Customers pay more. PG&E profits. It’s a “raw deal”—and it doesn’t have to be this way.

In case you missed it, a former California energy executive pulled back the curtain recently on the basic unfairness at the heart of PG&E’s “leading with love” business model in a blistering San Francisco Chronicle opinion piece.

“For-profit utilities overcharge customers by billions annually,” writes Mark Ellis, the former chief of corporate strategy and chief economist at Sempra.

Ellis details how PG&E takes advantage of a loophole in the state regulatory system that allows the company to pay for infrastructure upgrades by setting artificially high “rates of return”—"enriching shareholders while providing no additional benefit to customers.”

That certainly checks out for San Franciscans, who have seen their PG&E rates go up not once, not twice, not three, BUT four times in the last year—adding $400 annually to the average bill—without any appreciable boost in service.

Ellis explains how PG&E and other for-profit utilities keep getting away with this—while pocketing almost $2.5 billion in profits last year:

Here’s how utility profits work, and why you are getting a raw deal:

When utilities build infrastructure like transmission or distribution system upgrades, they finance these multibillion-dollar projects with debt and shareholder equity. For debt, utilities simply pass the interest rate charged by their lenders through to customers. But for the shareholder equity portion, utilities charge customers a rate of return that is set by California regulators.

In principle, the regulated return to shareholders—the profit investors receive on their stock in a company—should be equal to the rate they would obtain in a competitive market: otherwise known as their market-based cost of capital. In practice, utilities have manipulated the regulatory process to convince regulators to award a return nearly double what investors accept in competitive markets.

The system is rigged, in other words, and San Franciscans are right to be fed up with it.

That’s why 78% of city residents support dropping PG&E and shifting to full public power, which the city has been providing for more than 100 years.

Public power isn’t just more affordable, safer and more reliable for customers. It’s also the only way to put an end to the shady backroom deals that allow PG&E to skim billions of dollars in profits into shareholder dividends and executive bonuses.

As a not-for-profit public utility, San Francisco doesn’t pay shareholder dividends, corporate taxes, or executive bonuses. We reinvest revenues back into the system and have access to lower-cost financing, reducing ratepayer costs. The city also has a decades-long track record of setting transparent rates.

The result is clear: Last year, the San Francisco Public Utility Commission’s not-for-profit public power utility, Hetch Hetchy Power, saved its customers more than $120 million compared to PG&E. The city’s CleanPowerSF program saved customers another $50 million that year. Combined, SFPUC customers saved more than $170 million in 2023 alone on electric bills compared to what they would have paid PG&E.

There’s a lot more of where that came from for San Franciscans—but only if we drop PG&E once and for all.

It’s our city. It’s our power. And we are going to need your help to take it back.