California Public Utilities Commission approves PG&E safety plan

San Francisco Examiner/Will Reisman, Staff writer, 12/20/12.  "Both sides unhappy with $2.2 billion PG&E safety plan".

We'll be replacing this pipe, 6.35% profit

While state regulators approved a new pipeline safety plan for PG&E on Thursday, neither the utility nor its opponents voiced pleasure with the ruling and how it will affect company ratepayers or shareholders. The California Public Utilities Commission unanimously signed off on a plan that requires PG&E to pressure-test 783 miles of natural-gas pipeline, replace or upgrade 385 miles of pipes and install 228 miles of safety valves. The safety plan, in the works for more than a year, came as a direct response to the PG&E pipeline explosion in San Bruno that killed eight people and injured 58 more in September 2010.

PG&E projects the total cost of this effort at $2.2 billion, and had hoped to recoup $768 million of that total through rate increases passed on to its customers. But the commission is only letting PG&E recover $299 million of that sum over the next three years, just 39 percent of what it asked for.  The commission also reduced PG&E’s requested profit for its shareholders. The utility had sought an 11.35 percent return on its investment, but the commission granted it just 6.35 percent.  As a result of the decision, PG&E ratepayers will experience a 1.5 percent rate increase on their monthly bills, which will equate to 88 cents more a month in 2013 and $1.36 more in 2014 for the average residential customer.

Commissioner Mark Ferron said his organization’s decision “strikes the right balance between the share of costs borne by PG&E shareholders and those borne by ratepayers.”  Utility officials expressed satisfaction that their long-discussed safety plan was finally approved, but they were unhappy about the financial burden their shareholders will have to weather as a result of the commission’s decision.  Read article.

Posted by Kathy Meeh