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

Header changed from enrolled bill format (with Assembly and Senate passage dates) to chaptered law format showing 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL' and 'CHAPTER 634' with the gubernatorial approval date of October 11, 2025.

Page numbers and running headers changed from 'AB 1167' style to 'Ch. 634' style throughout the document, reflecting its new status as a codified statute.

Removed duplicate word in Section 748.3(b): 'an above-the-line account account' corrected to 'an above-the-line account'

Removed redundant language in the digest and Section 748.3(e)(1): 'include, report' simplified to just 'report'

Fixed grammar in the legislative counsel's digest: 'an each electrical corporation or gas corporation' corrected to 'each electrical corporation or gas corporation'

Standard enrollment formatting: removed all prior amendment dates and author lists, added Assembly passage date (September 10, 2025), Senate passage date (September 9, 2025), and governor's approval signature block

The amendment to Section 314 of the Public Utilities Code is entirely removed. This provision would have given the Public Advocate's Office the same authority as the commission to discover information and review utility accounts.

The definition of 'below-the-line account' changes from expenses a utility 'does not recover' from ratepayers to expenses a utility 'does not generally recover' from ratepayers, adding a qualifier that could affect edge cases.

The definition of 'promotional advertising' now excludes communications that are 'required by the commission,' narrowing what qualifies as prohibited promotional advertising.

Exclusions from 'political influence activity' are expanded from two to four: activities before 'regulatory or other governmental bodies' (previously only regulatory bodies) are excluded, and two new exclusions are added for activities responding to technical information requests from legislative committees, the commission, or government agencies, and activities required by federal or state statute or regulatory order.

The requirement to disclose funding source in response to a request is narrowed from any 'public request' to only a 'request from a party in the utility's most recent general rate case,' significantly limiting who can obtain this information.

The annual compliance report is now required to be submitted as part of the statement required under General Order 77-M rather than as a standalone filing, integrating it into existing regulatory reporting.

The annual expense report deadline changes from April 30, 2026 to May 31, 2026.

The penalty trigger is narrowed from 'fails or willfully neglects to comply' to only 'willfully neglects to comply,' removing liability for non-willful failures. Additionally, the 30-day cure period provision (which allowed utilities 30 days to correct a misrecorded expense before each additional day counted as a separate violation) is removed.

Public availability of reports is now qualified with 'consistent with Section 583' of the Public Utilities Code, adding a statutory constraint on how reports are made public.

The core prohibition in subdivision (b) now covers both recording prohibited costs to above-the-line accounts AND 'otherwise recovering from ratepayers,' closing a gap where utilities could move expenses to below-the-line accounts and still pass them through to customers via other mechanisms.

Senator McNerney was added as principal coauthor and Senator Allen was removed from the primary coauthor list, reflecting a shift in Senate sponsorship.

The civil penalty standard was lowered from requiring a 'willful' violation or 'willful neglect' to simply a violation or failure/neglect to comply, making it easier for the Public Utilities Commission to impose penalties without proving intent.

The specific civil penalty range of not less than $1,000 and not more than $10,000 per violation was removed. Penalties are now determined solely based on 'the severity of the violation' with no stated floor or cap.

A new exemption was added to the annual reporting requirements: employees who are represented by a labor organization, covered under a valid collective bargaining agreement, and performing activities at the direction of that labor organization are excluded from the detailed employee-level reporting (names, job descriptions, compensation, hours booked).

The promotional advertising exception for safety/emergency messages was expanded to also cover 'conservation of energy as described in subdivision (b) of Section 796, rates, utility programs and services approved by the commission,' but now requires that such messages 'do not primarily build the public image of the utility.'

The prohibition on outside attorney and expert payments was narrowed to specifically cover attorneys 'representing utilities in commission proceedings' and experts for work related to 'testifying on behalf of, or otherwise supporting the participation by, utilities in commission proceedings,' rather than the broader prior language covering any work 'related to commission proceedings.'

Removed 'litigation regarding existing or proposed federal, state, regional, or local regulations, legislation, or ordinances' from the list of expenses that utilities are prohibited from recording to above-the-line (ratepayer-recoverable) accounts. This means utilities can now recover litigation costs through rates.

Civil penalties under Section 748.3(h) now require a showing that the utility 'willfully violates' the expense prohibition or 'fails or willfully neglects to comply' with commission orders, rather than applying to any violation or failure to comply. This raises the enforcement threshold from strict liability to requiring proof of intentional or knowing misconduct.

Added new paragraph (h)(3) as a savings clause stating that the section does not limit the commission's authority under any other law to assess a penalty or sanction against a utility for violations or noncompliance.

Removed the provision that would have directed one-fourth of moneys collected from settlements or penalties for violations to be used by the commission to increase enforcement resources for this section, subject to legislative appropriation.

Sections were renumbered after removing an empty section number. The addition of Section 748.3 moved from SEC. 4 to SEC. 3, and all subsequent sections shifted down by one.

The civil penalty standard was lowered from requiring a 'willful' violation or 'willful neglect' to simply 'violates subdivision (b) or fails or neglects to comply.' This removes the intent requirement, making it significantly easier for the commission to impose penalties of $1,000 to $10,000 per violation.

Section 4, which contained legislative findings under the Open Government Act justifying limits on public access to certain information in the reports (to protect confidential corporate information and personally identifiable information), was entirely removed. The bill now relies on Section 583 of the Public Utilities Code for how public availability works.

