Summary - California
?PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIAENERGY DIVISION RESOLUTION E-5071 August 27, 2020 RESOLUTIONResolution E-5071. San Diego Gas & Electric’s adjustment to reflect the equity rate base exclusion for wildfire mitigation capital expenditures required by Assembly Bill 1054.PROPOSED OUTCOME: This Resolution adopts San Diego Gas & Electric’s (SDG&E) adjustment to reduce its Post Test Year (PTY) revenue requirements by $7.2 million, $11.0 million, and $10.4 million in PTYs 2020, 2021, and 2022, respectively. SAFETY CONSIDERATIONS:There are no safety considerations associated with this resolution.ESTIMATED COST: This Resolution is expected to reduce costs for SDG&E’s ratepayers by a combined $28.6 million from PTY 2020 through PTY 2022. By Advice Letter 3488-E and supplementals 3488-E-A and 3488-E-B, filed on December 30, 2019, March 4, 2020 and July 10, 2020, respectively. __________________________________________________________SummaryThis Resolution approves SDG&E’s Tier 3 Advice Letter (AL) 3488-E and supplemental ALs 3488-E-A and 3488-E-B, requesting to reduce PTY revenue requirements by $7.2 million in 2020, $11.0 million in 2021 and $10.4 million in 2022. SDG&E filed AL 3488-E pursuant to Ordering Paragraph 6 of Decision (D).19-09-051 and filed supplemental ALs 3488-E-A and 3488-E-B at the request of Energy Division.BackgroundOn October 6, 2017, SDG&E filed its Test Year 2019 General Rate Case (GRC) Application (A.)17-10-007.On July 12, 2019, Assembly Bill (AB) 1054 was signed into law. AB 1054 includes a provision requiring that the California Public Utilities Commission (CPUC) excludes the first $5 billion of aggregate wildfire mitigation capital expenditures from equity rate base for the three large electric investor-owned utilities. On October 1, 2019, the CPUC issued SDG&E GRC D.19-09-051 that includes Ordering Paragraph 6: …SDG&E shall file a Tier 3 Advice Letter concurrent with its year-end adjustment filing for 2019, providing a detailed explanation and showing of the revenue requirement impact of the Public Utilities Code section 8386.3(e) equity rate base exclusion when it makes its annual PTY revenue requirement implementation filings.On December 30, 2019, SDG&E filed Tier 3 AL 3488-E reducing PTY revenue requirements by $8.3 million in 2020, $10.9 million in 2021 and $10.3 million in 2022 in compliance with OP 6 of D. 19-09-051. On March 4, 2020, SDG&E filed supplemental AL 3488-E-A clarifying the timing of the $8.3 million refund for PTY 2020, stating that implementation would occur via electric distribution rates at SDG&E’s next revenue requirement change, either at April 1, 2020, or at the year-end rate change scheduled for January 1, 2021. On March 23, 2020, the Protect Our Communities Foundation (POC), filed a protest to supplemental Advice Letter 3488-E-A. SDG&E replied to the protest on March 30, 2020.On May 1, 2020 the CPUC published draft resolution E-5071 and a letter to parties containing instructions for submitting comments to the draft resolution. On May 21, 2020 SDG&E and POC filed comments on draft resolution E-5071. On July 10, 2020, SDG&E filed supplemental AL 3488-E-B and on July 30, 2020, POC filed a protest to supplemental AL 3488-E-B. SDG&E replied to the protest on August 6, 2020.NoticeNotice of AL 3488-E was made by publication in the Commission’s Daily Calendar. SDG&E states that a copy of the Advice Letter was mailed and distributed in accordance with Section 4 of General Order 96-B. ProtestsOn March 23, 2020, POC filed a timely protest to SDG&E supplemental Advice Letter 3488-E-A. On July 30, 2020 POC filed a timely protest to SDG&E supplemental AL 3488-E-B. The issues raised by POC in the protests are discussed below.DiscussionOn July 12, 2019, AB 1054 was signed into law by the Governor of California. Among its many provisions, AB 1054 added Section 8386.3(e) to the Public Utilities Code (PUC). Section 8386.3(e) states: The commission shall not allow a large electrical corporation to include in its equity rate base its share, as determined pursuant to the Wildfire Fund allocation metric specified in Section 3280, of the first five billion dollars ($5,000,000,000) expended in aggregate by large electrical corporations on fire risk mitigation capital expenditures included in the electrical corporations’ approved wildfire