AB 1302 mandates that the California Energy Commission (CEC) study and design a new system to allow residential and commercial customers to generate electricity on-site while specifying objectives for fairness, transparency in departing load charges, renewable integration, and stakeholder input. The bill stops short of imposing new tariff rules; it requires a report to the Legislature describing the proposed process and any legislative recommendations by December 31, 2027, and sunsets the authority in 2031.
For utilities, customer-generators, distributed energy developers, and regulators, the bill signals a structured review of how customer-owned generation is treated in cost-allocation and departure scenarios. The design task could reshape economic incentives for rooftop solar, storage, and behind-the-meter resources by changing how departing load charges are calculated and explained to customers.
At a Glance
What It Does
The bill directs the California Energy Commission to study and design a new system enabling customers to generate electricity on their residential or commercial sites, with specific design objectives including fairness and transparency in departing load charges, promotion of renewables, and stakeholder engagement. The CEC must deliver a detailed report and any legislative recommendations to the Legislature by December 31, 2027.
Who It Affects
Electrical corporations, community choice aggregators (CCAs), local publicly owned electric utilities (POUs), electrical cooperatives, customer-generators (residential and commercial), distributed energy providers, and state regulators will be directly affected by the study and any subsequent policy changes. Consumer advocacy groups and other stakeholders are explicitly included in the input process.
Why It Matters
Departing load charges and their calculation determine the economics of customer-sited generation and can shift costs between ratepayers; a redesigned process could change incentives for solar, storage, and grid investment. The CEC’s recommendations could prompt statutory changes to cost allocation, transparency requirements, or utility obligations.
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What This Bill Actually Does
AB 1302 creates a time-limited directive for the California Energy Commission to research and develop a new approach for customers who generate electricity at their homes or businesses. The bill frames the task as a design exercise rather than an immediate regulatory rewrite: the CEC must study how to allow on-site generation while attending to fairness among customers, clearer explaining and application of departing load charges, and alignment with statewide clean-energy goals.
The bill lists discrete objectives the CEC must address in the design: treating customers fairly, increasing transparency in calculation and application of departing load charges so customers can understand them, promoting renewable energy integration, and assessing benefits that customer-generated energy brings to utilities (for example, avoided generation, transmission, or procurement costs). It requires the commission to build a mechanism for stakeholder input that includes utilities and consumer advocates, ensuring the process is informed by competing perspectives.Rather than issuing immediate mandates, the CEC must compile its proposed design and any legislative recommendations into a report due to the Legislature by December 31, 2027.
The statute requires the report to comply with specified Government Code procedures and expressly sunsets the section on December 31, 2031. AB 1302 also makes a non-substantive edit to Public Utilities Code Section 451, but the bill’s substantive work is the study, design, and reporting requirement.
The Five Things You Need to Know
The bill requires the California Energy Commission to study and design a new system that allows customers to generate electricity on-site at residential and commercial locations.
The CEC’s design must increase transparency in the calculation and application of departing load charges so customers can more easily understand how those charges are determined.
The commission must explicitly consider benefits of customer-generated energy, including avoided costs of new generation, transmission, and electricity purchases for electrical utilities.
The bill mandates a stakeholder input mechanism that includes electrical utilities, consumer advocacy groups, and other interested parties during the design process.
The CEC must submit a report with the proposed process and any legislative recommendations to the Legislature by December 31, 2027; the new statutory directive is repealed on December 31, 2031.
Section-by-Section Breakdown
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Definitions—who counts as customers and utilities
This subsection defines key terms to set the scope: 'electrical customer' covers any customer of an electrical utility; 'electrical utility' explicitly includes electrical corporations (investor-owned utilities), community choice aggregators, local publicly owned electric utilities, and electrical cooperatives. That choice ensures the CEC’s study considers the full range of California distribution-sector structures rather than focusing solely on investor-owned utilities.
Fairness and transparency requirements for departing load charges
These clauses require the CEC to bake fairness into the new system and to improve transparency around departing load charges. Practically, the commission must identify what 'fair treatment' means in the context of customers that continue to rely on the grid versus those that self-generate, and must propose clearer methods and disclosures for calculating and applying departing load charges so customers can understand the components driving those charges.
