A utilities company in California has requested permission to increase bills for millions of customers so it can make better returns for its investors.
Newsweek has contacted PG&E for comment via email outside regular working hours.
Why It Matters
Pacific Gas and Electric Co. provides natural gas and electrical service to about 16 million people throughout northern and central California.
Earlier this year, California’s nonpartisan Legislative Analyst’s Office reported that the state’s electricity rates were almost double those of the rest of the country. The Golden State has the second-highest residential power bills in the nation, and rates have also increased rapidly in recent years. The proposed rate increase could add financial strain on many households.
What To Know
PG&E has asked the California Public Utilities Commission to raise rates, citing a need to “adequately compensate investors.” The move, if approved, would raise residential customer bills by about $5.50 per month.
The company has asked for the change via a cost of capital application, which is required every three years.
“These applications set the utilities’ financial return expected by people who provide money to utilities for upfront funding (capital) for essential energy system improvements, such as wildfire mitigation, and gas and electric safety and reliability projects,” PG&E said in a statement published on its website on Thursday. “Investors expect to be compensated for the risk they take when providing that funding.”
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The request follows California regulators’ approval of six PG&E rate increases in 2024 under Governor Gavin Newsom‘s administration. Last year, PG&E reported a record $2.47 billion in profits, surpassing a previous high set in 2023.
The California Legislative Analyst’s Office report also found that between 2019 and 2023, power rates for California’s three large investor-owned utilities, which include PG&E, increased by between 48 percent and 67 percent.
The company said its request included “testimony from a third-party expert showing that based on PG&E’s risks, its proposed 11.3 percent return on equity investment is reasonable.”
“PG&E pays the lowest dividend in the utility industry, and as a result PG&E reinvests 97 percent of what it earns back into the company,” the statement continued. “This includes programs that make the system safer for customers.”
What People Are Saying
The California Legislative Analyst’s Office said in a January report: “High and increasing electricity rates add cost burdens to ratepayers across the state. Many residents who earn lower incomes or live in hotter regions of the state are feeling these growing costs even more acutely.”
What Happens Next
If approved, PG&E’s proposal would take effect no earlier than January 1, 2026.
