AB 1167 (Berman, 2025): New Restrictions on Utility Political Spending and Ratepayer Costs
In 2025, California enacted AB 1167, also known as the California Ratepayer Protection Act of 2025, to strengthen limits on how investor-owned electric and gas utilities use funds recovered from ratepayers. Signed into law on October 11, 2025, the legislation adds new rules governing which expenses utilities may charge to customers and increases transparency around utility communications and political activity.
Existing law already requires the California Public Utilities Commission (CPUC) to ensure that utility rates are “just and reasonable” and prohibits utilities from using ratepayer funds for political advocacy that does not benefit customers. AB 1167 expands those protections by creating more explicit statutory limits on the types of expenses that utilities may recover from ratepayers and by establishing new disclosure and reporting requirements.
The most significant change in the law is a clear prohibition on utilities recovering certain categories of costs from ratepayers. Electrical corporations and gas corporations may no longer record these expenses to accounts that are recoverable through customer rates (often referred to as “above-the-line” accounts). Prohibited expenses include political influence activities, promotional advertising that primarily promotes the utility’s public image, contributions to political campaigns or trade associations engaged in political activity, charitable donations, investor relations costs, fines and penalties, and certain executive travel and insurance expenses. The law also limits the recovery of payments to outside attorneys or expert witnesses in CPUC proceedings if those payments exceed the hourly rates permitted under the commission’s intervenor compensation program.
AB 1167 also introduces new transparency requirements for utility communications. Utilities must clearly disclose in their public messages whether the costs of those communications are paid for by shareholders or ratepayers, ensuring that customers can distinguish between shareholder-funded advocacy and communications funded through utility rates.
To improve oversight, the law requires utilities to file annual reports with the CPUC beginning May 31, 2026. These reports must include detailed information about business units involved in political influence activities, employee compensation and hours charged to ratepayer-funded accounts, vendor activities related to regulated proceedings, and the costs associated with utility participation in commission proceedings. The CPUC is required to make these reports publicly available, increasing transparency around how utilities allocate expenses that may affect customer rates.
Finally, AB 1167 strengthens enforcement by requiring the CPUC to assess civil penalties against utilities that violate the new prohibitions or fail to comply with commission orders implementing the law. The size of the penalty must reflect the severity of the violation and may be imposed in addition to any disallowance of costs in ratemaking proceedings. Because violations of the Public Utilities Act can constitute criminal offenses, violations of commission actions implementing the law may also carry additional legal consequences.
Overall, AB 1167 expands California’s existing protections against the use of ratepayer funds for activities that primarily benefit utility shareholders. By clarifying which expenses cannot be recovered from customers, increasing disclosure requirements, and strengthening reporting and enforcement mechanisms, the law aims to ensure that utility rates more directly reflect costs that benefit ratepayers rather than corporate or political interests.