This former energy executive is fighting to lower your power bill. He has a message for California |
A PG&E technician works in San Francisco in 2019. Investor-owned utility consumers pay a return on equity surcharge that covers the cost of capital investments. Utilities say a healthy surcharge is essential to attract investors.
Mark Ellis, an amateur wrestler, is taking on a modern-day Goliath: America’s 168 investor-owned utilities. Among them is Pacific Gas & Electric Co., which has reaped record profits from rising bills for the modern-day essentials of heat and light.
After 15 years as an executive at Sempra, a leading energy infrastructure company, Ellis, a wiry 55-year-old financial analyst with a graying buzzcut, was laid off in 2019. Since then, he has challenged his former industry as an expert witness, public speaker and entrepreneur, all the while throwing a spotlight on a hitherto obscure financial concept known as ROE — return on equity.
ROE is a surcharge, paid by power consumers, on the cost of utilities’ capital investments, including basic infrastructure such as transmission lines. Shareholder-owned utilities say a healthy surcharge is essential to attract investors. But Ellis and other critics contend that state regulators have historically set the rate too high, violating, among other things, a century-old Supreme Court ruling that said regulated utilities have “no constitutional right to profits such as are realized or anticipated in highly profitable enterprises or speculative ventures.”
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California has long granted investor-owned utilities double-digit ROEs, something Ellis says has led to “a massive transfer of wealth from ratepayers to shareholders.” He’s convinced that scaling back these rates is the “skeleton key” that could finally unlock the iron grip of for-profit utilities — and lower your increasingly oppressive bills.
State legislators in Rhode Island, New York, Florida and New Jersey have recently backed bills to cap or lower the surcharge. And this battle is playing out at the California Public Utilities Commission, regulator of the........