CPUC OKs $1.7B SDG&E Revenue, $1.9B for SoCal Gas

By Published On: May 10, 2013

The California Public Utilities Commission unanimously approved increasing San Diego Gas & Electric customers’ average rates by 12.2 percent—$9.95/month—and Southern California Gas customers’ average rates by 9.6 percent—or $3.55/month. The 5-0 commission vote cast May 9 on the 2012 general rate cases of SDG&E and SoCal Gas—going into effect September 1—“affects every aspect of utility operations,” said commissioner Mark Ferron. The two Sempra affiliate utilities filed their rate cases in December 2010. Controversies, complexities and budget constraints delayed a ruling on this year’s rates. Ferron said the late revenue requirement decision resulted in current SDG&E and SoCal Gas rates being “artificially low,” pushing the rate hike into a shorter time frame and causing them to be noticeably higher. SDG&E’s approved revenue requirement of $1.733 billion marks a $123.3 million increase over current rates. SoCal Gas’s approved revenue requirement for 2012 of $1.956 billion is $84.8 million over today’s rates. Unlike the general rate cases of Pacific Gas & Electric and Southern California Edison, regulators tied subsequent annual rate increases in 2013-15 for SDG&E and SoCal Gas to the Consumer Price Index—plus .75 percent—in place of the higher utility-wide index. Ferron said this was an “important philosophical shift that looks squarely at impact on consumers.” Although he voted for the 1,100 page-plus decision by administrative law judge John Wong, Mike Peevey, commission president, warned that tying rate rises to the consumer index failed to factor in the two utilities’ increases in wages and medical costs. Commissioner Mike Florio, who also backed the decision, objected to the utilities high rates of return. “We’ve consistently given them more money than they need.” The adopted ruling provides funding to upgrade SDG&E’s electrical system, including to increase protection against wildfire threats and to enhance the safety of SoCal Gas’s gas system. While the decision increases funds to enhance the infrastructure, including $171 million for the gas system upgrades, it comes with stricter reporting and auditing requirements for the spending on infrastructure enhancements. Any unspent funds go back to ratepayers. If either of the utilities seeks increased safety funding, it must be approved by a commission vote. The ruling also does the following: * Reduces pension obligations for SDG&E by more than $15 million and SoCal Gas by $32 million; * Provides SDG&E $26 million for the research, development and deployment of energy storage; and * Includes a 6.5 percent rate of return on the old analog meters that were replaced by “smart” meters.

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