2014 Pacific Gas and Electric
General Rate Case

 

Background

On November 15, 2012, PG&E filed its General Rate Case (GRC) Application with the CPUC requesting to raise its customers' rates for the period from 2014 to 2016.  PG&E requests to increase its revenue requirement over present levels:

  • 2014:  $1.16 billion (or 17.8%) increase
  • 2015:  $436 million (5.6%) increase
  • 2016:  $487 million (5.9%) increase
  • Total:  Cumulative $4.84 billion increase over 3 years

PG&E's request would increase its current GRC revenue of $6.6 billion to $8.7 billion by 2016.

On January 22, 2013, the CPUC issued a Ruling setting a schedule for the proceeding.

Public Participation Hearings took place across PG&E's service territory, on its request to raise rates, from May 22 - June 25.

Evidentiary hearings took place at the CPUC July 15 - August 9, 2013.

On June 18, 2014, the CPUC issued its Proposed Decision that would adopt the following revenue increases over present levels:

  • 2014: $453 million (or 6.8%) increase
  • 2015: $322 million (or 4.5%) increase
  • 2016: $371 million (or 5%) increase
  • Total: Cumulative $2.37 billilion increase over 3 years

In particular, the Proposed Decision would adopt:

  • Supplemental Executive Retirement Plan (SERP):  $3.49 million per year for non-qualified pensions (i.e., supplemental pension for already highly compensated utility executives) and administrative costs. 
  • Short Term Incentive Program (STIP):  $89 million per year, compared to PG&E’s request for $130 million.
  • Rewards and Recognition Program:  $8.7 million per year for the utility’s Rewards and Recognition Program.  
  • Colusa Long Term Service Agreement (LTSA):  A milestone payment, which does not occur until 2019.  

The Proposed Decision could be voted on by CPUC Commissioners as early as August 14, 2014.

 

ORA Policy Position

ORA supports a revenue requirement that will allow for necessary system improvements without negative impact on operations and service. While ORA commends the CPUC's Proposed Decision to reduce PG&E's request by $707 million, it does not go far enough. The CPUC should make the following modifications to the Proposed Decision before approving a final decision:

  • Supplemental Executive Retirement Plan (SERP):  The CPUC should deny PG&E’s request for customer funding for SERP. In its two most recent decisions regarding non-qualified pensions, the CPUC has ordered customer funding of only 50%.  However, if the CPUC is inclined to authorize customer funding, it should apportion no more than 50% of the SERP costs to PG&E customers.
  • Short Term Incentive Program (STIP):  The CPUC should approve no more than $46 million.  Historically, customers have funded no more than 50% of PG&E’s STIP expenses.
  • Rewards and Recognition Program:  Customers should not pay for this program because it is inconsistent with CPUC precedent which denied customer funding for a similar program of Southern California Edison Company.
  • Colusa Long Term Service Agreement (LTSA): The CPUC should deny PG&E’s LTSA request, and instead address it in PG&E’s next GRC in 2017. The payment for 2019 should not be amortized into 2014 since the event will not occur within the current 2014-2016 rate cycle.  
  • Bonus Depreciation:  The Proposed Decision should be modified to keep the current rate case proceeding open for one year so that the benefits associated with any extension of 50% bonus depreciation in 2014 will be passed through in rates to customers. Customers will not get the bonus depreciation benefit unless the case remains open and its impacts are calculated accordingly. 

See ORA's July 8, 2014 Opening Comments on the CPUC's Proposed Decision.

 

ORA's analysis supports the following revenue increases for PG&E in 2014 - 2016:

  • 2014: Reduce PG&E’s current Revenue Requirement authorization by $125 million
  • 2015: Increase revenues by $169 million (or 2.6%)
  • 2016: Increase revenues by $159 million (or 2.4%)
  • ORA's Total: Cumulative revenue increase for 2014 - 2016 would be approximately $132 million.

ORA advocates for ratepayer funding for projects necessary to ensure safety and reliability. However, PG&E has demonstrated a pattern of not spending authorized funds as intended. ORA proposed that the CPUC establish mechanisms to ensure that PG&E has a process by which to recover funds for projects which they actually complete which will prevent approval of excessive funds up front, in order to prevent customers from over-paying.

ORA additionally recommended the CPUC should direct PG&E to submit a detailed breakdown of expenditures for its public relations efforts to repair its image post-San Bruno (“Lost its Way” Campaign), in order to demonstrate that no ratepayer funds were used.

See ORA's Presentation on its Overview of PG&E's Requests vs. ORA's Recommendations.

See ORA's September 6, 2013 Opening Brief.

See ORA's September 27, 2013 Reply Brief.

See ORA’s full analysis and potential bill impacts in its May 3, 2013 Testimony.

For an overview of DRA’s analyses, see the Executive Summary.

See ORA's December 17, 2012 Protest.

 

Current Proceeding Status

Reply Comments on the CPUC's Proposed Decision are due on July 14, 2014.

 

See the Proceeding docket.

 

Other Resources

See Historical PG&E GRC Information: 

  • ORA Testimony for 2011 PG&E GRC.