Pacific Gas & Electric (PG&E) took another big loss near the end of 2o19. As per usual, they’ve brought it upon themselves.
Recently, the California Public Utilities Commission (CPUC) unanimously ruled that profit margins for major electric companies will remain the same as the state’s other primary utilities, denying PG&E the higher shareholder returns they sought. The energy giant claimed that higher profits were essential to continue attracting investment capital to fund their operations, especially due to the wildfire liabilities that cost them billions and prompted their decision to file for bankruptcy.
They’re correct on one account: investors won’t be eager to fund their operations. PG&E has more than proven their incompetence on many levels, most notably their faulty infrastructure being the cause of last year’s most devastating wildfires.
However, their attempts to use their own failures to receive more profit didn’t fly with the commission. The CPUC pointed out that Assembly Bill 1054 potentially gave utility companies access to billions of dollars in aid to pay for fire damage ignited by equipment. That, coupled with investor-supportive policies already in play, were already helping mitigate California’s utilities.
Thanks to the actions of CPUC, profit margins for PG&E will stay at 10.25% for the coming year. For customers, this results in an additional 10 cent charge for the company’s shareholders.
Though it’s not the change that some groups were hoping for, it’s certainly better than the dramatically higher profits asked by the monopoly energy utility earlier last year—which would have resulted in monthly electric bill hikes of $7.85 for consumers.
Suffice it to say that the same profit margins as last year is anything but a win for the suffering energy company, but we can’t feel too sorry for their loss. It’s their own failures that got them where they are.
