Don Bauder 7:30 a.m., Dec. 9
San Diego Gas and Electric Company (SDG&E) is the finest public utility for delivering gas and electricity to customers within the SDG&E service area.
It has to be because it's the only one. SDG&E has an exclusive-inclusive franchise from San Diego local government to be and do just that. It may not exactly say so within the four corners of the document, but in any case, that's the intent and purpose of the franchise.
The franchise agreement is regulated under the California Public Utilities Code, which means that ultimately, any questions about the document are fair game before the California Public Utilities Commission (CPUC). Anyone who believes that CPUC opinions, rules, and other decisions as state regulators of public utilities don't carry any weight in this state has obviously never been removed from the governor's office by recall in time of war and rolling blackouts, to be replaced by the Last Action Hero.
It is an exclusive franchise, belonging only to SDG&E, unless you count another energy corporation with a local focus on global operations that has been advertising hourly about how we need it every day, but there will be more about how to count local energy companies in a future blog.
It's an inclusive franchise as well. Just try to build a house or a business in the County of San Diego that deliberately avoids including a hookup to SDG&E, so that you can start your own beef of a blog. If you use more electricity today than you have in all of your AAA to D cell batteries before re-charging, then you must somehow be a direct or indirect customer of franchise-holding SDG&E.
There are people in the most remote areas of the county who actually are not tied to the grid, but during wildfires, they get wildfire heat for free from SDG&E and are thus customers of an involuntary sort under the Public Utilities Code. If you think I'm making that up, then go to http://leginfo.ca.gov and see for yourself what the great State of California says about deliveries of heat coming from any utility's unconventional heat sources, controlled or not.
The plan to eventually put all power lines underground in San Diego is the best plan that franchise-holding SDG&E can come up with and implement, even if it takes until the last half of this century to get it done. Or maybe the next century if you know how to stall by including the Z-factors, around the time when San Diegans can expect to see city council chambers with a working sprinkler system. It is the best plan that SDG&E's limited undergrounding funds can buy, because SDG&E told CPUC it was, is, and always will be the best SDG&E can do with the meager CPUC-approved undergrounding fees that SDG&E collects from many thousands of customers, every day.
But SDG&E's owner, Sempra Energy, took in some $11 billion when the 2007 DJIA was over 14,000 and almost another $11 billion last year, the year of the biggest Crash since the Great Depression. Talk about recession-proof!
Sempra Energy puts out statements that go to the Securities and Exchange Commission, stating how much Sempra Energy's quarterly dividend will be to stockholders-of-record. On an annual basis, Sempra Energy's target range for dividend payouts to stockholders is between 30% to 40% of retained earnings, and its on-going target goal is on the top end of that range, lately from 37% to 40% of the corporate net less expenses of each year's $11 billion register receipts, rain or shine.
Every first year accounting student surviving mid-terms knows that in analyzing the books of any firm, the numbers do tell a story of corporate priorities. When a corporation pays out dividends rain or shine that are anywhere near 40% of retained earnings, then the board of directors is sending a signal to the analyzing student of accounting that corporate investing of retained earnings into its current holdings, or for real growth of the corporate physical plant, are definitely not the top priorities for the corporation in question. At a 40% dividend to retained ratio, those priorities probably aren't even on radar.
But every corporation in the marketplace needs to show continued growth to be attractive to investors, right? Well, not so much growth and real expansion in the economy if one is looking to buy on the expectation of getting 40% of retained earnings every quarter.
Is a paying stockholders by the quarter not to sell a bribe, or what?
There are other things to say about the SDG&E franchise under Sempra Energy's ownership. There are legal liability concerns that a criminal act or omission by a franchise employee on company time doing company business is, by statute in the Public Utilities Code, a criminal act or omission by the regulated public utility. Obviously, it is in the best interests of the stockholders that the board of directors and every executive employee hired by the board all be on the ball and make sure that every employee is obeying every law, order and regulation that is reasonably related to the operations of the public utility. If not, then the stockholders need to ask a question or two, such as “Is anybody in charge of the store? Who left the vault unguarded? Who's looking out for my investment?!?”
Ever wonder how much of Sempra Energy current upper management is composed of former SDG&E employees in upper management right up until the day Sempra Energy emerged to become a new kind of energy company, right before gaming the system caused the grid to fail us in the electricity crisis of 2000?
Remember: the acts of the employee are acts of the public utility. It's the law.