PG&E and AFUDC
PG&E requested an expedited decision from FERC on its request in Docket No. AC19-122 whereby PG&E proposed to determine its AFUDC rate in a manner that excludes certain liability provisions required by GAAP that do not have an impact on cash available to fund construction. Specifically, PG&E had requested the Commission’s authorization to exclude from the AFUDC rate formula calculation the 2017 Northern California Wildfires and the 2018 Camp Fire contingent liabilities, net of accrued insurance proceeds and accrued tax benefits (and any future regulatory asset offset), from its equity balance (i.e., capital structure calculation). On October 15, 2020, PG&E filed an Offer of Settlement and Stipulation (Settlement) in its Formula Rate Proceedings (ER19-13, ER19-1816 and ER20-2265) which included adjustments to PG&E’s regulatory capital structure used in its Formula Rate. In the Settlement, the Parties agreed to a fixed capital structure for use in the Formula Rate with common stock being fixed at 49.75%, preferred stock being fixed at 0.5%, and long-term debt being fixed at 49.75%. The Parties also agreed that this capital structure should be used in PG&E’s AFUDC calculation for the permanent capital component of the AFUDC rate. As a result, PG&E revised its request in Docket No. AC19-122 to reflect the terms of the settlement as to how the AFUDC calculation adjustment to the permanent capital component (i.e., non short-term debt) of the AFUDC rate be determined. PG&E requested that these changes apply to AFUDC calculations effective as of May 1, 2019 through June 30, 2020 as the 2017 Northern California Wildfires and the 2018 Camp Fire contingent liabilities were paid upon PG&E’s emergence from bankruptcy on July 1, 2020.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.