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Gov. Gavin Newsom signed two California bills intended to expand virtual power plants, which coordinate customer batteries, electric vehicles and other devices to support the grid during peak demand. The laws also seek to limit some utility costs, but their effects on customer bills will depend on implementation by state regulators.
California Gov. Gavin Newsom signed two bills on Wednesday aimed at expanding virtual power plants, which coordinate customer-owned batteries, electric vehicles and other devices to help the grid during periods of high demand. The measures are part of a broader affordability package intended to contain utility spending, though whether they will lower customers’ bills depends in part on how state regulators put them into effect.
The legislation targets two kinds of costs associated with meeting electricity demand during peak hours. SB 913 addresses the expense of keeping older gas-fired power plants available for occasional high-demand periods. SB 905 focuses on utility grid investments built to serve those peaks, capacity that can go underused at other times. Both bills also address utility returns on investments in wildfire prevention and mitigation and direct utilities to use more borrowing to finance grid projects.
Virtual power plants combine controllable customer devices, including rooftop-solar batteries, EV chargers and smart thermostats, and can reduce or shift electricity use when the grid is strained. Supporters say coordinating these resources could reduce the need for some peak-hour generation and grid capacity. The bills establish a policy direction; they do not by themselves confirm that utilities will avoid particular projects or that households will see lower rates.
Newsom also signed other energy-affordability legislation but vetoed a bill that would have required state agencies to revamp California’s community solar-battery market. The report said he had vetoed three virtual power plant bills the previous year and that his administration had sought successive funding cuts to the state’s main program, raising questions about its ability to continue operating next year.
How Virtual Plants Could Affect Rates
California electricity bills have become a major affordability issue. The source report says average residential rates at the state’s three major investor-owned utilities rose to roughly twice the U.S. average over the past decade, while the utilities reported record profits. The new laws address the system costs behind some peak-demand needs, rather than directly setting a lower rate for customers.
If coordinated devices can reliably reduce demand or supply stored electricity during the busiest hours, utilities may have less need to build or maintain infrastructure used mainly at those times. That could help contain costs passed on to ratepayers. But the outcome is not automatic: regulatory implementation, program funding and customer participation will shape whether virtual power plants deliver grid services at a lower cost.
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A Shift After Earlier Vetoes
The legislation marks a change from Newsom’s recent record on virtual power plants. He rejected three such bills last year, while state funding for California’s leading virtual power plant program has faced reductions. The latest approvals drew attention from clean-energy and ratepayer advocates partly because previous action by the governor had been less supportive.
The bills also sit within a wider package addressing utility finances and electricity costs. The source report notes that California’s utilities have opposed measures limiting capital spending on which they earn regulated returns. Separately, Newsom signed Assembly Bill 192 the previous month, providing $325 million for a transmission accelerator created under an earlier law. The community solar-battery bill he vetoed shows that the legislative outcome was not a blanket endorsement of every clean-energy proposal.
““I’d say we saw today a lot of evidence that Gov. Newsom has really prioritized affordability and accountability to an increased extent.””
— Mark Toney, executive director of The Utility Reform Network
Costs Depend on Implementation
The source material does not specify when the CPUC will establish implementation rules, how utilities will measure or procure virtual power plant services, or how much the measures could save. It also does not identify the funding plan needed to keep the state’s main virtual power plant program operating next year. No customer bill reduction has yet been established by the information provided.
It remains unclear how quickly utilities can enroll enough customers and devices to deliver dependable reductions during peak periods, or whether those resources will replace particular power plants or grid projects. The governor’s veto of the community solar-battery bill also leaves that market’s proposed state-led overhaul unresolved.
Regulators Face the Next Test
The California Public Utilities Commission will play a central role in putting the new laws into practice. The next governor will oversee the commission’s work, and the timing and details of regulatory proceedings were not specified in the source report. Those decisions will show how utilities can use customer devices and how the approach is evaluated against conventional grid spending.
Lawmakers and the next administration will also face a decision about funding the state’s existing virtual power plant program before it may be unable to continue operating next year. The immediate test is whether the state can turn the new authority into a functioning program with clear costs and benefits. Until that process unfolds, the bills represent a policy change, not a confirmed reduction in electricity rates.
Key Questions
What did Newsom approve?
He signed SB 913 and SB 905, two bills supporting virtual power plants and addressing utility costs tied to peak electricity demand and grid investments.
What is a virtual power plant?
It is a coordinated group of customer devices—such as batteries, electric vehicles, chargers and smart thermostats—that can shift or reduce electricity use or provide stored power to support the grid.
Will the bills lower electricity bills?
That is not yet known. Supporters say virtual power plants could reduce some peak-related costs, but the laws do not guarantee savings; the California Public Utilities Commission’s implementation will matter.
Did Newsom approve every clean-energy bill?
No. He vetoed a measure that would have directed state agencies to revamp the community solar-battery market.
What happens to California’s existing virtual power plant program?
The source report says successive funding cuts could leave the state’s leading program unable to operate next year unless the Legislature and the next governor agree on a funding plan.
Source: rss
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