PG&E and SoCalGas/SDG&E Spending Billions to Perform Gas-System Overhauls
PG&E and SoCalGas submitted their major, planned natural gas infrastructure investments under the CPUC's General Order 177 long-term gas planning framework.
The filings highlight a statewide wave of large-scale reliability, safety, and compliance projects focused on modernizing aging compressor stations, rebuilding critical transmission and terminal facilities, and replacing or retrofitting high-pressure pipelines through the 2026–2035 period.
PG&E Update
PG&E’s submission emphasizes backbone system reliability work such as compressor replacements at Los Medanos, Topock, Hinkley, and McDonald Island; a major terminal rebuild at Brentwood; a greenfield station replacement at Shingletown; and integrity upgrades to key pipelines. These projects address obsolescence, maintain storage and peak-day supply capability, comply with federal emissions rules, and prevent catastrophic failures that could disrupt gas deliveries.
Notably, PG&E's cover letter discloses that the S-238 Hinkley Electrical Upgrades Project commenced emergency construction on January 20, 2026, pursuant to GO 177's unplanned emergency exemption.
Component failures and obsolescence issues emerging in Summer 2025 elevated concerns that the Hinkley Compressor Station may not remain functional through the CPCN application period. (PG&E filed a motion to withdraw A.25-04-004 on February 4; see CRI's coverage here).
A utility invoking the emergency exemption and pulling its own CPCN application is a significant procedural indicator about the deteriorating condition of backbone infrastructure.
MC
PG&E lists estimated capital expenditures for several major backbone projects:
- Los Medanos Compressor Replacement (about $75.6 million);
- Brentwood Station Rebuild (about $212 million);
- Topock Compressor Station Rebuild (about $288 million); and
- Pipeline integrity upgrade (L-021B segment, about $50.4 million).
These costs are preliminary and subject to change as engineering progresses. PG&E also notes that many projects are early-stage, with some costs still "to be determined," particularly where detailed engineering has not yet begun. Three projects (Hinkley, McDonald Island, and Shingletown) have no cost estimates at this time.
The Sempra IOUs' Update
The SoCalGas/SDG&E report identifies 10 total projects meeting GO 177 thresholds, including a billion-dollar compressor modernization at Honor Rancho and near-billion-dollar modernizations at Moreno and Ventura, major pipeline replacements tied to the Pipeline Safety Enhancement Plan, transmission retrofits, and integrity remediation work driven by both federal safety mandates and actual inspection findings.
Two projects from the Sempra IOUs' 2025 report were removed from the current filing:
- Playa Del Rey Upgrade RECLAIM Lean Burn (placed in service Q4 2025); and
- Line 3000 Hydrotest (broken into sub-threshold projects).
Overall, the Sempra IOUs' investments are framed primarily as safety compliance, emissions reduction, and system resilience measures necessary to sustain reliable gas service for residential, industrial, and electric-generation demand. They also conform with increasing air-quality and pipeline safety requirements, and their in-service dates stretch into the early 2030s and beyond.
The Sempra Utilities' report shows even larger figures than PG&E does, including several mega-projects:
- Moreno Compressor Modernization (SDG&E, about $911 million);
- Honor Rancho Compressor Modernization (about $1.058 billion);
- Ventura Compressor Modernization (about $578 million);
- Line 85N Elk Hills–Lake Station Replacement (about $185 million);
- Supply Line 38-539 Replacement (about $73 million);
- Line 85N Lake Station–Grapevine Replacement (about $261 million);
- SL 44-306/44-307 Retrofits (approximately $67–68 million each);
- Line 85-Section 5 Replacement (approximately 50 miles of PSEP Phase 1B pipeline, cost TBD); and
- Line 235 West Assessment: Newberry Springs to Victorville.
The latter project is driven by PHMSA and the Transmission Integrity Management Program. An October 2024 inline inspection identified 16 immediate repair conditions that were already repaired, plus 18 two-year conditions scheduled for Q2 2026. The full remediation scope and cost have yet to be determined.
INSTANT ANALYSIS
These filings confirm that California’s gas utilities are advancing a long-duration capital cycle to rebuild the foundations of their gas systems, even as official policy narratives emphasize electrification and load decline.
The scale (individual projects in the hundreds of millions to over $1 billion) indicates utilities are planning for continued operational dependence on the gas network for peak reliability, storage management, and electric-sector support well into the 2030s. The Hinkley emergency construction episode underscores that this dependence is not theoretical; backbone infrastructure is already degrading faster than planned replacement timelines can accommodate.
- From a regulatory strategy perspective, GO 177 reporting is functioning as a pipeline of future rate base, not merely a transparency exercise. Many projects are framed as safety, emissions compliance, or obsolescence replacements rather than expansions, a positioning that aligns with CPUC tolerance for reliability spending even under decarbonization mandates. This suggests the Commission is likely to face increasing tension between gas transition policy and the need to authorize large capital recovery to avoid reliability risks.
- For market participants, the practical implication is that gas system costs are not plateauing; they are resetting upward. As throughput declines over time, fixed costs from these investments will be spread across a shrinking customer base, intensifying affordability pressure and raising the probability of future cost-allocation battles (e.g., exit fees, non-bypassable charges, or electrification cross-subsidies). Many projects are also located in ESJ communities, increasing the political sensitivity of cost-recovery decisions.
Most importantly, the filings suggest that California is entering a phase where the gas system becomes a strategic reliability backstop rather than a growth platform. That transition typically produces regulatory shock points: stranded asset debates, accelerated depreciation proposals, and potential pressure for state intervention if customer bills spike.
Stakeholders should treat these reports as early indicators of future proceedings where the central question will shift from “whether to invest” to “who pays for a shrinking but indispensable system."