PG&E utility poles in San Francisco's Mission District. California’s largest investor-owned utility asked state regulators to approve increased compensation for shareholders, saying it’s needed to attract investors. (Sheraz Sadiq/KQED)
Utility giant PG&E asked California regulators this week to allow it to increase compensation for its investors, a move that would add yet another rate hike for customers.
California’s largest investor-owned utility said raising the allowable rate of return for shareholders by 1 point, to 11.3%, is appropriate because of the risk involved with investing in energy in the state. That return would bring the utility more in line with other comparable energy companies, according to PG&E.
If the California Public Utilities Commission approves PG&E’s application, which was submitted Thursday, the rise in residential customer costs would be felt in January 2026 at the earliest. PG&E estimates the average increase would be about $5.50 per month.
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The company said in a statement that it pays the lowest dividend in the utility industry and that the increase is needed to attract investors. Investors provide the upfront capital for system improvements, wildfire mitigation and safety and reliability projects.
PG&E trucks sit inside a Mission District facility owned by the utility. (Sheraz Sadiq/KQED)
Californians, on average, pay the second-highest electricity rates in the nation, driven mostly by PG&E and the state’s two other largest investor-owned utilities, according to a January report by the nonprofit Legislative Analyst’s Office.
“Here’s the problem,” said Lee Trotman, a spokesperson for the Utility Reform Network, or TURN, “PG&E also recorded record profits last year. For 2024, they recorded $2.47 billion in profits. That’s a record, and they did it by raising rates six times.”
He expects the increase, if approved, will cause further distress for PG&E customers, about 20% of whom are behind on their energy bills, according to the CPUC’s Public Advocates Office (PDF).
Trotman said TURN will advocate for a lower increase and ask the company about other ways to save money: “We will intervene, and we’ll say, ‘OK, that’s excessive, that’s not sustainable. So, have you tried this? Will you try that?’”
PG&E said it is trying to moderate customer costs and added that the rate impact of this application, if approved, would not be felt until next year.
“That coincides with a few charges coming off the bill,” PG&E spokesperson Mike Gazda said in an email, “so even if an increase is authorized, it will be offset or partially offset.”
PG&E expects average annual bill increases of 2% to 4% through 2026.
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