FRIDAY AGGREGATE: Chevron/Valero Challenge 59.2% Crude Oil Transportation Rate Increase

Friday's roundup looks at an application for rehearing filed by Chevron and Valero that challenges last month's CPUC authorization of a 59.2% Crimson Pipeline rate increase for crude oil transportation on the San Joaquin Valley-to-Bay Area pipeline system.

Chevron and Valero argue the increase is unlawful under the statutory 10% interim cap for oil pipelines (and question whether emergency rate relief makes sense for a pipeline that has been idle since November 2025).

Other items on today's radar include:

• SCE's request to recover $7.9 million in incremental O&M costs from its Class C water utility and small gas utility on Santa Catalina Island;
• Edison's request to launch a program for residential customers who are rebuilding/repairing homes in the aftermath of the January 2025 wildfires; and
• SoCalGas's update to the imbalance cash-out rates under its "California Producer Service" tariff.

CRUDE OIL TRANSPORTATION

Chevron Products Company and Valero Marketing & Supply Company filed an application for rehearing of Resolution O-0098, which the CPUC adopted last month.

The applicants argue that the CPUC unlawfully granted Crimson Pipeline utilities a 59.2% interim rate increase for crude oil transportation on the San Joaquin Valley-to-Bay Area pipeline system (see CRI's coverage of Resolution O-0098 here.)

CPUC Adopts New Flexible Service Connection Rules

Topics covered: energization, wildfire cost recovery, SoCalGas Distribution Integrity Management Costs, crude oil transportation.

CALIFORNIA REGULATORY INTELLIGENCEMC

The shippers contend that state law limits oil pipelines to a 10% interim rate increase prior to CPUC approval, and that the resolution improperly relied on general Commission authority to bypass this statutory cap. This is Crimson's fourth attempt at securing interim relief above 10%; the three prior requests were all rejected, and the CPUC declared in a 2024 decision (D.24-05-007) that it considered the matter settled.

The application further argues that the emergency justification is unsupported because the pipeline moved its last volumes in November 2025, with nominations at zero through February 2026 as shippers shifted to alternative supply routes. From Chevron and Valero's point of view, a retroactive rate increase under these conditions would impose substantial costs on past shippers without restoring service. They request the CPUC vacate Resolution O-0098.

INSTANT ANALYSIS: This filing challenges the CPUC's interpretation that its general authority allows it to override the Public Utilities Code 10% interim cap for oil pipelines. The authorized interim rate ($3.7527/bbl) actually exceeds the rate Crimson requested in its pending 2025 General Rate Case ($3.6137/bbl), raising the additional question of whether the CPUC can set an interim rate above what could ultimately be authorized on final disposition.

The deeper reality is that the dispute may already be overtaken by events. With the pipeline idle since November 2025, the practical effect of the interim rate increase is a retroactive cost allocation to former shippers, a circumstance that tests whether the CPUC's emergency authority extends to preserving a crude transportation asset that may no longer serve an active market.

SCE's WATER & GAS UTILITIES

SCE filed an application seeking to recover approximately $7.9 million (including interest) in incremental O&M costs from its Class C water utility and small gas utility on Santa Catalina Island.

The underlying $6.2 million in base costs ($5.78 million for water, $0.43 million for gas) were recorded across memorandum accounts covering COVID-19 response, storm events, pipeline assessments, decommissioned pipe removal, mandatory water conservation (Stage 1 rationing), and Lead and Copper Rule compliance. Labor costs are limited to premium time only.

• To address affordability concerns on Catalina, SCE proposes recovering water costs over five years and gas costs over two years, with rate design that shifts the entire revenue increase onto non-residential (largely tourism-driven) customers so residential rates remain flat.
• SCE also proposes a new one-way balancing account to capture revenues from a water distribution planning study charge and a non-potable water rate, functioning as offsets analogous to Other Operating Revenue in an electric General Rate Case.
• On the gas side, higher-than-forecast microturbine propane usage has already driven actual 2025 rates approximately 1.5% below prior-year levels, cushioning the impact of the relatively modest $0.43 million gas recovery.

