WEDNESDAY AGGREGATE: PG&E's Yield Spread Adjustment; SDG&E TIMPBA Settlement; the RA Market Price Benchmark
Today's roundup is heavy on SDG&E filings. Topics covered include:
- PG&E's implementation of a Yield Spread Adjustment, as authorized by the CPUC in its 2026 Cost of Capital decision;
- An amended joint motion filed by SDG&E and Cal Advocates that seeks approval of a settlement resolving SDG&E’s application to recover Transmission Integrity Management Program Balancing Account costs from January 2019 through December 2023;
- SDG&E's response to an application for rehearing filed by two CCAs in which the CCAs argue that the CPUC unlawfully set Power Charge Indifference Adjustment rates by retroactively applying a new Resource Adequacy Market Price Benchmark methodology to 2025 costs;
- A draft resolution approving two SDG&E mid-term reliability contracts resulting from the company's Tranche 3 solicitation, authorizing a combined 92 MW of standalone battery energy storage projects; and
- A ruling requiring PG&E to explain why it filed its recent gas-line subsidy application without including the non-residential gas line extension allowance calculations expressly required by prior Commission direction.
PG&E RATES/COST OF CAPITAL
PG&E filed an advice letter to implement the Yield Spread Adjustment (YSA) authorized in the CPUC's 2026 Cost of Capital decision, establishing how interest will be calculated on balancing and memorandum accounts beginning January 1, 2026.
The YSA is designed to reflect the difference between PG&E’s actual short-term borrowing costs and the three-month Commercial Paper rate historically used for regulatory interest. For 2026, the YSA is set at 125 basis points, based on a 12-month average spread.
| Month | PG&E Rate | H.15 CP (90-Day) | Spread |
|---|---|---|---|
| Nov 2024 | 5.84% | 4.57% | 1.27% |
| Dec 2024 | 5.53% | 4.43% | 1.10% |
| Jan 2025 | 5.44% | 4.23% | 1.21% |
| Feb 2025 | 5.45% | 4.27% | 1.18% |
| Mar 2025 | 5.45% | 4.28% | 1.17% |
| Apr 2025 | 5.45% | 4.32% | 1.13% |
| May 2025 | 5.45% | 4.30% | 1.15% |
| Jun 2025 | 5.46% | 4.32% | 1.14% |
| Jul 2025 | 5.55% | 4.30% | 1.25% |
| Aug 2025 | 5.52% | 4.20% | 1.32% |
| Sep 2025 | 5.54% | 4.01% | 1.53% |
| Oct 2025 | 5.42% | 3.90% | 1.52% |
| Average | 5.51% | 4.26% | 1.25% |
| Source: PG&E Advice Letter 5169-G/7818-E (Jan. 20, 2026). Weighted average reflects PG&E Revolving Credit Facility, AR Facility, 364-Day Floating-Rate Note, and Term Loan. | |||
PG&E is implementing this adjustment across 174 gas and electric balancing and memorandum accounts by revising preliminary statements so that monthly interest accrues at the Commercial Paper rate plus the authorized spread.
The adjustment is temporary, expiring at the end of 2028 (or earlier if PG&E regains access to Tier 1 commercial paper markets), and PG&E claims the filing does not change customer rates or charges. Rather, the filing affects how under- and over-collections accrue carrying costs during that period. Protests are due February 9.
INSTANT ANALYSIS: PG&E’s filing implements a subtle but important element of the CPUC's 2026 Cost of Capital decision: how interest is calculated on regulatory under- and over-collections. By adding a 125-basis-point Yield Spread Adjustment to the Commercial Paper rate, the CPUC is recognizing that PG&E’s actual short-term borrowing costs are higher than the proxy rate long used for balancing and memorandum accounts. While the advice letter does not change rates today, it increases the interest accruing on large, long-lived accounts, expanding the eventual revenue requirement tied to wildfire costs, procurement balances, ERRA, and other major tracking mechanisms if balances persist. For parties and large customers, this heightens the importance of procedural timing: regulatory delays now carry a higher financing cost that will surface later in rates, rather than being absorbed at the lower proxy rate.
SDG&E RATES
SDG&E and Cal Advocates filed an amended joint motion seeking CPUC approval of a settlement resolving SDG&E’s application to recover Transmission Integrity Management Program Balancing Account costs from January 2019 through December 2023.
The settlement approves recovery of $6.985 million, reflecting a $0.428 million disallowance from SDG&E’s original $7.4 million request, largely tied to disputed O&M labor, related overheads, and interest.
