With hearings set to begin in June, Pacific Gas and Electric Co. (PG&E) is betting its short-term future on a $1.1 billion general rate case targeted to be effective at the start of next year with smaller interim revenue increases in 2012 ($275 million) and 2013 ($343 million). But the California Public Utilities Commission’s (CPUC) independent consumer unit, the Division of Ratepayer Advocates (DRA), has come out of the gate drawing its line in the sand at a revenue level less than 25% of what the utility asked for in its CPUC filing.
Hearings are scheduled to begin June 21, conclude in mid-July and have briefs among the parties starting in August. A CPUC administrative law judge is scheduled to make a proposed decision in November, with a final decision from regulators due before the end of this year.
The DRA said last week it will urge state regulators to grant PG&E no more than a 4.1% ($227 million) rate increase, compared with the utility’s proposed 19.7% ($1.1 billion) hike in annual revenues.
On a first quarter earnings conference call last Friday PG&E senior management spent considerable time talking about the details of the rate case — its largest in a number of years — and the need to eventually begin phasing in a tiered rate system for its largest residential customers.
“We have put a lot of time and effort into this case with a lot of experts and we think we have put forth a good case,” said PG&E CEO Peter Darbee. “We plan to work closely with the CPUC staff and other parties as we proceed.”
The DRA’s reaction to the PG&E general rate case (GRC) filing “is pretty typical” of the consumer unit’s reaction to past GRCs, according to CFO Kent Harvey, who said the proposal is about 21% of the utility’s 2011 request. “In the last major GRC [at the CPUC] by Southern California Edison Co., DRA recommended about 18% of what the utility had requested,” Harvey said.
Harvey acknowledged, however, that there are “substantial differences” between the utility and the CPUC independent consumer unit in this case. “We’re still digging into their testimony so we can understand their logic,” he said.
PG&E senior officials noted that if the general rate decision is delayed and pushed into next year, the CPUC could have two new members or be operating with three commissioners rather than its full five-member quorum. The terms of two existing members, John Bohn and Dian Grueneich, expire at the end of this year. As long as there are at least three commissioners present, a decision can be rendered on the GRC.
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