Background on 2013 Energy Cost of Capital 

In April 2012, the four largest Investor-owned Utilities (IOUs) in California – PG&E, Edison, SDG&E, SoCalGas – each filed a Cost of Capital application, requesting CPUC approval to update its Return on Equity (ROE) that will ultimately impact its Rate of Return and its total revenue requirement that can be collected from ratepayers. See summaries below for more details on requests. Evidentiary Hearings were held at the CPUC on September 21, 24 & 25, 2012. Public Participation Hearings were held in each utility service territory in October 2012. See Table comparing utility requests.

The November 2012 Proposed Decision adopts:

  • An ROE of 10.40% for Edison - 0.7% less than its initial request.
  • An ROE of 10.40% for PG&E – 0.6% less than its initial request.
  • An ROE of 10.30% for SDG&E – 0.7% less than its initial request.
  • An ROE of 10.10% for SoCalGas – 0.8% less than its initial request.
  • The capital structures proposed by Edison, SoCalGas, and PG&E.
  • A split of SDG&E’s capital structure request to increase its common equity ratio by 3% to 1.5% for common equity and 1.5% to long-term debt.
  • The cost of long-term debt and preferred stock as updated by late-filed exhibits for all four utilities.

In 2012, the CPUC commenced Phase 2 of the Cost of Capital proceeding to determine the Cost of Capital Adjustment Mechanism (CCM).                         


See DRA's Energy Cost of Capital page.