WEDNESDAY AGGREGATE: CPUC Tests Appetite for Broader Flexible Connections

Good morning, the most consequential item in today’s aggregate is the CPUC’s push to expand flexible service connections, with comments due July 21. A new proposal from Commissioner Darcie Houck would move constrained circuits away from being automatic upgrade triggers and toward being managed service conditions. Under the proposal, customers could connect under defined operating limits while utilities, DERs and grid-edge tools manage capacity constraints.

Additionally, SoCalGas and PG&E are testing the exception process left over from the CPUC's 2022 gas-line subsidy decision, and PG&E requests a $26.6 million shareholder award for a natural gas procurement year the CPUC later investigated.

DISTRIBUTED ENERGY RESOURCES/GRID MODERNIZATION

The CPUC is seeking comments on an Assigned Commissioner's proposal to expand flexible service connections in its High DER grid-modernization proceeding. (A full summary of the proposal can be found here.)

The proposal aims to connect customers to the distribution grid faster by using existing capacity more efficiently rather than waiting for conventional upgrades. The ruling frames flexible connections as a way for DERs, power control systems and DERMS tools to provide near-term energization options while maintaining safety and reliability and containing ratepayer costs.

The investor-owned utilities must respond by July 14 to questions on grid-edge DERMS efforts, including PG&E's technology-provider workshops and any SCE or SDG&E work using local measurement, computation and power control systems to manage capacity constraints.

All parties must file initial comments by July 21 and replies by July 28 on the overall proposal, covering:

• Implementation feasibility;
• Cost-and-benefit tracking;
• Safeguards against proprietary lock-in;
• Safety issues; and
• A recommendation directing SDG&E to stand up a static flexible service connection offering aligned with requirements already imposed on PG&E and SCE.

A separate question seeks input on cybersecurity testing and certification programs.

INSTANT ANALYSIS: The CPUC is moving flexible interconnection past the pilot stage. A 2026 decision (D.26-02-025) already ordered PG&E and SCE to stand up static flexible service connection offerings. This ruling extends the framework: it circulates Commissioner Houck's proposal for comment, proposes the same static offering for SDG&E, and asks how to measure whether any of it saves ratepayers money.

Instead of treating a constrained circuit as an automatic trigger for upgrades and multi-year energization delays, customers and DERs would take service under defined operating limits. Developers, large-load customers, aggregators, Community Choice Aggregators, and the utilities themselves all have money riding on how those limits get set.

PG&E must file the workshop materials from its grid-edge DERMS technology-provider collaborations (actual work products, not summaries). SCE and SDG&E must file whatever exists documenting comparable efforts using local measurement, computation and power control systems. Those filings will show which utilities have built something and which have been attending meetings. The Commission has already noted that Enterprise DERMS doesn't scale for many of these scenarios and that grid-edge planning, progress and costs remain opaque.

GAS TRANSITION

SoCalGas and PG&E each filed CPUC applications on July 1 under the exception process created by a 2022 decision (D.22-09-026), which eliminated gas-line extension subsidies.

• SoCalGas is seeking allowances for seven non-residential projects (six renewable natural gas refueling stations and one beverage manufacturer) totaling an estimated $5.292 million. This is SoCalGas's second annual filing; the first, A.25-07-001, is still pending. Recovery would run through a new Gas Line Extension Allowance Balancing Account after each project's three-year true-up period.
  • The lifetime revenue requirement across the seven projects is estimated at $11.9 million, with a peak-year 2032 requirement of $722,000. The residential bill impact at peak is approximately 0.04 cents per month. SoCalGas is also proposing an updated allowance multiplier of 3.6, up from 3.1 in the prior filing.
• PG&E received 17 non-residential subsidy requests and is advancing one: the San Francisco Public Utilities Commission's wastewater project, which would upgrade municipal biogas into pipeline renewable natural gas. PG&E estimates the project would reduce GHG emissions by 14,200 metric tons of CO2e annually, and puts the maximum subsidy at $3,215,964, a figure it says ratepayers would recover through project revenues in about eight months.
  • PG&E's application includes an explicit disclaimer: it does not independently verify the SFPUC's technical, engineering, or financial claims.

INSTANT ANALYSIS: Rate impacts are negligible. D.22-09-026 ended gas line subsidies to advance building decarbonization, but left an opening for projects that can demonstrate GHG benefits and no feasible electrification path. SoCalGas and PG&E are now defining what fits through that opening, and in both cases the answer is primarily RNG.

SHAREHOLDER REWARDS

PG&E filed an application requesting a $26,629,484 shareholder award for Year 30 of its Core Procurement Incentive Mechanism, covering gas procurement from November 2022 through October 2023. The filing is the company's first CPIM award request submitted as a formal application rather than an advice letter, a change the CPUC ordered after its investigation into the winter 2022-23 gas price spike.

PG&E reports actual gas costs of $2.086 billion against a benchmark of $2.283 billion, which is 91.4% of the benchmark, or $196.8 million in savings. Of that, $177.1 million fell below the tolerance band and is subject to sharing. Customers will keep $170.2 million. The shareholder award, capped at 1.5% of annual gas commodity costs, comes to $26.6 million; without the cap it would have been $35.4 million. PG&E used no physical hedges during the year and took no award for Year 29.

A companion motion asks the Commission to keep the unredacted report under seal as market-sensitive commercial data. PG&E estimates the award's rate impact at $0.01307 per therm.

INSTANT ANALYSIS: The award year overlaps with the winter gas-price spike that produced the process PG&E is now filing under. PG&E beat its benchmark by $197 million during a period the CPUC spent three years investigating, and the first test of the new application format is a request to pay shareholders $26.6 million for performance during it.

The formula favors PG&E. Customers keep $170 million, the cap trimmed $8.8 million off the uncapped award, and D.26-02-028 already cleared the gas utilities of causing the spike. The open question is whether Cal Advocates treats this as the same limited review it ran under the advice-letter process or uses the application format to examine what the benchmark actually measured in a year of extreme volatility. A benchmark built from index prices inflates alongside the market. Beating an inflated benchmark by 8.6% is not the same achievement as beating a normal one.