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CPUC Staff Slashes PG&E Gas Pipeline/Storage Rate Request

California regulatory staff last week issued proposed and alternate decisions that nearly cut in half a $1 billion-plus natural gas transmission pipeline and storage system rate increase request by Pacific Gas and Electric Co. (PG&E).

The alternate proposed decision would order PG&E to provide additional gas storage-related information in light of the four-month Aliso Canyon storage well leak (see related story).

The California Public Utilities Commission (CPUC) proposal calls for an increase of $944.9 million, an estimated 47% reduction in PG&E’s request. The initial request by PG&E would cover enhanced safety and maintenance programs, including in-line pipe inspections and replacement of up to 60 miles of old high-pressure transmission pipe, the kind that failed six years ago in San Bruno, CA (see Daily GPISept. 13, 2010).

PG&E spokesperson Keith Stephens said the San Francisco-based combination utility has received the proposed CPUC decision, and "we're reviewing it."

A CPUC spokesperson said the proposals represent a 32.1% increase from the 2014 authorized gas transmission/storage rates for PG&E, and would mean a 10.7% monthly rate increase for residential gas customers.

Both the proposed and alternate proposed decisions call for allocating $850 million in shareholder funding for safety related pipeline/storage improvements that were previously ordered as part of the San Bruno-related penalties adopted by the CPUC (see Daily GPIApril 9, 2015).

If this option is adopted by the parties, the increase would be cut to $858.5 million, basically 20% higher than 2014 rates, and lead to a 9.9% increase in monthly residential gas bills, according to CPUC.

The proposals call for:

  • $59.2 million for in-line inspection of about 135 miles to transmission pipelines;
  • $23.5 million for direct assessment of portions of more than 6,000 miles of transmission pipelines, with shareholders contributing $20.6 million;
  • $148.3 million to strength test 170 miles of transmission pipelines for manufacturing or other defects;
  • $164.5 million to replace 60 miles of old pipe;
  • $52.5 million to automate and upgrade 38 gas shut-off valves; and
  • $41.2 million for capital expenses and $90 million for corrosion control programs.

Parties may comment on the proposal and a public meeting will be scheduled before a vote by the five-member CPUC. The earliest the regulators could vote is June 9.

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