mitigation plans. An electrical corporation’s share of the fire risk mitigation capital expenditures and the debt financing costs of these fire risk mitigation capital expenditures may be financed through a financing order pursuant to Section 851, subject to the requirements of that financing order. Excluding capital expenditures from equity rate base, as required by Section 8386.3(e), means that the capital-related shareholder return on equity (ROE), (and associated income taxes) is removed from the utility’s revenue requirement and replaced with less costly debt financing. As a result, implementing the Section 8386.3(e) capital exclusion from equity rate base saves utility rate payers money by reducing financing costs in rates.Financing capital expenditures with debt is less expensive than financing with equity, because debt is viewed as less risky by investors and thus a lower risk premium is required by investors. For example, SDG&E’s PTY 2020 adopted cost of equity financing is 10.20%, while SDG&E’s adopted cost of debt financing is 4.59%. For ratemaking purposes, a utility’s capital expenditures are accounted for in its rate base, which is financed by a roughly 50/50 mix of debt and equity. This mix, weighted by the individual authorized costs of equity and debt, results in a ratio known as the rate of return. SDG&E’s 2020 Commission-authorized rate of return is 7.55%. The significance of the authorized rate of return is that prior to implementation of Section 8386.3(e) SDG&E ratepayers would have been required to finance the related capital at 7.55%, plus tax impacts, however, after implementation of Section 8386.3(e) ratepayers will finance the related capital at the 4.59% cost of debt only for PTYs 2020-2022. For each year after 2022, SDG&E will reflect the exclusion from equity rate base for the entire useful life of these capital expenditures. SDG&E’s MethodologyAs referred to in Section 8386.3(e), PUC Section 3280 states that SDG&E’s allocation metric is 4.3% of the excluded $5 billion aggregate large electric corporation spending, meaning that SDG&E is required to exclude $215 million of approved wildfire mitigation plan capital expenditures from equity rate base.As set forth in AL 3488-E, SDG&E’s method for implementing the requirement of Section 8386.3(e) begins by tracking approved wildfire mitigation capital expenditures as of August 1, 2019, the first month after AB 1054 was signed into law. SDG&E notes this is consistent with the application of Section 8386.3(e) proposed by the other large electrical corporations. Next, SDG&E sets forth a schedule of the capital expenditures from 2019 through 2020 and the related capital deployment from PTY 2020 through PTY 2022. SDG&E then computes the standard revenue requirement using its 7.55% rate of return and compares it to the revenue requirement result using its 4.59% cost of debt only.Supplemental AL 3488-E-ASDG&E filed supplemental AL 3488-E-A on March 4, 2020 clarifying the proposed implementation of the calculated reductions to revenue requirement. AL 3488-E-A states: The implementation of this refund will be part of SDG&E’s next available revenue requirement rate change and will be amortized through the end of the year. Currently, SDG&E is expected to implement a revenue requirement rate change April 1, 2020 for the Self-Generation Incentive Program (SGIP) pursuant to D.20-01-021 and SDG&E’s 2019 ERRA Trigger Application (D.20-02057). Subsequent to April 1, 2020, SDG&E’s next expected revenue requirement rate change will be submitted through its year-end electric consolidated advice letter for rates effective January 1, 2021. SDG&E filed supplemental AL 3488-E-A at the request of Energy Division for more clarification regarding the timing of the implementation of the proposed refunds. Supplemental AL 3488-E-BAt the request of Energy Division, SDG&E filed supplemental AL 3488-E-B on July 10, 2020 updating its equity rate base exclusion calculations to reflect its actual wildfire mitigation capital expenditures from August 1, 2019 through April 30, 2020. Supplemental AL 3488-E-B states that the updated capital expenditures are included in five capital electric distribution system hardening programs approved in its 2019 GRC. In addition, supplemental AL 3488-E-B includes updated revenue requirement adjustments and related tables. Table 1: from SDG&E