Public utilities: electrical and gas corporations: return on equity.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Utilities and Energy
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Overview
This bill changes how California’s Public Utilities Commission (PUC) regulates the rates charged by electrical and gas corporations. It requires the PUC to demand specific studies from companies proposing rate changes that consider their investment needs and the cost of capital. The PUC is also limited in the return on equity it can authorize, capping it at 400 basis points above the rate on long-term federal debt. The bill aims to reduce utility rates and prevent excessive profits by ensuring investments are justified and aligned with cost of capital.
Key provisions
- Requires electrical and gas corporations to include specific studies in rate change proposals.
- Demands analysis of internally generated cash and external investment needs.
- Requires a study on how capital structure optimizes revenue requirements.
- Limits the authorized return on equity to 400 basis points above the federal government’s long-term debt rate.
- Mandates the PUC to consider the interests of ratepayers and avoid compounding costs.
- Aims to reduce utility rates by 25 percent.
- Prohibits authorizing rates based solely on excessive return on equity.
Who is affected
- Electrical corporations
- Gas corporations
- Public Utilities Commission
- Ratepayers
- California residents
Notable changes
- Introduces a new section (454.05) to the Public Utilities Code.
Bill text
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Sponsors
Official sponsors from legislative records.
3 on record
Primary sponsor
Cosponsors
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