MONDAY AGGREGATE: SoCalGas CAP Rates; IOU Distribution Planning; the Future of CA's "Base Services Charge"

On Monday's radar:

• Protests to the Sempra Utilities' September Cost Allocation Proceeding showcase opposition over how utilities will allocate infrastructure costs as throughput declines under electrification pressure.
• Autumn rate volatility suggests that commodity swings, not delivery charges, drive C&I cost risk, with SoCalGas procurement rebounding 50% in November after three months of decline.
• On the electricity/distribution side, independent engineers' assessments of all three major investor-owned utilities reveal grid planning systems straining under the speed of electrification demands, particularly from transportation loads that dominate project pipelines but materialize unpredictably.

SOCALGAS RATES

On Friday, several key stakeholders filed protests or responses to the September Cost Allocation Proceeding (CAP) application filed by SoCalGas/SDG&E (the Sempra Utilities).

With the new CAP application, the Sempra Utilities seek to revise natural gas rates, modify storage allocations, and adjust rate-design elements effective January 1, 2027. Parties raise concerns about rate impacts, storage reductions, embedded cost methodologies, allocation fairness, and insufficient justification for key proposals. Below are micro-summaries of their remarks.

• TURN: The Utility Reform Network argues that the Sempra Utilities' embedded cost approach would improperly shift a greater portion of costs onto residential customers, diverging from long-run marginal cost principles. TURN also objects to SoCalGas’s plan to increase fixed residential customer charges (from $5 to $20 for non-CARE customers by 2029) and to $10 for CARE customers, calling the justification inadequate and reminiscent of earlier proposals that the CPUC has already rejected. TURN argues further that the utilities have double-counted certain plant costs by including Asset Retirement Obligations in rate-base calculations, and requests that the Commission compel them to submit an alternative scenario excluding those costs.
• INDICATED SHIPPERS: The Indicated Shippers (a coalition that includes large industrial gas users such as Chevron, Phillips 66, and Marathon) warn that SoCalGas’s cost-allocation proposals could yield substantial increases for noncore customers, including a 20.5% rise in commercial and industrial transmission-level service rates. The Indicated Shippers assert that Sempra’s filings are opaque and fail to justify these increases in light of the company’s concurrent claims of an overall rate decrease. The Shippers also challenge proposed storage reductions (from 119.5 to 118.8 billion cubic feet of working capacity) and narrower withdrawal rights, which they argue could threaten system reliability and raise price volatility. The Shippers' protest emphasizes that the utilities have not addressed how their storage plans interact with the state’s biennial review of the Aliso Canyon natural gas storage facility, particularly given the CPUC Energy Division’s 2025 recommendation to reduce its capacity by 10 Bcf.
• CAL ADVOCATES: Cal Advocates identifies a wide range of contested issues, ranging from the utilities’ storage and balancing framework and weather-design standards to their demand forecasts, embedded cost studies, and proposed fixed-charge increases. Cal Advocates questions whether the Sempra Utilities' proposals for rate allocation, storage use, and backbone transportation service are just and reasonable.
• CITY of LONG BEACH: Long Beach, which operates its own municipal gas system serving half a million people, points out that transmission rates have risen over 300% in the last decade and that SoCalGas’s proposals risk further burdening customers already struggling with high energy costs. The city argues that the Sempra Utilities' filing lacks transparency and fails to include a sufficiently detailed cost-of-service model disaggregating customer classes. The city also warns that the proposed adjustments to storage and balancing allocations could reduce reliability for municipal customers who depend on SoCalGas storage fields to meet winter demand. Long Beach further objects to the proposed expansion of Rule 23 ("Continuity of Service and Interruption of Delivery"), which would extend core priority service to electric generators up to 10 megawatts, potentially worsening curtailment risk for existing wholesale customers.
• SHELL ENERGY NORTH AMERICA (SENA): SENA focuses on SoCalGas’s proposed revisions to Backbone Transportation Service (BTS) and Rule 30 ("Transportation of Customer-Owned Gas") scheduling procedures. SENA notes that the utilities’ plan to cap firm BTS sales at 110% of design-standard capacity and to prioritize firm nominations during all intraday cycles could address past operational concerns that allowed interruptible customers to jump ahead of firm shippers (i.e., obtain capacity before) later in the same gas day.

INSTANT ANALYSIS: SoCalGas/SDG&E face an uphill battle convincing regulators and stakeholders that their 2027 rate and storage proposals are justified. Nearly every intervenor raises transparency, fairness, and timing concerns. A common refrain is distrust of Sempra’s embedded-cost framework and skepticism toward its accelerated schedule. This proceeding has potential to be a referendum on how California’s gas utilities will allocate shrinking throughput costs in the era of mass electrification.

ADDITIONAL NATURAL GAS RATE UPDATES

SoCalGas recently posted its October 2025 and November 2025 commercial and industrial gas rate summaries. Below is our four-month retrospective.

