Pacific Gas and Electric (PG&E), in a proposed decision of an administrative law judge filed with the California Public Utilities Commission (CPUC) on Feb. 27, is authorized a general rate case (GRC) revenue requirement increase for 2017 of $86m over its currently authorized level of about $7.9bn, a 1.1% increase.
The item may be heard, at the earliest, at the CPUC’s April 6 business meeting.
The proposed decision addresses a comprehensive settlement agreement between all active parties in the proceeding, that, as filed, resolves all but two contested issues. The settlement agreement is approved, with several modifications of provisions of the agreement that are found to be either not reasonable in light of the whole record, not consistent with law, or not in the public interest, according to the proposed decision. The two contested issues are also resolved, the proposed decision added.
The authorized increase, the proposed decision added, is the net result of a decrease from 2016 levels of $64m for electric distribution, a decrease of $3m for gas distribution, and an increase of $153m for electric generation.
According to the proposed decision, the CPUC also authorizes post-test year revenue requirement increases of $444m in 2018 – an annual increase of 5.5% – and $361m in 2019 – an annual increase of 4.3%.
Certain sections of the settlement agreement are not approved, including: “Section 18.104.22.168 of the settlement agreement is not adopted. PG&E shall restore the annual Rule 20A undergrounding 2017-2019 work credit levels that are allocated to governmental entities to the 2010 level: $80.988 million, and shall apply the two-part formula in its commission-approved Rule 20 tariff to allocate this amount to eligible governmental entities.”
The proposed decision added that with the adopted increases and decreases in the sub-components of PG&E’s revenue requirement, PG&E’s total authorized 2017 revenue requirements for its gas distribution, electric distribution, and electric generation lines of business are about $1.7bn, about $4.1bn, and about $2.1bn, respectively, a total of about $8bn.
The revenue requirements provided for in the settlement agreement will provide the necessary funds to allow PG&E to operate its electric distribution system, gas distribution system, and its electric generation assets safely and reliably at reasonable rates, the proposed decision said.
The proposed decision noted that the adopted electric distribution revenue requirement, for instance, includes additional funding to enable PG&E to continue to invest in enhancing grid capabilities, as well as ongoing emergency preparedness and response activities. PG&E will continue to invest in its electric distribution system to support growth in customer connections and related investments for underground assets, substations, and system reliability by replacing aged equipment, the proposed decision said, adding that a related area involves investments in grid modernization with circuit upgrades, protection upgrades, and additional capacity increases to support distributed generation resources.
The adopted Information Technology (IT) revenue requirement includes additional funding in 2017 to enable PG&E to further improve its IT-related services by investing in additional technology to facilitate the convergence of digital technology and utility operations, such that PG&E becomes what it describes as a “digital utility.”
The authorized expenditures and new investments, the proposed decision added, are intended to help PG&E maintain reliability and support the digital utility, including investments in its telecommunications network, IT operational continuity and data center disaster recovery capabilities, as well as enhancements in system and information cyber security.
Discussing PG&E’s application, the proposed decision said that the company filed it in September 2015, seeking authority to increase its base revenue requirements for its gas and electric distribution systems and electric generation by $457m – an increase of 5.7% – effective Jan. 1, 2017. That requested increase consisted of $85m for its gas distribution system, $164m for its electric distribution system, and $208m for electric generation. The proposed decision added that PG&E also requested additional post-test year increases of about $489m for 2018, and an additional $390m for 2019.
In May 2016, PG&E modified and lowered its original request, seeking authority to increase its base revenue requirements by a total of $319m, consisting of increases of $59m for gas distribution, $67m for electric distribution, and $193m for electric generation. The company also requested total post-test year increases of $467m in 2018, and $368m in 2019.
Noting that the CPUC’s Office of Ratepayer Advocates served testimony on April 8, 2016, and that such intervenors as the Modesto Irrigation District (Modesto ID) served testimony on April 29, 2016, the proposed decision said that the parties engaged in settlement discussions in May 2016, and continued during the months thereafter. PG&E in July 2016 notified all parties on the service list for the proceeding of a settlement conference in order to discuss the terms of a possible settlement agreement.
The proposed decision also noted that the settling parties, including PG&E, Modesto ID, and The Utility Reform Network (TURN), on Aug. 3, 2016, signed the settlement agreement and filed and served a joint motion for adoption of settlement agreement.
Among other things, the proposed decision said that PG&E is to notify the CPUC’s Energy Division of any tax-related changes, tax-related accounting changes, or any tax-related procedural changes that materially affect or may material affect revenues. “Materially affect” is defined as a potential increase or decrease of $3m or more, the proposed decision said.