CPUC Sets Scope for Sempra Utilities’ Gas Cost Allocation Proceeding Covering 2027–2029 Rates

CPUC Commissioner John Reynolds issued a scoping memo for the Sempra Utilities' Cost Allocation Proceeding, or "CAP" application.

In the CAP, SoCalGas/SDG&E seek Commission approval to reallocate gas service, transportation, and storage costs across core and noncore customer classes at a time when gas demand is forecast to decline but overall revenues and transportation-related costs are expected to rise.

The scoping memo identifies a wide range of contested issues, including:

• Whether the proposed rate changes and cost allocations align with cost-causation principles;
• How residential customer charges affect affordability;
• How gas storage capacity at facilities such as Aliso Canyon should be allocated and reduced; and
• Whether various accounting, balancing, and cost recovery mechanisms should continue or be modified.

CAP Context: Potential Rate Impacts

As reported by CRI on November 12, the Southern California Generation Coalition (SCGC) protested the CAP filing, contending that SoCalGas misleadingly compares its proposed 2027–2029 rates to “normalized” September 2025 rates (rather than actual), giving a false impression of decreases.

According to SCGC’s analysis, certain rates (e.g., electric-generation transmission-level service) would actually increase 23% under the proposal. SCGC also challenged SoCalGas’s plan to replace the storage and balancing regime adopted in the 2024 CAP settlement, noting reductions in total storage inventory, injection, and withdrawal capacities without sufficient justification.

Other parties, as reported by CRI here, also take issue with the CAP filing. A common refrain includes distrust of the Sempra Utilities' embedded-cost framework and skepticism toward their proposal of an accelerated schedule.

Activity heats up in late spring and goes full tilt in the summer. Intervenor testimony is due May 15, with rebuttal testimony due June 15. A status conference will convene on June 22. Evidentiary hearings, if needed, will convene on July 20-24.

As a reminder, the Sempra Utilities provided the following illustrative rate impacts with their application.

INSTANT ANALYSIS: The scoping memo sets a procedural roadmap for the CAP but confirms that the CPUC obviously views this proceeding as the venue for a potential re-litigation of gas cost allocation, storage policy, and affordability under declining demand conditions. By explicitly acknowledging cost-causation alignment, residential bill impacts, storage capacity reductions, and the continued use of embedded-cost and balancing-account frameworks as contested issues, the CAP looks to become a significant battlefield.