The California Public Utilities Commission (CPUC) has issued a proposed decision on a rate case involving Sempra subsidiaries which includes a 10.5% rate hike for San Diego Gas & Electric (SDG&E) customers.
The decision adopts a 2024 Test Year revenue requirement of $2.8 billion for SDG&E’s combined operations ($2.198 billion for electric and $602.123 million for natural gas operations), which is $206.6 million lower than the $3.007 billion that SDG&E had requested. The adopted combined operations’ revenue requirement represents an increase of $267 million, or a 10.5% increase, over 2023 current combined revenue requirement of $2.533 billion.
Based on a high-level estimate in the proposed decision, it is anticipated that a typical non-California Alternate Rates for Energy (CARE) residential electric customer can expect a monthly bill increase of $4.46 or 2.7%, and a CARE residential electric customer can expect a monthly bill increase of $2.90 or 2.7%. An average SDG&E non-CARE residential gas customer can expect a monthly bill increase of $5.01 or 8.6 percent, and a CARE residential gas customer can expect an increase of $3.47 or 8.8 percent for gas services.
The decision also involved Sempra subsidiary Southern California Gas, which is receiving a 14.5% rate hike.
CPUC said the largest driver of the rate increases is the maintenance and replacement of aging pipeline infrastructure and monitoring equipment as part of the integrity management programs required to meet federal and state safety requirements. The proposed decision also authorizes 99% of SDG&E’s investments to modernize the electric grid and upgrade and construct substations, CPUC added.
Additionally, the rate increases are meant to support the undergrounding of additional miles of electric lines, but not to the degree that SDG&E originally requested. SDG&E asked for a four-year budget of $1.9 billion to underground 605 miles and install covered conductors on 180 miles of electric lines. Instead, the proposed decision authorizes an annual budget of $154.5 million to underground 35 miles and install covered conductors on 100 miles of electric lines. The funding also allows SDG&E to continue work to harden its grid and reduce wildfire risks.
The proposed decision also authorizes clean energy innovations that CPUC says the utilities have demonstrated would benefit ratepayers and be cost-effective. However, the decision does not authorize “other innovations,” such as hydrogen, that have “not been demonstrated to be directly related to its core function of providing safe and reliable natural gas service,” CPUC indicated.
In May 2022, SoCalGas and SDG&E originally filed the applications seeking CPUC approval for rate increases. The utilities modified their request in July 2023.
CPUC noted that SDG&E’s request to recover approximately $775 million of incremental cost recorded in wildfire mitigation costs between 2019 and 2022 will be addressed in Track 2 of the current proceeding.
Comments by parties on the proposed decision are due by November 7, with reply comments due by November 12. The proposed decision is currently scheduled to be on the December 5, 2024 CPUC Voting Meeting agenda.
In May this year, CPUC adopted a decision to implement a flat rate meant to reduce electricity prices and accelerate electrification. CPUC says the rate lowers overall electricity bills on average for lower-income households and those living in regions most impacted by extreme heat events.
