California lawmakers took aim at rising electricity costs this summer, passing a bill that promotes using the state’s existing grid infrastructure more effectively to alleviate upward price pressure.

Gov. Gavin Newsom now has a historic opportunity: signing Senate Bill 905 into law would help lower electricity bills in California.  

CEBA represents large energy buyers, including many of the state’s leading employers and innovators that are concerned about keeping electricity cost-effective. Maximizing the efficiency of the state’s existing electrical grid is one of the most immediate and effective strategies available to address affordability and accelerate clean energy deployment needed to support continued economic growth.

S.B. 905 addresses a critical inefficiency in how California’s grid is currently managed. The national average for grid utilization is only between 40% and 50%, meaning nearly half of our multi-billion-dollar infrastructure often sits idle. Using the analogy of a 10-lane highway: we currently build 10 lanes to handle rush-hour traffic (periods of peak energy demand), but half of those lanes remain empty for the vast majority of the time.

This bill mandates the transparency and data requirements necessary to use those empty “lanes” during off-peak hours rather than defaulting to the construction of expensive new infrastructure. Using existing grid infrastructure more efficiently adds grid capacity critical to helping ensure reliable, affordable power to California households and businesses.

For large energy buyers, including hyperscalers, retailers, and major industrial customers, grid utilization is a vital economic lever. Efficient grid use benefits these stakeholders in several key ways:

• Spreading fixed costs: Utilities have massive fixed costs for building and maintaining poles and wires. By increasing utilization and moving more energy through existing wires, those fixed costs are spread across a larger volume of sales, lowering the per-kilowatt-hour rate for every customer.
• Avoiding unnecessary capital expenditures: When a utility builds a new substation or transmission line, the cost is added to the rate base. Tapping underutilized segments may postpone or negate the need for costly construction, preventing multi-billion-dollar expenses from being passed on to ratepayers.
• Faster interconnections: Better data transparency allows new clean energy resources to plug into existing headroom on the grid much faster, avoiding years of delays currently associated with building new traditional infrastructure.
• Optimizing demand-side resources: Grid utilization data enables the load flexibility of distributed assets to absorb off-peak power and lower system costs for all ratepayers. This transparency ensures we maximize existing capacity first, while providing the data needed to justify and accelerate targeted infrastructure upgrades exactly where they can provide the most value.

By implementing the grid utilization metrics required by S.B. 905, California would improve the market for innovative grid technologies — such as battery storage and demand response — that other states could eventually adopt to manage rising power prices for their ratepayers.

Signing this bill into law is a commonsense step to help address rising electricity costs, integrate carbon emissions-free energy sources, and ensure a reliable power supply for homes and businesses.

California has long been a clean energy leader; it’s time to extend that pragmatism to the power system supporting these critical technologies.