Public utilities: review of accounts: electrical and gas corporations: rates: political influence activities.

The document was reformatted from an official enrolled bill layout (with Secretary of the Senate and Chief Clerk signature blocks, page numbers, and Governor approval line) to a web page display format (with site navigation, search tools, version history list, and status timeline). No legal text was changed.

Section 748.3 was deleted in its entirety. It had prohibited utilities from recovering from ratepayers: trade association dues supporting political activities, charitable giving, political influence activities (broadly defined), promotional advertising, outside attorney fees exceeding intervenor rates, political contributions, costs for unregulated products or services, penalties and fines, board of directors liability insurance and travel expenses, aircraft for board members, and investor relations.

The bill's legislative digest changed from covering 'political influence activities and promotional advertising' to only 'political influence activities,' reflecting the removal of the broader Section 748.3 provisions.

All annual reporting requirements were removed. The deleted Section 748.3 had required utilities to report by May 31, 2026 and annually thereafter: lists of covered business units with employee names, job titles, compensation, hours booked to above-the-line accounts; vendor logs documenting time, work performed, costs, and justification for rate recovery; and detailed accounting of expenses in commission proceedings.

Public message disclosure requirements were removed. The deleted Section 748.3 had required utilities to clearly and conspicuously disclose in all public messages whether costs were paid by shareholders or ratepayers, consistent with candidate disclosure rules.

Civil penalty provisions were removed. The deleted Section 748.3 had required the commission to assess civil penalties based on severity of violation, with each day an improperly recorded expense remained in an above-the-line account constituting a separate violation after a 30-day cure period.

Section 748.4 previously referenced definitions from Section 748.3. In the enrolled version, it now contains its own standalone definitions for above-the-line account, below-the-line account, compensation, expense, political influence activity, public official, and utility, making it self-contained.

The core prohibition now covers not just recording expenses to above-the-line accounts but also 'otherwise recovering from ratepayers' those costs. This appears in both Section 748.3(b) and Section 748.4(b), closing a potential loophole where utilities could pass prohibited costs to ratepayers without formally booking them to rate-recovery accounts.

The provision on outside attorneys and experts was narrowed to cover only attorneys 'representing utilities in commission proceedings' and experts 'testifying on behalf of, or otherwise supporting the participation by, utilities in commission proceedings,' rather than all work 'related to commission proceedings.'

The provision that directed one-fourth of moneys collected from settlements or penalties (upon legislative appropriation) toward increasing enforcement resources for this section was entirely deleted.

The civil penalty provision now requires a utility to 'willfully fail or neglect' to comply with a commission order implementing the prohibition, rather than simply failing or neglecting to comply. This raises the threshold for penalties related to non-compliance with commission orders.

The phrase 'any refunds that the commission orders a utility to pay to ratepayers' was removed from the penalty section, which may affect how the commission structures remedies alongside civil penalties.

References to the Public Advocate's Office having the same discovery authority as the commission were removed from the monitoring provisions of both Section 748.3(f) and Section 748.4(c), though this authority remains in Section 314(c).

The definition of 'political influence activity' now includes 'regional' level legislation and public officials (alongside federal, state, and local). The exclusion for policies affecting gaseous fuels or electricity was narrowed from 'demand for the use' to simply 'the use.'

The definition of 'public official' was expanded to include 'regional' level decisionmakers and executive office officers, and the prior reference to 'staff that support the decisionmaker's policy development' was removed.

The definition of 'covered political influence employee' (an employee who conducts a political influence activity) was removed from the definitions section.

The exclusion for promotional advertising was expanded to cover public messages about energy conservation (as described in Section 796(b)), rates, and commission-approved utility programs and services, provided they do not primarily build the utility's public image. This gives utilities more room to communicate with ratepayers without triggering the prohibition.

The reporting requirement for job descriptions was changed from describing each 'listed employee job title' to describing each 'listed employee,' shifting from a role-based to an individual-based reporting standard.

New Section 1 amends Public Utilities Code Section 314 to give the Public Advocate's Office of the CPUC the same authority to discover information and review accounts of any public utility as the commission itself. This extends oversight beyond just electrical and gas corporations to all public utilities.

Removed the prohibition on recording litigation costs (regarding existing or proposed federal, state, or local regulations, legislation, or ordinances) to above-the-line accounts. Utilities can now recover these litigation costs from ratepayers.

Throughout the disclosure provisions, 'advertising' was replaced with 'public messages,' broadening the scope of communications for which utilities must disclose whether costs are paid by shareholders or ratepayers.

Removed the requirement that outside attorney expense disclosures include 'both the hourly rates and number of total hours devoted by each individual to relevant tasks,' simplifying the reporting obligation for outside counsel costs.

The definition of 'public official' was expanded to include 'an executive office at the local, state, or federal level,' broadening who is covered by the political influence activity restrictions.

The definition of 'expense' was narrowed from 'includes a payment to an external entity...' to 'means a payment to an external entity...', making the definition exclusive rather than illustrative.

The annual compliance report deadline was clarified to May 31, 2026 (removing a prior April 30 reference), and the reporting mechanism changed from submitting a separate report to including information as part of the statement required under General Order 77-M.

Added 'disallowance or future adjustment ordered by the commission' as an additional remedy alongside refunds and civil penalties for violations of the accounting prohibitions.

The requirement that the commission make reports publicly available was qualified with 'consistent with Section 583,' adding a statutory limitation on public disclosure.

The trade association cost prohibition exception was expanded to also cover activities required by applicable federal or state statute, or by order of a regulatory authority, undertaken to satisfy that statutory or regulatory requirement.

