CPUC’s Rate Proposals Differ on Meters

By Published On: April 29, 2011

In Pacific Gas & Electric’s triennial general rate case, a California Public Utilities Commission administrative law judge’s proposed decision allows old analog meters that are replaced by digital ones to continue getting a rate of return on the un-amortized part of the investment of 5.73 percent over six years. A rival proposal, by CPUC president Mike Peevey, allows a six-year amortization of the old meters at a rate of 7.42 percent. He stated that amount reflects “reduced regulatory risk” for the unused meters. Pacific Gas & Electric requested that the traditional return on capital investment be maintained. That return can be as high as 11.35 percent. The Utility Reform Network advocated denying any rate of return because the equipment is no longer “used and useful” as required by regulatory precedent. For instance, if a capitalized asset like the Humboldt Bay nuclear power plant is shut down before the end of its amortization, that plant is taken out of rates because it is no longer operating and, therefore, not “used and useful.” Bob Finkelstein, TURN legal director, stated allowing the rate of return on replaced analog meters allows profiting “on what virtually amounts to PG&E’s garbage.” All the state’s investor-owned utilities responded that the “used and useful” precedent is not absolute, according to CPUC documents. Most of the other issues under the pending rate case are a part of a settlement. The settlement allows an 8 percent increase in revenue for this year. That includes an increase for $400 million on the electric side and $47 million for gas distribution. PG&E originally asked for an increase of 18.6 percent. The commission could vote on the general rate case in May.

Share this story

Not a member yet?

Subscribe Now