2014 Pacific Gas and Electric
General Rate Case
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 have increased its previous revenue requirement of $6.6 billion to $8.7 billion by 2016.
Public Participation Hearings were held across PG&E's service territory from May 22 - June 25, 2014.
Evidentiary hearings took place at the CPUC July 15 - August 9, 2013.
On August 14, 2014, the Commission adopted a Final Decision for a cumulative 3-year increase of $2.4 billion from 2014 through 2016 for PG&E customers:
2014: $460 million (6.9%)
2015: Additional $324 million (4.6%)
2016: Additional $371 million (5.0%)
Specifically for 2014, the Final Decision:
- Reduced PG&E’s revenue request by $20 million for nuclear fuel inventory, which will instead be considered in the CPUC’s Energy Resource Recovery Account proceeding.
- Approved over 90% of PG&E’s request for capital expenditures, which will result in costs of approximately $315 million per year.
- Approved an Operations & Maintenance expense increase of about $140 million for electric distribution, gas distribution, and electric generation operations, compared to PG&E’s request for a $227 million increase.
- Approved PG&E’s $3.5 million request for Supplemental Executive Retirement Plan and nearly 70% of PG&E’s $130 million request (or $89 million) for a management bonus program.
The revenue increases for 2015 and 2016 are essentially for general inflation of expenses, additional capital expenditures, and incremental gas distribution expenses not factored into the 2014 revenue requirement.
ORA Policy Position
ORA advocated for ratepayer funding for PG&E projects necessary to ensure safety and reliability, and a revenue requirement that will allow for necessary system improvements without negative impact on operations and service. However, the CPUC’s decision did not go far enough in reducing PG&E's request to increase rates. 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 would prevent approval of excessive funds up front, in order to prevent customers from over-paying. ORA's analysis supported 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.
See Comparison Table of Proposals vs. Final CPUC Outcome.
In particular, ORA does not support the CPUC’s adoption of most of PG&E’s incentive and management bonus programs:
- 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.
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 ORA’s analyses, see the Executive Summary.
See ORA's December 17, 2012 Protest.
See the Proceeding docket.
PG&E is expected to file its 2017 general rate case in November 2015.
ORA Presentation on CPUC Final Decision on PG&E's 2014 General Rate Case
See Historical PG&E GRC Information:
- ORA Testimony for 2011 PG&E GRC.