SB 24 prohibits electrical and gas utilities from recording to above-the-line accounts—or otherwise recovering from ratepayers—costs tied to opposing the municipalization of service. The ban covers direct lobbying, participation in city or county political proceedings, and other political influence activities aimed at undermining publicly owned utilities.
The bill defines key terms (above-the-line/below-the-line accounts, political influence activity), requires the California Public Utilities Commission (CPUC) to monitor and investigate compliance, prevents simple reclassification of expenses from hiding prohibited charges, and preserves a narrow federal labor-law carveout for payments authorized by the NLRA and the National Labor Management Cooperation Act.
At a Glance
What It Does
SB 24 bars utilities from recovering, via above-the-line accounts, any direct or indirect expenses used to oppose municipalization of electrical or gas service. It mandates CPUC monitoring, requires disclosure in rate proceedings, and keeps a narrow federal labor-law exception.
Who It Affects
Investor-owned electric and gas corporations operating in California, their corporate affiliates, outside lobbyists and consultants, and municipal governments and organizers pursuing public ownership. CPUC staff and consumer advocates will also be pulled into new monitoring and discovery workstreams.
Why It Matters
The measure shifts the cost burden of campaign-style activity off ratepayers and toward utilities or shareholders, establishes disclosure expectations for contested rate cases, and sets a precedent for restricting recovery of certain political activities in utility ratemaking.
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What This Bill Actually Does
SB 24 draws a bright accounting line: utilities may not charge ratepayers for activities intended to defeat efforts to municipalize electrical or gas service. To make that line operational the bill defines “above-the-line” accounts as those used to calculate revenue requirements in general rate cases (i.e., costs recoverable from customers) and “below-the-line” accounts as nonrecovered expenses.
The prohibition applies to direct lobbying, participation in local political proceedings, and other political influence activities aimed at preventing a publicly owned utility.
The bill’s definition of “political influence activity” is broad: it includes efforts related to legislation, elections, franchises, public opinion campaigns, and preparatory research or materials supporting those efforts. It also lists exclusions—such as communications necessary for customer safety, commission-approved public purpose program activities, and activities required by law—so not every interaction with government or the public is covered.
Importantly, SB 24 preserves federal labor-law-authorized payments as recoverable if federal law allows their use.Enforcement rests with the CPUC, which must monitor and investigate compliance. The statute makes clear that moving an expense from an above-the-line account to a below-the-line account after initial booking does not shield it from disclosure in discovery or commission proceedings.
Practically, that means utilities will need stronger cost-tracking, clearer affiliate invoicing, and revised compliance controls to show that disallowed political activity was not charged to customers.
The Five Things You Need to Know
The bill prohibits recording to above-the-line accounts—or otherwise seeking ratepayer recovery—for direct or indirect costs used to oppose municipalization of electric or gas service.
It defines “political influence activity” to include lobbying, actions related to legislation or elections, public-opinion campaigns, and preparatory research supporting those efforts, while carving out several narrow exceptions.
SB 24 requires the CPUC to monitor and investigate compliance and treats prohibited expenses as discoverable in general rate cases and other commission proceedings.
Transferring an expense from an above-the-line to a below-the-line account after the fact does not prevent disclosure to the CPUC or production in discovery.
The statute preserves an exception allowing above-the-line recording for payments authorized under the National Labor Relations Act and the National Labor Management Cooperation Act of 1978.
Section-by-Section Breakdown
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Key definitions that set the scope
This section supplies the paper trail: it defines above-the-line and below-the-line accounts, expense and compensation, utility, public official, and the multi-part definition of “political influence activity.” Those definitions determine both what is banned and how utilities must classify costs for rate proceedings. Practically, the definition’s reach—covering direct activities plus research and preparation—means many communications and third-party contracts can fall within the ban unless an enumerated exception applies.
Ban on charging ratepayers for anti-municipalization activity
Subdivision (b) is the operative prohibition: utilities may not book to recoverable accounts costs for opposing municipalization, including lobbying, participation in city or county political proceedings, and other influence activities intended to undermine publicly owned utilities. For compliance teams this requires a ruleset to flag any expenditure touching local political processes, and for rate-case attorneys it creates a new category of disallowable expense to contest.
CPUC monitoring and investigatory responsibility
The CPUC must monitor and investigate compliance and noncompliance. While the bill does not create a new enforcement mechanism or explicit penalties, CPUC’s oversight power means prohibited costs can be exposed and disallowed in rate cases, and the commission can use established proceeding tools (audits, discovery, evidentiary hearings) to pursue violations.
No protection by retroactive reclassification
This clause prevents gamesmanship: moving an expense from an above-the-line account to a below-the-line account after it was initially booked does not shield it from commission disclosure or discovery in rate proceedings. The practical implication is that books-and-records controls and audit trails matter—the timing and initial classification are subject to scrutiny and late corrections can’t be used to evade enforcement.
Federal labor-law carveout
The bill expressly permits above-the-line recording for payments made pursuant to the NLRA and the National Labor Management Cooperation Act. That narrow exception preserves federally authorized labor-management conduct but creates a potential preemption interaction: payments lawfully authorized under federal statutes remain recoverable despite the state prohibition.
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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
- Municipal governments and community organizers — They gain a lower-cost path to pursue municipalization because utilities cannot pass on the expense of organized opposition to ratepayers, reducing the asymmetric expense burden that often accompanies incorporation or franchise challenges.
- Residential and small commercial ratepayers — Customers avoid footing the bill for utilities’ political campaigns and related research aimed at defeating local public ownership options, which can reduce contested recoveries in future rate cases.
- Consumer and public-interest advocates — The bill furnishes a clear basis to challenge rate recovery of politically oriented costs and supports discovery requests and audits targeting those expenses.
Who Bears the Cost
- Investor-owned electric and gas utilities — They must absorb or shift expenses opposing municipalization away from ratepayer recovery, increase internal compliance and accounting controls, and potentially see higher shareholder expense if they continue such activities.
- Corporate affiliates and third-party consultants — Firms that historically provided opposition services (lobbyists, PR firms, polling vendors) may lose a source of utility-funded, rate-recoverable work or face new billing scrutiny.
- Utility rate-case litigants and CPUC staff — The commission and intervenors will need to add investigatory time and resources to trace costs, litigate classifications, and handle discovery disputes, increasing the administrative load of proceedings.
Key Issues
The Core Tension
The bill forces a trade-off between protecting ratepayers from funding political campaigns and preserving utilities’ ability to engage in government relations and public debate; enforcing that protection requires intrusive auditing and line-drawing that will inevitably chill some constitutionally protected speech or impose material compliance costs on utilities.
SB 24 draws a clear policy line but leaves several operational and legal questions unresolved. The statutory definition of “political influence activity” is broad and in places internally inconsistent with the listed exclusions; that ambiguity will force fact-intensive inquiries into whether a particular communication or consultant engagement ‘intended to undermine’ municipalization.
Tracing costs through affiliate invoices, parent-company recharges, and bundled consulting contracts will be technically complex and likely contested in discovery and audit procedures.
There is also a real preemption and constitutional wrinkle. The bill preserves a federal labor-law exception but does not address how federal preemption or First Amendment free-speech claims might interact with a state prohibition on rate recovery of political activity.
Utilities could respond by absorbing certain expenses (which shifts the economic burden to shareholders) or by curtailing public engagement activities that sit close to the line but serve legitimate regulatory or safety purposes, with the unintended consequence of reducing useful stakeholder participation in local policy debates.
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