2020 GRC Workshop

2020 GRC Workshop

January 25, 2019

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Objectives• Provide a high-level roadmap of PG&E’s 2020 GRC• Provide an informal process to answer questions about the filing

Using Today’s Information • If parties wish to use responses today on the record, please submit a

data request to ensure accuracy

PG&E Key Contacts• Shilpa Ramaiya – GRC Case Manager• Mary Gandesbery – GRC Lead Attorney• Conor Doyle – Assistant GRC Case Manager• Ken Arnold – Discovery Lead

Introduction

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Case Overview – Shilpa Ramaiya and Mary Gandesbery

Specific Area Overviews• Safety, Risk, Integrated Planning and Affordability – Conor Doyle and

Janaize Markland (Risk)• Electric Distribution – Kathy Wade (Electric Distribution) and Sumeet Singh

(Electric Distribution Wildfire)• Liability Insurance – Janaize Markland• Energy Supply – Greg Bosscawen• Gas Distribution – Nathalie Oram• Customer Care – Bill Chen • Shared Services and Information Technology – Various • Human Resources – Judy Gutierrez• Administrative & General – Gabe Briggs• Results of Operations – Niel Jones• Post Test-Year Ratemaking Proposal – Niel Jones

Discovery ProcessNext Steps/Follow-up

Agenda

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Exhibit Summary(PG&E-1)Summary of PG&E’s 2020 General Rate Case

• Provides overall policy testimony on PG&E’s request including testimony on PG&E’s Mission, Vision, and Culture and a summary of PG&E’s forecast drivers.

• Provides an executive summary of the case and revenue requirement forecast.

• Outlines the structure of the remaining exhibits.(PG&E-2)Safety, Risk, and Integrated Planning

• Presents PG&E’s safety policy and an update on PG&E’s efforts to implement the recommendations of NorthStar Consulting Group (NorthStar) in the Safety Culture Order Instituting Investigation (OII).

• Provides a summary of PG&E’s Integrated Planning Process and Customer Affordability Roadmap (Affordability).

• Present’s PG&E’s risk management policy, program, and integration of the Risk Assessment and Mitigation Phase into the 2020 GRC request.

(PG&E-3)Gas Distribution

• Describes PG&E’s policy on managing its gas distribution operations, including its risk management program.

• Describes the activities and costs incurred in operating, maintaining and improving gas distribution assets.

• Describes how proposed spending addresses safety-related risks.

• Presents Gas Distribution’s Affordability initiatives and associated savings estimates.(PG&E-4)Electric Distribution

• Describes PG&E’s policy on managing its electric distribution operations, including its Community Wildfire Safety Program and risk management program.

• Describes the activities and costs incurred in operating, maintaining and improving electric distribution assets.


• Presents Electric Distribution’s Affordability initiatives and associated savings estimates.(PG&E-5)Energy Supply

• Describes PG&E’s policy on managing its energy supply operations, including its risk management program.

• Describes the activities and costs incurred in operating, maintaining and improving generation assets.

• Describes the activities and costs incurred to procure electricity and gas.


• Presents Energy Supply’s Affordability initiatives and associated savings estimates.(PG&E-6)Customer Care

• Describes PG&E’s policy on managing its distribution customer service functions.

• Describes the activities and costs incurred in providing customer services to distribution customers.

• Presents Customer Care’s Affordability initiatives and associated savings estimates.

Structure of Exhibits

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Exhibit Summary(PG&E-7)Shared Services and Information Technology

• Describes PG&E’s policies on, and costs relating to, common support costs, such as fleet, safety, environmental, materials, corporate security, and building costs and two enterprise-wide programs.

• Describes PG&E’s policy on, and costs relating to, managing its Information Technology (IT) assets and processes, including cybersecurity.

(PG&E-8)Human Resources (HR)

• Describes PG&E’s human resources programs, including those related to executive and non-executive compensation, employee benefits, diversity, training and hiring.

• Includes the methodology relating to, and results of, the Total Compensation Study.

• Describes PG&E’s costs relating to the Short-Term Incentive Plan and benefits.

• Describes PG&E’s HR Department costs.

• Describes PG&E’s methodology for removing officer compensation from this GRC request in accordance with Senate Bill (SB) 901.

(PG&E-9)Administrative and General

• Describes PG&E’s A&G costs, including Corporate Services department costs, costs of services provided by PG&E Corporation, insurance, claims and other A&G costs.

• Seeks recovery of incremental expenses recorded to the Wildfire Expense Memorandum Account.(PG&E-10)Results of Operations

• Presents the electric and gas distribution, and generation results of operations.

• Translates the SAP view of costs presented in Exhibits (PG&E-3) through (PG&E-9) to the FERC account view required by the Rate Case Plan.

• Presents other technical cost chapters (e.g., taxes, rate base).(PG&E-11)Post Test-Year Ratemaking

• Presents PG&E’s proposed mechanism for cost recovery during the attrition years 2021 and 2022.

• Presents the forecast of rate base growth for the attrition years.

(PG&E-12)General Report

• Presents general information supporting the cost exhibits (e.g., escalation rates).

• Presents other information required by the Rate Case Plan including a summary of compliance requirements from various CPUC decisions.

• Presents the costs incurred through December 31, 2016 for the Mobile Home Park (MHP) Utility Upgrade Program

• Presents the Safety Earnings Adjustment Mechanism proposal pursuant to the NorthStar Report on PG&E’s safety culture in the Safety Culture OII.

• Presents a master list of acronyms used throughout the case.

Structure of Exhibits (cont’d)

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Key Changes from 2017 Testimony Structure

Exhibit (PG&E-4), Electric Distribution• New Wildfire Risk Overview Chapter• New Integrated Grid Platform Testimony and Grid Modernization Plan

Exhibit (PG&E-7) Shared Services and IT• Policy Chapter Removed• Integrated Disability Management Testimony Moved from Exhibit (PG&E-8), Human

Resources

Exhibit (PG&E-12), General Report• Electric and Gas Revenues at Present Rates Moved from Exhibit (PG&E-10), Results of

Operations• New Testimony on Mobile Home Park Upgrade• New Safety Earnings Adjustment Chapter as recommended in the NorthStar Report

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2020 GRC Revenue Requirement Functional Breakdown(millions of nominal dollars)

2019 2020 Difference % ChangeAdopted(a) Proposed

Electric DistributionRevenue Requirement $4,364 $5,113 $749 17.2%

Gas Distribution TotalRevenue Requirement 1,963 2,097 134 6.8%

Electric GenerationRevenue Requirement 2,191 2,366 175 8%

Breakdown by Cost TypeOperations and Maintenance 1,946 2,156 210 Customer Services 338 319 (19) Administrative & General 953 1,315 361Less: Revenue Credits (OORs & Wheeling) (152) (196) (44)RF&U, Other Adjs, Taxes Other than Income 181 236 55Return, Taxes, Depreciation, Decommissioning and Amortization 5,252 5,747 495

GRC Retail Revenue Requirement $8,518 $9,576 $1,058 12.4%

(a) These amounts include revenues from PG&E’s 2017 GRC Decision 17-05-013 and reflects changes that resulted from the Tax Cuts and Jobs Act of 2017. Also included is adopted base revenue for the Diablo Canyon Seismic Studies Long Term Seismic Program, Residential Rate Reform, the Natural Gas Leak Abatement Program, Mobile Home Park Program, and the Greenhouse Gas Compliance Instruments held for future use inventory, and Diablo Canyon Retirement. These amounts exclude pension costs.

8

2020 GRC Revenue Requirement(millions of nominal dollars)

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Expense Walk (2017 – 2020)(millions of nominal dollars)

$3,133

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Capital Walk (2017 – 2020)(millions of nominal dollars)

$4,523

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Other Key Items

• Incorporates Risk Assessment Mitigation Proceeding (RAMP)

• New Balancing Accounts• Wildfire Mitigation Balancing Account• Risk Transfer Balancing Account• Residential Rate Reform subaccount in the existing Statewide Marketing Education and Outreach

Balancing Account

• Balancing and Memorandum Accounts Proposed for Elimination• Fire Hazard Prevention Memorandum Account• Natural Gas Leak Abatement Balancing Account• Diablo Canyon Seismic Studies Balancing Account• Assembly Bill 802 Memorandum Account• Incremental Inspection and Removal Cost Tracking Account, a subaccount of the Vegetation

Management Balancing Account

• Does not seek recovery of officer compensation or potential claims resulting from the 2017 and 2018 Northern California wildfires

• Potential Update:• City and County of San Francisco Gross Receipts Tax

Exhibit (PG&E-2) Safety, Risk, and Integrated Planning

Conor DoyleAssistant GRC Case Manager

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Risk, Safety, and Integrated Planning Exhibit Structure

Chapter No.

