This week, 38 California Assembly members — nearly half the California State Assembly — issued a letter urging the California Public Utilities Commission to reject rate increases proposed by PG&E — along with Southern California Edison, Southern California Gas and San Diego Electric.
Rate increases, the utilities say, are necessary to make the utilities a more attractive investment opportunity in the face of rising risk from wildfires, thus lowering rates in the long term because utilities can better raise money for capital projects and realize lower interest rates when borrowing.
“Last week, despite six rate increases in 2024, despite $2.4 billion in profit (not including $86 million in shareholder dividends), and despite being the most expensive utility provider in the nation, PG&E requested the CPUC approve yet another rate increase in order to boost the return on investment for their shareholders,”
Assembley-member Chris Rogers (D-Santa Rosa) said in a social media post. “Today, I joined half the California Assembly in calling on the CPUC to reject this request.”
“If the CPUC doesn’t reject a rate increase to boost already-record-profits while Californians are struggling to pay their energy bills, they really are useless and need to be significantly reformed or abolished,” Rogers added.
The letter, addressed to CPUC President Alice Reynolds and authored by Assemblymember Cottie Petrie-Norris (D-Irvine), encourages regulators to reject an approximately 1% increase in rates that PG&E and its fellow utilities have proposed — to bolster return on equity (ROE) and make the utility a more attractive investment.
Petrie-Norris is chair of the Utilities and Energy
Committee. Her office told the Times-Standard on background that, while wildfire risk is very real and PG&E is by no means making money hand-over-fist at the expense of ratepayers, the needs of the utility must be balanced against the very real struggles that Californians are
facing in terms of cost of living.
“Californians are facing enormous strain at the kitchen table, and specifically with their electric and natural gas bills,” the letter reads. “The CPUC has long recognized this in its annual SB 695 Report, noting electricity rates have
increased faster than inflation for customers of California’s electric investor-owned utilities (IOUs).
Nearly one in five electric IOU customers are behind on their bills, with the average amount owed approximately $821. This trend is unsustainable. Yet little action has occurred to date. Continuing a business-as-usual approach and approving these IOU requests to increase their profit structure, will inflict harm on an already pained system.”
The letter continues: “The utility sector is a capital-intensive industry, and utilities need investors to pay for the significant new investment needed to modernize the grid and decarbonize our economy. It is in all our interests that California’s utilities are healthy — any increase to their cost of borrowing or decrease to their credit rating results in higher cost to ratepayers, who shoulder the cost of utility financing. However, the need for utilities
to bring forward significant new capital investments must be balanced with our clear mandate to keep costs low. The IOUs’ proposals to increase their ROE does not strike an appropriate balance, and the CPUC should push back firmly.”
The letter goes on to entail a strategic “pivot” by the CPUC. First, Petrie-Norris says, the CPUC should conduct its own independent analysis of ROE, noting that “the CPUC should lead the discussion of IOU cost of capital, not be a passive recipient of the IOUs’ wishes.
Second, Petrie-Norris says, “the CPUC should pursue alternative financing options in its evaluation of future capital needs.” Those alternatives include “securitized financing orders, partnerships with nonprofits … (and) state revenue bonds to offset utility cost of borrowing.”
At the time of publication, PG&E could not be reached for comment.