Over a century later, California may need another revolt against its utility companies

Fed up with decades of powerful railroads corrupting the state board that was supposed to regulate them, California voters created the modern Public Utilities Commission in 1911. Now, some 114 years later, Californians have reached their limit with the cozy cronyism between the commission and the private utilities it is required to keep in check. 

That voter initiative in the early 20th century made the commission the primary protector of California’s families and businesses against rapacious or unsafe electric and gas utilities. California statutes are filled with requirements that the utilities commission ensures that each cost to provide electricity and gas to customers is both necessary, as well “just and reasonably” priced. 

As President Franklin D. Roosevelt put it during a 1932 campaign stop in Oregon, state utility commissions have a “delegated authority and duty to act as the agent of the public themselves; that it is not a mere arbitrator as between the people and the public utilities, but was created for the purpose of seeing that the public utilities do two things: first, give adequate service; second, charge reasonable rates.”

“This means,” he continued, “when that duty is properly exercised, positive and active protection of the people against private greed!”

Today, Californians are again faced with what FDR called “a systematic, subtle, deliberate and unprincipled campaign of misinformation, of propaganda, … lies and falsehoods” — bought and paid for by private utilities, he remarked. 

More than a century later, California’s utilities commission has lost its way. Over the past 10 years, each and every time California’s private utility companies have wanted more of our money, the state’s appointed commissioners have willingly agreed. 

Between 2019 and 2023, average residential electricity rates increased 47%, outpacing inflation, the Legislative Analyst’s Office noted in a January report. Last year alone, the commission approved six increases for PG&E, while it raked in record-breaking profits.

California’s utilities commission is neglecting its primary responsibility. The companies claim that they know best what money and programs they need in order to provide gas and electric service to their customers. They ask us to trust them to spend customer money wisely, without suffocating their businesses with regulatory bureaucrats standing over their shoulders, second-guessing every dollar spent. The CPUC has increasingly obliged, allowing the utilities to choose for themselves what they will spend money on or decide how much they will charge for electric and gas service — gold-plating profit potential without sticking to job one: safe and reliable service at a reasonable cost. 

Over and over again, the utilities ask and the commission gives them whatever they want. In the past three years the CPUC has created a pernicious practice of “interim” rate increases, handing the utilities billions of dollars more without even having to list or provide any detail for the specific costs they presented for payment. 

These interim rate decisions abrogate the CPUC’s fundamental role to dig into the utilities’ cost proposals, figure out what we actually should pay for safe service, and reject the expensive baubles and trinkets Californians shouldn’t be on the hook for.  

The commission also ignored independent audits of the utilities’ wildfire spending. In 2021, California’s big three utilities either could not account for or diverted $240 million, $700 million and $1.5 billion in money the CPUC had already allowed the companies to collect for programs they proposed, planned and profited off. The audits urged commissioners to withhold money for additional wildfire prevention projects until the utilities could explain what they spent the initial funding on.

Read More: Californians pay billions for power companies’ wildfire prevention efforts. Are they cost-effective?

That didn’t happen. Both PG&E and Southern California Edison were given the vast majority of what they asked for in new funding, without any true up or requirement that they explain how they spent the previous tranche of public dollars.

So it’s not surprising that California families now face the second-highest utility rates in the nation, and California businesses own the dubious prize of paying the highest business rates in the country.

What’s surprising is why, for so long, we have tolerated the commission’s abdication of its central duty: To protect us while making sure that needed and reasonable investments are made to keep the lights on. When will we require our elected officials to stop the gravy train and make the state utilities commission do its job?