San Diego Gas & Electric (SDG&E)
2016 General Rate Case (GRC) 

Background  

Approximately every three years SDG&E files an Application with the CPUC requesting approval of the revenue it needs to operate the utility, including any cost increases.    

On November 14, 2014, SDG&E filed its 2016 GRC Application requesting the following revenue increases over present levels:  

  • 2016: $116 million (6.5%)   
  • 2017: additional $97 million (5.1%)   
  • 2018: additional $96 million (4.8%)   
  • Cumulative 3-year = $638 million   

SDG&E’s request would bring its Total GRC Revenues to $2.1 billion by 2018.   

The main drivers of SDG&E’s request to increase revenues include:  

  • Capital Expenditures:  Electric Distribution, Information Technology, and Gas Operations.  
  • Expenses:  Electric Distribution, Support Services such as Rent & Vehicle Leases, Information Technology, and Electric Generation.   

Despite SDG&E’s forecast to increase revenues, SDG&E rates are forecast to decrease in 2016 because the previous 2012 revenue increase was implemented late and will extend into 2016, creating an overage of $162 million, which would offset SDG&E’s requested $133 million increase.   

  • $0.25 decrease per month (-0.3%) for electric  
  • $0.32 decrease per month (-0.8%) for gas  

The CPUC held Public Participation Hearings throughout SDG&E's service territory June 1 - June 10, 2015.      

 

Proposed Settlement Agreement

On September 11, 2015, ORA, SDG&E, and several other consumer and environmental organizations filed a Settlement Agreement with the CPUC that would increase revenues by:    

  • 2016: $16.5 million (0.92%) 
  • 2017: Additional $63.4 million (3.5%) 
  • 2018: Additional of $65.6 million (3.5%) 
  • Cumulative 3-year = $242 million 

This Settlement Agreement would reduce SDG&E's original total revenue request by $396 million. Customer gas bills in 2016 are estimated to decrease about $1.45 per month (or 3.5% decrease) for the average customer (approximately 28 therms). Customer electric bills in 2016 are estimated to decrease about $0.74 per month (or 0.7% decrease) for the average customer (approximately 500kWh). This would result in a combined $2.19 (1.5%) decrease per month.  

A CPUC Proposed Decision is expected to be issued in the first quarter of 2016. 

 

CPUC Proposed Decision

On May 19, 2016, the CPUC issued a Proposed Decision approving the Settlement Agreement with the following modifications:  

  • Bonus Depreciation: Adopts an adjustment to the 2016 revenue requirement that reflects inclusion of bonus depreciation for tax years 2015/2016, which occurred after the Settlement Agreement was filed. 
  • SONGS Offsite Fuel Storage: Removes about $1 million in expense that SDG&E already recovered through the Energy Resources Recovery Account (ERRA), which was adopted after the Settlement was filed.  
  • Third Attrition Year: Denies Settlement Agreement proposal to transition to a 4-year rate case cycle.  

 The Proposed Decision results in a a $1 million decrease for SDG&E's 2016 revenue requirement.  

CPUC Final Decision

On June 23, 2016, the CPUC issued its Final Decision, adopting the Proposed Decision.

 

    

ORA Policy Position 

ORA supports the Settlement Agreement because it would provide SDG&E with the revenues that it needs to run its system safely and reliably, yet it significantly reduces SDG&E's initial request, which over-estimated its needs, as well as decreases combined monthly gas and electricity bills.

See: 

ORA's June 8, 2016 Comments on the Proposed Decision.

 

ORA's Analysis

ORA reviewed SDG&E’s initial Notice of Intent to file its Application and informed SDG&E of errors and deficiencies in summer 2014, which resulted in SDG&E making corrections and reducing its request by about $33 million when it filed its formal application in November 2014.   

ORA's analysis had shown that SDG&E had over-estimated its costs in the areas of incentives / awards paid to utility employees, medical benefits, forecasts of electric distribution operations and maintenance expenses, customer service, and the escalation rates for 2017 and 2018. ORA recommended a 3-year cumulative decrease of $58 million for SDG&E, comprising: 

  • 2016: $80 million (4.5%) decrease   
  • 2017: $60 million (3.5%) increase  
  • 2018: $62 million (3.5%) increase    

See:

ORA's April 24, 2015 Testimony in response to SDG&E's GRC Application.   

ORA’s December 17, 2014 Protest to SDG&E’s GRC Application.   

 

Proceeding Status 

See the Proceeding docket. 

 

Resources 

Archives

2012 SDG&E General Rate Case   

DRA September 2011 Press Release: DRA Recommends Rate Decrease for SDG&E (ORA was formerly DRA, the Division of Ratepayer Advocates)