PG&E must curb wasteful spending before receiving rate hike

At least 51.2 million reasons should compel the California Public Utilities Commission to carefully scrutinize PG&E’s demand for an 18% rate hike next week.

The $51.2 million in compensation garnered by PG&E CEO Patti Poppe made her the highest paid CEO of any for-profit utility in the United States in 2021, weeks before customers learned of double-digit rate increases — and the company still lost more than $88 million in net income.

It’s a symptom of a much larger disease at PG&E — and indeed, in the CPUC’s regulatory oversight. Residential rates have already doubled since 2006 and nearly tripled for low-income customers, according to The Utility Reform Network. The proposed $39-per-month rate hike the commission will consider on Thursday will further burden struggling residents and small businesses.

The company responds that higher rates will fund long-overdue infrastructure improvements to mitigate the risk of wildfires and gas explosions. PG&E pits our calls for affordability against our safety.

Yet Californians deserve both. We can achieve affordability and safety if the CPUC holds PG&E and other for-profit utilities accountable by compelling them to redirect wasteful spending to core safety needs.

What do we mean by accountability? In 2020, PG&E executives sought to give themselves $188 million in bonuses, only a few days after telling a bankruptcy judge that it was “not financially sustainable” to employ 5,500 tree trimmers to reduce vegetation-triggered wildfire risk. The CPUC needs to condition rate increases on PGE’s forbearance of ratepayer-funded executive bonuses.

PG&E could trim fat in other places, such as slashing the $2.1 million it spent in 2021 on campaign contributions or the $4.9 million it spent last year on lobbying.

It could stop offering dividends to its preferred PG&E shareholders well in excess of the average yield in the utility industry. It could more tightly regulate its excessive attorney fees, such as the $140 million ratepayers paid for lawyers during PG&E’s bankruptcy, only to see the company emerge with more debt than it carried into bankruptcy. And it could cut its multi-million-dollar weekly spends on those omnipresent feel-good cable and internet TV ads — a puzzling expenditure for a utility with a government-authorized monopoly over its customer base.

If Californians must tighten their belts to pay PG&E’s bills, so must the company. The CPUC must demand it.

The  CPUC must also heed public objections to its proposal to allow for-profit electric utilities to seek additional rate increases weeks or months after the public resolution of the current rate battle — without any public hearing at all.