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SDG&E fights to keep equity profits from being adjusted downward

The utility filed an application with CPUC in August 2021 to block automatic adjustments of return on equity.

SAN DIEGO COUNTY, Calif. — San Diego Gas and Electric customers are amped up over recent increases in their utility bills.  

So, it may surprise you to find out that SDG&E is asking the California Public Utilities Commission (CPUC) not to reduce the utility’s profits.

The CPUC sets “return on equity” profit rates for SDG&E every three years through a Cost of Capital (COC) hearing process.

Currently, SDG&E is allowed a 10.2% equity profit on capital projects, such as wildfire prevention upgrades in the East County, or pilot programs to install electric vehicle charging stations.

Edward Lopez, a consumer advocate with San Diego’s Utility Consumers’ Action Network (UCAN) said profit rates for SDG&E were supposed to automatically go down in 2022, under a complex adjustment mechanism.

“Currently, SDG&E’s return on equity is among the highest in the country,” said Lopez. “It would actually, we believe, lower the return on equity to 9.62%. We believe that would reduce the revenue for SDG&E. In other words, save customer as much as $25 million or more. SDG&E is fighting that.”

Because of declining stock values -- the utility blames on the pandemic and other risk factors -- SDG&E wants to keep its profit rate at 10.2% through 2022.

“[T]he pandemic has exacerbated SDG&E’s already existing, above-average risks,” the utility wrote in its August 2021 application to the CPUC.

“Sempra has underperformed… Falling by about 15%, as it continues to be discounted by investor analysts for SDG&E’s unique, heightened wildfire liability and regulatory risks that are outside of its control.” the utility claimed in the application.

Lopez and other consumer advocates said the CPUC should not intervene now, and let SDG&E’s return on equity percentage fall.

“The profitability for Sempra simply is unreasonable at this point, especially with the high prices and rates SDG&E customers are paying,” said Lopez.

Evidentiary hearings on the COC applications currently are set for Feb. 24 and Feb. 25.

SDG&E emailed CBS 8 the following statement:

“SDG&E is not seeking an increase in our rate of return. In the current proceeding, we are asking to keep it at the same level as what was approved for 2020-2022. As a regulated utility, SDG&E’s rate of return is reviewed and approved by the California Public Utilities Commission in an open and transparent proceeding every three years, with input from consumer advocates and other stakeholders.”

If you are amped up about your high SDG&E bill, there is an upcoming opportunity for ratepayers to voice their concerns to CPUC board members.

“On February 28, as well as March 1, the CPUC will hold all day workshops on what they call the affordability of the electrical system,” said Lopez. “There is an opportunity as this is a public meeting for the public to provide comments.”

The CPUC will not be voting on any resolutions during the upcoming "En Banc" workshop, but SDG&E customers can telephone in during afternoon public comment time, or email responses in advance.

WATCH RELATED: SDG&E customer wants answers after being charged for neighbor's electricity bills (February 2022)

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