CaliforniaSB 2542025-2026 Regular SessionSenateWALLET

Electrical corporations: nonbypassable charge.

Sponsored By: Josh Becker (Democratic), Cottie Petrie-Norris (Democratic), Aisha Wahab (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

27 provisions identified: 12 benefits, 4 costs, 11 mixed.

Utilities pay extra $3.9 billion

If the administrator says more funding is needed to pay claims, each large utility must pay its share of $3.9 billion in five equal yearly payments. The first payment is due within 120 days of the notice. These payments cannot be charged to customers. If the account winds down early, utilities must return half of any unpaid amounts to customers as bill credits.

$19.5B in bonds for wildfire fund

The Department of Water Resources can sell up to $10.5 billion in bonds for the Wildfire Fund. If the administrator notifies and all large utilities participate, up to $9.0 billion more can support the Continuation Account. Bonds cannot mature after January 1, 2036, and debt service must be covered by fund or account revenues.

How wildfire claims get paid

The Continuation Account in the Wildfire Fund is kept separate and is always available to pay eligible wildfire claims for fires that start on or after the law’s effective date. Money in the account is continuously appropriated to speed payments. The administrator reviews settlements: 40% or less of the claimed amount is generally paid; higher settlements need a reasonableness finding. Final court judgments are paid in full. Officials acting in good faith have limited legal immunity, and the State is not liable beyond the money in the fund. If the fund is exhausted, the administrator pays remaining eligible claims and costs, sells assets, and sends any leftover money to the state General Fund; this does not end the Continuation Account.

20% tax credit for transmission projects

Beginning in 2026, qualified businesses and investors can claim a California tax credit equal to 20% of eligible transmission project costs, up to $20,000,000 per taxpayer each year. Extra credit carries forward for up to seven years. You must reduce any related deductions and you cannot earn a return on equity on the credited portion. The credit applies to tax years that begin on or after January 1, 2026 and before January 1, 2036, with an administrative repeal on December 1, 2036. Credits are for taxpayers participating in the state’s Transmission Accelerator program, and the state bank informs the tax agency. Usual bill requirements for new tax expenditures do not apply to these credits.

Process to add 2036 wildfire charge

When the fund administrator asks for more money, state regulators must open a case within 15 days on adding a nonbypassable wildfire charge to electric bills. They must decide within 90 days. If they find the charge is just and reasonable, utilities start collecting it on February 1, 2036. That order cannot be changed before January 1, 2046. If the charge is imposed, large utilities must also pay $300 million total each year from 2029 through 2045 into the Wildfire Fund’s Continuation Account (PG&E 47.85%, SCE 47.85%, SDG&E 4.30%). The Continuation Account receives those utility payments and any approved bill charges.

Stronger wildfire plans tied to rates

Electrical companies must file wildfire plans at least every four years. Starting January 1, 2027, a preliminary plan is due one year before a general rate case or with a risk filing. Plans must show how fast fixes can be deployed and the cost per avoided ignition. The safety office has up to 9 months to act, and the commission considers plan costs in rate cases and may allow memorandum accounts for unexpected costs. After the commission sets revenue, the utility must submit a revised plan within 45 days. Utilities must weigh speed and cost‑effectiveness when choosing wildfire fixes.

Wildfire Fund payments and bond rules

Utilities pay into the Wildfire Fund. A large utility’s initial payment equals $7.5 billion times its allocation share; its annual payment equals $300 million times that share. Regional utilities pay $625 per 2019 customer account initially and $25 per account each year. Payments are due by January 1 each year. The state uses collected money first for bond debt, contracts, reserves, and administration. Recovery bonds must be issued by December 31, 2035. New wildfire charges and bonds are delayed until older DWR power bonds are defeased or paid. If costs are disallowed, a utility must repay the account within six months, up to the smaller of the disallowed costs or 20% of its transmission and distribution equity rate base minus prior reimbursements. Wildfire cost cases have set timelines, with a proposed decision in 12 months (a 6‑month extension is allowed). If any large utility opts out, the Continuation Account chapter ends and is repealed the next January 1. The revenue requirement normally ends January 1, 2036, but can run to January 1, 2046 only if the commission imposes a nonbypassable charge and all large utilities join.

