Pacific Gas & Electric’s 2014 revenue would increase $453 million, or 6.8 percent, in place of the utility’s requested $1.16 billion, under a proposed June 18 California Public Utilities Commission decision. The proposed revenue requirement sets “just and reasonable rates,” states the 724-page ruling by administrative law judge Tom Pulsifer. It “places priority on ensuring the ongoing resources in terms of infrastructure and operations to provide safe and reliable natural gas and electric power service.” PG&E was not pleased. It stated its originally proposed 17.5 percent revenue hike would keep its ratepayers’ bills below the national average. “The proposed decision advocates significant reductions to our proposed investments,” Chris Johns, utility president, stated. “We respectfully urge the commission in its final decision to support responsible infrastructure investment so we can fulfill our mission to provide safe, reliable, affordable energy.” The general rate case includes a huge range of projected utility costs, from gas and electric plants and lines to smart meters, health care, inflation to computer equipment. General rate cases are usually decided upon by the commission every three years. PG&E’s total requested revenue for 2014 of $7.79 billion is slimmed down to $6.63 billion by the pending decision. It includes a rate of return on the utility rate base of 8.6 percent and return on equity investment of 10.4 percent. The Office of Ratepayer Advocates urged the commission to reduce the utility’s revenue requirement by another $125 million, to $6.5 billion. The office said it had not yet reviewed the proposed decision so did not comment. According to The Utility Reform Network, giving the utility a 17-plus percent increase would raise average electricity rates by $5/month and gas rates $7/month. Next year, the hike would rise to $14/month, according to TURN. The commission proposal approves utility attrition amounts for 2015 of $436 million and $486 million for 2016—4.5 percent and 5 percent increases for next year and the following year respectively. These “attrition” increases are largely projected inflation costs. “Attrition increases can also account for incremental costs that the utility forecasts beyond those forecasted for the initial test year,” according to Cheryl Cox, ORA spokesperson. PG&E seeks a 5.9 percent rise in attrition for 2015 and 6.1 percent for 2016. Inflation rates are based on the Consumer Price Index. Over the last 12 months, the CPI has increased 2.1 percent, according to the Department of Labor. The decision notes expected CPI increases of 1.7 percent and 1.9 percent for 2015 and 2016. “We conclude that reliance on the CPI would not be in line with the above-referenced escalation rates most recently approved for [Southern California Edison] and Sempra,” the proposal reasons. Other differences between what PG&E requested for its upcoming three-year rate cycle and the commission’s proposal include: * $514 for electric distribution; the commission agreed to a $127 million increase; * $446 million for its gas distribution system, compared to the $242 million the proposed decision would allow; * $199 million hike for electric generation requested by PG&E, but $84 million if the decision is adopted. “The revenue requirement authorized in this decision does not include commodity costs of electricity procured for customers or costs of fuel used in generating electricity, which are addressed in a separate proceeding,” according to the proposed ruling. The utility is facing significant gas system upgrades since the 2010 pipe explosion in San Bruno. That disaster left eight dead and destroyed more than three dozen homes. Also, the utility could be hit with a $2.2 billion penalty by the commission for numerous safety violations related to the gas pipe blast. The commission analysis of PG&E’s detailed requests—rejecting some and accepting others—concluded the pending rate hike addresses related safety costs. PG&E filed its 2014-16 General Rate Case in November 2012. Comments on the proposed decision are due July 9. A commission decision is expected Aug. 14.