AL 3488-E-B:As shown in Table 1 included with supplemental AL 3488-E-B, SDG&E is scheduled to reach its first $215 million in capital expenditures during PTY 2020. By comparing the revenue requirement on the capital using the full 7.55% rate of return to the revenue requirement using the 4.59% cost of debt only, SDG&E is able to isolate the revenue requirement difference that is equivalent to including the capital in equity rate base. For example, SDG&E calculates a $18.0 million revenue requirement using the adopted 7.55% rate of return on PTY 2020 capital placed in service while calculating a $10.8 million revenue requirement using only a debt return of 4.59% on the same capital placed in service. The difference between the two revenue requirements for PTY 2020 is $7.2 million, which represents the return on equity-related revenue requirement for the capital.SDG&E then proposes reducing the revenue requirement by $7.2 million in 2020, $11.0 million in 2021, and $10.4 million in 2022 in order to comply with the equity rate base exclusion required by Section 8386.3(e).SDG&E supplemental AL 3488-E-B also includes a revised Attachment A with additional calculation details. For example, Table 2 below is reproduced from Attachment A and demonstrates how SDG&E arrives at the $7.2 million reduction for PTY 2020:Table 2: from SDG&E AL 3488-E-B, Attachment A(dollars in millions)As shown in Table 2, the $7.2 million reduction for PTY 2020 is mostly attributed to the removal of the Return on Common Equity and the associated taxes, while there is an offsetting increase for the additional cost of debt that replaces the equity financing. Depreciation expense remains unchanged as the amount of capital deployed is the same under either scenario.CPUC Review of SDG&E’s ProposalFrom a practical standpoint, by excluding capital expenditures from equity rate base, Section 8386.3(e) ensures that large electric corporation shareholders will not profit from the first $5 billion spent, in aggregate, on approved wildfire mitigation capital expenditures. Consistent with PUC Section 8386.3(e), SDG&E is seeking to exclude its share “of the first five billion dollars … expended in aggregate by large electrical corporations on fire risk mitigation capital expenditures included in the electrical corporations’ approved wildfire mitigation plans.” In order to grant this request, here we consider two factors. First, we consider whether the expenditures are included in an approved wildfire mitigation plan as required by Section 8386.3(e). Second, we consider whether the expenditures have been found just and reasonable in a general rate case or other application, as set forth in Section 8386.4(b)(1). In supplemental AL 3488-E-B, SDG&E demonstrated that the programs comprising the $215 million in excludable capital expenditures were approved by the Commission in its recent GRC and that its WMPs have been approved by the Commission. Therefore, the Commission finds that SDG&E has received the approvals to exclude its first wildfire risk mitigation spending from its equity rate base.From a ratemaking implementation standpoint, excluding certain capital from equity rate base is a financial adjustment that reduces financing costs for approved wildfire mitigation plan capital expenditures by substituting the full rate of return with the debt only return. Thus, for SDG&E, the exclusion from equity rate base can be distilled to a dollar amount reduction to its annual revenue requirement. It is therefore reasonable for SDG&E to determine ratepayer savings for PTYs 2020-2022 from the AB 1054 equity rate base exclusion by calculating the difference between the revenue requirement on the capital expenditures using the full 7.55% rate of return and the revenue requirement on the same capital expenditures using the 4.59% return on debt. Since AB 1054 became law on July 12, 2019 and capital accounting systems generally work on a monthly accrual basis, it is also reasonable for SDG&E to begin tracking its $215 million of excludable capital expenditures as of August 1, 2019.With respect to SDG&E ‘s statement indicating its intent to file a financing order application, we find this to be consistent with language in PUC Sec. 8386.3(e):…An electrical corporation’s share of the fire risk mitigation capital expenditures and the debt financing costs of these fire