Consumer advocates, including the AARP, are saying they can live with a compromise by state regulators on how much San Diego Gas & Electric is authorized to profit from its capital investments on infrastructure.
The California Public Utilities Commission late last week approved a 10.1 percent rate of return on common equity for SDG&E during the coming year.
That rate is lower than the 11 percent rate sought by the utility serving San Diego and southern Orange counties, but considerably higher than initial recommendations by groups including the American Association of Retired Persons and the state Division of Ratepayer Advocates.
“We would like to see it be a little bit lower if you look where the return on equity is relative to other utilities across the United States,” Michael Richard, of AARP California, told the commissioners shortly before the unanimous vote of approval. “But, on balance, we think it is a balanced decision.”
The reductions translate into an average utility bill decrease in San Diego of $1.52 on electricity and 16 cents on gas, based on 600 kilowatt hours and 38 therms of consumption, according to commission estimates.
For utility investors and ratings agencies, cost of capital proceedings are closely watched as a way to gauge future earnings potential. The proceedings set out to determine reasonable return on equity given current interest rates and risks.
Federal executive agencies, a major power customer in the region, wanted further reductions, arguing that capital borrowing costs, as measured by average bond yields, have fallen dramatically since the last time utility return rates were adjusted in 2007.
The Division of Ratepayer Advocates, an in-house consumer watchdog at the state utilities commission, also had lobbied for further reductions, but commended the final decision.
Morgan Lee • U-T