Report 2022-115 Recommendation 2 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 #2 To: Public Utilities Commission

To promote transparency, when the actual rate of return significantly exceeds the authorized rate of return, the CPUC should require that the utilities identify the major costs categories where projected costs exceeded actual costs and provide supporting documents. The CPUC's Energy Division should then publish this information so that it is available to Cal Advocates and to other interested parties, and it should objectively analyze the information for the CPUC.

6-Month Agency Response

The CPUC has established an appropriate threshold for determining when a utility's actual rate of return has significantly exceeded its authorized rate of return, which is reflected in its new internal protocol implemented in February 2024. (See CPUC Rate of Return Procedures)

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

The CPUC has developed a policy that outlines that it will require a utility to identify the major cost categories where projected costs exceeded actual costs and provide supporting documents, when utility's actual rate of return significantly exceeds its authorized rate of return. However, it has not yet performed all steps outlined in its policy. Until it does so, we will continue to report this recommendation as not fully implemented.

60-Day Agency Response

The CPUC is establishing a threshold for determining when a utility's actual rate of return has significantly exceeded its authorized rate of return. This process consists of 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.