Electrical corporations and gas corporations: rate recovery: political activities and promotional advertising.

Assembly Members Berman and Addis articulate a framework to shield California ratepayers from funding utilities’ political influence and promotional advertising by introducing a new governance structure for how investor-owned electrical and gas utilities account for and disclose certain expenses. The authors describe the measure as a means to separate ratepayer-funded activities from shareholder interests, adding a requirement that public messages indicate who pays for them and mandating ongoing reporting to the Public Utilities Commission. Existing law already restricts ratepayer funds from political advocacy that does not benefit ratepayers, and the bill expands that framework with a new accounting and disclosure regime.

The core mechanism creates a clear distinction between “above-the-line” and “below-the-line” expenses tied to ratepayer recovery, and prohibits recording or recovering many costs to above-the-line accounts unless explicitly allowed. Prohibited above-the-line costs include trade association dues or charitable giving if portions fund political influence or advertising, political influence activities, promotional advertising, certain outside counsel or expert compensation in rate proceedings beyond approved rates, political contributions, costs for nonregulated products or services, penalties, director/officer compensation and related travel, aircraft expenses for leadership, and investments in investor relations. The bill provides exceptions for activities governed by federal labor acts and certain regulatory appearances or information requests. Public messages must clearly disclose whether funding is from shareholders or ratepayers, and for messages funded from above-the-line accounts, the funding source must be identifiable upon request in rate-case proceedings. Utilities must annually report detailed information about covered business units, including employee names, titles, descriptions, total compensation, hours charged to above-the-line accounts, and the portion of compensation so charged; if outside vendors perform above-the-line work, the report must include applicable accounting numbers and logs showing costs, benefits to ratepayers, and rationale for not treating activities as prohibited. The reporting must also include a detailed accounting of above-the-line expenses tied to each commission proceeding in which the utility participates, and the reports must be made publicly available to the extent allowed. The commission is tasked with monitoring compliance and may impose civil penalties for violations or failure to implement the section, while the broader legal framework for PU Act violations could yield criminal consequences under existing law.

In context, the measure interacts with the current authority of the Public Utilities Commission to fix rates and require that ratepayer funds not be used for nonbeneficial advocacy, by adding a granular, auditable framework for cost categorization, disclosure, and enforcement. It establishes civil-penalty remedies and references the commission’s ability to respond to noncompliance within the PU Act framework, with public reporting and greater transparency as central elements. The bill creates a potential local-cost implication for state-mandated local programs, while stating there is no required local reimbursement for the new costs. Implementation would require utilities to upgrade accounting practices, establish detailed disclosure protocols, and align internal controls with the commission’s reporting cadence, alongside regulatory guidance on disclosure standards and data privacy considerations.