AB 99 adds Section 748.3 to the California Public Utilities Code and constrains when electrical corporations may seek systemwide rate increases above inflation during a general rate case cycle. The bill conditions any such proposal on prior customer approval in an election, while preserving a carve-out that allows the commission to approve increases when costs are tied to safety/modernization or higher commodity/fuel prices.
The measure alters the practical balance of power in California rate-setting: it injects direct customer voting into what has historically been an administrative process before the California Public Utilities Commission, imposes election costs on shareholders, and creates interim rate mechanics. Those changes could affect utility revenue predictability, investment in long-lived infrastructure, and the administration burden on the commission and utilities alike.
At a Glance
What It Does
The bill bars electrical corporations from proposing systemwide rate increases that exceed the annual California CPI during a general rate case cycle unless a customer election approves the increase; the commission retains authority to approve increases for clearly identified safety/modernization projects or higher commodity/fuel costs. It requires one ballot per customer, mandates that shareholders pay the costs of the election, and allows the utility to submit multiple rate plans until one wins majority support.
Who It Affects
Investor-owned electric utilities operating in California (and their shareholders and bondholders), residential and commercial electricity customers (each entitled to one ballot), the California Public Utilities Commission (which must administer interim rates and may set election rules), and consumer-advocacy groups that could mobilize turnout.
Why It Matters
The bill substitutes a voter-like check for certain rate increases, potentially reducing utilities’ ability to recover costs through traditional PUC proceedings and shifting political pressure onto customers. It also creates operational and legal questions about election administration, turnout effects, what counts as a 'customer' for voting, and how narrowly the safety and commodity exceptions will be interpreted.
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What This Bill Actually Does
AB 99 inserts a new section into the Public Utilities Code that changes the pathway for any electrical corporation seeking a systemwide rate increase above the California rate of inflation during a general rate case cycle. Instead of relying solely on the PUC’s adjudicatory process, a utility must now win a customer referendum before the commission may approve rates that exceed inflation.
The bill treats the inflation cap as a baseline: utilities may collect up to that cap through the normal rate case process without an election, but anything above it requires a separate customer authorization.
The statute sets out how the customer authorization will work in broad strokes: every customer receives one ballot and must be given information about the proposed increase; the utility may present multiple alternative rate plans until one secures majority support; and the utility’s shareholders, not ratepayers, must pay the direct costs of running the election. While the measure directs the PUC to fill in procedural details, it also requires the commission to set an interim rate plan for the utility that cannot exceed the inflation baseline while the election process runs.AB 99 also preserves a specific exception to the election requirement.
The PUC may approve increases above inflation without prior customer approval when the commission finds that the underlying costs are directly tied to safety improvements and system modernization or to increases in commodity or fuel expenses. Lastly, the bill defines the rate-of-inflation benchmark as the annual change in the California Consumer Price Index, and the statute’s placement in the Public Utilities Code means that noncompliance would have criminal-law implications under existing provisions.
The Five Things You Need to Know
Section 748.3 requires one ballot per customer and mandates that the electrical corporation provide information on the proposed increase to each voter.
Shareholders must bear the full cost of conducting the customer election; those costs are explicitly excluded from recovery from ratepayers under the bill.
An electrical corporation may offer unlimited alternative rate plans serially until one plan wins majority approval from voting customers.
While an election is pending, the PUC must set an interim rate plan for the utility that does not exceed the California CPI-based inflation benchmark.
The statute lets the PUC bypass the election requirement only when it determines increased costs are directly related to safety/modernization or to higher commodity or fuel costs; 'rate of inflation' is defined as the annual increase in the California Consumer Price Index.
Section-by-Section Breakdown
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Baseline cap on proposed systemwide rate increases
This subdivision bars an electrical corporation from proposing a systemwide rate increase above the rate of inflation for any general rate case cycle. Practically, the provision creates an explicit ceiling—measured by CA CPI—on the portion of a rate request that can be advanced through the ordinary PUC general rate case process without additional approval mechanisms.
