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PG&E proposes changing accounting policy to capitalize prepaid three‑year cloud contracts
Summary
PG&E’s shared services exhibit asks the CPUC to allow capitalization of prepaid multiyear third‑party cloud computing agreements as capital investments rather than operating expense. Company witnesses said some cloud costs are already capitalized when part of capital implementations.
PG&E’s Shared Services and IT exhibit (Exhibit 7) includes a proposed policy change to allow capitalization of prepaid three‑year third‑party cloud computing agreements. Jerry Cajas (shared services case manager) and other presenters explained the company currently capitalizes cloud costs when they are part of a capital implementation, but the proposal would expand capitalization to include certain prepaid vendor agreements that provide ongoing cloud capabilities.
Jerry told the workshop the change is intended to reflect the long‑lived value of cloud agreements and align accounting treatment with the utility’s broader capital lifecycle management. Workshop participants asked for clarification on what cloud components are capitalized and how the IT capital request overlaps with distribution grid modernization; PG&E responded that foundational network and cloud investments in Exhibit 7 are distinct from end‑device grid modernization investments in Exhibit 4 but that the two exhibits are complementary.
PG&E presented the policy change as part of the capital forecast and noted that the company will provide the proposed tariff and accounting language in the exhibit work papers for CPUC review.
