PG&E claims no connection between rate increases and $2.2B jump in earnings

https://abc7news.com/pge-rate-increase-2023-earning-2-billion-dollar-profit/14483425/

by _dp9d • 2 years ago

129 116 2 years ago

abc7news.com

ethbr13• 2 years ago

I mean, technically they're right.

There's no connection between a rate increase on Jan 1 2024 and reported earnings for 2023.

Bad title.

But it will be curious to see how 2024 goes financially for them.

bushbaba• 2 years ago

Rate increase means more profit. As PGE is granted a preset profit margin of revenues.

ethbr13• 2 years ago

For the current year. Not last year.

darth_avocado2• 2 years ago

PG&E has had rate increases in 2022 and 2023. There is no way they can claim no relationship between rate increases and profitability.

If anything, 2023 profits should then mean 2024 rate increases which were made on the claims of company losing money were unnecessary.

oefrha• 2 years ago

Sure,

But the notion that anything coming out of our earnings report is in direct result of the rate increase, is completely false.

emphasis on the rate increase.

But of course there was a rate hike in 2023 as well:

The average PG&E bill may soon be going up a shocking $35 a month - Feb 3, 2023 https://www.sfgate.com/news/article/pge-utility-bill-increas...

EchoChamberMan2• 2 years ago

Unlimited year over year growth is cancer, and it's killing most of us. A lot of other companies are raking in records profits as well.

[Edit]

Much of these profits have just as much justification as pg&e - "I want more."

[Edi]

Wow, they have the audacity to say the profits are "primarily driven by an increase in customer capital investment," as if customers chose to give their money away.

https://www.pgecorp.com/news/news-details.d78413bf-71e9-4a77...

aiauthoritydev23• 2 years ago

Profit is not a problem. The problem is PG&E is pretty much a monopoly enabled by Californian state.

EchoChamberMan2• 2 years ago

Profit at any cost is absolutely a problem.

toomuchtodo2• 2 years ago

Why is the state government so adverse to nationalizing them vs allowing them to leach off of their collective customer base? $2B in profits after a rate hike? Outrageous. Who cares what it costs to nationalize at this point, y’all are already getting raked over the coals with no end in sight.

janalsncm2• 2 years ago

Power grid operators are basically a textbook example of a natural monopoly. In other words, it wouldn’t make sense to have multiple companies running power lines to houses. This isn’t like a coffee shop where it makes sense for there to be multiple in the same neighborhood competing on price.

benreesman• 2 years ago

I’m not sure whether you will agree wholly or partly with this, your comment can be read more than one way. But several child commenters seem to be reading it as “Government is not the solution to our problems, government is the problem”. So I’m going to address the ever more psychotic Reaganomics that still haven’t “trickled down” 40 years later and how that ties into the energy situation in California. He won his second term the year I was born, in California, so I watched all of this since like, 1989 and was hearing about it in the womb.

Enron is arguably the nastiest collapse of any large company due to sanctioned crime, there’s just not another word, a bunch of people went to jail.

They lobbied to get energy business de-regulated, and it was so extreme that they had the pull to get something like half the base load generation turned off, spiking the price per kilowatt hour over 4k USD at one point, fire departments were rescuing people from elevators in blackouts.

Capitalism sounds awesome: I hope I live to see it. But it’s not practiced in the United States in any credible way: you’re always hearing “it not what you know, it’s who you know”, “you get jobs through your network”, “the value of an Ivy university degree is the people you meet”. “The YC network is an advantage no startup should turn down”.

That’s not capitalism, that’s how to get a decent pair of shoes in East Berlin in the 1970s. Or so I’ve been told.

Our system is a capture kleptocracy with a core economic engine built around “indentured” labor, and has been since Jonestown Virginia in the 17th century. For a time people from Africa got by far the worst of it to date, that’s substantially (though by no means completely) addressed now, and now you see headline after headline (like this one) about staggering corporate profits, or stagnant wages, or both pricing traditionally solidly middle class people out of an existence in which they have any real choice about whether to work, for who, and for how much. If you’ve got a diabetic kid, and the insulin (that’s basically too cheap to meter anywhere else in the “developed” world), you don’t get to “negotiate the value of you labor on a fair, free, transparent, and competitive marketplace. That’s just one example of one friend who got popped with a pay decrease recently and has no real option but to take it.

