SoCalGas Rates for January 1, 2026 Include a Massive 54.6% Backbone Transportation Service Increase
SoCalGas filed Advice Letter 6578-G (available here) to implement its consolidated gas transportation rate update effective January 1, 2026. Protests are due January 20.
The filing reflects:
- Annual regulatory account amortizations approved in the 2024 Cost Allocation Proceeding;
- Updates to Cost of Capital, greenhouse gas and climate-credit adjustments, low-income program cost recovery, leak-abatement funding; and
- Revised forecasts for company-use fuel and unaccounted-for gas.
In aggregate, the consolidation produces a net systemwide revenue decrease of approximately $17.4 million (with franchise fees and uncollectibles), with sizable bill impacts redistributed across customer classes. The precise impact on class of service is delineated below.
| Class of Service | Applicable Rate Schedules | Net M$ (with FF&U) Increase/(Decrease) |
|---|---|---|
| Core | GR, GS, GM, GO-AC, G-NGVR, GL, G-10, G-AC, G-EN, G-NGV | ($232.8) |
| Noncore | GT-NC, GT-TLS | ($8.9) |
| Unbundled Storage | G-TBS | $0.0 |
| Backbone Transportation Service (BTS) | G-BTS | $224.3 |
| TOTAL | ($17.4) |
Core customers will see a large overall reduction, noncore transportation rates will decline modestly, but Backbone Transportation Service (BTS) rates will rise higher than expected (54.6%) due to higher allocated costs and integration adjustments. (Recall that, in SoCalGas's preliminary version of this filing, which CRI summarized here, SoCalGas projected a 51.2% BTS increase.)
The increase in the BTS revenue requirement to $224.3 million in the 2026 consolidated rate update reflects the stacking of multiple allocation and integration adjustments, not a single driver.
- The core component is the $219.6 million BTS increase arising from the annual regulatory account amortization under the 2024 Cost Allocation Proceeding framework, which reallocates balancing account balances disproportionately to backbone service even as total system revenues decline.
- That base increase is then further adjusted upward through transmission system integration mechanics (most notably the assignment of $4.5 million of SDG&E Pipeline Safety Enhancement Plan backbone transmission balancing account costs to SoCalGas BTS) and minor correcting entries (including exchange cost corrections), yielding a net BTS increase of $224.3 million.
In short, BTS is serving as the landing zone for layered amortization, integration, and true-up adjustments. Below are illustrative class-average rates.
| Service Type | Present $/therm |
Proposed $/therm |
Change | % |
|---|---|---|---|---|
| CORE | ||||
| Residential | $1.49280 | $1.42236 | ($0.07044) | -4.7% |
| C&I | $0.97893 | $0.89756 | ($0.08137) | -8.3% |
| NGV Post-Sempra-Wide | $0.40713 | $0.37738 | ($0.02975) | -7.3% |
| Gas A/C | $0.76716 | $0.67550 | ($0.09166) | -11.9% |
| Gas Engine | $0.29627 | $0.22849 | ($0.06778) | -22.9% |
| Total Core | $1.28292 | $1.21198 | ($0.07094) | -5.5% |
| NONCORE C&I | ||||
| Distribution-Level Service | $0.28163 | $0.27724 | ($0.00439) | -1.6% |
| Transmission-Level Service | $0.08772 | $0.08044 | ($0.00728) | -8.3% |
| Total Noncore C&I | $0.19314 | $0.18743 | ($0.00571) | -3.0% |
| NONCORE ELECTRIC GENERATION | ||||
| Distribution Post-Sempra-Wide | $0.26808 | $0.27049 | $0.00241 | +0.9% |
| Transmission-Level Service | $0.08019 | $0.07679 | ($0.00340) | -4.2% |
| Total Electric Generation | $0.10968 | $0.10719 | ($0.00249) | -2.3% |
| Total Retail Noncore | $0.14599 | $0.14210 | ($0.00389) | -2.7% |
| WHOLESALE | ||||
| Long Beach / SWG / Vernon / Int'l | $0.06757 | $0.07608 | $0.00851 | +12.6% |
| SDG&E Wholesale | $0.07395 | $0.07676 | $0.00281 | +3.8% |
| Total Wholesale incl. SDG&E | $0.07188 | $0.07654 | $0.00466 | +6.5% |
| TOTAL NONCORE | $0.12764 | $0.12586 | ($0.00178) | -1.4% |
| SYSTEM TOTALS | ||||
| System Total (w/o BTS) | $0.58790 | $0.55880 | ($0.02910) | -4.9% |
| Backbone Transportation (BTS) | $0.57976 | $0.89609 | $0.31633 | +54.6% |
| System Total w/BTS | $0.64919 | $0.64710 | ($0.00209) | -0.3% |
INSTANT ANALYSIS: SoCalGas’s January 1, 2026 consolidated rate update aggregates a wide set of previously authorized adjustments into a modest net systemwide revenue decrease, but this masks a significant reallocation of costs. Annual regulatory account amortizations, updated cost-of-capital, greenhouse gas and climate credit true-ups, leak-abatement funding, and revised gas price forecasts collectively lower overall revenues. But Backbone Transportation Service emerges as the primary cost sink, absorbing a $224.3 million increase.
Why is this happening? Pursuant to the Cost Allocation Proceeding framework, the BTS bucket functions as the residual allocator of last resort. While core and noncore distribution classes stabilize, non-volumetric, transmission-driven and integration-related costs are routed to backbone service. Under current CAP assumptions, the BTS class is designated as the only class capable of carrying system-level transmission risk without distorting retail price signals (or violating cost-causation principles).