Pending rate case settlements for Sempra Energy’s two California utilities were rejected last month in draft decisions by both the administrative law judge and assigned commissioner at the California Public Utilities Commission. At stake is a proposed $1.5 billion rate base for Southern California Gas Co. and combined electric-gas rates of nearly another billion dollars for San Diego Gas and Electric Co.

The two Sempra utilities struck the stakeholder deals last December in their separately filed, but jointly processed cost-of-service rate cases.

Both the assigned ALJ Douglas Long and assigned Commissioner Carl Wood rejected the proposed settlements because “they do not resolve all of the issues, and more importantly, the parties failed to provide sufficient detail in stipulating to specific expectations.” As an example, they cited the fact that disputes about work force size, compensation and forms of compensation were never “adequately resolved” by the settlements.

In addition to authorizing the $1.5 billion in base rates for SoCal Gas, the draft decisions allocate SDG&E $776 million in electricity rate base and $211.5 million for its gas distribution operations. The proposed amounts are close to what were agreed to in the settlements, but collectively about $120 million less than the utilities’ originally proposed in their applications to the CPUC.

Noting that the two utilities, which combined represent the largest private-sector distribution utility customer base in the nation, enjoy blanket monopoly status, the proposed decisions said the CPUC must assert its full powers “to assure the public that the prices they pay for monopoly service are in fact just and reasonable, (and) that they are in fact reasonably related to costs prudently incurred.”

In the draft decisions released Sept. 28, the ALJ and Wood both reiterate that the utilities had been warned not to settle the case without “clearly resolving all of the issues.” They go on to conclude that “few of the signatory parties to the partial settlements actively litigated and filed detailed briefs in the proceeding.”

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