Chapter Name Witness

1 Safety Policy Todd Hohn

2 Integrated Planning Process and Customer Affordability Roadmap Jamie Martin

3 Risk Management and Mitigation Stephen Cairns

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Safety Policy

• Developments Since 2017 GRC• Corrective Action Program• Speak Up Program• Verification by Third Parties• Employee Knowledge and Skills Enhancement

• Safety Governance and Culture• Enterprise and LOB Safety Councils• Commitment to Implement Recommendations from NorthStar

Report• Employee and Contractor Safety

• One PG&E Occupational Health and Safety Plan• Public Safety

• Key Enterprise and LOB Programs

15

Integrated Planning

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Customer Affordability Roadmap

Affordability Expense Savings2018 2019 2020 Total

Total $92M $40M $9M $142M

Affordability Capital Savings2018 2019 2020 2021 2022 Total

Total $147M $26M $96M $130M $228M $626M

Exhibit (PG&E-2)Risk Management Policy

Janaize MarklandDirector, Enterprise and Operational Risk Management

and Insurance

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Risk Policy and Implementation Overview

Enterprise Risk Chapter Line of Business Chapters

Overview Provides an overview of PG&E’s risk management philosophy, organizational structure and risk reporting, and how PG&E is transitioning from RAMP to GRC

Each LOB discusses their portfolio of risks with an emphasis on Top and Enterprise risks and lessons learned from RAMP filing

Contents • How lessons learned from risk assessments during RAMP are being adopted

• How SED and Intervenor recommendations from PG&E’s RAMP report are being addressed

• How EORM program is being managed, with a focus on maturing PG&E’s data-driven, risk-based decision making to assist with mitigation strategies and to demonstrate risk reduction

• Progress made since last GRC and adoption of SMAP proceeding requirements, such as Multi-attribute Value Function evaluation tool

• Evolution of Company’s investment planning process (Risk Informed Budget Allocation)

• How risks and associated mitigations have changed, since last GRC and RAMP filing, and how funding for these mitigations are being addressed, including any risk spend efficiency calculation changes

• What efforts are underway to mature company’s risk quantification and modeling, new data collection and utilization

• How SED and Intervenor recommendations are addressed

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Evolution of Enterprise and Operational Risk Management

Negligible Minor Moderate Major Extensive Severe CatastrophicFrequency

Level7 10 32 100 316 1,000 3,162 10,0006 6 18 56 178 562 1,778 5,6235 2 7 23 74 234 740 2,340

4.5 2 7 21 67 211 669 2,1154 2 6 18 56 178 562 1,7783 1 4 14 43 135 426 1,3482 1 3 10 32 100 316 1,0001 1 2 6 18 56 178 562

Impact LevelsFr

equ

ency

1 2 3 4 5 6 7

2015 RET Tool

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PG&E Risk Management Overview

EORM

Risk Assessment Leverages RAMP

Quantitative Models

Risk-Spend Efficiency (RSE) factors into mitigation strategy

Risk-Informed Budgeting (RIBA) influences annual investment decisions

Top safety risks are central to the GRC request

LOB Risk & Compliance MeetingsVP Risk CommitteeSession D

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Top 22 Safety Risks (RAMP)

• Distribution OH conductor• Transmission OH conductor• Wildfire• Records Management• Nuclear core damage• Hydro dam failure• Transmission Pipeline Failure ‐ Rupture with Ignition• Failure to Maintain Capacity for System Demands• Measurement and Control Failure ‐ Release of Gas with Ignition Downstream• Measurement and Control Failure ‐ Release of Gas with Ignition at M&C Facility • Release of Gas with Ignition on Distribution Facilities ‐ Cross Bore• Compression and Processing Failure – Release of Gas with Ignition at Manned Processing Facility• Release of Gas with Ignition on Distribution Facilities ‐ Non Cross Bore• Storage ‐ Wells• Skilled and Qualified• Cyber Attack• Insider Threat• Contractor Safety• Employee Safety• Motor Vehicle Safety• Climate Resilience• Fitness for Duty*

* - While identified as a stand-alone safety risk in PG&E’s 2017 RAMP filing, Lack of Fitness for Duty Awareness has been absorbed into the Employee Safety risk as a risk driver in PG&E’s GRC filing.

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Risk-informed Budget Allocation (RIBA)

• The RIBA process informs the prioritization of budgets core lines of business (gas operations, electric operation and generation) based on impact on:• Safety risk• Environmental risk• Reliability risk• Other considerations (compliance, commitment, in-flight, customer

requested work, etc.)• RIBA contributes to annual integrated planning decisions as well as on-

going budget tradeoff decisions.• Continuous improvement objectives for the RIBA process include

integration of quantitative operational risk modeling to enable consistent data driven, risk-informed decision making.

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RAMP-to-GRC Integration

Exhibit (PG&E-2) Chapter 3, Risk Policy• Overview of Enterprise RAMP Process and RAMP-to-GRC Integration Process• Workpaper includes Table of All RAMP Risks Controls and Mitigations by Exhibit and

Chapter

LOB Exhibit Risk Chapters• Summary of Original LOB RAMP Risks• Summary of LOB RAMP Changes Since Original RAMP Filing

LOB Detail Chapters• Summary of Original RAMP Risks Controls and Mitigations• Explanation of Changes Since Original RAMP Filing (Activities, Forecasts, RSEs)

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RAMP to GRC Integration

Workpapers Supporting Exhibit (PG&E-2) Chapter 3, WP-3

Exhibit (PG&E-4) Chapter 6 Table of Contents

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RAMP to GRC Integration Continued

Exhibit (PG&E-4) Chapter 6 RAMP Discussion

Exhibit (PG&E-4) Electric Distribution

Kathy WadeElectric Distribution GRC Case Manager

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Electric Distribution – Exhibit StructureVolume 1

Chapter No.


1 Electric Distribution Operations Policy and Introduction Michael Lewis2 Electric Distribution Risk Management David Gabbard

2A Wildfire Risk Policy and Overview Sumeet Singh3 Emergency Preparedness and Response Evermary Hickey4 Electric Emergency Recovery Angelina Gibson5 Distribution System Operations Michael Swanson6 Electric Distribution Maintenance Jeffrey Deal7 Vegetation Management Matthew Pender8 Pole Asset Management John Mathieson9 Distribution Overhead System Hardening and Reliability Steve Calvert

10 Distribution Automation and System Protection Steve Calvert

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Chapter No.


11 Underground Asset Management Steve Calvert12 Substation Asset Management David Gabbard13 Electric Distribution Capacity Satvir Nagra14 Electric Distribution Engineering and Planning Satvir Nagra

15 Electric Distribution Technology Mansi Magon16 New Business and Work at the Request of Others Andrew Dashner17 Rule 20A Tamon Norimoto18 Electric Distribution Support Activities Kevin Wetzel19 Integrated Grid Platform and Grid Modernization Plan Olya Anguelov

19A Grid Modernization Plan – 10 Year Vision Mark Esguerra

Electric Distribution – Exhibit StructureVolume 2

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Summary of Forecast Electric DistributionExpense and Capital Expenditures

Expense*(millions of nominal dollars) (millions of nominal dollars)

Capital

521

888 9271,027

0

200

400

600

800

1000

1200

2017 2018 2019 2020

1,539 1,732 1,977

2,485 2,582 2,609

-

500

1,000

1,500

2,000

2,500

3,000

2017 2018 2019 2020 2021 2022

* Amounts for 2018 and 2019 include Enhanced Vegetation Management Work tracked in the Fire Hazard Prevention Memorandum Account shown for tracking purposes.

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2020 Expense Forecast by Chapter (Millions of Nominal Dollars)

Ch 03 Emergency Preparedness and Response, $48.8

Ch 04 Emergency Recovery, $91.1

Ch 05 Distribution System Operations, $43.5

Ch 06 Maintenance, $83.8

Ch 07 Vegetation Management, $607.4

Ch 08 Pole Asset Management, $13.6

Ch 10 Automation and System Protection, $2.1

Ch 12 Substation Asset Management, $29.2

Ch 14 Engineering and Planning, $17.0

Ch 15 Technology, $4.3

Ch 16 New Business and WRO, $21.5

Ch 18 Support Activities, $54.3

Ch 19 Integrated Grid Platform and Grid Modernization, $10.2

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Electric Distribution Expense Walk(Millions of Nominal Dollars)

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Key Cost Changes from 2017 Expenses

RAMP Risk Mitigation $429M• Community Wildfire Safety Program Initiatives:

– Wildfire Safety Operations Center (Ch 3)– Expanded Weather Stations (Ch 3)– Wildfire Cameras (Ch 3)– Enhanced Vegetation Management (Ch 7)– Program Management Office (Ch 18)

Operations, Automation and Support $47M• Distribution Operations (Ch 5)• Asset Performance Center (Ch 14)• Electric Distribution Overhead Support Costs (Ch 18)

Grid Modernization $10M• Technology costs for Integrated Grid Platform (Ch 19)

Safety, Maintenance and Compliance $43M• Electric Distribution Maintenance (Ch 6):

• Increases in patrols and inspections and overhead maintenance

• Vegetation Management (Ch 7): • Insourcing of pre-inspectors for routine tree work

Emergency Response ($17M)• Major Emergency (Ch 4):