risk mitigation capital expenditures may be financed through a financing order pursuant to Section 851, subject to the requirements of that financing order.The CPUC has reviewed SDG&E AL 3488-E, supplemental ALs 3488-E-A and 3488-E-B, and SDG&E’s underlying calculations that substantiate Tables 1 and 2, and finds the proposed revenue requirement reductions and the timing for such reductions contained therein to be reasonable. SDG&E AL 3488-E and supplemental ALs 3488-E-A and 3488-E-B therefore, are approved.It is important to note that the revenue requirement adjustments proposed by SDG&E in supplemental AL 3488-E-B for PTYs 2020-2022 are not the final equity rate base adjustments related to the $215 million capital expenditures. Pursuant to PUC Section 8386.3(e), SDG&E will be required to reflect the exclusion from equity rate base in each year after 2022 for the entire useful life of these capital expenditures. Protest of the Protect Our Communities Foundation to supplemental AL 3488-E-A and SDG&E’s reply POC’s protest states that supplemental AL 3488-E-A “neither explains what additional information was requested nor how the information provided in the Advice Letter meets those requirements. Nor is it clear as to whether SDGE [sic] 3488-E-A is in fact adding to Advice Letter 3488-E or eliminating aspects of Advice Letter 3488-E.”Regarding the additional information, supplemental AL 3488-E-A contains a section titled “Discussion- Timing Of Refund” that explains that implementation of the PTY 2020 refund “will be part of SDG&E’s next available revenue requirement rate change and will be amortized through the end of the year.” This information was not previously included in AL 3488-E and therefore provides the additional information. Regarding the protest’s concern whether supplemental AL 3488-E-A is eliminating aspects of the original AL 3488-E, supplemental AL 3488-E-A clearly states that it “supplements in part and will not change the integrity of the original AL 3488-E” As a result, the Commission finds that supplemental AL 3488-E-A does not eliminate any information contained in AL 3488-E. POC’s protest adds that “Advice Letter 3488-E-A fails to include any reference to the recent decision D.20-01-002 which is currently under discussion in I.19-10-010/011, requires SDG&E to file a petition to modify D.19-09-051 in A.17-10-007, and which involves SDG&E’s requested revenue requirements in 2022 and 2023.” However, as noted in SDG&E’s reply, AL 3488-E was not protested and the Commission’s General Order (GO) 96-B, General Rule 7.5.1, states that “any new protest shall be limited to the substance of the supplemental or additional information contained herein.”Supplemental AL 3488-E-A contains additional information related to the timing of the PTY 2020 customer refund, does not eliminate information from AL 3488-E (which was not protested) and does not reference D.20-01-002. Therefore, pursuant to GO 96-B, POC’s protest should be limited to the additional information presented in supplemental AL 3488-E-A.The protest further states that “Although the decision in the cost of capital proceeding was issued on December 20, 2019, SDG&E provides no update or explanation regarding the effect of D.19-12-056 on this Advice Letter or how this Advice Letter incorporates the holdings of D.19-12-056.” Again, pursuant to GO 96-B General Rule 7.5.1, supplemental AL 3488-E-A does not discuss SDG&E’s cost of capital proceeding, therefore POC’s protest should be limited to the additional information presented. Nevertheless, SDG&E’s reply explains that as a result of D.19-12-056 and AL 3499-E/2836-G “all the components of SDG&E’s Cost of Capital will remain unchanged from D.17-07-005.” As a result, there will be no impact from SDG&E’s recent Cost of Capital proceeding on AL 3488-E or supplemental AL 3488-E-A.To summarize, the Commission finds that the protest’s concerns regarding the possible elimination of information from AL 3488-E is unwarranted, discussion of D.20-01-002 is out of scope, and there is no impact from SDG&E’s cost of capital proceeding on the PTY refund amounts calculated in AL 3488-E. For the reasons stated above, POC’s protest of supplemental AL 3488-E-A is denied. Protest of Protect Our Communities Foundation to supplemental AL 3488-E-B and SDG&E’s reply. As mentioned above, SDG&E AL 3488-E was not protested