Dumbass children(-in-law) will be hanging around the White House, doing crime no matter who wins the next Presidental Election. You see the occasional wealthy or successful person who friggin ground it out from nothing, those people exist, everyone knows a few examples, but it’s not a defensible claim that this is typical.

Jon Stewart (who for some reason is not regarded as patriotic by many in spite of choosing better treatment of 9/11 first responders and their families as his “wedge” issue, laboring tirelessly and often shaming corrupt Congresspeople by standing on their steps personally), recently interviewed Larry Summers (who brought you hits like crippling the CFTC in a no minutes hatchet job on Brooksley Born, who called the 2008 financial collapse and regulated the derivatives and would have personally prevented the collapse):

https://youtu.be/tU3rGFyN5uQ?si=E6bLq1jYxRMeqpc6

Judge for yourself, but Summers sounds pretty full of it I think, and I think there’s a grudging consensus around that.

The topic being a planned increase in unemployment (openly declared by the FOMC) to reduce wages (this is for real) to combat inflation (as defined by the CPI and a dartboard).

Stewart’s assertion, and I think, that of any humane person, is that corporate profits can’t be shattering record after record while wages are suppressed in broad daylight.

pleb_nz• 2 years ago

I don't think they said profit is the problem. They said it being expected increased profits year on year is the problem.

refurb4• 2 years ago

PG&E's rates and operational budget is approved by the California government. They can't just raise rates on their own. Or spend less to make more profit.

So consider the profit "CA government approved". Does that make you feel better?

jkelleyrtp3• 2 years ago

PGE charges me 50c/kwh just to deliver my power. I still spend an additional 12c/kwh for it to be generated. My bill last two months were $200 each for a 1 bed in SF. Insane.

meaydinli3• 2 years ago

For the last few months, we have done our best to reduce both our electric and gas usages. Unfortunately, regardless of however much we reduce, each bill came higher than the one before.

obmelvin• 2 years ago

This has roughly been my experience in San Diego with SDG&E as well. We are renting with mostly older appliances, including an electric water heater that with an energy rating sticker suggesting a cost of nearly $100 month - the numbers look much better on it because they use 12c kWh lol.

We do nearly all vacuuming, washer, dryer and dishwasher on the weekends when it's cheapest. We don't use an AC or heater. But, we do cook nearly every night on an ancient electric stove and I do work from home with 1 or 2 32" monitors. It seems impossible to pay much less than $150 month.

ethbr13• 2 years ago

That's insane. Are they sweeping all the state/city mandates into the delivery charge?

Example from the SE: base charge of $35 (static, I believe) + 10.6c/kwh.

eszed• 2 years ago

Are they sweeping all the state/city mandates into the delivery charge?

Nope, not on my bill.

monero-xmr• 2 years ago

But you are saving the climate

fragmede2• 2 years ago

At this rate, the cost of electricity in SF is going to rival the cost of gasoline for an EV. That's already the case in some places in Europe.

In SF, gasoline is roughly at $5/gallon. If your ICE car gets 31 mpg but your electricity works out to be $0.70/kWh on an EV that gets 4.2 mi/kWh (eg Tesla Model 3), you're ever so slightly better off choosing an ICE vehicle vs an EV in a strictly financial sense in that case, according to chooseev's calculator*.

* https://chooseev.com/savings-calculator/

seanmcdirmid2• 2 years ago

Where in Europe is gasoline only $5/gallon, or do you mean their local rate for gasoline?

I was surprised recently when BC’s gas prices were about the same as WA’s, it’s almost always been more expensive in my lifetime.

xster• 2 years ago

I have a Rivian. It's equivalent to 16.7 mpg given its mi/kWh, and electricity and gasoline costs.

jkelleyrtp3• 2 years ago

The cost of gas has come down in the city - around $4.30/gal for where I fill up. So yes, it’s actually cheaper to drive an ICE than an EV in SF.

