[bcrosby95]

In theory rate hikes have to go through California regulators but, at the same time, the company is allowed a certain rate of return.

In practice I have no clue how it works out though.

[tomrod]

Typically in markets like CA and TX you will have a rate case go to the public utility commission. I'm more familiar with Texas' approach (it was a data source for my dissertation); the idea is to let the companies charge enough to cover reasonable costs.