2017 PG&E GRC Phase II - Revenue Allocation and Rate Design 


PG&E’s GRC Phase II was filed in June 2016. In the application PG&E seeks to adopt updated marginal costs, and make a number of changes to their rate design which could impact residential and small commercial customers. Among the consequential changes for residential customers, PG&E has recommended revising electric and gas baseline quantities and moving from the current six month summer period to a shorter four month summer.

PG&E has also identified many system costs as fixed costs to lay groundwork for a potential future fixed customer charge, to be recovered as a set fee on a customer’s monthly utility bill. This charge is intended to recover costs which vary with number of customers, but not with electricity usage. The Public Advocates Office (the Office) has been opposed to such fixed customer charges in the past, on the grounds that such charges blunt conservation incentives and benefit large electric consumers at the cost of small users. 

The Officeis participating fully in the GRC Phase II proceeding, and has be filed testimony on marginal cost and rate design issues, as well as issues relating to a fixed customer charge.


Public Advocates Office Position

The Office filed testimony on February 15, 2017, and other intervenors filed testimony on March 15, 2017.

Based on its analysis, the Office recommends the CPUC adopt the following:


  • Marginal Distribution Capacity costs should be calculated using the National Economic Research Associates (NERA) regression method.
  • Marginal Customer Access Costs should be calculated using the New Customer Only (NCO) method.
  • Time of Use Periods should be modified to a new Four Month Summer Period with an on-peak period from 3 p.m. to 9 p.m., and a Winter on-peak period from 4 p.m. to 10 p.m. All other hours would be off-peak.
  • The revenue allocation should include the Office’s marginal cost calculations and caps and floors that would limit large increases for any customer class.
  • PG&E’s proposal to increase small commercial customer charges by 50% to 100% should be rejected.
  • Revenue Shortfalls from the EV program and the Economic Development Rates (EDR) Program should be reduced.


Current Status

Parties are working on potential settlements on TOU Periods, Small Commercial Rates, and Residential Rates.

Parties have reached settlements on Revenue Allocation and Economic Development Rates.

If adopted by the Commission, the Revenue Allocation Settlement will save residential and small commercial customer classes by approximately $24.3 million comparing to current allocation method.

The EDR settlement will reduce PG&E’s proposed maximum enhanced EDR discount from 35% to 25%, will create a new “mid-enhanced” discount range with an 18% discount, and will place caps or limits on the potential load of both the enhanced and mid-enhanced EDR contracts. Therefore, it enables PG&E to retain customers who may move out of the state due to high energy costs or provide incentive to attract new load. In addition, it mitigates other ratepayers’ rate increase exposure for revenue shortfalls that may come from offering these discount rates.


The Office's February 15, 2017 Testimony.


Proceeding Record

See the Proceeding docket.