July 2 CPUC Voting Meeting Preview: Paper Capacity Dies; PG&E Eats $2.6 Billion
The CPUC's July 2 voting-meeting agenda features several consequential items spanning Resource Adequacy, natural gas decommissioning work, and utility capital structure. Notable movement on Demand Response and low-income subsidies is also on tap.
Summaries of select agenda items can be found below the paywall.
LOCAL & FLEXIBLE CAPACITY
A proposed decision in the CPUC's Resource Adequacy rulemaking (R.25-10-003) adopts 2027-2029 Local Capacity Requirements, 2027 Flexible Capacity Requirements, and a set of Slice-of-Day RA reforms that change what it means to hold RA capacity in California.
The PD adopts the CAISO's recommended Local Capacity Requirements:
- 23,618 MW for 2027;
- 24,545 MW for 2028; and
- 25,480 MW for 2029.
The LA Basin climbs from 6,823 MW to 7,721 MW over the three years. Seven of 10 local areas carry the CAISO’s resource-deficiency notation, meaning resource shortfalls or storage charging constraints could cause load shed after a first contingency at summer peak. The Western LA Basin is already hitting charging limits; the Eastern LA Basin hit them in 2025.
The PD adopts the 2027 Flexible Capacity Requirements without modification, peaking in November at 30,058 MW system-wide and 28,448 MW for CPUC-jurisdictional areas.
CRI's full summary, dated June 2, can be found here.
MC
LONG-TERM GAS PLANNING/DECARBONIZATION
A proposed decision establishes the application process for Senate Bill 1221 neighborhood decarbonization pilots. The PD authorizes gas corporations to seek approval for voluntary projects that replace gas service with zero-emission alternatives and enable decommissioning of the underlying gas infrastructure.
CRI's full summary, dated May 30, can be found here.
MC
UTILITY FINANCES/COST OF CAPITAL
A proposed decision denies PG&E's request to exclude approximately $2.6 billion in wildfire liabilities and a state loan from its capital structure calculations.
CRI's full summary, dated May 27, can be found here.
MC
LOW-INCOME SUBSIDIES
A proposed decision authorizes 2027 bridge-year budgets for the four IOUs' income-qualified programs (CARE, FERA, ESA) and defers every contested question to the 2028–2033 full-cycle applications pending in A.26-01-003. Excluding subsidies, the PD authorizes PG&E to collect $66.3 million, SoCalGas $66.8 million, SCE $38.3 million, and SDG&E $21.0 million.
- CARE Administration: The PD rejects both the utility requests and Cal Advocates' 2024-actuals-only position. It sets budgets at 2024 actual spending plus three years of 3% escalation (a 9.27% increase) for $33.6 million collectively.
- FERA Administration: The PD grants FERA in full at $5.75 million. Senate Bill 1130 eliminated a three-person household floor, which expanded the eligible pool, and the PD declines to under-resource the program against that. The PD also confirms that FERA subsidy projections run through balancing accounts and the ERRA process and have no ratemaking effect here.
- ESA: The PD sets budgets at 2026 projected spending, not 2024 actuals. The portfolio is approved at approximately $380 million gross, netting to about $153 million after $227 million in unspent funds.
The PD directs all four IOUs to apply every committed and uncommitted unspent dollar at year-end 2026 against 2027 collections (PG&E $104 million, SoCalGas $55 million, SCE $49 million, SDG&E $19 million) and rejects SoCalGas's bid to retain $29 million as a tariff reserve.
A Tier 1 Advice Letter reconciling the exact amounts is due February 28, 2027.
DEMAND RESPONSE
The July 2 consent agenda features five draft resolutions that impose stricter standards on Demand-Response program changes.
- Draft Resolution E-5456 gives SCE approval to let customers enroll directly in its Capacity Bidding Program Elect, with SCE acting as aggregator, closing a participation shortfall that was leaving Self-Generation Incentive Program customers without a qualifying DR option when third-party aggregators stopped taking residential enrollments.
- Draft Resolution E-5444 denies SDG&E approval for a new residential Capacity Bidding Program because its proposal weakens penalties too far from the existing model and lacks the Resource Adequacy compliance and load-impact filings required of supply-side resources.
- Draft Resolution E-5450 gives PG&E partial approval for changes to its Automated Response Technology program, including a 30-day performance evaluation timeline, Day-of Adjustment standardization, CAISO tariff alignment, and minor formatting updates. But the draft resolution rejects a 30% capacity-payment increase and a proposal to remove the cap that zeroes out negative performance, both insufficiently justified after just one year of program operation.
- Draft Resolution E-5451 gives PG&E partial approval for mid-cycle updates to its Base Interruptible Program, approving a streamlined online enrollment process for aggregated customers, removal of fax references, and a form language cleanup. The draft resolution denies a 10% summer incentive increase, finding insufficient justification given declining dispatch frequency and two non-test BIP events since 2023.
- Draft Resolution E-5453 approves, with modifications, a joint PG&E and SCE request to update their Automated Demand Response Technology Incentive Program guidelines. The draft resolution expands eligible customer segments and measures, adds PG&E's ART program as a qualified residential AutoDR program, and clarifies cloud-based control requirements to align the two utilities' interpretations of existing policy.
TRANSMISSION/INFRASTRUCTURE PERMITTING
A proposed decision grants PG&E a permit to construct the Moraga-Oakland X 115-kV Rebuild Project, which would replace four circuits built between 1908 and 1931 that serve about 200,000 customers, including the Port of Oakland. The rebuild spans about four miles of overhead line and one mile underground at an estimated cost of $276.8 million.
The Commission certifies the Final Environmental Impact Report and finds the project environmentally superior to all alternatives studied, including three underground routing options. Significant and unavoidable construction impacts on transportation and wildfire evacuation in the Oakland Hills remain after mitigation.
The PD adopts a statement of overriding considerations, finding benefits to reliability, safety, wildfire-risk reduction, and long-term operability outweigh the unavoidable construction impacts
CUSTOMER-SITED SOLAR
A proposed decision declines to expand the Solar on Multifamily Affordable Housing (SOMAH) program to new-construction, under-construction, or master-metered affordable multifamily properties. The PD finds that Senate Bill 355 permits (but does not require) those additions, and that expansion would add administrative costs and divert funds from existing eligible projects.
The PD treats SOMAH's greenhouse-gas allowance revenues as ratepayer money and routes unused funds accordingly. Liberty and PacifiCorp, where participation is negligible, could propose returning unused 2025 and first-half 2026 collections via the Residential and Small Business Climate Credit, with additional annual returns authorized thereafter. At program close, accrued interest first offsets 2026 budget allocations; remaining interest and unused funds then return to utility GHG revenue accounts.
NATURAL GAS/RATE RECOVERY
A proposed decision approves a settlement authorizing SDG&E to recover $6.985 million recorded in its Transmission Integrity Management Program Balancing Account for 2019-2023.
SDG&E had sought $7.413 million; Cal Advocates recommended a $717,000 disallowance across straight-time labor, vacation and sick leave, and intercompany O&M. The settlement reduces the request by $428,000, expressed as $394,000 in O&M and $34,000 in interest.
The key dispute was incrementality: whether the costs exceeded amounts already authorized in SDG&E's 2019 General Rate Case and prior Transmission Integrity Management Program (TIMP) advice letters.
Cal Advocates said SDG&E redirected existing employees to TIMP work instead of adding staff, so the labor was already in rates and SDG&E argued that new federal pipeline-safety mandates expanded TIMP's scope and that costs were properly tracked in the balancing account.
The PD finds the settlement reasonable, crediting neither side's full position.