AB 2065: Rates: prohibited cost recovery.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, gas corporations, water corporations, sewer system corporations, or and telephone corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. Existing law prohibits a utility from recording to an above-the-line account, as defined, or otherwise recovering from ratepayers specified costs.

This bill would prohibit require the commission to find that an electrical corporation, gas corporation, water corporation, sewer system corporation, or telephone corporation from engaging in inappropriate has engaged in prohibited cost recovery by recording to an above-the-line account, as defined, if the corporation records a cost to a regulator-approved financial account that meets specified criteria, including if the cost is categorically excluded from ratepayer recovery by statute, commission decision, or commission rule, exceeds the scope of the commissions authorization for the specific account or application, or has already been authorized for recovery through another ratemaking mechanism. The bill would require the commission, upon making a determination that such a corporation has engaged in inappropriate cost recovery, recorded prohibited costs to a ratepayer-funded account in violation of commission rule, tariff, or statute, to disallow recovery of the inappropriate cost from ratepayers and to impose a financial penalty for inappropriate prohibited cost recovery equal to the amount of the inappropriate prohibited cost recovery or 3 times that amount, except as specified. The bill would require each such utility to submit an annual report to the commission identifying all instances in the prior year in which prohibited cost recovery was identified, the actions that were taken in response to the identification, and any actions that were taken by the utility to prevent future occurrences.

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 provisions of this bill would be a part of the act and because a violation of a commission action implementing the bills requirements would be a crime, the 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.