AB 2088 California Assembly · 2025-2026 Regular Session

Public Utilities: thermal energy networks.

Summary

Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including gas corporations and heat corporations. Existing law requires every public utility to furnish and maintain adequate, efficient, just, and reasonable service, instrumentalities, equipment, and facilities, as are necessary to promote the safety, health, comfort, and convenience of its customers, its employees, and the public. Existing law authorizes a gas corporation to cease providing service if a certain pilot program has been implemented and the PUC determines that adequate substitute energy service is reasonably available for the energy end uses of affected gas corporation customers. This bill would authorize a utility regulated by the PUC to own and operate thermal energy service through thermal energy networks, as defined, and would require the PUC to ensure that the substitution of thermal energy service for gas service offers an adequate substitute for the thermal end-use energy needs of customers, as provided. The bill would prohibit a utility regulated by the PUC from recovering costs for gas infrastructure in areas approved to be served by a thermal energy network, except as specified. The bill would require the commission and gas corporations to prioritize the use of the existing gas utility workforce for the transition to thermal energy network operations, as specified. The bill would require a utility to ensure that all contractors and subcontractors performing work on a thermal energy network project use a skilled and trained workforce. The bill would require the PUC, on or before December 31, 2027, to initiate a proceeding to establish a regulatory framework for the provision of cost-effective thermal energy service by gas corporations or other public utilities, as provided. This bill would require the State Energy Resources Conservation and Development Commission (Energy Commission) , in consultation with the PUC, on or before December 31, 2027, to develop technical standards for thermal energy networks, as provided. The bill would require the Energy Commission to complete the development of the technical standards before the PUC initiates the proceeding described above. Under existing law, a violation of the Public Utilities Act or an order, decision, rule, direction, demand, or requirement of the PUC is a crime. Because the labor requirements for a thermal energy network project would be part of the act and a violation of a PUC action implementing those 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.

Issues: ✓ Energy

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 18, 2026 Last action May 14, 2026

Maddy AI version diff · 3 comparisons

What changed between versions

04/27/26 - Amended Assembly → AB2088 · 3 edits

MINOR

No substantive policy changes occurred between these two versions of AB 2088. The differences are limited to formatting and presentation: the old version is an amended assembly document with amendment date headers, while the new version is the clean bill text as displayed on the California Legislature website, which adds navigation elements and removes the amendment tracking headers.

TECHNICAL

A minor drafting artifact appears in Section 719.5(c) of the new version: an extra fragment reading '(c) The regulatory framework shall include a' is inserted between the introductory sentence and item (1). This does not change any policy requirement and appears to be a leftover from prior amendment markup.

The amendment date headers ('AMENDED IN ASSEMBLY APRIL 27, 2026' and 'AMENDED IN ASSEMBLY APRIL 13, 2026') were removed in the clean bill text version.

Website navigation elements (skip to content, home, accessibility, FAQ, feedback, sitemap, login, search tools, bill tracking links) were added as part of the web page presentation format.

04/13/26 - Amended Assembly → 04/27/26 - Amended Assembly · 9 edits · Apr 27, 2026

MAJOR

The April 27 amendment significantly broadens AB 2088 from a bill focused on gas corporations to one covering any PUC-regulated utility that may own and operate thermal energy networks. It adds a detailed regulatory framework requiring cost-effectiveness analysis including nonenergy benefits, an equitable cost-allocation mechanism for stranding costs when customers leave the gas system, and new definitions. A sequencing requirement was added mandating the Energy Commission complete technical standards before the PUC initiates its regulatory proceeding.

SCOPE

The bill now authorizes any utility regulated by the PUC to own and operate thermal energy service through thermal energy networks, not just gas corporations satisfying their duty-to-serve obligation. This expands eligibility from a narrow set of gas utilities to all PUC-regulated utilities.

A new subsection (d) in Section 1 explicitly states that the act maintains the PUC's authority to authorize only just and reasonable expenditures by utilities under Section 451, clarifying the regulatory boundary.

REQUIREMENT

A new mechanism is required in the regulatory framework to ensure customers transitioning to thermal energy network service bear an equitable share of unrecovered gas distribution infrastructure costs attributable to their departure, so that remaining gas customers are held indifferent. This addresses the stranding cost problem directly.