Section 779.9 was entirely deleted. This section would have prohibited utilities from terminating residential or commercial service for nonpayment on days when the Air Quality Index in the ZIP Code area was 'unhealthy for sensitive groups' or worse, and for three days after conditions improved. It also required utilities to restore service within 24 hours of an AQI deterioration event.

Section 4, which contained legislative findings required by the California Constitution for statutes that limit public access to government meetings and writings, was removed along with the related redaction authority.

The specific civil penalty range of not less than $1,000 and not more than $10,000 per violation was removed. The penalty is now described only as being 'based on the severity of the violation' without a stated dollar floor or ceiling.

The commission's authority to redact confidential information (including personally identifiable information) from publicly available reports was removed. Reports must now be made publicly available without a redaction mechanism.

The anti-evasion provision (moving an expense from above-the-line to below-the-line after booking) was expanded to specify that it does not protect the 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.'

The annual expense report deadline changed from April 30, 2026 to May 31, 2026, and the report is now required to be included as part of the statement filed under General Order 77-M rather than submitted as a separate filing.

The definition of 'political influence activity' was expanded with two new exclusions: activities responding to requests by a legislative committee, the commission, or a government agency for technical information, and activities required by applicable federal or state statute or regulatory authority. The existing exclusion for regulatory appearances was also broadened from 'regulatory bodies' to 'regulatory or other governmental bodies.'

The definition of 'promotional advertising' now excludes communications that are required by the commission, and the definition of 'below-the-line account' changed from expenses a utility 'does not recover from ratepayers' to those it 'does not generally recover from ratepayers,' which is a broader category.

The advertising disclosure requirement now must be consistent with candidate disclosure rules adopted under Article 5 (commencing with Section 84501) of Chapter 4 of Title 9 of the Government Code, tying utility ad disclosures to existing political disclosure standards.

The requirement for utilities to identify the funding source of above-the-line advertising in response to a public request was narrowed: only a party in the utility's most recent general rate case may make such a request, rather than any member of the public.

The limitation on outside attorney and expert costs in commission proceedings was clarified to specifically reference 'hourly rates' rather than total amounts exceeding the intervenor compensation program thresholds.

The amendment to Public Utilities Code Section 2771 (which made nonsubstantive changes to how the commission establishes priorities among customer types) was removed entirely from the bill.

The state-mandated local program designation changed from 'no' to 'yes,' indicating the bill now imposes costs on local agencies or school districts that trigger reimbursement analysis under Article XIII B of the California Constitution.

A new subdivision (e) was added to Section 748.4, creating an exception that allows utilities to record to above-the-line accounts payments made pursuant to the National Labor Relations Act or the National Labor Management Cooperation Act of 1978, mirroring a similar exception already present in Section 748.3(c).

Section 748.3(h)(1) now requires the commission to assess civil penalties 'based on the severity of the violation,' adding a proportionality requirement that was not in the prior version.

The fiscal committee designation changed from 'no' to 'yes,' indicating the bill now requires fiscal committee review, likely due to the penalty and enforcement cost implications.

The bill now adds Sections 748.3, 748.4, and 779.9 to the Public Utilities Code in addition to the original minor amendment to Section 2771, transforming it from a technical fix into a comprehensive regulatory package.

Section 748.4 separately prohibits utilities from recording costs of opposing municipalization of electrical or gas service (including lobbying, participation in city/county political proceedings, and other activities intended to prevent publicly owned utilities) to above-the-line accounts.

The air quality service protection in Section 779.9 applies to both residential and commercial service, which is broader than the existing law's protections that generally apply only to residential customers.

Section 748.3 prohibits utilities from recording to ratepayer-recovered (above-the-line) accounts: political influence activities, promotional advertising, charitable giving, industry trade association dues supporting political activity, litigation over regulations, board and officer travel/aircraft/liability insurance, investor relations costs, penalties and fines, costs for unregulated products or services, and legal fees in commission proceedings exceeding intervenor compensation program limits.

Utilities must clearly and conspicuously disclose in all advertising whether costs are paid by shareholders or ratepayers, and must identify the specific funding account upon public request for above-the-line-funded advertising.

Section 779.9 prohibits utilities from terminating residential or commercial service for nonpayment on any day the AQI for the ZIP Code area is 'unhealthy for sensitive groups' or worse, and for three days after it drops below that threshold. Utilities must restore previously terminated service within 24 hours of the AQI reaching that level and notify customers about repayment plans.

Section 748.3 defines key terms including 'above-the-line account' (expenses recovered from ratepayers), 'below-the-line account' (expenses not recovered from ratepayers), 'political influence activity' (with narrow exceptions for regulatory appearances and commission-approved programs), 'promotional advertising,' 'covered business unit,' and 'utility affiliate.'

Starting April 30, 2026, and annually thereafter, utilities must submit detailed reports to the CPUC listing covered business units, employee names, job titles, compensation, hours booked to above-the-line accounts, vendor time logs, and a detailed accounting of expenses in each commission proceeding.

The CPUC must assess civil penalties of $1,000 to $10,000 per violation. For improperly recorded expenses, utilities have 30 days to move them to below-the-line accounts; after that, each additional day constitutes a separate violation. One-fourth of penalty and settlement funds (upon legislative appropriation) must be used to increase enforcement resources.

Fiscal committee review changed from 'no' to 'yes' and state-mandated local program designation changed from 'no' to 'yes,' reflecting the bill's expanded scope and new enforcement obligations.