Electric Transmission Rates and FERC Proceedings

Electric Transmission Rates and Related FERC Proceedings

A California consumer’s electric bill reflects a variety of separate charges associated with providing electric services that are “bundled” into a single amount. Part of the charges on a bill are used to pay for electric transmission service, which is the part of the electric grid that is typically at a higher voltage and is considered to be part of an interstate system. Unlike the CPUC-regulated local distribution system, because transmission infrastructure is considered to be interstate, it is regulated by the Federal Energy Regulatory Commission (FERC).

In California, while the flow of energy on the transmission grid is controlled by the California Independent System Operator (CAISO), three investor-owned utilities (IOUs) own most of the transmission facilities: Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E). These transmission owners are required to provide transmission service at just and reasonable rates. The rates cover the costs of providing transmission service, as well as a rate of return on associated capital investments. The total cost of construction, maintenance, and operation, including the return on investment, is referred to as a utility’s transmission revenue requirement.

The collective revenue requirements for all of the participating transmission owners in the CAISO region determine the Transmission Access Charge (TAC) rate, which is charged to electric customers (i.e., ratepayers).

Because transmission rates are subject to oversight by FERC, the transmission revenue requirements of the various utilities that participate in the CAISO are determined in transmission owner rate case proceedings at FERC.  The CPUC - along with other stakeholders – intervenes as a party in these rate cases to help ensure the rates that electric utilities charge for transmission service are just and reasonable.

By statute, the CPUC has the responsibility to represent the interests of the People of the State of California, including retail electric ratepayers, in legal proceedings before FERC.

Below are some of the FERC cases where the CPUC has intervened or otherwise engaged on behalf of California ratepayers:

Transmission Owner Rate Cases:

• PG&E TO21 Rate Case, formula rate filed October 13, 2023 (FERC Docket ER24-96) – Effective January 1, 2024. Protested by the CPUC on November 3, 2023. In the Order setting the case for hearing and settlement procedures, FERC summarily disposed of PG&E’s request to receive a 50-basis point return on equity (ROE) incentive adder for participation in the CAISO, determining that CAISO participation is not voluntary. In the remainder of the rate case, parties reached agreement in principle in December 2024.
• PG&E TO20 Rate Case, Rate Year 2023 Annual Update filed December 1, 2022 (FERC Docket ER19-13) – Effective January 1, 2023.  Protested by the CPUC on December 28, 2022.  Awaiting Order from FERC.
• PG&E TO20 Rate Case, Rate Year 2022 Annual Update filed December 1, 2021 (FERC Docket ER19-13) – Effective January 1, 2022. Protested by the CPUC on December 22, 2021.  On October 8, 2024, FERC issued an Order on CPUC’s Protest of the Rate Year 2022 Annual Update.  Among other things, FERC determined that vegetation management for existing right-of-way expansion cannot be capitalized and set fire related costs attributable to the Camp Fire, as well as insurance proceeds tracking, for hearing and settlement. 
• PG&E TO18 Rate Case for March 2017 to February 2018 rate period (FERC Docket ER16-2320) – An offer of settlement was approved by FERC on August 22, 2024.  The settlement fully resolved all issues in the TO18 rate case, as well as issues in TO19 and TO20 that were contingent on the outcome of TO18. The settlement will refund to transmission customers $236.2 million for TO18, $357.7 million for TO19, and $405 million for TO20, plus interest.  
• PG&E TO19 Rate Case for March 2018 to April 2019 rate period (FERC Docket ER17-2154) – As explained above, the approved TO18 settlement resolved remaining issues in TO19.
• SCE TO2025 Annual Update filed November 22, 2024 (FERC Docket ER25-550) - Effective January 1, 2025. Final filing uncontested by the CPUC.
• SCE TO2024 Annual Update filed November 17, 2023 (FERC Docket ER24-439) - Effective January 1, 2024. Final filing uncontested by the CPUC.
• SCE TO2023 Annual Update filed November 18, 2022 (FERC Docket ER19-1553) – Effective January 1, 2023. Protested by the CPUC on December 9, 2022.  Awaiting Order from FERC.
• SDG&E TO6 Cycle 1 new formula rate filed on October 30, 2024 (FERC Docket ER25-270) with proposed effective date of January 1, 2025. Protested by the CPUC on November 20, 2024.  Awaiting action by FERC on our Protest.
• SDG&E TO5 Cycle 6 Annual Update filed December 1, 2023 (FERC Docket ER24-524) – Effective January 1, 2024.  Final filing uncontested by the CPUC. 

