PG&E "CARD" Filing: First-Time Merger of the GCAP and GT&S Applications

On November 21, PG&E filed an application seeking CPUC approval of its comprehensive 2027 Gas Cost Allocation and Rate Design (CARD) proposals, which for the first time combine its historically separate Gas Cost Allocation Proceeding (GCAP) and Gas Transmission & Storage (GT&S) CARD into a single, unified framework.

• The filing aligns cost allocation, throughput forecasting, and rate design across gas distribution, transmission, and storage functions for the 2027–2030 period, using revenue requirements and capacity forecasts from PG&E’s pending 2027 General Rate Case Phase I.
• PG&E emphasizes that falling gas throughput (driven by electrification and state climate policy) requires updated methodologies to maintain system safety and reliability while supporting decarbonization.
• PG&E proposes shifting to embedded-cost allocation for distribution, updating backbone and local transmission methodologies, modifying energy-efficiency and brokerage-fee allocations, adjusting storage service design, updating master-meter discounts and Natural Gas Vehicle compression charges, and increasing the residential minimum monthly transportation charge from $4 to $15.

INSTANT ANALYSIS: PG&E’s 2027 Gas CARD consolidates GCAP and GT&S into one framework and resets how gas costs are assigned as statewide gas use declines. Backbone and inventory costs fall, but rising storage obligations and the shift to embedded-cost distribution methods push costs upward for small commercial, certain noncore groups, and wholesale customers. Residential customers will see a brief dip in 2027 before pressures return in later years. The filing introduces new forecasting and imbalance tools that reshape how expenses are spread across customer classes as the gas system contracts.

Below is an analysis of PG&E's accompanying testimony, which is available here.

ACCOMPANYING TESTIMONY

Policy Introduction

The policy portion of PG&E's testimony explains how the CARD fits into the overall ratemaking structure (following General Rate Case Phase I revenue authorization) and updates the underlying cost-of-service studies, including:

• Embedded cost methodology;
• Local-transmission allocation;
• Energy-efficiency cost allocation;
• NGV compression cost methodology;
• Master-meter discounts; and
• Inventory-management practices.

PG&E argues that shifting fully to embedded costs better reflects today’s safety-driven investments and that rate design should be recalibrated annually rather than based on multi-year averaged forecasts.

The company situates these proposals within California’s broader gas-transition policies, anticipating a nearly 10% decline in throughput by 2027 due to electrification and renewable expansion. PG&E proposes increasing the minimum monthly transportation charge, preparing for a future fixed residential charge, and aligning rate calculations with year-specific sales forecasts to maintain system stability as throughput erodes.

Forecast & Cost-of-Service Studies

PG&E projects a steady decline in natural-gas usage through 2030, driven mostly by reduced reliance on gas-fired electric generation as renewable and storage capacity grows on the CAISO system.

• Market-responsive electric-generation demand falls sharply from 684 MDth/d in 2024 to the mid-500s by 2027–2030, with a small uptick in 2030 tied to the staged retirement of Diablo Canyon. Non-market-responsive cogeneration stays flat at approximately 148 MDth/d.
• Core residential and commercial loads gradually decline due to energy-efficiency and electrification, while industrial throughput shows mixed trends (distribution-level volumes continue a long decline, but transmission-level throughput recovers slightly from post-COVID lows). Total on-system throughput falls from 2,008 MDth/d (2024) to roughly 1,820 MDth/d by 2030.
• In designing backbone transmission rates, PG&E maintains the long-standing system-average backbone load-factor methodology adopted in prior GT&S and CARD cases, producing load factors of about 80% in 2027, declining to 74% by 2030. This approach stabilizes Redwood/Baja path* rates, avoids large swings tied to changing gas-supply patterns, and evenly allocates reserve capacity.
• PG&E proposes a Baja-Redwood differential set at 50% of the natural differential, slightly lower than the 54% settlement value used for 2023–2026. Adjustments for off-system flows, firm reservations, Silverado flows, and path-specific distortions round out the backbone inputs used to set 2027 rates.

Core Gas Supply

PG&E’s prepared testimony outlines Core Gas Supply’s methodology for determining storage inventory and withdrawal capacity necessary to meet the state’s 1-in-10 cold-day reliability standard.

The testimony includes confidential storage tables showing current and proposed 2027 withdrawal levels, inventory trajectories, and allocations between PG&E-owned and independent storage providers.

Core Gas Supply explains that, in the 2027 GRC, PG&E proposed making allocated-storage withdrawal capability dependent on inventory levels, prompting CGS to develop its own empirically based withdrawal-to-inventory curve using winter load data from 2015–2025. By analyzing peak-demand days (defined as exceeding the 90th percentile) CGS derives a January baseline withdrawal capacity that should count toward meeting the reliability requirement.

The testimony ultimately recommends specific-albeit-redacted thousand-Dth/day withdrawal levels to ensure PG&E can serve core customers during extreme conditions while aligning storage operations with updated standards and the 2024 California Gas Report.

Cost Allocation and Rate Design for GT&S

PG&E lays out how the utility will translate General Rate Case–adopted revenue requirements and capacity forecasts into actual gas transmission, storage, and customer-access rates for 2027–2030.