• Forecast based 5-year average adjusted to remove CEMA-related costs

Affordability Initiatives ($13M)• Targets for planned efficiencies (Ch 18)• Other efficiencies embedded in forecast (Ch. 4, 5, 6, 12)

2017 Recorded – $521M; 2020 Forecast – $1,027M; Increase = $506M

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2020 Capital Expenditures Forecast by Chapter(Millions of Nominal Dollars)

Ch 03 Emergency Preparedness and Response,

$11.7 Ch 04 Emergency Recovery, $241.0

Ch 05 Distribution System Operations, $0.3

Ch 06 Maintenance, $270.9

Ch 08 Pole Asset Management, $109.4

Ch 09 Overhead System Hardening and Reliability,

$817.0

Ch 10 Automation and System Protection, $34.2

Ch 11 Underground Asset Management, $99.7

Ch 12 Substation Asset Management, $123.4

Ch 13 Capacity, $126.9

Ch 15 Technology, $13.7

Ch 16 New Business and WRO, $577.8

Ch 17 Rule 20A, $46.6

Ch 18 Support Activities, -$29.5

Ch 19 Integrated Grid Platform and Grid

Modernization, $42

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Electric Distribution Capital Walk(Millions of Nominal Dollars)

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2017 Recorded – $1,539M; 2020 Forecast – $2,485M; Increase = $946MRAMP Risk Mitigations $835M• Community Wildfire Safety Program Initiatives:

– Expanded Weather Stations (Ch 3)– Non-Exempt Surge Arrester Replacement Program (Ch 6)– Overhead System Hardening (Ch 9)

New Business, WRO, Capacity $190M• Electric Distribution Capacity (Ch 13)

• Increases in substation and line capacity• New Business and Work Requested by Others (Ch 16)

• New customer connections • State infrastructure projects

• Rule 20A Projects (Ch 18)• Forecast based on five-year average

Grid Modernization $42M• Technology costs for Integrated Grid Platform (Ch 19)

Safety Maintenance & Compliance $26.3M• Electric Distribution Maintenance (Ch 6)• Pole Replacements (Ch 8)

Asset Management & Reliability ($55M)• Electric Distribution Reliability (Ch 9)

• Decrease in proactive reliability projects such as FLISR

• Substation Asset Management (Ch 12)• Limiting proactive replacement work to in-flight projects

Emergency Response ($26M)• Major Emergency (Ch 4):

• Forecast based 5-year average adjusted to remove CEMA-related costs

• Substation Emergency Equipment Replacement (Ch 12)• 2017 recorded was higher than average

Operations, Automation & Support ($20M)• Distribution Automation and System Protection (Ch 10)

• Nearing completion of distribution substation SCADA installations

• Electric Distribution Technology (Ch 15)• Mix of technology projects; shift of focus to Integrated Grid

Platform

Affordability Initiatives ($47M)• Targets for planned efficiencies (Ch 18)• Other efficiencies embedded in forecast (Ch 4, 6)

Key Cost Changes from 2017 Capital Expenditures

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RAMP Risk Update

Change Drivers:• No change to Additional Public Awareness Outreach• Overhang Clearing mitigation folded into new Enhanced Vegetation Management (EVM)

mitigation, consistent with Wildfire risk mitigation.• Removing overhanging trees and limbs above PG&E’s distribution lines• Removing or trimming trees from ten high risk species that have a high potential of falling and striking

PG&E’s distribution lines• Removing vegetative fuel from beneath PG&E’s distribution lines.

• Lower RSE driven by EVM mitigation’s relatively high cost

Risk 2017 RAMP Estimate(2017-2022)

2020 GRC Estimate (2017-2022)

2017 RAMP to 2020 GRC Estimate Change

2017 RAMP Risk-Spend Efficiency

2020 GRC Risk-Spend Efficiency

2017 RAMP to 2020 GRC Risk-Spend EfficiencyChange

Distribution Overhead Conductor -Primary

Total – $93.6MCapital - $0MExpense-$93.6M

Total – $2.0BCapital - $0MExpense -$2.0B*

Total – $1.9BCapital - $0MExpense-$1.9BM

0.538 0.055 -0.483

* Includes 2018 and 2019 Enhanced Vegetation Management Work tracked in the Fire Hazard Prevention Memorandum Account

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Other Requests

• Establish a new two-way balancing account for Wildfire Risk Mitigation

• Retain the existing two-way balancing account for Major Emergencies

• Retain the existing one-way balancing account for Vegetation Management

• Retain existing Rule 20A one-way balancing account and align the work credit allocation to program authorized spend

Electric Distribution Wildfire Risk OverviewExhibit (PG&E-4), Chapter 2A

Sumeet SinghVice President, Community Wildfire Safety Program

39

Wildfire Risk BackgroundWildfire Risks in California have Increased Significantly*

*Includes fires outside of PG&E service territory

40

Wildfire Risk Background

41

Wildfire Risk BackgroundWildfire Risks in PG&E’s Service Area

42


2015-2017 Fire Incident Drivers for PG&E’s Tiers 2 and 3, and Tier 1/Zone 1

43


As part of its commitment to safety, and faced with an extended wildfire season, PG&E is proposing a series of important safety investments as part of its 2020 GRC to help further protect its 16 million customers and the energy system they depend on.

Investment Areas:

1) Enhanced Vegetation Management

2) System Hardening

3) Enhanced Operational Practices

4) Enhanced Situational Awareness

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Enhanced Vegetation Management

Exhibit (PG&E-4) Chapter 7Targeted Tree Species Work• 10 species responsible for 75 percent of vegetation-related

ignitions in Tier 2 and Tier 3 HFTD areas• Remove or Trim all that could strike distribution lines

Overhang Clearing• Remove all trees and tree limbs above distribution lines in Tier

2 and Tier 3 HFTD areas • Minimum clearance of four feet• 2,900 circuit miles per year over an 8-year period• Additional fuel clearing in select locations

45

System Hardening

Exhibit (PG&E-4), Chapters 6 and 9Non-Exempt Surge Arrester Replacement Program• Reduce the potential for exposed electrical arcs, sparks, or hot

material Resilience Zones• Provide temporary power to critical community services during

Public Safety Power Shutoff (PSPS) events• More quickly restore service after PSPS eventWildfire System Hardening • Replacement of overhead conductor with insulated conductor in Tier

2 and Tier 3 HFTD areas• Replacement of wooden poles in Tier 2 and Tier 3 HFTD areas

46

Enhanced Operational Practices Exhibit (PG&E-4), Chapters 3, 5, 9 and 10

Public Safety Power Shut Off• Suspension of service to select circuit segments in Tier 2 and Tier 3 HFTD areas when fire

danger conditions are elevated above certain thresholdsReclose Blocking• Disable reclosers and circuit breakers in Tier 2 and Tier 3 HFTD areas when fire conditions are

elevated above certain thresholdsAutomation Protection• Additional SCADA for remote recloser disabling• Additional reclosers and Fusesavers in Tier 2 and Tier 3 HFTD areas• Additional reclosers at Tier 2 and Tier 3 HFTD area boundariesWildfire and Infrastructure Protection Teams• 25 crews staged during periods of higher fire likelihood• 5 crews for an extended season throughout service territory

Exhibit (PG&E-7), Chapter 2

Aviation Resources• 4 heavy-lift helicopters

• Fitted with fire suppression equipment• Available to aid in suppression efforts under direction of lead agency

47

Enhanced Situational Awareness

Exhibit (PG&E-4), Chapter 3Wildfire Safety Operations Center• Monitor potential fire threats across PG&E’s service area in real time• Coordinate with first responders and public safety officialsExpanded Weather Station Deployment• 1,300 weather stations in Tier 2 and Tier 3 HFTD areasSOPP Model Automation• Update the SOPP model to provide updates and advanced warning

when weather changes indicate an increase in fire dangerAdvanced Fire Modeling• Model where a fire could spread under difference scenarios

48

Enhanced Situational Awareness (Continued)

Exhibit (PG&E-4), Chapter 3Wildfire Cameras• 600 HD cameras in Tier 2 and Tier 3 HFTD areas• Will allow monitoring of more than 90 percent of Tier 2 and Tier 3

HFTD of distribution systemSatellite Fire Detection System• Developing fire monitoring and alerting tools with satellite dataEnhanced Wire Down Detection• Use of SmartMeter™ system to help detect and locate downed

distribution lines more quickly

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Wildfire Risk Mitigation Forecast Summary(Thousands of Nominal Dollars)

Category

Expense Forecast Capital Forecast

2018 2019 2020 2018 2019 2020 2021 2022Enhanced Vegetation Management $339,750 $338,349 $378,106 – – – – –

System Hardening – – – $59,065 $324,258 $821,075 $842,825 $859,827

Enhanced Operational Practices $4,905 $7,461 $21,045 $21,834 $38,770 $7,442 $7,640 $7,844

Enhanced Situational Awareness $3,959 $13,237 $22,877 $8,600 $6,966 $10,500 $6,438 $6,588

