Assembly BillIntroducedPublic Resources
AB 2088: Public Utilities: thermal energy networks.
What AB 2088 does, verified June 8, 2026
<p>The bill authorizes utilities regulated by the Public Utilities Commission (PUC) to own and operate thermal energy networks as an alternative to gas service, ensuring these networks adequately meet customer needs. It prohibits utilities from recovering costs for gas infrastructure in approved thermal network areas, except under specific conditions. The PUC is required to prioritize existing utility workforce for transitioning to thermal network operations and ensure contractors use skilled labor. By December 31, 2027, the PUC must establish a regulatory framework for cost-effective thermal energy service provision. Additionally, the State Energy Resources Conservation and Development Commission will develop technical standards for these networks in consultation with the PUC.</p>
Bill journey
1IntroducedCurrent
2In CommitteePending
3First Chamber FloorPending
4Second ChamberPending
5GovernorPending
6ChapteredPending
Last action: In committee: Held under submission. (2026-05-14)Alert me
Author and sponsors
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| May. 14, 2026 | In committee: Held under submission. |
| May. 14, 2026 | Joint Rule 62(a), file notice suspended. (Page 5030.) |
| May. 13, 2026 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr. 28, 2026 | Re-referred to Com. on APPR. |
| Apr. 27, 2026 | Read second time and amended. |
Latest bill textAmended version, April 27, 2026 · 1,941 words
| Amended IN Assembly April 27, 2026 |
| Amended IN Assembly April 13, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 2088
| Introduced by Assembly Member Papan (Coauthor: Assembly Member Rogers) |
February 18, 2026 |
An act to add Section 25236 to the Public Resources Code, and to add Sections 236.5, 451.10, 451.10 and 719.5 to the Public Utilities Code, relating to public utilities.
LEGISLATIVE COUNSEL'S DIGEST
AB 2088, as amended, Papan. Public Utilities: thermal energy networks.
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, and specified. The bill would require a gas corporation 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, 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.
The people of the State of California do enact as follows:
SECTION 1.
(a) The Legislature finds and declares all of the following:(1) California has adopted ambitious statewide climate and air quality goals that require substantial reductions of the emissions of greenhouse gases from buildings and industrial sectors, including emissions associated with heating and cooling.
(2) California law requires the state to achieve carbon neutrality by 2045, which will require a transition away from fossil fuels in sectors beyond transportation.
(3) Thermal energy networks and other nonemitting shared thermal infrastructure systems can provide heating and cooling services without combustion of fossil fuels or water-intensive traditional evaporative cooling, while maintaining reliability and enabling a range of clean thermal energy sources, including geothermal and industrial waste heat.
(4) Existing law authorizes investor-owned utilities to provide electricity or natural gas service, service and has previously authorized the establishment of a limited number of voluntary neighborhood decarbonization zones to provide alternative zero-emission energy service in natural gas service areas, but does not expressly authorize those utilities to provide heating or cooling as a regulated utility service through thermal energy networks or similar infrastructure at a commercial or industrial scale.
(5)The absence of clear statutory authority for gas corporations and other utilities regulated by the Public Utilities Commission to provide thermal energy service creates legal and regulatory uncertainty that limits the development of thermal energy networks and inhibits investment in zero-emission infrastructure.
(6)The Legislature has previously authorized new utility functions in response to evolving technologies and public policy needs, subject to regulation by the Public Utilities Commission.
(7)The Legislature has previously authorized the establishment of a limited number of voluntary neighborhood decarbonization zones to provide alternative zero-emission energy service in natural gas service areas. However, there is no clear statutory guidance to enable utilities to provide heating and cooling service through modern, zero-emission thermal energy infrastructure.
(b) It is the intent of the Legislature in enacting this act to remove legal barriers to the provision of thermal energy service by gas corporations and other utilities, while preserving the Public Utilities Commission’s authority to regulate that service in a manner that maintains system safety and reliability and does not disproportionately burden remaining customers on the gas system.
(c) This act does not mandate the deployment of any specific technology, require a gas corporation or other utility to undertake a particular project, or alter existing obligations to provide natural gas service, except as determined by the Public Utilities Commission pursuant to its authority. service.
(d) This act maintains the authority of the Public Utilities Commission to authorize only just and reasonable expenditures by utilities pursuant to Section 451 of the Public Utilities Code.
