[BETA] Fortnightly

The California Public Utilities Commission has rejected a request by Pacific Gas and Electric Co., for a waiver from scheduled rate reductions mandated under a three-year base-rate plan approved in December 1995.

The court said the company has shown no "extraordinary circumstances" to support breaking the three-year rate contract.

The utility had claimed it would incur greater-than-expected maintenance and service expenses in areas such as tree trimming, meter reading and meter repair. The utility also claimed that a waiver was warranted because it had expected to have a performance-based rate plan in place by now.

While rejecting the waiver request, the commission emphasized the efficiency-related incentives inherent in traditional ratemaking methods as opposed to more modern "performance-based" rate plans.

The court explained that by establishing a three-year base revenue cycle under its traditional cost-of-service rate plan, it "knowingly provided an incentive for the utilities to become more productive in the years between test periods." Just as it is inconsistent with this ratemaking policy to reduce the base revenue requirement between general rate cases when costs go down, it is inconsistent to selectively grant the utility interim increases in areas where it finds its costs may be going up, the commission said. Re Pacific Gas and Electric Co., Application 96-04-002, Decision 96-12-066, Dec. 20, 1996 (Cal.P.U.C.).

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