2015 PG&E Gas Transmission and Storage 

Background 

Approximately every four years PG&E files an Application with the CPUC requesting funding approval for its Gas Transmission and Storage operations. PG&E was ordered by the CPUC, in the Pipeline Safety Enhancement Plan proceeding, to include future pipeline safety upgrade costs within their Gas Transmission and Storage rate case application. 

 

PG&E Application

On December 19, 2013, PG&E filed its 2015 Gas Transmission and Storage (GT&S) Application with the CPUC requesting to increase its customers' rates for the period from 2015 to 2017.   

PG&E requests to increase its revenue requirement over present levels: 

  • 2015:  $572 million (or 80%) increase over 2014 authorized rates. 
  • 2016:  $61 million (4.7%) increase. 
  • 2017:  $168 million (12.5%) increase. 
  • Total:  Cumulative $2 billion increase over 3 years.  

PG&E is requesting CPUC approval to spend an additional $2 billion from 2015-2017 for a total of $2.6 billion in capital expenditures. PG&E’s rate request includes its Pipeline Safety Enhancement Plan expenditures for this same period. 

 

CPUC Staff Report on Risk Assessment

 On September 11, 2014, the CPUC’s Safety and Enforcement Division issued its Final Report on PG&E’s Risk Assessment approach, incorporating input from parties to the Preliminary Report.  

On September 15, 2014, PG&E and other parties provided Rebuttal Testimony. 

 

Suspension of Proceeding

On September 25, 2014, the CPUC issued a Ruling suspending the GT&S proceeding schedule due to improper ex parte communications by PG&E. A Prehearing Conference was held on October 20, 2014 to discuss the proceeding going forward.  

 

Hearings

CPUC Public Participation Hearings were held from August 12 to September 9, 2014 throughout PG&E’s service territory.   

 

Evidentiary Hearings were held at the CPUC February 2 - 27 and March 16 - 20, 2015. 

Evidentiary Hearings on Fines & Remedies were held at the CPUC on September 1, 2015. 

 

CPUC Proposed Decision

On May 5, 2016, the CPUC issued a Proposed Decision, which would have:  

  • Adopted a base revenue requirement of $1.1 billion, a $377 million increase over currently authorized rates (or a 51% increase). 
  • Adjusted the base revenue requirement to $950 million, after accounting for PG&E’s ex parte rules violations.  
  • Established a new standard to not hold utilities accountable for improperly deferred maintenance.   

 
 

 CPUC Alternate Proposed Decision

On May 5, 2016, the CPUC also issued the Alternate Proposed Decision of Commissioner Peterman. The Alternate Proposed Decision found:  

  • Found PG&E’s risk model reasonable for use solely in this proceeding.  
  • Corrects calculations for per-dig costs when conducting direct assessments.  
  • Corrects calculations for Public Awareness costs. 
  • Adopts ORA’s recommendation for an additional year between GT&S rate case cycles, so the next PG&E GT&S will be filed in fall 2017, rather than the fall of 2016. 

 The Alternate Proposed Decision adopts a 2015 Revenue Requirement of $1.05 billion dollars.
 

CPUC Final Decision

On June 23, 2016, the CPUC Adopted the revised Alternate Proposed Decision as its Final Decision.   
The Decision dismisses ORA's motion to sanction PG&E for improper ex parte communications.  

 

ORA Policy Position

ORA supports the CPUC’s Final Decision, as it provides PG&E with sufficient funding to run its natural gas system in a safe and reliable manner. Additionally, the decision largely comports with ORA’s recommendations to protect ratepayers and reduce costs so that they are more realistic and will mitigate rate-shock for customers. ORA recommended that the Final Decision should:  

  • Uphold the CPUC’s policy on not improperly deferring maintenance and should remove language that PG&E should not be held accountable for such improperly deferred maintenance.
     
     
  • Remove language finding that PG&E’s risk model is reasonable.  
     
  • Corrects calculations which will save customers $150,00 savings per dig when conducting assessments.  
      
  • Reduce the per-mile cost of pressure testing pipelines cost from $970k per mile to $840k per mile.   
     
  • Reduce the unit cost for vintage pipe replacement. 
  • Correct calculations Public Awareness costs, which will result in an approximately $300,000 savings for ratepayers. 
      
  • Add an additional year between GT&S rate case cycles, so the next PG&E GT&S will be filed in fall 2017, rather than the fall of 2016.  

 

 See ORA's: 

May 25, 2016 Comments on the Proposed and Alternate Decisions. 

June 3, 2016 Reply Comments.
 

 

ORA Recommendations

ORA recommends a $1.044 billion revenue requirement that will allow for necessary PG&E system and reliability improvements without a negative impact on operations and service. ORA urges the CPUC to reject nearly half of PG&E’s 3-year cumulative increase request. Instead, ORA recommends that it is more reasonable for the CPUC to: 

  • 2015: Increase revenues by $329 million (or 46%). 
  • 2016: Increase revenues by $24.8 million (or 2.3%). 
  • 2017: Increase revenues by $129.5 million (or 12.1%). 
  • ORA's Total cumulative revenue increase for 2015 - 2017 would be approximately $483 million (or 67.5%). 

ORA also recommends the 4-year cycle be retained, with a 2018 revenue increase of $34.6 million (3%).  

See ORA's:  

August 11, 2014 Testimony 

September 15, 2014 Rebuttal Testimony.  

  

April 29, 2015 Opening Brief. 

May 20, 2015 Reply Brief. 

January 31, 2014 Protest to PG&E’s GT&S Application.  

 

 

Proceeding Status

See the Proceeding docket. 

 

 

 

Other Resources

ORA Pipeline Safety Enhancement Plans Portal   

ORA's Motion for CPUC Rule 1 Violation: ORA filed a Motion with the CPUC requesting that PG&E show cause as to why it should not be sanctioned for intentional misrepresentations of its compliance with gas safety regulations.