MONDAY AGGREGATE: SoCalGas Recovery for DIMPBA Costs; Line 225 Force Majeure; PG&E NG Transportation Contracts

Happy New Year from CRI. Today’s aggregate captures how interim ratemaking, operational outages, and long-dated infrastructure commitments are reshaping cost exposure across California’s energy system.

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SoCalGas Natural Gas Distribution

Administrative Law Judge Brandon Gerstle issued a proposed decision in A.25-08-008 that grants SoCalGas partial interim rate recovery for costs recorded in its Distribution Integrity Management Program Balancing Account between 2019 and 2023.

The PD authorizes SoCalGas to recover $35.5 million on an interim basis, representing 60% of the $59.1 million requested, for a 12-month period, subject to refund with interest pending a final reasonableness determination. The PD finds that interim recovery is warranted because it:

• Produces direct interest savings for ratepayers (approximately $918,000);
• Promotes intergenerational equity by aligning cost recovery more closely with when costs were incurred; and
• Helps preserve SoCalGas’ financial integrity following a recent credit-rating downgrade, which can indirectly reduce future capital costs.

At the same time, the PD rejects SoCalGas’ request for 85% interim recovery, concluding that a lower percentage better balances ratepayer affordability concerns (particularly in light of recent gas rate increases) while still achieving the public-interest benefits of interim relief. Recovery would be implemented through a Tier 1 advice letter using the Equal Percent of Authorized Margin cost-allocation methodology.

Rate Impacts

SoCalGas provided the following table to demonstrate what transportation rates would look like if its 85% interim relief request were granted (in dollars per therm). Actual impacts under the PD's recommended 60% authorization would be proportionally smaller.

SoCalGas also provided the table below, which anticipates what interim recovery costs (in millions) would look like if granted versus not granted.

Comments are due January 20. The earliest the CPUC will consider this item is February 5.

INSTANT ANALYSIS: This PD continues the Commission’s willingness to grant interim rate relief where doing so reduces carrying costs and supports utility finances, even outside wildfire-related proceedings. By authorizing only 60% interim recovery (rather than the 85% sought) the PD attempts to balance interest-expense savings and credit-metric support against affordability concerns.

Line 225 Force Majeure

On December 27, SoCalGas issued an Envoy notice reporting a potential natural gas pipeline break near the I-5 Freeway and Lake Hughes Road in the Castaic area. Crews isolated the affected pipeline segment and stopped the leak, with no signs of ignition or explosion, though significant land movement was observed and the cause remains under investigation.

Consequently, Line 225 has been taken out of service for an indeterminate period under a force majeure, reducing Wheeler Ridge Zone capacity by 650 million cubic feet per day. To partially offset the outage, capacity at the Kern River/Mojave Kramer Junction Receipt Point may increase by up to 150 MMcf/d when system conditions permit, allowing customers to potentially exercise firm rights on an alternate delivery basis.

Any incremental capacity will not be posted in Envoy’s Buy Rights Ledger, and customers are directed to monitor the Envoy Capacity Utilization page for cycle-by-cycle availability.

INSTANT ANALYSIS: This force majeure removes about 0.65 Bcf/d of Wheeler Ridge Zone capacity while offering, at best, a partial and conditional backfill via Kern River/Mojave, exposing the thin operational margin of Southern California’s gas deliverability. For noncore customers and generators, the event reinforces that firm rights and corridor diversity (not spot procurement) are the binding constraint during system stress, and that outage risk is increasingly a locational and contractual problem rather than a commodity-price one. If the outage persists, this type of operational shock is exactly the kind of fact pattern that later migrates into balancing-account volatility, curtailment precedence disputes, and future infrastructure justification at the CPUC. All of which makes it an early-warning datapoint for parties with gas exposure tied to Wheeler Ridge.

PG&E Natural Gas Transportation Contracts

PG&E filed Advice Letter 5157-G, seeking pre-approval to enter into five firm interstate natural gas transportation contracts with NGTL, Foothills, and GTN pipelines to move Western Canadian supplies to California via Malin, Oregon.

The contracts are intended to meet the Interstate Capacity Planning Range requirements established in prior CPUC decisions and to ensure adequate long-term gas supply for PG&E’s core customers. The contracts were reviewed and supported by both Cal Advocates and TURN, enabling PG&E to use the expedited advice letter process.

Contract terms are confidential. Costs will continue to be recovered from core gas customers through existing pipeline demand charge mechanisms, and PG&E states the filing will not increase current rates or charges. Protests are due January 9.

