CARD or Separate Rulemaking? Why PG&E and Storage Providers Are Fighting to Keep ISP Market Scrutiny Out of A.25-11-006

In A.25-11-006, parties filed opening comments on the draft scope of issues for PG&E’s 2027–2030 Gas Cost Allocation and Rate Design (CARD) proceeding. (CRI's previous CARD coverage is available here.)

PG&E “CARD” Filing Combines GCAP and GT&S

PG&E’s 2027 Gas CARD consolidates GCAP and GT&S into one framework and resets how gas costs are assigned as statewide gas use declines.

CALIFORNIA REGULATORY INTELLIGENCEMC

A recurring concern is "Issue 20" of the draft scope, which asks:

How can the Commission ensure that core customers are charged reasonable rates for storage purchased through the Independent Storage Providers (ISPs) given the concentration of ISP ownership and the proposed increasing dependence of PG&E on ISP storage to meet core peak demand?

• Wild Goose Storage and Lodi Gas Storage argue that draft Issue 20 is based on a misunderstanding of the ISP market and should be removed from the final scope. They contend the Commission has repeatedly found Independent Storage Providers lack market power, has approved all ISP tariffs, and recently concluded that ISP contracts did not contribute to the 2022–2023 winter gas price spike. They also note that noncore customer access to ISPs kept the market liquid and reduced gas prices in PG&E's service territory, per the Commission's own proposed decision in I.23-03-008 (see CRI's coverage of that item here.)

PD Lands in CPUC’s Natural Gas Price Spike Investigation

The PD finds that the winter 2022–2023 natural gas price spike resulted from a convergence of adverse market conditions.

CALIFORNIA REGULATORY INTELLIGENCEMC

• Wild Goose and Lodi further emphasize that PG&E's Independent Storage Provider contracts are already subject to a detailed reasonableness review process involving Cal Advocates, TURN, and CPUC approval. Wild Goose and Lodi add that this is a multi-step process adopted in the CPUC's 2019 GT&S decision (D.19-09-025), under which PG&E has entered into (or amended) at least 15 ISP contracts for core storage, all approved, and that any broader inquiry into ISP market structure belongs in a separate rulemaking.
• Cal Advocates supports the proposed scoping issues but recommends modifying the procedural schedule. Specifically, it opposes PG&E’s proposed August 18 deadline for intervenor testimony and instead proposes September 1 citing the complexity of combining Gas Cost Allocation Proceeding and Gas Transmission & Storage issues and uncertainty around related General Rate Case Phase II hearing dates.
• PG&E seeks technical revisions to several issues to reflect the combined CARD structure and clarify terminology, and argues that certain proposals — e.g., re-bundling storage costs into transportation rates (Issue 15), implementing new fixed charges in this cycle, or evaluating ISP market concentration — are outside the bounds of its application.
• In addition to highlighting several out-of-scope arguments, PG&E identifies nine issues requiring clarification or modification to be properly scoped, including:
  • Corrections to reflect the combined CARD structure;
  • Removal of "storage" from the local transmission analysis issue;
  • A recharacterization of the Baja-Redwood rate differential to reference the backbone paths rather than "PG&E's service territory";
  • A specification of "backbone-level end-user service"; and
  • A clarification that Issue 18 (storage assets to meet the 1-in-10 Reliability Standard) is limited to PG&E's Core Gas Supply and storage cost allocation proposals rather than GRC Phase I storage capacity questions.
• Central Valley Gas Storage similarly requests clarification of Issue 20. Central Valley Gas Storage states that if the issue concerns PG&E’s allocation of ISP-related storage costs to core customers, it may be appropriate for this proceeding. However, if it seeks to evaluate the reasonableness of rates charged by ISPs themselves, that inquiry falls outside the scope of a cost allocation case and should occur, if at all, in a dedicated proceeding focused on the ISP market structure. Central Valley Gas Storage proposes narrowing the language of Issue 20 accordingly to avoid expanding the case beyond its intended purpose.

INSTANT ANALYSIS

PG&E and all storage providers are aligned: keep ISP market concentration and contract pricing out of this CARD. They argue that if the Commission wants to examine ISP market structure, it should do so in a separate rulemaking, not inside a cost-allocation case. Translation: storage providers want this door closed. The ALJ is deciding whether to leave it slightly open.

Beyond Issue 20, the draft scope pushes into territory that PG&E did not propose, particularly on Core Firm Storage Account unbundling (Issue 15) and accelerated fixed charges. These are not minor add-ons. Issue 15 would reverse a quarter-century of procurement rate design, and implementing fixed charges ahead of the Long-Term Gas Planning docket's resolution could create conflicting policy tracks.

If the final scoping memo keeps these issues alive, this proceeding expands well beyond a standard CARD.

WHO SHOULD CARE?

• PG&E, SoCalGas, SDG&E. Scope defines risk. If Issue 20 survives, storage procurement and core reliance could face broader scrutiny. That affects contract matters, evidentiary burden, and future storage strategy. If Issue 15 survives, the implications extend to how all California investor-owned utilities structure core storage cost recovery. SoCalGas and SDG&E should be watching for precedent risk even though they are not parties here.
• Gas storage providers and investors. This is existential. An expanded ISP inquiry inside CARD creates a cloud of unresolved regulatory risk. Even if nothing changes now, the signal matters for financing and expansion plans. Central Valley Gas Storage's citation of the I.23-03-008 proposed decision (which would limit ISP market reviews to ISP-specific applications) is the strongest legal anchor the storage providers have. If that PD is adopted, it gives storage providers a strong argument to keep this kind of inquiry out of future cost-allocation cases.
• Large Industrials. These parties should watch cost allocation.
  If ISP costs or blending mechanics shift, backbone and core/noncore splits could move. Storage revenue recovery mechanics are not academic.
• Core procurement stakeholders/core transport agents (CTAs). Volatility and Core Firm Storage Account mechanics were raised, even if PG&E says they are out of scope. If those matters continue to surface, bill stability and procurement transparency become live issues. Additionally, Issue 15's subparts on CTA-specific transportation rates and storage revenue unbundling directly affect CTAs who secure their own storage. This is not abstract.
• Consumer advocates and affordability watchers. Issue 20 ties directly to peak reliability costs flowing into core rates. If dependence on ISP storage grows while throughput declines, the rate design pressure intensifies. The fixed charge questions, if scoped in, could accelerate rate restructuring ahead of PG&E's own timeline, with affordability implications that have not been analyzed in testimony.
• Policy observers tracking gas transition risk. The key issue here is the combination of declining load and fixed storage costs. As demand erodes, who carries reliability infrastructure? That question sits underneath the scoping fight.