CPUC Draft Resolution Imposes Stricter Interconnection Refund Terms for PG&E Data Center in Sunnyvale

The CPUC issued Draft Resolution E-5433, which approves, with modifications, PG&E’s agreement to energize a new 49-MW data center and computing lab in Sunnyvale for Menlo Equities. The data center requires the construction of new transmission facilities, including a 115-kV line extension, and substation upgrades.

The draft resolution finds the project reasonable but imposes additional ratepayer protections due to the scale and uncertainty of a transmission-level large load. These protections include limiting refunds of the customer's upfront energization costs to 75% of PG&E's annual net revenues from the project, plus an income-tax component adjustment.

In this scenario, "net revenues" is defined as the transmission component of Menlo Equities' electric rates plus the per-meter customer charge, explicitly excluding generation costs and Public Purpose Program charges. The draft resolution also extends the refund period from 10 to 15 years.

Additionally, the draft resolution allows PG&E to recover costs on an actual-cost basis, removes certain tariff options that could shift risk to ratepayers, and treats the filing as an exceptional case while broader rules for transmission-level retail service are being considered in a separate proceeding.

The earliest the CPUC will consider this item is March 19.

INSTANT ANALYSIS

This draft resolution shows the CPUC moving toward a stricter, risk-containment framework for transmission-level large loads, particularly data centers and computing facilities. By capping refunds at 75% of net revenues and extending the recovery horizon, the Commission is demonstrating that future hyperscale customers will be expected to shoulder more interconnection risk rather than relying on optimistic load forecasts.

The draft resolution also functions as a live prototype for the pending Rule 30 framework on transmission-level retail service, though its language explicitly disclaims that linkage, stating the draft resolution should not prejudge the PG&E Rule 30 proceeding (A. 24-11-007) or be considered precedential. That disclaimer notwithstanding, the parallels are real: the cost-containment mechanisms, ratepayer risk logic, and refund modifications adopted here will almost certainly inform how Rule 30 is ultimately written.

For CRI readers, the takeaway is that large-load siting, interconnection negotiations, and transmission planning in PG&E territory are entering a new phase where policy risk, not engineering constraints, may become the binding factor.