Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Under existing law, it is the policy of the state that each electrical corporation continue to operate its electric distribution grid in its service territory and to do so in a safe, reliable, efficient, and cost-effective manner.
This bill would authorize the commission to evaluate performance metrics and financial performance-based incentives to identify mechanisms that may serve to better align electrical corporation operations, expenditures, and investments with delivering safe and reliable electrical service and achieving public policy goals, while minimizing costs for ratepayers. The bill would require the commission to prioritize performance metrics and financial performance-based incentives that can reduce electrical corporations' preference for investments that can be added to their ratebase and instead encourage electrical corporations to propose the most cost-effective solutions for providing safe and reliable electrical service, as provided. The bill would require the commission to study incentive mechanisms approved by the commission, and other incentive mechanisms deployed by other jurisdictions, to determine their effectiveness and to identify any unintended consequences of their adoption, as provided. The bill would authorize the commission, on or before January 1, 2028, to begin tracking one or more of the performance metrics identified, and to subsequently consider whether financial performance-based incentives linked to those performance metrics would be effective and beneficial for minimizing costs for ratepayers.
Under existing law, a violation of the Public Utilities Act or an order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill would be a part of the act and a violation of a commission action implementing the requirements of the bill would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Statutes affected:
SB 500: 25233 PRC
02/19/25 - Introduced: 25233 PRC
03/26/25 - Amended Senate: 25233 PRC