Support Programs $1,230 $9,820 $9,449 $4,500 $541 $555 $570 $585

Total $349,844 $368,867 $431,477 $93,999 $370,535 $839,572 $857,473 $874,844

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2017 RAMP-2020 GRC RAMP Risk(s) Update

Change Drivers:• Risk exposure updated to reflect new High Fire Threat District Map• Updated and new mitigations:

• Targeted conductor replacement mitigation replaced with System Hardening• Overhang Clearing mitigation folded into new Enhanced Vegetation Management (EVM) mitigation,

consistent with Wildfire risk mitigation.• New mitigations added for Enhanced Operational Practices and Enhanced Situational Awareness

• RSE reflects increased costs for proposed mitigations


2020 GRC Estimate (2017-2022)





Wildfire Total –$967MCapital -$839MExpense -$128M

Total –$5.24BCapital -$3.041BExpense -$2.199B*

Total –$4.273BCapital -$2.202BExpense -$2.071B

0.096 0.024 -0.072

* Includes 2018 and 2019 Enhanced Vegetation Management Work tracked in the Fire Hazard Prevention Memorandum Account

Exhibit (PG&E-9)Liability Insurance and Wildfire Expense Memorandum Account Request

Janaize MarklandDirector, Enterprise and Operational Risk Management

and Insurance

52

Summary of 2020 Insurance Forecast

Total: $388.2 million

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

Misc. Liability and Property(Aviation, Control of Well, etc.)Directors & Officer's Liability

Property (Non-Nuclear)

Excess Liability

53

Insurance Premium History

Coverage 2017 2017 Adopted

2017 2017 Actual

20182018Actual

2020 2020 Forecast

General Liability $52 million $124 million $360.3 million $360.3 million

Investor Owned Utility (IOU) Market Challenges• Reduction in available insurance capacity from traditional markets due to climate exposures

(e.g., fire, flood, etc.) • The application of inverse condemnation in California• 2017 Industry Losses - Natural catastrophes and large global energy sector losses

54

Historical General Liability Program

• Insurance is a critical financial risk mitigation tool used to mitigate against the financial impact of a Insurance is a critical financial risk mitigation tool used to mitigate against the financial impact of a catastrophic event in order to protect customer rates

• Since 2009, insurance costs for the state’s utilities have increased dramatically • Recent wildfires combined with the application of inverse condemnation have highlighted the increasing Recent wildfires combined with the application of inverse condemnation have highlighted the increasing

loss potential PG&E faces and the need for increased limits of insurance

$- $50 $100 $150 $200 $250 $300 $350 $400

$- $200 $400 $600 $800

$1,000 $1,200 $1,400 $1,600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017R

2018

PG&E Historical General Liability Policy Limit and Cost

Liability Coverage Total Cost

Risk Transfer at Full limit loss($ in MM)

Premium Cost ($ in MM)

2017R separately highlights the reinstatement of PG&E’s liability tower following the 2017 Northern California Wildfires. These costs were excluded from the forecast assumptions for the 2020 GRC.

2018 represents the total risk transfer for wildfire losses. There is ~ $800m in limits available for non-wildfire events.

55

Program Changes Since 2017 GRC

New Sources of Capacity

• Captive: PG&E established a captive insurance company in 2017 to broaden its market reach and increase capacity for unique risks such as wildfire risk

• Secured $100M in Reinsurance in 2017• More than $500M in Reinsurance secured in 2018

• CAT Bond: PG&E created an industry first Wildfire CAT Bond in 2018 to provide an additional financial risk transfer option for wildfire caused property damage

• Additional $200M in capacity secured through CAT Bond

56

Managing Liability Insurance Costs

.

• PG&E continues to pursue options with lower transaction costs (e.g., CAT Bonds and Reinsurance)

• Large deductible maintained by PG&E• Current Deductible: $10M Per Occurrence

• PG&E aggressively negotiates price, and coverage terms and conditions with participants

• PG&E actively markets program to increase competition

• PG&E approached 165 prospective participants in 2018

57

Risk Transfer Balancing Account

• PG&E seeks approval of a new “two-way” Risk Transfer Balancing Account (RTBA) for general liability insurance costs:

a. Actual insurance costs exceed forecast and amounts adopted in GRC 2020 and future GRCs, PG&E to file a Tier 2 Advice Letter (AL) to seek recovery of the difference

b. Actual insurance costs less than forecast and amounts adopted, PG&E to return the amount of overcollection (with interest) to ratepayers

• RTBA Goals

• Recovery of costs that may exceed GRC forecast given market uncertainty moving forward due to wildfire risk

• PG&E flexibility to procure more than forecasted $1B-$2B in capacity if cost effective financial risk transfer options are identified

• Ensure ratepayers pay only actual costs of coverage purchased by PG&E

58

Wildfire Expense Memorandum Account Request

• WEMA approved by CPUC in 2018 (D.18-06-029)

• WEMA allows PG&E to track specific incremental wildfire costs not

included in rates, including insurance premium costs

• Requests recovery of incremental CPUC-jurisdictional insurance premium

costs of $67 million for the period July 26, 2017 through August 1, 2018

Exhibit (PG&E-5) Energy Supply

Greg BosscawenEnergy Supply GRC Case Manager

60

Energy Supply – Exhibit Structure

Chapter No.


1 Energy Supply Summary Tatjana Rmus

2 Energy Supply Risk Management Eric Van DeurenMaureen Zawalick

3 Nuclear Operations Costs Cary Harbor

4 Hydro Operations Costs Michael L. Jones

5 Natural Gas and Solar Generation Operations Costs Steve Royall

6 Energy Procurement Administration Costs Candice K. Chan

7 Energy Supply Technology Programs Thomas R. Baldwin8 Energy Supply Ratemaking Stephanie Maggard

61

Summary of Energy Supply Forecast Expense and Capital Expenditures

Expense(Millions of Nominal Dollars)

Capital(Millions of Nominal Dollars)

62

2020 Expense Forecast by Chapter(Millions of Nominal Dollars)

63

Energy Supply Expense Walk(Millions of Nominal Dollars)

64


Escalation $46.1 M• Higher labor costs due to market labor rate increases and union contract negotiations and general inflation for contracts, materials, and other

services or fees.

Nuclear Support Cost Allocations $5.5 M• As the DCPP capital forecast is reducing faster than the expense forecast as a result of the planned plant at the end of the current licenses, the

allocation of support and overhead costs will increase .

Regulatory Costs $7.9M• Dam spillway inspections, regulatory fees, and leases, as well as implementation costs associated with new FERC licenses

HBGS Overhauls and Solar Warranty Expirations $3.3M• Increase in number of engine maintenance overhauls annually for Humboldt Bay Generating Station (HBGS) • Expiration of solar warranties

Vacancy Capture ($8.3M)• Capturing headcount for anticipated vacancies at DCPP and EPP

Rescheduled or Reduced Work ($46.2M)• Changes in DCPP outage work scope and duration and completion of projects• Higher than usual hydro expense work in 2017 as a result of storm damage and a reduction in expense reliability work in 2020• Reduction in the frequency of Natural Gas Long Term Service Agreement (LTSA) outages

Affordability Savings ($22.9M)• Implemented a number of enterprise wide affordability initiatives designed to find cost savings opportunities for DCPP, Hydro, and Natural Gas

& Solar

2017 Recorded – $616M; 2020 Forecast – $602M; Decrease = $14M

65


66

Energy Supply Capital Walk(Millions of Nominal Dollars)

67

Key Cost Changes from 2017Capital Expenditures

2017 Recorded – $480M; 2020 Forecast – $289M; Decrease = $191MNuclear Operations ($147.6M)• Balancing Account ($28.1M) – Ramp down in needed investment as the plant approaches retirement of Unit 1 in 2024, and Unit 2 in

2025• Non-Balancing Account ($119.6M) – Ramp down in needed investment as the plant approaches retirement of Unit 1 in 2024, and Unit

2 in 2025

Hydro Operations ($45.6M)• Non-Balancing Account ($58.0M) – Ramp down primarily driven by customer affordability initiatives, such as the capital portfolio

optimization• Balancing Account $12.4M – hydro relicensing and license conditions implementation

Natural Gas and Solar Generation Operations $2.1M• Increase is primarily attributable to life cycle replacement work

Energy Supply Technology $0.5M• Relatively flat

68

2017 RAMP Risk Update

Change Drivers:• The mitigation plans were updated in the GRC with the latest financial forecasts • Additional projects were added to the GRC since the RAMP Report that provide

additional risk mitigation• PG&E does not propose additional mitigations for the core damaging event risk as

the cost of the existing controls as planned continues to achieve the highest level of safety.


