Plain English Breakdown
The official text states studies must be included 'as provided' but does not list them in the summary.
Rules on Utility Company Profit Rates
This law requires the Public Utilities Commission to ask for specific studies when utilities propose rate changes based on investment returns and limits how high their profit rates can be set.
What This Bill Does
- Requires utility companies proposing new rates tied to return on invested capital to include certain studies in their proposals.
- Prohibits the Public Utilities Commission from setting a profit rate, called return on equity, that is more than 400 basis points above federal long-term debt interest rates.
Who It Names or Affects
- Electrical corporations and gas corporations proposing new rates based on investment returns.
- The Public Utilities Commission, which regulates these companies.
- Local agencies that may face state-mandated programs because violating the commission's rules is a crime.
Terms To Know
- Return on equity
- A profit rate allowed for utility companies based on their invested capital.
- Basis points
- Small units used in finance where 100 basis points equal one percent interest rate change.
Limits and Unknowns
- The bill does not list the specific studies that must be included, only stating they are 'as provided'.
- It is unclear how much this law will lower customer bills or company profits until rates are set.
- The text states no state reimbursement is required for local costs but gives a specified reason without detailing what it is.