PG&E profits hop higher as revenue is surging
Utility titan predicts 2024 profits will top 2023's $2.3B
PG&E's profits soared higher in 2023, buoyed by surging electricity and natural gas revenues.
The Oakland-based power company earned an eye-popping $2.24 billion in profits last year, an increase of 24.6% from 2022, PG&E reported on Thursday. The report also predicted the utility titan's investors can anticipate even better earnings in 2024.
The news comes as customers have seen their monthly PG&E bills spike and as the company has asked state regulators to approve even higher rates that it says are necessary to pay for improvements to equipment to prevent the types of catastrophic wildfires it has caused in the past.
The Utility Reform Network, a consumer advocacy group that goes by TURN, blasted the latest profit figures.
“TURN believes it is unacceptable for PG&E shareholders to pocket billions in profits at the expense of its customers who have seen bills skyrocket by 33% last year alone,” said Mark Toney, the group's executive director.
Critics of the way the company operates have directed much of their ire at the California Public Utilities Commission (PUC), whose five governor-appointed commissioners are charged with regulating utilities — including rate increases.
“PG&E's profits are being created on the backs of working families and small businesses in California that pay some of the nation's highest utility bills,” said Loretta Lynch, a former PUC commissioner who for numerous years has been an outspoken critic of both PG&E and the state regulator.
“The PUC is supposed to be a watchdog, but instead, the PUC is a lapdog,” Lynch said. “When PG&E asks for a rate increase, the PUC's response is how high should it be.”
The state Public Utilities Commission responded that it is doing its job to supervise PG&E's operations, including the utility's requests for additional revenue from its customers.
“The state PUC's job is to hold PG&E accountable, ensuring ratepayer dollars are used in the
cost-effective way possible, maintaining full transparency of their financial records, ensuring they invest in making the system safer,” Terrie Prosper, a spokesperson for the regulatory agency, said in comments she emailed to this news organization.
In a December 2023 decision regarding PG&E's general rate case, the PUC authorized $2 billion less in revenue from ratepayers than PG&E had requested, Prosper noted.
However, as a result of the PUC's actions, in January 2024, PG&E monthly bills zoomed higher and reached an average of $294.50 a month for the typical residential customer who receives combined electricity and gas services from the utility.
That combined bill was 22.3% higher than the average monthly charges that went into effect at the start of January 2023 when combined bills were $240.73 for the typical residential customer.
An interim rate increase requested by PG&E could shove average monthly bills past the $300 mark for the first time by May of this year. The current average bill is already at an alltime high.
PG&E Chief Executive Officer Patricia Poppe, in a statement, addressed the year-end financials, saying, “Our story of progress continued in 2023, including further reducing wildfire ignitions and burying more powerlines than any prior year,”
PG&E reported $17.42 billion in revenue from its electricity operations in 2023, a 15.7% increase from revenue of $15.06 billion in 2022. Natural gas revenue totaled slightly more than $7 billion in 2023, up 5.8% from gas revenue of $6.62 billion last year.
Both electricity and gas revenue in 2023 hopped at a pace that greatly exceeded the Bay Area inflation rate, as measured by the consumer price index, over the same 12 months. In 2023, Bay Area consumer prices rose 2.6%.
“Between its rank greed and rampant property destruction from wildfires, it's difficult to identify another company that has inflicted more harm to the residents of the state than PG&E,” said Ken Cook, president of the Environmental Working Group, a consumer advocacy organization.
PG&E has been ordered to pay billions of dollars in penalties for its role in causing a deadly gas explosion in 2010 in San Bruno and a series of devastating wildfires in Northern California, including the deadly Camp Fire in 2018 that claimed more than 80 lives and decimated the town of Paradise.
Lawmakers, including congressional candidate and former San Jose Mayor Sam Liccardo, are alarmed at the costs being passed along to customers.
“Nobody should be surprised by these numbers or that rate hikes will continue,” Liccardo said. “That's why I've proposed a federally backed program to liberate ratepayers from rising bills by enabling investments in electricity storage and generation within apartment buildings and houses.”
PG&E's jump in profits is being disclosed just weeks after a big increase in monthly utility bills for residential customers went into effect on Jan. 1 — and only weeks before yet another bill increase is slated to begin.
It's unclear if any relief for consumers is on the horizon. Wall Street and investors in PG&E — whose largest shareholders include Vanguard Group, FMR, Blackrock, JPMorgan Chase and State Street, according to the Yahoo Finance website — can at this point anticipate a bright 2024 when it comes to the company's profits.
PG&E suggested its profits for 2024 could be in the range of $1.10 to $1.14 a share, which is an improvement from prior guidance that this year's profits would range from $1.08 to $1.12 a share.
By comparison, PG&E earned $1.05 a share during 2023.
In the October-throughDecember fourth quarter of 2023, PG&E earned $919 million, a robust jump of 79.1% compared with profits of $513 million in the fourth quarter of 2022.
Excluding certain onetime or unusual items, PG&E earned $1.01 billion in the 2023 fourth quarter, up 79.6% from the similarly calculated profits for the final three months of 2022.