Public Utilities Code section 748.3
(a)
For purposes of this section, all of the following definitions apply:(1)
“Above-the-line account” means an account that contains expenses that a utility recovers from ratepayers, including an account that contains expenses that the utility used to calculate a revenue requirement request in its general rate case.(2)
“Below-the-line account” means an account that contains expenses that a utility does not generally recover from ratepayers.(3)
“Compensation” means salary, a bonus, benefits, or other consideration of any value.(4)
“Covered business unit” means a division, department, or other organizational employee group within a utility that performs activities specified in subdivision (b).(5)
“Expense” means a payment to an external entity, a cost incurred by a parent company or corporate affiliate and invoiced to a utility, and compensation paid to an employee of a utility.(6)
(A)“Political influence activity” means either of the following:(i)
An activity for the purpose of directly or indirectly influencing any of the following:(I)
The adoption, repeal, or modification of federal, state, regional, or local legislation, regulations, or ordinances.(II)
The election, recall, appointment, or removal of a public official or the adoption of initiatives or referenda.(IV)
Public opinion with respect to legislation, regulations, ordinances, elections, referenda, or rate setting of a utility.(V)
Decisions of federal, state, regional, or local public officials.(ii)
Research, preparation, or any other activity undertaken for the purpose of supporting any activities specified in clause (i).(B)
“Political influence activity” does not include any of the following:(i)
An activity that is directly and necessarily related to appearances before regulatory or other governmental bodies in connection with the utility’s existing or proposed operations of the utility’s regulated system. Policies affecting the use of gaseous fuels or electricity are not directly and necessarily related to the utility’s existing or proposed operations.(ii)
An activity that is directly related to a commission-approved energy efficiency program or another commission-approved public purpose program if the participation of the utility has not otherwise been prohibited by the commission.(iv)
An activity required by applicable federal or state statute, or by order of a regulatory authority, and undertaken for the purpose of satisfying that statutory or regulatory requirement.(7)
(A)“Promotional advertising” means written, online, video, or audio communications that primarily build the public image of a utility and that is not required by the commission, including communications about the undergrounding of electrical lines or other actions that a utility may take in the future.(B)
“Promotional advertising” does not include, except as specified in subparagraph (A), any of the following:(i)
Public messages that the utility is directed to publish by a federal, state, or local agency.(ii)
Public messages that provide information on safety measures, emergency conditions, the conservation of energy as described in subdivision (b) of Section 796, rates, utility programs and services approved by the commission, or service interruptions, and that do not primarily build the public image of the utility.(8)
“Public official” means a decisionmaker within an administrative agency or legislative body at the local, regional, state, or federal level, or an executive officer at the local, regional, state, or federal level.(9)
“Utility” means an electrical corporation or gas corporation.(10)
“Utility affiliate” means an entity that is related to the utility as a subsidiary, parent, or sibling corporation, including by shareholding or other means of control.(11)
“Vendor” means a person or business that provides goods and services.(b)
Except as provided in subdivision (c), a utility shall not record to an above-the-line account, or otherwise recover from ratepayers, direct or indirect costs of any of the following:(1)
Membership dues, sponsorships, or other contributions to an industry trade association, group, or related entity incorporated under Section 501 of the Internal Revenue Code of 1986, as amended, if any portion of those contributions support political influence activities or advertising. This paragraph does not apply to fees for professional licenses necessary for employee job duties.(2)
Charitable giving, including contributions to an organization that qualified under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended.(3)
Political influence activities.(4)
Promotional advertising.(5)
Payments to outside attorneys representing utilities in commission proceedings or experts testifying on behalf of, or otherwise supporting the participation by, utilities in commission proceedings that exceed the hourly rates that would be permitted for rate recovery under the commission’s intervenor compensation program.(6)
Contributions to political candidates, political parties, campaign committees, issue committees, or independent expenditure committees, or other political expenses.(7)