Customer election procedures and utility obligations
Subdivision (b) establishes the mechanics of the customer vote: one ballot per customer, a requirement to provide informational materials, PUC authority to add rules and procedures, and the allocation of election costs to shareholders. It also permits utilities to submit repeated or alternative rate plans until one secures majority support, which creates an iterative approval path distinct from a single, adjudicated rate case proposal.
Commission approval conditioned on customer authorization
This clause prevents the commission from approving or modifying any request to raise rates above the inflation benchmark unless customers have first approved the increase via the election described in subdivision (b). That shifts a gating function from the administrative regulator to a customer-level consent mechanism, subject to the PUC’s authority to set related electoral rules.
Exceptions for safety/modernization and commodity/fuel costs
Subdivision (d) creates a carve-out: the commission may approve increases above inflation without a customer vote when the costs are directly related to safety enhancements, system modernization, or to higher commodity or fuel costs. The provision leaves factual determinations to the PUC but does not detail evidentiary standards or thresholds for those categories, which will be critical in future adjudications.
Fiscal note and criminal-law framing
The bill includes language asserting no state reimbursement is required for local agencies under the California Constitution, citing the statutory framework that treats failures to follow PUC orders as criminal; because the new section sits inside the Public Utilities Code, implementing or violating related commission actions could invoke criminal penalties and generate local compliance considerations.
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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 electricity customers: They gain a direct mechanism to block systemwide rate increases above CPI, giving households a political check against automatic cost recovery and possible protection against sharp rate hikes.
- Low-usage and fixed-income consumers: By capping automatic increases at inflation absent a vote, these customers may face fewer unexpected increases tied to long-term utility cost recovery unless exceptions apply.
- Consumer advocacy organizations: Groups that mobilize turnout can use the new election process to influence rate design and to press for targeted alternatives or concessions within proposed plans.
Who Bears the Cost
- Investor-owned electrical corporations and their shareholders: Utilities face revenue uncertainty above the inflation baseline, potential delays in cost recovery, and the explicit requirement that shareholders pay election expenses rather than passing them through to customers.
- Investors and bondholders in utilities: Constrained ability to recover costs could affect credit metrics and raise borrowing costs if revenue streams become less predictable.
- California Public Utilities Commission and utility compliance teams: The PUC will need to establish and enforce election rules, administer interim rates, and litigate disputes about exceptions and voter eligibility—raising administrative and legal workloads.
Key Issues
The Core Tension
The central dilemma is between democratic control and regulatory predictability: giving customers a direct veto over above-inflation rate increases increases political accountability but risks undermining utilities’ ability to secure predictable revenue streams for long-lived safety and modernization investments—forcing regulators to choose between protecting consumers from rate shocks and preserving utilities’ capacity to maintain and upgrade the grid.
The bill creates several implementation and legal fault-lines. First, the language leaves key electoral definitions unstated: it does not define who counts as a 'customer' for voting purposes (account holder, meter, or billing address), nor does it establish turnout thresholds, vote-validation procedures, or what constitutes sufficient information disclosure.
Those gaps invite disputes over voter eligibility, ballot delivery methods, and whether low turnout could allow a small, organized minority to block or approve major cost recoveries.
Second, the safety/modernization and commodity/fuel exceptions introduce judgment calls that the PUC must resolve without statutory guidance on scope, thresholds, or evidentiary standards. That discretion could produce litigation as utilities and intervenors contest whether particular expenditures qualify.
The provision allowing utilities to resubmit unlimited alternative plans until one secures majority approval encourages strategic packaging of rates and cross-subsidies; utilities might split contested cost components across multiple proposals to engineer a favorable outcome. Finally, shifting election costs to shareholders changes the distribution of financial burdens but may translate into higher financing costs over time.
The statute’s insertion into the Public Utilities Code also raises unresolved questions about the interplay with the PUC’s traditional ratemaking authority and potential constitutional challenges tied to vested contract or takings doctrines.
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