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<ns0:Id>20250SB__090598AMD</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-01-22</ns0:ActionDate>
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<ns0:ActionText>AMENDED_SENATE</ns0:ActionText>
<ns0:ActionDate>2026-03-17</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator Becker</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Becker</ns0:Name>
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<ns0:Title>An act to add Chapter 20 (commencing with Section 25998) to Division 15 of the Public Resources Code, and to add Sections 399.10, 451.11, 701.11, and 769.1 to, the Public Utilities Code, relating to electricity.</ns0:Title>
<ns0:RelatingClause>electricity</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Electricity.</ns0:Subject>
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<html:p>
(1)
<html:span class="EnSpace"/>
Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to administer the Electric Program Investment Charge Fund for research, development, and demonstration programs that will benefit electricity ratepayers.
</html:p>
<html:p>This bill would require the Energy Commission, in consultation with the Public Utilities Commission (PUC), to develop and implement the Policy-Oriented and Wildfire Electric Reimbursement (POWER) Program to reduce the costs to ratepayers by providing reimbursement to electrical corporations and local publicly owned electric utilities for expenditures driven by public policy goals that provide a benefit to the general public, as provided. The bill would establish the
Policy-Oriented and Wildfire Electric Reimbursement Fund in the State Treasury and would require that moneys in the fund, upon appropriation by the Legislature, be expended by the Energy Commission for the purpose of the program. The bill would require the commission, when developing and implementing the POWER Program, to do specified things, including establish guidance and criteria for allocating reimbursements from the fund that require, among other things, that the proportion of any expenditures by an electrical corporation that are reimbursed pursuant to the POWER Program are excluded from the electrical corporation’s rate base and any asset funded by those reimbursed expenditures be funded without a return on equity, as provided. The bill would require the Energy Commission to annually report to the Legislature actual utility bill impacts in order to ensure the POWER Program is helping to reduce electricity costs for ratepayers. The bill would prohibit the Energy Commission from using more than 3% of
the moneys appropriated for the program or $5,000,000, whichever is less, for administrative and overhead costs each year.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Existing law vests the PUC with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the PUC to fix the rates and charges for public utilities and requires that those rates and charges be just and reasonable.
</html:p>
<html:p>This bill would require the PUC, for each electrical corporation, to assign a reduced return on equity, as a reduction applied each year to the then current authorized rate of return on equity, for specified types of capital costs included in the electrical corporation’s rate base, as specified.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Under existing law, it is the policy of the state that each electrical corporation continue to operate its electrical distribution grid in its service territory and to do so in a safe, reliable, efficient, and cost-effective manner.
</html:p>
<html:p>This bill would require the PUC, on or before January 1, 2028, to initiate a proceeding to investigate, develop, and adopt a framework for performance-based metrics for large electrical corporations, as provided. The bill would authorize the PUC to establish targets for each of the performance metrics developed in the proceeding and to assess the performance of the electrical corporation against the performance metrics and any targets during a general rate case, as specified. The bill would require the PUC, on or before January 1, 2028, to require each large electrical
corporation to have an incentive compensation structure for certain employees for which a minimum of 20% of their total compensation each year is contingent on the average cost of electricity, as specified.</html:p>
<html:p>This bill would require the PUC to initiate a rulemaking proceeding to evaluate opportunities for alternative methods of financing capital investments in electrical distribution, electrical generation, and electrical transmission that reduce costs for ratepayers, as specified. As part of the rulemaking, the bill would require the PUC to require each electrical corporation to annually submit a report identifying all opportunities for alternative financing of electrical distribution, electrical generation, and electrical transmission costs. The bill would require the PUC, on or before December 31, 2028, to submit a report to the Legislature outlining any findings and recommendations resulting from the rulemaking.</html:p>
<html:p>This bill
would require the PUC to require each large electrical corporation to make data available to the public that quantifies the potential for increased utilization of segments of its electrical distribution grid by reducing peak load, as specified.</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>Because certain of the above provisions would be a part of the act, and because a violation of a PUC action implementing those provisions would be a crime, this bill would impose a state-mandated local program.</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:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Chapter 20 (commencing with Section 25998) is added to Division 15 of the
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, to read:
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<ns0:Num>20.</ns0:Num>
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<ns0:LawHeadingText>Policy-Oriented and Wildfire Electric Reimbursement Program</ns0:LawHeadingText>
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<ns0:Num>1.</ns0:Num>
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<ns0:LawHeadingText>Definitions</ns0:LawHeadingText>
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<ns0:Num>25998.</ns0:Num>
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<html:p>For purposes of this chapter, all of the following definitions apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Electric utility” means either of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
An electrical corporation.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A local publicly owned electric utility.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Electrical corporation” has the same meaning as set forth in Section 218 of the Public Utilities Code.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Fund” means the Policy-Oriented and Wildfire Electric Reimbursement Fund established pursuant to Section 25998.50.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Local
publicly owned electric utility” has the same meaning as set forth in Section 224.3 of the Public Utilities Code.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Program” means the Policy-Oriented and Wildfire Electric Reimbursement Program established pursuant to Section 25998.10.
