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PG&E Seeking $457 Million Rate Hike


PG&E’s proposed $457 million rate hike for 2017-19 isn’t going unopposed.

The South San Joaquin Irrigation District board is hiring experts to challenge the application before the California Public Utilities Commission.

The SSJID is being motivated in part by the fact PG&E’s allowed revenue charges from agricultural users — that are charged higher rates than other users — exceeded what the CPUC allowed the utility to collect under the existing rates in place. That is due in large part to a significant increase in pumping because of the drought.

The accumulative cost per month for the proposed rate hike to a typical PG&E residential electrical and natural gas customer is $15.60.

This is not the first time SSJID has challenged a PG&E rate increase.

The local publically owned irrigation district took on PG&E in 2010 when the for-profit San Francisco-based utility sought a record $1.101 billion general rate increase for 2011, 2012 and 2013. SSJID funded an extensive analysis of the rate proposal. Using that information and working in concert with ratepayers’ advocacy groups, SSJID was able to make a case for the CPUC to shave over $100 million off of rate hikes.

The latest general rate increase request is in addition to other pending rate increases such as a proposal to increase customer rates $685 million so PG&E can install 25,000 electric car charging stations to generate more revenue and profit. That rate is expected to add 70 cents a month to a typical residential ratepayers’ bill between 2018 and 2022.

PG&E’s request to take its annual revenue from $7.916 billion to $8.373 billion under the latest general rate application is being justified by the utility due to:

* increased costs of delivering energy safely and providing responsive customer service;

* capital investments to replace aging infrastructure;

* capacity-driven additions needed to serve more energy load based on customer demand;

* recovery costs for depreciation associated with capital investments; and

* cost of complying with government regulations and orders.

In 2010, SSJID succeeded in pointing out the fact that PG&E wanted to double charge customers for power pole replacements.

PG&E secured rate increases from 2007 through 2010 to replace 47,000 power poles.

However, data gleaned from the for-profit utilities’ own records show they only ended up replacing 13,000 power poles during the four-year period.

The SSJID argued before the CPUC that part of the reason the work wasn’t done was PG&E was using the money to pad its profit margin and accelerate return to shareholders in such a manner it exceeded the state imposed cap of an annual return of 11.45 percent allowed on PG&E’s investments.

Two previous rate hikes authorized PG&E to collect $94.1 million from ratepayers to replace 15,000 poles in 2007. PG&E reported however, that they only spent $29 million to replace 3,172 poles which meant the San Francisco-based utility may have used $65.1 million in ratepayer collections for things that the CPUC did not authorize.

Responding to an inquiry from CPUC staff if PG&E simply ran out of money to do the work by underestimating the cost, the SSJID provided information taken from the utility’s corporate findings to refute that point.

The PG&E and other investor-owned utilities that are essentially granted monopoly status by the state are allowed a maximum return on investment of 11.45 percent.

Yet PG&E documents show that in 2007 it enjoyed a 12.37 percent return or a $1.006 billion profit, as well as a 12.16 percent return in 2008 or a $1.338 billion profit.

The SSJID has been locked in a 13-year struggle with PG&E to enter the retail power business in a bid to reduce rates by at least 15 percent across-the-board in Manteca, Ripon, and Escalon. They are currently in litigation in a bid to purchase the existing retail distribution system within SSJID’s boundaries.

PG&E rates are among the highest in the nation for electric utilities.