PG&E Under Fire

PG&E headquarters - image www.gettyimages.com

Reviving the Era of the Robber Barons

In a state already grappling with soaring living costs and climate-driven disasters, Pacific Gas and Electric (PG&E)—California's largest utility, serving over 16 million residents—has come under intense scrutiny for what critics describe as predatory pricing tactics reminiscent of the Gilded Age's Robber Barons. As of January 2026, PG&E's announcement of a modest 5% reduction in residential electric rates—equating to roughly $7-10 in monthly savings for average customers, or $4-5 for those enrolled in low-income assistance programs—has been met with widespread skepticism. This purported relief is overshadowed by the introduction of a new $24 fixed "Base Services Charge" effective March 2026 (reduced to $6 or $12 for qualifying low-income and affordable housing customers), which analysts warn could result in net bill increases of 20-60% for low-consumption households, effectively undermining the cuts and punishing energy conservation.

California's residential electricity rates, at an average rate of 32.04 cents per kilowatt-hour (kWh) as of December 2025, remain the nation's second-highest, trailing only Hawaii and nearly twice the national average of 18.07 cents. Peak-hour charges under PG&E's time-of-use plans can climb to 50 cents per kWh, exacerbating affordability issues in a state where energy poverty is on the rise. Detractors argue that PG&E's near-monopoly, solidified by the 1996 deregulation that allowed the utility to shift $40 billion in profits to its parent corporation while evading stringent oversight, enables such exploitation. Compounding the problem, regulators at the California Public Utilities Commission (CPUC) have been accused of complicity, approving hikes with minimal push-back and implementing policies that stifle competition and renewable adoption. This report examines the evidence, revealing a pattern of rate escalation, regulatory failures, and a bankruptcy rooted in chronic mismanagement that continues to burden ratepayers.

A Steep Ascent: The 60% Rate Surge and Its Roots in Neglect

Since 2020, PG&E's residential rates have surged by an estimated 60% on average (ranging from 50-70% across customer classes), a trajectory approved through repeated CPUC decisions despite mounting public outcry. This escalation, critics contend, is not merely a response to external pressures but a direct consequence of PG&E's longstanding failures in infrastructure maintenance and management oversight.

A year-by-year breakdown illustrates the relentless climb:

• 2020 Baseline: Rates averaged $0.26 per kWh, with typical monthly bills around $179, already strained by liabilities from the 2018 Camp Fire.

• 2021: A 7.7% increase to $0.28/kWh, attributed to gas procurement and initial wildfire mitigation amid post-pandemic economic recovery.

• 2022: An additional 3.5% rise to $0.29/kWh, justified by investments in grid resilience.

• 2023-2024: The surge intensified with multiple adjustments, including eight hikes in 2023 alone, resulting in a 56% bill increase over three years; peak rates exceeded $0.40/kWh, pushing average bills to $280-300.

• 2025: Increases capped at 2-4%, offering temporary respite but failing to reverse the damage.

PG&E argues that these hikes fund essential upgrades like putting power lines underground and vegetation management, yet investigations reveal they stem from PG&E's 2019 bankruptcy, precipitated by over $30 billion in wildfire liabilities. Far from an act of nature, the crisis was fueled by poor management: aging infrastructure (substations averaging 60 years old, well beyond standard lifespans), inadequate vegetation clearance, and deferred inspections that ignited preventable blazes like the 2018 Camp Fire (85 fatalities) and 2017 North Bay Fires.

Governor Gavin Newsom labeled it "greed," pointing to executives who prioritized shareholder dividends over safety investments. PG&E's guilty plea to 84 manslaughter counts and a history of falsified records underscore this systemic neglect, allowing the utility to emerge from bankruptcy in 2020 after $25.5 billion in settlements—only to pass ongoing remediation costs to ratepayers.

Regulatory Shortcomings: NEM 3.0 as a Case Study in Harmful Policy

The CPUC's oversight has drawn sharp criticism for decisions that appear to favor PG&E at the expense of consumers and the environment. Net Energy Metering (NEM) 3.0, implemented in April 2023, exemplifies this: by slashing export credits by 75%, it has rendered rooftop solar economically unviable for many, purchasing homeowner-generated power at 3-5 cents per kWh while charging up to 50 cents for grid electricity.

The fallout has been severe: Residential solar installations plummeted 66-85% in late 2023, with declines persisting at 45% in 2024 and another 13% in early 2025; projections for 2026 forecast further erosion. California's 100% clean energy target by 2045 is jeopardized, accompanied by 17,000 lost solar jobs and over 100 bankruptcies in the sector. Payback periods for solar systems have ballooned to 10-15 years, deterring adoption—particularly among middle- and low-income households—and forcing reliance on costly batteries.

Opponents argue the policy, shaped by utility lobbying, prioritizes short-term rate "equity" for non-solar customers over long-term sustainability, inflicting more harm than good and perpetuating PG&E's dominance by discouraging distributed energy alternatives.

Data from www.calssa.org

Profitability Amid Controversy: A Comparative Lens

Post-bankruptcy, PG&E has staged a remarkable financial turnaround, posting $2.51 billion in net income for 2024 (up from $1.3 billion losses in 2020), with revenue climbing 34% to $24.8 billion -- fueled more by rate increases than by demand. Profit margins stand at 10.29%, and return on equity (ROE) at 8.26%—solid but below the industry average of 9.73%. Fines, such as $1.94 billion for the Camp Fire, were shouldered by shareholders, yet ratepayers see 60% increase in rates and bear the brunt of broader mitigation expenses.

Comparisons with peers reveal PG&E's model relies on exorbitant rates to sustain profits, unlike utilities in lower-cost regions:

Company	Revenue ($B)	Net Income ($B)	Profit Margin (%)	ROE (%)	Avg Rate / kWh (Dec 2025, ¢)
PG&E (PCG)	24.42	2.51	10.29	8.26	32.04
Duke Energy (DUK)	30.05	4.61	15.35	9.00	15.12
NextEra Energy (NEE)	24.80	6.28	25.33	10.87	15.76
Southern Company (SO)	26.72	4.26	15.94	11.62	15.3
Dominion Energy (D)	14.46	2.07	14.32	6.86	16.62
Exelon (EXC)	23.03	2.46	10.68	9.14	19.05
American Electric Power (AEP)	19.72	2.98	15.09	11.03	17.61

This disparity underscores accusations that PG&E's high rates—double those of many competitors—prop up its recovery, even as mismanagement's legacy lingers.

The Greater Cost: Ratepayers and California Economy Caught in the Crossfire

The 60% hike and NEM 3.0 have intensified energy poverty, disproportionately affecting low-income families reliant on CARE/FERA discounts and solar adopters facing export disincentives. While PG&E claims the new charge promotes equity and electrification, detractors highlight how it shifts costs to efficient users, lacking adequate protections for vulnerable groups. Perhaps spelling even greater disaster is that high energy costs are often cited as a major reason that multiple companies have elected to leave California.

A Call for Accountability: Systemic Reform Needed

PG&E's trajectory exposes deep flaws: a utility plagued by historic mismanagement, rebounding on ratepayer backs, regulators enabling hikes, and a bankruptcy born of avoidable neglect. Public outrage mounts, with protests demanding transparency. Viable paths forward include CPUC complaints, switching to Community Choice Aggregators (CCAs) for greener alternatives, or advocating for public ownership to sever profit-driven incentives.

As California confronts its power crisis, ratepayers must engage—consult PG&E's bill calculator and mobilize before the 2027 General Rate Case. Without reform, the cycle of hikes and failures risks perpetuating a modern Robber Baron regime.