Most existing CARD structures remain intact (including Gas Accord backbone rate segmentation and unified volumetric Local Transmission rates) but PG&E proposes two notable changes:

• A revised Baja–Redwood path differential set at 50% of the “natural” cost spread; and
• A return to the pre-2023 method of allocating storage costs to injection, inventory, and withdrawal functions based on forecasted capacities rather than equal splits.

The biggest update is PG&E’s new empirical method for allocating Inventory Management costs. Using five years of SCADA-based imbalance data, PG&E shows that intra-day pressure-balancing needs dominate system operations and that the core, industrial, and electric-generation segments contribute to imbalances differently as throughput changes.

PG&E therefore replaces the 2023 GT&S CARD all-party settlement’s old 50/50 weighting of inter- vs. intra-day imbalances with a forecast-adjusted, data-driven approach (roughly 36/64) and applies these refined class-level imbalance patterns to produce new Inventory Management rates. The filing also updates noncore Customer Access Charges to match GRC-adopted revenue requirements and blends seasonal storage changes into annual rates to avoid mid-year adjustments.

Distribution Cost Allocation and Rate Design

PG&E proposes a major shift in how gas distribution costs are allocated, replacing the longstanding marginal-cost methodology with an embedded-cost approach that PG&E argues more accurately reflects actual infrastructure and customer-service obligations.

Because this transition significantly lowers the residential share of costs while increasing allocations for commercial and industrial classes, PG&E proposes a four-year glide path to avoid rate shock.

PG&E also updates energy-efficiency allocations, the core brokerage fee, NGV compression costs, and gas baseline quantities, and introduces a new annual (rather than 4-year average) sales-forecast methodology to reduce balancing-account volatility as throughput declines.

A central feature of the proposal is raising the residential Minimum Monthly Transportation Charge from $4 to $15, which PG&E argues is necessary to recover a meaningful portion of customer-related fixed costs, given that the true monthly cost to serve a residential gas customer approaches $28–$30.

PG&E presents the $15 charge as a partial, transitional step that improves cost causation, reduces volumetric rates, and modestly impacts about one-quarter of non-CARE customers. Looking ahead, PG&E indicates that a full fixed monthly customer charge will be proposed in a later CARD after the Commission’s Gas Transition Planning docket provides policy guidance.

Rate Table Appendices

Below are some observations from the rate-table testimony.

• Backbone transmission revenue responsibility shifts downward for core customers. The Redwood Path (core) reservation charge falls from $19.55 to $11.09 (2026) and trends modestly afterwards.
• Natural gas storage costs increase dramatically (especially in the core allocation). The core storage revenue requirement jumps 39 to 46% across 2027-2030.
• Inventory management costs fall sharply for both core and noncore (-22% to -26% reductions for core and -10% to -12% reductions for noncore). This is the clearest downward pressure item.
• Local transmission remains nearly flat (inflation-only growth). Local Transmission Base increases 1% per year for core and decreases -3% per year for noncore.
• There is significant compression of the Customer Access Charge (CAC). Large Commercial/Core NGV/Industrial drops from $0.1060 to $0.0511 in 2027 and Residential/Small Commercial drops from $0.3096 to $0.2323.
• Bill impacts demonstrate a cross-current: core residential customers see decreases and small commercial and noncore customers face increases.
  • For bundled residential customers, after a General Rate Case-driven uptick, January 2027 rates drop about 5% under the CARD proposal.
  • Bundled small commercial customers see a 5.4% GRC-driven increase plus a 2.8% CARD-driven increase in 2027, followed by a 6.6% increase in 2028.
  • Many backbone and transmission-only rates see modest decreases, but distribution-tiered classes (e.g., SC noncore NGV, West Coast Gas Castle/Mather) see large increases (double-digit).
• G-XF Expansion shipper rates remain stable and low-impact.
• Seasonal Straight Fixed Variable/Modified Fixed Variable** spreads remain intact.

These rate tables suggest a reshuffling of PG&E’s gas cost allocation that ultimately moderates residential impacts while increasing pressure on small commercial, storage-dependent classes, and certain wholesale/noncore segments.

The most consequential movement is the rise in storage-related revenue responsibility, which offsets major decreases in backbone and inventory management costs. Core customers benefit from double-digit reductions in backbone transmission charges, producing modest rate relief in 2027, but the relief is temporary as storage costs and class rebalancing tighten again by 2028–2030.

Small commercial customers, by contrast, face meaningful increases across both bundled and transport rates, with year-two (2028) impacts in the 6 to 15% range, and wholesale classes tied to distribution see some of the largest increases in the entire portfolio. PG&E’s reductions to the Customer Access Charge shift more cost recovery back into volumetric components, subtly re-weighting cost responsibility onto higher load-factor users without explicitly changing rate-design formulas.

FOOTNOTES

*PG&E’s Redwood and Baja Paths are the utility’s two major backbone gas-transmission corridors. Redwood moves gas from northern receipt points (Malin, Canadian and Northwest supplies) into PG&E’s system, while Baja moves gas from Southern California and Southwest interconnects northward.

**SFV recovers most fixed costs through the firm reservation charge and little through usage, while MFV shifts more of those fixed costs into volumetric charges, blending reservation and usage recovery.