AMENDED IN ASSEMBLY JUNE 29, 2026
AMENDED IN SENATE APRIL 28, 2026
AMENDED IN SENATE APRIL 9, 2026
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
96
Introduced by Senator Stern
(Coauthor: Senator Becker)
February 20, 2026
An act to add Section 469.5 to the Public Utilities Code, relating to electricity.
Vote: majority Appropriation: no Fiscal committee: yes Local program: yes
LEGISLATIVE COUNSEL’S DIGEST
Existing law requires the Public Utilities Commission to determine appropriate targets, if any, for each load-serving entity, as defined, to procure viable and cost-effective energy storage systems to be achieved by December 31, 2020. Existing law requires the commission to direct the state’s 3 largest electrical corporations to file applications for programs and investments to accelerate widespread deployment of distributed energy storage systems.
This bill would require an electrical corporation, for any proposed distribution or transmission infrastructure investment above a threshold established by the commission, as part of the distribution planning process,
to evaluate whether distributed energy storage systems or other nonwire alternatives can meet the identified reliability or capacity need, as provided. The bill would require an electrical corporation, if it determines that a nonwire third-party alternative may be feasible, to conduct a competitive solicitation or other transparent process to evaluate third-party solutions. The bill would prohibit the commission from approving rate recovery for a proposed infrastructure investment unless the electrical corporation demonstrates either that nonwire alternatives are not feasible within the required timeframe or that nonwire alternatives are not cost effective, as provided. The bill would authorize an electrical corporation to procure, own, or enter into a long-term contract for distributed energy storage systems
interconnected at the distribution level to meet identified reliability or capacity needs, and would require the commission to authorize an electrical corporation to recover the reasonable costs of, and earn a return on, those distributed energy storage systems, as provided.
Under existing law, a violation of the Public Utilities Act or of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill would be part of the act, and a violation of a commission action implementing the bill’s requirements would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the following:
(a) Energy storage system deployment can provide grid capacity and grid services, and help meet resource adequacy requirements of the California electricity grid.
(b) Front-of-the-meter battery deployment within the service territory of the Independent System Operator is rapidly expanding, with batteries comprising roughly 46 percent of total capacity in the interconnection queue as of mid-2025.
(c) From 2018 through mid-2025, battery storage capacity in California increased from 500 megawatts to more than 16,900 megawatts, with state projections envisioning 52,000 megawatts of battery storage needed by 2045.
(d) Energy storage is increasingly an affordable and attractive resource option for load-serving entities and regulators to consider, in part due to its declining costs, its modularity, and its fast average development timelines.
(e) Distributed energy storage systems of not more than 10 megawatts in capacity are well suited to meet near-term priority grid zones and high-risk grid soft spots, including constrained distribution areas and local capacity areas, areas that have been deemed higher risk for failure, have higher documented history of deenergization event occurrence, or are overly constrained with documented need for a reduction in aggregate demand serving the substation or feeder, and that can help defer traditional grid upgrade investments in the near term.
(f) The inclusion of energy storage, including distributed energy storage systems, in integrated resource planning, distribution resource planning, and rate design can help incentivize load-serving entity and third-party ownership and procurement of these systems while lowering Californian’s energy costs and enabling improved grid resiliency and grid services.
(g) The Public Utilities Commission and the State Energy Resources Conservation and Development Commission can leverage lessons learned from previous distributed energy resource deployment programs, including, but not limited to, the locational net benefit analysis methodology and subsequent distribution planning frameworks, to inform future distributed energy resource plans and to aid in effective systemwide rollout to address constrained distribution areas.
SEC. 2.SECTION 1.
Section 469.5 is added to the Public Utilities Code, to read:
469.5.
(a) For any proposed distribution or transmission infrastructure investment above a threshold established by the commission, As part of the distribution planning process, an electrical corporation shall evaluate evaluate, pursuant to the comparison required by subdivision (b), whether distributed energy storage systems or other nonwire alternatives
can meet the identified reliability or capacity need.
(b) The evaluation required pursuant to subdivision (a) shall include a comparison of total system costs, including each of the following:
(1) The cost of the proposed infrastructure investment.
(2) The cost of procuring or deploying distributed energy storage systems or other nonwire alternatives. systems.
(3) Avoided or deferred infrastructure costs.
(4) Reliability and operational benefits.
(1) Nonwire alternatives are not feasible within the required timeframe.
(2) Nonwire alternatives are not cost effective based on the evaluation required pursuant to subdivision (b).
(d) An electrical corporation may procure, own, or enter into a long-term contract for distributed energy storage systems interconnected at the distribution level to meet identified reliability or capacity needs.
(e) The commission shall authorize an electrical corporation to recover the reasonable costs of, and earn a return on, distributed energy storage systems and contracts procured pursuant to this section, if those resources are determined to be cost effective.
(f)
(c) This section does not limit the ability of third-party providers to propose or develop distributed energy storage systems or other nonwire alternatives to meet identified system needs.
(d) If an electrical corporation determines that a nonwire
third-party alternative may be feasible, it shall conduct a competitive solicitation or other transparent process to evaluate third-party solutions.
(e) This section shall not be construed to delay customer energization timelines.
SEC. 3.SEC. 2.
No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.