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CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

92

Introduced by Senator McNerney

(Coauthors: Senators Richardson and Wiener)

December 2, 2024

An act to amend Section 314 of, and to add Section 748.4 to, the Public Utilities Code, relating to public utilities.

Vote: majority   Appropriation: no   Fiscal committee: yes   Local program: yes

LEGISLATIVE COUNSEL’S DIGEST

Existing law authorizes the Public Utilities Commission to fix the rates and charges for public utilities, including electrical corporations and gas corporations, and requires those rates and charges to be just and reasonable. Under existing law, a regulated public utility is prohibited from using ratepayer funds for advocacy-related activities that are political or do not otherwise benefit ratepayers.

This bill would prohibit, except as provided, each electrical corporation or gas corporation from recording to accounts that contain expenses that the electrical corporation or gas corporation recovers from ratepayers, or otherwise recovering from ratepayers, direct or indirect costs of opposing the municipalization of electrical or gas service, as specified. The bill would require the commission to monitor and investigate compliance and noncompliance with the prohibition.

Existing law authorizes the commission, each commissioner, and each officer and person employed by the commission to inspect the accounts, books, papers, and documents of any public utility.

This bill would specify that the Public Advocate’s Office of the Public Utilities Commission has the same authority to discover information and review the accounts of a public utility as the commission.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the above-described provisions would be part of the act and a violation of a commission action implementing the bill’s 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.

Section 314 of the Public Utilities Code is amended to read:

314.

(a) The commission, each commissioner, and each officer and person employed by the commission may, at any time, inspect the accounts, books, papers, and documents of any public utility. The commission, each commissioner, and any officer of the commission or any employee authorized to administer oaths may examine under oath any officer, agent, or employee of a public utility in relation to its business and affairs. Any person, other than a commissioner or an officer of the commission, demanding to make any inspection shall produce, under the hand and seal of the commission, authorization to make the inspection. A written record of the testimony or statement so given under oath shall be made and filed with the commission.

(b) Subdivision (a) also applies to inspections of the accounts, books, papers, and documents of any business that is a subsidiary or affiliate of, or a corporation that holds a controlling interest in, an electrical, gas, or telephone corporation, or a water corporation that has 2,000 or more service connections, with respect to any transaction between the water, electrical, gas, or telephone corporation and the subsidiary, affiliate, or holding corporation on any matter that might adversely affect the interests of the ratepayers of the water, electrical, gas, or telephone corporation.

(c) The Public Advocate’s Office of the Public Utilities Commission shall have the same authority to discover information and review the accounts of a public utility as the commission.

SEC. 2.

Section 748.4 is added to the Public Utilities Code, to read:

748.4.

(a) For purposes of this section, all of the following definitions apply:

(1) “Above-the-line account” means an account that contains expenses that a utility recovers from ratepayers, including an account that contains expenses that the utility used to calculate a revenue requirement request in its general rate case.

(2) “Below-the-line account” means an account that contains expenses that a utility does not generally recover from ratepayers.

(3) “Compensation” means salary, a bonus, benefits, or other consideration of any value.

(4) “Expense” means a payment to an external entity, a cost incurred by a parent company or corporate affiliate and invoiced to a utility, and compensation paid to an employee of a utility.

(5) (A) “Political influence activity” means either of the following:

(i) An activity that is directly and necessarily related to appearances before regulatory or other governmental bodies in connection with the utility’s existing or proposed operations of the utility’s regulated system. Policies affecting the use of gaseous fuels or electricity are not directly and necessarily related to the utility’s existing or proposed operations.

(I) The adoption, repeal, or modification of federal, state, regional, or local legislation, regulations, or ordinances.

(II) The election, recall, appointment, or removal of a public official or the adoption of initiatives or referenda.

(III) The approval, modification, or revocation of franchises of a utility.

(IV) Public opinion with respect to legislation, regulations, ordinances, elections, referenda, or rate setting of a utility.

(V) Decisions of federal, state, regional, or local public officials.

(ii) Research, preparation, or any other activity undertaken for the purpose of supporting any activities specified in clause (i).

(B) “Political influence activity” does not include any of the following:

(i) An activity that is directly and necessarily related to appearances before regulatory or other governmental bodies in connection with the utility’s existing or proposed operations of the utility’s regulated system. Policies affecting the use of gaseous fuels or electricity are not directly and necessarily related to the utility’s existing or proposed operations.

(ii) An activity that is directly related to a commission-approved energy efficiency program or another commission-approved public purpose program if the participation of the utility has not otherwise been prohibited by the commission.

(iii) Public messages providing necessary information to customers about specific actions the customers can take for their safety.

(iv) An activity required by applicable federal or state statute, or by order of a regulatory authority, and undertaken for the purpose of satisfying that statutory or regulatory requirement.

(6) “Public official” means a decisionmaker within an administrative agency or legislative body at the local, regional, state, or federal level, or an executive officer at the local, regional, state, or federal level.

(7) “Utility” means an electrical corporation or gas corporation.

(b) A utility shall not record to an above-the-line account, or otherwise recover from ratepayers, direct or indirect costs for opposing the municipalization of electrical or gas service, including, but not limited to, any of the following:

(1) Lobbying.

(2) Engaging in city or county political proceedings, such as city county meetings or county board of supervisors meetings.

(3) Other political influence activities intended to undermine or prevent the establishment of a publicly owned municipal utility.

(c) The commission shall monitor and investigate compliance and noncompliance with this section.

(d) Moving an expense to a below-the-line account after it was booked to an above-the-line account does not protect that expense from being disclosed to the commission or disclosed in response to a discovery request or order in a general rate case or other relevant commission proceeding.

(e) Subdivision (b) does not prohibit a utility from recording to an above-the-line account a payment made pursuant to an agreement authorized by the National Labor Relations Act (29 U.S.C. Sec. 151 et seq.) or payment authorized by the federal National Labor Management Cooperation Act of 1978 (Public Law 95-524), and does not restrict any use permitted by federal law of moneys paid pursuant to those federal acts.

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.