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SB 875

Public utilities: eminent domain: just compensation.

2025-2026 Regular Session Introduced by Matt Haney and 2 co-sponsors

SB 875 accelerates municipalization in the PG&E area by making the local entity’s use of assets conclusively preferred, limits PUC review to fairness to employees, and bans ratepay

April 21 set for first hearing. Failed passage in committee. (Ayes 4. Noes 1. Page 3973.)
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Bill Summary · SB 875

Summary of SB 875 (2025-2026) – Public Utilities: Eminent Domain: Just Compensation

Note: This summary interprets the bill as amended in early 2026 and focuses on the substantive changes, affected parties, and timelines.

1. Purpose and Intent

  • SB 875 seeks to reform and accelerate the process for local public entities (municipal utilities) to acquire or separate from investor-owned utilities (notably within the Pacific Gas and Electric Company service area).
  • The bill aims to restore and strengthen local public ownership or “municipalization” of electric/gas water infrastructure by adjusting presumptions about public necessity, modifying regulatory review standards, and clarifying cost recovery rules related to eminent domain and asset separation.

Key themes:
- Strengthening the public sector’s ability to take or separate utility assets.
- Reducing delays and litigation costs associated with valuation and just compensation proceedings.
- Ensuring clear, timely findings on compensation and costs connected to asset separation.

2. Key Provisions and Changes

Eminent Domain and Just Compensation Standards

  • For PG&E service area assets that are electrical, gas, or water utility property, if a local public entity intends to put the property to the same use, the bill changes the presumption about “more necessary use”:
    • The presumption becomes conclusive (not rebuttable) in favor of the local public entity within the PG&E service area.
    • This marks a shift from the current rebuttable presumption to a conclusive presumption in these specific circumstances.
  • The related code sections modify how “resolution of necessity” operates:
    • In PG&E service area situations involving electrical, gas, or water property, the local public entity’s presumption is conclusive (not rebuttable).

Public Utilities Commission (PUC) Review and Asset Transfers

  • For transactions involving asset ownership changes from an electrical or gas utility to a public entity within the PG&E service area, PUC review is limited to determining whether the transaction is fair and reasonable to affected utility employees (instead of broader scrutiny).
  • The timing of the PUC review is tied to the point of the ownership change agreement (for voluntary changes) or after condemnation conclusions (for involuntary changes).

Just Compensation and Separation Costs

  • Utility owners must, within 90 days of a political subdivision submitting a compensation amount or separation plan, provide:
    • A competing just compensation amount, or
    • A response to the separation plan (agree or identify issues and propose alternatives).
  • If the PUC finds that total just compensation should cover costs for physical separation of assets (e.g., constructing new facilities, relocating, or modifying facilities), it may establish a process to reimburse those separation costs and determine reasonableness.
  • The PUC must make findings on just compensation within 18 months of the petition filing.

Litigation Costs and Ratepayers

  • A public utility may not recover from ratepayers any litigation costs incurred because of a political subdivision’s efforts to acquire utility property or related eminent domain actions.
  • A new provision (Section 1425) explicitly prohibits ratepayer funding of such litigation costs.

Administrative and Procedural Details

  • The bill adds new sections (1410.5, 1411, 1425) to the Public Utilities Code to implement the above procedures.
  • It includes a Senate finding that a special statute is necessary for PG&E service-area entities, reflecting unique regional considerations.
  • California constitutional and budgetary constraints are acknowledged, including that this bill does not require state reimbursement for mandated costs (local agency costs are addressed as a local program).

3. Parties Affected

  • Local public entities within the PG&E service area seeking to municipalize or separate assets.
  • Public Utilities Commission (PUC) oversight bodies reviewing compensation, asset transfers, and separation costs.
  • Investor-owned utilities (notably PG&E) and their employees, who are affected by a more limited review scope for certain transactions.
  • Ratepayers, who are protected from bearing litigation costs arising from political subdivision acquisition efforts.
  • Public entities’ ratepayers and local governments that pursue municipalization or asset separation.

4. Procedural and Timeline Aspects

  • Just compensation findings: Must be filed within 18 months from the petition date.
  • 90-day response window: Utility owners must respond with compensation amounts or separation plans within 90 days of a subdivision submission.
  • Separation costs: If included, a reimbursement process may be established by the PUC to address reasonableness of those costs.
  • Litigation cost prohibition: Ratepayers cannot bear litigation costs related to municipalization efforts.

5. Fiscal and Legal Notes

  • The bill is categorized as a local program with no state appropriation.
  • It imposes a state-mandated local program and creates penalties for noncompliance, with crimes/ENFORCEMENT implied for violation of Public Utilities Code provisions.

Overall, SB 875 advances a framework intended to streamline and strengthen the ability of local publicly owned utilities to acquire or separate PG&E-area assets, while limiting ratepayer exposure to related litigation costs and focusing PUC review on utility-employee impacts in certain voluntary acquisitions.

Compiled from official sources — confirm details with the bill’s official record.

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