Peevey Attachments 1-2
Peevey Attachments 3-4
Peevey Attachment 5

COM/MP1/hkr/oma Date of Issuance 5/13/2011

Decision 11-05-018 May 5, 2011

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company for Authority, Among Other Things, to Increase Rates and Charges for Electric and Gas Service Effective on January 1, 2011. (U39M)

Application 09-12-020
(Filed December 21, 2009)

Order Instituting Investigation on the Commission's Own Motion into the Rates, Operations, Practices, Service and Facilities of Pacific Gas and Electric Company.

Investigation 10-07-027
(Filed July 29, 2010)

DECISION ON PACIFIC GAS AND ELECTRIC COMPANY
TEST YEAR 2011 GENERAL RATE INCREASE REQUEST

DECISION ON PACIFIC GAS AND ELECTRIC COMPANY TEST
YEAR 2011 GENERAL RATE INCREASE REQUEST 1 1

1. Summary of Decision 2 2

2. PG&E's Request 2 2

3. Procedural Background 3 3

4. The Settlement Agreement 5 5

4.1. The Settling Parties 6 6

4.2. Non-Settling Parties 7 7

4.3. The Settling Parties' Litigation Positions 7 7

4.3.1. PG&E's Position 7 7

4.3.2. DRA's Position 8 8

4.3.3. TURN's Position 9 9

4.3.4. Aglet's Position 9 9

4.3.5. CAL-SLA's Position 10 10

4.3.6. CFBF's Position 10 10

4.3.7. CCUE's Position 10 10

4.3.8. CFC's Position 11 11

4.3.9. DACC's Position 12 12

4.3.10. DisabRA's Position 12 12

4.3.11. EPUC's Position 12 12

4.3.12. ESC's Position 12 12

4.3.13. Merced ID and Modesto ID Position 13 13

4.3.14. SSJID's Position 13 13

4.3.15. WPTF's Position 13 13

4.3.16. WEM's Position 14 14

4.4. The Non-Settling Parties' Litigation Positions 14 14

4.4.1. Greenlining 14 14

4.4.2. SCE 14 14

4.4.3. CCSF 14 14

4.5. Terms of the Settlement Agreement 15 15

4.6. Standard of Review 16 16

4.7. Discussion 17 17

4.7.1. Consistency with Law 17 17

4.7.2. Reasonableness in Light of the Whole Record 18 18

4.7.3. Non-tariffed Products and Services 22 22

4.7.4. Reprioritization and Cost Deferrals 26 26

4.7.5. Gas Distribution Pipeline Safety Reporting 31 31

4.7.6. Financial Health 32 32

4.7.7. The Public Interest 32 32

4.7.8. Clarifications 34 34

4.7.9. Conclusion 34 34

5. Rate of Return on Meter Devices 35 35

5.1. Addressing the Issue at this Time 36 36

5.1.1. Discussion 38 38

5.2. Facts Not in Dispute 41 41

5.3. Commission Precedents 42 42

5.4. Positions to Deny Rate of Return on Retired Meters 49 49

5.5. Positions Supporting Rate of Return for Retired Meters 50 50

5.6. Discussion 54 54

5.6.1. Cause 55 55

5.6.2. Cost-Effectiveness 57 57

5.6.3. Adopted Treatment 57 57

5.6.4. Amortization Period 58 58

5.6.5. Rate of Return 60 60

5.6.6. The Use of Group Accounting 63 63

5.6.7. D.83-08-031 64 64

5.6.8. Public Policy 66 66

5.6.9. SmartMeter Cost/Benefit Analysis 67 67

5.6.10. Standard of Proof 68 68

5.6.11. Other Arguments 70 70

5.6.12. Adopted Results 71 71

6. Comments on Proposed Decision 74 74

6.1. Revenue Requirement Calculations 75 75

7. Assignment of Proceeding 79 79

Findings of Fact 79 79

Conclusions of Law 86 86

ORDER 88 88

Attachment 1 - Settlement Agreement

Attachment 2 - Results of Operations Tables for Settlement Agreement

Attachment 3 - Changes to Appendix A of the Settlement Agreement

Attachment 4 - Changes to the Results of Operations Tables for

Settlement Agreement

Attachment 5 - Gas Distribution Pipeline Safety Reporting

DECISION ON PACIFIC GAS AND ELECTRIC COMPANY
TEST YEAR 2011 GENERAL RATE INCREASE REQUEST

1. Summary of Decision

A settlement agreement that resolves all but one issue in Pacific Gas and Electric Company's test year 2011 general rate case (GRC) is adopted with modifications and clarification. Modifications involve reporting related to cost reprioritizations and deferrals and gas distribution pipeline safety reporting. With respect to the lone remaining issue that relates to the ratemaking treatment for the undepreciated plant balance associated with electric meters that are replaced by SmartMeters, that plant balance will be amortized over a six-year period with the associated rate of return on the unamortized balance reduced to 6.3% to reflect the reduced regulatory risk for that plant.

Pacific Gas and Electric Company is authorized a GRC revenue requirement increase for 2011 amounting to $450 million, or 8.1%, over the current authorized level of $5,582 million. The authorized increase is comprised of $237 million for electric distribution, $47 million for gas distribution, and $166 million for electric generation. The decision also authorizes additional
post-test year attrition increases totaling $180 million for 2012 and $185 million for 2013.