alt Hacker NewsSo they are limited in their RoR on capital expenditures. Are they limited in their capital expenditures in the first place? That is, if they overspend on everything they build, do they make more profit than if they engineered things more carefully? I assume there must be some limitation here or they would use gold instead of copper in their MV transmission lines...
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https://legalclarity.org/what-is-a-rate-case-and-how-does-it...
This comes down to having quality regulators on your public utility commission which is heavily state dependent.
https://www.multistate.us/insider/2025/10/27/nine-states-fac...
I think technically CPUC approves at least a subset of expenditures, but yes there's the weird incentive where wasting money can actually increase profits
No, that is the obvious problem and it happens right out in front of everyone.
It sounds similar to the insurance industry. The more they pay for medical expenses, the more profit they are allowed to keep. Bad incentives all around.