AMENDED IN ASSEMBLY AUGUST 17, 2026

AMENDED IN ASSEMBLY JUNE 15, 2026

AMENDED IN ASSEMBLY MAY 7, 2026

AMENDED IN SENATE JANUARY 15, 2026

AMENDED IN SENATE JANUARY 5, 2026

AMENDED IN SENATE APRIL 8, 2025

AMENDED IN SENATE MARCH 24, 2025

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

92

Introduced by Senators McNerney and Wahab

(Coauthors: Senators Allen and Wiener)

February 11, 2025

An act to amend Sections 309.5 and 748.3 of 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. Existing law prohibits each electrical corporation or gas corporation from recording to an above-the-line account, or otherwise recovering from ratepayers, direct or indirect costs of specified activities.

This bill would additionally prohibit, except as provided, each electrical corporation or gas corporation from recording to an above-the-line account, or otherwise recovering from ratepayers, the direct or indirect costs of include in those activities for which costs may not be recovered from ratepayers any activities related to opposing the municipalization of electrical or gas utility service, as specified.

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. Existing law establishes within the commission an independent Public Advocate’s Office of the Public Utilities Commission and authorizes the office to require an entity regulated by the commission to produce or disclose any information the office deems necessary to perform its duties, as provided.

This bill would additionally authorize the office to require an entity regulated by the commission to produce or disclose any information the office deems necessary to support the commission’s duties. The bill would also specify that the office has the same authority to discover information and review the accounts of a public utility as the commission. commission and would change the timing of a specified annual report by the office to the Legislature.

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 309.5 of the Public Utilities Code is amended to read:

309.5.

(a) There is within the commission an independent Public Advocate’s Office of the Public Utilities Commission to represent and advocate on behalf of the interests of public utility customers and subscribers within the jurisdiction of the commission. The goal of the office shall be to obtain the lowest possible rate for service consistent with reliable and safe service levels. For revenue allocation and rate design matters, the office shall primarily consider the interests of residential and small commercial customers.

(b) (1) The director of the office shall be appointed by, and serve at the pleasure of, the Governor, subject to confirmation by the Senate.

(2) The director shall annually appear before the appropriate policy committees of the Assembly and the Senate to report on the activities of the office.

(c) The director shall develop a budget for the office that shall be subject to final approval of the Department of Finance. As authorized in the approved budget, the office shall employ personnel and resources, including attorneys and other legal support staff, at a level sufficient to ensure that customer and subscriber interests are effectively represented in all significant proceedings. The office may employ experts necessary to carry out its functions. The director may appoint a lead attorney who shall represent the office, and shall report to and serve at the pleasure of the director. The lead attorney for the office shall obtain adequate legal personnel for the work to be conducted by the office from the commission’s attorney appointed pursuant to Section 307. The commission’s attorney shall timely and appropriately fulfill all requests for legal personnel made by the lead attorney for the office, if the office has sufficient moneys and positions in its budget for the services requested.

(d) The commission shall develop appropriate procedures to ensure that the existence of the office does not create a conflict of roles for any employee. The procedures shall include, but shall not be limited to, the development of a code of conduct and procedures for ensuring that advocates and their representatives on a particular case or proceeding are not advising decisionmakers on the same case or proceeding.

(e) (1) The office may compel the production or disclosure of any information it deems necessary to perform its duties, or to support the commission’s duties, from any entity regulated by the commission, and has the same authority as the commission to discover information and review the accounts of any entity regulated by the commission.

(2) Any objections to any request for information pursuant to paragraph (1) shall be decided in writing by the assigned commissioner or by the president of the commission, if there is no assigned commissioner.

(f) There is hereby created the Public Utilities Commission Public Advocate’s Office Account in the General Fund. Moneys from the Public Utilities Commission Utilities Reimbursement Account in the General Fund shall be transferred in the annual Budget Act to the Public Utilities Commission Public Advocate’s Office Account. The funds in the Public Utilities Commission Public Advocate’s Office Account shall be a budgetary program fund administered and utilized exclusively by the office in the performance of its duties as determined by the director. The director shall annually submit a staffing report containing a comparison of the staffing levels for each five-year period.

(g) On or before January 10 February 1 of each year, the office shall provide to the chairperson of the fiscal committee of each house of the Legislature and to the Joint Legislative Budget Committee all of the following information:

(1) The number of personnel years utilized during the prior year by the office.

(2) The total dollars expended by the office in the prior year, the estimated total dollars expended in the current year, and the total dollars proposed for appropriation in the following budget year.

(3) Workload standards and measures for the office.

(h) The office shall meet and confer in an informal setting with a regulated entity before issuing a report or pleading to the commission regarding alleged misconduct, or a violation of a law or a commission rule or order, raised by the office in a complaint. The meet and confer process shall be utilized in good faith to reach agreement on issues raised by the office regarding any regulated entity in the complaint proceeding.

SEC. 2.

Section 748.3 of the Public Utilities Code is amended to read:

748.3.

(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) “Covered business unit” means a division, department, or other organizational employee group within a utility that performs activities specified in subdivision (b).

(5) “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.

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

(i) An activity for the purpose of directly or indirectly influencing any of the following:

(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 a franchise 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.