SergeyKa• 2 years ago

Yes, Model 3 charging works out about the same sa fuelling a Prius C.

One would think solar is the answer given such price per kWh. PG&E have lobbied for NEM3 and got it, to make rooftop solar less viable, look that up!

hnburnsy3• 2 years ago

In Florida FPL has an unlimited non peak hours EV charging plan for around $30 a month. Imagine your bill for driving each month never exceeding $30.

asdff4• 2 years ago

If you want cheap power you need a public provider. LADWP charges 16-21c/kwh depending on your usage.

vineyardmike2• 2 years ago

I moved somewhat recently from Seattle to SF. The electricity in Seattle was 7c/kwh when I was there. I did the math, it would have been cost-effective to heat my home with bitcoin mining, because electricity was so cheap (but GPUs - not so much).

My partner likes to use a space heater to warm the bathroom during the morning. It costs almost $1/hr to do that in SF with a 1500w space heater. We also spend $200 a month on electricity now, and we don't have an EV, and we have a gas stove and clothing dryer.

I miss my $5 electricity bill from when I was single in Seattle.

nelox• 2 years ago

So they should be able to drop prices without it affecting earnings

Kapura• 2 years ago

"Increased profits have nothing to do with increased rates" is like saying "the wetness on your leg has nothing to do with me taking a leak on it." I don't know if they think people are stupid, or if they just have a monopoly of they're little slice of the country so there's nothing anybody can do.

nielsbot• 2 years ago

What would happen if the state took ownership of distribution and ran it at $0 profit? Customers could choose any generation service they like.

Any downsides?

bmitc• 2 years ago

Certain political parties hate anything not making a profit, even government services, so the major downside that I see is getting politicians to agree to it.

For what it's worth, I agree with you and feel many things should be turned into non-profit government services.

parineum3• 2 years ago

Certain political parties hate anything not making a profit

Since we're talking about the one party state of California, I assume you're talking about Democrats.

earthwalker99• 2 years ago

That's literally communism.

vineyardmike2• 2 years ago

Yes.

It works in much of the world. Plenty of places have have government run the power companies.... like, for example, the capital city of California, or the largest city in California (LA). And SF, another major city, is looking into having a municipal power company as well.

I grew up in a small town on the east coast, and we had a municipal electricity company. Service was better and cheaper. And we got discounts on next month's electricity if the company accidentally ran a profit the prior month.

Americans have such a visceral reaction to their own perception of communism they forget that it can work, even in America.

Paul-Craft• 2 years ago

State-run services are not communism. Don't be obtuse.

djmips• 2 years ago

We have state owned electricity company and it's not communism ( very loaded term )

woodrow• 2 years ago

Urban ratepayers would still be subsidizing the infrastructure upgrades, utility undergrounding, and legal settlements involving wildfires in more rural/wildland areas. Profit notwithstanding, there's a reason why SMUD (Sacramento Municipal Utility District) rates are significantly lower than PG&E: https://www.smud.org/en/Rate-Information/Residential-rates.

refurb4• 2 years ago

Well, profit is about 10%, so peak rates for electricity could drop to $0.63/kWh instead of $0.70/kWh, which is still a ridiculous rate, even in California.

And instead of shareholders capitalizing the company, the government would need to use tax payer money.

And worst of all, when the state company fucks up, then the politicians would take the blame and might lose votes.

#1 and #2 are possible, but #3? Never going to happen in California.

sevg• 2 years ago

For people outside USA/California, PG&E serves gas and electricity to two thirds of California.

They're featured in the film Erin Brockovitch for knowingly dumping 1400 million litres of hexavalent chromium contaminated water in the 50s and not informing the water board until the 80s, resulting in countless cancer deaths in Hinkley, California.

Their equipment has led to many wildfires (eg, approximately 40 of the 315 wildfires in PG&E's service area in 2017 and 2018 were allegedly caused by PG&E equipment). They've been guilty multiple times of criminal negligence, including for gas explosions (see comments below from epistasis and toomuchtodo).