by any party and the Commission’s GO 96-B, General Rule 7.5.1 regarding supplemental advice letter filings states that “Any new protest shall be limited to the substance of the supplemental or additional information.” Nevertheless, POC’s protest to supplemental AL 3488-E-B contains certain arguments that are not limited to the additional information presented by SDG&E in supplemental AL 3488-E-B. For example, while supplemental AL 3488-E-B only updates SDG&E’s AB 1054 revenue requirement decrease to use recorded capital expenditures through April 30, 2020, POC’s protest to supplemental AL 3488-E-B argues that ratepayers should not have to pay for “SDG&E’s unjustified and unreasonable” Wildfire Mitigation Plan (WMP) capital expenditures because SDG&E’s 2019 and 2020 WMPs have not been approved by the commission, nor have any SDG&E WMP capital expenditures been approved during GRCs. This Resolution only relates to WMP expenditures already approved by the Commission, as explained below. Consistent with GO 96-B, General Rule 7.5.1, the remainder of this section will focus on addressing the arguments in POC’s protest that deal with the substance or additional information presented in supplemental AL 3488-E-B.Regarding POC’s assertion that “Any consideration of SDG&E’s revenue requirement or rate adjustments should only be considered through the formal GRC process, which is ongoing in a separate Commission proceeding,” POC’s assertion in this instance is incorrect. As noted in SDG&E’s reply, SDG&E was specifically directed by its GRC decision D.19-09-051 to file a Tier 3 AL to adjust its PTY revenue requirements beginning with PTY 2020. In compliance with D.19-09-051, SDG&E filed AL 3488-E which was not protested by any party. POC also argues that “revenue reductions and related matters should be considered in A.17-10-007 or another formal proceeding” and while citing to events in other proceedings and decisions that have occurred after D.19-09-051 was issued, states that “aforementioned developments render consideration of capital expenditures by advice letter inappropriate.” However, supplemental AL 3488-E-B is not considering capital expenditures and does not discuss subsequent events or proceedings– AL 3488-E-B only updates the revenue requirement savings to be based on actual expenditures through April 30, 2020 related to programs that have already been considered and approved in the 2019 GRC. Furthermore, these arguments do not adhere to the subject matter limitations for supplemental Advice Letters required by Commission GO 96-B, General Rule 7.5.1 and are disregarded here.POC also asserts that “AL 3488-E-B omits any reference to an application filed by SDG&E seeking approval of any WMP capital expenditures, to any decision by the Commission approving such an application, or to any GRC proceeding in which SDG&E’s WMP was the subject of testimony and before the Commission.” AL 3488-E-B actually contains multiple detailed references demonstrating the WMP capital expenditures subject to the equity rate base exclusion were approved in the 2019 GRC, including citations to program names, budget codes, exhibit numbers and decision page numbers. As a result, we disagree with POC that these WMP capital expenditures have not yet been approved in a GRC.Similarly, POC argues that the five WMP capital expenditure programs listed by SDG&E in AL 3488-E-B as being approved in the 2019 GRC were in existence before SDG&E’s first WMP was submitted to the Commission, and thus “could not have been approved in the context of approving wildfire mitigation plan expenditures pursuant to SB 901 which was effective January 1, 2019” including a review for cost-effectiveness. That the Commission first approved the costs in question as just and reasonable and then approved the WMP capital expenditures program is immaterial and the requirements of AB 1054 are satisfied. At the request of Energy Division, SDG&E’s AL 3488-E-B updated its equity rate base exclusion calculations to reflect actual WMP capital expenditures from August 1, 2019 through April 30, 2020. AL 3488-E-B provided further information showing these five capital expenditure programs were approved by the Commission in the 2019 GRC. To summarize, supplemental AL 3488-E-B simply updates the required AB 1054 revenue requirement savings to include only actual recorded