California lawmakers apply pressure over high electric bills. ‘Ratepayers are not a bank’
California lawmakers are setting their sights on lowering residents’ electricity bills. They convened a panel of witnesses Wednesday to dig into the topic, but after three hours of testimony, one thing became clear — there won’t be an easy fix.
“Even if we have these solutions, it’s not going to drop your bill from $500 to $200,” said Sen. Bob Archuleta, D-Pico Rivera. “But these small steps will add up as we go along.”
The oversight hearing of the Senate Energy, Utilities and Communications Committee followed a tranche of recent reports, some commissioned by the governor’s office, outlining why utility bills are so high and recommending ways to lower costs. Two of the biggest reports were from studies by the California Public Utility Commission and the California Energy Commission.
During Wednesday’s hearing, the state’s utility regulator and Pacific Gas & Electric pushed back on lawmakers’ accusations of being too permissive with rate increases and profiteering from them.
Much of the frustration from lawmakers focused on the three large investor-owned utilities: PG&E, Southern California Edison and San Diego Gas & Electric.
According to the Public Advocates Office, the watchdog arm of the CPUC, the average October 2024 electric bill for customers of those companies was more than $150 in San Jose and the Los Angeles area. For non-discount customers, PG&E said in an email its typical bill is around $211 per month as of January.
Since 2015, bills from those three big utilities have risen between 70% and 100%, outpacing the rate of inflation. (Sacramento Municipal Utility District, a nonprofit utility which serves much of Sacramento County, says on its website their average bill is 57.8% less than PG&E.)
Costs are ‘pancaking’
In their testimony, the Public Advocates Office identified three main drivers of high costs: wildfire-related activities, transmission and distribution maintenance and upgrades, and incentives and subsidies to fund certain programs. Those costs are baked into the average customers’ monthly bill.
According to The Utility Reform Network, a quarter to a third of low-income customers are behind on their bills, and one in five people not on discount programs are behind.
“I will say I’m deeply disappointed in the fact that rate payers are being treated like an endless bucket of money, because they are not,” said Sen. Aisha Wahab, D-Hayward. “I have residents in my district being charged $700 a month-plus on their utility bills.”
Carla Peterman, PG&E’s corporate affairs & chief sustainability officer who was present to defend the company, said bills are unusually high right now due to a pile-up of approved expenses.
“We’re in this period where we’re seeing a pancaking of costs,” she said. “There’s certain costs that are in the bills right now that will move out.”
Peterman also took heat for PG&E playing catch-up on tree trimming and other climate change hardening projects. In 2019, a federal judge chastised the company for paying out stock dividends for years instead of conducting necessary maintenance. Those charges are now a hefty part of delivery rates.
“I feel that the shareholders do have some responsibility to pay for the maintenance that’s now required,” said Sen. Jerry McNerney, D-Pleasanton. “It’s debatable how much, but I feel that that’s something that the shareholders should share in.”
How does PG&E make money?
Although it’s a for-profit company, PG&E doesn’t make money on how much electricity it sells. Instead, its earnings come from money it charges when making infrastructure investments, like undergrounding power lines.
After CPUC President Alice Reynolds testified, Wahab asked her why the regulator had approved a series of rate hikes in 2024, making it a record year for increases.
“We don’t want the utility spending nothing, because they have work to do throughout the year. They have to serve their customers,” Reynolds responded. “So everything we do is a rate increase because we’re approving the cost that they need to collect for customers.”
Both the public advocates office and utility reform network argued utilities should be forced to shift away from piecemeal requests and back to setting a comprehensive budget, as part of the CPUC’s general rate case process.
More discussion is on the horizon: AB 745, introduced by Assembly member Jacqui Irwin, D-Thousand Oaks, would increase oversight on capital projects a utility company wants to undertake.
Another bill, Wahab’s SB 332, would cap the authorized rate of return that utilities get from their investments.
During the hearing, Wahab contrasted PG&E’s billions of profits in 2024 to the average households’ utility bill.
“Ratepayers are not a bank,” she said. “The math doesn’t matter to the average person, right? And we serve the average Californian.”