</html:p>
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<ns0:Num>2.</ns0:Num>
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<ns0:LawHeadingText>Policy-Oriented and Wildfire Electric Reimbursement Program</ns0:LawHeadingText>
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<ns0:LawSection id="id_1DD78428-A1B4-439D-9395-096BF7D83292">
<ns0:Num>25998.10.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The commission, in consultation with the Public Utilities Commission, shall develop and implement the Policy-Oriented and Wildfire Electric Reimbursement Program to reduce the costs to ratepayers by providing reimbursement to electric utilities for expenditures driven by public policy goals that provide a benefit to the general public.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The intent of the program is to use nonratepayer funds to reduce costs to ratepayers. This chapter does not authorize the use of funds in a way that would directly or indirectly increase costs to ratepayers.
</html:p>
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<ns0:LawSection id="id_62C8CBBA-32FF-4445-8B25-DF392136D75E">
<ns0:Num>25998.20.</ns0:Num>
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<ns0:Content>
<html:p>In developing and implementing the program, the commission shall do all of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
Establish guidelines and criteria for allocating reimbursements from the fund that do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Require that reimbursement from the fund be made only for electric utility expenditures that are driven by public policy goals, that provide benefit to the general public and not just to ratepayers, and that are not required for the safe and reliable delivery of electricity to the ratepayers of the electric utility. These expenditures include all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Transportation electrification programs and incentives.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Building electrification programs and incentives.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Public purpose programs, including energy efficiency programs, research and development programs, and low-income customer discounts.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Programs to promote equity and affordability for low-income ratepayers.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Wildfire mitigation activities.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
Distributed energy resource incentives.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
Other purposes specified in statute, including statutes appropriating moneys for the purpose of the program.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Require that reimbursement from the fund be made for expenditures that are either of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
For an electrical corporation, the Public Utilities Commission has approved the expenditures as being just and reasonable.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For a local publicly owned electric utility, the expenditures are approved by its governing board.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Require that reimbursement from the fund be used entirely to reduce the costs paid by the ratepayers of the electric utility and not be used for shareholder incentives or return on shareholder equity for an electrical corporation.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Require that the proportion of any expenditures by an electrical corporation that are reimbursed pursuant to this section shall be excluded from the electrical corporation’s rate base and any asset funded by those reimbursed expenditures shall be funded without return on equity for the lifetime
of the proportion of that asset that would have otherwise been borne by ratepayers.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Annually adopt a spending plan for available funds and publish the plan on the commission’s internet website.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Notwithstanding Section 10231.5 of the Government Code, annually report to the Legislature actual utility bill impacts in order to ensure the program is helping to reduce electric utility costs for ratepayers.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
</html:p>
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<ns0:LawSection id="id_E82C5011-C359-40C3-8CCE-866F59B80CB5">
<ns0:Num>25998.30.</ns0:Num>
<ns0:LawSectionVersion id="id_5CBF61CE-3E93-45F8-A1AB-467984A48C2B">
<ns0:Content>
<html:p>The commission shall not use more than the lesser of 3 percent of the moneys appropriated for the program or five million dollars ($5,000,000) for administrative and overhead costs each year.</html:p>
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<ns0:Num>3.</ns0:Num>
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<ns0:LawHeadingText>Policy-Oriented and Wildfire Electric Reimbursement Fund</ns0:LawHeadingText>
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<ns0:Num>25998.50.</ns0:Num>
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<html:p>The Policy-Oriented and Wildfire Electric Reimbursement Fund is hereby established in the State Treasury. Moneys in the fund shall, upon appropriation by the Legislature, be expended by the commission for the purpose of the program.</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 399.10 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
,
<ns0:Positioning>immediately following Section 399.9</ns0:Positioning>
, to read:
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<ns0:Num>399.10.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
On or before January 1, 2028, the commission shall initiate a proceeding to investigate, develop, and adopt a framework for performance-based metrics for large electrical corporations. These performance metrics shall be designed to promote safe, clean, and reliable electrical service at the lowest cost to ratepayers. At a minimum, the framework shall require electrical corporations to track the performance over time of all of the following types of metrics:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Distribution system reliability.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Distribution system utilization, including the metrics required by Section 769.1.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Transmission system
