PG&E Update: 2026 Base Revenue Requirement Filing & the December 1, 2025 Diablo Canyon Oral Argument in Review
BASE REVENUE REQUIREMENT
PG&E filed Advice Letter 5155-G/7791-E to update its 2026 base revenue requirements effective January 1, 2026. The filing implements revenue levels previously authorized by the CPUC across electric distribution, electric generation, gas distribution, and gas transmission and storage.
These levels represent an increase of $174 million from 2025 (see Attachment 1, which provides a rolling, decision-by-decision reconciliation of PG&E’s adopted base revenue requirements from its 2023 GRC through the 2026 attrition year).
The filing reflects a total 2026 base revenue requirement of approximately $15.1 billion, incorporating approved General Rate Case attrition, pension updates, and a series of discrete Commission-directed adjustments.
Key drivers include implementation of the 2023 General Rate Case decision (D.23-11-069), updates from the 2026 Cost of Capital decision authorizing a 9.98% ROE, and a net revenue requirement decrease tied to Assembly Bill 1054 wildfire hardening securitization.
The advice letter also reflows revenue requirements to reflect the shift to a Non-Wildfire Self-Insurance Fund, incorporates permanent disallowances related to the 2015 Butte Fire, and true-up impacts from prior hydroelectric asset sales (Tule River, Deer Creek, and Chili Bar).
The AL's updates will be incorporated into PG&E's annual electric and gas true-ups. Protests are due January 12.
| Line No. | Revenue Requirements ($000s) | 2026 GRC | 2025 Pension | Total |
|---|---|---|---|---|
| 1 | Electric Distribution | $8,510,717 | $81,329 | $8,592,047 |
| 2 | Gas Distribution | $3,057,399 | $42,969 | $3,100,369 |
| 2 | Electric Generation | $1,193,610 | $30,252 | $1,223,862 |
| 3 | Gas Transmission & Storage | $2,169,032 | $20,480 | $2,189,512 |
| 4 | Total | $14,930,759 | $175,031 | $15,105,790 |
INSTANT ANALYSIS: This is a procedural filing but also a consequential implementation step that aggregates prior CPUC decisions into PG&E’s effective 2026 revenue baseline. AL 5155-G/7791-E defines the starting point for 2026 electric and gas rates.
DIABLO CANYON ORAL ARGUMENT
As previously reported at CRI, the Commission adopted a final decision in PG&E's latest Diablo Canyon cost-recovery proceeding (A.25-03-015) on December 4. For added context and posterity, we have summarized the proceeding's December 1 oral argument (OA) below.
At the OA, PG&E urged adoption of the CPUC's then-pending proposed decision, which recommended authorizing PG&E's request to recover $382.233 million in rates to support continued operations at the Diablo Canyon Power Plant. PG&E argued that the PD faithfully implemented Senate Bill 846 by:
- Properly distinguishing transition costs from extended-operations costs;
- Adopting the "Consumer Price Index for All Urban Consumers" (CPI-U) methodology to escalate the fixed management fee from 2022 dollars; and
- Approving its 2026 Volumetric Performance Fee spending plan as consistent with statutory public-purpose priorities such as grid reliability, safety, and decarbonization.
Opponents, led by the Alliance for Nuclear Responsibility, TURN, and EPUC, argued that the proposed decision:
- Effectively rubber-stamped PG&E’s requests;
- Allowed improper cost shifting from government funding to ratepayers through project rescheduling;
- Approved a retroactive and cumulative escalation of the fixed management fee that violates Commission precedent and statute; and
- Inadequately scrutinized Volumetric Performance Fee spending that could inflate shareholder compensation and undermine affordability.
Californians for Green Nuclear Power and the Coalition of California Utility Employees supported the PD, emphasizing Diablo Canyon’s reliability, safety, zero-emissions attributes, and grid-stabilizing benefits. They asserted that the Volumetric Performance Fee framework and affordability guidance were correctly applied as policy encouragement rather than enforceable legal constraints.
Rebuttal arguments focused on whether the Commission’s role is limited to administering SB 846’s cost-recovery mechanics as written, or whether it must aggressively police cost effectiveness, escalation methods, and cross-subsidization to protect ratepayers.