Public Utilities Commission: rates: returns on equity.

Plain English Breakdown

The official source material does not specify what happens if the Public Utilities Commission fails to comply with these rules, leaving this detail uncertain.

Public Utilities Commission: Rules on Utility Rates

The bill requires the Public Utilities Commission to include specific details in its decisions about utility rates and credit ratings, and to update its rules accordingly.

What This Bill Does

• Requires the commission to provide detailed information when setting rates for electrical and gas companies starting January 1, 2028.
• Makes the commission explain any changes from previous methods used to set these rates.
• Needs the commission to start a process to update its rules about how it sets utility costs.

Who It Names or Affects

• Public Utilities Commission
• Electrical and gas corporations

Terms To Know

Return on equity

The profit a company makes compared to the money invested by shareholders.

Cost of capital proceeding

A process where the Public Utilities Commission decides how much it costs for companies to raise money.

Limits and Unknowns

• Does not specify what happens if the commission does not follow these rules.
• The bill's requirements start on January 1, 2028, so there is a delay before they take effect.

Official Summary Text

AB 2463, as amended, Petrie-Norris.
Public Utilities Commission: rates: returns on equity.
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, in any decision issued on or after January 1, 2028, determining an authorized return on equity, as defined, for an electrical corporation or gas corporation, to include specified information reflecting the commission’s
independent
analytical basis for making that determination, including, among other things, an identification of each financial model the commission relied upon in determining the authorized return
on equity and an analysis of the relationship between the credit quality of the electrical corporation or gas corporation and the authorized return on equity. If, in any cost of capital proceeding, as defined, the commission adopts a methodology for determining the authorized return on equity that differs in any material respect from the methodology disclosed in the most recent prior decision in which the commission determined an authorized return on equity for the same electrical corporation or gas corporation, the bill would require the commission to identify each material departure from the prior methodology and provide a reasoned explanation for each material departure.
The bill would also require the commission to initiate a rulemaking proceeding to update its determinations of the cost of capital to conform with the requirements of the bill. The bill would require the proceeding to consider a long-term plan related to these requirements, as specified.
Existing law requires the commission to develop, publish, and annually update a report containing specified information, including the commission’s annual work plan and a summary of deenergization event trends, as specified. Existing law requires the commission to post the report in a conspicuous area of its internet website.
This bill would require the commission to include the analysis of the trends in the California corporation credit ratings described above in that annual report to the
Legislature.
Legislature, as provided.
Under existing law, a violation of an 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.

Current Bill Text

Download Bill PDF