would benefit customers across investor-owned electric and gas utilities statewide. A formal resolution of support and, if appropriate, participation in CPUC CITY ATTORNEY ACTING CITY MANAGER CITY CLERK Sonia R.Carvalho Alvaro Nunez Jennifer L. Hall 20 CIVIC CENTER PLAZA-P.O. BOX 1988, M31 -SANTA ANA,CALIFORNIA 92702 TELEPHONE(714)647-6900-FAX(714)647-6954-www.santa-ana.org Councilmember Requested Item — Southern California Edison Rate Affordability and State Legislative Reform Page 2 proceedings would position Santa Ana as an active advocate for its residents on one of the most pressing affordability issues facing the community today. SUBMITTED BY Councilmember Jessie Lopez EXHIBIT(S) 1. City of San Diego Draft Resolution in Support of Utility Affordability and Accountability Legislation, 2025-2026 Session (unanimously adopted by the San Diego City Council on June 16, 2026) CITY ATTORNEY CITY MANAGER CITY CLERK Sonia R.Carvalho Alvaro Nunez Jennifer L. Hall 20 CIVIC CENTER PLAZA-P.O. BOX 1988, M31 -SANTA ANA, CALIFORNIA 92702 TELEPHONE(714)647-6900-FAX(714)647-6954-www.santa-ana.org t�1110121P (R-2026-521) RESOLUTION NUMBER R-316829 DATE OF FINAL PASSAGE JUN 18 2026 A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN DIEGO SUPPORTING CALIFORNIA SENATE BILLS 905, 1098, 943, 1138, 1359, AND 913 AND ASSEMBLY BILLS 2463, 1761, 2516, AND 2493 RELATING TO UTILITY AFFORDABILITY AND ACCOUNTABILITY FOR THE 2025-2026 CALIFORNIA LEGISLATURE REGULAR SESSION. RECITALS The Council of the City of San Diego(Council) adopts this Resolution based on the following: A. Rising utility rates in California continue to increase the cost of living for millions of residents. Between 2020 and 2025, residential rates for the three largest investor-owned utilities increased at a rapid pace, far exceeding inflation. Pacific Gas and Electric Company rates increased by an average of 13.3% annually, Southern California Edison by 12.3%, and San Diego Gas & Electric Company(SDG&E)by 9.1%. In December 2024, the California Public Utilities Commission(CPUC) authorized an additional 18% revenue requirement increase for SDG&E. San Diego County currently maintains the highest electricity rates in the nation, with costs reaching $0.45/kWh, approximately 2.5 times above the national average, and an average monthly residential bill of$313. According to 2024 and 2025 CPUC reports, SDG&E maintains the highest electricity rates in the state, and utility debt in the region has increased by over$200 million since 2021, with nearly 30% of customers now qualifying for bill assistance programs. B. The following proposed legislation, currently pending in the 2025-2026 California Legislature Regular Session in both the Senate and Assembly(collectively, Utility Affordability and Accountability Legislative Package), aim to lower utility costs and hold investor-owned utility companies accountable: -PAGE 1 OF 4- (R-2026-521) 1. Senate Bill 905, as amended June 1, 2026, seeks to reduce utility profits on wildfire investments, expand options for low-cost public financing of capital projects, tie executive pay to reducing rate increases, and improve grid capacity. 2. Senate Bill 1098, as amended March 24, 2026, limits the use of balancing and memorandum accounts to bring more spending decisions into General Rate Cases, reducing unlimited corporate overspending. 3. Senate Bill 943, as amended March 23, 2026, directs the CPUC to develop a more equitable methodology for calculating high-voltage transmission charges and authorizes rate adjustments for industrial customers who switch to clean electricity. 4. Senate Bill 1138, as amended April 9, 2026, gives load-serving entities flexibility to meet up to 25% of resource adequacy obligations through short-term transactions, reducing unnecessary procurement costs passed to ratepayers. 5. Senate Bill 1359, as amended May 14, 2026, directs the CPUC to rigorously review gas infrastructure investments over$10,000,000 to ensure non-gas pipeline alternatives are prioritized, and forces developers instead of ratepayers to pay all upfront costs for new natural gas line extensions starting in 2030. 