Build Back Better” Blocked by State’s New Building Standards Freeze

The climate of climate policy has been bleak in California, says Bill Magavern, policy director for the Coalition for Clean Air. But there are still major changes moving through the legislature that could offer hope, says Sherry Lear, with 350 Southland Legislative Alliance, a regional group affiliated with 350.org.

“This continues to be a very challenging year for air/climate advocacy,” Magavern said. “The Trump Administration is attacking California’s protections, the state budget is in deficit, and most California elected officials seem to be in retreat mode when it comes to public health.”

Yet, “This is a very intensive climate legislative session,” Lear told Random Lengths. “There are a lot of bills related to climate issues,” including tangentially, “a lot off bills regarding homeowners insurance because of the fires,” But her group has focused a lot on bill related to the utility system, including the first legislation they’ve ever sponsored, which would move the state to a performance-based system that could both encourage renewable energy and save ratepayers money.

Regulatory standards are “the foundation of California’s efforts to clean up the air,” complemented with “incentive funds to advance the technology and turn over fleets more quickly,” Magavern said. And both are under attack.

California’s standards for cleaner cars, trucks, and heavy-duty vehicles are provided for via waivers in the Clean Air Act, and on April 22, Republicans ignored the Senate Parliamentarian to repeal the clean car waiver, leading Governor Gavin Newsom to immediately announce that California would sue to block the repeal. Meanwhile, House Republicans passed Trump’s murder budget, which includes repealing hundreds of billions of dollars in incentive funds provided in the Inflation Reduction Act.

Without these regulations and funds, California will violate the Clean Air Act for failing to meet air quality standards. Which could be the point, “You couldn’t put it past the Trump administration to want to make it impossible for California to attain the standards, and then on the other hand, penalize the state for not attaining those standards,” Magavern said. In fact, “During Trump one they were already making noises about that.”

At the same time, California’s budget deficit means cutbacks in state incentive funding.

“When it comes to heavy-duty transportation, state incentives have been greater than any money we got from the federal government.” When the state budget was in surplus, there was substantial funding, but “now that has been trimmed, way, way back,” along with “funding for the charging and fueling infrastructure.”

There’s also a broader retreat mode that Magavern mentioned. “I would point to the effort to reauthorize cap and trade without any reforms, which is the governor’s position, which is driven by his fear of anything that could be criticized as raising costs, particularly gas prices,” he said. Adding, “ I would point to the failure of some of the more far-reaching climate legislation that was introduced in the legislature this year.” A prime example would be SB 222, which would have empowered California residents and insurers to hold fossil fuel corporations financially liable for their contribution to climate disasters. It died in the Senate Judiciary Committee.

And there are problematic bills, such as SB 34 by San Pedro Sen. Laura Richardson, “to try to restrict the South Coast air districts’ ability to do an indirect first review rules for the ports, which is something is been needed for a long time,” Magavern said.

But despite the fate of SB 222, another far-reaching bill is still alive, if uncertain at press time.

The Polluters Pay Climate Superfund Act (SB 684 in the Senate and AB 1243 in the Assembly) would “Require fossil fuel polluters to pay their fair share of the damage caused by greenhouse gases,” specifically companies responsible for at least a billion metric tons globally between 1990 and 2024. Funds would go to help pay for climate disasters like the L.A. Wildfires, as well as to finance projects such as installing solar panels in low-income communities. Similar funds have already been established in New York and Vermont.

It’s “an important bill with a huge coalition behind it,” Lear said, with “petitions, meetings with legislators, rallies, even showing up outside legislators’ offices.” It’s facing “stiff opposition” from industry, “as one would expect,” she said, and supporters “are still rallying to get enough votes to get it out of committee.” While “normally there would be more concern,” she said, “the time guidelines to get a bill out of the first house don’t apply to an urgency bill.”

But it also requires a two-thirds majority, “Two-thirds is a very steep hill to climb,” Magavern said. But it could always be converted into a two-year bill. “We often see that the most ambitious bills do not make it through in the first year of a legislative session and do become two-year bills,” he said. “If you look at AB 32, SB 32. A lot of the major climate bills have been the case with them.”

There are a number of important utility-related bills, including ones influenced by the wildfires.

SB 500, introduced by Sen. Henry Stern, the first bill ever sponsored by 350 Southland, is particularly far-reaching in scope. It would begin restructuring how investor-owned utilities work in California, initiating the process of moving them from a cost-plus “cost of service model” to a performance-based model. The existing model, which has produced significant rate increases, and “encourages the utilities to build giant projects without any oversight on costs, without any assurance that these are the most effective ways to get electricity or power to the customers,” Lear explained.

The model made sense when California first wanted to build out its utility system to create the infrastructure that we now have in place. SB 500’s performance-based regulation would modernize things “by creating some more transparent benchmarks” using metrics serving the goal we have today. “You could have affordability and cost control, you could have reliability, you could have resilience. You could know how much green energy you are producing,” she said.

Under this system, Lear explained, “The utilities have to say, ‘Here’s our plan and this is how we’re going to meet it, and if they meet it, there’s a reward. If they don’t meet it, they’re actually penalized,” which is something new. “There’s no penalty system right now.” While California is often cited as a policy leader, 17 other states already have some sort of performance-based regulation, “most notably, Illinois has had it since 2011. It’s been very successful,” she said. Hawaii’s more recent adoption in 2021 resulted in “$25 million in cost reductions, and electricity rates for four of the islands decreased from 2023 to 2024,” she reported, adding, “We’re not seeing decreases here.”

Another utility reform bill they’re supporting is SB 332, “Which is by Sen. [Aisha] Wahab, the Investor-Owned Utilities Accountability Act, that is a direct response to the wildfires,” Lear said. “It’s asking to make investor-owned utilities or IOUs more responsible and accountable to consumers, not only in the rates that they are charging, but in the way that they manage their systems and how safe they are.”

A mid-April press release from the Center for Biological Diversity provided more detail:

The bill would: cap rate increases; prevent utility disconnections for vulnerable ratepayers; reduce ratepayer contributions to the Wildfire Fund and increase corporate utilities’ responsibility for the fund; require audits and replacement of dangerous equipment in high fire-risk areas; require proposed executive compensation to be contingent on safety metrics; and fund a feasibility study to determine what form of utility best serves ratepayers.

“People are really angry with investor-owned utilities,” Lear said. This is one bill is one reflection of that, translated into concrete policy changes..

Two other utility-related bills that 350 Southland supports would add new features to the existing policy landscape. AB 740 would add virtual power plants (VPPs) as an official part of California’s energy portfolio. Explaining the concept, Lear said, “You can look at on-site batteries, or rooftop solar, or distributed energy storage as themselves a power plant. If the power goes out, resources are available to keep the power running.” For example, with bidirectional charging, “the power from the battery in your car can then run your house.” It’s “a different way of looking at creating energy sources,” she said. “You want to encourage distributed energy resources, you want to encourage rooftop solar, you want to encourage energy battery storage, as opposed to encouraging just building more and more iwire transmission from other states, which in and of themselves have proven to be a cause of fires.”

Second is AB39, the Local Electrification Planning Act, from Assemblymember Rick Zbur. “This bill requires cities and counties to include in their general plan EV chargers and building electrification opportunities,” Lear said. “One of the biggest pushes by environmentalists is to get off of natural gas and to move towards electrification because electrification, you at least have a chance that it will be powered by renewable energy such as geothermal, wind or solar.”

Another questionable utilities bill is SB 540, “called the pathways bill, which is essentially a grid regionalization bill… it will put California’s energy into at Western State energy market,” Lear said. It’s being introduced by Senate leadership and has strong support, but there’s also strong environmental opposition. “Seven of our 350 groups in the state of California are strongly opposed,” Lear said, “especially under the Trump administration, because instead of having California having an independence over its energy market, it would fall under for under the Trump” administration, which is “trying to decimate clean energy and and prop up the coal industry.” While Lear thinks that supporters are well-meaning, they’re not being realistic to surrender state power at this time.

But another utilities bill Lear describes as “really horrible” is AB 942. It would break long-standing contracts with rooftop solar customers who bought systems under state-mandated agreements guaranteeing fair terms for 20 years. Contracts would be invalidated if houses were sold. “California is effectively taking away equity from the state’s lowest-income homeowners – the very people who didn’t have cash to buy their solar system outright but rather entered into a long-term financial arrangement under terms set by the state,” a coalition of more than 90 groups wrote in a letter of opposition.

“Utility companies want to charge you for energy; they don’t want to reward you for giving them energy into the grid,” Lear said. “They will take your energy, but then they will also charge you a minimum, and that is discouraging people from doing rooftop solar, even though we now have mandates for rooftop solar. So there are very inconsistent things happening.”

Underscoring just how inconsistent, a recent study found that California’s two million rooftop solar customers saved all ratepayers $1.5 billion in 2024 alone by reducing the need for costly utility infrastructure upgrades.

Another bill opposed by many, if not all, environmental groups is AB 306, which will freeze state building standards at the 2025 level until 2031. This is hardly the time to freeze the development of better standards “to make buildings safer, to encourage more resilient buildings.” It’s a defensive, counter-productive response to the wildfires. “This is the time to make sure that when you’re building things back your building them correctly by your building them with the correct type of materials that are more fire resistant” as well as energy-efficient, “so that you’re not putting such a heavy strain on the grid, and other things that lead to the problems that were having,” Lear said. “So it’s not just build back, it’s build back better.”

“We are seeing more bills this year to roll back the standards that are protecting our air and climate or to just make it harder to adopt such standards in the future,” Magavern summed up. And there’s “a lot of skittishness among the state politicians” being driven by concerns about affordability.

“We absolutely agree. Affordability is important,” he said. But “What a lot of these officials are missing is how to actually deliver affordability,” meaning “cars that don’t run on gasoline…homes that are properly weatherized or decarbonized… particularly for low and moderate income Californians. That’s who we think should be getting the incentive money…. That’s what our officials should be focused on. Instead, they’re using affordability as a club to defeat efforts to hold the big polluters accountable. Protecting the profits of the oil companies does not help the average consumer.”

This ties directly back to SB 500, 350 Southland’s bill to shift to performance-based utility regulation. If a similar shift could cut costs in Hawaii by $25 million in one year, imagine what it could do here in California.