Report 2022-115 Recommendation 1 Responses

Report 2022-115: Electricity and Natural Gas Rates: The California Public Utilities Commission and Cal Advocates Can Better Ensure That Rate Increases Are Necessary (Release Date: August 2023)

Recommendation #1 To: Public Utilities Commission

To promote transparency, the CPUC should by February 2024 institute a process that requires utilities to periodically publish actual rate-of-return calculations, using a methodology acceptable to the CPUC and to Cal Advocates.

1-Year Agency Response

The CPUC implemented a process requiring utilities to annually produce actual rate-of-return (ROR) calculations using a methodology consistent with ratemaking practices that was acceptable to both the CPUC and Cal Advocates. Furthermore, the audit recommendation does not state that the CPUC must develop and provide the utilities with a methodology. Instead, the CPUC required utilities to use a methodology consistent with ratemaking practices, acceptable to CPUC and Cal Advocates. The utilities' ROR information is posted to the CPUC's website. The CSA's recommendation has been fully implemented.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

The CPUC has established a process to require utilities to periodically publish actual rate-of-return calculations using a methodology acceptable to the CPUC and Cal Advocates. Staff have prepared an internal protocol and this new process was implemented in February 2024. (See CPUC Rate of Return Procedures)

California State Auditor's Assessment of 6-Month Status: Pending

Although the CPUC provided a policy that addresses this recommendation, it did not provide the methodology for utilities to calculate the actual rate-of-return. Until it does so, we will continue to report this recommendation as not fully implemented.

60-Day Agency Response

The CPUC is establishing a process to require utilities to periodically publish actual rate-of-return calculations using a methodology acceptable to the CPUC and Cal Advocates. Developing this process requires internal consultation among staff and may result in the creation of a written procedure.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2022-115

Agency responses received are posted verbatim.