Item 8.01 Other Events.
2020 General Rate Case
On December 20, 2019, Pacific Gas and Electric Company (the “Utility”), a subsidiary of PG&E Corporation, together with the California Public
Utilities Commission’s (“CPUC”) Public Advocates Office, The Utility Reform Network, Coalition of California Utility Employees, the CPUC’s Office of the Safety Advocate, the National Diversity Coalition, the Center for Accessible Technology, the
Small Business Utility Advocates, and California City County Street Light Association filed a motion with the CPUC seeking approval of a settlement agreement (the “settlement agreement”) that resolves all of the issues raised by these parties in the
Utility’s 2020 General Rate Case (the “GRC”).
In the GRC proceeding, the CPUC will determine the annual amount of base revenues (or “revenue requirements”) that the Utility will be authorized to
collect from customers from 2020 through 2022 to recover its anticipated costs for electric distribution, natural gas distribution, and electric generation operations and to provide the Utility an opportunity to earn its authorized rate of return.
The Utility’s request also reflected an updated capital forecast for 2018 and 2019.
Revenue Requirements and Attrition Year Revenues
The settlement agreement proposes that the Utility’s 2019 authorized revenue requirement of $8.5 billion be increased by $575 million, effective January
1, 2020, to $9.1 billion. The settlement agreement further provides for an increase of $318 million to the authorized 2020 revenue requirement in 2021 and an additional increase of $367 million in 2022, as shown in the table below.
The table below summarizes the differences between the amount of revenue requirement increases included in the Utility’s application on December 13,
2018, as updated in its testimony on November 1, 2019 (the “GRC application”), and the amount in the settlement agreement:
The following table shows the difference between the Utility’s requested increases in its GRC application in 2020 revenue requirements by line of
business and the amounts in the settlement agreement:
(1) Amounts may not sum due to rounding.
The following table shows the differences, based on line of business and cost category, between the amount of revenue requirements requested by the Utility in its GRC
application and the amount in the settlement agreement, as well as the differences between the 2019 authorized revenue requirements and (i) the GRC application and (ii) the amounts in the settlement agreement:
(1) Amounts may not sum due to rounding.
For the Utility’s largest requests in the GRC application, the Community Wildfire Safety Program (the “CWSP”) and excess liability insurance costs, the
settlement agreement includes the following terms:
Capital Additions and Rate Base
The settlement agreement proposes a 2020 weighted average rate base of approximately $29.4 billion for the portions of the Utility’s business reviewed in
the GRC, compared with the Utility’s request of approximately $29.9 billion. The $0.5 billion difference is primarily due to the lower level of working capital, depreciation and other reductions in the settlement agreement. This rate base amount
includes $601 million of forecast capital spend in 2020 that will not earn an equity return, pursuant to AB 1054. The Utility is in the process of preparing a five-year financial forecast, including projected capital expenditure assumptions, in
connection with its chapter 11 proceedings. While the Utility currently is evaluating capital expenditure assumptions, capital additions and rate base amounts may materially increase from the current forecast.
Over the 2020-2022 GRC period, the settlement agreement provides average annual capital investments of approximately $4.6 billion in electric
distribution, natural gas distribution and electric generation infrastructure. While the settlement agreement proposes overall revenue requirement increases for 2021 and 2022, it does not specify capital expenditures for those years.
Consistent with the Utility’s GRC application, the settlement agreement does not propose funding for claims resulting from the 2017 Northern California
wildfires or the 2018 Camp fire. Also, the Utility is not seeking recovery of compensation of PG&E Corporation’s and the Utility’s officers.
In order to allow settlement discussions to proceed, on December 2, 2019, the CPUC revised the procedural schedule for this proceeding. Briefs on
disputed issues outside of the settlement agreement and comments on the settlement agreement will be submitted by February 5, 2020. Also, on November 7, 2019, the CPUC issued a decision to allow the authorized revenue requirement changes to become
effective on January 1, 2020, even if the final CPUC decision is issued after that date.
Other parties may contest the settlement agreement, which will be subject to public comment in the GRC proceeding and considered by the CPUC. PG&E
Corporation and the Utility are unable to predict the timing and outcome of this proceeding.
Following the settlement and based on other facts and circumstances known to PG&E Corporation and the Utility as of the date of this filing, PG&E Corporation and
the Utility expect to remain on track to satisfy the rate base conditions included in their exit financing documents.
For more information about this proceeding, see PG&E Corporation and the Utility’s joint Annual Report on Form 10-K for the year ended December 31,
2018 and their joint Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019.
Forward-Looking Statements
This Current Report on Form 8-K includes forward-looking statements that are not historical facts, including statements about the beliefs, expectations,
estimates, future plans and strategies of PG&E Corporation and the Utility, including but not limited to PG&E Corporation's and the Utility’s ability to satisfy the conditions included in their exit financing documents, including those
related to rate base and other regulatory matters. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to
various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed
in PG&E Corporation and the Utility’s joint Annual Report on Form 10-K for the year ended December 31, 2018, their joint Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019, and September 30, 2019, and their
subsequent reports filed with the Securities and Exchange Commission. Additional factors include, but are not limited to, those associated with the voluntary cases commenced by each of PG&E Corporation and the Utility under chapter 11 of title 11
of the United States Code on January 29, 2019 and PG&E Corporation’s and the Utility’s ability to satisfy the conditions included in their exit financing documents, including those related to rate base and other regulatory matters. PG&E
Corporation and the Utility undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.