Application of Sempra Utilities for Authority, Among Other Things, to Update its Revenue Requirement and Base Rates Effective on January 1, 2024 (A. 22-05-015/016)
BACKGROUND
All investor-owned utilities must obtain approval from the California Public Utilities Commission (CPUC) of their budgeted expenses and investments before they are able to include those costs in rates charged to utility customers. The investor-owned utility will submit a General Rate Case (GRC) application to the CPUC to justify the proposed budget. In addition to seeking customers’ funding of its operating expenses, the utility can include in its GRC application such things as a request to upgrade its computer systems or to build new infrastructure. Southern California Gas Company (SCG) and San Diego Gas & Electric Company (SDG&E), collectively the Sempra Utilities (Sempra), propose to update their revenue requirements in their Test Year 2024 General Rate Cases.
SDG&E requests CPUC authorization for a base revenue requirement of $3.022 billion ($674 million gas and $2.348 billion electric), to become effective on January 1, 2024. SDG&E’s request represents an increase of $475 million, or 18.7%, over the expected 2023 revenue requirement. SDG&E also requests a $364 million increase (12%) in 2025, $339 million (10%) in 2026 and $308 million (8%) in 2027.
SCG requests a 4-year cumulative revenue increase of $4.899 billion comprised of $767 million (20.9%) for 2024, $295 million (6.70%) in 2025, $266 million (5.66%) in 2026, and $415 million (8.73%) in 2027.
PUBLIC ADVOCATES OFFICE POSITION
The Public Advocates Office participates in these proceedings on behalf of utility customers to obtain the lowest rates possible, consistent with safety, reliability, and the state’s environmental goals. We evaluate the proposals made in each GRC application and recommend whether the CPUC should approve or adjust the costs that will be passed on to customers. Our advocacy in GRC proceedings is one way we accomplish our statutory mandate.
The Public Advocates Office recommends more moderate increases than those requested by Sempra:
- Lower increases for SCG of $360 million (9.8%) in 2024, $188 million (4.7%) in 2025, $215 million (5.1%) in 2026, and $225 million (5.1%) in 2027.
- Lower increases for SDG&E of $271 million (10.6%) in 2024, $222 million (7.9%) in 2025, $239 million (7.9%) in 2026, and $247 million (7.5%) in 2027.
These recommendations provide reasonable level of ratepayer funding for the utilities to maintain safe and reliable service levels. Cal Advocates proposes various adjustments to the utility forecasts for expenses and capital expenditures, which would result in lower increases relative to the utility requests. For example, the Public Advocates Office proposes:
- Lower ratepayer funding levels for the utility incentive compensation plans, which pay additional bonuses on top of ratepayer-funded wages and overtime;
- Lower funding than the utilities in various functions such as fleet services, information technology, customer services, and electric operations;
- Lower forecasts of program expenses related to the utilities’ safety-related capital investments for Gas Integrity Management Programs;
- No increases to current depreciation rates that benefit ratepayers;
Separately, the Public Advocates Office also requested lower ratepayer funding levels to discourage lobbying activities from being charged to ratepayer funded accounts.
OUR MAIN COMMENTS
- March 27, 2023. Executive Summary of Report for Test Year 2024 General Rate Case
Contact Us
Mary Flannelly, Policy & Communications
Mary.Flannelly@cpuc.ca.gov
General Support & Questions
PublicAdvocatesOffice@cpuc.ca.gov