State regulators vote to keep utility profits high angering customers across CA
32 comments
·December 22, 2025ursAxZA
themafia
> 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.
nospice
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.
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labcomputer
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.
ursAxZA
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.
aschobel
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?
aidenn0
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...
amanaplanacanal
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.
ar0b
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...
Rebelgecko
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
jeffbee
No, that is the obvious problem and it happens right out in front of everyone.
frugalmail
Just purchased a replacement gas stove/oven because electricity prices in LA are INSANE.
pclmulqdq
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.
fusslo
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?
vkou
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?
skybrian
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.
roenxi
> 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.
RheingoldRiver
Archive link: https://archive.is/LkHqZ
doctorpangloss
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
sure, if you're not in the majority of the population that rents instead of owns a home.
Rebelgecko
Hopefully California hops on the balcony plug-in solar train in the coming years
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jeffbee
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.
orthecreedence
> 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?
youarentrightjr
> 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
FWIW, one source is https://www.eia.gov/electricity/sales_revenue_price/pdf/tabl...
labcomputer
That includes government-run utilities, like LADWP, Silicon Valley Power, and SMUD, which have much lower rates than private utilities (And, no, the rate difference is not made up by taxpayer subsidies. They’re just run more efficiently).
stahtops
Where? My minimum delivery charge is $0.41 a day.
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.