Fitch: ALJ PD Brings Resolution of PG&E's 2015 GT&S Rate Case Closer
OREANDA-NEWS. The proposed decision (PD) issued by the administrative law judge (ALJ) in Pacific Gas and Electric Company's (PG&E's) 2015 gas transmission and storage (GT&S) rate case is consistent with the utility's current ratings and Positive Rating Outlook, according to Fitch Ratings.
On May 5, 2016, the ALJ in PG&E's 2015 GT&S rate case issued a proposed decision (PD) in Phase 1 of the proceeding. In its PD, the ALJ recommends a $143 million (20%) 2015 revenue increase including the impact of a $164 million penalty related to violations of California Public Utilities Commission (CPUC) ex parte communication rules and shareholder-funded safety improvements. In Fitch's opinion, a final CPUC decision consistent with the ALJ PD would be a constructive credit development. This, combined with resolution of pending federal criminal charges against PG&E along with continued strong credit metrics could result in future constructive resolution of the Positive Rating Outlook, in Fitch's view.
In addition to the $143 million rate increase after the impact of the reduction from the ex parte and San Bruno penalties, the PD includes attrition rate increases in 2016 and 2017 of $273 million and $70 million, respectively. The ALJ PD addresses issues associated with the San Bruno penalty decision that had previously been bifurcated into a second phase of the GT&S proceeding by the CPUC, as discussed further below. If the ALJ PD is adopted, a Phase 2 decision in the GT&S proceeding will not be necessary and a final decision could be issued by the CPUC as soon as June 9, 2016.
PG&E filed its 2015 GT&S rate case in December 2013 for recovery of gas transmission and storage business costs. The rate case was bifurcated into two phases by the commission. A final CPUC decision in Phase 1 had been expected to determine, in addition to revenue requirement, the penalty mandated by the CPUC in its 2015 orders instituting investigation (OII) into GT&S-related ex parte communication violations. That penalty, as ordered by the commission in the OII, could be up to five months of the annual revenue increase authorized in Phase 1 of the GT&S rate case and is reflected in the $164 million penalty included in the ALJ PD.
Phase 2 of the GT&S proceeding was ordered by the CPUC to determine natural gas safety work to be disallowed in accordance with the penalty phase of the CPUC's San Bruno OII. The ALJ PD identifies costs to be counted toward the $850 million of safety-related capital and operating expense to be disallowed. The PD allocates $588 million of the total disallowance to 2015 and the remaining $262 million to 2016.
Fitch has assumed a rate increase of approximately $300 million in PG&E's GT&S rate case, before fines, penalties and other unrecoverable costs. The CPUC's final decision in the 2015 GT&S rate case will be retroactive to Jan. 1, 2015. Finally, CPUC Commissioner Carla Peterman issued an alternative proposed decision that differs from the ALJ PD significantly only in requiring PG&E to issue a report on its gas storage risk management and safety initiatives in light of the Aliso Canyon natural gas storage facility leak within 60 days of issuance of a final GT&S decision.
Комментарии