They've had controversies surrounding tax dodging, deforestation, dirty tactics to maintain monopoly, collusion with regulatory agencies, and rates that are among the highest in the US (eg, electricity rates in 2021 were 80% above the national average).

Overall, a real treasure of a utility company.

https://en.m.wikipedia.org/wiki/Pacific_Gas_and_Electric_Com...

toomuchtodo2• 2 years ago

Also of note is their handling of their fossil gas infrastructure.

https://en.wikipedia.org/wiki/San_Bruno_pipeline_explosion

https://www.latimes.com/business/la-fi-pge-safety-investigat...

epistasis7• 2 years ago

One of the many times they have killed: eight people in San Bruno in 2010 due to a gas pipeline explosion:

https://en.wikipedia.org/wiki/San_Bruno_pipeline_explosion

On January 13, 2012, an independent audit from the State of California issued a report stating that PG&E had illegally diverted over $100 million from a fund used for safety operations, and instead used it for executive compensation and bonuses.

This while charging unbelievably high rates for some of the worst reliability rates I have ever seen anywhere in the US.

roenxi3• 2 years ago

That isn't really on the same scale as 1.4 billion litres of hexavalent chromium. I'm not sure if they are meant to be the same incident, but at $10 million/life, $100 million in savings at cost of 8 lives would be an appropriate design choice. We have to draw a line somewhere. I don't think that is the comparison you're trying to draw, but I'm not sure what you are trying to say, so...

Life be risky. Perfect safety is not a reasonable goal.

throwaway892238• 2 years ago

Every American utility company I have ever looked into has numerous crimes and controversies associated with it. It's kind of weird.

I actually suspect it's due to them being publicly traded. They literally are not allowed to do things that would jeopardize the share price, so they will hurt themselves and people in order to make a minor profit increase YOY. You shouldn't need to be a capitalist enterprise (with the whole "infinite revenue growth" thing) if your purpose is just to make sure your customers - who won't ever really grow much, because, you know, only so many babies born etc - have power, water, etc. But as publicly traded companies, their first purpose is just to increase shareholder revenue. If you end up (accidentally) burning down a forest, poisoning some communities, or compromising a state election with a fake candidate, that may just be an unfortunate side effect in the service of increasing the stock price.

whatshisface2• 2 years ago

The presumed legal duty to break the law in the interest of shareholders is grossly exaggerated... Nobody can sue you for failing to commit a crime on their behalf.

epistasis7• 2 years ago

IMHO the problem is that utilities are like no other company in that they have a monopoly but are supposed to be reigned in by regulators. But the vast majority of regulatory bodies are either captured or incompetent at regulation.

Public versus privately traded doesn't matter as much as the fundamental conflict, wherein they profit more when the costs increase, and there's no penalty for literally killing people.

HIPAA violations result in jail time for executives. Meanwhile PGE illegally raids safety fund accounts to pay executive bonuses while regular people are killed due to failing infrastructure.

CPUC and PGE executives need to face serious consequences, and most certainly jail time, for their malfeasance.

asdff4• 2 years ago

The public companies also suffer from corruption and such. I guess there just must be some law of a universe where if you have a sufficient sized captive base of income, people who might be inclined to abuse their position to take advantage of the situation will strive to take advantage of the situation. Then it becomes not a matter of if there is any corruption, but when will you end up with a corruptible individual in a position that can be corrupted.

Maybe these organizations or government bodies can be organized like a RAID away. Mirror these positions of power and use redundant pools. Identify corrupt bits by comparing results between these mirrors and hot swap the corrupted positions for a new candidate. Incrementally replace your array on schedule to avoid chance of future corruption and to mitigate batch effect.

Ferret74462• 2 years ago

"Fiduciary duty" is probably the single most damaging policy/legislative decision that was made in US history. Even though it technically doesn't force companies to chase short term gains above all else, it still creates enough perverse incentives to create a lot of harm.

Rygian• 2 years ago

Maybe every publicly traded company should be subject to a fiduciary liability: when convicted, the judge can order an imposed hit on share price, and forbid dividends for a lengthy period.

jjav3• 2 years ago

The PG&E rates are hard to believe for anyone outside their grip of death. From my February bill:

peak: 53.0 + 18.3 = 71.3 c/kWhw

partpeak: 51.3 + 11.1 = 62.4 c/kWh

offpeak: 34.4 + 09.8 = 44.2 c/kWh

Electricity is my third largest monthly expense (after mortgage and food) but at the current rate of increases, it'll be the second largest in a few years.

