Office of Legislative Affairs - "The Friday Wrap-Up"

Amid a slow stream of new bill introductions, the state budget continues to be a major preoccupation for the administration and legislative leadership - in particular, the recent actions of the Trump administration.

On January 27, President Donald Trump’s Office of Management and Budget (OMB) issued a memo to the Heads of Executive Departments and Agencies, requiring agencies to identify and review all federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.

In response to the memo, Attorney General Rob Bonta, along with 22 other Democratic state attorneys general, filed a fresh lawsuit challenging the funding freeze and asking a court to block the action. A host of nonprofit organizations also filed suit prior to the state attorneys general, prompting a federal judge to put a temporary hold on the funding freeze minutes before it was scheduled to take effect. The judge called it a “brief administrative stay” to maintain the status quo through Friday while court challenges proceed.

Elected officials and staff are still grappling with the real and potential impacts of President Trump’s chaos-inducing executive order. On Wednesday, the White House issued a memo that appeared to rescind the funding freeze, with the White House Press Secretary later stating that the White House merely rescinded the memo, but not the funding freeze.

We will continue to follow and report on developments as well as impacts to the state and county.

Legislative Analyst’s Office Report on California’s High Electricity Rates

The Legislative Analysts Office (LAO) recently released a report on electricity rates in California. The report discusses the reasons why California has the second highest electricity rates in the country, behind Hawaii, with a trajectory to continue growing at a faster pace than rates in the rest of the country. The report points to significant and increasing wildfire‑related costs, the state’s ambitious greenhouse gas (GHG) reduction programs and policies, and differences in utility operational structures and services territories as the big drivers behind the high rates.

The report also highlights how electricity prices challenge the state’s ambitious greenhouse gas targets. High electricity prices tend to disincentivize consumers from buying electric cars and other appliances over models that rely on fossil fuels. The LAO warns that the legislature will likely confront difficult decisions about how to approach electricity rates in order to best support its varied goals, including balancing the desires to both mitigate and adapt to climate change as well as preserve affordability.

The Electricity Landscape
California’s electricity landscape is somewhat complex and includes both heavily regulated investor-owned utilities and publicly owned utilities. Roughly three‑quarters of statewide electricity is distributed in investor-owned utility service territories, which cover the bulk of the state’s land area, including PG&E and Southern California Edison which serves Orange County. About a quarter of the state’s population is served by publicly owned utilities like Los Angeles Department of Water and Power (LADWP) and the Sacramento Municipal Utility District (SMUD).

In areas with investor-owned utilities, community choice aggregators (CCAs) act as load serving entities and are responsible for the generation portion of the electricity provided to customers, while the investor-owned utilities continue to be responsible for the transmission and distribution parts of the system. Investor-owned utilities (IOU) also provide meter reading, billing, and maintenance services for CCA customers. CCAs have grown in recent years as more local communities have sought to expand consumer choices available to their residents; 25 now operate in various regions of the state. Currently, nearly 40% of the electricity consumed in IOU territories is purchased through CCAs. In Orange County, the Orange County Power Authority, launched in 2022, acts as a CCA.

Electricity that load serving entities sell to consumers is largely generated by power plants and renewable energy sites with some owned by the load serving entity themselves and others being operated by other private companies. Some generation also comes from smaller scale sources like rooftop solar.

Electricity Rate Setting
For investor-owned utilities, electricity rates are set by the California Public Utilities Commission (CPUC). Every four years, the CPUC authorizes a utility’s rates through what is known as a General Rate Case proceeding. The CPUC also conducts a variety of other types of proceedings, including the determination of the rate of return a utility is authorized to receive (known as a Cost of Capital proceeding) and how much it should be compensated for purchasing fuel and power (known as an Energy Resources Recovery Account proceeding).

Publicly owned utility and CCA electricity rates are set by local governing boards. For publicly owned utilities, the utility’s governing board, consisting of local elected officials, set the rates. Under a similar model, local governing boards typically oversee the rates that CCAs charge their customers for electricity generation and purchases.

The Federal Energy Regulatory Commission generally oversees the transmission portion of electricity rates, as transmission infrastructure can cross state lines.

