While regulators set a specific percentage for investor returns, the actual portion of a customer’s bill that goes to profit is usually much higher because of how the math of utility investments works. According to the authors of the newly released report, this discrepancy exists because the total amount of money shareholders have invested in infrastructure is typically larger than the total revenue a utility collects from its customers in a single year.
“The profit share of a customer’s bill is typically higher than the authorized ROE, not lower. ROE is earned on shareholder equity invested in the rate base. For capital-intensive utilities, that equity base is usually larger than the revenue collected from customers in any single year.”
To understand this, think of the difference between a percentage of what a company owns versus a percentage of what it earns in sales. Utilities spend enormous sums building power plants and lines, and regulators allow them to earn a profit based on that massive total value. Since the value of all those buildings and equipment is often much greater than the total amount of money customers pay in bills over twelve months, even a modest profit rate applied to the investment results in a big chunk of every monthly bill going straight to investors.
The Energy & Policy Institute released its report “Paying for Their Profits: How Ratepayers Foot the Bill for Soaring Utility Profits” in March 2026. Authored by Daniel Tait, Sue Sturgis, and Shelby Green, the analysis tracks financial data from over 100 investor-owned utilities to reveal the significant role corporate returns play in driving up household electricity costs.
