PG&E 2015 Annual Report Download - page 59

51
PART II
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(inmillions)
Amounts
RequestedIn
theGRC
Application
Amounts
Currently
AuthorizedFor

Increase
Comparedto
Currently
Authorized
Amounts
LineofBusiness
Electricdistribution       
Gasdistribution        
Electricgeneration        
Totalrevenuerequirements        
CostCategory
Operationsandmaintenance       
Customerservices        
Administrativeandgeneral        ()
LessRevenuecredits  ()  ()  ()
Franchisefeestaxesotherthan
incomeandotheradjustments 
      
Depreciation(includingcostsofassetremoval)
returnandincometaxes 
      
Totalrevenuerequirements        
In its application, the Utility stated that over the 2017-
2019 GRC period the Utility plans to make average
annual capital investments of approximately $4 billion in
electric distribution, natural gas distribution and electric
generation infrastructure, and to improve safety, reliability,
and customer service. (These annual investments would
be incremental to the Utility’s capital expenditures for
electric and natural gas transmission infrastructure.) The
Utility also requested that the CPUC establish a ratemaking
mechanism that would increase the Utility’s authorized
revenues in 2018 and 2019, primarily to reflect increases
in rate base due to capital investments in infrastructure
and, to a lesser extent, anticipated increases in wages and
other expenses. The Utility estimates that this mechanism
would result in increases in revenue of $489 million in
2018 and an additional $390 million in 2019.
In October 2015, the Utility filed supplemental testimony
to reduce its original revenue requirement request by
approximately $17 million per year based on its forecast
that it will incur approximately $61 million for unrecoverable
costs to implement the remedies ordered in the Penalty
Decision.
On February 22, 2016 the Utility will file an update of its
forecasted increase, primarily to reflect the impact of
the recent five-year extension of the federal tax code
provisions regarding bonus depreciation.
According to the CPUC’s current procedural schedule,
testimony from the ORA and other parties is due
in April2016, evidentiary hearings are to be held this
summer, followed by a proposed decision to be released
in November 2016 and a final CPUC decision to be issued
in December 2016. The Utility has requested that the
CPUC issue an order directing that the authorized revenue
requirement changes be eective January 1, 2017, even if
the final decision is issued after that date.
2015 Gas Transmission and Storage Rate Case
In the 2015 GT&S rate case, the Utility requested that
the CPUC authorize a 2015 revenue requirement of
$1.263billion to recover anticipated costs of providing
natural gas transmission and storage services, an increase
of $532million over currently authorized amounts. The
Utility also requested attrition increases of $83 million in
2016 and $142 million in 2017. The Utility requested that the
CPUC authorize the Utility’s forecast of its 2015 weighted
average rate base for its gas transmission and storage
business of $3.44 billion, which includes capital spending
above authorized levels for the prior rate case period.
The ORA has recommended a 2015 revenue requirement of
$1.044 billion, an increase of $329 million over authorized
amounts. TURN recommended that the Utility not recover
costs associated with hydrostatic testing for pipeline
segments placed in service after January 1, 1956, as well
as certain other work that TURN considers to be remedial.
TURN also recommended the disallowance of about
$200million of capital expenditures incurred over the
period 2011 through 2014 and recommended that about
$500 million of capital expenditures during this period be
subject to a reasonableness review and an independent
audit. TURN states that the Utility’s cost recovery should not
begin until the CPUC issues a decision on the independent
audit. On December 18, 2015, the ORA filed a motion in
the 2015 GT&S rate case for an Order to Show Cause