The Public Utilities Act generally prohibits an electrical corporation from constructing or extending facilities without first obtaining a certificate of public convenience and necessity from the Public Utilities Commission, though a certificate is not required for modifications to existing transmission facilities. Under its regulatory authority, the commission has established a Transmission Review Process for capital transmission projects beginning January 1, 2024. This bill would require the commission to review and approve or deny transmission line projects—including extensions, expansions, upgrades, or modifications—initiated by electrical corporations based on their appropriateness and cost-effectiveness.

This bill builds upon Proposition 4 (2024) which authorized $10 billion in bonds for environmental and climate resilience projects, including $850 million for clean energy initiatives with $325 million specifically designated for public financing of clean energy transmission projects. The legislation would: (1) allow additional legislative appropriations beyond the bond funds to support transmission projects; (2) authorize the PUC to issue recovery bonds for utility undergrounding costs (excluding fines/penalties) while prohibiting large utilities from including undergrounding costs in their equity rate base; and (3) maintain existing criminal penalties for violations of PUC orders. The bill creates a state-mandated program but specifies no state reimbursement is required for local costs, aiming to expand financing options for grid modernization while protecting ratepayers from certain cost recoveries.