Risk Assessment and Mitigation Phase

Safety Policy Division’s Risk Assessment and Safety Analytics (RASA) section is responsible for evaluating investor-owned energy utility risk assessments and risk mitigation plans, a process called the Risk Assessment and Mitigation Phase (RAMP). California’s three major energy utilities—Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and Sempra (consisting of San Diego Gas & Electric Company [SDG&E] and Southern California Gas Company [SoCalGas])—submit risk assessments and risk mitigation plans to the CPUC for evaluation every four years. The plans address safety, reliability, and financial risks and include the utility’s estimated costs for risk mitigation. This evaluation in turn informs each utility’s General Rate Case (GRC), a proceeding where the CPUC evaluates a utility’s projected budget (including its operation and maintenance budget and capital budget). The goal of RASA’s evaluation is to ensure that each utility’s risk mitigation plan and associated budget adhere to the CPUC’s requirements for incorporating a risk-based decision-making framework into its planning and budgeting processes. 

Schedule of RAMP Applications

Background

The requirements for the RAMP were initially established in CPUC Decision (D.) 14-12-025, “Decision Incorporating a Risk-Based Decision-Making Framework into the Rate Case Plan and Modifying Appendix A of Decision 07-07-004” (December 2014). This decision introduced the RAMP requirements and the requirement that utilities link safety-related investments to risk reduction in their General Rate Case applications. This decision was part of Rulemaking (R.) 13-11-006, “Order Instituting Rulemaking to Develop a Risk-Based Decision-Making Framework to Evaluate Safety and Reliability Improvements and Revise the General Rate Case Plan for Energy Utilities” (November 2013). The goal of the RAMP, as set forth in D.14-12-025, is to examine the utility’s assessment of its key risks and its proposed programs for mitigating those risks.

A number of subsequent decisions have refined the RAMP requirements, including decisions under Application (A.) 15-05-002 (2015), in particular D.18-12-014 “Phase Two Decision Adopting Safety Model Assessment Proceeding (S-MAP) Settlement Agreement with Modifications” (December 2018), which established a Risk-Based Decision-Making Framework, and decisions under R. 20-07-013 “Order Instituting Rulemaking to Further Develop a Risk-Based Decision-Making Framework for Electric and Gas Utilities” (July 2020), which modified D.18-12-014. This proceeding included four phases, each introducing new elements to the RAMP. One main outcome of the decisions under R.20-07-013 is the introduction of a benefit-cost approach to analyzing risk mitigation investments, including standardized dollar valuations of safety and reliability consequences from risk events (introduced in phase two). For more information on the changes made to the RAMP process through this proceeding, see the CPUC web page Risk-Based Decision-Making Framework (RDF): R. 20-07-013.

Criteria for Evaluation of a RAMP Application

The RASA section’s evaluation of a utility’s RAMP application is primarily aimed at determining whether the application is compliant with the requirements of the CPUC’s Risk-Based Decision-Making Framework. Additionally, the evaluation may consider whether the application:

• Adequately addresses safety, reliability, and financial risks.
• Describes in sufficient detail how capital investments and operating costs will translate into risk mitigation.
• Demonstrates a prioritization process that takes into account the estimated benefit-cost ratio of risk mitigation measures.
• Improves on elements that RASA found lacking in the utility’s last RAMP application.