MONDAY AGGREGATE: IOU Cost Discipline Following Senate Bill 254; PG&E Cost of Capital Adjustments; LCFS and EV Program Volatility

Today's roundup has a heavy emphasis on PG&E.

• WILDFIRE COST RECOVERY: In PG&E's 2027 General Rate Case proceeding, several parties have responded to an amended scoping memo, with thoughts on how Senate Bill 254 should affect the use of wildfire mitigation memorandum accounts in this GRC. EPUC, joined by the California Large Energy Consumers Association, filed the most aggressive comments, invoking the CPUC's own February 2025 response to Executive Order N-5-24. The CPUC's response, they note, found that wildfire mitigation costs totaled approximately $24 billion in ratepayer collections from 2019-2024, and that multiple recovery venues decreased transparency.
• COST OF CAPITAL: PG&E is proposing to modify several gas and electric revenue adjustment mechanisms. These changes, if approved, would allow interest savings from future draws on a Department of Energy loan (excluded from PG&E's authorized 2026 cost of debt) to be returned to customers.
• ELECTRIC VEHICLES: PG&E is looking to add $18 million to the budget of its "Pre-Owned Electric Vehicle Rebate Program" in order to keep the program open and issuing rebates through the end of 2026. PG&E's request demonstrates how Low Carbon Fuel Standard revenues are functioning as a flexible backstop for EV programs during periods of market volatility

More detail is available below.

PG&E – GENERAL RATE CASE

Parties recently weighed in on how Senate Bill 254 should reshape the use of wildfire mitigation memorandum accounts in PG&E’s 2027 General Rate Case. Their comments showcase a split between utilities seeking continued flexibility, and ratepayer advocates pressing for stricter discipline and the closure of existing accounts.

The impetus for these comments was a January 26 amended scoping memo.

• SCE and SDG&E argue that SB 254 does not mandate closure of existing wildfire mitigation plan and fire risk mitigation memorandum accounts. SoCalGas joins SDG&E's response only with respect to Question 4 in the amended scoping memo, concerning requirements or guidance for demonstrating that costs are "unforeseen and incremental."
• SCE and SDG&E emphasize that wildfire risk, technology, and regulatory requirements continue to evolve between General Rate Case cycles, and that alignment between Wildfire Mitigation Plans and GRCs will not fully occur until the early 2030s (SCE projects its own alignment at 2033, SDG&E at no earlier than 2032). Until that alignment is achieved, both utilities contend, memorandum accounts remain necessary to address unforeseen and incremental safety needs that cannot reasonably be forecast years in advance, with reasonableness reviews preserving Commission oversight.
• SDG&E also raises a distinct argument tied to SB 254's compliance provisions: the legislation now allows fines for any degree of Wildfire Mitigation Plan non-compliance and more closely ties compliance to the safety certificates that are existential for electrical corporations under the Wildfire Fund framework. SDG&E frames this as requiring continued financial flexibility to achieve approved safety goals.
• Both SDG&E and PG&E independently argue that the policy and statutory interpretation questions raised by SB 254 should be addressed in an all-utility rulemaking rather than a single GRC.
• PG&E advances a similar position, asserting that immediate closure of the Wildfire Mitigation Plan Memorandum Account and Fire Risk Mitigation Memorandum Account would be premature and inconsistent with SB 254's structure. PG&E stresses that statutory discretion over memorandum accounts was tied to future alignment of Wildfire Mitigation Plan and GRC cycles, which has not yet occurred for PG&E and will not occur until at least its 2031 GRC. PG&E argues that without these accounts, it would lack a viable mechanism to recover costs for genuinely unforeseen mitigation measures implemented to reduce catastrophic wildfire risk.
• In contrast, Cal Advocates, TURN, and the Energy Producers and Users Coalition (a.k.a. EPUC, joined by the California Large Energy Consumers Association, a.k.a. CLECA) read SB 254 as a deliberate pivot away from routine reliance on memorandum accounts. They argue that the statute reflects legislative concern over rising wildfire-driven rate pressures and is intended to force utilities to forecast and manage most wildfire mitigation costs within GRC revenue requirements. These parties maintain that PG&E has now had multiple GRC cycles to internalize wildfire mitigation spending and that the original justification for broad memorandum accounts has mostly dissipated. They point to declining balances in the Wildfire Mitigation Plan Memorandum Account and Fire Risk Mitigation Memorandum Account in recent years as evidence that remaining costs are manageable within authorized budgets.
• TURN provides the most granular spending data, showing combined Wildfire Mitigation Plan Memorandum Account and Fire Risk Mitigation Memorandum Account recorded costs dropping from over $1 billion in 2022 to roughly $40 million in each of 2023 and 2024 (a figure TURN characterizes as trivial relative to PG&E's $13.5–14.2 billion total GRC revenue requirement). TURN also introduces a nuanced incrementality standard drawn from multiple reasonableness review decisions: completing new work by redirecting existing authorized resources does not constitute an incremental cost, even if the activity itself is new.
• EPUC/CLECA filed the most aggressive comments, invoking the CPUC's own February 2025 response to Executive Order N-5-24, which found that wildfire mitigation costs totaled approximately $24 billion in ratepayer collections between 2019 and 2024 and that multiple recovery venues decreased transparency.
• EPUC/CLECA also draws an analogy to the Catastrophic Event Memorandum Account framework as the appropriate template for any future "unforeseen and incremental" standard (a framework none of the other parties invoke).
• On the question of closing existing accounts, Cal Advocates would stop recording costs effective January 1, 2027 and close the accounts once balances through December 31, 2026 have been considered and discharged, while TURN and EPUC/CLECA call for immediate closure.

