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Pacific Gas and Electric resolves all issues in Calif. general rate case

Pacific Gas and Electric Co. reached a settlement agreement with consumer advocacy groups in California, resolving all issues raised by the intervening parties in its pending general rate case that covers funding for the utility's efforts to prevent wildfires, reduce risks and improve safety.

The settlement, filed with the California Public Utilities Commission on Dec. 20, calls for increasing the PG&E Corp. subsidiary's 2019 authorized revenue requirement by $575 million to $9.1 billion, effective Jan. 1, 2020, according to a Form 8-K filing. The agreement further provides for an increase of $318 million to the authorized 2020 revenue requirement in 2021 and an additional increase of $367 million in 2022.

Pacific Gas and Electric, originally filed for increases of approximately $1.0 billion for 2020, $356 million for 2021 and $481 million for 2022. The settlement amounts incorporate a net reduction for the reduction-in-equity portion of a 2019 state law, or Assembly Bill 1054.

The settled amounts for 2020 include $411 million for electric distribution, $58 million for gas distribution and $106 million for electric generation for an overall increase of 6.8%, compared to the originally requested increase for 2020 of 11.8%, according to the filing.

The agreement proposes a 2020 weighted average rate base of approximately $29.4 billion for the portions of the utility's business reviewed in the general rate case, compared with its request of about $29.9 billion. The $500 million difference was mainly driven by the lower level of working capital, depreciation and other reductions in the settlement agreement, PG&E said. This rate base amount includes $601 million of forecast capital spend in 2020 that will not earn an equity return, pursuant to AB 1054.

The utility said it is in the process of preparing a five-year financial forecast, including projected capital expenditure assumptions, in connection with its Chapter 11 proceedings. "While the Utility currently is evaluating capital expenditure assumptions, capital additions and rate base amounts may materially increase from the current forecast," PG&E said.

Over the three-year rate case period, the agreement provides average annual capital investments of approximately $4.6 billion in electric distribution, natural gas distribution and electric generation infrastructure.

The utility noted the settlement does not propose funding for claims resulting from the 2017 Northern California wildfires or the 2018 Camp fire. Also, it will not fund any officer compensation for PG&E and its parent company.

If approved by the CPUC, the agreement would result to an average monthly increase of $5.69, or 3.4%, for a typical residential electric and gas customer in 2020. This includes $4.90 for electric and 79 cents for gas service.

The parties to the settlement agreement included the Public Advocates Office of the CPUC, the Utility Reform Network, Coalition of California Utility Employees, Office of the Safety Advocate of the CPUC, National Diversity Coalition, Center for Accessible Technology, Small Business Utility Advocates and California City-County Street Light Association.

The agreement will be reviewed by the assigned administrative law judges. A final CPUC decision is expected in 2020.