Public Utilities Commission: memorandum and balancing accounts.

New mandatory closure requirement: the commission must close any memorandum or balancing account it determines is no longer necessary, specifically naming wildfire mitigation, system hardening, undergrounding, and emergency response accounts as examples that should be closed when costs can be addressed through the general rate case.

The written finding justifying an account now requires the commission to explain not only why costs cannot be forecasted but also why the relevant costs are outside of the utility's control - a new justification standard that raises the bar for authorizing accounts.

The requirement for the commission to consider cost-sharing mechanisms and lower rates of return when authorizing accounts was softened from 'shall, at the same time, consider taking the following actions' to 'shall consider the following, as appropriate,' making it more discretionary.

New transparency requirement: the commission must prepare a report and post it on its public website describing the process and outcome of its review of each utility's memorandum accounts and balancing accounts.

Review timing flexibility: the commission may now review accounts on a 'proceeding cycle, or at a similar cyclical review interval to the general rate case proceeding' rather than being locked into the next general rate case specifically.

Definition of 'memorandum account' changed from costs that 'have not been authorized by the commission' to costs that 'have not been previously authorized by the commission,' clarifying that prior authorization does not disqualify a cost from being tracked.

Changed 'forecasted' to 'anticipated' in multiple places describing when accounts are permissible, and changed 'adhere to' to 'apply' for the commission's obligation to follow the stated principles.

Section 457(c)(2): The standard for authorizing memorandum or balancing accounts was changed from 'only under exceptional circumstances' to 'only when necessary to address costs that cannot reasonably be forecasted in the general rate case process.' This is a lower threshold, making it easier for utilities to obtain such accounts.

Section 457(c)(4): Previously required the commission to adopt one of three actions (cost-sharing mechanism, lower rate of return, or expiration date) when authorizing an account. Now the commission only needs to 'consider taking' those actions at the same time as authorization. This removes a mandatory protective requirement.

Section 457(d): Previously required every memorandum or balancing account authorized by statute or the commission to include a specified expiration date. Now only accounts authorized before January 1, 2027 must be included and reviewed in the subsequent general rate case proceeding, and the commission merely 'considers' assigning an expiration date during that review.

Section 457(e): The scope of exceptions the commission may establish was narrowed from 'categories of costs not reviewed in a general rate case, such as pursuant to subdivision (d)' to 'categories of costs not reviewed pursuant to subdivision (d),' tying exceptions more tightly to the review process.

Legislative finding (f) stating that 'Restoring forecast-based ratemaking and limiting reliance on memorandum accounts and balancing accounts will better align utility incentives with affordability and ratepayer protection' was removed entirely, along with portions of findings (a) and (d) that described the problem in more detail.

Two additional coauthors were added: Assembly Members Connolly and Harabedian, joining Boerner.

The amendment to Section 1006 of the Public Utilities Code (cease and desist orders for construction without a certificate of public convenience and necessity) was removed entirely. The bill now only adds Section 457.

Section 457(e) exception language was modified to reference subdivision (d) and added 'including, but not limited to' before the examples of cost categories eligible for exceptions, broadening the scope of potential exceptions.

Section 457(c)(4) changed from requiring the commission to adopt either cost-sharing mechanisms or a lower rate of return when authorizing an account, to merely requiring the commission to consider taking those actions. This makes both options discretionary rather than mandatory.

A new option (C) was added in Section 457(c)(4) allowing the commission to assign an expiration date to a memorandum or balancing account as one of the considerations when authorizing it.

Section 457(c)(2) now requires the commission to make a written finding explaining why a memorandum or balancing account is necessary and why the relevant costs cannot be adequately forecasted in the general rate case process.

Section 457(d) was substantially rewritten. Instead of requiring all accounts to include a specified expiration date, accounts authorized before January 1, 2027 must now be included and reviewed in the subsequent general rate case proceeding, with the commission considering (but not required to assign) an expiration date during that review.

A new subdivision (g) was added providing that the ratemaking treatment of any memorandum or balancing account in effect on January 1, 2027 shall remain unchanged until the commission reviews it pursuant to subdivision (d). This creates a transition protection for existing accounts.

The definition of 'balancing account' in Section 457(a)(1) was expanded to include that it may provide an opportunity for ratepayers to receive credits for costs below authorized amounts, not just for utilities to seek recovery above authorized amounts.

Assembly Member Boerner was added as a co-author. Fiscal committee designation changed from 'no' to 'yes' and state-mandated local program changed from 'no' to 'yes' in the bill's procedural information.

Entirely new Section 457 added to the Public Utilities Code establishing forecast-based ratemaking as state policy and the default approach for setting revenue requirements for electrical and gas corporations.

Memorandum accounts and balancing accounts may now only be authorized under 'exceptional circumstances,' and any such account must include a specified expiration date.

When the commission authorizes a memorandum or balancing account, it must either adopt cost-sharing mechanisms for costs recovered through the account or set a lower rate of return on capital costs recovered through it, to incentivize reliance on forecast-based ratemaking.

Activities or programs currently using memorandum or balancing accounts must be transitioned to forecast-based ratemaking at the earliest opportunity once sufficient historical data exists.

The commission may establish exceptions for categories of costs not reviewed in a general rate case (such as low-income rate discounts) or where the explicit purpose is to reduce incentives to disconnect customers for nonpayment.

New statutory definitions added for 'balancing account' (tracks specific costs incurred for comparison to authorized costs) and 'memorandum account' (tracks specific unanticipated costs not yet authorized by the commission).

Fiscal committee review changed from 'no' to 'yes' and state-mandated local program designation changed from 'no' to 'yes,' reflecting the new criminal penalty implications of the added requirements.

A no-reimbursement provision (new Section 3) was added, stating that no reimbursement is required under Article XIII B because any local agency costs arise only from changes to crime definitions or penalties.