State regulators vote to keep utility profits high angering customers across CA

https://www.latimes.com/environment/story/2025-12-18/state-regulators-vote-to-keep-utility-profits-high-angering-customers

by connor11528 • 7 months ago

128 101 7 months ago

latimes.com

RheingoldRiver• 7 months ago

Archive link: https://archive.is/LkHqZ

fusslo• 7 months ago

difficult to find the reasoning behind the 10% being considered "reasonable" from the article. It sounds like Edison has a lot of risk mitigation of wildfires, and is dealing wit a lot of litigation.

Is part of the 10% profit going to these costs? Or since they're an expense it's not apart of the 10% profit?

vkou5• 7 months ago

Pussyfooting around this issue is the worst of both worlds.

Why on earth is a government-protected monopoly entitled to 10% margins? Or even 6% margins? It's risk-free money with a captive market.

What is the point of all this bullshit? Why not just call it a day, and run it as a crown corporation?

The companies pointed to the January wildfires in Los Angeles County, saying they needed to provide their shareholders with more profit to get them to continue to invest in their stock because of the threat of utility-caused fires in California.

What utter nonsense. The shareholders need nothing. Take out a bloody loan.

The firm's entire concern, as reflected in the article - is it's stock price.

Under the state’s system for setting electric rates, investors provide part of the money needed to build the infrastructure and then earn an annual return on that investment over the assets’ life, which can be 30 or 40 years.

Wait, why is this financed by investors and not lenders, like it is in the rest of the civilized world? Is this some kind of novel California-specific innovation, and if it is, what value has it produced for the world?

roenxi• 7 months ago

Why on earth is a government-protected monopoly entitled to 10% margins?

Indeed, how do they pick any margin? If higher is better, why not pick 1000%? If lower is better, why not pick 0%? If we want something reasonable, why not make it market based to figure out what people think when they have to stump up real resources themselves? Once profit margins are set by committee decision there is little point trying to claim that the concern is profit motivated. The profits aren't doing much useful signalling. It just sounds stupid.

skybrian2• 7 months ago

It’s certainly not risk-free. PG&E went bankrupt twice. There will be more wildfires. It could happen again.

Also, much of the point of having shareholders is that they take the risk. If something goes wrong, they lose their money first.

CaptainNegative• 7 months ago

Capping margins at a percentage also directly breeds inefficiencies. If you could spend $10M to fix a problem that costs you $4M/yr, you're effectively paying $10M now to lose $400k in annual profit potential.

autoexec2• 7 months ago

It sounds like Edison has a lot of risk mitigation of wildfires, and is dealing wit a lot of litigation.

They made their own bed. https://www.latimes.com/environment/story/2025-12-17/edison-...

Seems like it's unfair to ask the public to foot the bill for problems they caused in part because they wanted to stuff their pockets with cash instead of investing money in keeping their services up.

doctorpangloss• 7 months ago

california has its minuses - wildfires, nimbys - but also its plusses: solar makes sense for the SFH community people want.

the best escape valve against PG&E and Edison is installing solar panels and a battery.

JohnMakin• 7 months ago

sure, if you're not in the majority of the population that rents instead of owns a home.

Rebelgecko2• 7 months ago

Hopefully California hops on the balcony plug-in solar train in the coming years

kelnos7• 7 months ago

I tried to do it a few years ago (condo building). Most installers wouldn't touch buildings with more than 2 floors (we have 5). I assume it's an insurance issue, but was super weird to me since SF has so many buildings (even SFHs) taller than 2 floors.

I did find an installer who claimed they'd do it, but after a site visit -- where the guy taking measurements said everything looked fine -- my sales rep emailed to say they were dropping me as a prospective client, and bizarrely refused to tell me why when I asked.

