AB 2710 California Assembly · 2025-2026 Regular Session

Public utilities: electrical and gas corporations: financial distress: reporting.

Summary

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations and gas corporations. This bill would require an electrical corporation or gas corporation to submit a financial condition report to the Legislature, as provided, if the corporation's credit rating reaches a near-distress rating level, as defined, or if the commission issues a cost-of-capital decision, as defined, affecting the corporation. The bill would specify information required to be included in the report, including information determined by the commission to be relevant to the Legislature's understanding of the corporation's financial condition. Under existing law, a violation of the Public Utilities Act or an order, decision, rule, direction, demand, or requirement of the commission is a crime. Because the above 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.

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 20, 2026 Last action May 14, 2026

Maddy AI version diff · 3 comparisons

What changed between versions

03/19/26 - Amended Assembly → 04/16/26 - Amended Assembly · 6 edits · Apr 16, 2026

MODERATE

The April 16 amendment adds a new financial reporting requirement to AB 2710 that obligates electrical and gas corporations to submit quarterly financial condition reports to the Legislature when their credit rating reaches a near-distress level (one notch above investment grade) or within 45 days of a commission cost-of-capital decision. The bill also removes a prior provision expressing legislative intent to enact future bankruptcy-specific legislation, and restructures the bill so the new reporting provisions appear first in Section 720 before the existing public assistance conditions.

Scope change

The bill now applies not only when a utility is in or near financial distress (triggering public assistance conditions) but also proactively whenever a utility's credit rating approaches non-investment-grade status or the commission issues a cost-of-capital decision, creating an ongoing reporting obligation to the Legislature independent of any actual distress event.

REQUIREMENT

New requirement that electrical or gas corporations submit a financial condition report to the Legislature quarterly (within 30 days of quarter end) whenever they hold a near-distress credit rating, and within 45 days of any commission cost-of-capital decision affecting them, regardless of credit rating.

Detailed content requirements for the financial condition report including: current credit ratings and changes, total executive and director compensation, dividends and share repurchases, board composition and vacancies, wildfire fund participation and insurance changes, financial ratios (debt-to-equity, interest coverage), pending legal claims and insurance gaps, material SEC disclosures, going concern status, a plain-language executive summary of no more than two pages, and any other information the commission deems relevant.

DEFINITION

New definitions added: 'cost-of-capital decision' (a final PUC order determining authorized return on equity, cost of debt, and capital structure), 'credit rating agency' (SEC-registered NRSROs including S&P, Moody's, and Fitch), and 'near-distress rating' (BBB by S&P or Fitch, Baa2 by Moody's, or a negative outlook/watch on the rating one notch above that level).

SCOPE

New legislative findings establishing that the Legislature has an interest in receiving timely financial information from utilities before distress reaches a crisis stage, and that requiring plain-language presentation of information already disclosed to the SEC imposes minimal additional burden.

Removed the provision stating it is the intent of the Legislature to enact subsequent legislation relating to bankruptcy proceedings for electrical corporations.

TECHNICAL

The bill's short title 'Leading with Love Act' was moved from the first section to the last section, and the fiscal committee vote in the digest changed from 'no' to 'yes' while the state-mandated local program designation changed from 'no' to 'yes'.

02/20/26 - Introduced → 03/19/26 - Amended Assembly · 16 edits · Mar 19, 2026

MAJOR

AB 2710 was transformed from a simple one-section statement of legislative intent regarding future bankruptcy legislation for electrical corporations into a comprehensive regulatory framework adding Section 720 to the Public Utilities Code. The amended bill establishes mandatory terms and conditions that utilities must accept before receiving any public financial assistance during financial distress, including shareholder equity contributions of at least 25 percent, executive compensation caps, board independence requirements, safety monitoring, and strict enforcement penalties. This represents a major expansion in both scope (now covering gas corporations as well) and substance (from aspirational intent to binding regulatory requirements).

SCOPE

Scope expanded from electrical corporations only to include gas corporations, defined collectively as 'utility' under the new Section 720 of the Public Utilities Code.

