Public utilities: review of accounts: electrical and gas corporations: rates: political influence activities.

Senator McNerney, with Assembly Member Berman as principal coauthor, advances a measure that ties ratepayer-funded political activity to municipalization debates by prohibiting certain anti-municipalization costs from being recorded in above-the-line accounts and by expanding regulatory oversight over utility accounting. The core objective is to ensure that expenses recovered from ratepayers are not used to oppose publicly owned municipal utilities, while increasing visibility into related-party transactions and the broader accounting practices of electric and gas utilities.

Key mechanisms establish a new accounting framework and expanded investigative authority. The bill adds a new provision to define above-the-line and below-the-line accounts, with above-the-line costs generally recoverable from ratepayers and below-the-line costs not, and it prohibits utilities from recording or recovering the above-the-line costs of opposing municipalization, including lobbying and participation in political proceedings, except for explicitly enumerated exceptions. The Public Utilities Commission would monitor compliance, and the Public Advocate’s Office would obtain parity with the Commission in discovering information and reviewing the accounts of utilities, including subsidiaries and affiliates, for transactions that could affect ratepayers. A moving of expenses from above-the-line to below-the-line after booking does not shield disclosure in rate-case or other proceedings. The measure also carves out certain payments—such as those authorized under the National Labor Relations Act or the National Labor Management Cooperation Act—from the prohibition, and it sets definitions for terms like “political influence activity,” “expense,” “compensation,” and “public official.” In addition, the act declares the arrangement a state-mandated local program with no required local reimbursement.

Implementation and policy context emphasize regulatory oversight, compliance costs, and procedural specifics. Utilities would need to adjust internal accounting controls to distinguish above- versus below-the-line expenses and to document compliance in rate cases and PUC proceedings. The Public Advocate’s enhanced authority could drive increased scrutiny of affiliate arrangements and cross-corporate transactions. The administration notes that violations could constitute crimes under existing enforcement mechanisms, aligning with the bill’s overall criminal-law framework, while explicitly stating no state reimbursement to local agencies for costs arising from the act. Legislative history indicates passage in both houses during September 2025 and enrollment on September 17, 2025, situating the measure within a broader context of transparency and accountability in utility governance, rate-setting, and municipalization debates.