An act to add Sections 399.10, 451.11, 701.11, and 769.1 to the Public Utilities Code, relating to electricity.
SB 905 would create a new state program, the Policy-Oriented and Wildfire Electric Reimbursement (POWER) Program, administered by the Energy Commission in consultation with the Public Utilities Commission (PUC). The program is intended to lower electricity rates by reimbursing electrical corporations and local publicly owned utilities for certain expenditures that are driven by public policy goals and benefit the general public, including transportation electrification, building electrification, energy efficiency, low-income discounts, wildfire mitigation, and distributed energy resources. The bill creates a dedicated fund in the State Treasury for these reimbursements and limits administrative spending to the lesser of 3% of appropriated funds or $5 million annually.
The bill also changes utility ratemaking rules. For reimbursed expenditures, it would require those amounts to be excluded from an electrical corporation’s rate base and prohibit any return on equity on assets funded by those reimbursed costs. Separately, it would require the PUC to assign reduced returns on equity for certain capital costs recovered through balancing accounts, exempted from reasonableness review, or related to undergrounding. The bill further directs the PUC to open proceedings on performance-based metrics for large electrical corporations, require public dashboards and historical data, and mandate that certain senior utility compensation be tied in part to average electricity cost growth.
In addition, SB 905 would require the PUC to study alternative financing methods for utility capital investments in distribution, generation, and transmission that could reduce ratepayer costs, with a report to the Legislature due by the end of 2028. It would also require large electrical corporations to publish public data on distribution grid utilization, including off-peak hosting capacity and constrained areas, to help identify where the grid can support more load or distributed resources. The bill makes conforming and related changes to existing Public Utilities Code provisions governing nonbypassable charges and the use of collected funds for reliability and in-state benefits.
The general sentiment reflected in the bill’s legislative history appears cautiously favorable but not unanimous. The bill passed a committee vote 13-2 and later cleared suspense file consideration 7-0, suggesting broad support for its goal of reducing rates and improving utility accountability, while also indicating that fiscal and policy concerns were significant enough to warrant suspense review. No committee transcript was provided, so the record does not show detailed debate, but the structure of the bill suggests it is aimed at ratepayer relief, utility transparency, and stronger oversight of utility spending and incentives.
The main points of contention are likely to be the bill’s impact on utility earnings, rate design, and regulatory authority. Utilities and other stakeholders may object to reduced returns on equity, the exclusion of reimbursed costs from rate base, and compensation requirements tied to electricity costs, while supporters are likely to argue these provisions better align utility incentives with affordability and efficiency. Another likely issue is the funding mechanism for the new reimbursement program and whether shifting costs away from ratepayers through nonratepayer funds is practical, equitable, and sufficient to cover the policy-driven expenditures the bill identifies.
SB 905 would add a new chapter to the Public Resources Code establishing the POWER Program and a corresponding state fund, and it would add multiple sections to the Public Utilities Code governing utility ratemaking, performance metrics, financing studies, and grid transparency. It would affect electrical corporations and local publicly owned electric utilities by creating a reimbursement framework for policy-driven expenditures, changing how certain costs are treated in rate base, and directing the PUC to adopt new oversight and reporting requirements. The bill would also require public disclosure of distribution grid utilization data and create new reporting obligations to the Legislature and the public.
The available voting history suggests the bill has generally favorable support in the Legislature, with a strong committee vote and unanimous suspense-file action. That pattern indicates lawmakers were receptive to the bill’s consumer-affordability and accountability goals, but also attentive to its fiscal and regulatory implications. Because no committee transcript was provided, there is no direct record of floor or committee debate, but the bill’s advancement implies that concerns did not outweigh support at the committee stage.
Likely areas of contention include the bill’s reduction of utility returns on equity, the exclusion of reimbursed expenditures from rate base, and the requirement that senior utility compensation be tied to average electricity costs. These provisions directly affect utility shareholder returns and management incentives, so they may draw opposition from electrical corporations and possibly labor or management interests. There may also be debate over whether the POWER Program’s reimbursement criteria are broad enough to cover the intended policy costs, whether nonratepayer funding is sufficient, and how much discretion the Energy Commission and PUC should have in implementing the new framework.