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So they are limited in their RoR on capital expenditures. Are they limited in their capital expenditures in the first place? That is, if they overspend on eve

by aidenn0 10mo ago

So they are limited in their RoR on capital expenditures. Are they limited in their capital expenditures in the first place? That is, if they overspend on everything they build, do they make more profit than if they engineered things more carefully? I assume there must be some limitation here or they would use gold instead of copper in their MV transmission lines...

jeffbee 10mo ago
No, that is the obvious problem and it happens right out in front of everyone.
Rebelgecko 10mo ago
I think technically CPUC approves at least a subset of expenditures, but yes there's the weird incentive where wasting money can actually increase profits
- aidenn0 10mo ago
  If the government has to approve expenditures and profit margins, there seems to be little reason for a private utility to exist?
  - danans 10mo ago
    Without the private sector utility company, there wouldn't be a mechanism to raise funds from and pay profits to shareholders.
    - xboxnolifes 10mo ago
      Sure there would be; raise funds: tax, pay profits: reduce tax / tax breaks. The real differentiator is in the ability to choose who your shareholders are with less scrutiny.
      - danans 10mo ago
        I tend to agree, but that's a collective decision and action problem, which we have difficulty with as a society today.
  - dragonwriter 10mo ago
    There is very little reason for private utilities to exist in California, especially PG&E (none of them are great, but PG*E is especially bad), which keeps funding lavishly to lobby against expansion of public utility coverage areas, committing homicide, and going bankrupt only to be resurrected in an endless cycle of nonsense.
- refurb 10mo ago
  All the CPUC rate setting committee discussion minutes are public. You can look up what is discussed. The regulator gets down to relatively minor capital investments like fence replacement at substations.
amanaplanacanal 10mo ago
It sounds similar to the insurance industry. The more they pay for medical expenses, the more profit they are allowed to keep. Bad incentives all around.
- aidenn0 10mo ago
  At least with health insurance most companies purchasing insurance for their employees have at least 2 companies to choose from, which gives some incentive to keep costs down. With power companies, there seems to be little market pressure, making any benefits of being privatized minimal at best.
ar0b 10mo ago
https://legalclarity.org/what-is-a-rate-case-and-how-does-it-affect-you/ https://legalclarity.org/what-is-a-rate-case-and-how-does-it... This comes down to having quality regulators on your public utility commission which is heavily state dependent. https://www.multistate.us/insider/2025/10/27/nine-states-face-key-public-utility-commission-elections-ahead-of-2026 https://www.multistate.us/insider/2025/10/27/nine-states-fac...

by aidenn0 10mo ago

jeffbee 10mo ago

No, that is the obvious problem and it happens right out in front of everyone.

Rebelgecko 10mo ago

I think technically CPUC approves at least a subset of expenditures, but yes there's the weird incentive where wasting money can actually increase profits

aidenn0 10mo ago
If the government has to approve expenditures and profit margins, there seems to be little reason for a private utility to exist?
- danans 10mo ago
  Without the private sector utility company, there wouldn't be a mechanism to raise funds from and pay profits to shareholders.
  - xboxnolifes 10mo ago
    Sure there would be; raise funds: tax, pay profits: reduce tax / tax breaks. The real differentiator is in the ability to choose who your shareholders are with less scrutiny.
    - danans 10mo ago
      I tend to agree, but that's a collective decision and action problem, which we have difficulty with as a society today.
- dragonwriter 10mo ago
  There is very little reason for private utilities to exist in California, especially PG&E (none of them are great, but PG*E is especially bad), which keeps funding lavishly to lobby against expansion of public utility coverage areas, committing homicide, and going bankrupt only to be resurrected in an endless cycle of nonsense.
refurb 10mo ago
All the CPUC rate setting committee discussion minutes are public. You can look up what is discussed. The regulator gets down to relatively minor capital investments like fence replacement at substations.

amanaplanacanal 10mo ago

It sounds similar to the insurance industry. The more they pay for medical expenses, the more profit they are allowed to keep. Bad incentives all around.

aidenn0 10mo ago
At least with health insurance most companies purchasing insurance for their employees have at least 2 companies to choose from, which gives some incentive to keep costs down. With power companies, there seems to be little market pressure, making any benefits of being privatized minimal at best.

ar0b 10mo ago

https://legalclarity.org/what-is-a-rate-case-and-how-does-it-affect-you/ https://legalclarity.org/what-is-a-rate-case-and-how-does-it... This comes down to having quality regulators on your public utility commission which is heavily state dependent. https://www.multistate.us/insider/2025/10/27/nine-states-face-key-public-utility-commission-elections-ahead-of-2026 https://www.multistate.us/insider/2025/10/27/nine-states-fac...