Natural Gas Transmission Costs for Non-Core Industrials Expected to Increase by 60% Pursuant to PG&E Proposed Rate Schedule

Print this Article | Send to Colleague

On Thursday January 16, 2014, Pacific Gas & Electric (PG&E) hosted an informal workshop at their headquarters in San Francisco designed to provide an overview of their 2015 Gas Transmission and Storage Application (2015 GT&S) that will set rates for the recovery of costs associated with the Pipeline Safety Enhancement Plan (PSEP) and the implementation of a new ratemaking methodology employing risk-based assessments.  The objectives of the workshop were to: provide an overview of PG&E’s 2015 GT&S prepared testimony and answer questions; to obtain feedback from the attendees on the proposed schedule prior to a pre-hearing conference; and, to facilitate discovery in advance of litigation of this proceeding.

Under the 2011 Gas Transmission and Storage Rate Case, known as "Gas Accord V Settlement" (Accord), the Public Utilities Commission  (Commission) approved PG&E rate requirements at $2.2 billion for 2011-2014.  However, the San Bruno explosion in 2010 occurred before the Commission finalized the Accord.  As a result of the disaster, California’s gas utilities were ordered to develop plans for the testing and replacement of all pipelines in service in the state.  This is the Pipeline Safety Enhancement Plan or "PSEP."  The Commission also ordered PG&E to file the current 2015 GT&S to determine revenue requirements for both the PSEP and the future upgrades under the new revenue methodology.

Under the 2015 GT&S, PG&E is requesting increases in base revenue requirements of $1.286 billion for 2015, $1.347 billion for 2016, and $1.515 billion for 2017 for a total of $4.148 billion.   The total recovery sought by PG&E for 2011 through 2017 amounts to $6.348 billion in requested revenue increases.

As a result, PG&E is proposing a 60 percent average increase in noncore industrial transmission rates.  This represents a significant increase in transportation costs for food processors.

Overall, it appears that the risk assessment proposal evolved as the PSEP was implemented.  Essentially, PG&E extended the coverage intended by the PSEP to include all other aspects of compliance issues.  This means that the traditional factors generally used in ratemaking to calculate costs may no longer apply.

CLFP will be a party to this proceeding as it moves forward.  Should you wish more information on this proceeding, please contact John Larrea at john@clfp.com.

By John Larrea, Government Affairs Director, California League of Food Processors

Back to In the View Homepage