The PUC's regulatory framework must now include standards for determining when a thermal energy network offers an adequate and reliable substitute for thermal end-use energy needs, and requirements to maintain system safety and reliability during and after the transition from gas service.

The cost-effectiveness methodology in the regulatory framework was expanded to also evaluate nonenergy benefits, and a new factor was added: the geographic concentration of customer departures and localized costs and benefits within a defined service area.

The provision designating thermal energy network construction, maintenance, or repair projects as public works was removed from the bill.

TIMELINE

A sequencing requirement was added: the Energy Commission must complete development of technical standards for thermal energy networks before the PUC initiates its regulatory framework proceeding under Section 719.5. Both are due by December 31, 2027.

DEFINITION

A new definition of 'thermal end-use energy needs' was added, covering all energy requirements of a customer's building previously served by a gas corporation (space heating, cooling, water heating, process heat) that can be delivered through a thermal energy network.

TECHNICAL

The definition of thermal energy network was moved from Section 236.5 to what is now referenced as Section 660 of the Public Utilities Code, and the prohibition on combustion for primary generation was broadened from 'onsite combustion' to simply 'combustion.'

02/18/26 - Introduced → 04/13/26 - Amended Assembly · 7 edits · Apr 13, 2026

MODERATE

The amended version significantly broadens AB 2088 beyond gas corporations to include any PUC-regulated utility (such as electric utilities) that may own and operate thermal energy networks. It adds a prohibition on recovering gas infrastructure costs in areas served by thermal energy networks, strengthens worker protections with a non-layoff requirement, and requires the PUC to develop a cost-effectiveness evaluation methodology for thermal energy networks comparable to gas and electrical resources.

SCOPE

The bill now applies to 'a utility regulated by the PUC' in addition to gas corporations. Any PUC-regulated utility may own and operate thermal energy service as a regulated utility service through a thermal energy network, not just gas corporations.

The PUC regulatory framework proceeding (due by December 31, 2027) is now for 'cost-effective thermal energy service by gas corporations or other public utilities determined by the commission to be appropriate to own or operate thermal energy networks,' broadening it beyond just gas corporations.

REQUIREMENT

A new provision prohibits a PUC-regulated utility from recovering costs for gas infrastructure in areas approved to be served by a thermal energy network, unless those costs are necessary to ensure the safety of decommissioned gas infrastructure.

Gas corporations are now prohibited from laying off gas utility workers or reducing the size of the existing gas utility workforce as a result of the transition to thermal energy network operations.

A new subsection requires the regulatory framework to include a methodology for evaluating cost-effectiveness of thermal energy networks comparable to gas and electrical resources, accounting for lifetime project costs, ratepayer efficiency benefits, health and environmental impacts from air pollution, and greenhouse gas emission reductions.

ELIGIBILITY

The skilled and trained workforce requirement now includes an exception: it does not apply to work covered by a valid collective bargaining agreement with the gas corporation.

DEFINITION

Legislative findings were expanded to include California's 2045 carbon neutrality goal and a finding that voluntary neighborhood decarbonization zones lack clear statutory guidance for utilities to provide heating and cooling through zero-emission thermal energy infrastructure.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

May 14, 2026

Lower · Passed

In committee: Held under submission.

lower

May 13, 2026

Committee

In committee: Set, first hearing. Referred to APPR. suspense file.

lower

Apr 28, 2026

Committee

Re-referred to Com. on APPR.

lower

Apr 27, 2026

Lower · Passed

Read second time and amended.

lower

Apr 23, 2026

Introduced

From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 17. Noes 0.) (April 22).

lower

Apr 14, 2026

Committee

Re-referred to Com. on U. & E.

lower

Apr 13, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on U. & E. Read second time and amended.

lower

Apr 8, 2026

Lower · Passed

In committee: Hearing postponed by committee.

lower

Mar 2, 2026

Committee

Referred to Com. on U. & E.

lower

Feb 19, 2026

Lower · Passed

From printer. May be heard in committee March 21.

lower

1 primary · 1 co-sponsor