- The costs stem from expanded federal pipeline safety requirements and updated Pipeline and Hazardous Materials Safety Administration guidance that increased TIMP scope beyond what was forecast in SDG&E’s 2019 General Rate Case.
- The $7.4 million request represents the remaining unrecovered portion of the TY 2019 GRC cycle, specifically covering August 1, 2023 through December 31, 2023, out of $128.7 million in total TIMP expenditures over the full five-year period.
Following discovery, testimony, and negotiations, the parties agreed the reduced amount represents a reasonable compromise that avoids further litigation. If adopted, SDG&E would implement the updated revenue requirement in 30 days, via advice letter, with rates adjusted on the first day of the following month or alongside other authorized rate changes.
INSTANT ANALYSIS: This settlement reinforces how closely the CPUC is scrutinizing incrementality in post-GRC balancing accounts. Cal Advocates did not contest that federal PHMSA rule changes expanded TIMP scope; the dispute involved whether SDG&E demonstrated that the added work required incremental labor, rather than redeploying base-funded staff. The modest $0.428 million disallowance (well below Cal Advocates’ request) suggests SDG&E largely carried its burden on program necessity, but fell short on labor and overhead documentation.
Going forward, two signals matter: Activity-by-activity incrementality arguments remain viable, but only with clean staffing records; broad Risk Spending Accountability Report overspend arguments are not enough. At the same time, Cal Advocates’ choice not to challenge cost allocation leaves the Commission's 2024 Cost Allocation Proceeding decision (D.24-07-009) intact as the default framework for transmission balancing accounts. The takeaway for utilities is straightforward: federally driven safety work remains recoverable, but the evidentiary bar on labor proof continues to rise.
SDG&E RATES/MARKET PRICE BENCHMARK
SDG&E filed a response urging the CPUC to deny San Diego Community Power and Clean Energy Alliance’s application for rehearing of a 2025 decision (D.25-12-008) on SDG&E's 2026 ERRA Forecast submission.
SDG&E argues that the rehearing request is an improper collateral attack on the CPUC’s earlier decision adopting a revised Resource Adequacy Market Price Benchmark methodology, D.25-06-049. (See CRI's review of the application for rehearing here.)
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- SDG&E contends the CCAs are attempting to relitigate policy issues already decided, rather than identifying any independent legal error in the ERRA forecast decision itself. SDG&E notes that Cal CCA already sought rehearing of D.25-06-049 itself, which the Commission denied in D.25-10-061, making this the CCAs' third attempt to challenge the same methodology, for all intents and purposes.
- The utility argues that D.25-12-008 merely implemented binding Commission policy by applying the revised Resource Adequacy Market Price Benchmark methodology to the 2025 PCIA true-up, as required, and that neither a pending writ nor disagreement with Commission policy suspends the effectiveness of a final decision.
- SDG&E further asserts the Commission was not required to calculate alternative benchmarks under a methodology it has rejected and that the decision contains sufficient findings for review.
INSTANT ANALYSIS: SDG&E is asking the CPUC to summarily reject the CCAs’ rehearing request, framing it as a procedurally improper attempt to relitigate the Resource Adequacy Market Price Benchmark overhaul adopted in D.25-06-049. SDG&E argues the rehearing does not identify any standalone legal defect in the ERRA forecast decision itself, but instead seeks to unwind settled policy by challenging its application to the 2025 PCIA true-up. If accepted, SDG&E warns the rehearing would undermine Commission finality, destabilize PCIA administration, and invite serial collateral attacks each time a binding ratemaking methodology is applied.
SDG&E ENERGY STORAGE
The CPUC issued Draft Resolution E-5446, which approved two SDG&E mid-term reliability contracts resulting from the company's Tranche 3 solicitation, authorizing a combined 92 MW of standalone battery energy storage projects expected to come online June 1, 2027.
The resolution approves a 44 MW four-hour battery and a 48 MW eight-hour battery, both under 15-year tolling agreements with Golden Fields Solar VI, LLC (a Clearway project), procured to help SDG&E meet its mid-term reliability obligations under prior Integrated Resource Planning decisions.
Energy Division found the contracts were supported by a competitive least-cost/best-fit solicitation process overseen by an independent evaluator, and reasonable despite price adjustments driven by evolving supply-chain and tariff conditions.
Contract costs remain confidential, but the draft resolution approves SDG&E’s proposed cost recovery through the Power Charge Indifference Adjustment, allocating the eight-hour battery costs to the 2021 vintage and the four-hour battery costs to the 2023 vintage, with charges borne by bundled and departing-load customers as applicable.
