WEDNESDAY AGGREGATE: CPUC Orders PG&E to Fortify Claim that Increased Data Center Load Will Reduce Bills
Today's roundup includes:
- A scoping memo for the CPUC's Climate Credit rulemaking, i.e., the docket where the Commission is considering ways to improve the California Climate Credit;
- Activity in PG&E's 2027 General Rate Case, where a February 3 ruling orders PG&E to provide granular explanations and workpapers on a slew of topics e.g., deferred and imputed wildfire-related inspections and transformer replacement assumptions;
- An amended scoping memo in the ERRA/PCIA reform docket, which formally launches Track Two to focus on how pre-2019 banked RECs should be valued for PCIA purposes; and
- A scoping memo establishing the procedural framework for the CPUC’s review of SoCalGas's proposal to implement a woody biomass pilot project with West Biofuels LLC.
CALIFORNIA CLIMATE CREDIT
President Alice Reynolds issued a scoping memo in R.25-07-013, which is the proceeding that considers ways to improve the effectiveness of the California Climate Credit as an affordability tool.
The rulemaking responds to recent statutory changes under Assembly Bill 1207, which:
- Extended and renamed the state’s cap-and-trade program as Cap-and-Invest;
- Revised how Climate Credit revenues may be distributed; and
- Directed the Commission to maximize bill affordability by aligning credits with high-bill months.
Phase 1 of the proceeding will focus exclusively on the residential Climate Credit and is split into two sub-phases. Phase 1A will address near-term actions for 2026, including whether to:
- Pause distribution of the 2026 residential electric Climate Credit for large utilities (PG&E, SCE, SDG&E) pending a decision on timing (the small and multi-jurisdictional utilities are excluded because they are winter-peaking, and gas utilities are excluded because their next residential credit won't occur until 2027);
- Shift credits into summer high-usage months;
- Implement new outreach requirements attributing credits to Cap-and-Invest at the top of customer bills; and
- Establish procedures to transfer 5% of electric allowance revenues to the State Treasury for the California Transmission Accelerator Revolving Fund starting July 2026.
Phase 1B, to be scheduled later in 2026, will consider more comprehensive reforms to the residential Climate Credit, including eligibility, timing, number of distributions, calculation methods, cost impacts, and environmental/social considerations.
INSTANT ANALYSIS: This ruling sets up a fast-track reset of the California Climate Credit with a clear legislative push toward bill affordability rather than seasonal visibility.
The near-term risk for customers is that the Commission is openly contemplating pausing the 2026 residential electric credit for large utilities and redeploying it into summer peak months, a move that could significantly change when relief shows up on bills.
For utilities and large stakeholders, the key procedural takeaway is the compressed Phase 1A schedule, which forces decisions on 2026 credits before ERRA forecasts are set in October, while also operationalizing new AB 1207 mandates on bill messaging and the 5% revenue transfer to the California Transmission Accelerator Revolving Fund.
Longer term, Phase 1B suggests that the residential Climate Credit will no longer be treated as a fixed entitlement but as a policy lever subject to redesign around timing, eligibility, and distribution rules.
PG&E GENERAL RATE CASE 2027
In a pair of closely related rulings in PG&E’s 2027 General Rate Case, the assigned Administrative Law Judges substantially expand the evidentiary record required from PG&E while also clarifying the procedural boundaries for post-2027 undergrounding plans.
In a February 3 joint ruling, the ALJs identify areas where PG&E's filing may be incomplete (or where additional evidence would provide a better record across a range of cost, forecasting, and policy areas) and order extensive supplemental filings.
The ruling demands granular explanations and workpapers on issues including:
- The capitalization of pole reinforcement and pole test-and-treat work;
- Deferred and imputed wildfire-related inspections;
- Vegetation management and targeted tree-inspection programs;
- Customer-driven “new business” construction costs;
- Transformer replacement assumptions;
- Gas safety work that exceeds minimum code requirements;
- Clean-energy transition strategy; and
- The rapidly growing data-center interconnection queue and its claimed rate impacts.
The judges also require reconciled historical and forecast demand data, clearer treatment of post-test-year cost reductions, and explicit cross-referencing to PG&E’s Wildfire Mitigation Plan wherever relied upon, indicating heightened scrutiny of both cost causation and compliance rationales.
This info is due February 13.
- Separately, an email ruling addresses a narrower but important issue: the scope of testimony and cross-examination related to PG&E's proposed "Bridge Program" for electrical undergrounding in the 2028–2030 attrition years.
- Under the Bridge Program, PG&E would seek authorization of up to approximately $3.6 billion for up to 1,200 miles of undergrounding via an advice-letter mechanism, contingent on the timing of the Commission's decision on PG&E's 10-year Electric Undergrounding Plan under Senate Bill 884.
The ruling clarifies that schedule extensions previously granted for intervenor and rebuttal testimony on post-2027 undergrounding do not expand the substantive scope set by the earlier scoping memo.
Additionally, the ALJs indicate that post-2027 undergrounding discussion is limited to contingency planning tied to potential delays or outcomes in PG&E's SB 884 Electric Undergrounding Plan proceeding, preserving ratepayer protections over 2027 approved funds while avoiding procedural spillover into the core 2027 GRC record.
