2014 PG&E Revenue Allocation and
Residential Rate Design 


Following PG&E’s 2014 General Rate Case to increase its revenue requirement, on April 18, 2013 PG&E filed an Application requesting the CPUC adopt its proposals to revise electric marginal costs, revenue allocation, and rate design.  The purpose of this second phase of PG&E’s rate case is to:  

  • Determine the incremental (or “marginal”) costs of serving additional customers or load growth for  generation and distribution functions. 
  • Allocate generation and distribution revenue requirements to customer classes based on the marginal costs, and of various program costs based on other criteria. 
  • Design rates for each customer class in order to recover its revenue responsibility. 

PG&E proposes: 

  • Changes to current class rates ranging from a 0.5% decrease to a 21.5% increase without a cap. 
  • Changes from a 3% decrease to a 3% increase with a proposed cap.  
  • Increases capped to residential and small commercial class rates of 0.6% and 2% respectively, over and above any rate changes resulting from Phase 1 of its 2014 General Rate Case. 


ORA Position

Based on its analysis, ORA recommends the CPUC require the following changes to PG&E’s proposals:   

 Marginal Cost and Revenue Allocation  

  • Modify PG&E’s marginal costs to reflect more reasonable customer and load growth assumptions related to near-term surplus capacity conditions and to integrate cost data from Phase I of the rate case.  
  • allocate costs of various programs in a manner that better reflects the costs to the system caused by the residential class. This should be based on either:
    • The ratio of each class’s energy consumption to system energy consumption, or  
    • The ratio of the class’s revenue responsibility to total system revenues. 
  • Reject PG&E’s proposal to allocate all program costs based on the ratio of each class’s share of distribution revenue requirement to the total system distribution revenue requirement. 

Rate Design   

Make changes to current class rates, ranging from a 7.6% decrease to a 19.5% increase, without capping; and from a 4% decrease to a 4% increase with capping.  

  • Cap decreases of approximately 2.1% and 4% in the residential and small commercial classes’ revenue responsibilities, respectively. 
  • Reject PG&E’s proposals for a $20 customer charge for all lower demand (single-phase customers) and a $30 customer charge for higher demand (all poly-phase customers) and instead implement a two-level customer charge for small commercial customers of 20 kW or below: 
    • Retain existing monthly customer charge of $10 for single-phase customers.  
    • Retain $20 for poly-phase customers.  
    • Increase the charge for all customers above 20 kW to $40.  

ORA’s proposal would decrease residential and small commercial class revenue responsibilities by $140 million and $95 million, respectively. In addition, it would decrease the bill for small commercial customers that impose less than 20 kW of load by about $10 per month, compared with PG&E’s proposal.  

See ORA’s November 15, 2013 Testimony. 


Proceeding Status


See the Proceeding docket.