Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical, gas, heat, telegraph, telephone, and water corporations. The Public Utilities Act requires the commission to inspect and audit the books and records of each electrical, gas, heat, telegraph, telephone, and water corporation for regulatory and tax purposes. The act requires an inspection and audit to be done at least every 3 years if the utility has over 10,000 customers and at least every 5 years if the utility has 10,000 or fewer customers. The act alternatively authorizes the commission to inspect and audit the books and records of those utilities in accordance with the commission-approved general rate case cycle, if that cycle provides for a rate case no less frequently than once every 5 years. The act provides that an audit conducted in connection with a rate proceeding is deemed to fulfill these requirements.

This bill would instead require the commission to audit the books and records of each electrical, gas, heat, telegraph, telephone, and water corporation if the utility has over 10,000 customers and would require the commission to review or audit the books and records of the utility if the utility has 10,000 or fewer customers. The bill would require these reviews or audits to be conducted for regulatory purposes, rather than regulatory and tax purposes. The bill would provide that a review or audit conducted in connection with a rate proceeding shall be deemed to fulfill the applicable requirements for review or audit.

Existing law authorizes the commission to conduct financial and performance audits of any entity or program created by any order, decision, motion, settlement, or other action of the commission and authorizes the commission to conduct additional followup work that is related to any findings and recommendations related to the audit. Existing law requires that the audit be completed in a timely manner consistent with the Generally Accepted Government Auditing Standards.

This bill would alternatively authorize the commission to conduct financial and performance reviews of any entity or program created by any order, decision, motion, settlement, or other action of the commission and would authorize the commission to conduct additional followup work that is related to any findings and recommendations related to the review. The bill would require that the review or audit be completed in a timely manner consistent with applicable auditing standards. The bill would require the commission, by January 15, 2020, and every year thereafter, to post on its internet website its standard practice audit manual, titled Utility Audit, Finance and Compliance Branch UAFCB Audit and Attestation Standard Practice, and updates of that manual, if any.