Angeles Link Denial Draws Broad Support, but Parties Look to Contain Precedent Risk

On April 9, parties filed comments on a proposed decision denying SoCalGas's request to recover $266 million from natural gas ratepayers to fund Phase 2 front-end engineering and design work for the Angeles Link hydrogen pipeline project.

Recall that the Angeles Link proposes dedicated hydrogen transmission pipelines to deliver renewable hydrogen into the Los Angeles Basin for hard-to-electrify sectors including power generation, industrial uses, and heavy-duty transportation.

• The PD finds that the project remains speculative, with no specific customer base identified – as required by a 2022 decision (D.22-12-055) – no guarantee of construction, and no demonstrated direct benefits to existing natural gas ratepayers.
• The PD concludes that ratepayer funding is not justified at this stage, emphasizing that the project is still in planning, has seen cost estimates rise, and lacks clear alignment with established standards requiring projects to be "used and useful" before cost recovery.
• The PD does not adopt TURN's alternative proposal to track Phase 2 costs in a memorandum account for future recovery once the project becomes operational.

Below is a roundup of parties' comments on the PD; if any additional comments surface we will update accordingly.

Overview of Parties' Comments

Parties are divided along cost-allocation and policy lines, with broad agreement that Phase 2 cost recovery is off the table now, but disagreement over whether the denial is legally sound and how it should be framed.

Consumer Advocates

Consumer advocates support the denial but with distinct requests. TURN supports the PD without modification. The Utility Consumers' Action Network (UCAN) requests attribution corrections and a hedge on Infrastructure Investment and Jobs Act funding language. The PD states as fact that SoCalGas declined federal funding because compliance costs would not be in ratepayers' interest; UCAN wants "SoCalGas claimed" added to indicate that this is SoCalGas's characterization.

UCAN also requests a new finding that parties' participation in the Angeles Link Planning Advisory Group contributed to this decision, which would open the intervenor compensation window for Advisory Group work completed throughout 2023 and 2024.

Cal Advocates cites a §1705 deficiency: the PD discusses cost causation but fails to separately state findings of fact and conclusions of law on the issue, an omission with appellate implications.

Environmental Advocates

The Environmental Defense Fund raises two errors of omission:

• The PD ignores the CPUC's Affiliate Transaction Rules, which apply to any regulated gas utility proposing activities outside its core business; and
• The PD offers no guidance on what a compliant future hydrogen application would need to demonstrate, risking a market signal that utilities should abandon hydrogen infrastructure entirely.

Industrial Ratepayers and Commercial Interests

Air Products/Indicated Shippers support the PD and want it adopted expeditiously, but seek attribution corrections throughout. The PD credits Cal Advocates, CEJA/Sierra Club, and TURN for arguments that Air Products/Indicated Shippers also advanced in the record. Air Products/Indicated Shippers further preserve their jurisdictional position for future proceedings, maintaining that whether standalone hydrogen transportation falls under CPUC authority is ultimately a question for the Legislature.

Prospective Hydrogen Users and End-User Interests

The Port of Los Angeles and the Southern California Generation Coalition (SCGC) accept the denial but want it without prejudice. The Port is a prospective direct hydrogen offtaker with zero-emission deadlines in 2030 and 2035, partially addressing the PD’s no-identified-beneficiary finding.

SCGC takes a narrower approach: deny the application without prejudice and allow SoCalGas to refile under the existing Angeles Link Memorandum Account. SCGC also makes a forward-looking market case: a Lancaster-to-LA-Basin pipeline corridor is emerging, with Element Resources building a $1.85 billion green hydrogen plant opening in 2027 and the Los Angeles Department of Water & Power converting the Scattergood gas plant to run on hydrogen.

Labor-Aligned Parties

Labor-aligned parties oppose the PD but argue differently. The Utility Workers Union of America Local 483 (UWUA) makes a procedural case: the PD mischaracterizes SoCalGas's position; it sought only a nominal Phase 2A authorization with allocation deferred to Phase 2B, not immediate recovery from all ratepayers. If the Commission adopts the PD, UWUA requests dismissal without prejudice.

The California State Pipe Trades Council (CSPTC) makes a statutory case: the planning-stage bar is wrong as a matter of law. The Commission has approved pre-construction R&D costs in rates before, including EPIC, EV charging, and demand-flexibility pilots. Senate Bill 1075's explicit directive to develop green hydrogen infrastructure is sufficient to justify departing from cost causation. CSPTC cites specific project benefits:

• 53,000 direct construction positions;
• 4.5 to 9 million metric tons of CO₂ avoided; and
• NOx reductions equivalent to 90% of SCAQMD's 2037 stationary source targets.

SoCalGas

SoCalGas accepts the affordability-based outcome but mounts a comprehensive attack on the PD's legal reasoning. The main scoping violation: Phase 2A was scoped to law and policy without an evidentiary record, yet the PD renders findings of fact on cost reasonableness, beneficiary identification, and Infrastructure Investment and Jobs Act funding without affording parties a hearing. SoCalGas argues this violates Public Utilities Code §1705 and due process precedent.

The main legal error: the PD conflates used-and-useful, which applies to plant in rate base, with the prudence standard that governs planning expenditure recovery. Applying used-and-useful to planning authorization creates a regulatory paradox that makes Phase 2 approval permanently unachievable under the staged framework that D.22-12-055 itself established.

Beyond the legal errors, SoCalGas highlights two practical dangers:

• The PD silently bypasses the subset-of-ratepayers question the scoping ruling put directly at issue; and
• Its jurisdictional language is broad enough to reach pending proceedings the CPUC never intended to touch.

SoCalGas wants three things added to the PD's ordering paragraphs:

• Deny without prejudice;
• Declare non-precedential on jurisdiction and cost allocation; and
• Expressly carve out Phase 1 cost recovery in A.25-06-011, the Phase 1 cost-recovery proceeding.

INSTANT ANALYSIS

Angeles Link is in a pre-construction phase with no identified beneficiary class, making broad cost socialization hard to justify under any standard in this record.

The fight is over what the denial actually adjudicates. The PD treats the denial as a merits determination (the project fails cost causation, used-and-useful, and beneficiary identification). SoCalGas, Air Products/Indicated Shippers, EDF, and SCGC argue in different registers that it should be narrower: a policy call on affordability, with jurisdictional and cost-allocation questions reserved for a proceeding with an actual evidentiary record.

If the used-and-useful holding stands, utilities cannot recover planning costs for infrastructure that isn't already built, structurally precluding the staged development model the CPUC approved in D.22-12-055. If the cost-causation adjudication stands without addressing the subset question, it forecloses alternative allocation designs parties never had the chance to brief.

Notably, the without-prejudice ask cuts across opposing sides: UWUA, SCGC, the Port of Los Angeles, and SoCalGas all want it despite disagreeing on the outcome. The Commission can grant it without changing the result.

TL;DR

The Commission is not killing hydrogen. It's declining to fund a $266 million planning exercise on existing ratepayer backs for a project that may never be built. That is a defensible policy call. The question is whether the PD's legal reasoning survives the record it built.