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<ns0:Id>20250AB__271098AMD</ns0:Id>
<ns0:VersionNum>98</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-20</ns0:ActionDate>
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<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2026-03-19</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureType>AB</ns0:MeasureType>
<ns0:MeasureNum>2710</ns0:MeasureNum>
<ns0:MeasureState>AMD</ns0:MeasureState>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Bauer-Kahan</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Bauer-Kahan</ns0:Name>
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</ns0:Authors>
<ns0:Title>An act to add Section 720 to the Public Utilities Code, relating to public utilities.</ns0:Title>
<ns0:RelatingClause>public utilities</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Public utilities: electrical and gas corporations: financial distress: public assistance.</ns0:Subject>
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<ns0:DigestText>
<html:p>Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations and gas corporations.</html:p>
<html:p>This bill would prohibit an electrical corporation or gas corporation from receiving public assistance, as defined, to avoid or recover from financial distress, as defined, unless the commission finds that the corporation has agreed to certain terms and conditions, including a requirement that shareholders contribute equity capital equal to not less than 25% of the total amount of public assistance provided. The bill would require an electrical corporation or gas corporation receiving public assistance to provide quarterly public reports detailing compliance with the terms and conditions for the public
assistance, as specified. The bill would require the commission, before approving the public assistance, to make certain findings, including a finding that the public assistance is necessary to maintain safe and reliable utility service to California residents and businesses. The bill would require the commission to continuously monitor compliance with all terms and conditions on the public assistance and would authorize the commission to take certain enforcement actions, as specified.</html:p>
<html:p>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.</html:p>
<html:p>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.</html:p>
<html:p>Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.</html:p>
<html:p>This bill would make legislative findings to that effect.</html:p>
<html:p>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.</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
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<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_BBB433EE-96AC-4915-923D-C1305D1821AF">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>This act shall be known, and may be cited, as the Leading with Love Act.</html:p>
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<ns0:BillSection id="id_5FDCFB8A-11D1-453B-B00D-934619D0CD04">
<ns0:Num>SEC. 2.</ns0:Num>
<ns0:Content>
<html:p>The Legislature finds and declares all of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
Investor-owned utilities provide essential services to millions of California residents and businesses, making their financial stability a matter of public concern.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
When investor-owned utilities face bankruptcy or severe financial distress, ratepayers may be called upon to provide financial assistance through rates, bonds, or other mechanisms authorized by the state.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Previous instances of financial distress have resulted in costs being borne by ratepayers without adequate protection of ratepayer interests or adequate accountability for utility management and shareholders.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
In the future, public financial assistance to an investor-owned utility should not be used to insulate shareholders from the consequences of mismanagement, imprudence, or excessive risk-taking.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Any public assistance provided to prevent or recover from utility bankruptcy must include strong protections for ratepayers and accountability measures for utility management and investors.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
No public financial assistance should be approved unless the Public Utilities Commission finds that shareholders have borne, and will continue to bear, material financial consequences proportional to the
assistance provided.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The receipt of public financial assistance should not create any expectation, entitlement, or presumption of future assistance.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Conditioning public financial assistance on accountability, governance, and ratepayer protections is a valid exercise of the state’s police power over public utilities.
</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 720 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
, to read:
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<ns0:Num>720.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For purpose of this section, all of the following definitions apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Financial distress” means either of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A utility has filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code (11 U.S.C. Sec. 1101 et seq.).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A utility is at imminent risk of bankruptcy as determined by the commission based on one or more of the following indicators:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A credit rating below investment grade.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Inability to access private capital markets on reasonable
terms.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Projected insolvency within 12 months absent extraordinary relief.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Public assistance” means an action, authorization, or approval by the state or the commission that has the effect of transferring financial risk, costs, or liabilities from a utility or its shareholders to ratepayers or taxpayers, or that provides extraordinary financial support to a utility to avoid, mitigate, or recover from financial distress, including, but not limited to, any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Authorization to recover through rates any costs, losses, liabilities, or expenses arising from bankruptcy proceedings, financial restructuring, catastrophic events, or the conduct that precipitated financial distress.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
State-backed or ratepayer-backed financing,
loans, loan guarantees, credit support, liquidity facilities, or other forms of financial backstop.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Issuance of rate reduction bonds, recovery bonds, securitization, or similar financing mechanisms supported directly or indirectly by ratepayers.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Creation, expansion, or use of a state-administered or state-approved fund, insurance mechanism, or risk-pooling arrangement that limits or displaces shareholder exposure to losses.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
A deferral, amortization, refinancing, or restructuring of costs or liabilities that would not be available to the utility on a purely private-market basis absent state action.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
Other mechanisms, whether denominated as regulatory relief, financial assistance, or cost recovery, that the commission or the state
authorizes for the purpose or with the effect of stabilizing a utility’s financial condition by shifting risk away from shareholders.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Utility” means an electrical corporation or gas corporation.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Public financial assistance to a utility is an extraordinary remedy and shall be disfavored absent a clear showing of ratepayer benefit and shareholder accountability.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Public financial assistance shall not be used to preserve private investment value at public expense.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
A utility shall not receive public assistance to avoid or recover from financial distress unless the commission, after notice and hearing, makes findings that the utility has agreed to all of the following mandatory terms and conditions:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Shareholders shall contribute equity capital equal to not less than 25 percent of the total amount of public assistance provided, through one or more of the following mechanisms:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