WMP-approved capital expenditures through April 2020 – expenditures that SDG&E has shown were already found reasonable in the 2019 GRC. POC’s protest fails to show that the capital expenditures cited by SDG&E were not approved in the 2019 GRC or that the amounts shown in AL 3488-E-B are not recorded expenditures. POC’s protest also does not provide evidence that the revenue requirement savings calculations that are the subject of AL 3488-E-B are invalid. For the reasons stated above, POC’s protest of supplemental AL 3488-E-B is denied.The Commission approves the revenue requirement reductions for PTYs 2020, 2021 and 2022 proposed by SDG&E in supplemental AL 3488-E-B. The PTY 2020 reduction of $7.2 million shall be implemented during SDG&E’s next available revenue requirement change. If SDG&E’s next available revenue requirement change is not until January 1, 2021, SDG&E will include the PTY 2020 reduction of $7.2 million, simultaneously with the PTY 2021 revenue requirement reduction of $11.0 million. The PTY 2022 reduction of $10.4 million shall be included in SDG&E’s annual revenue requirement implementation filing effective for January 1, 2022. CommentsPublic Utilities Code section 311(g)(1) provides that this resolution must be served on all parties and subject to at least 30 days public review. Please note that comments are due 20 days from the mailing date of this resolution. Section 311(g)(2) provides that this 30-day review period and 20-day comment period may be reduced or waived upon the stipulation of all parties in the proceeding. The 30-day review and 20-day comment period for the draft of this resolution was neither waived nor reduced. Accordingly, this draft resolution was mailed to parties for comments on May 1, 2020.SDG&E and POC submitted comments on May 21, 2020. The comments are summarized below. SDG&E suggests that certain language regarding the financial impact of removing capital expenditures from equity rate base be deleted because it “appears to provide a justification for the required exclusion from equity rate base.” This suggestion is denied because rather than providing a reason or justification for the equity rate base exclusion, the language cited by SDG&E provides a necessary technical explanation for why the removal of capital expenditures from equity rate base results in a reduction to revenue requirement.SDG&E also proposes revisions to page 4 of the draft resolution to clarify the ongoing nature of the equity rate base adjustments. As a result, the resolution is modified to clarify that for each year after 2022, SDG&E is required to reflect the exclusion from equity rate base for the entire useful life of the related capital expenditures. POC’s comments take issue with the draft resolution’s interpretation of AB 1054 and recommend the Commission reject SDG&E AL 3488-E and supplemental AL 3488-E-A based on the premises that “SDG&E has neither an approved wildfire mitigation plan nor any approved wildfire mitigation plan capital expenditures.”With regard to whether SDG&E’s 2019 Wildfire Mitigation Plan (2019 WMP) has been approved, POC points to D.19-05-039 and states that “SDG&E’s 2019 WMP persists as the only 2019 WMP that was neither approved nor conditionally approved by the Commission in May of 2019. D.19-05-039 discusses the approval of SDG&E’s 2019 WMP and concludes “SDG&E’s WMP contains each of the elements required by Public Utilities Code Section 8386(c).” The question of what constitutes approval was examined in WMP Rulemaking (R).18-10-007 with WMP Guidance D.19-05-036 concluding “the statute provides the answer: approval means that every WMP contains 19 elements that the SB 901 Legislature deemed essential to catastrophic wildfire mitigation.” As a result, SDG&E’s 2019 WMP was deemed approved when D.19-05-039 found that SDG&E’s 2019 WMP met the statutory burden for approval. Similarly, SDG&E’s 2020 WMP was approved (after POC filed its Comments) by Commission Resolution WSD-005.With regard to Commission approval of SDG&E’s 2019 WMP capital expenditures, POC asserts that no already-approved wildfire mitigation plan expenditures exist because “Neither SDG&E’s TY 2019 GRC application nor the testimony presented by SDG&E in support thereof included SDG&E’s 2019 WMP, because SDG&E had not yet created or filed its WMP at the time it submitted its GRC application or