The earliest the CPUC will consider this item is February 26.
INSTANT ANALYSIS: This draft resolution continues the CPUC’s steady build-out of mid-term reliability resources through utility-contracted storage rather than new generation, with SDG&E adding 92 MW of standalone battery capacity timed for a June 2027 online date. While contract pricing remains confidential, the draft resolution locks in long-duration (8-hour) and shorter-duration (4-hour) storage as compliance tools under the IRP-driven mid-term reliability framework, reinforcing storage's role as a reliability resource under California's capacity planning framework rather than a bridge to new gas.
The PCIA vintage split is notable: costs are explicitly assigned to 2021 and 2023 vintages, ensuring that departing load customers share in the cost responsibility and limiting future cost-shift disputes. More broadly, the approval suggests continued regulatory comfort with negotiated price adjustments in response to tariff and supply-chain volatility, provided utilities can demonstrate least-cost/best-fit outcomes under independent evaluator review.
GAS LINE SUBSIDIES
Administrative Law Judge Elaine Lau issued a ruling requiring PG&E to explain why it filed its gas-line subsidy application without including the non-residential gas line extension allowance calculations expressly required by prior Commission direction.
The ruling notes that PG&E moved to withdraw the application, stating it lacked sufficient information to comply with the Assigned Commissioner’s Scoping Memo, which itself restated requirements adopted in a 2022 decision (D.22-09-026). That decision obligates utilities to quantify, on a project-by-project basis, how much proposed gas line subsidies would cost ratepayers using current allowance methodologies and inputs.
Because PG&E filed the application without this information, the ALJ directs the utility to provide an explanation by February 6, addressing why the filing proceeded despite the missing calculations that are central to evaluating the reasonableness of the requested subsidies.
INSTANT ANALYSIS: This ruling puts PG&E on the defensive procedurally and reinforces the CPUC’s intolerance for incomplete gas-line subsidy filings. By explicitly tying the Scoping Memo to D.22-09-026, the ALJ makes clear that non-residential gas line extension allowance calculations are not a discretionary detail but a threshold requirement for ratepayer cost scrutiny. PG&E’s attempt to withdraw the application rather than supplement it invites a deeper question from the Commission (i.e., why the filing proceeded at all without the required project-level cost data). Practically, this suggests heightened scrutiny of future gas-line subsidy requests and a clear expectation that utilities quantify ratepayer exposure upfront, particularly as California continues to narrow the policy aperture for new or expanded gas infrastructure.
LOW-INCOME SUBSIDIES
SoCalGas and SDG&E have each filed applications seeking approval of their income-qualified customer assistance programs:
- Energy Savings Assistance (ESA);
- California Alternate Rates for Energy (CARE); and
- For SDG&E, Family Electric Rate Assistance (FERA).
These applications pertain to the 2028–2033 program cycle, following the framework established in a 2021 decision (D.21-06-015). and subsequent bridge-funding actions.
Both utilities emphasize program continuity, affordability, and administrative stability through another six-year cycle, while proposing reforms motivated by lessons from the 2021–2026 period.
SDG&E requests approximately $1.6 billion in total funding across ESA, CARE, and FERA. Under this proposal, SDG&E would maintain core program structures while adding an ESA electrification pilot, moving natural-gas appliance testing costs into ESA, shifting its multifamily whole-building program to local administration, and increasing flexibility in fund-shifting and administrative caps.
For CARE, SDG&E seeks to strengthen program integrity by increasing post-enrollment verification caps and removing the National School Lunch Program from categorical eligibility. For FERA, it proposes automatic enrollment pathways tied to Low Income Home Energy Assistance Program data sharing, higher capitation fees, and expanded outreach to reach newly eligible households after Senate Bill 1130.
SoCalGas requests $1.20 billion for CARE and approximately $800 million for ESA over the six-year cycle. SoCalGas proposes to continue ESA and CARE largely intact, with incremental budget updates reflecting inflation, labor costs, and enrollment growth. SoCalGas also proposes to return multifamily ESA delivery to local administration, update cost-effectiveness parameters, maintain the statewide "Community Help and Awareness of Natural Gas and Electricity Services" outreach program, and modernize CARE enrollment, verification, and communications tools.
INSTANT ANALYSIS: SoCalGas and SDG&E are asking the CPUC to approve large, multi-year funding extensions for these well-known programs as a continuing buffer against rising energy bills. The filings highlight how income-qualified programs are increasingly being used to manage affordability as underlying rates continue to climb.
For CRI's analysis of equivalent filings from PG&E and SCE, click the links below.
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