reliability.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Transmission system utilization.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Utilization of electrical corporation-owned generation.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Timely completion of customer energization requests.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Timely completion of transmission and generation interconnections for generation and energy storage projects.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Utilization of demand response resources or other distributed resources to serve during periods of peak demand as a means of reducing the need for additional investment in both generation resources and transmission and distribution infrastructure.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
Capital and expense spending on distribution.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
Capital and expense spending on transmission.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
Capital and expense spending on generation.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
Capital and expense spending on wildfire mitigation.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
The annual average greenhouse gas emissions intensity of all electricity used to serve loss-adjusted load, as defined in Section 398.6.
</html:p>
<html:p>
(14)
<html:span class="EnSpace"/>
The average cost of electricity charged to each customer class.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For each of the performance metrics identified in subdivision (a), each electrical corporation shall provide 10 years of historical data whenever feasible.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The commission
may establish targets for each of the performance metrics developed in the proceeding initiated pursuant to subdivision (a), and may assess the performance of the electrical corporation against the performance metrics and these targets during a general rate case. The commission shall not condition any financial incentives to the electrical corporation on the achievement of these targets.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The commission shall create a public dashboard on its internet website that provides, for each electrical corporation, public access to information on the performance metrics identified in subdivision (a), and any targets established pursuant to paragraph (1).
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
On or before January 1, 2028, the commission shall require each large electrical corporation to have an incentive compensation structure for any employee serving as a vice president, or an equivalent position, or higher, for which
the compensation is funded through rates. For these employees, a minimum of 20 percent of total compensation each year shall be contingent on the average cost of electricity, for both bundled and unbundled customers, increasing by no more than the federal social security beneficiary cost-of-living adjustment during the three-year period that includes that year and the two preceding years.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For purposes of this section, all of the following definitions apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Average cost of electricity” means the total cost of all charges to bundled or unbundled customers, including, but not limited to, volumetric rates, fixed charges, nonbypassable charges, and taxes, divided by the total amount of electricity in kilowatt-hours delivered to those customers.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Distributed resources” has the same meaning as defined in
Section 769.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Large electrical corporation” has the same meaning as defined in Section 2827.
</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 451.11 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
, to read:
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<ns0:Num>451.11.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
For each electrical corporation, the commission shall assign a reduced return on equity, as a reduction applied each year to the then current authorized rate of return on equity, for the following types of costs included in the electrical corporation’s rate base:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Capital costs recovered through a balancing account.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Capital costs exempted from a reasonableness review.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Capital costs relating to undergrounding of the electrical system.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The commission shall determine the reduced return on equity applicable to the capital costs
identified in subdivision (a) at the time the costs are initially authorized for inclusion in the rate base. The reduced rate of return shall reflect any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The lower level of cost recovery risk faced by the electrical corporation, including for costs that are exempted from a reasonableness review.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The ability to begin cost recovery sooner, including for costs in balancing accounts.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Any other reduction in risk for the shareholders of the electrical corporation, including reductions in the risk of liability for wildfire-related losses achieved by the undergrounding of electrical equipment or other wildfire mitigation investments.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The need to minimize incentives for overspending on capital relative to
expense.
