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Comment by jedberg | Hacker News Reader

> Let the market work.

That would be great if it worked both ways. I don't have a choice, I have to use PG&E. They have no incentive to lower prices when their energy prices drop. The point of all those regulations is to force them to pass on their savings to consumers who have no choice in energy provider.

If we have so much solar generation during summer, why isn't my energy free or nearly so? If the market worked correctly, they would be paying me to use energy in the summer.

But instead PG&Es profits get to go up, because I have no choice but to use PG&E.

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> If we have so much solar generation during summer, why isn't my energy free or nearly so?

In general, as variable renewable energy penetration in grid increases, the cost will be more dominated by distribution of electricity, not wholesale price of generation of electricity.

They already have a profit cap at 10% of revenue. They have every incentive to drive their own costs as high as possible

if profit is capped at 10% of revenue then it sounds like the incentive is to raise revenue, not lower expenses.

That's what s1artibartfast is saying. They want things to be very expensive because that's how they make the most money. Lowering expenses means they need to lower their prices which lowers their revenues which lowers their profits.

If it costs $90 to deliver a day's energy to a customer, they can charge $100, making $10 profit per customer-day.

If it costs $900 to deliver a day's energy to a customer, they can charge $1000, making $100 profit per customer-day.

Where is the incentive to reduce expenses if the only way you can raise profit is by raising expenses?

Indeed.

The same is true of healthcare insurance in the US. The Affordable Care Act instituted an 80/20% rule for insurers. Naturally, the best way to increase profit is to drive up the cost of healthcare.

I do not believe that this is accurate. California Investor Owned Utilities (IOUs) have had their profit decoupled from revenue since 1981. [0]

The Federal Energy Regulatory Commission (FERC) allows for an equity rate of return on assets of approx 10% (9.3). [1]

As a result, California IOUs don't have an incentive to sell more power, but do have an economic incentive to build more assets. Asset construction is driven by growing peak demand. Or under-investment in O&M.

[0] https://www.sciencedirect.com/science/article/abs/pii/S09571...

[1] https://www.utilitydive.com/news/ferc-lowers-pge-transmissio...

I believe there is a distinction between profits for "transmission" specifically and for electric utilities more broadly. The FERC ruling that you reference is for PG&E's transmission assets, i.e. high voltage lines and transformers and such. I assume that their retail electric business is regulated by CPUC and has a different profit/revenue/whatever arrangement.

> They already have a profit cap at 10% of revenue.

what about cap on very high executive bonuses?

what about them?

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