Who Profits — and Why This Line?

A regulated utility like SDG&E doesn't profit by selling more electricity — it profits by building things. Its earnings are set as a guaranteed rate of return on the value of the capital it builds and owns (its “rate base”). Federal regulators set that return at roughly 10.3%. So a ~$2 billion line can throw off on the order of $110 million a year in shareholder profit — recovered from ratepayers, every year, for the multi-decade life of the line. ^{[1] [2]}

Here's the machinery behind that. The “rate base” is the running total of what a utility has spent building and installing equipment — lines, towers, substations — that's in service. A federal regulator, the Federal Energy Regulatory Commission (FERC), which oversees high-voltage transmission, approves a rate of return on that pile of investment. Each year the utility is then allowed to collect a “revenue requirement” equal to (rate base × that approved return) + depreciation + maintenance + taxes. Build more, and the rate base — and the guaranteed yearly collection — grows right along with it. And because that return is a rate regulators set in advance — not a market price that rises and falls — SDG&E can project its profit on a line like this before it ever breaks ground. ^{[1] [2]}

One thing to be clear about: that money does not come from the federal government. FERC's job is to approve the rate — the dollars are billed to electricity customers. For a big regional line like this one, the charge is spread across every California ratepayer through a statewide transmission charge, and FERC-approved “formula rates” make the recovery nearly automatic, with any shortfall trued up the next year — so the utility takes on very little risk. In short: federally blessed, ratepayer-funded. ^{[1] [6]}

That creates a simple, legal incentive: the more big infrastructure a utility builds, the more money it makes. Economists Harvey Averch and Leland Johnson described the predictable result back in 1962 — now known as the Averch-Johnson effect: when a company is guaranteed a profit rate higher than what its own money costs it, it tends to over-build — picking bigger, more capital-heavy projects than the cheapest way to do the job — because every extra dollar sunk into equipment it owns earns that guaranteed return. (Critics call the gold-plated version of this “gold-plating.”) ^[3]

In plain terms, the rules reward building expensive infrastructure the company owns — a 500 kV line — over cheaper fixes, or over helping you put panels on your own roof, which earn the utility nothing. ^[3]

Zoom out and the pattern is unmistakable. Sempra — SDG&E's parent company — earned about $2.8 billion in profit in 2024 on roughly $13 billion in revenue, and pays shareholders a dividend every quarter. ^[4] Because it earns that money by owning infrastructure, its growth plan is simply to build more of it: a record $56 billion construction plan for 2025–2029 — over 90% of it regulated utility projects — explicitly designed to grow the capital it earns a return on by about 10% a year, since extended to roughly $65 billion through 2030. ^[5]

This line is one brick in that wall. Every mile becomes rate base the company collects a guaranteed return on — which is exactly why the incentive is always to build the big project, not to help you avoid needing it. ^{[5] [3]}

Because a 500 kV line is classified as “regional,” its cost isn't billed only to the people it serves. It's rolled into a statewide transmission charge spread across all California ratepayers — so Temecula residents help pay for this line whether or not it ever delivers them a single watt. ^[6]

And by the grid operator's own account, it wouldn't. The line is built to serve San Diego and the Los Angeles basin and to connect remote desert renewables — not Riverside County. The community that bears the towers, the fire risk, and the disruption is not the community that gets the power. ^[7]

The stated reason is real: California's 100%-clean-by-2045 law and the loss of the San Onofre nuclear plant push the grid toward large desert solar and geothermal, far from the coast. ^[8] But the financial structure pushes the same way — toward big company-owned lines — and state policy has actively discouraged the local alternative. In 2023, California cut the credit for rooftop-solar power by about 75–80%, and home-solar sales fell by more than half. ^[9]

Meanwhile, local solar, batteries, and flexible demand — “non-wires alternatives” — can meet growing demand faster, cheaper, and with far less land than a new long-distance line. That's the alternative the environmental review is supposed to weigh seriously. ^[10]

It's fair to ask: instead of a 150-mile line, what if that clean power came from solar where people actually live? Here are the honest numbers. A typical California home system is about 7.2 kW and runs ~$22,600 before incentives — roughly $15,800 after the 30% federal tax credit, or about $38,000 with a battery. ^[11] Putting solar on the 1–1.5 million homes this line is said to serve would cost far more upfront than the line's ~$2 billion price tag. So this isn't a claim that “a rooftop is cheaper than the wire.”

