SB332 - Investor-Owned Utilities Accountability Act.

Amended IN Assembly July 14, 2025 Amended IN Assembly June 30, 2025 Amended IN Senate May 28, 2025 Amended IN Senate April 23, 2025 Amended IN Senate April 07, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 332 Introduced by Senator Wahab (Coauthor: Senator Hurtado) (Coauthors: Assembly Members Garcia and Ortega) February 12, 2025 An act to add Chapter 3.5 (commencing with Section 25250) to Division 15 of the Public Resources Code, and to amend Sections 706 718 and 8389 of, to add Section 8386.8 to, to add Article 4.5 (commencing with Section 570) to Chapter 3 of Part 1 of Division 1 of, and to add Chapter 10 (commencing with Section 8450) to Division 4.1 of, the Public Utilities Code, relating to energy. LEGISLATIVE COUNSEL'S DIGEST SB 332, as amended, Wahab. 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 state’s energy policies. This bill would require the Energy Commission to select a research institute, as defined, to conduct a comparative analysis of the benefits and challenges of transitioning the electrical corporations to a public entity, nonprofit public benefit corporation, or mutual benefit corporation in order to identify a recommended model, as provided. The bill would require the research institute to complete the analysis on or before January 1, 2029, and, upon completion, to submit the analysis to the Legislature and the Energy Commission. The bill would require the Energy Commission to make a draft of the analysis available to the public for comment before submitting the final draft to the Legislature, and would limit the cost of conducting the analysis to $5,000,000. This bill would require the research institute to conduct the first phase of the comparative analysis and to submit an interim report, on or before December 31, 2026, to the Energy Commission on threshold legal issues, as provided. The bill would require the Energy Commission to convene a group of state attorneys from the legal departments of state agencies that regulate electrical corporations to advise the research institute on the first phase of the comparative analysis, as specified. This bill would, upon completion of the analysis by the research institute, require the Energy Commission to present the analysis at a publicly noticed business meeting on or before September 30, 2029. (2) Existing law vests the Public Utilities Commission (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 customer’s 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 customer’s dispute or complaint, or when the customer has been granted an extension of the period for payment of a bill. This bill would require a utility, including an electrical corporation, local publicly owned electric utility, gas corporation, and local publicly owned gas utility, to quarterly each electrical corporation and gas corporation, on or before March 1, 2026, and each local publically owned electric utility, on or before March 1, 2027, and annually thereafter, to post specified information concerning termination terminations of service due to nonpayment on their respective internet websites, 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 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 triennially contract with an independent and reputable third party to audit all of the electrical corporation’s equipment and electrical lines and identify any equipment or electrical lines that have reached their end of life. The bill would require the audit to be completed in alignment with the wildfire mitigation plan cycle, as specified. The bill would require the PUC to assess fines on an electrical corporation that fails to comply with these provisions, as specified. This bill would require the PUC to develop a best value procurement model in a new or existing proceeding for use in the procurement of equipment and materials for electrical corporation infrastructure projects that compares the costs and benefits of potential supplies, as provided. (5) (3) Existing law requires the Director of the Office of Energy Infrastructure Safety to issue a safety certification that is valid for 12 months after the date of issuance to an electrical corporation if the electrical corporation provides documentation that it is meeting certain requirements and the office that it has an approved the executive incentive compensation structure of the electrical corporation. that is structured to promote safety as a priority and to ensure public safety and utility financial stability with performance metrics, as specified. This bill would additionally require that the electrical corporation’s executive incentive compensation structure is structured to ensure ratepayer affordability, as provided. The bill would also require, for purposes of the safety certification, that documentation related to compensation include specified dollar amounts. Existing law requires the PUC to develop policies, rules, or regulations with a goal of reducing the statewide level of gas and electrical service disconnections for nonpayment by residential customers, as specified. Existing law requires the PUC to include in an annual report to the Legislature information on residential and household gas and electrical service disconnections, disaggregated by certain customer categories. This bill would require the PUC to provide any public nonconfidential data collected pursuant to the above-described provisions to the Office of Energy Infrastructure Safety for the purpose of reviewing ratepayer affordability when assessing executive compensation under the above-described provisions. (6) (4) Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime. Because certain provisions of this bill would be part of the act and a violation of a PUC action implementing the bill’s 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. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. This act shall be known, and may be cited, as the Investor-Owned Utilities Accountability Act. SEC. 2. (a) The Legislature finds and declares all of the following: (a) (1) Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), San Diego Gas and Electric Company (SDG&E), and SoCalGas, which SoCalGas are investor-owned utilities (IOUs) that have collectively exercised their monopoly over provided electrical and gas service to California ratepayers as regulated public utility monopolies for over 100 years, have lost the trust of the people of California due to their crushingly high rates, exorbitant payouts to executives and shareholders, reckless endangerment of life and property, and excessive spending with the goal of generating profits rather than providing an essential service. years. (b) Rates (2) According to a January 2025 report by the Legislative Analyst’s Office, electricity rates are higher in investor-owned utility (IOU) IOU service territories across California than in the service territories of not-for-profit utilities, including municipal utilities, rural electric cooperatives, and tribal utilities, which has resulted in working class and low-income people paying higher rates. utilities. On average, California IOU electricity rates are more than 50 percent higher than electricity rates charged by publicly owned utilities. For utilities, and, for IOU customers in California, electricity rates have increased nearly 50 percent over the past three years. (c) Under the current system, most distribution and transmission infrastructure is financed by IOUs and paid for by utility ratepayers. Ratepayers also pay for a rate of return for the IOUs for each project, which can average close to 10 percent. This return on investment rate creates a significant and increasingly unsustainable burden on ratepayers as more unnecessary transmission lines are constructed. This can result in unnecessary rate hikes for consumers, as capital expenses can be overestimated and overspent to increase profits. As an example, in the 2023 General Rate Case, PG&E admitted that they overestimated the actual cost of infrastructure needed by $3 billion. Despite electricity demand remaining stable, executive compensation, infrastructure spending, and customer rates continue to increase. While utilities submit new rate increase proposals on a roughly three- to four-year cycle to the Public Utilities Commission, they can also submit annual increases and emergency supplements. The compounding effect and increased frequency of these rate increases, largely related to wildfire emergencies, have unfairly burdened California residents. Specifically, from (3) IOU electricity rates are set by the Public Utilities Commission through a general rate case every three to four years, which includes review of all IOU expenses, establishing a rate of return (profits for shareholders), and a determination that the rates are just and reasonable. IOUs can also request annual rate increases and emergency supplements. From January 2021 to October 2024, inclusive, PG&E residential rates increased by 56 percent, SCE rates increased by 48 percent, and SDG&E rates increased by 21 percent. (d) These increasing rate hikes and record profits are a function of the IOUs being unwilling to adequately serve their ratepayers through affordable utility rates. One in five households served by the state’s largest IOUs are in utility debt. From (4) From August 2022 to August 2024, inclusive, PG&E, SCE, and SDG&E also compensated their shareholders with $7.62 billion in dividends. During that period, the estimated cost to prevent all residential shutoffs for nonpayment was seventy-seven one hundredths of 1 percent of that compensation to shareholders. dividends, according to a recent report. (e) The (5) Investigations have concluded that IOUs have caused some of California’s most destructive wildfires. PG&E is responsible for more than 30 wildfires since 2017 that have destroyed more than 23,000 homes and businesses and killed more than 100 people. These fires include the 2017 Tubbs Fire, the 2018 Camp Fire, the 2019 Kincade Fire, the 2020 Zogg Fire, and the 2021 Dixie Fire. SCE was found responsible for burning more than 385,000 acres, destroying thousands of structures, and causing five deaths in the 2017 Rye Fire, the 2017 Meyers Fire, the 2017 Liberty Fire, the 2017 Thomas Fire, and the 2018 Woolsey Fire. In 2007, SDG&E caused three fires, the Witch Fire, the Guejito Fire, and the Rice Fire, burning 207,000 acres, killing two people, destroying 1,141 homes. Assembly Bill 1054 (Chapter 79 of the Statutes of 2019) established a wildfire insurance fund of $21 billion, all passed onto ratepayer bills, directly and indirectly. funded in part by ratepayers. (f) Past and present experience demonstrates that the IOUs prioritize profits over the safety and well-being of the ratepayers and residents of California, and thus, to support public necessity and public purpose, must be replaced with a well-researched and structured successor entity that focuses on the needs of ratepayers, workers, fire survivors, and community members instead of shareholders. (g) (6) The State of California created the not-for-profit public benefit corporation, Golden State Energy, designated as a receiver for PG&E’s assets, through passing Senate Bill 350 (Chapter 27 of the Statutes of 2020) for the purpose of owning, controlling, operating, or managing electrical and gas services for its ratepayers, for the benefit of all Californians if PG&E were to lose its business license in a six-step accountability process overseen by the Public Utilities Commission. At that time, PG&E was in bankruptcy due to an untenable amount of after incurring liabilities for wildfires caused by its equipment. Senate Bill 350 created a successor in name only and was never in a position to did not receive PG&E assets. This (b) The intent of this bill builds is to build on Senate Bill 350 (Chapter 27 of the Statutes of 2020) by authorizing an in-depth unbiased study by a neutral third party to assess the practical, financial, legal, regulatory, labor, and technical aspects of a smooth and just transition away from the IOU model to one that prioritizes the needs of the people and ecology of the State of California. SEC. 3. Chapter 3.5 (commencing with Section 25250) is added to Division 15 of the Public Resources Code, to read: CHAPTER 3.5. Investor-Owned Utility Transition Feasibility Study 25250. For purposes of this chapter, all of the following definitions apply: (a) “Critical minerals” means those minerals specified by the United States Geological Survey as essential to the economic or national security of the United States, have a supply chain that is vulnerable to disruption, and serve an essential function in the manufacturing of a product, the absence of which would have significant consequences for the economic o [Text truncated for display. Full text available on Congress.gov.]