Cal. PUC § 792.5

(a) Whenever the commission authorizes any change in rates reflecting and passing through to customers specific changes in costs, except rates set for common carriers, the commission shall require as a condition of the order that the public utility establish and maintain a balancing account reflecting the balance, whether positive or negative, between the related costs and revenues, and the commission shall take into account by appropriate adjustment or other action any positive or negative balance remaining in the balancing account at the time of any subsequent rate adjustment.

(b) The commission shall develop a risk-based approach for reviewing or auditing balancing accounts periodically to ensure that the transactions recorded in the balancing accounts are for allowable purposes and are supported by appropriate documentation.

(c) The commission shall maintain an inventory of the balancing accounts established pursuant to this section.

(d) The commission shall require the public utility to record all related costs and revenues in the balancing account, unless those costs or revenues are specifically exempted by the commission.

(e) The commission shall adopt balancing account review or audit procedures that are consistent with a risk-based approach.

(f) The commission may forgo the review or audit of a balancing account pursuant to this section if an independent auditor has reviewed or audited the balancing account in the preceding five years.