Photo courtesy of The Utility Reform Network

SAN FRANCISCO, CA (MPG) – California’s for-profit utilities submitted cost of capital proposals to the California Public Utilities Commission (CPUC) today, seeking to increase their already excessive guaranteed profit percentages. The Utility Reform Network (TURN), an intervenor in the proceeding, urges the California Public Utilities Commission to reject these profit-seeking increases and take decisive action to lower bills for struggling utility customers. 

"California utilities are driving an affordability crisis, with families paying billions in excessive costs while investor profits soar,” said Lee Trotman, Communications Director of The Utility Reform Network (TURN).  “As Pacific Gas & Electricity, SoCal Edison, and San Diego Gas & Electric submit their cost of capital proposals today, the California Public Utilities Commission (CPUC) must take bold action to lower bills by tackling the root cause of skyrocketing rates: guaranteed profits that reward utilities for spending more, not spending wisely.”

Cost of capital proposals determine the guaranteed profit percentage (return on equity) for-profit utilities receive on infrastructure investments and how much they can collect from utility customers. Every percentage point increase in their percentage profit rate translates to hundreds of millions of dollars in increased costs for utility customers, without any added benefit for customers. Far from needing an increase, the guaranteed profit rate for California’s utilities should be substantially lowered, as they far exceed what is needed to attract capital.

The Utility Reform Network has identified three immediate steps regulators and lawmakers can take to rein in out-of-control energy costs:

1. Reduce the profit rate for utility investors – California Public Utilities Commission must lower the return on equity that utilities earn at ratepayer expense. SoCal Edison, Pacific Gas & Electricity, and San Diego Gas & Electric are pocketing guaranteed profits of over 10.6%, far exceeding what’s necessary to attract investment. Lowering these rates will provide direct relief to families struggling with soaring bills.
    
2. Put the brakes on reckless capital spending – California Public Utilities Commission must stop rubber-stamping costly infrastructure projects that inflate the rate base and drive up customer bills. Instead, the Commission should prioritize cost-effective investments that enhance safety and reliability without unnecessary spending that enriches shareholders.
    
3. Expand public financing options – The Legislature should advance solutions that eliminate profits from essential infrastructure investments. Public financing tools, like state-backed bonds, can ensure California builds the clean, safe grid we need — without forcing ratepayers to foot the bill for excessive corporate profits.

For-profit utilities have treated California’s regulatory system as a blank check for too long, leading to a 101% rate hike for Pacific Gas & Electricity customers, 85% for SoCal Edison and 71% for San Diego Gas & Electric in less than 10 years. Meanwhile, 2.2 million California households, or nearly 1 in 5 customers of Pacific Gas & Electricity, SoCal Edison and San Diego Gas & Electric, have fallen behind in paying their bills.

The California Public Utilities Commission will now begin its review of the cost of capital proposals, with consumer advocates, including The Utility Reform Network, set to file formal protests by April 20. 

The proceeding will continue through the summer and fall, with testimony expected between July and October. A final decision is anticipated between March and May of next year. The Utility Reform Network will continue to advocate for policies that prioritize ratepayer affordability and ensure that utility profits do not come at the expense of struggling California families.