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California Supreme Court:
Public Utilities’ Decisions No Longer Given ‘High Deference’
By Kimber Cooley, associate editor
The California Supreme Court declared yesterday that the era of affording high deference to all Public Utilities Commission interpretations of the code governing its operations is over, saying that amendments adopted in the 1990s to address deregulation of the energy market make clear that the Legislature intended to expand judicial review of most of the agency’s decisions.
Justice Leondra Kruger authored yesterday’s unanimous opinion. Quoting from the court’s 1968 decision in Greyhound Lines Inc. v. Public Utilities Commission, she said:
“For nearly a century, statutory law directed courts to uphold the Commission’s decisions so long as the Commission had ‘regularly pursued its authority.’…During this era, we instructed that ‘the [C]ommission’s interpretation of the Public Utilities Code should not be disturbed unless it fails to bear a reasonable relation to statutory purposes and language.’…But as the century drew to a close, the Legislature revised the law to expand judicial review of most Commission decisions.”
She continued:
“The question before us is whether the highly deferential approach of Greyhound continues to apply in cases affected by this significant legislative change. We conclude it does not.”
1998 Amendments
At issue are Public Utilities Code §§1757 and 1757.1, which were amended in 1998 to specify several bases on which a reviewing court may set aside a determination by the commission.
Both sections extend judicial review to include asking whether the action amounts to an abuse of discretion, an unlawful act, an unauthorized power grab, or one unsupported by the findings or procured by fraud, as well as consideration of any violations of the constitutional rights of a petitioner.
Sec. 1757 applies to complaint and enforcement proceedings, as well as certain ratemaking and licensing decisions, and §1757.1 governs in all other circumstances. Each provision retains the “regularly pursued its authority” deferential standard only for actions relating “solely to water corporations.”
All other commission decisions—including those affecting the telecommunications, transportation, and energy industries—are subject to the more substantial inquiry that Kruger says “parallels” that prescribed under “the general administrative mandamus statute, Code of Civil Procedure section 1094.5.”
Consumer-Generated Power
The question arose in a dispute over the compensation paid by utilities to customers who generate electricity through rooftop solar panels and other measures. Because such tools sometimes create more energy than a consumer needs, excesses are exported to the grid operated by the power company.
Since 1995, the Legislature has required power companies to pay such consumers for the energy exported. Initially, customers could use the electricity they supplied to offset their bills.
Critics argued that the approach overcompensated consumer-generators by treating energy exported by customers as equivalent in value to that delivered by utility companies and effectively shifted more of the burden of paying for services onto those who did not have the expensive green-power solutions. In 2013, the Legislature directed the commission, through the adoption of Public Utilities Code §2807.1, to revisit the compensation scheme by, among other things, weighing the costs and benefits of renewable electrical generation.
The Public Utilities Commission responded by adopting a tariff that significantly reduces the price paid to consumer-generators.
Writ Petition
Three advocacy groups—the Center for Biological Diversity Inc., the Environmental Working Group, and the Protect Our Communities Foundation—filed a petition for writ review of the tariff in Div. Three of the First District Court of Appeal. They argued that the commission “failed to take into account all of the benefits of renewable energy, particularly those conferred on society generally.”
Div. Three affirmed the decision of the commission in 2023, applying Greyhound’s deferential standard of review and determining that the agency’s interpretation of the legislation as favoring the tariff bears a reasonable relation to the statutory purposes and language.
The petitioners sought review, asking the high court to address the continuing vitality of the Greyhound framework.
Continued to Cite
Kruger noted that “even after” the 1998 amendments, “courts have continued to cite Greyhound when applying the modified statutory standard of review, albeit without much explanation or discussion.” Finding this analysis to be flawed, she wrote:
“After careful examination of the effect of the legislative changes, we now conclude that, for the category of cases in which the ‘regularly pursued its authority’ standard is no longer in effect, the degree of deference prescribed in Greyhound no longer governs review under Public Utilities Code sections 1757…and 1757.1.”
Because the language of those provisions now mirrors that generally applicable to an agency’s reading of a governing law, she pointed to the 1998 opinion in Yamaha Corporation of America v. State Board of Equalization as “our leading case concerning review of an agency’s statutory interpretation.”
In that case, the high court distinguished between “quasi-legislative” regulations adopted under a statutory grant of authority and a commission’s interpretation of the “meaning and legal effect” of a law. As to the latter category, courts are not required to defer to the agency’s view and instead must “independently judge the text of the statute.”
She remarked:
“The Court of Appeal in this case did not cite Yamaha, nor did its analysis resemble the Yamaha inquiry. The court instead relied on the ‘uniquely deferential’ approach it understood to be required under Greyhound.”
Finding this to be an error, she announced that the court also disapproves of the 2004 decision by Div. Eight of this district’s Court of Appeal in Southern Cal. Edison Co. v. Public Utilities Commission, the 2008 opinion by Div. Five of the First District in The Utility Reform Network v. Public Utilities Commission, and the Ames v. Public Utilities Commission case decided by Div. Three of the Fourth District in 2011.
The jurist wrote:
“The parties vigorously dispute whether the challenged tariff should be upheld under the Yamaha standard….[W]e leave this question for the Court of Appeal to address in the first instance.”
The case is Center for Biological Diversity Inc. v. Public Utilities Commission, 2025 S.O.S. 2250.
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