WEDNESDAY AGGREGATE: Risk Mitigation Accountability; SoCalGas Gas Line Scope Fight; PG&E Hinkley Emergency Bypass; and POLR Draft Resolution
Today's roundup covers a wide spectrum of items spanning risk mitigation, gas line extension allowances, Senate Bill 1221, Provider of Last Resort, Diablo Canyon, and natural gas backbone transportation.
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RISK MITIGATION
In the CPUC's Risk-Based Decision-Making Framework proceeding, Cal Advocates filed a proposal outlining an enforcement framework for utility Risk Mitigation Accountability Reports, responding to a directive in D.25-08-032 to develop a clearer accountability structure.
Cal Advocates generally supports the Safety Policy Division’s previously proposed Risk Mitigation Accountability Report enforcement model. That model contemplates escalating responses to infractions depending on the severity, materiality, and impact of reporting errors or failures to meet risk mitigation commitments.
However, Cal Advocates recommends two key modifications:
- First, that any Safety Policy Division warning emails or notices of violation, along with documentation of final resolution, be formally filed and served in the utility’s current General Rate Case proceeding and appended to its next General Rate Case application to ensure transparency and Commission oversight; and
- Second, that any corrective actions required due to insufficient progress, reporting deficiencies, or non-compliance be funded by shareholders rather than ratepayers.
The proposal also introduces a political accountability mechanism for utilities demonstrating insufficient progress toward adopted risk reduction or benefit-cost ratio metrics. Under this process, utilities would be required to:
- Send letters to the CPUC, the Governor's Office, and the California State Assembly's Committee on Utilities and Energy explaining their remediation plans; and
- Host a workshop or en banc within six months detailing their progress.
The proposal emphasizes tying ratepayer funding to demonstrable, cost-effective risk reduction outcomes and strengthening the Commission’s ability to hold utilities accountable for both the accuracy of Risk Mitigation Accountability Report filings and compliance with adopted General Rate Case risk mitigation requirements.
INSTANT ANALYSIS: Cal Advocates is trying to embed Risk Mitigation Accountability Report enforcement directly into the General Rate Case cycle. By requiring violations to be filed in active rate cases and appended to future applications, the proposal would turn reporting deficiencies into litigation leverage. More consequential is the proposed cost-allocation shift. Missed risk mitigation metrics or non-compliance would trigger shareholder-funded corrective actions. If adopted, the Risk Mitigation Accountability Report becomes a potential earnings risk mechanism, not just a reporting tool.
SOCALGAS – GAS LINE EXTENSION ALLOWANCE
In A.25-07-001, SoCalGas filed an objection seeking to exclude portions of Sierra Club testimony from the evidentiary record in its pending gas line extension allowance proceeding.
SoCalGas argues that the challenged testimony is inadmissible on two distinct grounds:
- First, that Sierra Club improperly relies on findings from prior General Rate Case decisions to argue that methane-fueled vehicle infrastructure is categorically inconsistent with state climate policy (an argument SoCalGas characterizes as a collateral attack on D.22-09-026, which expressly created the annual application process for individual project review); and
- Second, that Sierra Club's testimony regarding project siting in disadvantaged and Environmental and Social Justice communities falls outside the proceeding's scope because D.22-09-026 expressly declined to adopt ESJ location as an eligibility criterion.
According to SoCalGas, the proceeding is limited to evaluating whether proposed projects satisfy the three eligibility criteria established in D.22-09-026: demonstrable greenhouse gas reductions, consistency with California climate goals, and lack of feasible non-gas alternatives.
SoCalGas maintains that Sierra Club's references to past General Rate Case rulings, stranded asset concerns, and ESJ-based siting arguments constitute policy advocacy and an attempt to relitigate prior Commission decisions, rather than admissible evidence relevant to the specific criteria at issue. Notably, SoCalGas concedes that if the challenged Sierra Club testimony is excluded, its own rebuttal testimony responding to those portions should likewise be struck, a concession that reflects confidence in the objection.
INSTANT ANALYSIS: This is a scope fight. SoCalGas is defending D.22-09-026 as a contained eligibility test: GHG reduction, climate consistency, and no feasible non-gas alternative. Sierra Club is attempting to fold prior General Rate Case methane rulings and ESJ findings into the proceeding framework.
If the objection is sustained, line extension allowance review stays technical and project-specific. If overruled, methane policy and siting disputes gain a foothold inside future allowance proceedings. The CPUC's response will determine whether D.22-09-026 functions as a narrow subsidy mechanism or absorbs broader decarbonization enforcement pressures.