This is for a tiny house with nothing special using electricity.

fmobus• 2 years ago

What the actual fuck. I live in Germany and pay ~35c/kWh, I thought power was supposed to be cheap in the states.

OJFord• 2 years ago

What are the two things summed? Are they really both c/kWh? Just confused because in the UK they'd be p/day and p/kWh respectively, and the numbers look 'in the right ballpark'. (Except that it would be mental to have the standing charge vary according to peak/not time.)

doctorpangloss2• 2 years ago

Their equipment has led to many wildfires

Who are the antagonists in this story?

California decided that people who live in fire areas deserve (1) the last marginal sales price of the homes in their burnt down area (2) paid by taxpayers, in disguise, through their utility bills (3) and in exchange, get what?

Why should anyone be living in the places where these ancient powerlines are?

The essentially infinite land the US + cars have played an important role in keeping home prices from rising to truly stratospheric levels in the urban US. So I understand that it also benefits many communities to have the escape valve of this housing.

But there must be better land and better places than wildfire prone California. You have to draw the line somewhere. There are people who in the same breath say PG&E is the antagonist, that they are to blame and not the recklessness of the communities that live in these places; but then, they complain about wetland restrictions being rescinded and that taxpayers should not be paying for repeat flood victims in Florida, Louisiana, whatever, in red states. It's the same fucking thing!

I don't know why the money to achieve this ridiculous compensation scheme has to meander through the utility company's liability. Obviously if it were an ordinary tax - I mean, it's a tax, that we're paying, through these utility bills - people would not do it. The only reason PG&E liability is on anyone's radar is because of some kind of complex political shenanigans that I do not understand and I wish were not a part of my community at all.

free_bip• 2 years ago

This comment reeks of victim blaming. Natural disasters happen literally everywhere on earth. When someone's house is destroyed by a tornado in Tornado Valley do you tell them "Oh well you were really irresponsible for living in tornado valley"? Or how about Florida, which has been hit by over 40% of US-landfall hurricanes? Do you tell the hundreds of thousands of people whose homes have been destroyed that they should have just packed up shop and moved away since they get regular hurricanes?

Ferret74462• 2 years ago

It's only wildfire prone due to the incompetence (corruption?) of PG&E and public forest management. Your argument only works if people aren't the cause of a significant amount of the risk.

robocat• 2 years ago

Goddam weird how we treat a corporate as though it has history and morals: PG&E is not a person.

Projecting past crimes and predicting future actions makes zero sense.

Eddy_Viscosity22• 2 years ago

Are companies like this not proof that the free market system does not exist? I mean how could PG&E still exist if this were the case?

epistasis7• 2 years ago

What do you mean by "free market"?

In any case, that might be a tangential, as regulated utilities are decidedly what nobody thinks of as a free market. They are a monopoly, but trade off regulation of their pricing and investment decisions in return for the monopoly status.

refurb4• 2 years ago

Download the General Rate Case (GRC)…all 1000+ pages, on the CPUC website and see how much control PG&E has over its operations and rates.

https://www.cpuc.ca.gov/industries-and-topics/electrical-ene...

(Hint: it’s near zero)

PG&E can’t fill their toilet paper dispensers in their bathrooms without CPUC’s ok. Ok, a slight exaggeration, but things like replacing a chain link fence on a substation that costs $200k gets rejected. That’s how detailed CPUC gets into PG&E’s operation and finances. Keep in mind it took 3 years for PG&E and CPUC to finalize these rates. They started in 2020.

You’re probably asking, who the hell is CPUC? And who nominates those on the CPUC board? Governor Newsom. He nominates them directly.

My theory is keeping PG&E private provides a convenient whipping boy for the state politicians. If it was made public then all those problems would be Newsom’s (political) problems? Right now? Newsom gets votes for his “tough talk” about PG&E which is hilarious to me.