• From August to November 2025, SoCalGas’s C&I rate summaries reveal notable swings in core gas procurement prices and moderate-but-steady variation in delivery components. The Non-Residential Core Procurement Charge declined through early fall before rebounding in November to the tune of a 50% increase.
• SoCalGas's crossover rate (G-CPNRC) held flat at 36.665 ¢ from October through November after falling from 42.853 ¢ in September, indicating that procurement volatility might trace back to the base commodity rather than balancing service.
• For core commercial service (G-10), base rates eased slightly through October but then rose in November, tracking the procurement rebound. Similar upticks appear in the air-conditioning and gas-engine schedules.
• Across noncore tiers, distribution charges hovered within a narrow band, indicating stability in transportation margins even amid commodity turbulence. Transmission Level Service (GT-3/GT-4/GT-5) remained near 25 ¢/therm class average throughout, and backbone transportation reservation rates held constant at $0.57976 per Dth/day (albeit with looming CAP and Annual True-Up increases on the horizon).

INSTANT ANALYSIS: SoCalGas’s autumn rate pattern provides a glimpse into how commodity volatility dominates cost risk for C&I customers. After three straight months of falling procurement charges, November brought a dramatic 50% rebound, reversing prior savings and tightening margins for noncore users. Delivery, transmission, and public-purpose charges remained steady, suggesting that transportation infrastructure costs are not the source of fluctuation. A deep negative buy-back rate reflects oversupply conditions and low system demand, hinting at possible storage congestion or weak downstream offtake. While October represented a temporary price trough, November’s spike suggests that gas-supply markets are turning, with SoCalGas procurement costs re-coupling to broader wholesale volatility while delivery components stay inert.

On PG&E's end, a multi-month forecast is available below (source documents can be found here).

January 2026 changes assume increases for PG&E's 2023 General Rate Case decision (D.23-11-069); 2026 Cost of Capital (A.25-03-010); Wildfire and Gas Safety costs (A.23-06-008); Wildfire Mitigation and Catastrophic Events ("WMCE," A.22-12-009); Advanced Metering Infrastructure (A.24-03-011) and transmission revenue requirements.

March 2026 assumes the effects of the 2023 WMCE (A.23-12-001), and August 2026 assumes:

• Recovery of the 2024 WMCE (A.24-11-009);
• Billing Modernization recovery begins (A.24-10-014); and
• The recovery of PG&E's 2011-2014 Gas Transmission and Storage capital expenditures (D.22-07-007) ends.

INSTANT ANALYSIS: PG&E’s rate trajectory continues to be shaped by overlapping wildfire, safety, and modernization cost cycles that will raise rates in Q1 2026 before lowering mid-year. Covered entities benefit from a clearer seasonal drop-off, while non-covered entities face persistently higher therm costs due to GHG adders and broader capital recovery alignment.

DISTRIBUTION PLANNING

In our Friday aggregate we reported on PG&E's  2025 Distribution Planning Advisory Group (DPAG) Independent Professional Engineer (IPE) Report. The report, filed in the Commission's High DER Future rulemaking, suggested that PG&E is entering a period of accelerated stress, driven by surging load requests and mass electrification, with an acute need to improve how it responds to real-world demand.

• SCE's equivalent report is available here. SCE's report confirms that electrification is driving a dramatic expansion in grid needs (a 69% jump in one year and 250% growth over five). While SCE’s load-forecasting process is robust and compliant with CPUC reforms, it also reveals mounting uncertainty in how fast transportation and building electrification loads will actually materialize. Known-load data show projects increasing in size but slipping in completion, with only about 12% fully energized and 78% either completed or deferred.
• Electric vehicle and port electrification now dominate the pipeline, suggesting that half of SCE’s projected near-term load growth is transport-related. A "Borrow Forward" forecasting method, which effectively decouples SCE’s embedded loads from Integrated Energy Policy Report constraints, could inflate future demand projections if project materialization rates remain weak. The IPE’s recommendations (tracking pending loads alongside known ones and better integrating DER-based mitigation) point toward a more agile, data-verified planning regime.

As with PG&E, SCE's report highlights a system straining under the velocity of electrification ambitions, where forecast integrity and load realization, not modeling sophistication, may determine the success of any grid modernization efforts.

SDG&E's report, available here, shows a jump from 25 to 52 identified grid needs, along with a 37% rise in total known-load additions (driven largely by commercial and transportation electrification), which indicates intensifying distribution-capacity pressure. While about half of SDG&E's needs were mitigated through operational fixes like load transfers, the remaining 22 planned projects (notably 10 new circuits and three new substations) confirm a serious buildout is underway.

DEMAND FLEXIBILITY

On October 31, 2025 Cal Advocates held an ex parte meeting with advisors to CPUC Commissioner John Reynolds to discuss the future of California’s Base Services Charge (BSC), formerly known as the Income-Graduated Fixed Charge (IGFC).

• Cal Advocates expressed support for the BSC concept but urged the Commission to promptly open a new rulemaking to revise and expand it. The office argued that the BSC approved in a 2024 decision (D.24-05-028) failed to adequately lower volumetric electricity rates, especially given that PG&E and SCE rates have risen more than 30% since 2022, while the adopted BSC only reduces volumetric charges by 8% to 13%.
• Without enlarging the fixed charge, Cal Advocates warned, California risks undermining affordability and electrification goals. Cal Advocates recommends allowing additional fixed costs (such as non-marginal distribution expenses) to be recovered through the BSC, noting this could expand PG&E’s eligible cost share from 12% to 31.5% of its revenue requirement.

Cal Advocates also urged updates to income tier definitions and verification methods to ensure customers are accurately placed in low-, moderate-, and high-income brackets. The office highlighted that working groups on implementation and income verification are already active but said a new proceeding should focus solely on BSC issues to enable timely reforms.