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 701.11 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
, to read:
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<ns0:LawSection id="id_9963CFAC-E550-46A0-8324-E246F02050B8">
<ns0:Num>701.11.</ns0:Num>
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<ns0:Content>
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(a)
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The commission shall initiate a rulemaking proceeding to evaluate opportunities for alternative methods of financing capital investments in electrical distribution, electrical generation, and electrical transmission that reduce costs for ratepayers. The proceeding shall consider options for substituting alternative financing for shareholder equity and other financing mechanisms that could lower the cost of capital recovered in retail rates.
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(b)
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As part of the rulemaking initiated pursuant to subdivision (a), the commission shall require each electrical corporation to annually submit a report identifying all opportunities for alternative financing of electrical distribution, electrical generation, and electrical transmission costs.
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(c)
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(1)
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On or before December 31, 2028, the commission shall submit a report to the Legislature outlining any findings and recommendations resulting from the rulemaking pursuant to subdivision (a).
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(2)
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The requirement for submitting a report imposed under paragraph (1) is inoperative on January 1, 2029, pursuant to Section 10231.5 of the Government Code.
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(3)
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A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
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</ns0:BillSection>
<ns0:BillSection id="id_FCA45AC3-7ED1-40E6-B7F0-FCE1FC04A88B">
<ns0:Num>SEC. 5.</ns0:Num>
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Section 769.1 is added to the
<ns0:DocName>Public Utilities Code</ns0:DocName>
, to read:
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<ns0:Fragment>
<ns0:LawSection id="id_DADABF77-4EEC-4E94-8565-187948FC4622">
<ns0:Num>769.1.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
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The commission shall require each large electrical corporation to make data available to the public that quantifies the potential for increased utilization of segments of its distribution grid by reducing peak load, including all of the following:
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(1)
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A capacity utilization metric that measures the average electricity delivered over a distribution segment during a period of time divided by that distribution segment’s maximum electrical capacity.
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(2)
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Off-peak load-hosting capacity data that estimates the capacity of a distribution segment to support new loads outside of the highest peak load periods annually for that distribution segment, or data providing a similar
quantification of off-peak capacity, as determined by the commission.
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(3)
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The location of constrained distribution areas with sufficient detail to allow third parties to identify locations where distributed resources could benefit the constrained distribution area.
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(b)
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In approving a capacity utilization metric pursuant to subdivision (a), the commission shall consider establishing a target and timeline for each large electrical corporation to increase distribution grid capacity utilization in accordance with the approved metric.
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(c)
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As part of its distribution planning process, each large electrical corporation shall include an assessment of current distribution grid capacity utilization relative to each approved metric and may propose new or modified distribution grid utilization metrics for commission approval.
This assessment shall be shared with the commission and made available to the public.
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(d)
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For purposes of this section, both of the following definitions apply:
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(1)
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“Constrained distribution area” means a segment of the distribution grid where capacity limits are already delaying, or are anticipated to delay, energization of new loads or the ability to handle load growth from existing customers, as identified by low load-hosting capacity or by locational net benefits analysis, or a similar successor metric, as determined by the commission.
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(2)
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“Large electrical corporation” has the same meaning as defined in Section 2827.
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</ns0:BillSection>
<ns0:BillSection id="id_05342BF8-FB74-471A-9E1D-722B62C5B549">
<ns0:Num>SEC. 6.</ns0:Num>
<ns0:Content>
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No reimbursement is required by this act pursuant to Section 6 of Article XIII
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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
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B of the California Constitution.
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</ns0:Bill>
</ns0:MeasureDoc>