The California Public Utilities Commission voted unanimously on Sept. 3 to grant PG&E a limited exemption tied to a state loan for costs associated with the Diablo Canyon power plant's extension. Simultaneously, the commission denied the utility's request to exclude wildfire-related costs from its capital-structure calculation. In a separate action during the same meeting, the commission also voted 5-0 to open a new rulemaking process aimed at revising the comprehensive General Rate Case Plan, which guides electric and gas utility rate requests.
PG&E had sought relief under affiliate transaction rule 9B, requesting exclusions for substantial wildfire-related expenses. As detailed by President Reynolds in the meeting transcript, these requests included $625 million in long-term debt and $542 million in equity costs linked to the Kincade wildfire, along with $277 million in long-term debt associated with the Dixie Fire. The utility also sought relief for up to $1.4 billion in costs related to Diablo Canyon's extension, which are covered by an interest-free loan from the Department of Water Resources. President Reynolds stated that the commission’s alternate proposed decision found no basis to approve the wildfire-cost exclusions. However, the commission did approve a narrow capital-structure adjustment specifically for the Diablo Canyon costs backed by the Department of Water Resources loan.
The decision to grant a narrow adjustment for Diablo Canyon costs stemmed from the unique nature of the Department of Water Resources loan. President Reynolds and other commissioners highlighted that this loan is unusual because it is interest-free, forgivable, and structured through specific legislative financing for Diablo Canyon. To ensure ongoing transparency and accountability, the commission’s alternate decision also incorporates new reporting requirements for PG&E’s upcoming cost-of-capital application. These mandates include a true-up analysis to account for any surplus equity that might be attributable to wildfire costs and an updated status report on the forgiveness of the Department of Water Resources loan.
Following these decisions, the commission moved to address the broader framework for utility rate setting. The 5-0 vote to initiate a new rulemaking aims to comprehensively revise the General Rate Case Plan, a crucial guide that has not seen a full update since 2007. President Reynolds indicated that this rulemaking will explore extensive changes designed to standardize filings from utilities, streamline the entire rate case process, and integrate newer statutory requirements. These updated requirements are intended to enhance affordability, accountability, and transparency within utility operations and rate determinations. The discussion at the meeting specifically referenced AB 2666 and SB 254 as examples of legislation that could be incorporated into this significant rewrite of the rate case plan.
The commission's recent actions reflect its continued efforts to navigate complex issues surrounding wildfire costs, utility financing models, and the extent of information utilities must provide in future rate cases. The initiation of the General Rate Case Plan rulemaking signifies a move towards modernizing how electric and gas utility rates are determined, with a stated focus on public benefit and regulatory efficiency. The new rulemaking process will now proceed to consider these broader changes.
