SDG&E, along with
If approved by CPUC commissioners, average electricity rates in SDG&E's service territory would increase from
Natural gas rates would increase 4.9 percent for an average residential bill, going from
As part of its application, SDG&E asked the commission to raise its return on equity -- essentially, the return shareholders receive -- from 10.2 percent to 14.3 percent.
That's a sizable increase but the two larger investor-owned utilities in the state asked for even more.
In their own cost of capital filings,
All three utilities cited the risk of wildfires and their associated costs as the primary driver for the higher numbers.
SDG&E's application asked for a return on equity of 10.9 percent and then included a 3.4 percent "risk premium" to account for what the company said are the "the unique wildfire liability risks" posed in the state. Adding the two percentages together accounts for the 14.3 percent figure.
"That is a 40 percent increase that (SDG&E officials are) asking for in their profit margins," Toney said.
Although the Lilac Fire in
Stock prices for
After the 2007 Witch, Guejito and Rice fires destroyed more than 1,300 homes in the
SDG&E's program has been held up as a model for the other utilities in the state to replicate -- which made Toney question why the company is asking for a similar increase in shareholder return as
"They, from all appearances, have had fewer catastrophic fires in the past few years," Toney said. "So for SDG&E to also be asking for a really astronomical increase ... it's like they are just trying to jump on the gravy train or bandwagon, whatever you want to call it. It's like, well, if those utilities can ask for a higher rate, we're going to as well."
Jones of SDG&E said, "While we believe our wildfire mitigation programs are extremely effective, the liability construct that exists today in the state of
"I do think it shows the unique situation
The applications by SDG&E,
"That's very fast for one of these cases," he said.
Should the CPUC approve a big jump in the return for shareholders, would that placate
"I don't think the way to resolve this is through a cost of capital proceeding," Patterson said. "I think the way to resolve this for everybody -- ratepayers and the companies, etc. -- is to come up with a workable plan to resolve this wildfire conundrum" in
Saying "utilities either in or on the verge of bankruptcy are not good for Californians, for economic growth, or for the state's future," a "strike force" put together by Gov.
Among the remedies, the report listed making changes to the legal doctrine known as "inverse condemnation." As interpreted in
Utilities have complained inverse condemnation makes them particularly vulnerable to financial ruin but power company critics have insisted it is essential to ensure utilities properly maintain their equipment and uphold safety procedures.
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