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AB 127

Climate change.

2025-2026 Regular Session

AB 127 broadens climate programs by expanding funding use, increasing CEC certification costs, extending EPIC follow-on funds, and allowing wider eligibility for clean transportati

Re-referred to Com. on B. & F. R.
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Bill Summary · AB 127

AB 127 — Climate change (Budget Act of 2025) — Summary

Status: Re-referred to Senate Committee on Budget and Fiscal Review (7/02/2025)
Introduced: January 8, 2025
Classification: bill; appropriation

Purpose and intent

AB 127 is a Budget Committee bill that makes multiple policy and fiscal changes affecting California’s energy and transportation climate programs. The bill (as amended) (1) adjusts certain salaries, (2) extends program authorities and expands eligible uses of appropriated funds, (3) revises permitting fee structures for large-generation and storage projects certified by the California Energy Commission (CEC), and (4) modifies operational/administrative provisions for state-owned energy assets and incentive programs.

Key provisions and changes

  • Salary increase for CEC chair: grants the chairperson a 5% additional salary increase for each of the 2025–26, 2026–27, and 2027–28 fiscal years (parallel to prior increases afforded to other commission members for 2023–24 through 2025–26).

  • EPIC follow-on funding: extends the Energy Commission’s authority to award noncompetitive “follow-on” funding under the Electric Program Investment Charge (EPIC) from the prior cutoff of July 1, 2025 to January 1, 2028.

  • CEC certification fee structure (large facilities and opt‑in process):

    • Replaces the prior application fee schedule with a required nonrefundable deposit of $750,000 at application time.
    • Requires applicants to pay all actual CEC processing costs; the CEC must invoice annually for actual costs exceeding the deposit.
    • Increases annual certification fee from $25,000 to $70,000 per year.
    • Specifies that petition-to-amend fees (previously $5,000) are nonrefundable.

  • Distributed backup / Demand-Side Grid Support programs and DWR operations:

    • Confirms CEC implementation responsibilities for programs that incentivize distributed backup assets and demand-side grid support during extreme events.
    • Narrows the operational limitation on fossil-fueled response facilities to those “constructed and owned by” the Department of Water Resources (DWR) (previously applied to facilities constructed by DWR or under contract with DWR) — such owned facilities may only operate as necessary to respond to extreme events, with limited exceptions.

  • Use of appropriated funds for Demand-Side Grid Support:

    • Authorizes the Energy Commission to use any additional funding appropriated by the Legislature for demand-side grid support and associated mitigation costs for regulatory development, third‑party block grants/contracts implementing programs, or advancing up to 25% of awards.

  • Clean Transportation Program eligibility:

    • Expands eligible recipients for block grants or incentive programs by removing the restriction that such grants be administered only by public entities or nonprofit technology entities.
    • Explicitly authorizes funding for block grants or incentive programs supporting zero‑emission vehicle infrastructure.

Who is affected

  • Project developers and applicants seeking CEC certification (large thermal, renewable, and energy storage projects) — higher up‑front deposit, possible additional invoices, and higher annual fees.
  • The California Energy Commission — increased ability to recover application processing costs and expanded programmatic authority/uses of appropriations.
  • Department of Water Resources — narrower operational requirement tied to facilities it constructs and owns.
  • Entities (public, private, nonprofit, for‑profit) seeking Clean Transportation Program block grants or incentives — expanded eligibility, especially for ZEV infrastructure projects.
  • Ratepayers and program implementers for EPIC, Distributed Electricity Backup Assets, and Demand‑Side Grid Support programs — potential shifts in funding and administration.

Fiscal and timeline notes

  • The bill is tied to the 2025 Budget Act and affects appropriation uses; it references a prior 2021–22 appropriation of $200 million for demand-side grid support.
  • EPIC follow-on award authority is extended through January 1, 2028.
  • Legislative actions: Passed Assembly (3/20/2025); transmitted to Senate and assigned; read and amended in committee (6/24/2025); reported out (6/25/2025); re-referred to Senate Budget Committee (7/02/2025).

Limitations / truncation

Some sections of the legislative digest were truncated in the source materials (notably parts referencing State Air Resources Board fee deposits and related certification funds). This summary focuses on the completed and repeated provisions available in the provided documents.

Compiled from official sources — confirm details with the bill’s official record.

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