Every three years SDG&E files what is known as its “Cost-of-Capital” proceeding that determines the appropriate “rate of return” on its capital assets. Capital assets are the physical resources used by SDGE to get electricity and gas to your home. These assets include power plants, substations, transmission and distribution lines as well as gas pipelines, compressor stations and storage facilities. A “rate of return” is paid by ratepayers and is included in electricity rates.
SDGE is requesting an 11.25% return on equity (ROE) citing above-average risks than most utilities. UCAN is recommending 8.87% (UCAN’s Expert Testimony). The average ROE for most utilities in the United States for 2024 was 9.74% (SDG&E’s Testimony pgs. 8-9) There is a growing body of research showing that Commissions are approving ROEs that exceed market-based ROEs and have resulted in ratepayers being overcharged. (Mark Ellis White Paper)