The California Public Utilities Commission last Wednesday approved separate cost-of-service rate settlements for Sempra Energy’s two utilities, resulting in slight decreases in their rates while authorizing collective revenue requirements of more than $2.4 billion for Southern California Gas Co. and San Diego Gas and Electric Co. The action was unanimously approved by the five-member panel, although two members had concerns about the lack of detail in the two settlements.
In taking its actions, the CPUC regulators overruled a recommendation from Douglas Long, the administrative law judge in the case, who recommended the settlements be rejected. Before the settlements, the utilities were collectively seeking rate hikes of more than $200 million.
For SoCalGas, the CPUC authorized a new revenue requirement of $1.45 billion, representing a $33 million decrease under current rates. For SDG&E, a $754 million revenue requirement for its electricity operations was set, or a $8.2 million decrease, and $204 million for natural gas operations, or a slight increase of $1.6 million.
The CPUC made two modifications to the SDG&E settlement: (a) declining to adopt a pressure upgrade in the Otay Mesa area south of San Diego as part of the utility’s proposed capital additions, and (b) adjusting SDG&E’s portion of the San Onofre Nuclear Generating Station revenue to reflect the amount adopted in a previous CPUC decision in Southern California Edison’s general rate case.
Generally, the regulators determined that “the settlements are reasonable in light of the whole record, consistent with the law, and in the public interest,” a CPUC spokesperson said. In their initial rate filings, SDG&E sought a $59 million increase for electric operations and a $21.6 increase for its gas service, and SoCalGas sought a $130 million increase.
“Both settlements represent fair and reasonable compromise,” said Commissioner Geoffrey Brown, whose proposed alternate to the CPUC judge’s recommendation won unanimous support. “The critical issue in these proceedings is to assure that the companies receive a reasonable level of revenue that will assure customers of safe, reliable and responsible service.”
While he supported the action, Commissioner Carl Wood said he continued to have “reservations” about the settlements because they allow the utilities to avoid having to produce more detailed information on a number of critical operating areas, including investment planning, safety, reliability, customer service and gas resource planning. He said the two utilities produced “unenthusiastic showings on these issues.”
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