Southern California Gas Company (SoCalGas)
2016 General Rate Case (GRC) 

   

Background

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

SoCalGas' 2016 Rate Case Application Proposal

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

  • 2016: $245 million (11.7%)   
  • 2017: additional $125 million (5.3%)   
  • 2018: additional $94 million (3.8%)   
  • Cumulative 3-year  =  $1.08 billion   

SoCalGas’ initial request would have brought its Total GRC Revenues to $2.56 billion by 2018.   

The main drivers of SoCalGas’ request to increase revenues include:   

  • Capital Expenditures:  Engineering costs, Gas Distribution, Information Technology, and Underground Storage.   
  • Expenses:  Administrative costs such as medical costs, Customer Service, Gas Distribution, and Support Services such as vehicle leases.  

This proposal would have increased an average residential customer’s bill by about $2.75 per month (a 5.5% increase).      

The CPUC held Public Participation Hearings throughout SoCalGas' service territory May 12 - May 21, 2015.  

Proposed Settlement Agreement

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

  • 2016:  $122.8 million (5.86%)   
  • 2017:  Additional $77.7 million (3.5%)    
  • 2018:  Additional $80.4 million (3.5%)    
  • Cumulative 3-year = $604 million   

This Settlement Agreement would reduce SoCalGas' original total revenue request by $476 million. Customer gas bills in 2016 are estimated to increase  about $1.00 per month (or 1.9% increase) for the average customer (approximately 39 therms).    

 

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.
     
  • Third Attrition Year: Denies Settlement Agreement proposal to transition to a 4-year rate case cycle.  

 The Proposed Decision results in a a $102 million increase for SoCalGas' 2016 revenue requirement.  
 

CPUC Final Decision

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

 

ORA Position

ORA supports the Settlement Agreement because it would provide SoCalGas with the revenues that it needs to run its system safely and reliably, yet it significantly reduces SoCalGas' initial request which over-estimated its needs. The Agreement would increase an average customer's gas bill by about $1.00 per month, compared with SoCalGas' original proposal which would have increased gas bills by $2.75 per month.   

See: 

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

 

ORA's Analysis

ORA had reviewed SoCalGas’ initial Notice of Intent to file its Application and informed SoCalGas of errors and deficiencies in summer 2014, which resulted in SoCalGas making corrections and reducing its request by about $34 million when it filed its formal application in November 2014.    

ORA's in-depth analysis showed that SoCalGas over-estimated its costs in the areas of incentives / awards paid to utility employees, medical benefits, forecasts of gas distribution operations and maintenance expenses, customer service, and the escalation rates for 2017 and 2018. ORA initially recommended a 3-year cumulative increase of $437 million for SoCalGas, comprising:    

  • 2016: $48 million increase (2.3%)   
  • 2017: additional increases of $75 million (3.5%)  
  • 2018: additional $78 million (3.5% 

 

See:

ORA's April 24, 2015 Testimony in response to SoCalGas' Application. Some Testimony documents were updated on May 11, 2015. 

ORA’s December 17, 2014 Protest to SoCalGas’ GRC Application.  
 

  

 Proceeding Status

See the Proceeding docket. 

  

  

Other Resources

ORA Archives

 SoCalGas 2012 General Rate Case