Item 8.01 Other Events.
Wildfire Mitigation and Catastrophic Events ("WMCE") Costs Recovery Application
On September 30, 2020, Pacific Gas and Electric Company (the "Utility"), a
subsidiary of PG&E Corporation, filed an application with the California Public
Utilities Commission (the "CPUC") requesting cost recovery of recorded
expenditures related to wildfire mitigation, certain catastrophic events, and a
number of other activities. The recorded expenditures exclude amounts
disallowed as a result of the CPUC's decision in the Wildfire Order Instituting
Investigation into the 2017 Northern California Wildfires and the 2018 Camp Fire
and consist of $1.18 billion in expense and $801 million in capital
expenditures, which translate to a revenue requirement of approximately $1.28
billion. The Utility refers to this application as the WMCE application.
The costs addressed in the WMCE application cover activities mainly during the
years 2017 to 2019 and are incremental to those previously authorized in the
Utility's 2017 General Rate Case ("GRC") and other proceedings. The majority of
costs addressed in this application reflect work necessary to mitigate wildfire
risk during the years 2017 to 2019 and to respond to catastrophic events
occurring in 2019. The Utility recorded these costs to the Fire Hazard
Prevention Memorandum Account (FHPMA), the Fire Risk Mitigation Memorandum
Account (FRMMA), the Wildfire Mitigation Plan Memorandum Account (WMPMA), and
the Catastrophic Event Memorandum Account (CEMA). The CEMA costs reflected in
the application include the Utility's costs incurred responding to ten
catastrophic events, including the 2017 Tubbs fire.
On February 7, 2020, in its Application for Wildfire Mitigation and Catastrophic
Events Interim Rates (the "Interim Rate Relief application"), the Utility
requested authorization to recover, on an interim basis, a portion of the costs
reflected in the WMCE application, seeking $891 million in revenue. On
September 18, 2020, the CPUC issued a proposed decision that would provide for
$447 million in interim relief in the Interim Rate Relief application. Based on
the procedural schedule, a final decision in the Interim Rate Relief application
could be voted out by the CPUC as soon as October 22, 2020.
In the WMCE application, the Utility proposes to recover the remaining revenue
requirement (not otherwise recovered through the Interim Rate Relief
application) over a one-year period following the conclusion of interim rate
relief recovery or over a two-year period if interim relief is not authorized by
the CPUC. The Utility has proposed a schedule that would call for a final
decision by the CPUC in September 2021. The Utility is unable to predict the
outcome and timing of the application.
For information about the Interim Rate Relief application, see PG&E Corporation
and the Utility's joint quarterly report on Form 10-Q for the period ended June
30, 2020.
Application to Sell General Office Complex
Also on September 30, 2020, the Utility filed an application with the CPUC to
authorize it to sell its San Francisco General Office headquarters complex (the
"SFGO") located at 215 Market Street, 245 Market Street, 77 Beale Street, 50
Main Street, 25 Beale Street, and 45 Beale Street in downtown San Francisco, and
relocate and consolidate this site and certain East Bay office locations into a
single Bay Area corporate headquarters located at 300 Lakeside Drive in Oakland
(the "Lakeside Building"), and for appropriate ratemaking treatment of those
transactions.
According to this application, the Utility proposes the SFGO sale and
headquarters transition proceed in several interrelated steps: the Utility will
enter into the lease, with an option to purchase, the Lakeside Building; the
Utility will initiate the sale process for, and ultimately sell, the SFGO,
subject to CPUC approval (the "SFGO Sale"); the Utility will enter into an
agreement with the buyer of the SFGO to lease back space during the multi-year
relocation period; and as space in the Lakeside Building becomes available
following the expiration of existing tenants' leases and completion of the
redevelopment of the property to the Utility's specifications, the Utility will
relocate employees and operations from the SFGO and certain East Bay office
locations to the Lakeside Building in phases over several years, beginning in
2022 (collectively, the "Transactions").
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Is this application, the Utility requests that the CPUC:
- authorize the Utility to sell the SFGO;
- approve the Utility's proposal to distribute all of the gain on sale of
the SFGO to customers on an annual basis over a period of five years,
beginning in 2022;
- determine that the Transactions are reasonable, and authorize the Utility
to recover (i) the costs of exercising the option to purchase the
Lakeside Building and include the costs in rate base; (ii) the costs of
leasing necessary space in both the SFGO and in the Lakeside Building
during the transition period (with the SFGO leased space decreasing as
the Lakeside Building space increases); and (iii) other transition and/or
transaction-related costs, in accordance with the ratemaking treatment
requested; and
- establish a balancing account to record lease payments, net savings or
costs on operating expense and capital expense, gain on sale, moving
costs and related costs for inclusion in electric and gas rates.
For information about the Lakeside Building lease, see PG&E Corporation and the
Utility's joint quarterly report on Form 10-Q for the period ended June 30,
2020.
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