California is getting grid planning right – now we actually need to build it

California’s clean energy transition is no longer a question of whether the state electrifies, but how it does so – quickly, affordably and equitably. That reality makes one thing clear: grid planning matters more than ever.

Over the past year, state regulators have taken a series of important actions to modernize how the state’s large electric utilities forecast demand and plans to upgrade the grid. Taken together, these decisions move California away from reactive, worst-case planning and toward a smarter, more flexible approach that can support rapid electrification while protecting customers’ bills.

The work is not finished. But the direction is right – and now it is incumbent on the regulators and electric utilities to carry it through.

Planning for electric demand that is actually coming

For years, the electric utilities have systematically understated future electricity demand and corresponding grid upgrade needs. That was not because electrification was not happening – it was because the antiquated rules only allowed utilities to plan for loads that were already firmly in hand. Everything else, including electrification projects still under development, was largely invisible to planners.

In December 2025, state regulators addressed this problem by allowing utilities to include pending electric demand in their forecasts – including customer electrification plans that are still being developed and credible, third-party electrification studies. The electric utilities can now plan for electric demand when supported by real-world data. This includes EV charging, building electrification, and other loads connecting to the distribution grid, rather than data centers and other large customers that connect to the higher-voltage transmission system.

In their action, regulators introduced a critical new concept: electrification hot spots. In areas in California where electrification of our buildings and transportation is clearly emerging, the electric utilities now have more discretion to proactively incorporate diverse data sources into their forecasts. That means fewer surprises, fewer last-minute upgrades, and better alignment between grid investments and customer needs. In effect, the regulators are directing the state’s electric utilities to plan for the future that is actually being built.

Moving beyond a single guess about the future

Just as important, California regulators are pushing the electric utilities to confront uncertainty head-on by directing them to adopt scenario-based load forecasting. Rather than anchoring grid plans to a single “best guess,” utilities must now evaluate at least three futures: low, mid and high load growth scenarios.

The electric utilities will pair this scenario planning with innovative decision-tree framework that guides how they should act under different outcomes – when to invest early, when to wait, and how to manage the uncertainty of their load forecasts. For example, California utilities plan for both high and low demand futures, so they can invest early when risks are high and hold back when demand may not actually happen.

This approach reflects a basic reality: overbuilding the grid is expensive but underbuilding it can be even more costly – missing opportunities to connect clean energy and locking in fossil dependence, emissions and reliability risks. Scenario planning, especially when combined with the new pending-loads framework, gives electric utilities a more disciplined way to strike that balance.

Integrating grid work to save money

Forecasting improvements alone are not enough. Execution matters just as much. Last month, the utilities filed a Commission-required proposal describing how they will better integrate capacity-driven grid upgrades with other distribution work. The concept is straightforward but powerful: when utilities are already replacing aging equipment or addressing safety needs, they should evaluate whether modestly upsizing that equipment today can avoid a second, more expensive project tomorrow.

For example, replacing a transformer at the end of its useful life without considering future load growth almost guarantees that ratepayers will pay twice – once now, and again when electrification demand materializes. This kind of integrated planning can reduce duplicative construction, lower costs and make better use of limited utility workforce resources. It also aligns closely with EDF-commissioned research from Black & Veatch showing that proactive grid planning is often the most cost-effective option.

While Environmental Defense Fund is not satisfied with the utilities’ initial proposal – and is actively engaging at the Commission to improve it – the CPUC’s underlying directive is well designed and worth supporting.

Electrification can lower bills if utilities plan for flexibility

 In October 2025, Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric released draft studies examining how electrification will affect the electric grid – and how much electric demand flexibility can change the outcome. While this work will continue into 2026, the early results are striking.

PG&E’s analysis finds that while enabling electrification will require tens of billions of dollars in distribution investments through 2040, that same electrification could also save customers up to 25% by putting downward pressure on electric rates by improving system utilization. The takeaway is clear: electrification does not have to result in runaway costs to the customer’s electric bill.

When electric utilities actively plan for flexible demand – including managed EV charging, building electrification paired with demand response, and distributed energy resources – the grid can be used more efficiently, spreading the fixed costs of grid investments over more kilowatt-hours, and lowering costs for all ratepayers.

Turning planning into practice

None of these reforms will matter if they remain on paper. California’s regulators have laid out a thoughtful, forward-looking framework for electric demand forecasting and grid planning – one that supports electrification, improves affordability, and manages uncertainty instead of ignoring it. Now the hard(er) work begins.

The electric utilities must implement these tools rigorously and transparently.

Ensuring that California’s clean energy is affordable and reliable depends on getting this right. The good news is that the state has a planning framework in place to make this a reality. Now it’s time to start building.