Electricity Rate Structure
The structure of electricity rates for consumers vary between the type of electricity provider and several other factors. Fixed and variable costs may be charged as a flat fee or be rolled into rate based charges based on volume used. Lower income consumers may also qualify for reduced rate programs depending on their provider.

Consumers with solar panels who participate in net metering programs and joined prior to April 2023, do not typically pay a share of the utility’s fixed costs, and those costs are shifted to other electricity consumers. After April 2023, the state’s new net metering rules kicked in, which shift some fixed costs back to new rooftop solar customers. While rooftop solar customers benefit from the fixed investments in the grid, solar industry advocates argue that the now lower compensation rate for rooftop solar electricity generation makes installation of solar less financially attractive to consumers.

Comparing Electricity Rates
Average electricity rates in California are close to double the national average. Californians’ residential electricity rates vary widely across the state, depending on which utility provides their service. On average, California investor-owned utility electricity rates are more than 50% higher than rates charged by their publicly owned counterparts. In some cases, the differences in rates between individual utilities are quite stark, even within similar geographic areas. For example, PG&E’s residential electricity rates for a typical market rate customer are more than double SMUD’s rates—so customers in Sacramento pay notably less for a comparable level of service compared to their neighbors in nearby Davis. Similarly, in the southern part of the state, Southern California Edison’s residential electricity rates for a typical market rate customer are more than 70% higher than LADWP’s rates. Accordingly, customers in the portions of Culver City that are served by LADWP pay significantly less for electricity than those who live in the portions of the city served by Southern California Edison.

In general, average residential electricity rates in California have grown faster than inflation in recent years, rising by about 47% over the four‑year period from 2019 through 2023 compared to overall growth in prices of about 18%. This is particularly true for the state’s three large investor-owned utilities. Over the same four‑year period, PG&E, Southern California Edison, and San Diego Gas & Electric average rates have increased 48-67%.

Key Factors Driving Higher Rates
The LAO points to several key categories of factors that likely are driving these higher rates particularly for investor-owned utilities including: wildfire‑related costs, GHG reduction programs and policies, and differences in utility operational structures and services territories.

Electricity rates reflect the costs of implementing various state GHG reduction policies to encourage utilities to use cleaner sources of electricity. For example, one of the key programs aimed at shifting the state’s mix of energy sources is the Renewable Portfolio Standard (RPS), which requires utilities to provide a certain percentage of retail electricity sales from renewable generation. While the costs of generating electricity from renewable resources have declined in recent years, this transition still has added costs for ratepayers.

In addition to contributing to somewhat higher generation costs, renewable sources of electricity often require additional investments in other infrastructure for transmission and reliability, which can be costly. For example, utility‑scale renewable generation sites frequently are located in remote areas that require new or upgraded transmission lines to reach. Additionally, renewable sources of electricity often are more intermittent than fossil fuel‑powered sources, and sources such as solar often generate electricity at times when it is relatively plentiful. Accordingly, as the share of electricity generated from these sources has increased, the state has had to take steps—such as preserving the availability of natural gas‑powered plants to operate when needed and increasing investments in battery storage—to ensure that adequate electricity supplies are available to meet demand at all times. The amount that the costs of these activities have contributed to rates is uncertain.

California ratepayers not only pay for activities associated with shifting to more renewable sources of electricity, but also bear other costs related to supporting the state’s efforts to meet its GHG targets. The LAO estimates that in 2023, about 4% of average rates for the large investor-owned utilities was used for supporting climate‑related activities.

The LAO report explores other structural issues that may contribute to higher utility costs. Investor-owned utilities must generate a profit for shareholders and do not benefit from tax exempt borrowing that publicly owned utilities do. Service territories also differ, with companies like PG&E that serve a large distributed rural population and carry higher fixed costs as a result.

Impacts of High Energy Prices
High electricity rates, particularly volumetric charges, make it costlier for Californians to use electricity. This has the potential to encourage electricity conservation, such as by wasting less and potentially switching to more efficient appliances. This, in turn, has environmental benefits since electricity generation often results in environmental impacts, including the emission of GHGs.

However, very high electricity rates can lead to a decrease in beneficial electricity uses such as cooling for necessary health reasons and transition to electric cars and appliances.

Key Emerging Issues That May Affect Electricity Rates and Legislative Decisions

• Increasing stringency of GHG emission reduction requirements for the electricity grid
• Accommodating more electricity demand from electrification
• Growing demands for funding to pay for programs aimed at supporting state climate policies
• Continuing wildfire‑related costs
• Trade‑offs related to fixed charges for investor‑owned utility customers

High electricity rates in California continue to put a strain on consumers across the state, particularly those with low incomes or who live in hotter parts of the state. The LAO writes that the legislature will likely confront difficult decisions about how to approach electricity rates in order to best support its goals, including balancing the desire to both mitigate and adapt to climate change as well as preserve affordability.

Governor’s Press Releases

Below is a list of the governor’s press releases beginning January 22.

January 28: Governor Newsom announces appointments 1.28.25

• Deborah Hoffman, of Sacramento, has been appointed Chief Deputy Director at the Office of Tax Appeals
• Krista Dunzweiler, of Sacramento, has been appointed Chief Deputy General Counsel in the Office of Legal Affairs at the Department of Corrections and Rehabilitation
• Todd Gloria, of San Diego, has been appointed to the California Air Resources Board
• Roxanne Messina Captor, of Redondo Beach, has been reappointed to the California Arts Council

January 28: Governor Newsom meets with leaders of Kehillat Israel, Palisades synagogue that still stands after fire

January 28: TODAY: Governor Newsom, Magic Johnson, and Casey Wasserman to announce details of ‘LA Rises’ initiative

January 28: Governor Newsom announces LA Rises, a private-sector initiative led by Mark Walter, Earvin “Magic” Johnson and Casey Wasserman, to support swift and unified rebuilding of Los Angeles

January 27: Hear the experts give the real facts on California water

January 27: On Holocaust Remembrance Day, Governor Newsom’s Council on Holocaust and Genocide Education releases findings and recommendations

January 27: Governor Newsom cuts red tape, further suspends Coastal Commission rules to help LA firestorm survivors rebuild

January 25: Governor Newsom announces appointments 1.25.25

• Bret Ladine, of Sacramento, has been appointed Director of the Financial Information System for California (FI$Cal)
• Alicia Fowler, of Sacramento, has been appointed General Counsel at the California State Transportation Agency
• Basem Muallem, of Chino Hills, has been appointed Statewide Regional Director at the California High-Speed Rail Authority
• Christy Bouma, of Sacramento, has been appointed to the Fair Access to Insurance Requirements (F.A.I.R) Plan Governing Committee

January 24: Working together for fire survivors, Governor Newsom welcomes President Trump to Los Angeles

January 24: Here’s all the actions Governor Newsom has taken in response to the Los Angeles fires

January 24: Governor Newsom meets with frontline firefighters battling unprecedented Los Angeles firestorms

January 23: Governor Newsom signs $2.5 billion bipartisan relief package to help Los Angeles recover and rebuild faster from firestorm

January 23: TODAY: Alongside legislative and local leaders, Governor Newsom to sign $2.5 billion relief package for Los Angeles

January 23: Governor Newsom proclaims Ed Roberts Day 2025

January 23: California refuerza los Centros de Recuperación de Desastres para ayudar a los sobrevivientes de los incendios de Los Ángeles en línea y en persona

January 23: California bolsters Disaster Recovery Centers to help Los Angeles firestorm survivors online and in-person

January 23: Governor Newsom announces commitments from state banks and credit unions to provide mortgage relief for firestorm survivors

LEGISLATIVE BRANCH ACTIVITY

Congressional Republicans Continue to Plan For Reconciliation Package

The House was out of session this week as Republican lawmakers attended their annual retreat. The gathering focused on coalescing around the strategy to advance tax and budget legislation. Speaker Mike Johnson has expressed his hope that their plan will lead to the passage of the reconciliation package by Memorial Day.

Discussions were led by key committee chairs, including Homeland Security Chairman Mark Green, Judiciary Chairman Jim Jordan, and Energy and Commerce Chairman Brett Guthrie. Additional committees—such as Agriculture, Education and Workforce, Oversight, and Ways and Means—also participated. On Wednesday, several committees provided updates on their progress in the reconciliation process. Lawmakers aim to mark up a budget resolution next week, laying the groundwork for a reconciliation bill.

