The California Public Utilities Commission voted unanimously 5-0 on Sept. 3 to approve a limited exemption for PG&E related to state-backed Diablo Canyon costs. This decision came alongside the denial of PG&E's request to exclude wildfire-related expenses from its capital-structure calculations. The commission also voted 5-0 to open a new rulemaking aimed at revising the General Rate Case Plan, which guides how electric and gas utility general rate cases are conducted.
According to President Reynolds, PG&E had sought relief under affiliate transaction rule 9B for several significant cost categories. These included $625 million in long-term debt and $542 million in equity costs associated with the Kincade wildfire, as well as $277 million in long-term debt tied to the Dixie Fire. Additionally, the utility requested 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 grant the wildfire-cost exclusions requested by PG&E. However, the commission did approve a narrow capital-structure adjustment specifically for the Diablo Canyon costs backed by the Department of Water Resources loan. Reynolds and other commissioners noted that the DWR loan is unusual due to its interest-free nature, potential for forgiveness, and its connection to a legislative financing structure for Diablo Canyon. The commission's decision also imposes new reporting requirements for PG&E's next cost-of-capital application. These requirements include a true-up analysis of any surplus equity that may be attributable to wildfire costs and an updated status report on the forgiveness of the DWR loan.
Following these financial decisions, the commission moved to address the broader framework for utility rate setting. President Reynolds announced the opening of a new rulemaking to comprehensively revise the General Rate Case Plan. This plan, which dictates the process for electric and gas utility rate cases, has not undergone a full update since 2007. The new rulemaking is intended to consider widespread changes, including efforts to standardize filings, streamline the overall process, and integrate newer statutory requirements. Specific provisions related to affordability, accountability, and transparency are expected to be central to this rewrite. The discussion cited state laws AB 2666 and SB 254 as examples of legislation that could be incorporated into the revised plan.
The commission's actions reflect its ongoing efforts to grapple with complex issues, including how to account for wildfire costs, manage utility financing, and determine the scope and detail of information companies must provide in future rate cases. The new rulemaking will shape how utilities, including PG&E, propose their rates and manage their costs moving forward.
