Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.

This bill would require the commission, on or before April 1, 2027, to open a rulemaking to conduct a systemwide review of the methodologies used to determine the cost of capital and authorized return on equity for each electrical corporation and gas corporation. The bill would require the commission to establish and apply a baseline capital-market risk framework to serve as the analytical foundation for determining authorized returns on equity for electrical corporations and gas corporations, as provided. The bill would require the commission to develop and adopt a strategy for adjusting authorized returns on equity for each electrical corporation and gas corporation based on specified load growth or sales volume thresholds. The bill would require the commission to conduct a comprehensive review of the cost of capital adjustment mechanism applicable to each electrical corporation and gas corporation, evaluate the authorized return on equity applicable to each electrical corporation’s infrastructure that serves transmission-level customers, and to evaluate alternative incentive-based return models that link a portion of shareholder earnings to performance outcomes, as provided.

Under existing law, a violation of an order, decision, rule, direction, demand, or requirement of the commission is a crime.