2020 GRC Estimate (2017-2022)





Hydro System Safety –Dams

Total $60.4M (Expense: $3.7M / Capital: $56.7M)

Total $64.3M (Expense: $3.3M / Capital: $60.9M)

Total $3.9M (Expense: $(0.4)M / Capital: $4.2M)

0.157 0.133 -0.024

Nuclear Operations and Safety – Core Damaging Event

Total (Expense: $0M / Capital: $0M)



N/A N/A N/A

69

Other Key RequestsHydro

• Expand use of two-way Hydro Licensing Balancing Account (HLBA)

• Establish a hydro decommissioning reserve similar to natural gas

• Allow recovery of hydro public benefit costs through a non-bypassable charge

Natural Gas and Solar

• Establish a fuel cell generation decommissioning reserve similar to natural gas

• Levelization of major long term service agreement combined cycle outages

Nuclear• Implement ratemaking for the DCPP cancelled project costs and the recovery of the

DCPP net book value that were approved in the retirement decision• Levelization of DCPP dual refueling outages• Credits for Department of Energy Litigation proceeds• Recovery of DCPP Seismic Studies previously in the Energy Resource Recovery

Account proceeding

Energy Procurement• Include the financing/carrying costs of the California Air Resources Board’s (CARB)

Cap and Trade Program compliance instruments that are held as inventory until remittance to the CARB or the sale/transfer to other entities

Exhibit (PG&E-3) Gas Distribution

Nathalie OramGas Distribution GRC Case Manager

71

Gas Distribution – Exhibit Structure

Chapter No.


1 Gas Distribution Operations Policy and Introduction Jesus Soto, Jr.

2 Gas Distribution Forecast Summary and Investment PlanningAndrew Paul Abranches, Daniel

Menegus, and Mike Kerans

2A Gas Distribution Cost Forecasting MethodologyAndrew Paul Abranches and

Richard W. Yamaguchi

3 Gas Distribution Risk Management Christine Cowsert

4 Asset Family - Distribution Mains and Services Mike Kerans

5Asset Family - Measurement and Control, and Compressed Natural Gas Stations

Terry White

6 Gas Distribution Operations and Maintenance Melvin J. Christopher

7 Corrosion Control David McQuilling

8 Leak Management Kelly L. Ball

9 Gas System Operations Daniel Menegus

10 New Business and Work at the Request of Others Andrew Dashner

11 Gas Operations Technology and Other Distribution Support Andrew Paul Abranches

72

Summary of Gas Distribution Forecast Expense and Capital Expenditures

Expense(millions of nominal dollars) (millions of nominal dollars)

Capital

339 342 346 372

0

50

100

150

200

250

300

350

400

2017 2018 2019 2020

821 969 933 951 973 992

-

200

400

600

800

1,000

1,200

2017 2018 2019 2020 2021 2022

73

Gas Distribution Expense Walk(in Millions of Nominal Dollars)

$339 $23 $3 $18 $0.4 $7 $1 $1 ($20.3)

$372

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

2017 RecordedAdjusted

Ch 4 - AssetFamily -

DistributionMains and

Services

Ch 5 - AssetFamilies -

Measurementand Control,

andCompressedNatural Gas

Stations

Ch 6 -DistributionOperations

andMaintenance

Ch 7 -Corrosion

Control

Ch 8 - LeakManagement

Ch 9 - GasSystems

Operations

Ch 10 - NewBusiness andWork at theRequest of

Others

Ch 11 - GasOperationsTechnologyand Other

DistributionSupport

2020 Forecast

74

2020 Expense Forecast by Chapter(in Millions of Nominal Dollars)

Ch 4 - Asset Family -Distribution Mains and Services, $55.0

Ch 5 - Asset Families -

Measurement and Control, and

Compressed Natural Gas

Stations, $6.9

Ch 6 - Distribution Operations and Maintenance,

$116.6Ch 7 -

Corrosion Control,

$27.5

Ch 8 - Leak Management,

$66.6

Ch 9 - Gas Systems

Operations, $15.2

Ch 10 - New Business and Work at the Request of

Others, $6.0

Ch 11 - Gas Operations

Technology and Other

Distribution Support, $78.4

75


Distribution Mains and Services $23M• Cross Bore Program: Higher unit cost due to

Unable to Access (UTA) cross bore inspections • Meter Protection Program: Increase in number

of locations requiring meter protection

Distribution Operations and Maintenance $18M• Damage Prevention: Increase in number of

Underground Service Alert (USA) tickets to be worked

• Increase in Preventative and Corrective Maintenance

Leak Management $7M• Leak Survey Cycle: Transitioning from a 4-year

to a 3-year leak survey cycle resulting in more leak surveys and repairs

Measurement and Control and Compressed Natural Gas (CNG) Stations $3M• Overpressure Protection Enhancements

Program: A new program to prevent overpressure events

Technology and Other Support Plans ($-20M)• A one-time charge for consulting costs incurred

in 2017

2017 Recorded – $339M; 2020 Forecast – $372M; Increase = $33M

76

Gas Distribution Capital Walk(Millions of Nominal Dollars)

$821 $23 $48 $0 $3 $18 $16 $26 ($4.8) $951

$-

$200.00

$400.00

$600.00

$800.00

$1,000.00

2017RecordedAdjusted

Ch 4 - AssetFamily -

DistributionMains and

Services

Ch 5 - AssetFamilies -

Measurementand Control,

andCompressedNatural Gas

Stations

Ch 6 -DistributionOperations

andMaintenance

Ch 7 -Corrosion

Control

Ch 8 - LeakManagement

Ch 9 - GasSystems

Operations

Ch 10 - NewBusiness andWork at theRequest of

Others

Ch 11 - GasOperationsTechnologyand Other

DistributionSupport

2020 Forecast

77

2020 Capital Expenditures Forecast by Chapter

(in Millions of Nominal Dollars)

Ch 4 - Asset Family - Distribution

Mains and Services, $512.3

Ch 5 - Asset Families -Measurement and Control, and CNG Stations, $131.1

Ch 6 - O&M, $2.0

Ch 7 - Corrosion Control, $18.6

Ch 8 - Leak Management,

$39.2

Ch 9 - Gas Systems

Operations, $69.5

Ch 10 - New Business and Work at the

Request of Others, $162.6

Ch 11 - Gas Operations Technology and Other

Distribution Support, $15.2

78


2017 Recorded – $821M; 2020 Forecast – $951M; Increase = $130MMeasurement and Control $48M• High Pressure Regulator (HPR) Program:

Increase in the number of HPR rebuilds and replacements

• District Regulator Station Program: Increase in the unit cost for regulator station rebuilds

• Station Overpressure (OP) Protection Enhancements Program: New program includes modifying or adding station equipment to provide protection against OP events

New Business and WRO $26M• Increase in new customers connections, and

increase in load from existing customers

Distribution Mains and Services $23M • Meter Protection Program: Includes the

relocation of 770 services• Service Replacement Program: Decrease

driven by the completion of the Copper Service Replacement Program

Leak Management $18M• Leak Survey Cycle: Transition from a 4-year to a

3-year leak survey cycle resulting in an increase of the volume of leak repair work

Gas System Operations $16M• New Capacity: Increase in the unit cost of

installing distribution pipe in 2020• SCADA: Increase in the unit costs for Remote

Terminal Unit (RTU) installation

Other Support ($5M)• Managing Buildings: Decrease due to the

forecast for this type of work moving to Shared Services

79

2017 RAMP-2020 GRC RAMP Risks Update

Change Drivers:• M&C- Downstream: Reduced number of HPR rebuilds and replacements, and added the M&C Station Overpressure Protection Enhancements Program as a

mitigation.• Cross Bore: Reduced unit cost, and reduced number of inspections for 2019-2020. During 2019-2020, PG&E will focus on UTAs in SF (this work plan will still

allow the program to significantly reduce risk given SF has a higher population density than other areas, and the find rate in SF is higher than the find rates outside of SF).

• Non-Cross Bore: Reduced the new valve installations for 2020-2022 given PG&E expects to reduce the size of most of its Emergency Shutdown Zones (ESZ) by the end of 2019. New valves are primarily installed to improve PG&E’s ability to isolate the gas system through ESZ.

• Transmission costs are included in the 2017 RAMP estimate for M&C Downstream and M&C Facility risks. They are not included in the 2020 GRC estimate.


2020 GRC Estimate (2017-2022)





Measurement & Control Failure –Release of Gas with Ignition Downstream

Total – $485.2MCapital - $485.2MExpense-$0M

Total – $576.3MCapital - $563.6MExpense-$12.7M


.0.018 0.031 0.013

Measurement & Control Failure –Release of Gas with Ignition at M&C Facility




0.005 0.005 0.000

Release of Gas with Ignition on Distribution Facilities – Cross Bore



Total – $(206.1)MCapital - $0MExpense-$(206.1)M

0.087 0.151 0.064

Release of Gas with Ignition on Distribution Facilities – Non-Cross Bore



Total – $(13.7)MCapital - $(29.6)MExpense-$8.2M

0.155 0.186 0.031

80

Other Requests

• Extend the Distribution subaccount of the New Environmental Regulations Balancing Account through 2022 to track the incremental costs of complying with the leak abatement Best Practices adopted by the Commission in D.17-06-0151

1. CPUC Resolution G-3538 indicates that PG&E’s below ground Grade 3 leak repair program will be reevaluated in 2020 after the CPUC has an opportunity to review cost and emissions data from repairs completed in 2018 and 2019.

