Rate hike approved for PG&E
California regulators on Thursday authorized Pacific Gas and Electric Co. to increase the amount of revenue it collects from its customers by $1.51 billion spread over the next three years.
While substantial, it’s a steep drop from the $2.26 billion that PG&E originally requested.
The utility, California’s largest, reached an agreement last year with consumer groups to accept the lower amount. The California Public Utilities Commission, which sets utility rates, unanimously approved the revenue plan Thursday.
“These cases are about the most important work we do,” said Commissioner Clifford Rechtschaffen. He noted this winter’s outcry over spiking PG&E bills,
the result of cold weather and higher natural gas rates.
“It’s very tough to strike the right balance between what revenue the utilities need to provide safe and reliable service, and insulating ratepayers from unmanageable bills,” Rechtschaffen said.
The commission typically sets rates in three-year plans, called general rate cases, which first determine how much revenue the utilities should receive to cover operations and recoup the costs of their infrastructure. Then the commission decides how much of the revenue should come from different classes of customers, including homeowners, farms and large businesses.
For the rate case approved Thursday, which runs through 2019, that second phase is still to come. But PG&E estimated that for the rest of 2017, the decision would increase the typical residential customer’s monthly bills by 1 percent. The average residential PG&E customer spends $165.10 per month on gas and electricity combined, according to the company.
Commissioner Martha Guzman Aceves said the five-member panel will pay particular attention to setting appropriate baselines for energy use in different parts of the state at different times of year. Much of the criticism over high bills this winter focused on whether current baselines, which help set a floor for rates, are realistic.
“What is equitable for the valley?” she asked. “What’s equitable for other regions? What’s equitable for winter or for summer?”
Thursday’s decision will boost by $88 million the amount of revenue PG&E can collect from customers this year to cover the costs of its operations and infrastructure, which had previously been set at $7.92 billion. The company’s authorized revenue will rise an additional $444 million in 2018 and $361 million in 2019.
The money will enable PG&E to continue upgrading its infrastructure, an issue thrust back into the spotlight last month when a fire at a PG&E substation in San Francisco knocked out power to 88,000 customers. The increased revenue will also help improve PG&E’s ability to respond to emergencies and integrate renewable power sources into the electricity grid.
PG&E spokesman Donald Cutler noted that the utility had hammered out the revenue plan in negotiations with 14 groups, including consumer advocacy organizations, agricultural irrigation districts and Marin County’s public power project, Marin Clean Energy.
All of those groups reached an agreement on PG&E’s revenue plan in August. The commission tweaked it Thursday, adding a requirement to audit PG&E’s program for placing power lines underground.
The agreement “will help us continue to provide safe and reliable energy to our customers in a way that supports California’s ambitious clean energy goals while keeping customer bills as low as possible,” Cutler said in an email.