The real difference is what your money buys. The line is just wires: ratepayers also pay for the distant power plants it connects, and hand SDG&E a guaranteed profit on the line for forty years — and own nothing at the end. A rooftop system is generation and delivery in one; it's federally subsidized, loses no power to long-distance transmission, takes no new land, and the household owns it and cuts its own bill. ^{[11] [16]}

And at the scale of the whole grid, local really is cheaper. A peer-reviewed national study found the lowest-cost path to a clean grid includes about 247 GW of local solar and 160 GW of storage — saving ratepayers roughly $473 billion by 2050. The point isn't that one roof beats one line; it's that a system built around local power costs less and keeps the money at home, instead of routing it into utility profit. ^[12]

The upfront comparison favors the line — but a power line isn't a one-time cost. Ratepayers don't just repay the line; they pay a guaranteed return on it, plus maintenance and taxes, every year for its ~40-year life. Run the standard regulatory formula on this ~$2 billion line and ratepayers end up paying on the order of $7–8 billion over 40 years — and roughly $3 billion of that is pure shareholder profit. The profit alone is bigger than the sticker. ^{[13] [2]}

And the bills it sits in keep climbing. SDG&E already charges the highest electricity rates in the country — about 47.7¢ per kWh, more than double the national average — and they've been rising around 10% a year. Every new line is added to the base those rates are built on. ^[14]

That's where the lifetime math flips toward solar. A home system is bought once and lasts 25–30+ years — panels lose under 1% of output a year, with about one inverter swap along the way — so the household that owns it caps decades of those rising bills. Upfront, the line is cheaper; over its life, it's a meter that runs forever, with rate hikes, and you don't own it. ^{[15] [11]}

A clean-energy line still has a heavy physical footprint of its own. Almost all of a transmission line's built-in carbon comes from making its materials — and the steel in the towers and the concrete in the foundations alone are more than 60% of that. Here that means lattice towers up to 200 feet, 84 concrete footings bored deep into Temecula Creek, aluminum conductors (transmission lines use aluminum, not copper), and a cleared corridor more than 250 feet wide. ^{[16] [17]}

Building it is its own months-long industrial operation. Erecting 21 towers and 84 footings across more than five miles of Temecula Creek means boring rigs, cranes, and graders running on diesel, plus convoys of concrete and gravel trucks hauling material in and out along the creek and new access roads. That work throws off diesel exhaust — soot and smog-forming pollutants — along with dust and construction traffic, right where people live. It's temporary, but it's real, and it's exactly the kind of construction air-quality and traffic impact the environmental review has to disclose and limit. ^[17]

We'll be straight about this: high-voltage lines are efficient to run (they lose only about 2% of the power they carry), the construction phase is a small slice of the line's lifetime carbon, and this line would carry clean energy. The point isn't that the line is “dirty” — it's that generating closer to home delivers the same clean power with far less steel, concrete, bulldozed land, and diesel. A real comparison of those footprints belongs in the environmental review. ^[16]

None of this means the approval was bought — and we won't claim it was. But the company behind the line has a documented record worth watching: a CPUC judge fined SDG&E's sister utility, SoCalGas, about $9.8 million for using customers' own money to lobby, and Sempra is a heavy, repeat political spender before the same regulators who will decide this project. ^[18]

That's not proof of wrongdoing on this line; it's a reason for the public to follow the money, show up to the proceedings, and demand the need, the cost, and the alternatives all be tested in the open. → Take action.