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Do PG&E, Edison need higher profits? It's time for California to decide

Sammy Roth, Los Angeles Times on

Published in News & Features

The Public Utilities Commission's in-house ratepayer watchdog, the Public Advocates Office, had proposed reducing profit margins to 8.65% for Edison and 8.49% for PG&E, SDG&E and SoCalGas. The Utility Reform Network, a San Francisco-based consumer advocacy group, had also asked for lower shareholder returns.

The Utility Reform Network "still believes lower interest rate forecasts and the lower numbers adopted by other states justify lowering CA utility returns below 10%," spokeswoman Mindy Spatt said in an email.

"We fully expect the utilities to lobby against this proposal and continue their unjustified demands for higher rates," Spatt said.

The three monopoly electric utilities originally asked for dramatically higher shareholder returns, which could have resulted in monthly electric bill increases of $7.85 for PG&E customers, $12.20 for Edison customers and $5.59 for SDG&E customers.

Utility officials said higher profits were needed to balance out the financial risk posed by wildfires.

PG&E has estimated it could face $30 billion in liabilities from fires sparked by its equipment, including the Camp fire, which killed 85 people and destroyed the town of Paradise. Edison recently estimated its potential liabilities from the Thomas and Woolsey fires and the Montecito mudslide at $4.7 billion.


After the passage of AB 1054, the three utilities substantially lowered their requests. But they still asked for higher profits.

PG&E spokesman Ari Vanrenen said the utility's proposal "is designed to make sure the company can meet the energy needs of its customers by attracting the critical funding necessary to invest in and increase the safety and reliability of its energy system while helping reduce California's wildfire risk."

"We recognize that any increase to customer bills can be challenging, and PG&E is committed to keeping costs as low as possible while meeting our responsibilities to safely serve our customers," he said in an email.

State officials "basically split the baby" by recommending that profit margins stay the same rather than endorsing either side's arguments, said Loretta Lynch, a former president of the Public Utilities Commission. Lynch is a board member at the Protect Our Communities Foundation, a San Diego-area group that also called for lower utility profits.


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