Then NEM3 took effect and solar-only (with no battery storage) became financially infeasible. I should look around again, probably, since battery prices have gone down... though I'll probably have to wait until reasonable people are in power again nationally, who restore financial incentives for this stuff.

aidenn03• 7 months ago

So they are limited in their RoR on capital expenditures. Are they limited in their capital expenditures in the first place? That is, if they overspend on everything they build, do they make more profit than if they engineered things more carefully? I assume there must be some limitation here or they would use gold instead of copper in their MV transmission lines...

jeffbee4• 7 months ago

No, that is the obvious problem and it happens right out in front of everyone.

Rebelgecko2• 7 months ago

I think technically CPUC approves at least a subset of expenditures, but yes there's the weird incentive where wasting money can actually increase profits

aidenn03• 7 months ago

If the government has to approve expenditures and profit margins, there seems to be little reason for a private utility to exist?

refurb5• 7 months ago

All the CPUC rate setting committee discussion minutes are public. You can look up what is discussed.

The regulator gets down to relatively minor capital investments like fence replacement at substations.

amanaplanacanal• 7 months ago

It sounds similar to the insurance industry. The more they pay for medical expenses, the more profit they are allowed to keep. Bad incentives all around.

aidenn03• 7 months ago

At least with health insurance most companies purchasing insurance for their employees have at least 2 companies to choose from, which gives some incentive to keep costs down. With power companies, there seems to be little market pressure, making any benefits of being privatized minimal at best.

ar0b• 7 months ago

https://legalclarity.org/what-is-a-rate-case-and-how-does-it...

This comes down to having quality regulators on your public utility commission which is heavily state dependent.

https://www.multistate.us/insider/2025/10/27/nine-states-fac...

jeffbee4• 7 months ago

People are mad about this but, in the end, not really mad enough to do anything. California has high volumetric, margin rates for electricity but the typical monthly electric bill just isn't that high, because we don't need that much of it. The median bill is estimated to be $135 – $165/month, that's in the middle of the pack for the 50 states. Moreover, the people who can effectively get mad about this — rich people and retirees — don't suffer from it because they are protected by rooftop solar, special rates for seniors, etc. The people most exposed to the marginal prices are the ones renting old, inefficient dwellings, and they don't get a voice.

youarentrightjr2• 7 months ago

The median bill is estimated to be $135 – $165/month

I have a hard time believing this; in the Bay Area, the privilege of simply having a 200A connection is $130/month.

verteu• 7 months ago

FWIW, one source is https://www.eia.gov/electricity/sales_revenue_price/pdf/tabl...

stahtops• 7 months ago

Where? My minimum delivery charge is $0.41 a day.

amluto3• 7 months ago

Excuse me? This is the basic rate:

https://www.pge.com/tariffs/assets/pdf/tariffbook/ELEC_SCHED...

You pay $0.40317/day for the connection but you get back $58.23 twice per year. That’s $30.70 per year.

It’s the price of the electricity that’s ridiculous in PG&E territory, not the price of the connection.

Note that many commercial users have a very different structure and pay monthly for their peak usage, measured over a 15 minute interval, and separately for their actual energy usage. So if you get a commercial 200A connection, max it out for 15 minutes, and then leave it idle for the rest of the month, you may pay something silly.

dragonwriter3• 7 months ago

I have a hard time believing this; in the Bay Area, the privilege of simply having a 200A connection is $130/month.

I have a hard time believing that; that's not how PUC-regulated electric rates work in California (neither the old system nor the new system has a panel capacity component.)

kelnos7• 7 months ago

Do many people in the bay area have 200A service? In the past 21 years, everywhere I've lived here was 100A.

orthecreedence2• 7 months ago

The people most exposed to the marginal prices are the ones renting old, inefficient dwellings, and they don't get a voice.

This comes off very much as "stop being poor lol." Was that your intent?

youarentrightjr2• 7 months ago

Not to pile on, but this is a similar vibe to people telling others to stop complaining about gas prices and just get an EV.

