California regulators Tuesday softened their proposed cuts to the profits that investor-owned utilities are allowed to pass on to their shareholders in 2026, frustrating ratepayer advocates aiming to slash energy bills amid a nationwide affordability push.
What happened: The California Public Utilities Commission published a revised proposed decision in its proceeding to set the allowed cost of capital for Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric and Southern California Gas.
The new proposal calls for a 2026 cost of common equity rate ranging from 9.78 percent to 10.03 percent for the four utilities, a reduction of 0.3 percent from the current rate. Last month, the CPUC proposed a 0.35 percent reduction, sparking utility pushback. The utilities’ requested return on equity rates range from 11 percent to 11.75 percent.
Why it matters: The cost of equity proceeding strikes at the core of utilities’ business model. While the companies scored a partial win with the less-harsh CPUC proposal, they are still facing the specter of reduced profits.