The California Public Utilities Commission wrapped up a busy April by launching two significant new rulemakings.
ELECTRIC RATE DESIGN
On April 9, the Commission issued an OIR that could lead to significant changes in rate design.
Commissioner Matthew Baker presented Fresno as a microcosm of rate stressors: Fresno customers have bills that are $40-to-$100/month above average in the summer, with the lowest wealth quintile spending as much as 75% of their discretionary income on electricity after rent.
Commissioner Darcie Houck acknowledged that the state's current rate-design structure tries to solve problems that ratemaking is ill-equipped to solve (e.g., wildfire mitigation costs). She cited a new Senate Bill 254 report as carrying recommendations the CPUC will need to coordinate with.
The SB 254 report details how the existing California model of strict utility liability under inverse condemnation; cost socialization through rates; and a retreating private insurance market was built for a loss environment that no longer exists.
With all that as contextual background, the new rulemaking arrives. It will consolidate unresolved issues from multiple proceedings into a single venue where affordability, electrification, and large-load growth now collide. Those issues include carryover from the Demand Flexibility docket, e.g.:
--The Base Services Charge;
--Dynamic rates; and
--Electrification incentives
A proposed consultant scope expands the CPUC's rate-design modeling infrastructure and adds a new toolkit for large non-residential customers. Parties will be able to model bill impacts across Time-of-Use periods, demand charges, and major cost drivers including transmission and wildfire costs.
The rulemaking is intended to be a major reset. The CPUC is consolidating unresolved issues from multiple proceedings into a single venue where affordability, electrification, and large-load growth now collide. Standardized modeling tools will compress input disputes. Conflicts over methodology, cost-allocation assumptions, and who controls the analytical frame will take center stage.
RISK-BASED DECISION-MAKING
On April 30, the Commission launched a successor docket for its Risk-Based Decision-Making Framework. The Risk-Based Decision-Making framework governs how utilities propose safety spending in General Rate Cases.
The proceeding has four objectives:
Incorporating a formal risk tolerance standard into the framework;
Modifying the Risk Assessment & Mitigation Phase schedule to give the CPUC's Safety Policy Division more review time;
Updating the Benefit-Cost Ratio methodology; and
Assessing whether small gas utilities Alpine Natural Gas and West Coast Gas should be required to file annual Risk Spending Accountability Reports.
The docket's risk tolerance track picks up where a 2025 decision (D.25-08-032) left off. That decision defined risk tolerance but declined to adopt a formal standard. The CPUC will seek proposals on both a formal tolerance standard and a benchmark tied to everyday risks Californians already accept.
Commissioner Darcie Houck warned against "risk reduction at any cost,” noting that zero risk is unattainable. She encouraged the integration of existing affordability metrics into Benefit-Cost Ratio analyses for a more granular ratepayer impact assessment.
Commissioner Christine Harada broadened the risk landscape beyond wildfires to include floods, cybersecurity threats, and pipeline failures. Harada supported the concept of a risk-tolerance standard, drawing parallels to engineering disciplines that operate within defined “risk envelopes."
Framework proceedings of this type receive less attention than rates cases but have significant impacts on what ends up in customers' bills.
Please visit California Regulatory Intelligence for more detail.