Some people can't afford a $38k car, heck, for some even $10k for a car is out of reach. There are people who have no choice but to buy a 20 year old ICE vehicle and pray it doesn't die. These same folks suffer due to the regressive nature of fuel tax.

jeffbee4• 7 months ago

I don't see how you could have gotten that from actually reading what I wrote.

dragonwriter3• 7 months ago

California has high volumetric, margin rates for electricity but the typical monthly electric bill just isn't that high,

Because California (whether residential or overall) uses very little electricity per capita (only Hawai'i uses less.

kelnos7• 7 months ago

You've been downvoted, but I think that's fairly true. My monthly bill is right around the high end of that median, and I expect a big driver of that is the year-round temperate climate. I don't run the heat much in the winter, and don't even have air conditioning for the summer (though lately I wish I did).

Rewind back to my childhood, living in NJ in the 80s and MD in the 90s. Our utility bill was significantly higher than what I pay now (inflation-adjusted) because the heat and a/c were on constantly for several months each out of the year.

ursAxZA6• 7 months ago

It’s strange that in 2025 we still don’t have even a minimal, per-capita baseline tier for electricity.

If a household uses less than the monthly per-capita average, why not cap that baseline at something like $10?

Yes — that gap would need to be subsidized, probably through taxes. But that’s already how grid maintenance works: we socialize the fixed costs while pretending rates are purely volumetric.(and I might be overstating this slightly).

Right now we punish low-usage consumers and reward structural inefficiency. A baseline tier would at least make the incentives coherent.

labcomputer2• 7 months ago

So PG&E already has something like this. It’s called either E-1 or TOU-C, depending on whether time-of-use billing applies. The price for the baseline tier is higher than you’d expect, though.

ursAxZA6• 7 months ago

That makes sense — but it feels like the balance could be better.

If we treat baseline access as a kind of ‘civilization tax,’ the pricing shouldn’t feel punitive for low-usage households.

nospice2• 7 months ago

That's more or less the system that exists today? You pay a lower rate up to a certain threshold and then a higher rate kicks in.

The problem with PG&E isn't the rate structure, which isn't all that different from utilities anywhere else in the world. It's that their costs are exceedingly high, through a combination of regulatory pressures and grift. This is exacerbated by municipal and state regulators who are pushing consumers to be more reliant on electric power (bans on gas appliances in new construction, pushes toward EVs, etc).

There are vast swathes of the country where people pay 5-10x less for electricity.

ursAxZA6• 7 months ago

My point was simply that electricity has a “civilization tax” aspect to it, and lower baseline access feels closer to the kind of future-proof system we should be aiming for.

If the floor is gentle, people can actually reduce usage without feeling punished for doing the right thing.

At the moment the baseline tier feels… maybe a “C-rating” version of what a real baseline could be?

itsdrewmiller• 7 months ago

Where do people pay 3-6 cents for electricity in the US?

bdangubic• 7 months ago

which country, UAE? :)

themafia2• 7 months ago

we socialize the fixed costs

Then we should socialize that infrastructure as well. Otherwise if we're merely _amortizing_ the costs then a total capacity metric should apply to each user.

A private company shouldn't be allowed to socialize important shared infrastructure simply because a weak PUC pretends to engage in oversight.

ursAxZA6• 7 months ago

I get the intuition behind fully socializing it, but I wouldn’t go that far. Single-operator systems lose redundancy fast, and that’s dangerous for infrastructure.

A layered mix — county-level public utilities, some private operators, and some hybrid/municipal entities — might be closer to a resilient structure.

Not clean or elegant, but fault-tolerant.

Manuel_D• 7 months ago

It is essentially socialized. The government dictates the rates that utilities company is allowed to charge.

refurb5• 7 months ago

I don't get it. A very cheap baseline tier would encourage consumption versus what we have today, not reduce it.

Today if I build a cabin somewhere I might decide not to electrify if it costs me $50 per month. But at $10? Sure!

ThePowerOfFuet• 7 months ago

Then if you do electrify, you'll use electricity instead of less-efficient, more-polluting alternatives.

