PG&E Proposes Safety Improvements, Rate Hikes

TURN is skeptical of PG&E’s latest demands for more of your money

Pacific Gas and Electric Co. unveiled a plan Monday that would raise customers’ bills by an average of about 6 percent to pay for three years of what it deems infrastructure and safety needs.

Monday’s “notice of intent” is the start of a regularly scheduled process that determines how much money the San Francisco-based, investor-owned utility will earn between 2014 and 2016.

Technically, PG&E is not supposed to make money selling electricity or natural gas. Instead, the state allows it to charge 11.35 percent interest on investments in its system. After covering various costs, the gain to the company is close to 9 cents on every dollar invested.

Consumer advocates immediately criticized PG&E’s request as excessive, and they questioned justifications for the $1.25 billion the company wants to spend improving its network. That amount represents an increase of about a fifth over the utility’s existing spending levels.

“It remains to be seen whether any of this is safety-related,” said Mindy Spatt, spokeswoman for Bay Area consumer advocacy group TURN.

Mark Pocta, program manager for the state Public Utilities Commission’s Division of Ratepayer Advocates, called PG&E’s proposal “quite sizeable” and said his group will be studying the application known as the utility’s general rate case.

“We’ll definitely be giving it a very close look and be scrutinizing it very closely,” he said, adding that a final decision on the rate case probably won’t arrive until 2014.

For its part, PG&E said the $1.25 billion will cover investments including:

  • new technologies to improve safety and leak detection in its natural gas pipelines;
  • increase the speed at which it replaces older gas lines, from 30 miles a year to 180 miles;
  • construction and operation of a centralized natural gas distribution control facility;
  • expansion and more staffing of its customer service centers.

“We are committed to improving the safety of our system and that’s why we’re seeing the dollars contained in this application,” said PG&E’s senior vice president of regulatory relations, Tom Bottorff.

Rate increases paid by various customer classes are expected to vary if the rate case goes through as proposed.

Bottorff said PG&E’s average residential electric customers would see an initial increase of about $5 a month in 2014, bringing their monthly bill to about $95, an increase of about 6.3 percent. Rates would then rise by 2.4 percent in 2015, and another 2.4 percent in 2016, he said.

Rate hikes paid by the utility’s average residential natural gas customers would be more dramatic. In 2014, Bottorff said, their monthly bills would increase about $7 to about $53, or about 14.5 percent. In 2015, their rates would jump by 5.5 percent, followed by a 4.4 percent rise in 2016.