Rates: prohibited cost recovery

The law strengthens protections against improper utility charges by requiring the California Public Utilities Commission to deny recovery and impose specified financial penalties. Utilities also must publicly account to the commission for identified violations and prevention steps.

What the law does ​

• Defines prohibited cost recovery as placing costs in a regulator-approved account when those costs are barred from ratepayer recovery or already recoverable through another ratemaking mechanism.
• Requires the commission to disallow prohibited costs charged to ratepayers when a utility violates a commission rule, tariff, or statute.
• Requires a penalty equal to the improper recovery, or three times that amount for repeat violations within five years or sustained practices across reporting periods.
• Waives the penalty only when the utility independently identifies and remedies the improper recovery before it is brought to the commission’s attention.
• Requires annual utility reports identifying prohibited recoveries found in the prior year, responses taken, and measures to prevent recurrence.
• Preserves the commission’s authority to impose additional penalties or remedies.

Who it affects ​

• Electrical, gas, water, and sewer system corporations regulated by the commission.
• Utility ratepayers.
• The California Public Utilities Commission.