By Dan Geis
December 2009
On December 21, Pacific Gas & Electric Company requested yet another major rate increase for all customers, asking the California Public Utilities Commission (CPUC) to increase rates by over $1 billion in 2011. PG&E requested over $800 million in increases in electricity rates alone. In their application, the utility asked the Commission to approve electricity rates exceeding $12 billion per year, which represents an average 7.2% increase over existing 2009 rates for all customers.
Under the proposal, agricultural and water pumping customers will see rates increase by 7.1%, reflecting a total increase of nearly $48 million a year in electricity costs to the industry.
Because PG&E is a regulated monopoly utility, they are required to get approval from the state, via the CPUC, for all rates charged to customers. This process occurs every three years, and is referred to as the General Rate Case (GRC). The GRC occurs in two phases. Phase I, which was just filed, reflects the total amount that PG&E believes they are entitled to collect from customers. The CPUC is expected to rule on this request by the end of 2010, with new rates expected to take effect in early 2011.
Phase II, which is expected to be filed in late March 2010, alters the rates each customers pays, and is tied to the Phase I request. For example, for agricultural customers PG&E will propose differing demand charges, energy charges, on-peak charges and other rate functions that effect the rates of all agricultural and water pumping customers.
This proceeding - Phase II - is where AECA becomes most involved in representing the interests of members. It is expected that PG&E will request even larger rate increases for agricultural customers when they file their Phase II request in Spring 2010.
This requested increase for PG&E only pertains to the distribution and transmission of electricity. The commodity price of electricity is not a factor in the request (see next Article.) Distribution and transmission revenues go to cover the crews, transformers, substations and other infrastructure that deliver electricity. The generation – or commodity – price of energy is determined elsewhere and is generally a pass-through cost for customers of PG&E.
PG&E cites the following reasons for the large requested increase:
- Maintaining reliability and customer service
- Capital investments to replace aging infrastructure
- Cost of compliance with governmental regulations
