PG&E Spends Millions Against Tom Steyer. What’s Behind the Clash?

But central to the conflict between the progressive billionaire and the power behemoth, experts say, is Steyer’s ambitious plan to cut electricity bills. That platform is built on a pledge to wield the governor’s power over appointments to install regulators who will reduce the utilities’ guaranteed profits.

“That is a material threat to utility investors,” said Michael Wara, director of the Climate and Energy Policy Program at Stanford University.

Few areas offer as vexing a challenge for the governor as the oversight of investor-owned utilities in the midst of California’s energy transition away from fossil fuels. Outside observers are divided over the impact that Steyer could have in a policy area that has thwarted the ambitions (and even careers) of previous governors.

But Steyer is relishing the clash, arguing that the utility’s big-dollar effort to stop him is proof of the power it holds — and the change he vows to bring.

He has cast the state’s three investor-owned utilities — PG&E, Southern California Edison and San Diego Gas & Electric — as bogeymen standing in the way of a more affordable life in California.

“I’ve said that we are going to regulate them differently and introduce local competition,” Steyer told KQED. “And they clearly think it’s worth $10 million as a bet to try and defeat me because they want to preserve their monopoly. I think that’s corrupt.”

Californians pay the second-highest electricity rates in the country after Hawaii, and those rates have grown much faster than the national average this decade. At the heart of the price spike are wildfire-related costs that the utilities have passed along in part to customers.

In response, Steyer is proposing to appoint reform-minded regulators to oversee the utilities. He promises that those appointees will cut utility profits, more closely examine the cost-effectiveness of wildfire spending and promote small-scale power generation, such as rooftop solar and microgrids.

To Steyer’s supporters, the politics of a utility crusade are undeniably positive. Voter antipathy toward the state’s large power providers cuts across urban progressives wary of monopoly power, rural residents anxious about utility-sparked fires and suburban solar customers furious about utility efforts to claw back rooftop benefits.

“This is an issue that is felt by not just the progressives but the moderates who also try to fight utility costs,” said Assemblymember Alex Lee, a progressive Democrat from San José who has endorsed Steyer. “We are all lamenting together that utilities have way too much power.”

PG&E spends big

Steyer is leading with a bold promise: a 25% drop in electricity rates. He has paraded that vow in town halls, candidate debates and unceasing television advertisements. On Valentine’s Day, Steyer released a “break-up message” video outside a PG&E substation in San Francisco in which he called out the company’s CEO, Patti Poppe.

Steyer’s broadsides against the electric giants caught the eye of utility leadership — particularly after former Rep. Eric Swalwell’s campaign imploded amid sexual assault allegations, making the possibility of a Steyer victory more realistic.

Pedro Pizarro, the CEO of SoCal Edison’s parent company, said on an April earnings call that he did not see any “fact basis” to Steyer’s promise of a 25% rate cut.

“We have been very pointed about taking on things that are not connected to fact like those, and being outspoken about them,” he said.

PG&E has gone further — emerging as the top anti-Steyer spender in the closing weeks ahead of the June 2 primary.

The utility has contributed $12.6 million to a committee named Californians for Resilient and Affordable Energy, No on Steyer for Governor 2026. That committee has sent $12.5 million to an anti-Steyer independent expenditure committee, called California is Not for Sale.

The California Chamber of Commerce’s political arm, JOBSPAC, sent over $7.7 million to California is Not for Sale — after receiving roughly $2 million from each of the state’s investor-owned utilities in April. A spokesperson for the Chamber said decisions on campaign spending are made by JOBSPAC leadership, not individual donors.

The anti-Steyer super PAC has also drawn contributions from groups representing realtors, homebuilders and correctional officers.

The television ads funded by California is Not for Sale make no mention of Steyer’s electricity plan. Instead, they take aim at investments made by Steyer’s former hedge fund in private prison companies and fossil fuel projects. Steyer left the firm, Farallon Capital Management, in 2012.

Steyer’s campaign filed a complaint with the California Fair Political Practices Commission earlier this month, arguing that PG&E is deliberately obscuring its role as the top funder of the ads by donating to the Resilient and Affordable Energy group instead of directly to California is Not for Sale.

PG&E referred a request for an interview for this story to a spokesperson for the super PAC.

Super PAC: Opposition ‘bigger than any one policy’

California is Not for Sale spokesperson Amelia Matier said the group’s spending is not being driven by PG&E — or by opposition to any specific proposal from Steyer.

“This is bigger than any one policy,” she said.

Matier argued the connective thread between the businesses spending against Steyer is a shared lack of faith that someone without any government experience could govern the world’s fourth-largest economy.

“The group of people behind the IE just don’t think he’d be a good governor,” she said. “He doesn’t have the experience and know-how, and he wants to make everybody else the big corporate bogeyman — but the reality is that’s him.”

The $12.6 million PG&E has spent against Steyer is hardly a financial avalanche in the context of costly California campaigns. The utility spent over $46 million to support a single initiative, Proposition 16, a failed 2010 measure that would have made it harder for cities and counties to create local power providers.

But the anti-Steyer spending marks PG&E’s largest such outlay in a governor’s race, according to online filings with the California secretary of state’s office, which date back to 1999.

In splashy television ads, Steyer has declared that he will “bust” the utilities and “break up” their power. But he is not proposing to end California’s current structure of electricity regulation, in which power companies are traded on Wall Street and entitled to a guaranteed rate of return on capital investments.

