AB 1167 bars electrical and gas utilities from recording a long list of expenses to above-the-line accounts — i.e., costs recoverable from ratepayers. That list includes dues to trade associations (when any portion supports political influence or advertising), charitable donations, political influence activities, promotional advertising, contributions to candidates or committees, certain attorney and expert fees above specified rates, investor relations, board perks, fines, and costs for non‑regulated products or services.
The bill also imposes a stringent transparency and enforcement regime: utilities must disclose in public messages whether shareholders or ratepayers paid for them, supply detailed annual reports as part of General Order 77‑M (including employee names, job descriptions, compensation and hours charged to above‑the‑line accounts), and provide vendor accounting logs tied to FERC account numbers. The CPUC will publish filings, monitor compliance, and may disallow recovery and assess civil penalties for violations.
At a Glance
What It Does
The bill prohibits utilities from recovering specified political, image‑building, and non‑regulated costs from ratepayers by barring those charges from above‑the‑line accounts. It mandates public disclosures of who paid for public messages and an annual, itemized report to the CPUC linking employee and vendor costs to above‑the‑line accounts.
Who It Affects
The measure applies to California electrical and gas corporations, their corporate affiliates, outside vendors, and legal counsel used in regulatory matters; it also affects industry trade associations that receive dues. The CPUC must expand monitoring, and consumer advocates will gain new data for rate proceedings.
Why It Matters
AB 1167 shifts many soft‑costs away from ratepayers and into shareholder expense or requires internal accounting changes, increases transparency about how utilities allocate employee time and vendor billing, and raises the stakes for whether trade association activities and promotional communications are treated as recoverable overhead.
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What This Bill Actually Does
AB 1167 draws a clear line between recoverable and nonrecoverable utility spending by defining "above‑the‑line" (rate‑recoverable) and "below‑the‑line" (nonrecoverable) accounts and then listing categories that may not be booked to above‑the‑line accounts. The bill targets activities that influence legislation, public officials, elections, public opinion on regulation or rate setting, and promotional communications aimed primarily at building a utility’s public image.
That scope captures traditional lobbying, many forms of advocacy conducted through trade associations, and what the bill calls "promotional advertising."
The statute contains several narrow exceptions. Activities that are "directly and necessarily related" to appearances before regulatory bodies, commission‑approved public purpose programs, responses to technical information requests from agencies, and activities compelled by statute or regulatory order are not political influence activities for purposes of this bar.
Payments made under federal labor laws (the NLRA and the Labor‑Management Cooperation Act) are also excluded from the prohibition. The bill additionally prevents recovery of attorney and expert fees in commission proceedings when those fees exceed hourly rates that would be allowed under the CPUC intervenor compensation program.To enforce the rules, AB 1167 layers substantial disclosure obligations on utilities.
Each utility must, annually and as part of the GO 77‑M statement, list covered business units and, for each covered employee, provide name, job title, job description, total compensation, hours charged to above‑the‑line accounts, and the percentage of compensation booked to above‑the‑line accounts. Vendors who perform mixed work must be tied to a Federal Energy Regulatory Commission Uniform System of Accounts number and submit logs showing time, work performed, costs, and an explanation of benefit to ratepayers.
The CPUC will make these filings publicly available (subject to Section 583 confidentiality rules), monitor compliance, and may disallow recovery, require future rate adjustments, and levy civil penalties based on the severity of violations. The bill also states that reclassifying an expense later to a below‑the‑line account does not shield it from disclosure or discovery in rate proceedings.
The Five Things You Need to Know
The bill bars recovery from ratepayers for trade association dues, sponsorships, or contributions when any portion supports political influence activities or advertising.
By May 31, 2026 and annually thereafter, utilities must file detailed GO 77‑M reports listing covered business units and, for each covered employee, name, job title, job description, total annual compensation, hours booked to above‑the‑line accounts, and percent of compensation charged to above‑the‑line accounts.
Public messages must conspicuously state whether shareholders or ratepayers paid for them, and for messages charged to above‑the‑line accounts utilities must be able to identify the specific expense or capital account funding the message upon request in the most recent general rate case.
The CPUC will publish the annual reports (subject to confidentiality law), may disallow recovery, and is authorized to assess civil penalties in addition to other sanctions; moving an expense to a below‑the‑line account after the fact does not avoid disclosure obligations.
Payments pursuant to the National Labor Relations Act and the Labor‑Management Cooperation Act are excluded from the prohibition, and attorney/expert fees exceeding rates allowable under the CPUC intervenor compensation rules are nonrecoverable.
Section-by-Section Breakdown
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Definitions and scope
This subsection supplies the operative vocabulary: above‑ and below‑the‑line accounts, political influence activity, promotional advertising, covered business unit, vendor, utility affiliate, and so on. Those definitions determine which activities are disallowed from rate recovery and which are not. Practically, the definitions broaden the CPUC’s reach beyond classic lobbying to include image‑building communications and certain trade association work, so compliance requires mapping business units and expense types to these categories.
Prohibited categories of rate‑recoverable costs
This is the core prohibition: utilities may not record to above‑the‑line accounts (and thus may not charge ratepayers for) dues or contributions to trade associations when any portion supports political influence or advertising, charitable giving, political influence activities, promotional advertising, certain attorney/expert fees, political contributions, marketing for nonregulated products, fines and penalties, board/officer perks and travel, aircraft usage, and investor relations. The provision is broad and prescriptive — it alters long‑standing cost allocation practices by listing multiple specific nonrecoverable items rather than relying on general reasonableness tests.