The budget resolution serves as the initial step in the reconciliation process, providing directives for committees to draft legislation. These instructions establish limits on how much committee proposals can contribute to the deficit, requiring lawmakers to determine broad spending and tax parameters before finalizing the budget resolution.

Under discussion for inclusion in the reconciliation bill are several provisions that could impact Orange County. These include proposed changes to Medicaid, the Supplemental Nutrition Assistance Program, and clean energy investments. Details of what will be included in the final package could come into better focus during the month of February.

Veterans Affairs Committee Holds Community Care Program Hearing

This week, the Senate Committee on Veterans' Affairs conducted a hearing focused on the Department of Veterans Affairs (VA) Community Care Program, which allows veterans to seek care outside the VA system under certain conditions. The session, titled "Protecting Veteran Choice: Examining VA’s Community Care Program", explored the program's effectiveness, challenges, and proposed improvements.

In the hearing, lawmakers stressed the importance of preserving veterans' ability to choose timely, high-quality care while addressing concerns over delays in authorizations and scheduling. Witnesses discussed declining provider participation due to delayed reimbursements and administrative hurdles, calling for streamlined billing processes and faster payments. Rising program costs and the need for better oversight were also central themes, with discussions focusing on ensuring accountability without compromising care quality.

Testimonies revealed gaps in care coordination between VA facilities and community providers, prompting recommendations for improved electronic health record integration. While veterans shared mixed experiences—with some highlighting the program’s value and others pointing to frustrating inefficiencies—the committee emphasized bipartisan collaboration to enhance the program's effectiveness while safeguarding its mission.

EXECUTIVE BRANCH ACTIVITY

Office of Management and Budget Reverses Course on Funding Freeze

On January 27, the acting director of the Trump Administration’s Office of Management and Budget (OMB) issued the now defunct memo directing agencies to halt all federal financial assistance. The memo directed agencies to “temporarily pause all activities related to obligation or disbursement of all federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” Additionally, a spreadsheet was circulated that reveals the broad scope of President Trump’s scrutiny of federal spending. It provided a list of programs that could at least temporarily be affected by a funding pause, though many of the programs appear to be unrelated to President Trump’s focus on cultural issues.

As a result, many states reported issues accessing funds under the Medicaid low-income health insurance program. Preschool centers struggled to obtain reimbursements under the federal program known as Head Start, putting some childcare services at risk. However, the directive likely does not comply with the Budget and Impoundment Control Act of 1974, which sets the parameters under which the President can rescind or delay money that’s been approved by Congress. The Trump Administration argues that this law is unconstitutional.

The memo earned quick criticism on Capitol Hill and consternation across Washington, with officials saying the sweeping guidance could imperil critical programs. The Trump Administration stated that the funding pause would not affect Social Security or Medicare, or other instances of assistance provided directly to individuals. Ultimately, a federal judge in Washington temporarily blocked the funding pause as several nonprofits filed lawsuits over the action. Facing significant backlash, OMB issued another memo rescinding the original freeze on federal funds.

Trump Administration Fires 17 Inspectors General

President Trump fired 17 inspectors general in federal agencies including the Pentagon, departments of State, Veterans Affairs and Interior. An inspector general leads independent investigations, audits or inspections when waste, fraud and/or abuse are suspected in the agencies they serve. For perspective, President Trump fired five inspectors general during his first term; President Biden fired the inspector general of the U.S. Railroad Retirement Board, after an investigation found he created a hostile work environment.

Senate Continues Cabinet Confirmation Hearings

This week, the Senate conducted confirmation hearings for President Trump's cabinet nominees. On Wednesday, January 29, Robert F. Kennedy Jr., nominated for Secretary of Health and Human Services, appeared before the Senate Finance Committee. His nomination is contentious due to his well-known anti-vaccine stance and recent public criticism from his cousin, Caroline Kennedy, who questioned his qualifications.

Additionally, the Senate Judiciary Committee confirmed Pam Bondi's nomination for Attorney General on January 29, following a postponement earlier this month. These proceedings are pivotal as the Senate continues to evaluate the qualifications and positions of key figures proposed for the administration.