INSTANT ANALYSIS: This dispute is about cost discipline in the wake of SB 254. Ratepayer advocates are pushing to collapse wildfire mitigation spending back into the GRC process, forcing utilities to forecast more precisely and live within authorized budgets. Utilities are defending memorandum accounts as a pressure-release valve while Wildfire Mitigation Plan and GRC cycles remain misaligned and mitigation tools keep evolving.

The strongest counterargument to a pure cost-discipline framing comes from SDG&E, which ties memorandum account continuation to the safety certification process, arguing that removing financial flexibility to achieve WMP compliance could jeopardize the certificates that are essential to utility operations under the Wildfire Fund. Whether that argument carries weight with the CPUC or reads as leveraging safety concerns to preserve spending flexibility will be telling.

If the Wildfire Mitigation Plan Memorandum Account and Fire Risk Mitigation Memorandum Account remain open, SB 254 comes off as a soft constraint, with continued after-the-fact review. If the accounts are closed or narrowed, wildfire mitigation becomes a front-loaded planning exercise, with fewer opportunities to socialize cost overruns later. The outcome will shape both rate trajectory and utility risk tolerance beyond this particular GRC.

PG&E – COST OF CAPITAL

PG&E submitted an advice letter to modify several gas and electric revenue adjustment mechanisms. These changes allow for any interest savings from future draws on a Department of Energy loan (excluded from the authorized 2026 cost of debt) to be returned to customers, as required by the 2026 Cost of Capital decision (D.25-12-043; see CRI's coverage here.)

December 18 CPUC Voting Meeting Results

Covers: Cost of Capital; Long-Term Gas Planning; the Woolsey Fire

CALIFORNIA REGULATORY INTELLIGENCEMC

The CPUC authorized a 5.04% cost of long-term debt for 2026 but required PG&E to calculate and return any savings if DOE loan draws occur, since those loans carry a lower cost of debt. PG&E excluded the DOE loan's lower borrowing cost from its requested long-term debt rate because of uncertainty around the draw schedule. Because PG&E has not yet drawn on the loan, the filing is procedural and forward-looking, updating the accounting rules for multiple accounts so any future interest savings can flow back to customers through the annual electric and gas true-up processes.

Protests are due February 24.

INSTANT ANALYSIS: This filing is mechanical compliance, not a policy shift. PG&E is pre-wiring its balancing and adjustment accounts so any interest savings from future DOE loan draws can be credited back to customers without reopening ratemaking disputes. The filing preserves the Commission’s approved 2026 cost of debt while ensuring that lower-cost federal financing, if used, does not become a shareholder windfall. Once DOE funds are drawn, PG&E can flow credits automatically through existing true-up channels, limiting both timing risk and litigation leverage for intervenors. There is no near-term rate effect, but it reduces friction around how and when federal financing benefits are returned to ratepayers.

PG&E – ELECTRIC VEHICLES

PG&E filed Advice Letter 7831-E, seeking CPUC approval to add $18 million to the budget of its "Pre-Owned Electric Vehicle Rebate Program" in order to keep the program open and issuing rebates through the end of 2026.

The program, originally approved as part of PG&E’s Low Carbon Fuel Standard holdback implementation plan and funded entirely with LCFS revenues, experienced significantly higher-than-forecast rebate demand in 2025, driven by:

• Accelerated purchases ahead of the federal EV tax credit’s expiration;
• Increased participation by income-qualified customers receiving higher “Rebate Plus” incentives; and
• Expanded marketing and community outreach.

Consequently, PG&E reports that approximately $8.6 million in rebate spending was effectively pulled forward from 2026 into 2025, leaving an estimated $16 million in uncommitted funds for 2026. This creates a projected funding gap that could force a suspension of new applications as early as June 2026 absent supplemental funding.

PG&E argues that uninterrupted operation of the program is important to avoid market disruption, protect access for income-qualified customers, and maintain continuity across its broader residential EV portfolio. It emphasizes that the requested budget increase would not affect rates.

Protests are due February 26.

INSTANT ANALYSIS: This filing reflects PG&E managing program continuity risk created by forecast error rather than proposing any expansion of scope or incentives. Higher-than-expected 2025 participation effectively pulled LCFS-funded rebate dollars forward, leaving the Pre-Owned EV Rebate Program exposed to a mid-year funding shortfall in 2026 absent CPUC action.

The request demonstrates how LCFS revenues are functioning as a flexible backstop for EV programs during periods of market volatility, particularly around the federal tax credit phase-out. Approval would preserve uninterrupted program operations through 2026 and clear the path for a more deliberate 2027 extension, while denial would force a pause that would fall most heavily on income-qualified customers and disrupt PG&E’s broader Transportation Electrification portfolio.