It's a feature, not a bug.

JumpCrisscross4• 7 months ago

Limit it to one use per SSN (dependents included).

frugalmail• 7 months ago

Just purchased a replacement gas stove/oven because electricity prices in LA are INSANE.

pclmulqdq2• 7 months ago

People don't realize how much electric heating costs in comparison to the fossil fuel alternatives. Gas so much cheaper per joule it more than makes up for the efficiency losses. This is true even without California's insane electricity economy.

amluto3• 7 months ago

The US average residential electricity price is 18.07 c/kWh [0]. Natural gas is $15.39/thousand cubic ft [1]. 1k cubic feet of gas is about 300kWh (this varies because natural gas is not always the same and because the higher heating value and lower heating value are different. So the US average is about 5c/kWh of natural gas.

In decent weather, one should not use resistive electric heat — one should use a heat pump. In decent weather, a COP of 4 is about par for the course, making electric heat a bit cheaper. So I don’t believe your assertion that “gas is so much cheaper per joule”.

Obviously this varies by what you do with your heat and the conditions. Gas stoves are wildly inefficient, but induction can exceed a COP of 100%. In very very cold weather, heat pump COP drops, so gas will win. Gas tankless water heaters are reasonably priced and can reach well over 90% efficiency, whereas heat pump water heaters need a tank, which is somewhat lossy.

But gas has a major downside (aside from CO2 and other emissions): you need to pipe the stuff to the endpoint, and a lot of communities, especially new developments, have decided that this is not worth the expense or danger.

[0] September 2025: https://www.eia.gov/electricity/monthly/epm_table_grapher.ph...

[1] https://www.eia.gov/naturalgas/monthly/pdf/table_20.pdf

aschobel• 7 months ago

I logged into my PGE and saw this

https://www.pge.com/en/newsroom/currents/energy-savings/pg-e...

shrug they claim prices re going down?

benced2• 7 months ago

California's average residential electricity rate is almost twice the US average (32 cents vs 18 cents) despite being in a state with abundant energy resources.

Even if advocates got everything they wanted here (6% margin vs 10% margin), that would lower rates by... 1.2 cents. PG&E desperately needs to be reformed into a competent organization, something that nobody in (Newsom) or adjacent to (these advocates) power in California seems to want to do.

https://www.eia.gov/electricity/monthly/epm_table_grapher.ph...

nebula88042• 7 months ago

I guess we will have a total whitewashing effort for Newsom coming up in 2028. Same nonsense as Kamala. Its funny how we can now predict the controversies.

twoodfin2• 7 months ago

The redirect on the French Laundry thing is going to be epic.

autoexec2• 7 months ago

I can only assume that they've been bribed not to reform PG&E. The real question becomes who is running for office that isn't willing to take bribes so that people who are willing can be voted out of office. If the answer is nobody, than nothing will ever change.

refurb5• 7 months ago

Indeed.

The CA Governor is the one who selects the people on the committee that regulate PG&E.

And the same committee approves PG&E’s budget and rate each year, all the way down to the fine details such as repairing an electrical fence at a substation.

This problem is entirely under the control of Newsom and the CA legislature yet they seem completely uninterested in fixing it.

kyboren2• 7 months ago

This problem is entirely under the control of Newsom and the CA legislature yet they seem completely uninterested in fixing it.

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

- Upton Sinclair, I, Candidate for Governor: And How I Got Licked (1935)

Ironically that quote came from a book about Sinclair's failed bid to win the CA governorship...

kelnos7• 7 months ago

PG&E are big campaign contributors to Newsom; he is expressly interested in not fixing it.

