The Utility Reform Network (TURN) said a recent proposal to restructure San Diego-based Sempra Energy is a solution for investors, not consumers.
“It doesn't address Sempra's failures to keep consumers safe from wildfires and gas leaks, or the various customer service issues that have plagued SDG&E and SoCal Gas,” Mindy Spatt, communications director for the San Francisco-based consumer advocacy organization, told the California Business Daily.
Sempra shareholders Elliott Management and Bluescape Resources last week called for an overhaul of the company's board of directors and a review of all of its business operations.
With the blessing of the California Public Utilities Company, Sempra has been investing ratepayer funds in foreign companies in an attempt to increase its profits.
But Sempra needs much more than just a refit, according to Spatt.
“TURN has a huge concern over utility corporations positioning themselves to use customers' money in affiliate transactions that benefit their non-utility businesses as consumers' expense,” she said. “It isn't customers' responsibility to create higher profits for Sempra's unregulated businesses, and there should be an impenetrable firewall between the two.”
Elliott’s Portfolio Manager Jeff Rosenbaum said that it was not just a matter of simply diverting ratepayers' monies.
"This isn't just take money from the ratepayers and turn around and spend it somewhere else," Rosenbaum told California Business Daily on June 11. "It's an access to capital that these businesses allow. So these are the types of businesses that have good credit profiles, they're steady, safe businesses and you can go out and you can get additional capital to do things. So it's not just a pure siphoning of funds from those businesses into businesses outside those utilities; it's the actual access to capital. That might be a key nuance."
Investments should be conformed to credit customers, not benefit investors, according to Spatt.
“Customers pay a guaranteed rate of return on utility investments, so those investments should be based on demonstrable customer needs, not investors' desire for higher profits,” she said.
No matter how Sempra restructures, TURN will be vigilant in making sure the utility can't position itself to take advantage of captive customers in order to subsidize its unregulated businesses or increase profits for those businesses, according to Spatt.
“Customers are already paying for huge corporate pay packages and executive perks, and certainly shouldn't pay a cent more,” she said. “If Sempra can't run its unregulated businesses properly, investors should be looking at cutting executive pay and perks.”