PCG » Topics » Cost of Service Ratemaking

This excerpt taken from the PCG 10-K filed Feb 18, 2005.

Cost of Service Ratemaking

        In January 2004, the CPUC determined that the retail electric rate freeze implemented as part of electric industry restructuring in 1998 ended on January 18, 2001. In February 2004, the CPUC approved a rate design settlement to implement an annual electricity rate reduction of approximately $799 million to begin on January 1, 2004. As a result of the Settlement Agreement and these CPUC decisions, the Utility's rates are now determined based on its costs of service. Electric rates reflect the sum of individual revenue requirement components, including base revenue requirements set by general rate cases as described below, revenue requirements for the regulatory assets provided under the Settlement Agreement, electricity procurement costs, and the DWR's requirement, among others. Changes in any individual revenue requirement will change customers' electricity rates and the Utility's revenues.

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