the California regulatory authorities We will review that proposal Structure can be modified Electricity prices From 2026. This approach arises in a context where The average price in the Golden State remains among the highest in the United States. Given this situation, the Public Utilities Commission (CPUC) is analyzing a An amendment aimed at reducing the return allowed to shareholders Of the three major privately owned electricity companies.
The document submitted by the CPUC sets out financial standards such as capital structure and rates of return approved for large companies in the field of electricity and gas supply. Among them Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E).
The central goal of the proposal is Determine compensation levels that allow companies to attract investment, but without charging consumers excessive fees.
For this reason, the Public Service Commission proposes A A decrease of approximately 0.35% in return on common capital (return on equity)This is a historic number compared to previous decades.
The proposal keeps the composition of each company’s authorized capital unchangedA participation rate of 52% is equivalent to a return on equity. The CPUC decided to deny requests from PG&E and SDG&E to adjust this ratio on the grounds that it did so The interests of the company’s clients were not adequately aligned Electrical system.
The document specifies a New table of rates of return on common capital Applicable from 2026:
The amounts represent a decrease compared to the current mandate, This is more than 10% in all cases.
The CPUC also sets gross rates of return (ROR) for Between 7.39% and 7.59% According to the company. These values are used to determine the financing cost that customers pay through rates. A moderate decrease in these ratios translates, in theory, into: A marginal reduction in monthly fees.
The purpose of the CPUC in creating a structured return is Ensuring the financial stability of companies, while at the same time avoiding fees that do not directly respond to the service provided.
The reduction in declared profitability is the main tool to mitigate costs ultimately paid by residential, commercial and industrial users.
Part of the benefits could come from a revenue credit given to PG&EThe company will transfer savings associated with the federal loan to customers. In addition, the decision to reject the increase proposed by SCE to cover transportation fees. If these costs had been approved, they would have raised consumer prices.
However, industry analysts point out this The expected reduction is not enough to make a significant difference in the final bill.
To minimize shareholder profits while keeping customers’ bills under control, you should… Change the balance of debt and equity owned by each interest. “You really need to understand credit,” he said in a conversation with . Associated Press (AFP).
For her part, Jennifer Robison, a spokeswoman for PG&E, confirmed The proposal fails to recognize the current high risks to help attract needed investments for California’s energy systems.
Meanwhile, SCE spokesman Jeff Munford said the proposed cost of capital decision needed adjustments to better reflect risks and market realities.
“Incorporate these adjustments into the final decision He could Strengthening the ability of the Supreme Council for the Environment to finance basic infrastructure projects He pointed to a more reliable, flexible and ready electrical network.
The regulatory process stipulates that the proposed decision must be submitted for comments from interested parties. The CPUC may then consider the matter at a deliberative meeting to set rates before a formal vote. This action may be completed at the hearing scheduled for December 18, 2025.
If the proposal gets the green light, Companies should incorporate the amendments into their annual presentationsknown as True-Ups, which are used to update approved entries.
The changes will not take effect before January 1, 2026which is also the due date for the application of the temporary PG&E amendment and the credit associated with the federal loan.