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How Low Will Utilities Rates Go?

Power companies, consumer groups at odds over rate costs in California

California has higher returns on equity than most other states, said Mindy Spatt, TURN communications director. The rates for SCE and PG&E ranked among the highest in the nation in a 2010 survey by Public Utilities Fortnightly, an energy industry trade publication, she said.

SCE, PG&E and SDG&E have proposed slight reductions in their pre-recession return on equity rates from current levels. SoCalGas proposed a slight increase in its equity return rate, but other changes would lower customers' bills about a penny a month.

Utilities cite high-risk state

The utilities say they need their proposed rates to attract investors who may view California as a relatively high-risk state. They also say they need to attract more investors because they need more capital than other states to meet California's unique infrastructure needs.

Stephanie Donovan, a SDG&E spokeswoman, said it must meet the state's renewable energy and other "green" requirements, as well as prepare for California wildfires and earthquakes. Jonathan Marshall, a PG&E spokesman, said his utility must offer higher returns because PG&E has a low credit rating.

"It would be a false economy to drive down rates of return to where we can't raise the necessary capital to invest in safer and more reliable energy infrastructure," Marshall said.

The CPUC is receiving public comments on this issue, and its decision will help determine the energy bills for more than 18 million of the state's 22 million regulated electricity and natural gas customers. Of those, PG&E serves more than 6.1 million in northern and central California, and SDG&E serves 1.4 million in San Diego and southern Orange County. SoCalGas provides natural gas to 5.8 million customers, and SCE provides electricity to 4.9 million customers in central, coastal and southern California.

"Working together, we can help stop the escalating cost of these essential services," said Pacheco. "Please join us by calling, emailing or writing the CPUC."

Send comments to CPUC Public Advisor, 505 Van Ness Ave., Room 2103, San Francisco, CA 94102 or email

Laura Mecoy is a freelance writer based in Los Angeles.

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