SEC. 2.
Section 25236 is added to the Public Resources Code, to read:25236.
(b) The commission shall complete the development of the technical standards pursuant to subdivision (a) before the proceeding is initiated pursuant to Section 719.5 of the Public Utilities Code.
(a)“Thermal energy network” means a multiuser system of piped noncombustible fluids that are used for transferring thermal energy into and out of buildings or industrial processes for the purpose of providing zero-emission heating, cooling, or process heat.
(b)A thermal energy network may use diverse noncombustion thermal sources, including, but not limited to, geothermal energy, industrial waste heat, data center waste heat, wastewater heat recovery, or ambient heat from water or air.
(c)A thermal energy network shall not use combustion for the primary generation of thermal energy within the network.
SEC. 4.SEC. 3.
451.10.
(a) (1) A utility regulated by the commission may own and operate thermal energy service as a regulated utility service through a thermal energy network pursuant to the regulatory framework established pursuant to Section 719.5 in a manner consistent with Section 451.(2) The commission shall ensure that the substitution of thermal energy service for gas service offers an adequate substitute for the thermal end-use energy needs of customers and is implemented in a manner that maintains system safety and reliability and does not disproportionately burden remaining customers on the gas system.
(3) A utility regulated by the commission shall not be eligible to recover 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.
(b) (1) The commission and gas corporations shall prioritize the use of the existing gas utility workforce for the transition to thermal energy network operations, and a gas corporation shall not lay off gas utility workers or reduce the size of the existing gas utility workforce of the gas corporation as a result of the gas corporation’s transition to thermal energy network operations.
(2) A gas corporation utility shall ensure that all contractors and subcontractors performing work on a thermal energy network project use a skilled and trained workforce, as defined in Section 2601 of the Public Contract Code. This paragraph does not apply to work that is covered by a valid collective bargaining agreement with the gas corporation. utility.
(c) For purposes of this section, “thermal energy network” has the same meaning as set forth in Section 660.
SEC. 5.SEC. 4.
719.5.
(a) On or before December 31, 2027, the commission shall initiate a proceeding to establish a regulatory framework for the provision of 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. As part of the proceeding, the commission shall evaluate the costs and benefits of thermal energy networks and identify potential implementation barriers, as required by Section 665.(b) The objective of the regulatory framework shall be to enable the safe and reliable deployment of thermal energy networks that optimize the use of diverse, nonemitting thermal sources, including, but not limited to, networked geothermal and deep geothermal energy.
(c) The regulatory framework shall establish conditions under which a gas corporation or another public utility, determined by the commission to be appropriate, may own and operate a thermal network as a regulated utility service that includes, at a minimum, all of the following:
(c)The regulatory framework shall include a
(1) A
methodology for evaluating the cost-effectiveness and nonenergy benefits of thermal energy networks in a manner comparable to gas and electrical(1)
(A)
Lifetime project costs over a reasonable common analysis period.(2)
(B)
Quantitative benefits to ratepayers through greater energy efficiency.(3)
(C)
Reduction of health and environmental impacts from air pollution.(4)
(D)
Reduction of greenhouse gas emissions related to electricity and natural gas production and use.(E) The geographic concentration of customer departures and the localized costs and benefits of thermal energy network deployment within a defined service area.
(2) A mechanism to ensure that customers transitioning to thermal energy network service bear an equitable share of unrecovered gas distribution infrastructure costs attributable to their departure, such that customers remaining on the gas distribution system are held indifferent to that departure, including consideration of whether cost responsibility should be allocated by customer class.
(3) Standards for determining that a thermal energy network offers an adequate and reliable substitute for the thermal end-use energy needs of customers, consistent with the obligation to provide service under Section 451.
(4) Requirements to maintain system safety and reliability during and after the transition from gas, or other utility, service to thermal energy service.
(d) For purposes of this section, both of the following definitions apply:
(1) “Thermal end-use energy needs” means all energy requirements of a customer’s building or premises previously served by a gas corporation, including, but not limited to, space heating, space cooling, water heating, and process heat, that can be delivered through a thermal energy network.
(2) “Thermal energy network” has the same meaning as set forth in Section 660.
Text of AB 2088 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions