June 2012 Bill Inserts
Each month, PG&E offers important information on rebates, saving energy and safety in printed inserts that accompany your bill. Now, access this information online whenever you wish.
- Notification of Application Filing by Pacific Gas and Electric Company to Approve Its 2013 Cost of Capital Proposal A. 12-04-018On April 20, 2012, Pacific Gas and Electric Company (PG&E) filed an application with the California Public Utilities Commission (CPUC) to decrease its authorized cost of capital for its electric and gas utility operations for test year 2013. If approved by the CPUC, PG&E's electric revenues1 would decrease by approximately $74.6 million or 0.6 percent, and its gas revenues would decrease by approximately $22.7 million, or 0.7 percent.
In addition, PG&E proposes that the CPUC continue to authorize the automatic cost of capital adjustment mechanism referred to as the Annual Cost of Capital Adjustment Mechanism (ACCAM). The ACCAM automatically adjusts PG&E's authorized cost of capital based on changes in benchmark interest rates, in lieu of an annual COC proceeding for the period 2014 to 2015.
Definition of the cost of capital
Cost of capital is a financial term defining how much a corporation is allowed in rates as a return on its invested capital. In this proceeding, the CPUC will determine the appropriate capital structure2 for PG&E, as well as PG&E's reasonable costs of long-term debt, preferred stock and common stock that are part of the authorized cost of capital. The cost of capital authorized in this application will be applied to capital investments authorized by the CPUC for PG&E.
Summary of PG&E's key reasons for its cost of capital request
Approval of PG&E's cost of capital proposals will assist the company in:
• Maintaining an investment-grade credit rating, thereby reducing overall financing costs
• Attracting the capital necessary to serve PG&E's customers safely and efficiently at reasonable rates
• Continuing the ACCAM to remove the costs and burdens associated with an annual cost of capital proceeding, while adjusting cost of capital based on defined changes in utility bond interest rates
The potential impact of the cost of capital request on revenues collected as rates from customers
Below is an allocation to illustrate the 2013 electric and gas revenue decreases across customer classes under PG&E's proposal, as shown in the tables below:
Will rates increase as a result of this application?
No, approval of this application will decrease electric rates by less than one percentfor bundled service customers (those who receive electric generation as well as transmission and distribution service from PG&E) and for direct access and community choice aggregation customers (those who take electric supply from non-PG&E suppliers). Electric rates for some departed load customers (customers who purchase their electricity from a non-utility supplier and receive transmission and distribution service from a publicly owned utility or municipality) will decrease slightly due to changes in the California Alternative Rates for Energy (CARE) discount. The annual electric revenue requirement decrease of $74.6 million will decrease the system bundled average rate by 0.6 percent (relative to current rates).
A typical bundled residential electric customer using 550 kWh per month would see a decrease in their average monthly bill of 0.6 percent or $0.50, from $89.73 to $89.23 per month. A customer using 850 kWh per month (roughly twice baseline) would receive a decrease of 1.1 percent or $1.98, from $185.92 to $183.94 per month. Individual customer bills may differ.
If the CPUC approves PG&E's request, a typical residential customer using 37 therms per month would see an average monthly gas bill decrease of $0.25, from $46.13 to $45.88. Individual customer bills may differ.
FOR FURTHER INFORMATION
To request a copy of the application and exhibits or for more details, call PG&E at
1-800-743-5000. For TDD/TTY (speech-hearing impaired), call 1-800-652-4712.
You may request a copy of the application and exhibits by writing to:
Pacific Gas and Electric Company
Cost of Capital Application
P.O. Box 7442, San Francisco, CA 94120.
THE CPUC PROCESS
The CPUC's Division of Ratepayer Advocates (DRA) will review this application.
The DRA is an independent arm of the CPUC, created by the Legislature to represent the interests of all utility customers throughout the state and obtain the lowest possible rate for service consistent with reliable and safe service levels. The DRA has a multi-disciplinary staff with expertise in economics, finance, accounting and engineering. The DRA's views do not necessarily reflect those of the CPUC. Other parties of record may also participate.
The CPUC may hold evidentiary hearings where parties of record present their proposals in testimony and are subject to cross-examination before an Administrative Law Judge (ALJ). These hearings are open to the public, but only those who are parties of record may present evidence or cross-examine witnesses during evidentiary hearings. Members of the public may attend, but not participate in, these hearings.
After considering all proposals and evidence presented during the hearing process, the ALJ will issue a draft decision. When the CPUC acts on this application, it may adopt all or part of PG&E's request, amend or modify it, or deny the application. The CPUC’s final decision may be different from PG&E's application.
If you would like to learn how you can participate in this proceeding or if you have comments or questions, you may contact the CPUC's Public Advisor as follows:
Public Advisor's Office
505 Van Ness Avenue
Room 2103
San Francisco, CA 94102
1-415-703-2074 or 1-866-849-8390 (toll free)
TTY 1-415-703-5282 or 1-866-836-7825 (toll free)
Email to public.advisor@cpuc.ca.gov
If you are writing a letter to the Public Advisor's Office, please include the number of the application (12-04-018) to which you are referring. All comments will be circulated to the Commissioners, the assigned Administrative Law Judge and the Energy Division staff.
A copy of PG&E's Cost of Capital Application and exhibits is also available for review at the California Public Utilities Commission, 505 Van Ness Avenue, San Francisco, CA 94102, Monday–Friday, 8 a.m.–noon, and the CPUC’s website at www.cpuc.ca.gov/puc.
1 Revenue describes the total amount of money customers pay in rates for the gas and electric service they receive.
2 Capital structure is a financial term used to describe the relative amounts, or weighting, of debt and equity used to fund PG&E’s investments in its plant and equipment.