INSTANT ANALYSIS: This filing is a reminder that, beneath California’s electrification rhetoric, the CPUC is still underwriting long-dated interstate gas capacity to protect core customers from supply volatility. For sophisticated load-exit, self-supply, and gas-exposed customers, the takeaway is not today’s rates but tomorrow’s cost boundary: reliability insurance for core customers continues to be socialized through regulated pipeline commitments, while optionality outside the core will increasingly face a thinner, less forgiving margin for error.

Crude Oil Transportation

The CPUC issued Draft Resolution O-0098, approving emergency interim rate relief for Crimson Pipeline's SPB-KLM system. The draft resolution authorizes a 59.2% rate increase from $2.3571 to $3.7527 per barrel, effective August 1, 2025, subject to refund.

The draft resolution:

• Finds that sustained volume declines (from approximately 100 kbpd in 2021 to under 30 kbpd by late 2025, including zero nominations for December 2025) justify interim action to prevent suspension of pipeline operations.
• Rejects an argument advanced by Chevron and Valero that the Public Utilities Code Section limits CPUC authority to approve increases above 10%. The draft resolution clarifies that the statutory cap constrains only what utilities may implement unilaterally, not what the CPUC may authorize.

As a condition of approval, Crimson must secure a letter of credit to protect shipper refunds. Final rate determinations remain with the pending General Rate Case (A.25-01-009).

INSTANT ANALYSIS: Draft Resolution O-0098 reflects the Commission’s willingness to use interim ratemaking to preserve critical infrastructure when volume collapse threatens operational continuity. The draft resolution prioritizes near-term system availability over rate stability, while deferring cost scrutiny and final rate reasonableness to the pending GRC (treating emergency relief as a temporary bridge rather than a final judgment).

Bioenergy

PG&E filed Advice Letter 7796-E to obtain CPUC approval of an amendment to extend its Bioenergy Renewable Auction Mechanism power purchase agreement with Burney Forest Products, a 29-megawatt biomass facility in Shasta County.

The amendment extends the contract delivery term by five years, from October 31, 2027 to October 31, 2032. Although the negotiated extension price exceeds the Commission’s per se reasonableness benchmark, PG&E argues that the terms are reasonable in light of market conditions, policy objectives related to wildfire risk mitigation and forest health, and the facility’s continued operational viability.

An independent evaluator monitored the negotiations and concluded that the process was fair, the facility remains compliant with air quality and emissions standards, and the contract amendment merits CPUC approval, with all associated procurement costs recoverable in rates through the Tree Mortality Non-Bypassable Charge. Protests are due January 20.

INSTANT ANALYSIS: This filing shows the Commission continuing to prioritize operational continuity and wildfire-mitigation capacity over strict price benchmarks for legacy bioenergy resources. By allowing a BioRAM extension above the per se reasonableness price, the CPUC is saying that certain biomass facilities function as policy infrastructure rather than least-cost energy supply, with costs expected to remain non-bypassable and socialized across customers via the Tree Mortality Non-Bypassable Charge.

Additional Items

• Long-Duration Energy Storage: SCE filed Advice Letter 5726-E (available here) reporting that SCE will not proceed with a Long Duration Energy Storage pilot during its current General Rate Case cycle. After failing to secure federal Infrastructure Investment and Jobs Act funding and after reassessing costs, benefits, and technology readiness, SCE concluded the project was not cost-effective and realized no benefits.
• Mid-Term Reliability: SCE filed Advice Letter 5722-E (available here), seeking approval to count previously executed firm import “bridge” energy contracts (totaling 620 megawatts for July 2025, 620 MW for August 2025, and 570 MW for September 2025) toward its 2024–2025 "Mid-Term Reliability" requirements under D.21-06-035/D.23-02-040. SCE also requests authorization to recover the associated costs from bundled customers and certain departing load customers through the Portfolio Allocation Balancing Account, arguing the contracts were executed before the Commission eliminated bridge contracts as a compliance option.
• Procurement: SCE filed Advice Letter 5723-E (available here), which updates the electric capacity procurement limits and ratable rate limits in its Bundled Procurement Plan to extend those limits through 2035, aligning them with the CPUC’s Slice-of-Day Resource Adequacy framework and avoiding disruption to near-term RA solicitations. The filing applies the existing, CPUC-approved methodology to SCE’s baseload-equivalent RA position and functions as a narrow/interim update ahead of broader Bundled Procurement Plan revisions that are expected this year. (PG&E's equivalent filing is available here.)
• Self-Generation Incentive Program: The SGIP Program Administrators jointly filed Advice Letter 7800-E to update the SGIP Handbook. The filing revises federal Investment Tax Credit treatment and adds new third-party ownership consumer protections. The changes narrow flexibility around the assumed 30% Investment Tax Credit, impose additional documentation requirements, and better align SGIP incentives with post-Inflation Reduction Act federal tax credit eligibility.