Exhibit (PG&E-6) Customer Care

Bill Chen Customer Care and Real Estate

GRC Case Manager

82

Customer Care – Exhibit Structure

Chapter No.


1 Customer Care Policy Don Howerton

2 Customer Engagement Jess Brown

3 Pricing Products and Income Qualified Programs Emily Bartman

4 Contact Centers Chris Zenner

5 Customer Service Offices Chris Zenner

6 Metering Craig Kurtz

7 Billing, Revenue and Credit Travis Browne

8 Customer Care Regulatory Policy and Compliance Darleen DeRosa

83

Summary of Customer Care Forecast Expense and Capital Expenditures

113

Expense(millions of nominal dollars)

Capital(millions of nominal dollars)

84

2020 Expense Forecast by Chapter(Millions of Nominal Dollars)

Customer Engagement$49.1

Pricing Products and Income Qualified

Programs$58.6

Contact Centers$63.9

Customer Service Offices$19.3

Metering$27.7

Billing, Revenue and Credit$85.3

Customer Care Regulatory Policy and Compliance

$15.1 *

Chapter 8

Chapter 7

Chapter 6

Chapter 5 Chapter 4

Chapter 3

Chapter 2

*Includes $7.2M for Operational Management and Operational Support (OM/OS) costs for all of Customer Care. This is due to revisions to the cost model for reporting overhead costs.

85

Customer Care Expense Walk(Thousands of Nominal Dollars)

*Note: Includes $16.3M recorded to the Residential Rate Reform Memorandum Account (RRRMA) in 2017, but is not included in 2017 Recorded GRC costs.

$318,937

$280,446 $4,386

$38,680 $6,040 $1,193 $146 $133 $972

($2,638) ( $10,420 )

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2017Recorded

CustomerEngagement

(Ch 2)

PricingProducts

and IncomeQualifiedPrograms

(Ch 3)

ContactCenters(Ch 4)

CustomerServiceOffices(Ch 5)

Metering(Ch 6)

Billing,Revenue and

Credit(Ch 7)

CustomerCare

RegulatoryPolicy &

Compliance(Ch 8)

OperationalManagementand Support

(Ch. 8)

AffordabilitySavings

2020Forecast

*

86


Mandated Statewide Marketing, Education and Outreach (ME&O) $20.0M• Forecast includes costs for paid media, development of creative campaign materials, measurement and evaluation, and

project management costs• Track Statewide ME&O costs in a new two-way balancing account

Ongoing Residential Rate Reform $11M• Costs currently recorded in the RRRMA through 2019; PG&E is proposing to recover in the 2020 GRC• Residential Rates Implementation• Operational activities to support RRR implementation• Residential Time-of-Use (TOU) Transition

Affordability Savings ($10.0M)• Affordability initiatives that reduce Customer Care’s 2020 Expense Forecast:▪ Contact Centers ▪ Metering▪ Billing, Revenue and Credit

2017 Recorded – $280M*; 2020 Forecast – $319M; Increase = $39M

*Note: Includes $16.3M recorded to the Residential Rate Reform Memorandum Account (RRRMA) in 2017, but is not included in 2017 Recorded GRC costs.

87


Contact Centers$8.2

Customer Service Offices

$0.5 Metering$133

Chapter 6

Chapter 5

Chapter 4

88

Customer Care Capital Walk(Thousands of Nominal Dollars)

$141,740 $142,017 $3,422 $416 $7,792

( $11,922 )

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

2017 RecordedAdjusted

Contact Centers(Ch 4)

Customer ServiceOffices(Ch 5)

Metering(Ch 6)

Billing, Revenueand Credit

(Ch 7)

2020 Forecast

89


2017 Recorded – $142M; 2020 Forecast – $141.7M; Decrease = $0.3M

Metering $7.8M• Increase in gas module purchases, routine maintenance exchanges and installation costs• Optimizing the coverage area for SmartMeter networks• Upgrading electric and gas meters currently operating on 3G to 4G networks • Ongoing deployment of Meter Radio Frequency Identification technology to optimize meter inventory management

Contact Centers $3.4M• Ongoing implementation of several technology initiatives that improve the overall customer experience and reduce

costs

Customer Service Offices $0.5M• Lifecycle Replacement of Equipment

Billing, Revenue and Credit ($11.9M) • Completion of Revenue Operations Printer Replacement Project• Completion of technology projects in Billing Operations

90

Other Key Requests

Customer Service Offices (CSO) Closure Proposal • Proposal to close 17 of PG&E’s 75 CSOs• Estimated cost savings not included in PG&E’s expense and capital forecast• PG&E’s expense and capital forecast to be updated if closures are granted

Memorandums of Understanding • Small Business Utility Advocates (SBUA)• Center for Accessible Technology (CforAT)

Statewide ME&O Two-Way Balancing Account ProposalAssembly Bill (AB) 802 Memorandum Account Closure

Exhibit (PG&E-7) Shared Services

Conor Doyle, Kathy Wade, Gabe Briggs, Bill Chen, Geri CallejasShared Services Chapters Case Managers

92

Shared Services– Exhibit Structure

Chapter Title Witness

1 Safety and Health Todd Hohn

1A Integrated Disability Management Heather Hornbrook

2 Transportation and Aviation Services Michael Glover

3 Materials Lance Schultz

4 Sourcing David Kevane

5 Real Estate Tara Agid

6 Land and Environmental Management Andy Williams

7 Enterprise Records and Information Management Megan Hertzler, Mike Swatek

8 Information Technology John Nichols

9 Cyber and Corporate Security Joe Sagona

93

Summary of Forecast Shared ServicesExpense and Capital Expenditures

Expense(millions of nominal dollars) (millions of nominal dollars)

Capital

94

2020 Expense Forecast by Chapter


95

Shared Services Expense Walk(Millions of Nominal Dollars)

$554.4

96

2017 Recorded – $508.3M; 2020 Forecast – $554.4M; Increase = $46.1M


Transportation and Aviation Services $21.7M• Cost Model change – Fleet overhead no longer allocated to GRC balancing accounts resulting in greater direct

charges to base expense.• A higher portion of transportation expenses were capitalized in 2017• Minor increase for addition of expenses for operating and maintaining the heavy lift helicopters supporting the

Community Wildfire Safety ProgramSafety and Health $3.6M• Addition of 23 FTEs for Corporate Safety and Health, DOT Compliance, and Enterprise Corrective Action Program• EscalationCompanywide Health and Wellness Programs $3M• Expanded utilization of the Clinical Support Program and Employee Assistance Program• Inclusion of Musculoskeletal Prevention ProgramMaterials $1.4M• One time adjustment for planned vacanciesLand and Environmental Management ($3.1M)• Reductions in remediation costsEnterprise Records and Information Management ($2.3M)• Reductions resulting from program maturitySourcing ($2.4M)• Operational efficienciesCorporate Real Estate ($2M)• Reductions in operating costs• Termination of leases

97

Key Cost Changes from 2017 GRC Expenses Continued

Information Technology $20.5M• Baseline Portfolio Maintenance contracts, licensing and cloud provider agreements to support technology

solutions deployed over the 2017 GRC period partially offset by Affordability Initiative Savings.• New investments in Foundational Technology to maintain IT asset security and reliability; address long-

term cost-effectiveness; and address IT risks.• New investments in Business Technology cross-functional software applications and mobile technology to

enable PG&E’s field workforce and new investments in software-based process automation that driveefficiency in LOB operations.

Cyber and Corporate Security $8.7M• New Cybersecurity mitigation investments to address the risk of Cyber Attack.• Increase in maintenance contracts to support operationalized mitigations and refine controls.

98

2020 Capital Expenditure Forecast


99

Shared Services Capital Walk

(Millions of Nominal Dollars)

$646

100

2017 Recorded – $547.3M; 2020 Forecast – $646.2M; Increase = $98.9M

Key Cost Changes from 2017 – Capital Expenditures

Corporate Real Estate $182.9M• Building and site purchases• Relocations • RenovationsTransportation and Aviation Services ($59.7M)• Longer vehicle livesSafety and Health ($5.8)• Completion ECAP application build in 2017Land and Environmental Management ($5.2M)• Completion of Habitat Conservation PlanSourcing ($3.9)• Completion of SAP Ariba project (internally named OASIS)Enterprise Records and Information Management ($1.6M)• Completion of IT projectsInformation Technology ($12.8M)• More efficient delivery of Network and Data Center Foundational Technology investments to address security,

resiliency, and capacity; enable business innovation and support commercial cloud advancements• New investments in Business Technology cross-functional software products, including mobile applications that are

necessary to increase efficiency and quality of field activitiesCyber and Corporate Security $4.9M• New Cyber and Corporate security mitigation investments to address the risk of Cyber Attack, Insider Threat,

Physical Attack and Alarm Mitigation risks

101


Change Drivers:• Contractor Safety – Tools and Technology mitigation acceleration.• Employee Safety - Update to Musculoskeletal program capital mitigation. Reclassification of expense

mitigations to controls.• Motor Vehicle Safety – No cost change. RSE change the result of excluding alternative mitigations.• Fitness for Duty – Costs for kiosks removed due to online and web-based interface to access

telemedicine service and capital costs for San Ramon clinic removed. Additional expense funding added for on-site care.


