Tom Steyer Denounces CPUC Vote to Uphold Utility Monopoly Profits

SAN FRANCISCO — Tom Steyer today released the following statement and social media video after the California Public Utilities Commission voted to continue the utility monopolies’ outrageously high profit margins:

“Today’s decision allows corporate utilities to continue to make multi-billion dollar profits and protect their monopoly, while working Californians get stuck with the bill. While shareholders and utility CEOs enjoy record windfalls, Californians continue paying among the highest energy rates in the country. When I am governor, I will appoint regulators who will look out for the people of California, not the monopolies' corporate profits.”

On Monday, Steyer called on the CPUC to reject proposed profit increases for the state's utility companies. He has made lower electric bills a key pillar of his campaign – pledging to cut Californians’ bills by 25% by ending utility monopolies. On Monday, Steyer unveiled a new 30-second paid television and digital advertisement highlighting utility monopoly power and his plan to restore accountability to California's energy system. 

And earlier this week, Steyer spoke to the American Prospect’s David Dayen about the broken system of how Californians get their electricity from the utility monopolies and what he’ll do to change the system as governor. Excerpts from the piece are below:

The American Prospect: Why Californians Will Pay $340 More for Electricity Next Year

Tom Steyer, the billionaire former financial services executive who is a candidate for California governor, slammed the further narrowing of the ROE as a “sweetheart deal for corporate utilities.” He released a letter to the CPUC earlier this week, calling for a reduction in the ROE, better adherence to state-mandated hookups to the electric grid for solar and other renewables, and increased oversight on utilities to avoid expensive, “gold-plated” infrastructure upgrades that can be folded into the rate base without achieving efficiencies for ratepayers.

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On a recent episode of Organized Money, the podcast co-hosted by Prospect executive editor David Dayen, Steyer framed utility ROE from a finance standpoint. A 9.78 percent return on the cost of borrowing, adjusted for inflation, is a real return of around 7 percent, without any risk. Steyer intimated that such guaranteed returns are fairly unprecedented in other business sectors.

In California, governors appoint the five commissioners to the CPUC, who have staggered six-year terms. The terms of all five commissioners will come due during the next governor’s first term. Steyer, who has promised to “break up the utility monopolies” and reduce utility bills by up to 25 percent, would be in a position to put his stamp on the commission in a way that would constrain guaranteed profits. 

That includes ensuring the CPUC uses its authority to limit expensive infrastructure projects embarked upon by utilities primarily as a moneymaking operation. “People think that the electric utility makes money by selling you electricity, but that’s not true,” Steyer said on the Organized Money podcast. “The electric utility makes money by getting investment accepted into the rate base with a guaranteed rate of return.”

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In a political climate where affordability is king, Steyer believes that the CPUC is squandering the opportunity to reduce guaranteed return for corporate utility companies. “Monopolies are in the business of charging the highest prices and providing the worst service,” he said on Organized Money. “And if you don’t like it, you can lump it because we’re a monopoly and there’s no place else to go. So when you look at a public utility commission, which is designed to control a monopoly, structurally that will not work.”

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