presented testimony.” POC’s assertion is incorrect. To clarify, POC contends that SDG&E’s TY 2019 GRC could not have approved capital expenditures included in the 2019 WMP because SDG&E filed its 2019 WMP with the CPUC after it filed its application for its TY 2019 GRC. However, simply because a GRC application was filed prior to a WMP filing does not mean that capital expenditure programs requested in that GRC application cannot be included in a subsequently filed Wildfire Mitigation Plan. For example, as described above, SDG&E’s approved 2019 WMP includes the Fire Risk Mitigation (FiRM) and Pole Risk Mitigation and Engineering (PRiME) programs which are discussed (and costs approved) in GRC D.19-09-051. This treatment is consistent with CPUC practice that cost recovery of approved WMPs is to be addressed in GRCs or other proceedings.With regard to the draft resolution’s interpretation of AB 1054, POC states “The Draft Resolution interprets AB 1054 as requiring rate reductions after wildfire mitigation plan capital expenditures have already been approved, but the Draft Resolution purports to authorize reductions before any wildfire mitigation plan capital expenditures have in fact been approved” As discussed above, SDG&E wildfire mitigation capital expenditures were approved in GRC D.19-09-051. However, it is also true that AB 1054 statutory language only requires the excluded capital expenditures to be “included in the electrical corporations’ approved wildfire mitigation plans” and does not specifically require GRC approval before implementing the rate reductions. As a result, the draft resolution language has been modified to more precisely reflect the language of AB 1054.FindingsAB 1054, signed into law on July 12, 2019, requires the Commission to exclude the first $5 billion of approved wildfire mitigation capital expenditures of the three large electric IOUs from equity rate base.According to Public Utilities Code Section 3280, SDG&E’s share of the first $5 billion aggregate wildfire mitigation capital spending is 4.3%, or $215 million.August 1, 2019 is an acceptable date for SDG&E to begin tracking the $215 million of approved wildfire mitigation capital spending to be excluded from equity rate base.The Commission found in D.19-09-051 that SDG&E’s $215 million wildfire mitigation capital spending was just and reasonable. Ordering Paragraph 6 of D.19-09-051 directed SDG&E to file a Tier 3 Advice Letter “…providing a detailed explanation and showing of the revenue requirement impact of the Public Utilities Code section 8386.3(e) equity rate base exclusion when it makes its annual PTY revenue requirement implementation filings.”SDG&E’s underlying calculations and revenue requirement reductions set forth in supplemental AL 3488-E-B appropriately capture the equity rate base exclusion requirements of AB 1054 for years 2020, 2021, and 2022. The equity rate base exclusion described in Public Utilities Code Section 8386.3(e) is not limited to PTYs 2020-2022 and remains in effect for the entire useful life of the assets. Therefore it is ordered that:The request of SDG&E to reduce PTY revenue requirements by $7.2 million in 2020, $11.0 million in 2021, and $10.4 million in 2022 as proposed in supplemental Advice Letter 3488-E-B is approved without modification.SDG&E should implement the $7.2 million PTY 2020 revenue requirement reduction at the next possible rate change. If SDG&E’s next rate change takes place on January 1, 2021, SDG&E will implement the PTY 2020 savings of $7.2 million, concurrently with the $11.0 million savings for PTY 2021. SDG&E’s PTY 2022 revenue requirement reduction of $10.4 million shall be implemented effective January 1, 2022. Pursuant to Public Utilities Code Section 8386.3(e), for each year following 2022, SDG&E is required to reflect the equity rate base exclusion for the first $215 million of approved wildfire mitigation capital expenditures until the end of the useful life of the assets. This Resolution is effective today.I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on August 27, 2020; the following Commissioners voting favorably thereon:/s/ Alice StebbinsALICE STEBBINS Executive DirectorMARYBEL BATJER PresidentLIANE M. RANDOLPHMARTHA GUZMAN ACEVES CLIFFORD RECHTSCHAFFENGENEVIEVE SHIROMA Commissioners ................
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