MONDAY AGGREGATE: PG&E GRC Judges Challenge Forecasts, Capitalization, Undergrounding Costs

Today's briefing covers the following matters.

• PG&E GENERAL RATE CASE: In a new ruling, CPUC judges tell PG&E to show its math. They note potential problems in cost forecasts, spending assumptions, and accounting treatment, and are forcing the utility to defend its calculations before hearings.
• NATURAL GAS SAFETY: More safety oversight is coming for utilities and storage operators, and companies that get organized now may face fewer mandates later.
• SDG&E ERRA COMPLIANCE: SDG&E is trying to recover leftover costs from a renewable energy program that did not work out as planned. There is a dispute on who should pay those costs: all customers, former participants in the program, shareholders, or someone else.

PG&E GENERAL RATE CASE

A new ruling in PG&E's 2027 General Rate Case adds three documents to the evidentiary record and puts more than 40 questions across 14 topic areas to PG&E in advance of hearings.

The added documents:

• PG&E's data-request responses;
• PG&E's 2026 Natural Gas Leak Abatement Compliance Plan, and
• Its responses to President Reynolds' PHC questions in A.26-02-005, the joint utility application for approval of the remaining cost-recovery mechanics under the Senate Bill 884 ten-year undergrounding program.

The subject of MAT 50A gas pipe replacement inspires the most detailed questioning. The judges computed unit costs from PG&E's own workpapers and put the results in the ruling: 2023 actuals exceeded forecast by 182%, 2024 actuals by 22%, and PG&E completed only 26% of planned 2024 MAT 50A units.

The ALJs direct PG&E to recalculate the unit cost forecast on a five-year base that includes the COVID years PG&E excluded, and to produce the Excel workpaper.

Gas operations draw parallel scrutiny, e.g., cost-Benefit Ratio discrepancies across about 30 line items between the 2027 General Rate Case and the 2024 Risk Assessment Mitigation Phase filing. The ruling also issues a direct challenge to PG&E's 2.4414 station oil inflation factor, which the ALJs read as a compounded 25% annual increase over four years.

Capitalization

The ALJs ask whether PG&E shifts authorized expense dollars into capital after a revenue requirement is set, placing more in rate base. The judges direct PG&E to calculate an expense-to-capital conversion factor for each of six proposed accounting policy changes:

• Gas transmission pipe;
• Electric distribution pole treatment;
• Pole reinforcement;
• Gateway/Colusa long-term service agreements;
• Prepaid IT contracts; and
• One-time IT-related O&M.

Separately, the ALJs require present-value modeling of long-run earned returns on capitalized Administrative & General amounts under two or three discount rate assumptions.

Wildfire Undergrounding

PG&E must answer the wildfire undergrounding questions orally by a sponsored witness, and PG&E must identify the witness by April 27.

The ALJs want answers on four points:

• Cost recovery for post-2027 undergrounding if a SB 884 plan is not approved before 2028;
• How to prevent double recovery if GRC funding overlaps with future SB 884 years;
• Whether outcomes in A.26-02-005 should govern cost review here; and
• Support for proposed costs and recovery mechanisms for 2027 and 2028-2030.

A separate written question requires 2025 recorded capital expenditures for the wildfire system hardening MAT codes in the format of the existing workpaper. PG&E's proposed bridge (2027 GRC funding plus an annual extension mechanism) will get tested at hearing.

Other Areas

New business and EV forecasting draw scrutiny of the two-year historical average for residential Plug-In Electric Vehicle connects, the reliance on California Energy Commission data over PG&E's own actuals for non-residential forecasts, and which lessons from the Public Utilities Code Section 938 third-party auditor have been incorporated.

INSTANT ANALYSIS: The ALJs did more than ask PG&E to explain its work. They ran arithmetic from PG&E’s own workpapers, put the results in the ruling, and are now asking PG&E to defend positions the bench has already tested.

The paired capitalization directives deserve close attention. A conversion-factor calculation across six accounting policy changes, alongside present-value modeling of earned returns under multiple discount rates, asks PG&E to translate accounting treatment into ratepayer dollars and shareholder earnings. Numbers like those are hard to argue around once they're in the record.

For intervenors, the ruling is a prioritized list of where the ALJs see vulnerability, in writing, before hearings begin. For PG&E, execution risk compounds. The company must defend not just what it asked for, but the logic of how dollars move, why forecasts missed, and how capitalization changes affect ratepayer recovery and shareholder earnings.

SAFETY CULTURE ASSESSMENTS

A new ALJ ruling in R.21-10-001 seeks party comments on a Safety Policy Division Phase 2 staff proposal for implementing safety culture assessments for small and multi-jurisdictional utilities and independent gas storage operators. Recall that this proceeding began in 2021 under Senate Bill 901.

The CPUC adopted a Phase 1 framework for large investor-owned utilities in January 2025 and held Phase 2 open for these smaller entities.

The ruling poses policy questions on three fronts:

• How assessments should treat contractors performing safety-critical functions;
• Whether Phase 2 entities should get an advice-letter mechanism mirroring Phase 1's; and
• How confidentiality concerns intersect with peer-review versus independent third-party assessment models.

On confidentiality, the ALJ presses parties to specify which categories of information need protection, from whom, whether the assessment model changes the answer, what mechanisms already exist, and what role the CPUC should play in enforcement. Opening comments are due May 25.

INSTANT ANALYSIS: Phase 1 covered the large IOUs where wildfire, gas safety, and organizational culture risks are most visible. Phase 2 extends the framework to small and multi-jurisdictional utilities and storage operators.

The contractor question shows the CPUC looking past direct employees to outsourced safety-critical work, a known weak point in accountability chains. The confidentiality questions read as the ALJ pushing back on parties who raised concerns without specifying what they actually want protected. Phase 2 entities that build credible internal safety processes now may avoid more prescriptive mandates later.

SDG&E ERRA COMPLIANCE

In SDG&E's 2023 ERRA compliance case (A.24-06-001), the utility filed a written ex parte communication, urging the CPUC to restore an earlier proposed decision that would have allowed recovery of stranded Green Tariff Shared Renewables costs from all ratepayers through the Public Purpose Program charge. For context, an April 22 revised proposed decision removed those findings and said the record was insufficient to determine who should bear the remaining costs.

SDG&E argues that the original February 13 PD:

• Was supported by the record and correctly found SDG&E administered the program reasonably;
• Correctly identified design flaws as the cause of the stranded balances; and
• Properly rejected retroactive charges on former participants nearly a decade after they left.

SDG&E adds that the revised PD pulls the entire factual foundation (findings, conclusions, and ordering paragraphs alike) without explanation, and asks commissioners to restore the original version before the April 30 voting meeting.

INSTANT ANALYSIS: This ex parte communication also functions as a response to a March 4 ex parte from San Diego Community Power and the Clean Energy Alliance, the two Community Choice Aggregators serving SDG&E territory. Those parties drove the mismanagement and statutory-bar arguments throughout the proceeding. The revised PD appears more favorable to the CCAs than the original version; it doesn't adopt their affirmative case, but it pulls the utility-favorable findings rather than ratifying them.

California clean-energy cost allocation remains contested long after programs unwind. If the CPUC declines to restore the original outcome on April 30, it would suggest reluctance to socialize legacy program balances without explicit statutory cover. Such a position would matter beyond this docket for future voluntary tariff design, CCA-IOU cost-shift disputes, and any proceeding where stranded program costs must be reassigned after subscription falls short.