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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 Environmental Defense Fund also advised the Public Utilities Commission to set different profit margins for investments in electric and gas infrastructure at the two major utilities that deliver both commodities, Pacific Gas & Electric and San Diego Gas & Electric.

The Environmental Defense Fund is one of a growing number of climate advocacy groups and state policymakers calling for California to begin taking steps to transition homes and businesses from gas-based heating and cooking to all-electric appliances. The idea is to replace natural gas, a planet-warming fossil fuel, with electricity, which in California increasingly comes from climate-friendly energy sources.

Seventeen cities and counties have passed building codes this year incentivizing or requiring electric appliances in new buildings. Those types of policies have faced pushback from SoCalGas, which argues that people should be able to choose how they power their homes and businesses, and that there are easier, cheaper ways to reduce climate pollution from natural gas than forcing consumers to replace their gas furnaces and stoves.

The California Restaurant Association sued Berkeley last month, arguing that the city's ban on gas hookups in most new residential buildings -- set to take effect Jan. 1 -- will have a "drastic impact unique to restaurants."

"This ban would effectively prohibit the preparation of flame-seared meats, charred vegetables, or the use of intense heat from a flame under a wok," the restaurant association said in a written statement.

The Environmental Defense Fund urged the Public Utilities Commission to consider allowing shareholders at PG&E and SDG&E to earn higher profits on investments in electric infrastructure than in gas infrastructure. That could help the state meet its climate policy goals, Colvin said.

"For any discretionary dollar that a utility is going to invest, are they going to invest in the clean electric grid that we say we want as a state?" Colvin asked. "Or are they going to invest in legacy gas infrastructure?"

PG&E opposed the environmental group's proposal, saying it "fails to recognize that maintaining safe and reliable service on the gas system requires capital, for which investors should receive a fair return."


"PG&E and SoCalGas have continuing responsibility for the safe, reliable operation of their gas systems, and must continue investing in their gas infrastructures to do so," PG&E said in a commission filing.

SDG&E also wrote that the Environmental Defense Fund's proposal can be "quickly dispensed with" because it is contrary to Supreme Court precedent on how shareholder returns should be set for utilities.

The Public Utilities Commission's proposed decision doesn't set separate returns on equity for gas and electric investments. But it doesn't accept or reject the environmental group's arguments, either, leaving open the possibility that the agency could return to the idea the next time utility profits are adjusted.

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