California reopens the utility rulebook last rewritten in 2007

The California Public Utilities Commission has moved to revise the general rate case plan that structures how it reviews utility applications, a framework it has not comprehensively updated since 2007, and the order reported by Utility Dive names Pacific Gas and Electric, Southern California Edison, San Diego Gas & Electric, and Southern California Gas Company as parties to the proceeding. The commission's stated aims are procedural—streamline general rate cases, give parties and decision-makers more complete information, and promote consistency and uniformity across the utilities' applications—but as this publication has argued, utilities have spent the past year selling ratepayer protection alongside data-center demand, and California is now standing up the process that would test the promise.

California carried the second-highest average retail electricity price in the country as of June, behind only Hawaii, according to the Energy Information Administration, and a commission working under that pressure has less patience for the cost recovery it approves.

Commissioner Darcie Houck put the sharper version of that on the record at the Sept. 3 meeting, asking staff and the assigned judge to take “a closer look at the correlation between utility performance and compensation.” Whether compensation should track performance is the question in a rate case that touches returns most directly, and it is the one most likely to draw the attention of investors holding California utility equity and the yield funds that own the debt beneath it.

The order also reaches three statutes: AB2666, whose changes the rulemaking must implement; AB2847, the 2024 law requiring utilities to disclose more about long-term capital expenditures; and SB254, which tightened ratepayer protections in 2025 and adjusted the California Wildfire Fund. At the same meeting, Reynolds said the rulemaking would carry out the legislative direction while also addressing matters the legislation does not cover, aiming at a more efficient review of costs and ultimately both greater certainty in rates and greater affordability for customers, then added that the “implementation issues are very, very big.”

PG&E spokesperson Mike Gazda wrote to Utility Dive that the utility supports the commission's efforts to strengthen “affordability, accountability and transparency” in the process, while noting the need to keep customer costs low and still make the investments required for safe, reliable service.

Rate base in the state will keep growing. The odds that it grows on 2007's evidentiary terms are falling, and the sponsors and yield buyers who still model California cost recovery as a schedule have the most to reprice.