CPUC Potentially Clears Path for PG&E Data Center Interconnection Facility; Defers Cost Recovery Fights
The CPUC issued Draft Resolution E-5447, which approves PG&E's Advice Letter 7653-E, authorizing a non-standard Engineering, Procurement, and Construction agreement with STACK Infrastructure for construction of the 115 kV Ringwood Switching Station in San Jose.
The agreement was executed in May 2023, meaning this infrastructure has been in the pipeline for nearly three years before reaching a potential CPUC approval.
TLDR: Draft Resolution E-5447, which is tentatively scheduled for consideration on March 19, approves STACK Infrastructure's build-and-transfer of a switching station for its 90 MW San Jose data center, but limits the decision strictly to construction terms (cost recovery and rate base fights are punted to FERC, where the draft resolution's aside on rate base credits hints at how they'll be resolved).
The Ringwood facility is a key component of infrastructure needed to energize STACK’s planned 90-megawatt data center load. Under the agreement, STACK will design, procure, and construct the switching station and then transfer ownership to PG&E upon completion.
- The draft resolution emphasizes that this approval is limited to the Engineering, Procurement, and Construction agreement itself and does not authorize cost recovery, determine rate base treatment, or modify the refund framework previously adopted by the CPUC for the broader energization project.
- Cal Advocates protested PG&E's advice letter, arguing that PG&E should not earn a full rate of return on a customer-financed asset and raising concerns about potential ratepayer exposure to cost overruns. Draft Resolution E-5447 finds these issues outside the scope of this AL disposition, deferring them to the applicable ratemaking forum.
- Notably, the draft resolution does not dismiss Cal Advocates' concerns; it explicitly acknowledges the perverse incentive scenario Cal Advocates describes but finds that existing safeguards mitigate it. The draft resolution notes that ratemaking treatment will be addressed in the appropriate forum and that prior modifications to the refund framework (limiting refunds to 75% of PG&E's annual net transmission revenues from STACK) already provide meaningful ratepayer protection.
The draft resolution also includes a pointed contextual aside: "for context only and without making a ratemaking determination," it states that customer-provided capital advances (whether in cash or, as here, advanced in-kind through customer construction) are commonly treated as credits offsetting the utility's rate base. Any unrefunded amount would remain as a credit. This suggests likely ratemaking treatment without formally deciding it.
INSTANT ANALYSIS
Draft Resolution E-5447 provides insight on how California will handle large new loads trying to self-fund grid upgrades. The draft resolution is allowing a customer-build-and-transfer path to proceed without settling the harder question of whether utilities can later earn returns on those assets. That unresolved tension is where the future fights will occur, especially as data center demand accelerates.
The main takeaway: the CPUC will let projects move forward first and push the financial disputes into later proceedings. That sequencing favors speed to energization over upfront clarity on long-term cost treatment. In short, California is not slowing large-load interconnections at the approval stage, even when the ratemaking implications are contested.
WHO SHOULD CARE?
- Data center developers and large-load customers. The draft resolution confirms the CPUC will approve customer-built transmission facilities under Rule 15/16 where the broader energization framework is already in place. That matters for timeline certainty. The nearly three-year gap between Engineering, Procurement, and Construction execution and approval demonstrates the patience these projects require.
- Utilities facing large interconnection requests. If this draft resolution is approved, PG&E will secure approval of a non-standard Engineering, Procurement, and Construction structure without reopening refund or rate treatment debates.
- Transmission and infrastructure investors. The draft resolution is allowing customer-financed, build-and-transfer models to proceed, with refund limits serving as the primary ratepayer safeguard. The rate base credit language, while non-binding, offers a window into how these assets may be treated.
- Ratepayer groups. The draft resolution confirms that cost recovery and return treatment fights will be decided in ratemaking venues, not in implementation advice letters.
If you track large load growth, transmission cost allocation, or data center siting in California, this is a relevant item.
For additional CRI coverage on this matter, visit our October 30, 2025 CPUC Voting Meeting report:
MC