McNerney’s Bill to Protect Ratepayers from Utilities’ Abuses Wins Approval from Legislature

The California Legislature today approved Sen. Jerry McNerney’s SB 327, which would protect ratepayers by strengthening oversight of investor-owned utilities (IOUs) and barring IOUs from using ratepayer funds to fight local efforts to create municipal utilities.

“IOUs have been pocketing billions in record profits while Californians pay the second-highest utility rates in the country. And when ratepayers have attempted to lower their bills by creating a municipal utility, some utilities used their customers’ money to fight such efforts. It’s appalling,” said Sen. McNerney, D-Pleasanton. “SB 327 will hold utilities accountable and stop them from wasting ratepayer dollars.”

SB 327 won approval today in the Senate on a vote of 30-10, after the Assembly passed the bill on Thursday on a 46-18 vote. The bill now goes to the governor’s desk.

SB 327 is sponsored by The Utility Reform Network (TURN).

“TURN is very pleased to see SB 327 make it to the governor’s desk. Preventing utilities from using ratepayer money to stop municipalization and protecting the Public Advocates Office’s right to investigate utilities for compliance with the law is more important now than ever before. At a time of skyrocketing utility bills, people deserve to choose a lower cost option like a municipal utility,” said Adria Tinnin, director of Race Equity and Legislative Policy for TURN. “We thank Sen. McNerney for this important legislation and urge Governor Newsom to stand with California families and businesses and sign SB 327 into law.” 

In 2024, PG&E posted record profits of $2.47 billion, while Southern California Edison took in a record $1.69 billion. Sempra Energy, which owns Southern California Gas (SoCalGas) and San Diego Gas and Electric (SDGE), posted $2.82 billion in net income. Those billions in profits were fueled by multiple rate hikes that utilities said they needed to finance more transmission lines, build additional energy sources, and harden the electrical system against wildfires.

The repeated rate hikes by IOUs have resulted in Californians, on average, paying the second highest rates in the nation. But in areas of the state that have formed municipal utilities, rates are considerably lower. SMUD customers, for example, pay 50% less than PG&E customers.

 At the same time, IOUs have been spending ratepayer dollars on political lobbying. SoCal Gas, for example, has used at least $36 million of its customers’ money for political lobbying to undermine California climate policies since 2019. In 2024, PG&E charged its customers for a commercial promoting the utility’s undergrounding of power lines. 

Last year, California enacted AB 1167 (Berman), which mandated fines against IOUs that illegally use ratepayer funds for lobbying, political campaign contributions, and promotional advertising.

However, IOUs have also spent large sums to stop local efforts to form a public utility. PG&E spent over $10 million against SMUD’s attempted expansion into Yolo County. SDG&E also contributed $400,000 to Responsible Energy San Diego, an advocacy group who opposed an effort to form a public utility in San Diego. 

SB 327 would: 

• Ban the use of ratepayer funds on lobbying or other political activities against local efforts to create a municipal utility.
• Strengthen oversight of IOUs by clarifying the authority of the Public Advocates Office to review utility information accessible to the CPUC.

Sen. Jerry McNerney is chair of the Senate Revenue and Taxation Committee, and his 5th Senate District includes all of San Joaquin County and Alameda County’s Tri-Valley.