GT&S Rate Case Update

Monday, July 07, 2014

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As reported in December, This link will open in a new window PG&E's California Gas Transmission filed its 2015 Gas Transmission and Storage Rate Case on December 19, 2013. Between now and the final resolution of the Rate Case, CGT's plan is to provide regular updates so that our customers are aware of issues and decisions as they unfold. Each update will be accompanied by the logo, above, indicating a Rate Case Update.

CGT's Objectives in the Rate Case

The tragedy of the San Bruno pipeline explosion, and subsequent legislation, have influenced a much different approach to the gas business, both in California and across the entire country. CGT's current focus, as spelled out in the Rate Case filing:

  • Gas Operators are required to do more than ever before to enhance public and employee safety. California legislation, Senate Bill (SB) 705, mandates that gas operators go beyond "adequate" and develop and implement safety plans that are "consistent with best practices in the gas industry."
  • CGT's 2015 forecast reflects a rigorous risk-based asset management and investment planning process. We believe that we have forecast the right work to achieve the appropriate level of risk reduction over a reasonable timeframe and at a reasonable cost.
  • CGT's approach to this rate case is different than past rate cases. We are providing more detail than previously about how we identified the forecast work and how we determined that it is the right work and the right amount of work. More detail, more transparency, and a new approach along asset family lines.

The Bottom Line

We are currently all facing the same challenges in the US natural gas industry: aging infrastructure, increased focus on safety and safe ways of doing business, striving to understand and adopt "best practices", all while continuing to provide reliable and cost-effective services. While the revenue requirement request is higher than in past cases, the work is necessary to reduce risk and meet current regulatory and legislative requirements.

What Our Customers Will Get Out of the Rate Case

We think there are some significant benefits for CGT's customers:

  • Equalized Redwood and Baja rates - Allows our shippers to focus on fewer market variables. The cost of supply will be the single determinant of which supply to bring to the Citygate.
  • Increase in storage capacity for load balancing, from the current 75 MMcf/day of injection and withdrawal to 130 MMcf/day of injection and 200 MMcf/day of withdrawal. This more closely reflects the actual operational use of balancing needed for intraday fluctuations in load, as evidenced during the cold wave of December 2013. 75 MMcf/d injection and withdrawal will continue to be the criteria for calling OFOs.
  • An additional nomination cycle - More opportunity to respond to changes in customer demand throughout the gas day.

The Currently Anticipated Time Line

8/11/14 - Intervenor Testimony due.
9/15/14 - Concurrent Rebuttal Testimony due.
10/6/14 - Hearings start.
10/24/14 - Hearings conclude.

The schedule set forth by the Commission anticipates a proposed decision by first quarter, 2015. However, in accordance with the last Gas Accord Settlement (GA V), in the absence of a decision, backbone transmission rates effective January 1, 2015 will be the 2014 base rates with a 2% escalation factor. (Note, prior to applying the 2% escalation factor, the rates that are effective 12/31/14 will be adjusted, both up and down, as several GA V rate factors drop away at the close of the GA V period.)

Please continue to follow these ongoing updates on Pipe Ranger. If you have questions, feel free to contact your CGT Sales Representative.

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