Wildfire Fund payouts and who pays first

The Wildfire Fund is run by an independent administrator who can hire experts, invest funds, approve claims, buy insurance, and collect from utilities. When regulators set a revenue requirement, money first pays bond debt, contracts, reserves, and admin costs, with the rest moved to the fund; that requirement is not revised before January 1, 2046. New or successor utilities formed after July 12, 2019 can join; if Golden State Energy replaces PG&E, it does not pay initial or annual contributions already covered by PG&E. For fires during a utility’s bankruptcy period, the fund pays no more than 40% of allowed claims for events between July 12, 2019 and the bankruptcy exit date. If costs are later disallowed, the utility must repay the fund within six months, up to the lesser of the disallowed amount or 20% of its total transmission and distribution equity rate base minus amounts already repaid; this limit does not apply for willful misconduct or missing safety certification. The administrator uses utility contributions before any ratepayer money. For each covered wildfire, a regional utility’s payout is capped at three times its initial plus funded annual contributions.

Limits on wildfire charges on bills

The law blocks utilities from adding their share of the first $6 billion of approved fire‑mitigation capital to equity rate base through December 31, 2035. Customers in CARE or FERA are not charged fixed wildfire recovery fees. Utilities cannot charge most initial or annual Wildfire Fund contributions to ratepayers. Golden State Energy customers are the exception and may be charged.

Stronger utility safety and service rules

Utilities face regular safety culture reviews by outside experts at least every five years, and they cannot charge customers for those review costs. The safety office runs wildfire‑focused reviews at least every two years and oversees utility compliance. By September 30, 2024, regulators set average and maximum times to connect new service, with reporting, fixes, and penalties by January 1, 2027. Agencies must share fire‑prevention and ignition data. A seven‑member Wildfire Safety Advisory Board advises on local utility plans. Large utilities must also publish 10 years of added financial detail on ratebase, returns, and capital mix.

Public power wildfire plans and reviews

After January 1, 2026, local publicly owned utilities and cooperatives must file wildfire mitigation plans at least every four years. Plans must cover risks, deenergization rules, notices, vegetation work, inspections, and restoration steps. They must hire an independent evaluator to review the plan. The report is posted online and presented at a public board meeting.

Stronger utility oversight and connection audits

Utilities must hire an independent auditor to review how they connect new customers and plan for demand. The auditor reviews the last three years and reports every two years in public reports. This audit rule ends on January 1, 2032. The safety office can make emergency rules and require data and verification from regulated utilities and their affiliates to improve wildfire safety.

Faster state permits for energy sites

Developers can apply to the Energy Commission by June 30, 2030 for certification. The Commission has exclusive authority to certify these sites, which can replace many state and local permits where federal law allows. The Commission checks completeness within 30 days and must decide within 270 days of a complete filing, with limited exceptions. The Commission must prepare a program‑level environmental report for classes of facilities, and later projects can rely on it. There is a presumption that certified facilities give a net economic benefit to the local government, unless proven otherwise.

State financing push for power lines

The state sets up a Transmission Infrastructure Accelerator by December 31, 2026 to speed transmission projects and cut costs. The infrastructure bank runs a revolving fund program to offer loans, bonds, and other help to selected projects, with program rules approved by its board. A dedicated Accelerator Revolving Fund is created, with most money continuously available; federal funds and administrative costs require appropriation. The accelerator must deliver a public‑private partnership plan by July 1, 2027. The bank can also finance clean energy projects funded by the 2024 bond act.

Fixed wildfire recovery charges on bills

Utilities can get approval to recover just and reasonable wildfire costs through fixed, nonbypassable charges on electric bills. These charges can back recovery bonds and stay on bills until the bonds and financing costs are fully paid. For 2020, a utility can also recover a verified undercollection if it was at least 5% of forecasted 2020 billed revenue or due to excess residential and small‑business bad debt.

Faster energy permits and local benefits

Developers get one extra year, until June 30, 2030, to apply for fast‑track state certification of eligible energy facilities. Applications must include environmental information the commission needs and proof you hold enough property rights to access, build, and operate. The commission drops a prior conformity‑findings paperwork step. Applicants must make enforceable community‑benefit agreements, which now can include community foundations. The law extends a contracting exemption for those agreements through July 1, 2027.

Faster undergrounding in high fire areas

The fast‑track program only allows undergrounding in Tier 2 or Tier 3 high fire‑threat areas or rebuild zones. Utilities must file a 10‑year plan with clear priorities, yearly cost and mileage targets, and workforce plans. The safety office has 9 months to act, then the commission has 9 months after public workshops and comments. An independent monitor reports each December 1, and utilities get 180 days to fix problems. Plan approvals are not treated as CEQA projects, but required environmental review still happens before digging approvals. Utilities must seek federal, state, and other non‑ratepayer money to lower costs on customers. Regional notification centers must share project planning data, with rules due by July 1, 2027.

