PCG 2015 GT&S Final Decision

PCG: GT&S Final Decision Forces Utility to Make Difficult Choices; Does this Set-up a Future San Bruno? ||

Of course, we cannot say for sure; however, it is our contention that San Bruno was not solely the responsibility of the company and that regulators and intervenors share partial responsibility for the tragic San Bruno accident
Therefore, the 2015 GT&S final decision (FD), which continues to penalize PG&E (in Phase 2, which is pending) for San Bruno and ex parte communications has the potential to contribute to a future San Bruno-type accident, in our opinion
The FD not only reduces PG&E request for $1.263B in 2015 revenue requirement to $1.046B, a reduction of some 17.2%, but also the $850MM in safety costs disallowance is still pending in a phase 2 decision that is expected mid-October 2016
The estimated impact of the ex parte communications disallowance is about $138MM, which reduces 2015 GT&S revenue to $908MM, an increase of some $193MM or about 27.0% over 2014 authorized revenue of approximately $715MM
Of the $850MM of disallowed safety spending, about $689MM is to come from capital expenditures and another approximately $161MM is expected to be cut from expenses – both items are to be determined by the CPUC taking into consideration public comments, briefs and reply briefs
Due to the delay in the FD, the CPUC allowed for attrition revenues to be determined through 2018 as part of the 2015 GT&S, allowing for $64MM increase in 2016 to $1.110B, $110MM increase in 2017 to $1.220B, and a further $104MM increase in 2018 to $1.324B, representing some 22.2%, 9.9%, and 8.5% increase, respectively, excluding any consideration for the $850MM reduction in safety spending to be determined – please see below table for more details

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PCG 2015 GT&S Preliminary Decision

PCG: 2015 GT&S Rate Case: Ouch! ||

On May 5, 2016, the proposed decision and the alternate proposed decision, which is substantively similar to the proposed decision, were issued in the 2015 Gas Transmission and Storage rate case by the California PUC.

Table 1. 2015 GT&S rate case proposed decision (PD) ($MM)

2015

% Ute Ask

2016

% Ute Ask

Increase

2017

% Ute Ask

Increase

Utility Ask

$1,263

$1,346

+6.57%

$1,488

+10.5%

PD

$1,109

87.8%

$1,183

87.9%

+6.67%

$1,309

88.0%

+10.7%

Ex Parte Penalty

($164)

$0

NA

PD B4 SB

$945

74.8%

$1,183

87.9%

25.2%

$1,309

88.0%

10.7%

SB Related Disallowed Expenses

($158)

$0

$0

SB Related Disallowed Revenue associated w/Capex

$10

($51)

($107)

SB Related Penalty Adj. related to Ex Parte Penalty

$62

$0

$0

NET PD

$859

68.0%

$1,132

84.1%

31.8%

$1,202

80.8%

+6.18%

Source: Company data and Auvila Research Consulting

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