Protests/responses are due April 13.

INSTANT ANALYSIS: The accounting is unlikely to generate major controversy (the Commission already approved similar catastrophic event-costs in a 2023 decision, D.23-11-089) but Cal Advocates will likely scrutinize the premium labor allocations between the shared-employee water and gas utilities. The main issue is whether the CPUC accepts a framework of loading recovery onto commercial customers and using new offset revenue mechanisms to shield residents from further rate increases on an island where water-affordability ratios already exceed statewide thresholds.

DISASTER RECOVERY

SCE filed Advice Letter 5764-E (available here), requesting CPUC approval to launch the SWITCH (Simplified Wildfire Incentives for Transforming Customer Homes) energy-efficiency program.

SCE would fund the program through an approximately $20 million shift within its existing 2024–2027 Energy Efficiency portfolio (no new ratepayer funding is requested). The program targets the approximately 8,500 residential customers (7,000 in Eaton and 1,500 in Palisades) rebuilding or repairing homes damaged by the January 2025 wildfires.

Eligible measures include:

• Induction ranges;
• Heat-pump water heaters;
• Heat-pump AC, electric dryers; and
• Smart thermostats.

Specific incentive amounts are not detailed in the filing, though gross measure costs range from $100 (smart thermostat) to $2,417 (heat-pump water heater). SCE frames the program as complementing concurrent grid investments in the burn-scar areas, including distribution undergrounding, voltage upgrades, and increased system capacity.

SCE seeks three program exceptions:

• Relaxed baseline verification requirements where destroyed homes make prior equipment data unavailable;
• Authority to apply "Normal Replacement" rather than New Construction measure treatment so that wildfire-impacted customers are not rendered categorically ineligible; and
• Flexibility to exceed "Incremental Measure Cost" caps so rebates can competitively steer appliance choices toward electrification.

Protests are due March 26.

INSTANT ANALYSIS: SCE is treating wildfire reconstruction as an electrification intervention point: catching customers at the moment they must replace major equipment anyway, when incremental costs are lowest and the risk of locking in decades of gas infrastructure is highest. The program is modest in scale with no rate impact, but the combination of relaxed verification rules, Normal Replacement measurement treatment, and Incremental Measure Cost cap could establish a replicable template for disaster-linked electrification across California.

SOCALGAS SCHEDULE G-CPS

SoCalGas filed Advice Letter 6610-G (available here) to update the imbalance cash-out rates under Schedule G-CPS (California Producer Service) for February 2026.

This routine monthly compliance update revises tariff sheets reflecting the gas price-based settlement rates applied to California producers who end the month with supply imbalances on the SoCalGas system.

The rates are calculated using the methodology approved by the CPUC in Resolution G-3489 and related decisions, which apply asymmetric multipliers (150% of the 7-day average high and 50% of the 7-day average low) to natural gas price indices at the SoCal Border, as reported by Natural Gas Intelligence.

The filing updates both the January and February 2026 daily imbalance cash-out values. The February table shows a declining trend through the month, with the seven-day average index falling to about $0.14179/therm by the end of February and averaging $0.19912/therm for the month.

INSTANT ANALYSIS: The February data shows a rapid normalization in the imbalance pricing environment after the volatility seen late in January. The average index used for cash-out settlement fell to $0.199/therm for February, down from $0.328/therm in January. The daily settlement value dropped significantly in the first few flow dates (still elevated at $0.462/therm on February 1 as the 7-day averaging window carried the late-January spike). Then it collapsed to a stable $0.18 band by flow date 5 (approximately) before fading gradually to $0.142 by month-end.

The main story: imbalance exposure became much less expensive during February, reducing the penalty risk for producers whose nominations deviate from actual flows. This softens the financial consequences of imperfect scheduling but does not change the underlying incentive to maintain balance.