Public Utilities Under the California Constitution

California’s public utilities are regulated under the Constitution in Article 12, which was added by Proposition 12 at the November 5, 1974 election, as well as statutes enacted by the Legislature. Article XII contains the following nine sections:

Section 1 provides for the Public Utilities Commission that consists of 5 members appointed by the Governor and approved by a majority of the Senate for staggered 6-year terms. In addition, this section provides that the Legislature may remove a member for incompetence, neglect of duty, or corruption, two thirds of the membership of each house concurring.

Section 2 states that that, subject to statute and due process, the Commission may establish its own procedures.

Section 3 provides that private corporations and persons that own, operate, control, or manage a line, plant, or system for the transportation of people or property, the transmission of telephone and telegraph messages, or the production, generation, transmission, or furnishing of heat, light, water, power, storage, or wharfage directly or indirectly to or for the public, and common carriers, are public utilities subject to control by the Legislature.

Section 4 provides that the Commission may fix rates and establish rules for the transportation of passengers and property by transportation companies, prohibit discrimination, and award reparation for the exaction of unreasonable, excessive, or discriminatory charges.

Section 5 specifies that the Legislature has plenary power, unlimited by the other provisions of this Constitution but consistent with this Article, to confer additional authority and jurisdiction upon the Commission, to establish the manner and scope of review of Commission actions in a court of record, and to enable the Commission to fix just compensation for utility property taken by eminent domain.

Section 6 provides that the Commission may fix rates, establish rules, examine records, issue subpoenas, administer oaths, take testimony, punish for contempt, and prescribe a uniform system of accounts for all public utilities subject to its jurisdiction.

Section 7 states that a transportation company may not grant free passes or discounts to anyone holding an office in this State and that the acceptance of a pass or discount by a public officer, other than a Public Utilities Commissioner, will cause a forfeiture of that office.

Section 8 specifies that a city, county, or other public body may not regulate matters over which the Legislature grants regulatory power to the Commission.

Section 9 provides that the provisions of this Article restate all related provisions of the Constitution in effect immediately prior to the effective date of this amendment and make no substantive change.