SB 332: Investor-Owned Utilities Accountability Act.

(1)Existing law vests the State Energy Resources Conservation and Development Commission (Energy Commission) with various responsibilities for developing and implementing the states energy policies.

This bill would require the Energy Commission, in coordination with the public advisor and the Public Utilities Commission (PUC), on or before March 31, 2026, to issue a request for proposals for a team to develop a study. The bill would require the study to (1) conduct a historical energy justice assessment of the investor-owned utilitys (IOU) operations and impacts, (2) complete a comparative analysis of the benefits and challenges of transitioning the IOUs to a successor entity in order to identify a recommended model, and, (3) if the study finds that it is in the best long-term interests of the people and ecologies of California to transition away from an investor-owned utility model, create a justice-centered implementation plan for managing the transition. The bill would require the Energy Commission, on or before June 30, 2026, to select the study team that is awarded the contract. The bill would require the Energy Commission to hold a public proceeding and submit a report of the study teams findings and recommendations to the Legislature no later than 24 months after selecting the study team for the feasibility portion of the study, and no later than 36 months after selecting the study team for the implementation plan portion of the study, as specified.

This bill would require the Energy Commission to require the study team to select and convene an advisory council by December 31, 2026, to participate in the study of the vision for a new energy system, as provided. Upon completion of the first 2 study components, the bill would require the study team, in consultation with the advisory council, to provide a recommendation for a particular successor entity type to the Energy Commission, as provided. The bill would require the Energy Commission to vote to approve the study and recommended successor entity on or before September 30, 2028. Upon approval by the Energy Commission, the bill would require the study team to begin work to create a justice-centered implementation plan. The bill would require the Energy Commission to vote to approve the implementation plan no later than October 31, 2029.

(2)Existing law vests the PUC with regulatory authority over public utilities, including electrical corporations and gas corporations, while local publicly owned utilities are under the direction of their governing boards. Existing law prohibits an electrical corporation, gas corporation, or water corporation from terminating a customers residential service for nonpayment of a delinquent account in certain circumstances, including, among other circumstances, unless the corporation first gives notice to the customer of the delinquency and impending termination, during the pendency of an investigation by the corporation of the customers dispute or complaint, or when the customer has been granted an extension of the period for payment of a bill.

This bill would, among other things, prohibit a utility, including an electrical corporation, local publicly owned electric utility, gas corporation, and local publicly owned gas utility, from disconnecting a customers residential service for nonpayment if the customer has a household income at or below 200% of the federal poverty line. The bill would prohibit a utility from disconnecting a customers residential service for nonpayment if the customers household is the residence of certain persons, including, among other persons, a person who is pregnant or 0 to 12 weeks postpartum. The bill would require the commission to establish a citation program to impose a penalty on an electrical corporation or gas corporation that violates the above-described prohibitions. The bill would also authorize the commission, a customer, or a member of the customers household to bring an action in state court for equitable relief regarding a utilitys or community choice aggregators use of any method, act, or practice inconsistent with the above-described provisions.

This bill would require a utility to offer a residential customer who meets the above-described requirements a payment plan for the customers electrical and gas service that includes a percentage of income payment plan, as specified. The bill would require each utility providing electrical service or gas service, or both, to residential customers to collect and submit to the commission monthly data on electrical and gas service terminations, reconnections, bill assistance and payment agreements, arrears, and created and broken payment plans, as provided.

(3)Existing law prohibits an electrical corporation from recovering from ratepayers an annual salary, bonus, benefit, or other consideration of any value paid to an officer of the electrical corporation, and requires that compensation to instead be funded solely by shareholders of the electrical corporation.

This bill would require each electrical corporation, on or before April 1, 2026, to submit a proposed executive compensation structure to the PUC that is structured to promote safety as a priority and to ensure public safety through performance metrics, as provided.

(4)Existing law authorizes the PUC to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.

This bill would prohibit, for proposed rate increases subject to PUC approval and a finding that the new rate is just and reasonable, an electrical corporation from proposing a compounded annual rate increase on residential customers above the increase in the Consumer Price Index. The bill would prohibit, for proposed rate increases not subject to PUC approval and a finding that the new rate is just and reasonable, an electrical corporation from proposing more than one rate increase per year, as provided.

