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As gas throughput changes, PG&E rate update request moves forward

Pacific Gas and Electric Co.'s gas utility on Aug. 12 moved closer to changing up its rate structure as an administrative law judge recommended updates that would address some of the utility's concerns about changing throughput.

In a recommended order for the California Public Utilities Commission, or CPUC, a commission administrative law judge said the regulators should approve a number of the utility's requests to revise its gas rates and tariffs over the next three years. The changes would redistribute how much different types of customers pay, among other things.

The utility, or PG&E, applied for the cost allocation and rate design changes on Sept. 14, 2017, to be applied to the period between Oct. 1, 2018, and Sept. 30, 2021. The company said it needed to update how it allocates distribution revenue requirements among its customer classes due to changes in "throughput, marginal costs and peak usage" since its last gas cost allocation proceeding, or GCAP, application in 2009.

CPUC Administrative Law Judge Adeniyi Ayoade agreed with PG&E's request to use the throughput forecast in its final 2019 gas transmission and storage proceeding to implement the rates in the GCAP application. The utility had argued that gas transmission and storage cases tend to be a better venue for litigating gas throughput forecasts, and the recommended order would allow PG&E to more easily update the throughput forecasts used for its gas cost allocation.

However, the proposed order noted that the commission "may consider opening a rulemaking in the future to examine rate design issues that may arise with continued investment in gas infrastructure amidst declining natural gas demand and corresponding throughput."

Gas use in the state is likely to remain in flux in coming years, especially after Berkeley, Calif., passed an ordinance aimed at ending the use of natural gas in new buildings and other jurisdictions appear to be considering similar measures.

In the near term, PG&E would be able to reduce the differential between its residential gas pricing levels, according to the proposed order. The proposal would grant PG&E's request to reduce the differential between its Tier 1 and Tier 2 bundled rates over four years, starting from the date CPUC implements his recommendation. Tiered rates structures are based on customer usage levels. The utility could also increase its residential transportation charges by $1 and hike the super-peak minimum transportation charge to $12 for customers not enrolled in PG&E's discount program for low-income ratepayers and those on public assistance.

PG&E Corp.'s gas utility business, long plagued with rising safety-related and other costs in the wake of a deadly 2010 explosion, has been the more stable of the corporation's utility operations this year as the company has started bankruptcy proceedings tied to wildfire costs associated with PG&E Corp.'s power business.

The five-member CPUC will vote on whether to approve and implement the judge's recommended order no earlier than Sept. 12.