PG&E: Shareholder profit request lowered
Pacific Gas and Electric Co. wants to increase its shareholder profit because of the bankrupt company’s wildfire risks — but not as high as it was looking to go before.
In April, PG&E asked California regulators to authorize greater rates of return for its shareholders, which it said would help the company continue attracting investment despite its exposure to catastrophic wildfires.
But this week, PG&E told the California Public Utilities Commission it does not need to raise returns as much because a new state law has lessened its risks.
PG&E said in a filing to the commission Thursday that it should raise authorized shareholder returns from 10.25% to 12% instead of the 16% it sought earlier. Southern California Edison and San Diego Gas & Electric,
which asked for higher returns in April as well, are seeking similar changes.
PG&E believes a 16% profit is no longer necessary, thanks to AB1054, legislation Gov. Gavin Newsom signed last month to address the wildfire problems facing the state’s electric utilities. The bill creates a $21 billion fund to protect the utilities from future wildfire costs, among other measures.
For the average residential customer who gets gas and electricity from PG&E, the profit increase would translate to an extra $4.12 on their monthly bill, according to the company. That’s down from $12.09 under PG&E’s original request.
Even under the lower increase PG&E is now asking for, however, the proposal would put the company’s profit above many of its peers outside California.
The national average shareholder profit allowed by states was 9.45% at the end of last year, according to the Edison Electric Institute, a trade group that represents investorowned utilities.
“Just reducing their increase is still unwarranted,” said Mark Toney, executive director of The Utility Reform Network consumer group. “What we should be doing is getting a decrease, because the risk is lower. They never had a wildfire fund before.”
PG&E said that higher allowed profits “would help to make sure rates are reasonable for customers while also supporting the financial health of the utility.”
The proposal would allow PG&E to attract investment that would support as much as $28 billion in infrastructure upgrades over the next four years, the company said.
PG&E has another request pending before federal regulators, who oversee a different part of the company’s electric infrastructure than the state utilities commission. That request, which would raise average residential electric bills by $1.50 per month, is still pending, according to the company.