SENATE BILL 1221
SoCalGas/SDG&E filed a reply in the CPUC's Long-Term Gas Planning docket defending their motion to amend their existing Senate Bill 1221 memorandum accounts to track incremental, verifiable costs incurred in complying with a 2025 decision (D.25-12-042; see CRI's coverage of that decision here).
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Responding to objections from the Indicated Shippers, the utilities argue that no petition for modification is required because they are not seeking to revise a prior decision, but merely to record costs associated with new Commission directives tied to SB 1221 implementation. The utilities note that PG&E filed a similar motion on December 23, 2025, and no party objected, underscoring the selective nature of the Indicated Shippers' challenge.
- SoCalGas/SDG&E emphasize that the request concerns tracking only (not cost recovery) and is necessary to avoid retroactive ratemaking concerns while ensuring transparent accounting.
- The specific costs at issue relate to directed compliance activities under D.25-12-042: stakeholder outreach, hosting and recording a virtual SB 1221 information session with interpretation services, and filing a report by April 1, 2026.
- SoCalGas/SDG&E contend that D.25-12-042 expressly contemplates such motions and that their proposal aligns with both the statutory framework of SB 1221 and prior Commission precedent allowing memorandum accounts for unforeseeable, legislatively directed gas system activities.
If the Commission prefers an alternate procedural vehicle, the utilities request that the original motion’s filing date govern the start of cost recordation.
INSTANT ANALYSIS: This is a procedural skirmish with longer-term implications. The utilities are only seeking authority to track incremental SB 1221 compliance costs tied to D.25-12-042, not recover them. But once tracking is authorized, future recovery debates shift to reasonableness rather than eligibility. If granted, the motion reinforces a streamlined pathway for incorporating new SB 1221 directives into existing memo accounts, reducing friction as long-term gas planning obligations expand. The immediate dollars are modest. The precedent is not.
PROVIDER OF LAST RESORT
The CPUC issued Draft Resolution E-5411, which denies SDG&E's request for review of Energy Division’s disposition denying Advice Letter 4475-E, which had sought to preemptively establish a memorandum account to track incremental administrative and procurement costs in the event of a mass involuntary return of customers to Provider of Last Resort service
Background
SDG&E argued that it needed the account in place ahead of any Community Choice Aggregator failure to ensure uninterrupted service and full cost recovery. The Commission disagreed, clarifying that the 2024 POLR Standards Decision (D.24-04-009) permits (but does not require) a memorandum account as an alternative tool for calculating reentry fees, and that procurement costs remain recoverable through the annual Energy Resource Recovery Account process regardless of whether such an account is opened.
Draft Resolution E-5411
- Draft Resolution E-5411 emphasizes that opening a memorandum account in advance would assume that actual cost tracking is appropriate in all return scenarios, contrary to the discretion framework adopted in D.24-04-009.
- The draft resolution draws a practical distinction: a memorandum account may be necessary in a large-scale unplanned return (such as a failure of San Diego Community Power, whose customer load exceeds SDG&E's current bundled base) but could be costlier and unnecessary for a small planned return, such as from Clean Energy Alliance, where incremental procurement costs could be forecasted and absorbed through the Financial Security Requirement calculator.
- Instead, the draft resolution affirms that if a Tier 2 financial trigger indicates material risk of CCA failure, SDG&E may then file a Tier 1 advice letter to establish the account.
The draft resolution also confirms that CPUC staff will notify the Provider of Last Resort when a CCA appears at material risk, subject to confidentiality limits, to provide sufficient preparation time.
However, the draft resolution acknowledges SDG&E's concern that the Provider of Last Resort is not part of the financial monitoring process and that CCAs would likely object to such notification (an issue that remains unresolved and may surface in Phase 2 of the Provider of Last Resort rulemaking).
The earliest the CPUC will consider this item is March 19.
INSTANT ANALYSIS: This draft resolution limits the Provider of Last Resort memorandum account to trigger-based use. SDG&E cannot preemptively establish cost tracking; the Financial Security Requirement calculator remains the default reentry fee mechanism. However, the Commission's practical distinction between large and small returns signals that the memorandum account is envisioned primarily for significant, unplanned CCA failures.
Procurement costs remain recoverable through ERRA regardless. The memorandum account only affects how reentry fees are calculated and assessed to returning customers. The draft resolution also commits to notifying the Provider of Last Resort when a CCA is at significant risk, though the mechanism for that notification remains undefined.
Bottom line: actual cost tracking remains available, but only situationally and under CPUC control.
NATURAL GAS – INTERSTATE CAPACITY
SoCalGas filed Advice Letter 6599-G (available here), requesting expedited Commission approval of two interstate capacity contracts with the Kern River Gas Transmission Company under the streamlined process authorized in a 2004 decision (D.04-09-022). SoCalGas states that Cal Advocates does not oppose the contracts following consultation, while TURN did not participate in the review.