(5)The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act requires the state board to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the statewide greenhouse gas emissions limit, as defined, no later than December 31, 2030. The act requires the state board to adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions. The state board is authorized to include market-based compliance mechanisms to comply with the regulations. The implementing regulations adopted by the state board provide for the direct allocation of greenhouse gas allowances to electrical corporations pursuant to a market-based compliance mechanism.

Existing law authorizes the PUC to allocate 15% of the revenues received by the electrical corporations from that allocation of allowances for clean energy and energy efficiency projects established pursuant to statute that are administered by electrical corporations. Existing law requires the PUC to direct the balance of the revenues to be credited directly to the residential, small business, and emissions-intensive trade-exposed retail customers of the electrical corporations, as specified.

Beginning with the fiscal year commencing July 1, 2026, and ending with the fiscal year ending June 30, 2036, this bill would require the PUC to annually allocate $100,000,000 of the revenues received by the electrical corporations from that allocation of greenhouse gas allowances to the Transformative Climate Communities Program and to the Community Resilience Center Program, as specified. The bill would require those allocations for the Transformative Climate Communities Program and Community Resilience Center Program to benefit disadvantaged communities in census tracts that are the most vulnerable to climate disaster, as specified.

(6)Existing law establishes the Wildfire Fund to pay eligible claims arising from a covered wildfire, as provided. Existing law requires the PUC to initiate a rulemaking proceeding to consider using its existing authority to require certain electrical corporations to collect a nonbypassable charge from its ratepayers to support the Wildfire Fund, and requires the PUC to direct those electrical corporations to collect that charge if the PUC determines that the imposition of the charge is just and reasonable and that it is an appropriate exercise of its authority, as specified.

This bill would require the PUC to revise the above-described rulemaking proceeding to reduce the charge imposed on ratepayers to an amount equal to 5% of the costs to support the fund, and require each electrical corporation to contribute the remaining 95% of the costs to support the fund.

Existing law establishes procedures under which electrical corporations are required to reimburse the Wildfire Fund for amounts disallowed by the PUC for recovery from ratepayers. Existing law requires an electrical corporation to reimburse the fund for the full amount of costs and expenses the PUC determined were disallowed, except as provided. Under existing law those exceptions do not apply if the administrator determines that the electrical corporations actions or inactions that resulted in the covered wildfire constituted conscious or willful disregard of the rights and safety of others.

This bill would provide that, for those purposes, evidence that an electrical corporations action were prudent includes common sense best practices such as conducting annual audits and replacing equipment that has outlived its usable life and deenergizing the electrical grid under threatening conditions.

(7)Existing law requires each electrical corporation to construct, maintain, and operate its electrical lines and equipment in a manner that will minimize the risk of catastrophic wildfire posed by those electrical lines and equipment.

This bill would require each electrical corporation to annually contract with an independent and reputable third party to audit all of the electrical corporations equipment and electrical lines and identify any equipment or electrical lines that have outlived their useful life. The bill would require the audit to be completed on or before June 30, 2026, and by June 30 of each year thereafter and submitted to the PUC on or before August 31, of each year. The bill would require an electrical corporation to replace any equipment or electrical lines identified by the third-party auditor that are located in a high fire risk area within 5 years, as provided. The bill would require the PUC to assess fines on an electrical corporation that fails to comply with these provisions, as specified.

(8)Existing law requires the PUC to establish an expedited utility distribution infrastructure undergrounding program and provides that only large electrical corporations may participate in the program.

This bill would instead require all large electrical corporations to participate in the program. The bill would also require an electrical corporation, after an emergency or disaster in which its electrical infrastructure was destroyed, to rebuild the destroyed electrical infrastructure using undergrounding methods, to the extent applicable. The bill would prohibit the cost of undergrounding the electrical infrastructure from being recovered from ratepayers.

(9)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 certain provisions of this bill would be part of the act and a violation of a commission action implementing the bills requirements would be a crime, the bill would impose a state-mandated local program.

In addition, to the extent the bill would impose new requirements on local publicly owned utilities, 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 specified reasons.