Investor-owned utilities can bill directly for hundreds of millions of dollars in shareholder returns despite being in what critics call a lower-risk business.

Rising costs are of particular concern for Californians, whose bills, especially under PG&E, have risen steadily because of wildfire response.

Governor Gavin Newsom announced an executive order last fall to address high-energy bills.

The State Legislative Analyst's Office released a report this month examining the state's climate policies and residential electric rates, which it found were increased by efforts to curb wildfires and global warming, among other factors.

There's a surprising cost baked into customers' bills that doesn't have its own line item.

A portion of each payment goes directly into the pockets of shareholders Called a return on equity, the amount is meant to compensate investor-owned utilities for the risk of doing business.

Southern California Edison's 2024 approved shareholder return rate was the highest among its Golden State peers at 10.75%, followed by PG&E at 10.7%, and San Diego Grass and Electric at 10.65%.

Even a fraction of their approved shareholder rates represents millions of dollars from ratepayers.

In 2023, for example, Southern California Edison collected $91 million out of a possible $198 million for shareholders, PG&E collected more than $111 million out of a potential $125 mill.. and San Diego Grass and Electric collected $41.9 million out of a possible $42 million.

Treasury bond yields are part of the model the California Public Utilities Commission uses when setting these shareholder rates.

Jeff Monford, spokesperson for Southern California Edison, said, "Without capital market funding, necessary grid work would have to be funded immediately in part through the rates customers pay, and this would significantly raise those rates.

Providing our investors with a competitive return on equity is crucial to the success of this model."

For CalMatters, I'm Melena Carollo.