Protests are due February 17.
INSTANT ANALYSIS: The AL's heavy confidentiality is par for the course but suggests active portfolio management, not a passive renewal. For shippers and large customers, added Kern River commitments can influence border optionality and backbone flows.
NATURAL GAS – INTERRUPTIBLE TRANSPORTATION SERVICE
SoCalGas submitted Advice Letter 6598-G (available here), seeking Commission approval of a First Amendment to its existing Interruptible Transportation Service Agreement with Gasoducto de Aguaprieta, S. de R.L. de C.V. (formerly Gasoducto Rosarito).
- The amendment updates the agreement to reflect regulatory changes adopted by Mexico’s Energy Regulatory Commission for the Gasoducto Rosarito pipeline system, including revised regulated rates and system segmentation.
- Operationally, the agreement continues to provide interruptible transportation service of up to 200,000 Dth per day between the North Baja Pipeline interconnect near Los Algodones at the U.S.-Mexico border and Transportadora de Gas Natural de Baja California near Tijuana.
Protests are due February 25.
INSTANT ANALYSIS: This is a standard housekeeping update, but it matters. SoCalGas is aligning its cross-border interruptible transport contract with new rates and pipeline definitions adopted by Mexico’s regulator for the Rosarito system. No California rates change. No new capacity is added. The practical impact is administrative continuity. Nominations and billing stay synchronized across the border, reducing settlement friction for traders and preserving operational flexibility tied to Baja flows.
DIABLO CANYON
PG&E filed Advice Letter 7834-E, seeking CPUC approval to revise its electric tariffs to implement the directives of a decision from last December (D.25-12-007), which approved the 2026 Diablo Canyon extended operations forecast, the Volumetric Performance Fee spending plan, and related cost recovery mechanisms. (See CRI's coverage of that decision here.)
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PG&E proposes updates to the Department of Energy Litigation Balancing Account to create a new “Extended Operations” subaccount to track DOE litigation proceeds and associated costs attributable to Diablo Canyon Extended Operations Balancing Account activities, consistent with the decision’s allocation framework.
The revisions also update allocation percentages for DOE settlement credits across generation, extended operations, and nuclear decommissioning customers for 2026–2030, and establish monthly accounting and interest procedures for the new subaccount.
Protests are due March 2.
INSTANT ANALYSIS: This is a compliance filing, but it's notable. PG&E is proposing a new extended operations subaccount within its Department of Energy litigation balancing account to route federal reimbursement proceeds tied to Diablo Canyon into the dedicated extended operations cost-recovery mechanism This move formalizes the 2026–2030 allocation percentages among generation customers, extended operations customers, and nuclear decommissioning customers, shaping how future federal credits offset Diablo Canyon costs. No immediate rate change will result from this filing, but the structures it proposes will determine where settlement dollars flow.
PG&E COMPRESSOR STATION UPGRADES
PG&E submitted Advice Letter 5175-G, formally noticing its decision to proceed with the above-$75-million-threshold S-238 Hinkley Compressor Station Electrical Upgrades Project under the emergency exemption in General Order 177, rather than awaiting a CPCN decision (see related coverage from CRI here).
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- PG&E states that recent component failures and accelerating obsolescence (emerging after its April 2025 CPCN application) created a risk that the station’s aging electrical distribution equipment could fail before the Commission issues a decision later this year.
- Because the Hinkley station supports backbone Lines 300A and 300B on the Baja Path and is critical to maintaining system-wide gas pressure, PG&E argues that an unplanned outage could trigger Emergency Flow Orders or curtailments affecting customers across its gas system.
PG&E began construction on January 20, 2026, including installation of temporary generators to bypass vulnerable equipment, and expects completion by January 2028. With the project now underway pursuant to GO 177, PG&E has separately moved to withdraw the CPCN application, arguing that the proceeding no longer serves a purpose and that future review will shift to cost recovery in upcoming General Rate Cases rather than prospective project authorization.
INSTANT ANALYSIS: PG&E has now moved Hinkley fully into the GO 177 emergency lane, with construction already underway. If the Commission grants the withdrawal, the CPCN proceeding ends without a ruling on project necessity, and review shifts to later GRC cost recovery after capital is spent.
At issue is precedent. GO 177 exists to prevent delays during real emergencies. Here, a project already in CPCN review is being reclassified midstream. If that stands, the practical bar for invoking “anticipated emergency” on major backbone work drops. For shippers and large customers, leverage narrows to rate treatment. For advocates and staff, this becomes a test of how much prospective review can be bypassed when reliability risk is asserted.