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PG&E Rate Plan Typically 15.6% More

Does PG&E think customers are a bottomless money pit?

Pacific Gas and Electric Co. asked California regulators on Monday for permission to collect an extra $5.25 billion from its customers over three years to make the company's electricity and natural gas delivery networks safer and more reliable.

If approved, the proposal would raise a typical homeowner's monthly bill 15.6 percent by 2016.

The proposal requires the approval of the California Public Utilities Commission to take effect, and the commission typically doesn't give utilities all the money they request. But this isn't the only rate increase that PG&E is seeking.

The San Francisco company has already asked the commission to approve spending $2.2 billion on upgrades to its natural gas pipeline network in the wake of the deadly 2010 San Bruno explosion, with $1.96 billion of that money coming from customers. And last month, PG&E requested approval to raise $539.5 million more from ratepayers next year, largely to pay the costs of buying more renewable power from wind farms and solar power plants.

Each of the rate requests, including the one filed Monday, covers a different aspect of PG&E's business. And PG&E insists that each is necessary.

"I can't emphasize enough how much people value safety and reliability," said Tom Bottorff, the company's senior vice president of regulatory relations, speaking about Monday's filing. "That's what they feel is most important, that's what we feel is most important, and that's the major driver here. We didn't make these requests lightly."

Replacing old pipes

Among other things, the latest request would let PG&E speed up replacement of old gas distribution lines - smaller lines that deliver gas within communities, as opposed to larger, long-distance transmission pipelines. The company would be able to replace 180 miles of distribution lines each year, up from the current figure of 30 miles per year.

PG&E also would deploy infrared sensors to locate "hot spots" on electricity lines that could be nearing failure. And the company, with a staff of 20,000, would add about 2,200 employees to improve its customer service and the reliability of its systems.

PG&E's operations have come under intense public scrutiny after the September 2010 explosion of a natural gas pipeline beneath San Bruno, a blast that killed eight people and severely damaged a neighborhood. While consumer advocates are pleased to see a renewed focus on safety, they fear the impact on ratepayers. PG&E customers, they say, are being asked to bear too many additional costs at the same time.

"In isolation, PG&E can look at this and say, 'Oh well, it's not really that much,' but that doesn't include all the other things they're asking for," said Mark Toney, executive director of The Utility Reform Network watchdog group. "I don't think there's any sense that there are limitations to what customers can pay, and there are hard choices to be made here."

Monday's filing is part of PG&E's latest "general rate case," a regulatory process that sets the basic blueprint for utility rates over a three-year period. In this instance, the general rate case would shape utility bills from January 2014 through December 2016.

If the utilities commission approves the filing, the typical homeowner's monthly electricity bill will rise $4.64 in 2014 to $94.37, while the average residential gas bill will climb $6.67 to $52.80 per month. Further increases would follow in 2015 and 2016, bringing the average monthly electric bill to $98.95 and the average gas bill to $58.15. Together, the combined bill of $157.10 would be 15.6 percent higher than the current average residential combined bill, which is $135.86.

Multiple requests

The increase would be greater if the utilities commission also approves PG&E's other rate proposals.

In 2014, for example, the general rate case alone would raise the average monthly residential bill by $11.31, when gas and electricity are combined. The $2.2 billion gas pipeline proposal would add $2 more, according to the company. An extra $1.70 would come from the $539.5 million request to pay for renewable power and other electricity generation. In total, instead of $11.31, homeowners would pay $15.01 more per month in 2014 than they do today. The general rate case would continue to impact customer rates through 2016.

If history is any guide, PG&E probably won't get all the money.

While the utilities commission seldom rejects rate-hike requests outright, it typically gives utilities less than they want, sometimes much less. In its last general rate case, PG&E asked for a revenue increase of $4.2 billion, spread over three years. The commission approved $1.9 billion. In 2009, the company proposed spending $2.05 billion to fight blackouts on its electricity grid. The commission approved $366.6 million.

PG&E's new general rate case will receive more scrutiny than the last. For the first time, the utilities commission will hire independent analysts to study the proposal in depth.

"They, like us, are concerned about making sure the system is safe going forward, so they wanted an independent review," Bottorff said.

Date: July 02, 2012
Author: David R. Baker
Source: SFGate


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