SACRAMENTO, California — State lawmakers on Saturday sent Gov. Gavin Newsom a sprawling package of bills to control the state’s energy prices, including measures to increase oil drilling and stem utilities’ wildfire expenses.
The package also includes bills to extend the state’s trading program for greenhouse gases, distribute the trading program’s billions of dollars in annual revenue and connect California’s electricity grid more closely to its neighboring states.
Newsom has already endorsed the package and has until Oct. 13 to sign the bills into law. The measures, some of which Newsom had backed as early as April as President Donald Trump issued threats against the state’s climate policies, came together only in the last days of California’s legislative session.
“After months of hard work with the Legislature, we have agreed to historic reforms that will save money on your electric bills, stabilize gas supply, and slash toxic air pollution — all while fast-tracking California’s transition to a clean, green job-creating economy,” Newsom said in a statement Wednesday after lawmakers unveiled the package.
Several of the measures drew bipartisan support, including bills to expand oil drilling, set up a regional electric grid and replenish the state’s wildfire fund for utilities — but not AB 1207, the bill to extend the state’s landmark climate program through 2045, which cleared its two-thirds vote threshold with only the state’s Democratic supermajority.
Cap and trade: Alongside AB 1207, lawmakers approved SB 840, to distribute the program’s billions of dollars in annual revenue among the state’s high-speed rail project and other air, water and fire programs meant to further drive down emissions.
The extension solidifies the thirteen-year-old program, under which polluters buy and trade a steadily declining number of permits meant to cover their greenhouse gas emissions, as the backbone of California’s climate strategy through mid-century.
Lawmakers’ votes fell along partisan lines — a change from the last time lawmakers extended the program in 2017, when a handful of moderate Republicans joined Democrats to clear the necessary two-thirds threshold for the bill.
Assemblymember Heath Flora, a Republican who voted for the cap-and-trade program in 2017 but withheld his vote on Saturday, lamented the elimination of funding for agricultural projects from the program.
“There’s a lot of things in there that I do like, some funding for labor jobs and keeping those folks employed,” he said in an interview. “But to the Central Valley, everything that allowed me to vote for the first time, all those got stripped down.”
Sen. Anna Caballero, a Democrat from Fresno who often represents a moderate Central Valley position, echoed those concerns but said she would work next year with other lawmakers to restore money for agriculture.
Electricity grid expansion: There was no such political divide on AB 825, a bill that would pave the way for a West-wide grid. The longtime proposal for a new Western energy trading market gained traction this year as a competitor regional market being launched out of Arkansas began drawing interest from California’s neighbors. Newsom intervened in July to rewrite the bill to make it more enticing for neighboring utilities to join in.
“Most of the stuff we’re doing today will make life less affordable to Californians, but this is one bill that will make life more affordable for Californians,” Sen. Tony Strickland, a Republican from Orange County, said in voting for the grid measure. The bill passed nearly unanimously, with two Assembly Republicans voting against it.
Electric bills and wildfires: Some Assembly Republicans also joined Democrats in getting behind a sprawling bill, SB 254, to replenish the state’s wildfire fund for utilities and make changes to how utilities finance transmission and wildfire prevention. Senate President Pro Tem Mike McGuire called it the “largest energy reform” in the state’s history.
“This bill in particular is a culmination of almost everything that we wanted to work on in regards to energy,” said Democratic Sen. Aisha Wahab, one of the bill’s co-authors. “There are pieces that some of us like and some of us don’t like, but this is a very large collaboration.”
The fund, which lawmakers created in response to Pacific Gas & Electric’s bankruptcy following 2018’s Camp Fire, was at risk of being drained from claims from the Eaton Fire that tore through Los Angeles County in January after sparking near Southern California Edison equipment. Newsom and lawmakers negotiated a ten-year, $18 billion replenishment, to be shared equally between utility customers and shareholders.
The bill also includes a suite of measures state lawmakers and Newsom are arguing will shave up to several dollars off monthly electrical bills. One would prevent investor-owned utilities from earning a rate of return on the first $6 billion they spend on wildfire prevention upgrades. Another would bolster requirements for investor-owned utilities to seek the most cost-effective ways to avoid sparking wildfires. And yet another would create low-interest state loans to cover the construction of new transmission lines.
Oil drilling: Democrats, joined by Republican lawmakers, largely supported a key piece of the package that would give state approval for a local Kern County ordinance — in the heart of California’s oil-rich Central Valley — that streamlines environmental permitting for new oil wells, an effort to boost crude oil extraction in a region that has seen sharp declines in recent years amid a series of lawsuits that have slowed new drilling.
But a handful of progressive Democrats voted against it, and others made it clear that their support for SB 237 came in spite of broad concerns that fossil fuels are driving climate change-linked natural disasters, and that the state does not have a plan for displaced workers and environmental cleanup when refineries eventually close.
“When we talk about affordability, I know that is going to be a constant reminder that I want to make,” said Assemblymember Al Muratsuchi, whose Southern California district is home to three of the state’s nine refineries. “But we need to make sure that the oil companies, and not taxpayers, are going to be paying for that cleanup when these refineries close down.”
The concept emerged in the wake of Valero’s announcement that it planned to close its Bay Area refinery by April of next year, setting off a panic that the loss of another facility could cause gas prices to soar. The California Energy Commission included boosting Kern County drilling among its June recommendations for stabilizing the industry, arguing that a failure to maintain minimum flows could threaten refineries calibrated for Central Valley crude, like PBF Energy’s facilities in the Bay Area and Los Angeles County.
Sen. Shannon Grove, a Republican from Bakersfield who’s long fought to boost crude extraction in her district, thanked Newsom for “being willing to listen.”
“We can help secure energy affordability for all Californians while enjoying the benefits of increased jobs and economic prosperity,” she said.
The bill would also increase oversight of the restart of idle oil pipelines along California’s coast, a direct effort to slow down Sable Offshore Corp., a Texas-based company that has moved to quickly start moving crude through a Santa Barbara County pipeline that ruptured in 2015. And it would direct state agencies to study options for switching California off of its unique, less-polluting gasoline blend.
Air pollution: The surprise addition to the package was a late-emerging proposal to strengthen a state law that requires air quality monitoring in communities disproportionately impacted by pollution.
The bill, SB 352, drew the ire of business groups like the California Chamber of Commerce, which called Sen. Eloise Reyes’ proposal an “end-run” around a separate agreement to clean up language in a state law passed last year that established a 300-foot buffer between warehouses and sensitive sites like homes and schools.
That opposition ultimately had little impact on Democratic lawmakers, who overwhelmingly backed the bill.