The bill's title changed from 'An act relating to electricity' to 'An act relating to electricity. An act to add Section 720 to the Public Utilities Code, relating to public utilities.' The bill was also named the 'Leading with Love Act.'

DEFINITION

New definitions added for 'financial distress' (Chapter 11 bankruptcy filing or imminent risk based on credit rating below investment grade, inability to access capital markets, or projected insolvency within 12 months), 'public assistance' (broadly defined to include rate recovery authorizations, state-backed financing, securitization, state funds, cost deferrals, and other mechanisms that shift risk from shareholders to ratepayers), and 'utility' (electrical or gas corporation).

REQUIREMENT

Shareholders must contribute equity capital equal to at least 25 percent of total public assistance provided, through new equity investment, debt-to-equity conversion, subordination of claims, or other commission-approved mechanisms.

Utilities receiving public assistance are prohibited from paying common stock dividends until all ratepayer-funded assistance is fully repaid, and are barred from repurchasing their own equity securities for 20 years.

Return on equity authorized by the commission for a utility receiving public assistance is capped at the median authorized return on equity for comparable electrical or gas utilities nationwide for a period of 20 years.

Executive officer and director total compensation (including bonuses, stock options, long-term incentives, and severance) is capped at the 75th percentile of comparable utility positions nationwide for 20 years. Severance packages are limited to three months of base salary with no accelerated vesting.

Board governance requirements include a majority of independent directors, a commission-nominated ratepayer advocate on the board, and a dedicated board-level compliance committee, all for 20 years.

An independent safety monitor appointed by the commission must oversee the utility's safety culture and operational practices for 20 years, with annual independent audits of safety programs and financial condition made public.

Utilities must publicly disclose all nonprivileged internal documents material to risk management, safety governance, and financial planning, subject to redaction for trade secrets and security-sensitive information.

Utilities must maintain commission-determined insurance coverage, participate in state-approved mutual insurance or risk-pooling mechanisms, and establish a catastrophic event reserve fund.

Before approving public assistance, the commission must find that: the utility agreed to all mandatory terms, the assistance is necessary to maintain safe and reliable service, alternatives including private financing have been fully explored and are inadequate, and the utility has operational capability to comply with all conditions.

ENFORCEMENT

The commission may impose monetary penalties of up to $100,000 per day for material violations, require additional shareholder contributions, revoke ongoing assistance authorization, order structural changes to governance, or initiate proceedings to modify, transfer, or revoke the utility's operating authority.

Violations of dividend restrictions, share buyback prohibitions, or executive compensation limits trigger automatic penalties equal to twice the amount of the prohibited payment, paid by shareholders and credited to ratepayers. Individual officers or directors may be barred from serving in utility management or governance roles.

TIMELINE

The agreement to terms and conditions must be executed within 30 days after the commission issues a proposed decision approving assistance; failure to do so renders the approval void. The agreement remains in effect indefinitely unless otherwise specified.

FISCAL

Fiscal committee review changed from 'no' to 'yes' and state-mandated local program changed from 'no' to 'yes,' reflecting the new enforcement provisions that create a crime under existing law for violations of commission orders implementing the bill.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

May 14, 2026

Lower · Passed

In committee: Held under submission.

lower

May 13, 2026

Committee

In committee: Set, first hearing. Referred to APPR. suspense file.

lower

Apr 23, 2026

Lower · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 13. Noes 3.) (April 22). Re-referred to Com. on APPR.

lower

Apr 20, 2026

Committee

Re-referred to Com. on U. & E.

lower

Apr 16, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on U. & E. Read second time and amended.

lower

Mar 23, 2026

Committee

Re-referred to Com. on U. & E.

lower

Mar 19, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on U. & E. Read second time and amended.

lower

Mar 19, 2026

Committee

Referred to Com. on U. & E.

lower

Feb 21, 2026

Lower · Passed

From printer. May be heard in committee March 23.

lower

1 primary · 0 co-sponsors