CPUC approves lower utility rate of return

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California's largest investor-owned utilities will face lower allowable return on equity (ROE) in 2013 as a result yesterday's decision by state energy regulators.

The California Public Utilities Commission (CPUC) decision affects Pacific Gas and Electric, Southern California Edison, Southern California Gas Company, and San Diego Gas and Electric. Required revenue reductions range from $22 million to $237 million, with return on common equity hovering around 10 percent. The ruling will pad customer wallets, who will save between $0.38 and $1.52 per month.

CPUC's independent Division of Ratepayer Advocates (DRA) praised the reductions.

"The Commission's decision on the utilities' Cost of Capital case is fair and reasonable, and more in line with the average utility ROE around the nation," said Joe Como, DRA's acting director, in a release.  "Utility customers will benefit from sharing in declining Cost of Capital rates in the current market."

CPUC Commissioner Mark Ferron noted that the decision is designed to spur infrastructure growth within the state and balance the need for utilities to remain profitable with the need to invest.

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