California’s monopoly electric utilities asked state officials to sign off on higher profits earlier this year, saying larger shareholder returns are needed to attract investors. Advocates say the investor-owned utilities would do fine making less money.
California’s monopoly electric utilities asked state officials to sign off on higher profits earlier this year, saying larger shareholder returns were needed to attract investors who might be scared off by the wildfire liabilities that prompted Pacific Gas & Electric to file for bankruptcy.In a proposal issued last week, staff at the California Public Utilities Commission called for keeping profit margins the same for PG&E, Southern California Edison and San Diego Gas & Electric.
“There are no remaining significant unmitigated risks that warrant investor compensation” through a higher return on equity, commission staff wrote.also calls for profit margins to remain the same at Southern California Gas, which like SDG&E is a subsidiary of San Diego-based Sempra Energy. The five-member Public Utilities Commission could vote on the staff proposal as soon as Dec. 19.
The commission is supposed to allow shareholder returns no higher than is necessary to attract investment so that utilities have enough money to pay for infrastructure projects, safety upgrades and the growing amounts of climate-friendly energy required by state law.The Edison Electric Institute, an industry trade group,that in 2018, utility regulators nationwide approved average returns on equity of 9.51%, “the lowest annual average in our 30 years of data.
That means for every dollar the utilities spend building electric or gas infrastructure, they’d be allowed to charge customers an additional 10 cents or so in profits for their shareholders. The logo for Pacific Gas & Electric appears above a trading post on the floor of the New York Stock Exchange.
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