The article by Malena Carollo explores how a hidden cost within California's power bills, specifically the return on equity (ROE), financially benefits shareholders of investor-owned utilities. This return compensates utilities for their business risks and helps attract favorable loan rates. California's ROE approval rates have hovered around 10%, significantly exceeding the 10-year U.S. treasury bond rates. Critics argue that such rates are excessive, leading to potential overcharging of customers, with the state's utility customers bearing the financial burden of these inflated rates annually.
"A portion of each payment goes directly in the pockets of shareholders. It pays back shareholders for their investment and helps utilities attract better loan rates."
"Studies found that shareholder rates regularly outpace a common economic benchmark, costing customers across the country as much as $7 billion annually."
"California's approved rates of return are hovering around 10%, more than double the rate for the benchmark, 10-year U.S. treasury bonds."
"Critics call that excessive and say utilities are exaggerating the risks they face, suggesting that we are providing some rather generous rates."
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