On Sunday’s Union-Tribune front page, reporter Rob Nikolewski wrote how and why SDG&E is making more money than ever. But it’s a “subscriber only” piece, and we’re only providing the first few paragraphs of the report here:
San Diego Gas & Electric is a very different company than it was just a few years ago. Rates charged to the 3.7 million people the utility serves continue to rise in large part because California utilities — not just SDG&E — have additional responsibilities to shoulder.
But SDG&E is also making more money than ever. A review by the Union-Tribune of federal financial submissions shows SDG&E profits have been steadily increasing for about a generation, with the pace accelerating since 2008. Last year’s earnings came to $915 million, the highest in company history. At its current pace, the utility may crack the $1 billion mark by the end of 2023.
What’s going on?
SDG&E officials say the rise in profits is primarily due to taking on more infrastructure projects to:
-
- help prevent outbreaks of devastating wildfires
- maintain reliability for an increasingly complicated power grid, and
- meet California’s ambitious decarbonization goals.
“We’re a 140-year-old company and we’ve seen probably more change over the last 20 years than we did for the previous 120 years,” said Scott Crider, SDG&E senior vice president of External and Operations Support. “The grid of 2023 certainly isn’t like 1923, or even 2003. The grid of today is far more complex.”
Energy analysts and even consumer groups who often lock horns with California’s investor-owned utilities concede that SDG&E’s profits are indeed related to infrastructure projects tied to the mushrooming growth in the rate bases — the value of properties utilities are allowed to earn a specified rate of return on — of the state’s utilities.
But with California utility rates showing no signs of letting up, they worry the bills utility customers pay each month are getting out of reach — not only for millions of low-income customers who are already struggling financially but for middle-income residents, too.
“If we’re going to stop that trajectory, we will need to look ahead and think about the ultimate price tag of some of these initiatives,” said Jennifer Dowdell, senior policy expert at The Utility Reform Network, or TURN, a consumer group based in San Francisco. “At this point, we are operating in a rate environment that has no margin of safety.”
In case you have a subscription, here’s the balance of the article.
{ 5 comments… read them below or add one }
Here’s NBC7’s version of this news: https://www.nbcsandiego.com/news/local/sdge-is-making-more-money-than-ever-before-and-ratepayers-are-noticing/3366779/
We get more profit bc the grid is more complex? Yeah, sure I don’t get it.
Call me ignorant… So a rise in costs leads to a rise in profits? 3 infrastructure projects mentioned. I guess if SDG&E charges ratepayers $305,000 more than the real cost for each, you get a $915,000 profit. Or how about 3M customers, $915,000 profit, $305 profit per customer. Greed by government granted monopolies in a society where SCOTUS has legalized bribery of politicians is inevitable. Isn’t calling SDG&E a ‘public utility’ ironic?
The problem is that there is a fundamental misunderstanding of where SDG&E makes its money. It doesn’t really profit from sending electricity to your home. It makes its money from capital improvement projects (think Sunrise Powerlink).
Under PUC rules, utilities are GUARANTEED an approximately 7% rate of return on any capital improvement projects they construct. Spend a dollar, make 7 cents. Spend a million dollars, make $70,000. So…the more they construct, the more profit they generate. There is no incentive to “right size” improvements or to economize – that would only reduce their income. But it is not really an issue of them charging more than the cost, it’s the way the utility system is structured in California.
Personally, I would love a guaranteed 7% rate of return on my investments.
The State of California wants to have SDG&E rates based on income.
That means it doesn’t charge you on how much you consume, but on how much you earn. Also, if you have solar you could end up paying more than you’re paying now even if you are selling much of your power back to SDG&E.
Question? If we are trying not to consume as much or trying to consume only clean energy, then why do our rates keep going up? Is there a city or state representative that can provide regular feedback? Who is the watchdog of SDG&E?
https://www.nbcsandiego.com/news/investigations/nbc-7-responds/sdges-new-fixed-rate-proposal-explained-what-does-it-mean-for-you/3347932/