What is the impact of this final GRC decision on Sempra's revenue?

The final decision approves higher revenue requirements for both SDG&E and SoCalGas, totaling approximately $1.733 billion for SDG&E and $1.959 billion for SoCalGas for 2012. These increases are retroactive, meaning the company will recognize a cumulative revenue impact in the second quarter of 2013 and will recover these amounts over the next 28-30 months through customer rates.

How do the approved revenue increases compare to the proposed decision?

The final decision is more favorable than the proposed decision (PD) in several key areas. It corrects discrepancies identified by the utilities, increases revenue for pension funding, provides additional funds for critical gas operations and customer service at SoCalGas, and allows for higher funding of employee incentive compensation plans. These adjustments are expected to increase the final revenue requirements compared to the PD.

What is the 'Z-Factor' mechanism and is it still active?

The Z-Factor mechanism allows SDG&E and SoCalGas to seek recovery for significant, unforeseen cost increases that occur between GRC filings, subject to a $5 million deductible per event. This mechanism will continue through 2015 under the terms of the final decision, providing a potential avenue for additional revenue recovery under specific circumstances.

When will customers see the impact of these retroactive revenue increases on their bills?

While the revenue is recorded retroactively in 2013, the actual recovery from customers will be phased in over time. SDG&E's recovery is planned to begin in September 2013 over 28 months, and SoCalGas's recovery is set to start in July 2013 over 30 months.

SRE/SREA 8-K SEC Disclosure

Summary

This 8-K filing from Sempra Energy (SRE) announces the final decision from the California Public Utilities Commission (CPUC) regarding the 2012 General Rate Case (GRC) for its California subsidiaries, San Diego Gas & Electric (SDG&E) and Southern California Gas Company (SoCalGas). The final decision establishes significantly higher revenue requirements for both utilities compared to the prior year, with SDG&E's authorized revenue increasing by 7.4% to $1.733 billion and SoCalGas's by 6.2% to $1.959 billion. These increases are retroactive to January 1, 2012, and the cumulative effect will be recognized in the second quarter of 2013, with recovery spread over subsequent months. The final decision reflects adjustments from a previously proposed decision (PD), notably correcting discrepancies and increasing revenue for pension funding, critical gas operations at SoCalGas, and employee incentive compensation plans. The GRC period is extended through 2015 with established annual attrition factors for revenue escalation, replacing a previously proposed CPI-U-based mechanism. This final GRC decision provides regulatory clarity and impacts the revenue outlook for Sempra's California operations.

Key Highlights

1Final decision in 2012 General Rate Case (GRC) for SDG&E and SoCalGas approved by CPUC.
2SDG&E's 2012 authorized revenue requirement set at $1.733 billion, a 7.4% increase from 2011.
3SoCalGas's 2012 authorized revenue requirement set at $1.959 billion, a 6.2% increase from 2011.
4Revenue increases are retroactive to January 1, 2012, with the cumulative effect to be recorded in Q2 2013.
5Recovery of retroactive revenue amounts to be spread over 28 months for SDG&E (starting Sep 2013) and 30 months for SoCalGas (starting Jul 2013).
6GRC period extended through 2015 with established annual attrition factors (2.65%, 2.75%, 2.75%).
7Z-Factor mechanism for cost recovery of unforeseen events between GRC filings remains in place.

SEMPRA 8-K Report, Corporate Update (May 10, 2013)

Summary

Key Highlights

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