2020 GRC Estimate (2017-2022)





Contractor Safety

Total $8.4M–Capital - $0MExpense-$8.4M


Total ($1.1M)Capital - $0Expense-($1.1M)

62.714 49.901 -12.812

Employee Safety Total $166.6M–Capital - $60.0MExpense-$106.6M


Total ($162.1M)Capital –($60.0M)Expense-($102.1M)

0.149 0.258 0.109

Motor Vehicle Safety

Total $2.9M–Capital - $0.5MExpense-$2.4M


Total $0–Capital - $0Expense-$0

32.687 38.721 6.034

Fitness for Duty Total $31.8M–Capital - $6.4MExpense-$25.4M


Total ($4.0M)Capital – ($5.5M)Expense-$1.5M

0.294 0.319 0.025

102

2017 RAMP - 2020 GRC RAMP Risk(s) Update

Change Drivers:• Scope and funding overlap with other IT projects and budgets• Modified project implementation to make use of existing tools or

services


2020 GRC Estimate (2017-2022)





Records and Information Management

Total $137.0MCapital -$35.0MExpense-$102.0M

Total $113.1MCapital -$12.8MExpense-$100.3M

Total ($23.9M)Capital –($22.1M)Expense-($1.7M)

0.113 0.217 0.1036

103


Change Drivers:• The mitigation plans were updated in the GRC with the latest financial forecasts • Following a security assessment at the end of 2017, implementation plan timelines were

resequenced between mitigations• Mitigation plans were re-scoped, consolidated, and replaced between sub-groups to optimize

approach and operational support


2020 GRC Estimate (2017-2022)





Cyber Attack Total –$193.1MCapital -$145.8MExpense-$47.2M

Total –Capital –$173.2M $133.3MExpense-$39.8M

Total –($19.9M)Capital –($12.5M)Expense-($7.4M)

N/A N/A N/A

Insider Threat

Total –$12.2MCapital -$6.6MExpense-$5.6M

Total –$5.7MCapital -$1.5MExpense-$4.2M

Total –($6.5M)Capital –($5.1M)Expense-($1.4M)

N/A N/A N/A

Exhibit (PG&E-8) Human Resources

Judith GutierrezHuman Resources GRC Case Manager

105

Human Resources – Exhibit Structure

Chapter No.


1 Human Resources Policy and Overview Dinyar Mistry

2 HR Operations David Hatton

3 HR Service Delivery and Inclusion Allison Neves

3A Report on Diversity and Inclusion Allison Neves

4 Total Rewards John Lowe

4A Safety and Compensation John Lowe

5 Employee Benefits Lisa Laanisto

6 PG&E Academy Chris Pickett

7 Total Compensation Study Willis Towers Watson

106

Summary of Forecast – Human ResourcesExpense and Capital Expenditures

Includes HR Operations, Total Rewards and PG&E Academy IT and Other Project Capital

Includes Company Wide, Department Costs, and IT Project Expense

Expense(millions of nominal dollars)

Capital(millions of nominal dollars)

$4

$5

$2$2

$3 $3

$0

$1

$2

$3

$4

$5

$6

2017 2018 2019 2020 2021 2022

$835$866

$897$923

$780

$800

$820

$840

$860

$880

$900

$920

$940

2017 2018 2019 2020

107

2020 Expense Forecast by Chapter(in Millions of Nominal Dollars)

CH 2 HR Operations, $12.6

Ch 3 HR Services and Delivery,

$41.8

Ch 4 Total Rewards, $182.9

Ch 5 Employee Benefits, $643.6

Ch 6 PG&E Academy, $39.6

HR IT Expense, $2.1

108

HR Expense Walk(Millions of Nominal Dollars)

$834.9

$1.3

$16

$22

$80 $1 $0

$922.5

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2017Recorded

Ch 2: HROperations

Ch 3: HRService and

Delivery

Ch 4: TotalRewards

Ch 5: Benefits Ch 6: PG&EAcademy

IT Projects 2020 Forecast

109

Key Cost Changes from 2017 to 2020

• PG&E’s goal is to offer a competitive total compensation package for its employees• PG&E’s total compensation study was conducted by Willis Towers Watson, and the results showed PG&E’s

compensation to be competitive with the market.• In accordance with SB901, PG&E will exclude approximately $21 million of officer compensation and benefits from it’s

2020 GRC forecast. This exceeds the requirements of Resolution 4963 and SB 901. o Forecast does not include Officer STIP or LTIP, consistent with previous GRC filings.

Key Drivers:• Medical Plans (Increase of $77.5 million)

o Average medical escalation rate from 2017 to 2020 is approximately 6% per year• Non Executive Short Term Incentive Plan (Increase of $21 million)

o Increase primarily due to labor escalation and 2017 STIP payment less than target (1.0)• Retirement Savings Plan (401k) (Increase of $17 million)

o Increase primarily due to labor escalation • Workforce Transition (decrease of $18 million)

o Forecasting methodology based on a 5-year average• Post Retirement Benefits Other than Pension Trust Contributions (decrease of $10 million)

o Based on the Actuarial analysis provided by Willis Towers Watson

Other: • PG&E intends to update its forecast labor escalation rate with recently ratified agreements. This will decrease the

current forecasted labor by approximately $4 million.

• PG&E’s overall forecast reflects a slight decrease in employee headcount from 2017 to 2020.

110

Capital Forecast by Chapter

2020 Capital Forecast(Millions of Nominal dollars)

HR Operations• Online HR – IT Projects ($0.9)

•Total Rewards• Tool to Automate Job Market Analysis – IT Projects

($0.05)

•PG&E Academy• Enhance Technical Library and Guidance

Documents – IT Projects ($0.2)• Maintain PG&E Learning Facilities ($1.2)

CH 2 HR Operations, $0.9

CH 6 PG&EAcademy, $1.5

CH 4 Total Rewards, $0.05

111

2017 RAMP-2020 GRC RAMP Risk(s) UpdateRisk 2017 RAMP

Estimate(2017-2022)

2020 GRC Estimate (2017-2022)





Skilled and Qualified Workforce

Total $66.1M Capital -$52.1MExpense-$14.0M

Total $69.2M Capital -$61.0MExpense-$8.2M

Total $3.1M Capital -$8.9MExpense-$(5.8)M

0.387 0.466 0.079

Change Drivers:• Costs and benefits have been updated to reflect current assessment data

Exhibit (PG&E-9) Administrative & General

Gabe Briggs2020 GRC A&G Case Manager

113

A&G Exhibit Structure

Chapter No.


1 Introduction Shannon Yuen

2 Finance Organization Costs Joe Marshman

3 Risk, Audit, and Insurance Departments Janaize Markland

4 Compliance and Ethics Tripti Uprety

5 Regulatory Affairs Megan Lawson

6 Law Organization Charles Middlekauff

6A Law Department Expense Allocation Study Charles Middlekauff

7 PG&E Corporation and PG&E Executive Offices; and Corporate Secretary Department Costs

Linda Cheng

8 Corporate Affairs Costs Susie Martinez

9 Administrative and General Ratemaking Adjustments Shannon Yuen

114

Summary of A&G Exhibit Forecast

Expense Capital

IT Project Costs(Capital)

(millions of nominal dollars) (millions of nominal dollars)

$185$152

$6

$177

$434

$2 $0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2017 2020 2017 2020 2017 2020

$11

$8 $8 $8

2017 2020 2021 2022

DepartmentCosts

CompanywideExpenses

IT Project Costs(Expense)

IT Project Costs(Capital)

115

2020 A&G Department Cost Forecast(in Millions of Nominal Dollars)

Ch.2 Finance Organization Costs,

$62.1

Ch 3. Risk, Audit, and Insurance

Departments, $11.5

Ch.4 Compliance and Ethics, $7.8

Ch.5 Regulatory Affairs, $15.6

Ch. 6 Law Organization, $48.7

Ch.7 PG&E Corporation,

Executive Offices, Corporate Secretary

Department Costs, $6.2

Ch. 8 Corporate Affairs, $25.2

116

Department costs:• 2020 forecast is $8M less than 2017 recorded adjusted costs

which is mostly attributable to reductions in staffing and contract costs

Companywide expenses:• 2020 forecast is $282M higher than 2017 recorded adjusted

costs due to an increase in liability insurance costs

IT project costs:• 2020 forecast is $4M less than 2017 recorded adjusted due to

the completion of Regulatory Affairs IT projects

Key Drivers of 2020 Forecast

117

2017 RAMP-2020 GRC RAMP Risk UpdateRisk 2017 RAMP

Estimate(2017-2022)

2020 GRC Estimate (2017-2022)





Climate Resilience

Total (Expense Only) -$4.549M

Total (Expense Only) -$4.261M

Total (Expense Only) –($288K)

N/A N/A N/A

Exhibit (PG&E-10)Results of Operations

Niel JonesWitness, Results of Operations Chapter

Manager, Regulatory Analysis

119

PG&E GRC Results of Operations (RO) Model• Proprietary Excel-based model that

calculates a revenue requirement using cost, tax and global inputs

• Details of PG&E’s RO are discussed inExhibit (PG&E-10)

• Consistent with 2017 GRC RO Model

• PG&E’s GRC RO model includes three functional areas and summarizes costs in the following categories:

• Operation & Maintenance Expenses• Customer Services• Administrative and General Expenses (salaries, benefits,

etc.)• Revenue Fees and Uncollectibles, Taxes other than

Income and Other Adjustments• Income Taxes, Depreciation & Amortization• Levels of Ratebase and Associated Return

Total GRC Revenue Request (Including test year and attrition years)

Gas Distribution

Electric Generation

Electric Distribution

Gas Distribution

Generation

120

PG&E’s 2020 GRC RO Model Data Flow

RO ModelExhibit

(PG&E-10)

Cost WitnessesExhibits (PG&E-3)-(PG&E-9)

Capital and Expense

Global Items WitnessesExhibit (PG&E-10) &Exhibit (PG&E-12)

Escalation Rates, Depreciation Rates, Working

Cash, Cost of Capital, etc.