6. Senate Bill 913, as amended May 14, 2026, proposes several policy changes to authorize and expand the use of aggregated distributed energy resources to satisfy resource adequacy requirements. 7. Assembly Bill 2463, as amended April 13, 2026, requires the CPUC to conduct a comprehensive, systemwide review of methodologies used to determine the cost of capital and authorized return on equity for electrical and gas corporations to bring greater consistency and ratepayer protection. -PAGE 2 OF 4- , (R-2026-521) 8. Assembly Bill 1761, as amended March 19, 2026, requires the CPUC and investor-owned utilities to publicly disclose all data and methodologies used to calculate the Power Charge Indifference Adjustment to identify billing errors. 9. Assembly Bill 2516, as amended April 13, 2026, establishes the California Grid Manufacturing Initiative to aggregate demand, coordinate procurement of critical grid components, and incentivize in-state manufacturing. 10. Assembly Bill 2493, as amended April 13, 2026, helps prevent utility overspending by increasing independent oversight of transmission projects and enabling lower- cost alternatives instead of expensive infrastructure build outs. C. Collectively,passage of the Utility Affordability and Accountability Legislative Package will help lower costs, ensure fair electricity pricing, and advance equitable and affordable energy for residents across the state. D. The City of San Diego's (City) support for the Utility Affordability and Accountability Legislative Package is consistent with previous actions by the Council to ensure accountability by investor-owned utilities and reduce rates for San Diegans. For example, in November 2023, the Council adopted San Diego Resolution R-315214 (Nov. 14, 2023) calling on the CPUC to implement improvements to oversight of gas and electric rates. E. The Office of the City Attorney prepared this Resolution based on the information provided by City staff, including information provided by affected third parties and verified by City staff, with the understanding that this information is complete and accurate. -PAGE 3 OF 4- a . (R-2026-521) ACTION ITEMS Be it resolved by the Council of the City of San Diego: 1. The Council declares its full support for the Utility Affordability and Accountability Legislative Package, as referenced in Recital B. 2. The Council requests the City's Government Affairs Department staff transmit this Resolution to the City's state lobbyists and other appropriate individuals to ensure this Resolution is received by state representatives and made part of the official record of support for the Utility Affordability and Accountability Legislative Package, as referenced in Recital B. APPROVED: EATHER FERBERT, City Attorney By Alma Robbins Deputy City Attorney AR:nj a April 23, 2026 Or. Dept: Council District— 9 Doc. No. 4406721 I certify that the Council of the City of San Diego adopted this Resolution at a meeting held on JUN I2n2fi DIANA J.S. FUENTES City Clerk By uty lcfty C1 Approved: (date) TODD GLORIA, Mayor Vetoed: (date) TODD GLORIA, Mayor -PAGE 4 OF 4- JUN 1 610 b the following vote: Passed by the Council of The City of San Diego on y g Councilmembers Yeas Nays Not Present Recused Joe LaCava 0 0 Jennifer Campbell 0 Stephen Whitburn 0 0 Henry L. Foster III 0 Marni von Wilpert Q / Kent Lee 0 0 Raul A. Campillo 0 0 Vivian Moreno 0 0 0 Sean Elo-Rivera 0 0 0 Date of final passage JUN 18 2026 (Please note: When a resolution is approved by the Mayor, the date of final passage is the date the approved resolution was returned to the Office of the City Clerk.) TODD GLORIA AUTHENTICATED BY: Mayor of The City of San Diego, California. DIANAJ.S. FUENTES (Seal) City Clerk of The City of San Diego, California. By , Deputy Office of the City Clerk, San Diego, California Resolution Number R- 316 62 9