Gov. Gavin Newsom vetoed a bill to provide demand-side electricity savings after it sailed through the state’s Assembly and Senate, with all 119 voting lawmakers unanimously approving the bill.
The bill would have required the California Energy Commission to adopt a set of rules for enabling electricity providers to reduce their demand forecast by using demand-side resources.
In his explanation for the bill, Newsom said, “This bill would require the California Energy Commission, in consultation with load-serving entities and resource aggregators, to develop and publish methodologies for ‘electric load modification protocols’ to adjust electric demand forecasts.”
“While I support expanding electric load flexibility,” he continued, “this bill does not align with the California Public Utility Commission’s Resource Adequacy framework. As a result, the requirements of this bill would not improve electric grid reliability planning and could create uncertainty around energy resource planning and procurement processes.”
A study by GridLab and Kevala found that applying California’s load management standard peak reduction in low to high scenarios decreased the overloaded feeder count by over half compared to other load management standard scenarios.
“California has failed to deliver significant cost savings for ratepayers,” said Edson Perez, California lead at Advanced Energy United. “With Assembly Bill 44 being vetoed, the state has missed a huge opportunity to advance common-sense policy that would have lowered costs, strengthened the grid, and unlocked the full potential of advanced energy. This bill would have made it easier for families and businesses to save money while building a stronger, more flexible, and reliable energy future.”
An assembly floor analysis of AB 44 said, “Caution may be in order, as these demand-side resources can vary greatly in their design – from virtual power plants to aggregated residential thermostats – and vary in their visibility to the state agencies and California′s energy market.”
However, the analysis said AB 44 seems to recognize this caution by not mandating adoption of these technologies, but rather enables state agencies and CAISO to set every requirement and protocol.
AB 44 garnered wide support, with proponents saying the bill would ″allow for more predictable and timely participation, reduce risk for those investing in load flexibility, and ultimately deliver savings to customers.”
In 2023, the California Energy Commission established a statewide goal of 7 GW of load shift by 2030, estimating that roughly between 3.1 GW to 3.6 GW of load was shifted the prior year.
The California Energy Commission said at the time, “The proposed target is aspirational but achievable with robust policy support,” and made 18 policy recommendations for reaching the goal. These recommendations included allocating funding for the commission to supplement demand response, reforming availability rules and resource adequacy requirements, and promoting load-modifying program development and measurement, including reducing resource adequacy requirements on load-serving entities with these programs.
AB 44 unanimously passed both the Senate and the Assembly, and did not receive any opposition on file.
The California Legislature can override the veto with a two-thirds vote in both the Assembly and Senate. However, according to the California Senate Office of Research, this has not happened in 25 years.
The veto comes as California lawmakers are pursing ways to use distributed energy resources, such as rooftop solar, energy storage and smart home devices, to reduce strain on the grid.
AB 740, which unanimously passed the Assembly, is currently awaiting its fate at Newsom’s desk. The bill requires the California Energy Commission to collaborate with the Public Utilities Commission and the California Independent System Operator (CAISO) to develop a comprehensive virtual power plant deployment plan, which would enable DERs, such as smart thermostats and home batteries, to coordinate together into a flexible power source.
The bill passed with one just vote against it. AB 740 was enrolled and sent to Newsom for his signature the day after AB 44, so his decision is expected soon.
The bills offered an ray of hope for distributed energy resource proponents, as they passed the same month California’s legislature and Newsom chose not to renew funding its for its grid reliability and premier virtual power plant program.
The decision risks ending the program altogether, according to Advanced Energy United, and may mean losing more than $200 million in energy cost savings for Californians and extending the state’s dependence on peaker plants to meet emergency power needs.
Read about other state legislation from this year’s session here.
(Also read: Newsom orders agencies to fast-track clean energy projects before federal tax credits expire)
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