By Stephanie Chase on September 16, 2025
State lawmakers last week made California the seventh state to pass a bill limiting investor-owned utilities from using customer money to pay for political and lobbying costs. Assembly Bill 1167, the California Ratepayer Protection Act, authored by Assembly Member Marc Berman (D-Menlo Park), passed both chambers of the legislature and now awaits action by Governor Gavin Newsom. AB 1167 includes provisions prohibiting investor-owned utilities from using customer money to support utility political activities, promotional advertising, and dues for trade associations that conduct political activities.
AB 1167 introduces new penalties, transparency provisions
California’s Ratepayer Protection Act is the first such legislation that mandates that the utility regulator enforce financial penalties on utility companies that violate the law. Provisions in other states allow regulators discretion in deciding whether or not to impose a penalty. In California, the Public Utilities Commission (PUC) currently prohibits recovery of certain charges from customers, but during rate cases utility companies regularly include inappropriate charges in their proposals to raise rates without facing any fines or penalties from the regulator. Investigations into SoCalGas found that the company tried to pass $36 million onto customers that the company spent on lobbying against environmental laws. A look into PG&E’s spending showed that the company was attempting to spend $6 million of wildfire funds on ads to burnish the utility’s public image. AB 1167’s mandatory penalty should deter utilities from trying to include those expenses in the first place, the bill’s sponsors, including Earthjustice and The Utility Reform Network (TURN), have said.
AB 1167 also limits how much utilities can charge their customers to pay for lawyers and expert witnesses employed in rate cases, in which utilities typically ask the PUC for approval to raise customers’ rates. If signed into law, utilities will not be able to charge customers for lawyers and witnesses at rates higher than those paid to consumer advocates intervening in commission proceedings. Intervenor funds enable consumer advocates and other interested groups to participate in rate cases, but they are usually dramatically outspent by utility companies, limiting their effectiveness.
Another provision of AB 1167 prohibits customer dollars from being spent on utility promotional advertising. In addition, utility advertisements must state whether the costs of the ads are paid for by company shareholders or customers. For example, safety ads, such as the call-before-you-dig program, could be paid for by customers and would say so in the ad. Goodwill advertisements meant to bolster the utility’s image would need to be paid for by shareholders and clearly disclose that information.
The bill requires annual public reporting that will detail utility expenditures on lobbying, advertising, and other influencing spending, as well as identify outside vendors who work for the utility in these areas. These disclosures should make it easier for the public and consumer advocates to track utility spending, allowing them to pinpoint if the utilities are illegally including those activities in rates.
The California legislature also passed a companion bill, Senate Bill 24, authored by Senator Jerry McNerney (D-Pleasanton), which bans investor-owned utilities from using customer money to lobby against utility municipalization efforts and provides the Public Advocate’s Office at the California PUC full investigatory authority over investor-owned utilities.
California’s investor-owned utilities opposed both pieces of legislation.
Governor Newsom has until October 12 to sign the measures.
More states are pursuing reforms in response to increasing utility costs
Americans are facing rising energy bills, on top of inflation and other cost of living increases. In response, state legislatures in 18 states, including California, have introduced bills in the last several years to prohibit monopoly utility companies from charging political, lobbying, trade association, and other corporate costs to customers.
Colorado, Connecticut, and Maine passed broad utility accountability laws in 2023, which included provisions similar to California’s measure. Earlier this year, Maryland passed the Next Generation Energy Act, which included a prohibition on charging customers for trade association memberships and private planes. New York passed a similar ban on charging ratepayers for membership dues in 2021. New Hampshire excluded lobbying and political activity costs from rates in 2019.
Laws in Colorado and Connecticut have led to prohibited utility expenses being excluded from customer rates. Colorado’s Public Utilities Commission ordered Xcel Energy to remove more than $775,000 from customer rates that the utility sought to include. EPI reviewed disclosures filed in Connecticut and found that utility companies there spent at least $9.7 million that was not included in customer rates because of the 2023 law.