New equity investment.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Conversion of debt to equity.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Subordination of shareholder claims.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Other mechanisms approved by the commission that result in shareholders bearing a proportionate share of financial responsibility.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The utility, or its parent, subsidiary, or affiliate acting on behalf of the utility, shall not declare or pay common stock dividends until all ratepayer-funded assistance has been
fully repaid, including any associated financing costs.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The utility shall not repurchase, redeem, or otherwise acquire its own equity securities, for a period of 20 years.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Notwithstanding any other law, the return on equity authorized by the commission for the utility shall not exceed the median authorized return on equity for comparable electrical or gas utilities nationwide for a period of 20 years.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Total compensation for executive officers and directors, including, but not limited to, bonuses, stock options, long-term incentive compensation, and severance benefits, shall not exceed the 75th percentile of comparable utility positions nationwide, as determined by an independent compensation consultant approved by the commission, for a period of 20 years.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Severance packages for executive officers who are terminated or resign for any reason shall not exceed three months of base salary and shall not include accelerated vesting of equity or incentive compensation, for a period of 20 years.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
A majority of the utility’s board of directors shall consist of independent directors who have no material financial, employment, or advisory relationship with the utility or its affiliates, as determined pursuant to standards adopted by the commission.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The utility shall establish a ratepayer advocate position on its board of directors, nominated by the commission and compensated by the utility, whose duty shall be to represent ratepayer interests in board deliberations and decisionmaking.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The utility shall establish a dedicated board-level committee responsible for overseeing compliance with all terms and conditions imposed pursuant to this section.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The utility shall be overseen by an independent safety monitor appointed by the commission, with authority to review and report on the utility’s safety culture, operational practices, and compliance with applicable law, for a period of 20 years.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The utility shall submit to annual independent audits of its safety programs and financial condition, conducted by firms approved by the commission, and the results of those audits shall be made public, for a period of 20 years.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The utility shall make publicly available all nonprivileged internal documents material to risk management, safety governance, and
financial planning, subject to reasonable redaction for trade secrets and security-sensitive information, with disputes regarding disclosure resolved by the commission, for a period of 20 years.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The utility shall maintain insurance coverage at levels determined by the commission to be adequate to cover reasonably foreseeable liabilities, including catastrophic events.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The utility shall participate in any industrywide mutual insurance, wildfire fund, or risk-pooling mechanisms established or approved by the state.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The utility shall establish and maintain a catastrophic event reserve fund in an amount determined by the commission to address future extreme risk events without immediate recourse to ratepayer assistance.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The utility shall not take an action, directly or indirectly, to evade or circumvent the requirements of this section, including through corporate restructuring, affiliate transactions, or reclassification of expenditures.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Public financial assistance approved pursuant to this section shall not result in an increase in rates, charges, or surcharges borne by ratepayers.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The utility shall provide quarterly public reports, in a form prescribed by the commission, detailing compliance with each term and condition imposed pursuant to this section, including executive compensation, shareholder contributions, safety performance, and use of public assistance funds.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
An agreement to the terms and conditions required by this section shall be executed by the utility no later
than 30 days after the commission issues a proposed decision approving public financial assistance.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Failure to timely execute the agreement shall render the approval void.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The agreement, and all terms and conditions contained in the agreement, shall remain in effect indefinitely unless otherwise specified.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Before approving public assistance, the commission shall make all of the following findings:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The utility has agreed to comply with all mandatory terms and conditions specified in subdivision (c).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The proposed public assistance is necessary to maintain safe and reliable utility service to California residents and businesses.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The terms and conditions imposed provide adequate protection for ratepayers and appropriate accountability for shareholders and management.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Alternatives to public assistance, including private financing and ownership restructuring, have been fully explored and are inadequate to address the financial distress while maintaining service quality and safety.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The utility has the operational and managerial capability to comply with all imposed terms and conditions.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The commission shall continuously monitor compliance with all terms and conditions imposed under this section.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If the commission finds that a utility has violated any material term or condition,
the commission may do any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Impose monetary penalties of up to one hundred thousand ($100,000) per day of violation, to be credited to ratepayers.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Require additional shareholder contributions.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Revoke authorization for any ongoing public assistance.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Order structural changes to utility governance or management.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Initiate proceedings, consistent with existing law, to modify, transfer, or revoke the utility’s operating authority.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Violations of the dividend restriction, share buyback prohibition, or executive compensation limitations shall result in automatic penalties equal to twice the
amount of the prohibited payment, with those penalties paid by shareholders and credited to ratepayers.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
In addition to other remedy, the commission may require individual officers or directors responsible for violations of this section to be barred from serving in a management or governance role at a utility.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
This section does not limit the commission’s authority to impose additional terms, conditions, or requirements on utilities receiving public assistance.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
This section does not create an entitlement to public financial assistance.
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
<ns0:Content>
<html:p>The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.</html:p>
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<ns0:BillSection id="id_37F28535-E17A-4CF3-BFDD-43FB8F0EC95D">
<ns0:Num>SEC. 5.</ns0:Num>
<ns0:Content>
<html:p>The Legislature finds and declares that Section 3 of this act, which adds Section 720 to the Public Utilities Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:</html:p>
<html:p>To protect the trade secrets and security-sensitive information of an electrical corporation, it is necessary to limit the disclosure of that information to the public.</html:p>
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<ns0:Num>SEC. 6.</ns0:Num>
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<html:p>
No reimbursement is required by this act pursuant to Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution.
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