The annual compliance report is now required to be included as part of the statement filed under General Order 77-M rather than submitted as a separate standalone report to the commission. This integrates the new reporting obligation into an existing filing process.

The deadline for the first annual report was simplified from 'April 30, May 31, 2026' to just 'May 31, 2026,' removing the earlier date.

The requirement to identify the funding source of public messages recorded to above-the-line accounts now applies only in response to a request from a party in the utility's most recent general rate case, rather than in response to any 'public request.' This narrows who can trigger the disclosure.

Senator Stern was added as a coauthor alongside Senator Allen, indicating additional Senate sponsorship of the bill.

New Section 3 amends Public Utilities Code Section 314 to explicitly state that the Public Advocate's Office has the same authority to discover information and review accounts of public utilities as the commission itself. This elevates the Public Advocate from a provision buried in the new Section 748.3 to a standalone statutory grant of inspection authority.

Throughout the bill, the term 'advertising public messages' was replaced with 'public messages,' broadening the disclosure requirement so that utilities must identify whether costs are paid by shareholders or ratepayers in all public communications, not just advertising.

The definition of 'covered political influence employee' (an employee who conducts a political influence activity) was removed from Section 748.3(a).

The political influence activity exclusion for regulatory appearances changed from 'Policies affecting demand for the use of gaseous fuels or electricity' to 'Policies affecting the use of gaseous fuels or electricity,' removing the word 'demand for' and slightly narrowing the scope of what is excluded.

In the prohibition on recording costs to above-the-line accounts, the requirement to disclose 'both the hourly rates and number of total hours devoted by each individual to relevant tasks' for outside attorneys and experts was removed, simplifying the standard to just whether payments exceed intervenor compensation program rates.

The civil penalty provision no longer references 'refunds that the commission orders a utility to pay ratepayers' as an additional remedy alongside disallowance or future adjustment, removing that specific reference from the penalty section.

Employee reporting language was simplified from 'each employee with a listed employee job title' to 'each listed employee,' and job descriptions are now required for each listed employee rather than for each job title.

The bill no longer amends Section 451 of the Public Utilities Code, which previously included nonsubstantive changes requiring utilities to furnish adequate, efficient, just, and reasonable service.

The advertising disclosure requirement was narrowed from 'all of its advertising' to 'all of its advertising public messages,' potentially reducing the scope of communications subject to the shareholder/ratepayer funding disclosure.

The prohibition on recovering outside attorney and expert costs was narrowed from covering both hourly rates and total hours devoted to relevant tasks that exceed permitted amounts, to covering only hourly rates that exceed permitted amounts.

The definition of 'public official' was expanded to include executive officers at the local, regional, state, or federal level, in addition to decisionmakers within administrative agencies or legislative bodies and their staff.

The term 'regional' was added throughout the bill as a level of government alongside federal, state, and local, broadening the scope of political influence activities and litigation covered by the rate recovery prohibition.

Disallowance or future adjustment ordered by the commission was added as an additional remedy alongside refunds and civil penalties for violations of the rate recovery prohibition.

The anti-avoidance provision (preventing utilities from moving expenses to below-the-line accounts to avoid disclosure) was expanded to explicitly cover disclosure in response to discovery requests or orders in general rate cases or other relevant commission proceedings.

Fiscal committee review changed from 'no' to 'yes,' and state-mandated local program designation changed from 'no' to 'yes.' Assembly Member Irwin was added as a coauthor.

Added an entirely new Section 748.3 to the Public Utilities Code (the California Ratepayer Protection Act of 2025) that applies specifically to electrical corporations and gas corporations, expanding the bill far beyond its original scope of minor edits to Section 451.

Added legislative findings declaring that energy bills are increasingly unaffordable and stating the intent to protect ratepayers from funding utility political influence, promotional advertising, and other activities primarily benefiting shareholders.

Prohibits utilities from recording to above-the-line accounts (costs recovered from ratepayers) a broad list of expenses including: political influence activities, promotional advertising, charitable giving, membership dues supporting political activity, payments to outside attorneys exceeding intervenor compensation rates, contributions to political candidates or parties, litigation over regulations, costs for unregulated products or services, penalties and fines, board and officer liability insurance, board travel and lodging, owned/leased/chartered aircraft for boards, and investor relations.

Requires utilities to clearly and conspicuously disclose in all advertising whether costs are paid by shareholders or ratepayers, and to identify the funding source upon public request for ads recorded to above-the-line accounts.

Added detailed definitions for 'above-the-line account,' 'below-the-line account,' 'political influence activity' (with carve-outs for regulatory appearances and commission-approved programs), 'promotional advertising' (with carve-outs for safety messages and agency-directed communications), 'covered business unit,' 'covered political influence employee,' 'utility affiliate,' and others.

Requires each utility to submit an annual expense report to the CPUC on or before April 30, 2026, and annually thereafter, including employee names, job titles, compensation, hours booked to above-the-line accounts, vendor logs, and detailed accounting of commission proceeding expenses.

Establishes civil penalties of $1,000 to $10,000 per violation, with each day an expense remains improperly recorded after a 30-day cure period constituting a separate violation. Directs the CPUC to monitor and investigate compliance and grants the Public Advocate's Office the same discovery authority as the commission.

Provides that one-fourth of moneys collected from settlements or penalties for violations shall be used by the CPUC to increase enforcement resources, upon legislative appropriation.

The original nonsubstantive grammatical edits to Section 451 (removing unnecessary articles like 'a' before 'public utility') are retained but renumbered as the final section of the bill, making them secondary to the new substantive provisions.