INSTANT ANALYSIS: These rulings raise the bar for PG&E's 2027 GRC showing. The ALJs are showing skepticism toward high-level forecasts and forcing PG&E to fully substantiate cost shifts, deferred wildfire work, emerging-load assumptions, and post-test-year savings with detailed workpapers and clear links to requirements.
- The stakes are substantial: the ruling covers approximately $8.7 billion in Overhead Maintenance and Poles capital alone (2027-2030), plus over $1 billion annually in vegetation management. That increases disallowance risk if PG&E cannot reconcile inconsistencies or demonstrate cost causation.
- Notably, the ALJs are demanding workpapers behind PG&E's public claim that every gigawatt of data center load could reduce customer bills 1-2%. If PG&E cannot substantiate that assertion, it undermines not just the GRC forecast but the broader emerging-load narrative that has become central to PG&E's strategic messaging.
At the same time, the Commission is containing the undergrounding debate. Post-2027 undergrounding is permitted only as contingency planning tied to the SB 884 process, not as a backdoor authorization of future spending. The focus stays on whether 2027 dollars are justified and controllable, not on speculative attrition-year buildouts.
ELECTRICITY RATES – ERRA/PCIA REFORM
Commissioner John Reynolds issued an amended scoping memo in R.25-02-005 to revise the scope and schedule of the proceeding addressing Energy Resource Recovery Account and Power Charge Indifference Adjustment policies.
The amendment formally launches Track Two, narrowing the focus to how pre-2019 banked RECs should be valued for PCIA purposes after questions arose in the 2026 ERRA Forecast proceedings.
Specifically, the Commission will examine:
- Whether assigning a value other than zero to these pre-2019 RECs is consistent with statutory indifference principles, prior Commission decisions, and cost-shift protections for bundled and departing customers; and
- If so, how that value should be calculated and allocated in future ratemaking.
Opening testimony is due March 2.
INSTANT ANALYSIS: This amended scoping memo sets up a financially sensitive PCIA dispute by isolating pre-2019 banked RECs as a standalone Track Two issue rather than letting it diffuse across ERRA forecasts.
- The Commission is implicitly acknowledging that earlier REC valuation rules created temporal mismatches that now sit awkwardly with indifference doctrine.
- By serving this ruling on the R.17-06-026 service list, the CPUC is indicating that it may need to modify a 2018 decision (D.18-10-019, which modified the PCIA methodology) and a 2019 decision (D.19-10-001, which refined the method for developing and truing-up Market Price Benchmarks).
- Additionally, by framing the key question as whether a non-zero valuation is even lawful, the ruling puts utilities and departing-load advocates on opposite sides of first principles rather than mechanics, which raises settlement pressure early.
In short, this fight has real dollar consequences, but the CPUC's preference appears to be closure rather than sprawling litigation.
BIOMETHANE
The assigned commissioner’s scoping memo in A.25-10-008 establishes the procedural framework for the CPUC’s review of SoCalGas’s proposal to implement a woody biomass pilot project with West Biofuels LLC.
SoCalGas filed the application last October, following withdrawal of an earlier version, and the filing drew protests from Cal Advocates, the Small Business Utility Advocates, and the Sierra Club, and also a response from the Bioenergy Association of California (CRI's coverage is available here).
MC
After meet-and-confer efforts and a prehearing conference, the CPUC determined that the main question is whether the proposed project qualifies as a legitimate pilot and complies with prior Commission decisions, including:
- Funding restrictions under a 2022 decision (D.22-02-025), including whether SoCalGas's proposed use of allowance proceeds for specific project "lanes" comports with the requirement that funding offset pipeline build-out costs;
- Requirements set out in a 2024 decision (D.24-12-032);
- Applicable California Air Resources Board regulations; and
- Whether precedents from Senate Bill 1383 dairy biomethane programs (covering project readiness, emissions reporting, and incentive structures) should apply.
The scope also covers:
- The ratemaking treatment of project costs (including whether certain pipeline investments may be capitalized);
- How ongoing operations and maintenance should be funded;
- Transparency and confidentiality of methane emissions data; and
- Potential environmental and social impacts.
Intervenor testimony is due March 13, with rebuttal testimony due April 10.
INSTANT ANALYSIS: This scoping memo provides for a narrowly framed, compliance-heavy review of SoCalGas’s woody biomass pilot and shows that the CPUC remains skeptical about stretching Cap-and-Trade–funded “pilot” authority beyond what was explicitly authorized in prior decisions.
The ruling puts particular pressure on SoCalGas to justify both the project’s pilot status and its proposed use of allowance proceeds for pipeline infrastructure, including whether any such assets can be capitalized or must be treated as expense-only.
The absence of evidentiary hearings at the outset favors a paper-driven outcome, but the explicit invitation to seek hearings if factual disputes emerge leaves open a path for intervenors to challenge cost recovery, emissions accounting, and environmental impacts.
Overall, the memo suggests that any approval will come with heightened scrutiny on funding mechanics, emissions transparency, and alignment with existing biomethane precedent and will not be a green light for broader infrastructure expansion.