Senate committee presses CPUC on runaway wildfire costs, utility returns and affordability

Chair Allen convened the California State Senate Committee on Energy, Utilities and Communications in Sacramento to examine the California Public Utilities Commission’s oversight of investor‑owned utilities and what is driving recent increases in household electric bills.

Professor Severin Borenstein, invited as a primer witness, told the committee that the core regulatory tradeoffs are efficiency, incentives and information asymmetry. "There is no silver bullet solution," Borenstein said, explaining that regulators must balance service quality against cost and that high allowed returns on equity can encourage utilities to favor capital‑intensive fixes. He calculated that a hypothetical 3‑percentage‑point cut in the allowed return on equity would reduce the three major utilities’ combined revenue requirement by about $1,000,000,000 a year, while noting that a move that large would be "a huge decline." (Professor Severin Borenstein)

President‑designee Reynolds, testifying for the California Public Utilities Commission, gave an agency overview and agreed that wildfire liabilities and mitigation have been…