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

(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) An activity that responds to a request by a legislative committee, the commission, or a government agency for technical information from the utility.

(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.

(7) (A) “Promotional advertising” means written, online, video, or audio communications that primarily build the public image of a utility and that is not required by the commission, including communications about the undergrounding of electrical lines or other actions that a utility may take in the future.

(B) “Promotional advertising” does not include, except as specified in subparagraph (A), any of the following:

(i) Public messages that the utility is directed to publish by a federal, state, or local agency.

(ii) Public messages that provide information on safety measures, emergency conditions, the conservation of energy as described in subdivision (b) of Section 796, rates, utility programs and services approved by the commission, or service interruptions, and that do not primarily build the public image of the utility.

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

(8) “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.

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

(10) “Utility affiliate” means an entity that is related to the utility as a subsidiary, parent, or sibling corporation, including by shareholding or other means of control.

(11) “Vendor” means a person or business that provides goods and services.

(b) Except as provided in subdivision (c), a utility shall not record to an above-the-line account, or otherwise recover from ratepayers, direct or indirect costs of any of the following:

(1) Membership dues, sponsorships, or other contributions to an industry trade association, group, or related entity incorporated under Section 501 of the Internal Revenue Code of 1986, as amended, if any portion of those contributions support political influence activities or advertising. This paragraph does not apply to fees for professional licenses necessary for employee job duties.

(2) Charitable giving, including contributions to an organization that qualified under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended.

(3) Political influence activities.

(4) Promotional advertising.

(5) Payments to outside attorneys representing a utility in commission proceedings or experts testifying on behalf of, or otherwise supporting the participation by, a utility in commission proceedings that exceed the hourly rates that would be permitted for rate recovery under the commission’s intervenor compensation program.

(6) Contributions to political candidates, political parties, campaign committees, issue committees, or independent expenditure committees, or other political expenses.

(7) A cost, including marketing, administration, or customer service, for products or services not regulated by the commission.

(8) Penalties or fines, including tax penalties or fines, issued against a utility.

(9) Board of directors and officers liability insurance, and travel, lodging, food, or beverage expenses for a utility’s board of directors and officers or the board of directors and officers of a utility affiliate.

(10) An owned, leased, or chartered aircraft for the utility’s board of directors and officers or the board of directors and officers of a utility affiliate.

(11) Investor relations.

(c) Subdivision (b) does not prohibit a utility from recording to an above-the-line account payments made pursuant to an agreement authorized by the National Labor Relations Act (29 U.S.C. Sec. 151 et seq.) or payments 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.

(d) (1) A utility shall clearly and conspicuously disclose in all of its public messages whether the costs of the public messages are being paid for by the utility’s shareholders or ratepayers, consistent with rules and regulations related to candidate disclosure rules adopted pursuant to Article 5 (commencing with Section 84501) of Chapter 4 of Title 9 of the Government Code.

(2) A disclosure is not clear and conspicuous if the disclosure is difficult to hear or read, or if the placement of the disclosure is easily overlooked.

(3) For public messages recorded to an above-the-line account, the utility shall identify, in response to a request from a party in the utility’s most recent general rate case, which expense or capital account is the source of the funding.

(e) (1) On or before May 31, 2026, and annually thereafter, each utility shall report, as part of the statement required under General Order 77-M, all of the following information from the previous calendar year to ensure the utility’s compliance with this section:

(A) (i) A list of covered business units of the utility. Except as specified in clause (ii), for each covered business unit, the report shall contain all of the following:

(I) A list of each employee’s name and job title.

(II) A job description of each listed employee sufficient to describe the employee’s responsibilities.

(III) The total annual compensation provided to each listed employee.

(IV) The number of hours booked to an above-the-line account for each listed employee.

(V) The percent of total annual compensation booked to an above-the-line account for each employee.

(ii) This subparagraph does not apply to an employee represented by a labor organization, covered under a valid collective bargaining agreement, and performing activities described in this chapter at the direction of the labor organization.

(B) To the extent the utility retains outside vendors to perform activities described in subdivision (b) and those vendors conduct any other work where the costs of the work are recorded to above-the-line accounts, the utility shall provide the Federal Energy Regulatory Commission Uniform System of Accounts number under which those costs are recorded and a log documenting the time, work performed, total cost incurred, how those costs benefit ratepayers, and the reason those activities are not deemed to be activities for which the recovery through rates of those costs is prohibited pursuant to subdivision (b).

(C) A detailed accounting of expenses booked to an above-the-line account for participation in each commission proceeding for which the utility is a party, including employee compensation, and vendor and other expenses.

(2) The commission shall make all reports filed pursuant to paragraph (1) with the commission publicly available, consistent with Section 583.

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

(g) 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.

(h) (1) In addition to any disallowance or future adjustment ordered by the commission, the commission shall assess a civil penalty, based on the severity of the violation, against a utility that violates subdivision (b) or fails or neglects to comply with any part or provision of any order, decision, decree, rule, direction, demand, or requirement of the commission implementing subdivision (b).

(2) This section does not limit the commission’s authority under any other law to assess a penalty or sanction against a utility that violates subdivision (b) or fails or neglects to comply with any part or provision of any order, decision, decree, rule, direction, demand, or requirement of the commission implementing subdivision (b).

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.