Transmission rate base in CAISO shows wide mix of growth, ROEs remain stable
Based on 2017 data, transmission rate base among utilities in the California ISO continued the mixed growth reported for 2016, with year-on-year growth for the three large investor-owned utilities in CAISO ranging from a low of just over 6% for Edison International subsidiary Southern California Edison Co., or SCE, to a high of over 31% for PG&E Corp. subsidiary Pacific Gas and Electric Co., or PG&E. The transmission rate base for Sempra Energy subsidiary San Diego Gas & Electric Co., or SDG&E, grew to $3.2 billion in 2017 from $2.9 billion in 2016, a year-on-year increase of 10.74%.
The compound annual growth rate, or CAGR, in transmission rate base for each of the three utilities exceeded 15% for the period 2011 through 2017, while the aggregate transmission rate base for the three utilities increased to $15.4 billion in 2017 from $5.8 billion in 2011.
All three investor-owned utilities in CAISO now report a current transmission rate base of over $3 billion: PG&E, $6.7 billion; SCE, $5.5 billion; and SDG&E, $3.2 billion. SCE overtook PG&E in 2014 to become the largest transmission owner in CAISO as measured by transmission rate base, but year-on-year growth from 2016 to 2017 of 31% enabled PG&E to again become the largest transmission owner in CAISO in 2017.
In a pending rate case before the Federal Energy Regulatory Commission, PG&E, which does not operate under formula rates, has requested an authorized transmission ROE of 10.9%, a slight decrease from its currently authorized ROE of 10.96%. SDG&E’s authorized transmission ROE has remained constant at 10.05% through its last four annual formula rate updates, while SCE’s authorized transmission ROE has remained constant at 9.8% through its last five annual formula rate updates.