Renewable integration and recognition of customer-generated benefits
The CEC must design the system to promote renewable energy integration and support California’s clean-energy goals while explicitly accounting for benefits that customer-sited generation provides to utilities—such as avoided investments or procurement costs. The commission will need to identify how to quantify those avoided costs and how to reflect them in any recommended treatment of departing load or cost allocation.
Stakeholder engagement and reporting obligation
The statute requires a mechanism for stakeholder input, naming utilities and consumer advocates but allowing inclusion of other parties, and directs the CEC to file a report to the Legislature by December 31, 2027. That report must set out the proposed new process and any legislative recommendations—meaning the CEC’s work is designed to feed policy choices at the statutory level rather than to create immediate tariff changes.
Administrative compliance, sunset, and minor PUC edit
The bill requires the CEC’s report to comply with Government Code Section 9795 and expressly repeals the added Public Resources Code section on December 31, 2031, limiting the directive to a multi-year study window. The bill also amends Public Utilities Code Section 451 in a nonsubstantive way—the operative obligation that utility charges be just and reasonable remains intact—so the substantive change in practice is limited to the CEC study and report.
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Explore Energy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Customer-generators (residential and commercial): Improved transparency and a redesigned departing-load framework could reduce uncertainty about future charges and improve project economics if the CEC’s design recognizes customer-generated avoided costs.
- Distributed energy developers and storage providers: Clearer rules and better-defined cost allocation can make it easier to price and market behind-the-meter systems, accelerating deployment where economics improve.
- Policymakers and regulators: The CEC’s study provides a structured, evidence-based package of options and legislative recommendations—which reduces the need for ad hoc fixes and supplies a technical foundation for future statutory change.
- Consumer advocates and ratepayer groups: Required transparency increases their ability to evaluate whether departing load charges are justified, helping them more effectively represent residential and small commercial customers.
Who Bears the Cost
- Electrical utilities (investor-owned utilities, CCAs, POUs, cooperatives): Utilities will face administrative and analytical costs to support the CEC’s study, potentially implement new billing systems or cost-recovery mechanisms, and may see revenue impacts if the new design reallocates fixed cost recovery.
- California Energy Commission: The CEC must absorb the research, modeling, stakeholder processes, and reporting workload within the specified timeframe—an unfunded work program unless budgeted separately.
- Remaining ratepayers: If the CEC’s design reduces departing load charges or credits on-site generation for avoided costs, the transition could shift some fixed costs onto non-participating customers unless the design includes offsetting measures.
- Distributed resource competitors and suppliers: Changes to cost-allocation or compensation could require product redesign, new revenue models, or re-pricing of services provided to customers.
Key Issues
The Core Tension
The central dilemma is balancing encouragement of customer-sited clean energy—by making self-generation economically viable and transparent—against protecting remaining ratepayers and maintaining stable utility revenue for grid services; any design that lowers costs for customer-generators risks shifting fixed costs, while strict protections for ratepayers can blunt the incentives for distributed renewables.
The bill tasks the CEC with a consequential design exercise but leaves critical choices unanswered. It requires increased transparency and consideration of avoided costs without prescribing methodology, timing, or metrics.
That means the study must confront how to value avoided generation, transmission, and procurement costs—an analytically complex task that depends on forecasting, allocation rules, and contested inputs. The statute imposes no immediate changes to tariffs or billing; it delivers a policy package for lawmakers and regulators to act on, which creates uncertainty about what, if any, regulatory outcomes will follow.
Jurisdictional complexity is another implementation challenge. The definition of 'electrical utility' includes CCAs and POUs, but many of those entities have independent ratemaking and procurement authorities distinct from the California Public Utilities Commission.
Designing a one-size-fits-all process that respects differing regulatory regimes, contractual arrangements, and local governance will be difficult. Finally, the sunset (repeal) date limits the statutory authority to a bounded study window; that creates pressure to produce actionable recommendations quickly but leaves open whether any long-term statutory framework will result.
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