Isn’t this the way regulated utilities work?
The funniest part is the utility increased rates...but only for people living in the fire-affected areas.
Somebody has to pay.
A publicly owned utility running at 0% returns wouldn't be able to pay interest on the debt it would have to issue to make capital investments.
A public utility has little incentive to be efficient as like you said, they are fine with 0% returns.
If a private utility gets a rate of $1.00 on $0.94 of expenses, it has an incentive to further reduce costs to increase the return, which reduces future rate growth (as higher rates won’t be approved).
Won't they, though? It seems like a rubberstamping process at this point.
So CA is a unique situation where the regulator effectively controls the public utility so calling it “private” is a bit of a stretch. More like a state controlled entity that trades on the stock market.
Rate increases absolutely aren’t rubber stamped, the CPUC routinely denies expenditures and the comedians rate increases.
But speaking more of the hypothetical, if set up correctly a regulated private utility could be incentivized to reduce costs to capture a higher profit at the same rate.
PG&E is paying 2.4 billion dollars a year in interest expense (at least in 2023), so it's fair to wonder if that's really any better.
They also don't keep your 401k healthy.