Pity the poor investor-owned electric company reps, who took the hot seat before a state watchdog panel Thursday as “We’re mad as hell and we’re not going to take it anymore!” seemed to echo in the background.

“Why are the investor-owned utilities so much more expensive than the publicly owned utilities?” asked Anthony Cannella, vice chair of the Little Hoover Commission. Sometimes they’re almost 50 percent higher; sometimes nearly double.

Well! The very pleasant Shilpa Ramaiya of Pacific Gas & Electric and Adam Smith of Southern California Edison set about answering as best they could — but there wasn’t necessarily a lot of empathy.

Billions for wildfire mitigation! they said. Sprawling territories! The cost of borrowing to fund infrastructure improvements, and of “public purpose programs” (like discounts for low-income folks), and of subsidizing rooftop solar owners (which some say shifts $8.5 billion a year to the bills of non-solar household bills, and which the solar industry says is fiction)!

PG&E’s Ramaiya even shared a breakdown of what makes up our electric bills on our man George Washington.

Cannella wasn’t quite getting what he wanted. “Can we lower rates?” Cannella asked. “Sounds like you’re saying no.”

Our electric bills in California are the highest in the nation, save for poor Hawaii. Rates have doubled over the past decade. They’re about twice the national average and continue to rise, outpacing inflation. Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric rake in big profits — even as they seek rate hikes.

There are several bills in the Legislature designed to remake, at least a little, California’s electricity mess. If we were the betting type, smart money would be on major change for the IOUs in the not-too-terribly-distant future.

Profit or nonprofit? Private or public?

For-profit, investor-owned utilities (IOUs) and publicly owned nonprofit utilities supply the overwhelming majority of California’s energy.

Among them, the cost of electricity — not counting the transmission and distribution thereof — varies wildly, from a high of nearly 30 cents per kilowatt hour at IOUs (San Diego Gas & Electric, about 28; and PG&E, about 24) to a low below 10 cents per kilowatt hour (at nonprofit community cooperatives).

The conclusion drawn from Little Hoover’s pretty graph is inescapable: With just a few exceptions, publicly owned nonprofit electric companies charge much, much less than their for-profit counterparts (city of Anaheim, about 17 cents per kilowatt hour; Burbank and Riverside, about 16; Sacramento, about 15; and Santa Clara, about 13).

We’ll note here that Edison (IOU, about 18 cents per kilowatt hour) was lower than Los Angeles Department of Water and Power and the cities of Glendale, Pasadena and Moreno Valley (public, about 19 to 20 cents per kilowatt hour).

Some key differences: IOUs supply most of the state with power. They have virtual monopolies and thus are regulated by the state Public Utilities Commission. The PUC must approve rate hikes and their profit margins (now, about 10%). They’re run by their own boards, answer to their own shareholders and make their money not on the actual cost of electricity — that’s a pass-through — but on infrastructure investments (giving them perverse incentive to spend way more than they have to, critics say). They go to the capital markets to borrow money for those infrastructure investments.

“To finance these large projects, IOUs need to attract lenders and investors, which means offering a return in the form of interest, dividends or rising stock value,” Little Hoover’s staff report said. “Indeed, in some cases, around 25% of customer payments cover utility profits, taxes on profit and interest.”

Ouch. In contrast, municipal power companies are public agencies owned and operated by local governments. They usually serve compact areas and don’t have to operate long-distance transmission lines. They’re not regulated by the PUC, but are run by elected or appointed officials close to home, making them more sensitive to customers. And since they’re nonprofits, they can finance projects with tax-exempt, low-interest municipal bonds, a much cheaper proposition than going to the capital markets, Little Hoover’s staff report said.

While the public utilities clearly emerged as the white hats at the hearing, the California Municipal Utilities Association’s Derek Dolfie stressed that they’re not immune from the pressures facing the IOUs.

“Even though we typically have lower rates than the IOUs, that doesn’t mean we’re not facing affordability challenges,” he said. “We are seeing cost of renewables increase. It’s more expensive to build infrastructure. Federal dollars are on pause…. If you have a bill that’s $10, and it increases by $5, that’s a huge increase, even though $5 might seem inconsequential if you have a $300 bill.”

Historically, America tends to swing back and forth between the virtues of publicly and privately owned enterprises, noted Commissioner David Beier. Regulation hasn’t always prevented harm.

All told, we’re kind of bummed we don’t live in Anaheim.

Fixes?

Several bills in the state Legislature seek to wrestle with California’s acute affordability issues. Some of the ideas floated include reducing operating expenses, lowering capital costs, phasing out programs and revising subsidies and rate structures.

Public financing of infrastructure projects can save up to $3 billion a year, experts have testified. Lowering the guaranteed rate of return for the utilities could save billions more, as could tying rate increases to inflation, exploring other funding sources for wildfire mitigation and scaling back rooftop solar subsidies, which would not please rooftop solar owners.

The IOU reps mentioned moving the cost of public subsidy programs from the bills of other electricity customers to the state’s general fund, where other welfare programs live. That sort of suggestion didn’t get far.

“You have to change in a much more comprehensive way,” Beier said. “People are unhappy and want reform. I’m hearing, ‘Let the taxpayers pay instead of the ratepayers.’ That’s not enough.”

Already in the works: Decoupling grid upkeep costs from electricity rates. After a wildly contentious proposal to marry grid charges to income, the PUC adopted a flat $24 monthly charge for most households, and a $12 charge for low-income customers. That’ll reduce the cost of power some 15% to 20%, but most customers’ bills are expected to be about the same. That’ll kick in this year and next.

Thursday’s hearing was the Little Hoover Commission’s third in a series examining the drivers of California’s high electricity costs. The not-to-miss next hearing, in July, will put the PUC itself in the hot seat. It has been derided as a weak watchdog that rolls over so the IOUs can scratch its belly. Stay tuned for that!