Labor and federal law exceptions
This subsection carves out payments authorized by federal law: collective bargaining‑related payments governed by the NLRA and payments under the Labor‑Management Cooperation Act remain recoverable as permitted by federal law. The bill also exempts employees acting under direction of a labor organization when covered by a valid collective bargaining agreement. Those carve‑outs recognize federal preemption concerns around union security and labor financing.
Public message disclosure and traceability
Utilities must clearly and conspicuously disclose in all public messages whether shareholders or ratepayers paid for them, consistent with candidate disclosure rules. For messages charged to above‑the‑line accounts, utilities must be able to identify the specific expense or capital account funding the message when asked in their most recent general rate case. The language raises compliance questions about how utilities label public communications and how CPUC staff and intervenors will verify the funding source and account coding.
Annual reporting requirements and vendor accounting
Each utility must file an annual report, via the GO 77‑M statement, that lists covered business units and provides granular employee‑level data: names, titles, job descriptions, total compensation, hours charged to above‑the‑line accounts, and the percent of compensation charged to above‑the‑line. Vendors doing mixed work must be identified by FERC Uniform System of Accounts numbers and provide detailed logs linking work and hours to above‑the‑line costs and explaining why the activities benefit ratepayers. The CPUC will publish these reports subject to confidentiality rules, adding a new public dataset for rate review and oversight.
Monitoring, disclosure protections, reclassification rule, and penalties
The CPUC must monitor and investigate compliance; filings are public consistent with Section 583. Reclassifying an expense to a below‑the‑line account after it was originally charged to an above‑the‑line account does not shield that expense from disclosure or discovery. The CPUC may order disallowances, future rate adjustments, and assess civil penalties proportional to the severity of violations; the statute expressly preserves any additional penalty authority under other laws. Together these clauses give the commission both investigatory tools and financial deterrents.
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Explore Energy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Residential and small commercial ratepayers, who gain protection against subsidizing utilities’ political advocacy, image‑building campaigns, and nonregulated activities because those costs must not be passed through in rates.
- Consumer advocacy groups and intervenors, who receive granular data tying employee time and vendor billing to above‑the‑line accounts and can use that information in rate cases to challenge cost allocations.
- Competing nonregulated service providers and smaller utilities, which benefit from reduced risk that a large utility will cross‑subsidize competitive or promotional activities through regulated rates.
- Labor organizations and collectively bargained employees, who are explicitly exempted when performing activities under a collective bargaining agreement, preserving certain labor finance practices.
Who Bears the Cost
- Investor‑owners and shareholders of utilities, who will absorb costs previously charged to ratepayers or otherwise see those activities curtailed.
- Utility trade associations, which may lose recoverable dues and will need to segregate and document advocacy versus nonadvocacy spending or face member pushback.
- Outside law firms and consulting experts, which may see portions of fees for regulatory work disallowed if their hourly rates exceed intervenor compensation ceilings or if their work is deemed political influence.
- Utility executives and boards, who lose routine perk reimbursements (travel, aircraft, hospitality) as recoverable expenses and will face stricter scrutiny of investor relations spending.
- The CPUC and its staff, who gain new oversight responsibilities and will need resources and procedures to review voluminous employee‑level filings, vendor logs, and to adjudicate disputes over what counts as political influence or promotional advertising.
Key Issues
The Core Tension
The bill pits two legitimate goals against each other: protecting ratepayers from subsidizing utilities’ political advocacy and image‑building activities versus preserving utilities’ ability to participate in policy debates and conduct public education. Strengthening transparency and cost allocation protects consumers but risks chilling lawful advocacy and public information efforts, and it imposes administrative burdens and confidentiality dilemmas on both utilities and the CPUC.
The bill resolves a longstanding policy question — who should pay for utilities' political and image‑building activities — by shifting recovery away from ratepayers, but it leaves several operational knots. First, the line between permissible regulatory advocacy and prohibited political influence is context‑dependent.
The statute excludes activities "directly and necessarily related" to regulatory appearances, but utilities, intervenors, and the CPUC will litigate where preparatory research, policy analysis, or public education crosses into the banned category. Expect disputes over mixed‑purpose communications and joint trade association outputs where only a portion supports advocacy.
Second, the reporting mandate demands granular, employee‑level disclosures (names, compensation, hours) and vendor logs tied to FERC account numbers; that raises privacy and commercial confidentiality concerns and will strain both utility compliance teams and CPUC review capacity. While Section 583 confidentiality procedures apply, managing redactions and legitimate confidentiality claims will be resource‑intensive.
Finally, operational workarounds — carving out functions to below‑the‑line accounts, reclassifying costs, contracting through affiliates, or restructuring trade association funding — will follow. The bill forbids hiding an originally above‑the‑line charge by later moving it below‑the‑line, but it does not eliminate incentives to restructure activities or to contest CPUC interpretations, so litigation and circumvention risk remain.
A related implementation tension concerns legal spend: tying recoverability to intervenor compensation hourly rates may limit utilities' ability to hire high‑cost experts, potentially slowing complex proceedings or shifting costs in ways that change litigation strategy. At the same time, forcing utilities to internalize political and promotional costs will likely reduce certain public outreach and association memberships, with secondary consequences for public education campaigns and stakeholder engagement that the CPUC and policymakers will have to weigh.
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