A cost, including marketing, administration, or customer service, for products or services not regulated by the commission.(8)
Penalties or fines, including tax penalties or fines, issued against a utility.(9)
Board of directors and officers liability insurance, and travel, lodging, food, or beverage expenses for a utility’s board of directors and officers or the board of directors and officers of a utility affiliate.(10)
An owned, leased, or chartered aircraft for the utility’s board of directors and officers or the board of directors and officers of a utility affiliate.(11)
Investor relations.(c)
Subdivision (b) does not prohibit a utility from recording to an above-the-line account payments made pursuant to an agreement authorized by the National Labor Relations Act (29 U.S.C. Sec. 151 et seq.) or payments authorized by the federal National Labor Management Cooperation Act of 1978 (Public Law 95-524), and does not restrict any use permitted by federal law of moneys paid pursuant to those federal acts.(d)
(1)A utility shall clearly and conspicuously disclose in all of its public messages whether the costs of the public messages are being paid for by the utility’s shareholders or ratepayers, consistent with rules and regulations related to candidate disclosure rules adopted pursuant to Article 5 (commencing with Section 84501) of Chapter 4 of Title 9 of the Government Code.(2)
A disclosure is not clear and conspicuous if the disclosure is difficult to hear or read, or if the placement of the disclosure is easily overlooked.(3)
For public messages recorded to an above-the-line account, the utility shall identify, in response to a request from a party in the utility’s most recent general rate case, which expense or capital account is the source of the funding.(e)
(1)On or before May 31, 2026, and annually thereafter, each utility shall report, as part of the statement required under General Order 77-M, all of the following information from the previous calendar year to ensure the utility’s compliance with this section:(A)
(i)A list of covered business units of the utility. Except as specified in clause (ii), for each covered business unit, the report shall contain all of the following:(I)
A list of each employee’s name and job title.(II)
A job description of each listed employee sufficient to describe the employee’s responsibilities.(IV)
The number of hours booked to an above-the-line account for each listed employee.(V)
The percent of total annual compensation booked to an above-the-line account for each employee.(ii)
This subparagraph does not apply to an employee represented by a labor organization, covered under a valid collective bargaining agreement, and performing activities described in this chapter at the direction of the labor organization.(B)
To the extent the utility retains outside vendors to perform activities described in subdivision (b) and those vendors conduct any other work where the costs of the work are recorded to above-the-line accounts, the utility shall provide the Federal Energy Regulatory Commission Uniform System of Accounts number under which those costs are recorded and a log documenting the time, work performed, total cost incurred, how those costs benefit ratepayers, and the reason those activities are not deemed to be activities for which the recovery through rates of those costs is prohibited pursuant to subdivision (b).(C)
A detailed accounting of expenses booked to an above-the-line account for participation in each commission proceeding for which the utility is a party, including employee compensation, and vendor and other expenses.(2)
The commission shall make all reports filed pursuant to paragraph (1) with the commission publicly available, consistent with Section 583.(f)
The commission shall monitor and investigate compliance and noncompliance with this section.(g)
Moving an expense to a below-the-line account after it was booked to an above-the-line account does not protect that expense from being disclosed to the commission or disclosed in response to a discovery request or order in a general rate case or other relevant commission proceeding.(h)
(1)In addition to any disallowance or future adjustment ordered by the commission, the commission shall assess a civil penalty, based on the severity of the violation, against a utility that violates subdivision (b) or fails or neglects to comply with any part or provision of any order, decision, decree, rule, direction, demand, or requirement of the commission implementing subdivision (b).(2)
This section does not limit the commission’s authority under any other law to assess a penalty or sanction against a utility that violates subdivision (b) or fails or neglects to comply with any part or provision of any order, decision, decree, rule, direction, demand, or requirement of the commission implementing subdivision (b).
Source:
Section 748.3, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PUC§ionNum=748.3. (updated Jan. 1, 2026; accessed Dec. 8, 2025).
