Utility Ratemaking
California utilities would have to show their math
AB 2463 would force the California Public Utilities Commission to explain the models, inputs and assumptions behind the profit rate it approves for electric and gas utilities. The new rules would apply to decisions issued on or after Jan. 1, 2028.
AB 2463 would require California regulators to lay out the reasoning behind the return on equity they authorize for electric and gas utilities. The bill would start with decisions issued on or after Jan. 1, 2028.
- The bill targets how California sets utility profit rates.
- It would apply to electric and gas corporations.
- Regulators would have to identify the models they used.
- The new disclosure rules would start with decisions on or after Jan. 1, 2028.
- In California, Assemblymember Cottie Petrie-Norris is asking regulators to show more of their work when they set the return on equity, the profit rate utility investors are allowed to earn on the money they put into electric and gas companies
In California, Assemblymember Cottie Petrie-Norris is asking regulators to show more of their work when they set the return on equity, the profit rate utility investors are allowed to earn on the money they put into electric and gas companies. AB 2463 would require the California Public Utilities Commission to explain the independent analytical basis for that decision in any order issued on or after Jan. 1, 2028.
That matters because the return on equity is one of the numbers that helps shape what ends up on customer bills. The bill does not promise lower rates, and it does not order the commission to pick a specific figure. It changes the paper trail around the choice.
The math regulators would have to reveal
Under the proposal, the commission would have to identify each financial model it relied on when deciding an authorized return on equity for an electrical corporation or gas corporation. It would also have to explain how the utility’s credit quality figured into the number it approved. If the commission adopts a methodology that differs materially from the one used in its most recent prior decision, that change would need to be called out too.
Why the record matters
The practical effect is less about any single rate case than about visibility. Customers, rate advocates and others who follow utility bills would have a clearer record to review when they want to understand how the commission arrived at the profit rate built into rates. In a field that often reads like it was written for accountants, the bill is an attempt to make the reasoning harder to hide.