Public Utilities Commission: memorandum and balancing accounts

The law aims to strengthen oversight and ratepayer protections by restricting when utilities can seek recovery for costs outside their approved forecasts.

What the law does ​

• Requires the California Public Utilities Commission to authorize memorandum and balancing accounts only for costs that cannot reasonably be anticipated in a general rate case.
• Requires written findings that an account is necessary, covers costs outside the utility’s control, and addresses costs that could not be adequately anticipated.
• Requires programs using these accounts to shift to forecast-based ratemaking when sufficient historical data becomes available.
• Directs the commission to consider cost sharing, lower returns on certain capital costs, and expiration dates when authorizing or continuing accounts.
• Requires review of accounts authorized before January 1, 2027, in the next general rate case cycle or a comparable recurring review, and closure of accounts no longer needed.
• Requires the commission to publicly report the process and results of its review for each utility’s accounts.
• Preserves existing treatment of accounts in effect on January 1, 2027, until the commission completes its required review.

Who it affects ​

• Electrical corporations and gas corporations using memorandum or balancing accounts.
• California Public Utilities Commission ratemaking and account-review processes.
• Utility ratepayers whose bills may reflect costs recovered through these accounts.

Context ​

The commission may exempt certain unreviewed cost categories, including low-income rate discounts and accounts intended to reduce disconnections for nonpayment.