Tougher utility safety certification rules

A utility gets a safety certificate only if it has an approved wildfire plan, a safety‑focused board committee, and executive pay tied to safety. Certificates last 12 months, renew within 90 days, and filings are public. The safety office must give public notice and take comments before adopting guidelines. Some annual safety reporting duties are repealed.

New rules to manage wildfire claims

For fires that destroy 1,000 or more structures, insurers must first offer to sell their recovery rights to the serving large utility, with a 30‑day window. Small California insurers with under $300 million in property premiums are exempt. The state sets how Wildfire Fund shares are allocated among utilities. Each large utility must keep reasonable insurance, with coverage levels reviewed by the administrator based on risk, safety record, and ratepayer impacts.

Faster utility program to bury lines

The commission creates a fast‑track program for large utilities to put distribution lines underground. Only large electrical corporations can join. A utility must file an undergrounding plan with the safety office.

State locks in wildfire recovery charges

Financing orders and fixed recovery charges and any associated fixed recovery tax amounts remain in place, with true‑ups, until wildfire recovery bonds and costs are fully paid. The state pledges not to change those charges or the recovery property during that time. Recovery bonds are not state debt.

State expands public transmission financing tools

The public power financing authority can now sponsor, own, build, and finance new transmission lines and seek help from the Transmission Accelerator Fund. The old $5 billion cap on its bonds is removed, and the old ban on approving new programs after 2007 is repealed. Lawmakers must appropriate infrastructure‑bank money before it can be used for Accelerator financing or general administration, though the bank may spend to service approved debt. Bond issuance costs paid from proceeds are capped at 5%.

Water hearings during planned shutoffs

A deenergization event is a planned outage to lower wildfire risk. It begins when an agency gets notice and ends when power is restored or the notice is canceled. Before making certain water supply declarations, public water suppliers must hold a hearing for customers. This hearing is not required during wildfires, planned deenergizations, or sudden failures like broken dams or pipelines.

New wildfire and energy planning reports

The Energy Unit must send a report to the Legislature each year by February 1 on priorities, partners, barriers, and recommendations. By April 1, 2026, the administrator must report options to fund and share disaster costs and may hire consultants, with this reporting rule ending January 1, 2030. If extra yearly contributions are needed, the administrator must present an annual operations plan showing account assets, durability, success measures, and a wind‑down plan if money may run out within three years.

Monthly Wildfire Fund bill charge

Customers of a regional utility see a Wildfire Fund charge on their monthly electric bills. The utility must send the collected money each month to the fund administrator.

Energy project applications need site rights

Applications to the Energy Commission must use its forms and include all required information. Applicants must show they have enough property rights to access, build, and run the project at the site.

Old energy statutes repealed

The law repeals Public Utilities Code Section 3283 and Government Code Sections 15475.4 and 15475.5. Agencies and utilities adjust their actions based on these removals.

Sponsors & Cosponsors

Cosponsors

Bob Archuleta
Democratic • Senate
Catherine Blakespear
Democratic • Senate
Dave Cortese
Democratic • Senate
Mark Mark GonzÃ¡lez
Democratic • House
Timothy Grayson
Democratic • Senate
Melissa Hurtado
Democratic • Senate
Mike McGuire
Democratic • Senate
Jerry McNerney
Democratic • Senate
Sasha RenÃ©e PÃ©rez
Democratic • Senate
Akilah Weber Pierson
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 198 • No: 28

Senate vote • 9/13/2025

Item WORF — Senate SFLOOR

Yes: 30 • No: 2

House vote • 9/13/2025

Item 206 — Assembly AFLOOR

Yes: 69 • No: 0

legislature vote • 9/12/2025

Vote in CX23

Yes: 16 • No: 0

legislature vote • 8/29/2025

Vote in CX25

Yes: 9 • No: 4

legislature vote • 7/17/2025

Vote in CX16

Yes: 9 • No: 4

legislature vote • 7/16/2025

Vote in CX23

Yes: 11 • No: 5

Senate vote • 6/4/2025

Item 67 — Senate SFLOOR

Yes: 29 • No: 10

legislature vote • 5/23/2025

Vote in CS61

Yes: 5 • No: 1

legislature vote • 5/12/2025