CPUC Delays Vote On PG&E Rate Hikes

BAY AREA, CA — An application by Pacific Gas and Electric Company to increase its rates for electric and gas service effective Jan. 1 was pulled from the California Public Utilities Commission agenda for Thursday.

Staff with the CPUC — the state agency that regulates privately owned public utilities in California such as PG&E — asked for more time to review before a vote takes place. The item was moved to the Nov. 16 meeting of the CPUC.

The item was tabled for this week after demonstrators took to the steps of the CPUC building Wednesday in the state's capital, demanding "fair rates."

Depending on how the commission votes, the average monthly PG&E bill for both electric and gas service would increase between 11 and 12 percent, or $30-$31. Electric-only customers would see their bill go up by $10.55 a month, while gas-only customers would see an average monthly increase of $9.46.

The rate hikes came into the picture as part of a review that the CPUC requires investor-owned utilities such as PG&E to undergo every four years. In the review, which is called a General Rate Case, the utility presents its four-year budget, including its plans for the various activities it needs to deliver safe and reliable electric and natural gas services to customers.

When PG&E submits its General Rate Case application to the CPUC, it opens a regulatory proceeding managed as a litigated process before an administrative law judge in what the CPUC says is "a highly transparent public process."

The CPUC receives input during this process from stakeholders representing consumers, environmental organizations, business and industry associations, and other stakeholder groups.

Stakeholders weigh in on the proposal and comments become part of the case record. The CPUC’s job by the end of the proceeding is to reach a proposed decision about what services and activities the utility should undertake over the next four years and the amount of money it can collect from its customers to cover those costs.

In PG&E's application for its current General Rate Case, the utility claims it needs to make several changes to ensure the safety and reliability of its energy services. The top drivers of PG&E’s proposed increases are inflation and significant investments in undergrounding electric lines to decrease wildfire risk.

As with each formal proceeding at the CPUC, at least one administrative law judge is assigned to the case. There is also a designated CPUC commissioner who can issue an alternate proposal that strikes a balance between strengthening the electric grid and natural gas system, improving safety, and ensuring affordability for customers.

The CPUC then compares the proposal from PG&E and the one from the designated commissioner.

In this case, according to the CPUC, there are two key areas where the proposals differ.

PG&E’s request to move electric distribution lines underground to reduce wildfire risk in areas with a high propensity for catastrophic wildfire. The administrative law judges proposed a decision in September that approves 2,000 miles of system hardening — 200 miles of undergrounding and 1,800 miles of covered conductor which is the insulation of overhead lines.

On Oct. 31, following a public comment period, the CPUC reported that the alternate proposal was modified to approve 1,230 miles of undergrounding — up from 973 miles — as well as 778 miles of covered conductor. This change increases the total hardened miles to 2,008.

"This increase in undergrounding miles boosts forecasted risk reduction, with an added cost of $454 million, but it’s still less expensive than PG&E’s proposal and is forecast to reduce more risk than PG&E’s proposal, while also providing PG&E with an opportunity to achieve economies of scale," the CPUC said. "The 1,230 approved undergrounding miles represent an historic opportunity for PG&E to invest in safer, reliable improvements; the revised total nearly equals the number of miles PG&E requested to complete through the end of 2025."

The second difference is in PG&E’s request for increased costs due to inflation. In this case, the alternate proposal approves only 25 percent of the increase requested by PG&E.

At the same time, both proposals reduce PG&E’s request for ratepayer funds, the CPUC said.

How Customer Energy Bills Are Affected By This Review

The impact on customers' bills will vary depending on their usage, what part of the state they live in, and other programs in which they choose to enroll.

Here are the monthly bill increases that will go into effect Jan. 1, 2024, on the electric and natural gas portion of PG&E bills for the average residential customer, based on the Revised Proposed Decision released Oct. 30 and the Revised Alternate Proposed Decision released Oct. 31.

The bills reflect an increase of 12.2 percent for the average residential customer compared to an increase of 11.8 percent for the average residential customer from the alternate proposal.

Overall, for the entire four-year period, bills increase by 15 percent overall or by 10. 8 percent overall under the alternate proposal.

Once approved by the CPUC, any changes to customers' bills will take effect Jan. 1.

PG&E declined to comment for this story.

"We will hold to comment on the General Rate Case (GRC) until after the CPUC issues a final decision, right now it looks like that may happen at the 11/16 voting meeting," a spokesperson wrote Thursday in an email to Patch.

Read PG&E's stance in this Oct. 10 letter to the editor sent to Patch. The letter is written by Aaron Johnson, PG&E vice president for the Bay Area region.