Newsom! PG&E? That’s you buddy!

renewiltord2• 2 years ago

Everyone on Reddit keeps posting outrageous bills. Meanwhile we've never broken $200 in a 2000 sq ft San Francisco apartment. I just set the thermostat for 72 F and forget about it. Sometimes we then turn on the air conditioner to cool things down since the apartment is multilevel and we sleep on the top floor.

So, COULD_NOT_REPRODUCE

jkelleyrtp3• 2 years ago

The delivery fee is different for every building in the city. I’ve been receiving $200+ bills and been asking around to friends and their delivery fee per kWh is less than mine, for whatever reason. Sounds like you got lucky.

renewiltord2• 2 years ago

That may well be true. I suppose then we should simply post our usage. Our highest bill (at $199.88) had 327 kWh total of energy consumption and 31 "therms" (apparently about 3.27 GJ) of gas energy. I would obviously prefer they measure gas by volume or mass of it provided but overall that doesn't seem outrageous.

asdff4• 2 years ago

If you want to actually stick it to the PGE investors, consider opening a short position during wildfire season.

doron2402• 2 years ago

I'm constantly amazed by the fact that in California, one of the world's most expensive places to live, with a GDP rivaling that of some countries, a company like PG&E is responsible for providing electricity and gas. Surely, we can expect a higher level of service?

alxmng• 2 years ago

PG&E has also done everything they can to stop San Francisco from providing its own power. But hopefully that's finally coming to an end:

San Francisco is taking the biggest steps in history toward creating a full public-power system.

In filings with the California Public Utilities Commission, the city has established that PG&E’s local property is worth about $2.3 billion—and if the commission agrees, the city can move to seize those assets under the power of eminent domain.

https://48hills.org/2024/03/after-111-years-sf-is-finally-mo...

MichaelZuo• 2 years ago

Seems like an absurdly low number, $2.3 billion couldn't even recreate a fifth of the current electrical grid in SF.

theogravity• 2 years ago

I love how at the bottom of the article it says, "In the meantime, if you do need help paying your PG&E bill, there is help available here."

Click it and it goes to a 404.

93po• 2 years ago

I wish it was just an image of a middle finger.

ghouse• 2 years ago

PG&E is an investor-owned regulated monopoly. Other utilities in California are publicly owned (either government, or non-profit. For example, LADWP, SMUD, Palo Alto, Turlock and many, many more). Those publicly owned utilities have much lower rates.

PG&E has a "revenue requirement" which is the amount it needs to bring in to cover operating, energy procurement, construction, and profit. At the most simplistic level, rates ($/kWh) are set by dividing the revenue requirement by the anticipated quantity of electricity sold.

The amount of profit it is allowed to make it determined primarily by how much it has invested to safely and reliably deliver electricity. Some of that is regulated by the Federal Energy Regulatory Commission (FERC). Something like a 9% return on equity for investment.

This creates a misalignment of incentives: PG&E would rather spend CapEx than OpEx. This is the market failure (of the natural monopoly) that the regulator is supposed to address.

However, PG&E's lack of maintainence on a metal hook (over > 80 years) which eventually failed caused the Camp Fire. Instead of replacing all of the hooks (a relatively inexpensive OpEx), PG&E proposed, and the CPUC blessed, an incredibly expensive effort to underground transmission lines. [0] This is a windfall for PG&E's investors and organized labor in California. But a huge headwind to the economy of California, and California's efforts to electrify. As others have noted, PG&E's rates are now so expensive that driving an EV doesn't save materially (or at all) over gasoline (even with California's relatively high gasoline prices).

[0] https://www.wsj.com/us-news/climate-environment/pg-e-wins-ap...

bcrl• 2 years ago

Here in Ontario we are similarly bent over the barrel by Hydro One. The key to operating a regulated monopoly is to inflate your expenses so that the regulator has no choice but to approve the increase the rate you charge. Hydro One accomplishes this by sending out 6 people to do a job that only requires 2 or 3. Works great -- our delivery rates have never been higher!

PG&E claims no connection between rate increases and $2.2B jump in earnings

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