It's amazing that we had a governor recalled 20 years ago in no small part due to utility-related scandals, but these days, being a public servant in their pocket is just business as usual.

amypetrik8• 7 months ago

I think back to every ... overly enthused student council member or student council president or HOA president I've seen in my education, a microcosm of politics. These are people with a fire inside of them to seize these positions. Speaking with them, as they were my representative to the academic leadership, they would often hear my request and provide a explanation as to why that was not feasible. A naive assessment of their explanation - often at face value reasonable in the most simplistic of ways, a slightly deeper reflection would reveal it was a convenient excuse for the truth - they had a completely different motivation, usually self-interest in nature, but hidden behind the lie to hide the ugly truth.

The same is much true of California. So many strict laws and regulation. For the environment? For safety? Why I can't build a house? No, no - they don't want anyone building houses to keep the prices pumped up high. Same for many things. Keep PG&E rich, and PG&E will keep the people in power rich either directly or through the major supporters of said politicians

mrguyorama• 7 months ago

A politician in the US requires immense resources to run any campaign. That means rich people control who gets to be a politician.

Fixing this would require both public funding of campaigns, and immense limits to campaigns. Certain people, ignorant or malicious, will pitch an insane fit about trying to do that.

It doesn't matter how much certain politicians "suck" because the way the system is built, your choices are a guy who is awful but will implement some of what you want, or a guy who is fucking bonkers and will destroy our country, and this is true regardless of your political affiliation.

Even Bernie sucks the political party money teat. Because being the most popular senator isn't a reliable enough way to get elected!

Our politicians spend more time on the job calling rich people and begging for cash than they do actually voting on or discussing legislation.

This will only continue to get worse because the rich people are fully in control, and it benefits them to keep pushing the cost of a campaign higher, as the richer of the rich benefit from boxing out the "just" very rich.

Any change requires serious moves to unseat the current supreme court.

Currently, populism is much more effective for extremely regressive and outright hateful politicians than extremely progressive ones though, so expect things to get much much worse.

FDR was only elected and provided the actual power to make changes after 30% of the country was jobless, and an entire generation had been raised in horrific fiscal policy, and lived in a world where a hard worker for 50 years died in the ditch because we had no retirement program or way of feeding people who no longer work.

If we do literally everything right and the very angry and stupid people suddenly put aside their hatred of "others" for long enough to actually vote for a good idea, we might see improvements in 30 years.

fulafel• 7 months ago

Fossil produced electricity is unsustainably cheap. According to https://lowcarbonpower.org/region/California only half of electricity is low-carbon there. It's imperative to ramp down fossils use and production to mitigate the climate disaster so we can't afford to believe there's "abundant energy resources" in a situation like this.

benced2• 7 months ago

I was counting solar and offshore wind as abundant energy resources. Also, nuclear, though that’s not state specific.

flave• 7 months ago

American/California confuses my tiny English brain

be freedom-loving capitalist America be freedom-loving state of California and electrical engineering centre of the world the government tells utility companies exactly how much yield they can make down to a tenth of a percent don’t worry bro this is about protecting_customers the yield is on infrastructure and is extremely non-cyclical and effectively backstopped by the state of California. It’s a 30y investment at a time when 30y t bills are at ~5% sets the yield at 10.3%

What am I missing?

kelnos7• 7 months ago

The utilities' profit margin should be 0%. There is absolutely no reason why they should be run as profit-seeking enterprises.

JumpCrisscross4• 7 months ago

The utilities' profit margin should be 0%

Yet much of America has utilities run for profit with far cheaper rates than California, where PG&E operates as a vertically-integrated regulated monopoly.

kelnos7• 7 months ago

As a California resident, I'm well aware. But that doesn't change anything; I still believe utilities should be run as non-profits (or co-ops or even just as government agencies, depending on what works best for local conditions).

The real problem in CA is that our governor is in PG&E's pocket, and the body that regulates the utility (with members appointed by the governor) is a textbook example of regulatory capture. I'm not sure why the legislature hasn't done anything about this, but I assume it has something to do with money, there, as well.

At this point I want SF to own its own grid, like Santa Clara and Palo Alto do. Of course, PG&E refuses to play ball with any plan/offer the city has put forth.

State regulators vote to keep utility profits high angering customers across CA

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