LEGISLATION INTRODUCED BY ORANGE COUNTY DELEGATION SINCE JANUARY 23

Friday 01/31

California’s monarch butterfly population plummets; fire wipes out Topanga habitat -- The Western population of the monarch butterfly has declined to a near-record low with fewer than 10,000 found living in California this winter, a foreboding sign for the future of the beloved black-and-orange insect. Clara Harter in the Los Angeles Times$ -- 1/31/25

As LA fires burn, SoCal Edison allowed to raise rates for 2017 blaze -- State utility regulators on Thursday approved a settlement that will require Southern California Edison customers to foot about $1.7 billion in claims from the 2017 Thomas Fire and the resulting 2018 Montecito Debris Flows. Malena Carollo CalMatters Melody Petersen in the Los Angeles Times$ -- 1/31/25


Thursday 01/30

State senator retains key role over fire insurance laws despite cannabis corruption probe -- State Sen. Susan Rubio, a Democrat from Baldwin Park, was reappointed last week as chair of the committee that oversees insurance-related legislation, a powerful position that went unoccupied for weeks while swaths of Los Angeles burned. Anabel Sosa in the Los Angeles Times$ -- 1/30/25

CSU, reeling from budget cuts to classes and faculty, decry more proposed state reductions -- Leaders of California State University voiced alarm Wednesday that proposed state funding cuts would be “catastrophic” and cripple the nation’s largest four-year public higher education system’s ability to serve as a powerful engine of progress for low-income and underserved students. Teresa Watanabe in the Los Angeles Times$ -- 1/30/25


Wednesday 01/29

California still lags behind pre-pandemic reading and math scores on national assessment -- A slight increase in fourth grade math was accompanied by lower scores on the fourth and eighth grade NAEP test. John Fensterwald EdSource -- 1/29/25

Massive Salton Sea lithium project gets judge’s go-ahead, ending advocates’ lawsuit -- Social and environmental groups sued last year saying the $1.8 billion Hell’s Kitchen project could cause water and air problems not disclosed in its environmental impact report. A judge disagreed. Deborah Brennan CalMatters -- 1/29/25

This would be ‘devastating’: California sues to stop Trump’s chaos-inducing funding freeze -- Scrambling to respond to the Trump administration’s late Monday night directive to pause a wide, but as-yet-unspecified, swath of federal spending programs, California’s Democratic elected officials and agency heads offered two consistent responses today: We don’t know what this means yet and; It’s almost definitely illegal. Ben Christopher CalMatters -- 1/29/25


Tuesday 01/28

OC sheriff says immigration law a federal, not local, law enforcement responsibility -- Sheriff Don Barnes made clear his department's immigration enforcement policy will not change, but expressed frustration at limits under state law. Sean Emery in the Orange County Register -- 1/28/25

‘This is bad news’: Rare bird flu strain detected at California farm -- The World Organization for Animal Health reported the outbreak on Monday, also noting that the more common H5N1 strain was present at the same farm. In response, nearly 119,000 birds were culled to prevent the virus from spreading. Aidin Vaziri in the San Francisco Chronicle$ -- 1/28/25


Monday 01/27
California bill would let insurers, policyholders sue Big Oil for climate disasters -- State Sen. Scott Wiener has introduced a bill that would create a pathway for Californians affected by fires, floods and other climate disasters to sue fossil fuel companies for damages. The bill would also let insurers do the same to recover costs. Christian Leonard in the San Francisco Chronicle$ -- 1/27/25


Weekend (01/26-01/25)

‘Horrifying’ fire at California lithium battery plant sparks calls for new clean energy rules -- When a massive fire erupted at one of the world’s largest lithium-ion battery storage facilities in Monterey County, it didn’t just send plumes of smoke over nearby communities — it cast a pall over the future of California’s clean energy industry. Clara Harter in the Los Angeles Times$ -- 1/26/25

The way pet insurance works in California just changed. Here’s what to know -- Senate Bill 1217, which went into effect Jan. 1, requires pet insurers to be more transparent about coverage and costs. It also requires that so-called “pet wellness programs” be clearly distinguished from pet insurance. Jessica Roy in the San Francisco Chronicle$ -- 1/26/25

With an executive order, Trump casts doubt on the future of EVs in California -- With the stroke of a pen, the President froze funding allocated for charging infrastructure and abandoned Biden’s ambitious goal that EVs make up half of new cars sold in the U.S. by 2030. Caroline Petrow-Cohen in the Los Angeles Times$ -- 1/25/25