Lax CPUC authorizes PG&E profits from garbage.
After months of delay, California regulators on Thursday gave Pacific Gas and Electric Co. permission to raise the revenue it collects from its customers by a total of about $1.9 billion over the next three years.
While substantial, the increase is less than half of what PG&E initially wanted. The utility’s customers will, however, end up paying for old electricity and gas meters that are being replaced by PG&E’s new SmartMeters, despite angry objections from consumer advocates.
The California Public Utilities Commission on Thursday voted 3-1 to approve the revenue increase as part of PG&E’s latest general rate case, a regulatory proceeding that helps set electricity and natural gas rates over a three-year period. The money will fund the operation and repair of PG&E’s electricity and gas distribution systems.
The decision will not have an immediate effect on electricity rates for PG&E customers. The utility, California’s largest, reported Thursday that it does not plan to change its electricity rates in response to the decision until January.
Natural gas rates, however, will rise on June 1. The average residential customer will see an increase of 2.4 percent, to $1.22 per therm.
"This decision will allow us to continue our focus on providing safe and reliable electric service over the next three years," said Tom Bottorff, the utility’s senior vice president of regulatory relations, in a prepared statement.
PG&E and several consumer advocacy groups reached agreement on the basic size of the revenue increase last fall, and the commission had been expected to vote on it by the end of 2010. But one disagreement remained.
The company wanted to be compensated for the old electricity and gas meters that have been removed from customers’ homes and replaced with digital SmartMeters. The old analog meters had an expected life span of 18 years, so removing them before then would cost the company money.
Consumer advocates, however, noted that the company would make a profit on each new SmartMeter. Compensating PG&E for the old meters as well, they said, would amount to double-dipping.
Members of the utilities commission agreed that the company should get money for the old meters but disagreed on how much. On Thursday, the commissioners deadlocked on a proposal to give the company a 7.42 percent rate of return on meters, over six years. After further discussion, a majority of commissioners settled on a 6.3 percent rate of return.
Several commissioners said they didn’t want to penalize PG&E for following the commission’s directions. The idea of switching to SmartMeters came first from the commission, not from PG&E.
"We need to be mindful of the signals we send to utilities and their investors when we want the utilities to invest in new technologies that could benefit their customers," said Commission President Michael Peevey.
The lower profit level still angered consumer advocates.
"The Public Utilities Commission has spoiled PG&E to the point where it’s giving the company profits off its trash," said Mindy Spatt, spokeswoman for The Utility Reform Network. "The old meters have no use to the customers, so why should the customers pay for them?"