Energy: transmission infrastructure accelerator: financing

The law aims to help finance new high-voltage grid projects that support reliability and state greenhouse-gas goals while reducing costs charged to electricity customers. It extends the program and related tax credits through 2036.

What the law does ​

• Requires the Transmission Infrastructure Accelerator to review the Independent System Operator’s draft transmission plans and select eligible projects after approved plans are released.
• Requires selected projects to support new competitively solicited high-voltage facilities, meet reliability and greenhouse-gas objectives, and have an interconnection point in the ISO balancing area.
• Requires project sponsors seeking fund financing to demonstrate transmission-project experience, pass tax-credit savings to customers through lower federal cost-recovery requests, and meet other ratepayer-savings and financial conditions.
• Gives the California Infrastructure and Economic Development Bank board final authority over financing after reviewing a project’s credit and financial merits, while requiring both accelerator selection and bank approval.
• Requires the accelerator to issue program guidelines by December 31, 2027, and extends the financing program’s sunset from 2031 to January 1, 2036.
• Maintains the separate California Transmission Accelerator Revolving Fund as a continuously appropriated public enterprise fund and allows it to receive bond proceeds, repayments, investment earnings, and other legislative funding.
• Requires certain privately owned, I-Bank-financed projects connected to large utility systems to certify that experienced in-state transmission prime contractors and experienced maintenance contractors were selected.
• Makes qualifying projects eligible for existing 20% personal and corporate income-tax credits, capped at $20 million annually per taxpayer, only if they meet the new project and contractor conditions.
• Allows the I-Bank board to meet privately on accelerator financing plans and confidential proprietary information.

Who it affects ​

• Transmission-project developers, owners, sponsors, contractors, and lenders seeking state-backed financing or tax credits.
• The Transmission Infrastructure Accelerator and California Infrastructure and Economic Development Bank.
• Electric utilities and their customers whose transmission charges may reflect project costs and required savings.

Context ​

The financing and tax-credit provisions generally operate through 2036, while approved financing contracts may remain in force for their full terms.

Breakdown ​

Transmission Project Financing Changes ​

AB 192 changes how the Transmission Infrastructure Accelerator identifies and prepares transmission projects for possible public financing. It ties project selection to the ISO transmission planning process, adds eligibility requirements for projects and sponsors, requires contractor-related certifications, and lets the I-Bank board meet privately on certain financing matters.

Key takeaways

• The accelerator must review draft results from the ISO’s transmission planning process before selecting projects for possible public financing.
• After the ISO releases its approved transmission plan, the accelerator may select one or more eligible transmission projects that could receive public financing.
• The accelerator must ensure that selected projects and their sponsors meet specified requirements before public financing can move forward.
• At the accelerator’s direction, the I-Bank must work with project sponsors to develop financing proposals for selected projects.
• Developers and owners seeking continued public financing must certify specified information about project contractors under penalty of perjury.
• The I-Bank board may hold closed sessions to consider accelerator financing plans and to discuss protected trade secret, confidential, or proprietary information.

Transmission Accelerator Financing Changes ​

The bill shifts final decisions on financial assistance for transmission accelerator projects from the accelerator to the I-Bank. It requires the I-Bank to review a project's credit and financial condition, directs the accelerator to issue program guidelines, and extends the program through 2035. It also restructures and expands the revolving fund's financing options and makes an appropriation by broadening the fund's revenue sources and allowable uses.

Key takeaways

• The I-Bank, rather than the accelerator, receives final authority to approve financial assistance for eligible projects.
• Before approving and financing a project, the I-Bank must consider its credit and financial aspects.
• The accelerator must develop program guidelines by December 31, 2027.
• The program's repeal date moves from January 1, 2031, to January 1, 2036.
• The California Transmission Accelerator Revolving Fund must be kept separate from other I-Bank funds, organized as a public enterprise fund, and may receive additional authorized investments and deposits.
• The bill removes the requirement for a legislative appropriation before bank fund money may be spent on program financing and makes an appropriation by expanding the revolving fund's funding sources and permitted uses.

Transmission Tax Credit Eligibility ​

AB 192 narrows which transmission projects can qualify for the existing state income and corporation tax credit. To qualify, a project must meet the bill’s accelerator-project criteria and comply with the new contractor certification requirements. The bill also treats this tax-law change as one requiring a two-thirds vote of each house of the Legislature.

Key takeaways

• The existing credit can equal 20% of qualifying project costs, up to $20 million per taxpayer each year, for tax years from 2026 through 2035.
• AB 192 changes the definition of an eligible transmission project for purposes of this credit.
• A project must meet the criteria for an accelerator project to qualify.
• A project must also satisfy the bill’s contractor certification conditions to qualify.
• Because the change may result in higher tax payments for some taxpayers, the bill required approval by two-thirds of each legislative house.

No State Reimbursement Required ​

This part of AB 192 says local agencies and school districts will not receive state reimbursement for costs imposed by the act. The bill identifies a specified reason for not requiring reimbursement under California’s state-mandate rules.

Key takeaways

• AB 192 states that no state reimbursement is required for costs created by the act.
• The provision applies to local agencies and school districts.
• The bill relies on a specified reason to exempt the act from California’s reimbursement requirement.