PG&E 2014 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2014 PG&E annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

57
Order to Show Cause
On September 15, 2014, the Utility notified the CPUC and the ALJ overseeing the 2015 GT&S rate case that it believes
certain communications between the Utility and CPUC personnel relating to the 2015 GT&S rate case violated the CPUC’s rules
regarding ex parte communications. The CPUC issued an order to show cause why the Utility should not be penalized. On
November 20, 2014, the CPUC issued a decision that prohibits the Utility from recovering up to the entire amount of the revenue
increase that would have been collected from ratepayers over the five-month period between March 2015 (the date the final
decision was originally scheduled to be issued) and August 2015 (the date called for under the revised procedural schedule issued
after the Utility’s notification of ex parte communications). The decision states that the exact amount of this revenue disallowance
will be determined in the CPUC’s final decision in the 2015 GT&S rate case. The CPUC also imposed a fine of $1.05 million on
the Utility for the violations. (See “Enforcement and Litigation Matters” above regarding additional ex parte communications that
were self-reported by the Utility.) The Utility and other parties have filed applications requesting the CPUC to rehear its decision.
The ORA, TURN, and the City of San Bruno argue that the applicable law supports the imposition of a fine ranging from $2.5
million to $250 million. It is uncertain when the CPUC will address these applications for rehearing.
Regulatory Accounting
The Utility’s continued use of regulatory accounting under GAAP (which enables it to account for the effects of
regulation, including recording regulatory assets and liabilities) for gas transmission and storage service depends on its ability
to recover its cost of service. The Utility’s ability to recover its costs of providing gas transmission and storage service will be
affected by the outcome of the 2015 GT&S rate case and future GT&S rate cases. If the Utility were unable to continue using
regulatory accounting under GAAP, there would be differences in the timing of expense or gain recognition that could materially
affect PG&E Corporation’s and the Utility’s future financial results.
Proposal for Electric Vehicle Infrastructure Development
On February 9, 2015, the Utility filed an application requesting the CPUC to approve the Utility’s proposal to deploy, own
and maintain EV charging infrastructure in its service territory, including EV retail charging stations, to promote and facilitate the
deployment of EVs. Under the Utility’s proposal, the Utility would develop EV charging infrastructure over an estimated five years
to meet approximately 25% of projected EV charging station needs by 2020. The Utility’s EV charging infrastructure is expected to
be used in future programs designed to aid the integration of increased intermittent renewable energy on the state’s electric power
grid. The Utility estimates that it would incur capital costs of $551 million and operating costs of $103 million over the proposed
project timeline. The Utility has requested that the CPUC authorize the Utility to collect an average annual revenue requirement
over the project development years of $81 million to recover these costs. The Utility has requested that the CPUC issue a decision
before the end of 2015.
FERC Transmission Owner Rate Case
The Utility has one TO rate case pending at the FERC. The Utility has requested a 2015 retail electric transmission
revenue requirement of $1,366 million, a $326 million increase to the currently authorized revenue requirement of $1,039.6 million
(The FERC approved the current revenue requirement on November 7, 2014). The proposed rates will be effective March 1, 2015,
subject to refund, pending a final decision by the FERC. The Utility’s 2015 cost forecasts reflect the continuing need to replace and
modernize aging electric transmission infrastructure, to meet the need for increased capacity in the CAISO controlled grid, and to
comply with new rules aimed at ensuring the physical and cyber security of the nation’s electric system. The Utility forecasts that
it will make investments of $975 million in 2014 and $1,125 million in 2015 in various capital projects. The Utility’s proposed
rate base for 2015 is $5.12 billion, compared to $4.57 billion in 2014. The Utility has requested that the FERC approve an 11.26%
ROE. The procedural schedule is currently being held in abeyance while settlement discussions are held.