Tax WitnessesExhibit (PG&E-10)

Deductions and Credits

Attrition WitnessesExhibit (PG&E-11)

Attrition Methodology

Revenue Requirement• Test Year – 2020

Attrition Years – 2021 & 2022• Expenses including depreciation• Taxes• Ratebase• Return on Ratebase

RO Inputs Supported by RO Output

121

Revenue RequirementLines of Business (LOB) Mapped to GRC Functional Areas

Lineof

Business

Direct Costs

Allocated& Direct-assigned

Costs

Allocated Costs

(PG&E-3) Gas

Distribution

(PG&E-4) Electric

Distribution

(PG&E-5) Energy Supply

(PG&E-6) Customer

Care

(PG&E-7) Shared

Services and Information Technology

(PG&E-8) Human

Resources

(PG&E-9) Administrative

and General

GR

CFu

nctio

nalA

rea Electric

Distribution ✓ ✓ ✓ ✓ ✓

GasDistribution ✓ ✓ ✓ ✓ ✓

ElectricGeneration ✓ ✓ ✓ ✓ ✓

122

PG&E’s Testimony Tables to the RO Model(An Example)

RO Model –Expense

RO Model –Capital

Testimony Table –Expense

Testimony Table –Capital

TABLE 8-4WILDFIRE RISK CONTROLS – CAPITAL

(Thousands of Nominal Dollars)MWC/ 2017 2018 2019 2020

Name MAT Recorded Forecast Forecast ForecastC9 – Deteriorated Pole Replacement 07D $98,195 $175,644 $109,273 $109,365

$98,195 $175,644 $109,273 $109,365

TABLE 8-5MWC GA FORECAST

(Thousands of Nominal Dollars)2017 2018 2019 2020

Name MAT CodeRecorded Adjusted Forecast Forecast Forecast

Intrusive Inspection Program GAA $11,218 $10,051 $12,192 $12,439 Pole Restoration Program GAD $4,856 $3,239 $4,762 $4,903

Pole Evaluations GAI $493 $0 $0 $0 Joint Pole Credits GA# ($4,372) ($3,408) ($4,167) ($4,189)

Joint Utility Coordination GAB, GAF, GAH $78 $400 $423 $435 $12,272 $10,282 $13,210 $13,588

Year ExhCh MWC Bus_Area Acct UCC CostElement Nominal$

2020 004-008 GA ED 588 301 LAB 407.50

2020 004-008 GA ED 588 301 MAT 320.95

2020 004-008 GA ED 593 301 LAB 1,552.70

2020 004-008 GA ED 593 301 MAT 15,463.19

2020 004-008 GA ED 598 301 LAB 52.60

2020 004-008 GA ED 598 301 MAT -25.41

2020 004-008 GA ED 456 301 Rev -4,183.50

Total 13,588.04

Description MWC MAT UCC 2018 2019 2020 Exhibit ChapterEcon Stim - Pole Replacment 7 07D 301 0 0 0 4 8

SYSPLN-07D-Pole Repl 7 07D 301 2,270 109,273 109,365 4 8

Steel Lattice Tow er-Pole Replacment - Group7 07D 301 7,187 0 0 4 8

Pole Replacement - Group 7 07D 301 166,187 0 0 4 8

175,644 109,273 109,365

123

Summary of Test Year RO OutputExhibit (PG&E-1) Table 2-2

Line No. Description

1/1/2020Authorized

(Note 1)2020

Proposed

Difference from

Authorized(a) (b) (c)=(b)-(a)

1 Electric Distribution2 Operation and Maintenance 809 1,142 333 3 Customer Services 214 197 (17) 4 Administrative & General 399 580 181 5 Less: Revenue Credits (OORs & Wheeling) (118) (154) (36) 6 FF&U, Other Adjs, Taxes Other than Income 86 115 29 7 Taxes: Income and Property 324 323 (1) 8 Depreciation, Decommission and Amortization 1,499 1,610 111 9 Return 1,151 1,300 149

10 Retail Revenue Requirement 4,364 5,113 749 17.2%

11 Gas Distribution Total12 Operation and Maintenance 395 377 (19) 13 Customer Services 121 118 (4) 14 Administrative & General 270 344 74 15 Less: Revenue Credits (OORs & Wheeling) (28) (33) (5) 16 FF&U, Other Adjs, Taxes Other than Income 55 62 8 17 Taxes: Income and Property 83 119 36 18 Depreciation, Decommission and Amortization 558 531 (27) 19 Return 508 579 70 20 Retail Revenue Requirement 1,963 2,097 134

6.8%Electric Generation

21 Operation and Maintenance 741 637 (104) 22 Customer Services 3 4 2 23 Administrative & General 284 390 106 24 Less: Revenue Credits (OORs & Wheeling) (6) (9) (3) 25 FF&U, Other Adjs, Taxes Other than Income 40 58 18 26 Taxes: Income and Property 82 141 60 27 Depreciation, Decommission and Amortization 620 713 93 28 Return 428 431 3 29 Retail Revenue Requirement 2,191 2,366 175

8.0%30 Total31 Operation and Maintenance 1,946 2,156 210 32 Customer Services 338 319 (19) 33 Administrative & General 953 1,315 361 34 Less: Revenue Credits (OORs & Wheeling) (152) (196) (44) 35 FF&U, Other Adjs, Taxes Other than Income 181 236 55 36 Taxes: Income and Property 488 583 95 37 Depreciation, Decommission and Amortization 2,677 2,854 177 38 Return 2,087 2,310 223 39 Retail Revenue Requirement 8,518 9,576 1,058

12.4%

(Millions of Dollars)

Application

Exhibit (PG&E-11) Post Test-Year Ratemaking

Niel JonesManager, Regulatory Analysis

125

Post Test-Year Ratemaking (PTYR)Exhibit Structure

Chapter No.


1 Post Test-Year Ratemaking Proposal Teresa Hoglund

2 Attrition and Proposed Attrition Changes Teresa Hoglund

3 Rate Base Growth in the Attrition Years and Related Costs Pei Sue Ong

126

EXPENSE

• Escalation consistent with 2017 GRC proposal

• Discrete Adjustments1. Nuclear Generation decrease2. Statewide rate reform

decrease3. Vegetation Management

increase

CAPITAL

• Escalation of adopted test-year additions

• Discrete Adjustments (bottom-up forecast)

1. Nuclear Generation2. Hydro Generation3. Corporate Real Estate

• Change from 2017 GRC proposal➢ Functional area bottom-up forecast

removed to simplify

Post Test-Year Ratemaking Proposal

• Continuation of the Z-factor mechanism with a modification to include test-year events.

127

Estimated PTYR adjustments based on PG&E’s test-year forecast:2020 GRC Revenue Requirement Forecast $9,576 million

2021 Attrition Increase $ 454 million 4.7% increase

2021 GRC Revenue Requirement Forecast $10,029 million

2022 Attrition Increase $ 486 million 4.8% increase

2022 GRC Revenue Requirement Forecast $10,516 million

Post Test-Year Ratemaking Proposal

128

Discovery Requests

Propounding Data Requests• Send DRs to [email protected]

Internet Access for Data Requests• Create an account and log-in at

https://pgera.azurewebsites.net/account/login• Request enrollment in the 2020 GRC• Follow instructions to complete and return to the Internet User Service

Agreement

Confidential Material• To obtain a Non-Disclosure Agreement, contact [email protected]

mailto:[email protected]

https://pgera.azurewebsites.net/account/login

mailto:[email protected]

Thank YouShilpa Ramaiya

Case ManagerMary Gandesbery

Lead AttorneyConor Doyle

Asst. Case Manager

For additional information and questions regarding PG&E’s 2020 GRC, please contact [email protected]

Next Steps/Follow-up