Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, gas corporations, heat corporations, telegraph corporations, telephone corporations, and water corporations. Existing law directs the commission to require a public utility to establish and maintain a balancing account whenever the commission authorizes a change in rates reflecting and passing through to customers specific changes in costs to reflect the balance between the related costs and revenues. Existing law requires the commission to develop a risk-based approach for reviewing those balancing accounts periodically to ensure that the transactions recorded in the balancing accounts are for allowable purposes and are supported by appropriate documentation. Existing law requires the commission to maintain an inventory of the balancing accounts and requires public utilities to record all related costs and revenues in their balancing accounts. Existing law requires the commission to adopt balancing account review procedures that are consistent with a risk-based approach.

Existing law requires the commission to annually provide the Legislature with an update on the status of its review of balancing accounts as part of an annual report or by posting it on its internet website, as provided.

Existing law requires that all charges demanded or received by any public utility, or by any 2 or more public utilities, for any product or commodity furnished or to be furnished or any service rendered or to be rendered be just and reasonable and provides that every unjust or unreasonable charge demanded or received for such product or commodity or service is unlawful.

This bill would require the commission to include, as part of its annual update to the Legislature on the status of its review of balancing accounts, the amount of funds in, and the expenditures from, the memorandum accounts and balancing accounts of each public utility. The bill would require the commission to conduct a comprehensive audit, with specified criteria, of each wildfire- or emergency-related memorandum account or balancing account of each electrical corporation on or before July 1, 2025, or, on or before January 1, 2027, if the commission is unable to review all those accounts by July 1, 2025, as provided. The bill would require the commission, if it determines that any actual costs recorded in those electrical corporation accounts have already been authorized and collected from customers, to deny the electrical corporation a 2nd recovery of those costs and to close the account after granting the electric corporation recovery of any just and reasonable costs that have not been collected from customers. costs. The bill would require the commission to make those determinations and take those actions in a manner that ensures that the rates are sufficient to enable the public utility to recover a just and reasonable rate of return.

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

Because a violation of a commission action implementing this bill’s requirements would be a crime, 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 a specified reason.