Pacific Gas & Electric (PCG)

Revenue Requirements

        Before the rates for the Utility's electricity and natural gas utility services can be set, revenue requirements must first be determined. The components of revenue requirements for electricity and natural gas utility service include depreciation, operating, administrative and general expenses, taxes and return on investment, as applicable, for each area of these services, including distribution, transmission, transportation, generation, procurement and public purpose programs. Revenue requirements are designed to allow a utility an opportunity to recover its reasonable costs of providing utility services, including a return of, and a fair rate of return on, its investment in utility facilities, or rate base. Revenue requirements are then allocated among customer classes and specific rates designed to produce the required revenue are established. In the Utility's rate cases, intervenors have the opportunity to comment on the Utility's application. The issues raised by these comments are then resolved by the appropriate regulatory agency. If the Utility and the intervenors can settle these issues, these settlements are submitted to the regulatory agency for approval.