“I’m happy to have investor-owned,” Steyer said during an interview on KQED’s Political Breakdown. “My issue is we are not regulating them right.”

A plan to ‘stop their gravy trains’

Much of Steyer’s electricity agenda is built on appointments he is eyeing for the five-member California Public Utilities Commission. The next governor will appoint two commissioners in January and replace three others over the course of their first term.

The CPUC has been at the center of bitter fights between utilities and ratepayer advocates over rooftop solar benefits, the structure of electricity bills and wildfire-related spending.

Former CPUC President Loretta Lynch, a frequent agency critic, said regulators have not properly scrutinized utility spending, which has resulted in higher bills for customers. Steyer could bring the first change to that dynamic in decades, she said.

“It’s not surprising if you look at it that way that the utilities are going all out to fight the candidates who are going to stop their gravy trains,” she added.

Steyer said he will appoint commissioners who push the utilities to more quickly connect new customers to the grid (spreading the system’s fixed costs more broadly) and incentivize the power providers to spend on solar and battery storage, instead of building expensive new transmission lines and substations.

But the most threatening proposal for California power companies is Steyer’s call for a cut in utility profits, said Wara.

The return on equity, set by the CPUC, currently sits at roughly 10% for PG&E, SoCal Edison and SDG&E. The rate represents the profit that utilities are authorized to earn — and collect from ratepayers — on shareholder-funded infrastructure investments.

Utilities argue that a healthy return on equity is necessary to attract capital and fairly compensate shareholders for the risk of owning power companies that could face massive liability and even bankruptcy if their equipment sparks a wildfire.

But those guaranteed profit rates have remained steady even at times when borrowing costs across the economy have declined. Utility critics point to research showing that elevated rates create a perverse incentive for electric companies to pursue costly investments in order to recoup the highest return — all at inflated cost to the customer.

A former economist for the parent company of SDG&E estimated that reducing the return on equity to 6% would save customers $6.1 billion annually.

Steyer has floated the idea of reducing the rate of return by 2 percentage points.

“If that could be accomplished, there is a significant potential savings for California electricity customers,” Wara said. “Of course [utilities] object to that — it would be crazy if they didn’t.”

But Wara cautioned that a cut to utility profits is not without risk. If California lowers its rate of return and other states do not, shareholders could decide to invest in utilities in parts of the country offering higher profits without wildfire risk. With less cash on hand, California utilities could face higher borrowing costs that, in turn, would raise bills for ratepayers.

“The question is how investors in that market respond,” Wara said. “Do they take their money elsewhere? Or do they think these three [California utility] stocks are too big not to have in their utility portfolio?”

Difficult tradeoffs

Others see an imperiousness in Steyer’s broadsides against the utilities — a belief that complex reforms can be pushed through without compromise or tradeoffs.

Bill Dodd, a former state senator who worked extensively on utility legislation, has had a recurring question as he’s watched Steyer’s ads promising lower electricity rates: “How the hell is he going to do that?”

Dodd argued that many of the cost pressures facing utilities and their ratepayers are a result of climate change, as hotter temperatures and shorter windows of precipitation have lengthened California’s fire season. No matter who is governor, power companies will need to spend money to trim trees and bury power lines, while setting aside billions of dollars to pay claims arising from future wildfires caused by their equipment.

And while governors typically enjoy great sway over state agencies, the commissioners Steyer appoints to the CPUC will still be bound by state law requiring utility rates to be “just and reasonable” — balancing affordability with the need to attract shareholder investment.

“The bottom line is even when you appoint members of the CPUC, they are still taking an oath to the state of California,” Dodd said. “So I don’t think it’s as easy to get done as just [saying] ‘I’m going to replace everybody.’”

Steyer’s campaign said he will look for commissioners with a shared vision for regulating the state’s investor-owned utilities.

Complicating matters, Californians’ desire for rate relief exists alongside their expectations of reliable service and wildfire safety. Steyer’s electricity plan promises to “strengthen safety, bolster reliability, and lower prices.”

“It’s hard for me to imagine that we can achieve all of those three things at once,” said Meredith Fowlie, faculty director at UC Berkeley’s Energy Institute at Haas.

Ongoing utility investments to prevent wildfires are likely to keep electricity prices elevated: The CPUC is projecting rate increases through 2028 of roughly 6% for PG&E and SDG&E and around 7% for SoCal Edison, compared with an assumed inflation rate of 2.6%.

But lowering bills by reducing spending on wildfire mitigation could require the state to accept a higher tolerance for catastrophic blazes. And while strategies such as planned power outages could help avoid those fires at a relatively low cost, they bring disruption to the daily lives of Californians.

“If we decide to focus on reducing rates, I think we’re going to have to trade off reliability and tolerate more wildfire risk,” Fowlie said.

Gov. Gavin Newsom and members of the Legislature have spent much of the last year weighing those tradeoffs. In some ways, Steyer would be showing up in the second act.

Legislation moving through the Senate this year would reduce utility profits and tap the state budget to pay for certain investments currently funded by ratepayers. And a state report on resilience to natural catastrophes released last month could serve as the starting point for negotiations this summer around reforms to wildfire liability and California’s home insurance market.

“So I think if I was a utility, I would see [Steyer] as signaling that he will continue along this path,” Fowlie said. “And continuing along that path could have implications for how they’re able to conduct their business.”