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SDGE Asking for Excessive Profits, Say Ratepayer Advocates

The Division of Ratepayer Advocates, a California Public Utilities Commission operation that represents consumers, says San Diego Gas & Electric (SDGE) is asking for a vastly excessive return on equity in the utility's current rate case. SDGE wants an 11% return on equity, or money that stockholders can expect to receive on their investment. The Division of Ratepayer Advocates says the rate should be 8.5%. Such a rate would result in a $50 million annual savings to SDGE customers.

One reason SDGE's request is unreasonable is that interest rates are very low, so the cost of capital has declined greatly since the last rate hearing in 2007. The division compared SDGE's request to the median return on equity of 34 utilities. That median is 9.9% -- well below SDGE's request. "It is unwarranted for [SDGE] to charge its customers a rate of return for its investors that is out of line with current market conditions," says Joe Como, acting director of the Division of Ratepayer Advocates.

The question is whether the commission, which is pro-utility shareholder and anti-consumer, will listen to the Division of Ratepayer Advocates.

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The Division of Ratepayer Advocates, a California Public Utilities Commission operation that represents consumers, says San Diego Gas & Electric (SDGE) is asking for a vastly excessive return on equity in the utility's current rate case. SDGE wants an 11% return on equity, or money that stockholders can expect to receive on their investment. The Division of Ratepayer Advocates says the rate should be 8.5%. Such a rate would result in a $50 million annual savings to SDGE customers.

One reason SDGE's request is unreasonable is that interest rates are very low, so the cost of capital has declined greatly since the last rate hearing in 2007. The division compared SDGE's request to the median return on equity of 34 utilities. That median is 9.9% -- well below SDGE's request. "It is unwarranted for [SDGE] to charge its customers a rate of return for its investors that is out of line with current market conditions," says Joe Como, acting director of the Division of Ratepayer Advocates.

The question is whether the commission, which is pro-utility shareholder and anti-consumer, will listen to the Division of Ratepayer Advocates.

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4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
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