Transmission Project Review (TPR) Process:

• The Transmission Project Review (TPR) Process, which was established with the passage of Resolution E-5252, began on January 2, 2024. The TPR Process is a uniform process for the CPUC and Stakeholders to review PG&E’s, SCE’s, and SDG&E’s capital transmission projects and to engage with the IOUs on historical, current, and forecast transmission projects.Each of the three IOUs participates in a repeating six-month cycle that begins with a data release from the utility, followed by multiple series of Stakeholder data requests/questions requiring the utility’s responses, and a Stakeholder Meeting. A CPUC TPR Process webpage is regularly updated with current scheduling, recent activity, and links to each utility’s TPR Process portal.

  FERC Rulemakings, Technical Conferences and Policy Initiatives:

• Notice of Proposed Rulemaking (NOPR), Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection, issued April 21, 2022 (FERC Docket RM21-17) – Initial Comments submitted on August 17, 2022 - CPUC Initial Comments. Reply Comments submitted on September 19, 2022 - Reply Comments. FERC issued Order 1920 on May 13, 2024, with further clarification in Order 1920-A on November 21, 2024.

• Advance Notice of Proposed Rulemaking on Transmission Planning, Generator Interconnection, and Cost Allocation (FERC Docket RM21-17) - Comments and Reply Comments filed. FERC issued Order 1920 on May 13, 2024, with further clarification in Order 1920-A on November 21, 2024.
• Notice of Proposed Rulemaking on Applications for Permits to Site Interstate Electric Transmission Facilities, issued on December 15, 2022 (FERC Docket RM22-7). CPUC Staff Comments filed on May 17, 2023. FERC issued Order 1977 on May 13, 2024, with further clarification in Order 1977-A on October 17, 2024.
• Technical Conference on Transmission Planning and Cost Management, October 6, 2022 (FERC Docket AD22-8).  Pre-Conference Summary Statement filed on September 16, 2022. Post-Conference Comments were filed on March 23, 2023. Awaiting FERC action in this Docket.
• Notice of Inquiry on Rate Recovery, Reporting, and Accounting Treatment of Industry Association Dues and Certain Civic, Political, and Related Expenses (FERC Docket RM22-5) - Joint Comments and Joint Reply Comments filed.  Awaiting a FERC Order.
• Supplemental Notice of Proposed Rulemaking on Electric Transmission Incentives Policy Under Section 219 of the Federal Power Act (FERC Docket RM20-10) - Joint Comments and Joint Reply Comments filed.  Awaiting a FERC Order.
• Notice of Proposed Rulemaking on Electric Transmission Incentives Policy Under Section 219 of the Federal Power Act (FERC Docket RM20-10) - Comments filed.  Awaiting a FERC Order.
• Joint Federal-State Electric Transmission Task Force (FERC Docket AD21-15). Between 2021 and 2024, Commissioners Rechtschaffen and Houck represented the Western Region of the United States on this Task Force.

Black Start Agreements:

• Sentinel Black Start Agreement (FERC Docket ER24-366): On November 8, 2023, Sentinel Energy Center, LLC filed at FERC a Black Start Agreement with CAISO and SCE for the East Los Angeles Basin to be effective January 8, 2024. The CPUC filed a protest on November 29, 2023. Sentinel re-filed under FERC Docket No. ER25-58 on October 8, 2024. The CPUC again protested the terms of the agreement, and the consolidated dockets are currently in settlement discussions.

Contact:

Simon Hurd, Supervisor; Simon.Hurd@cpuc.ca.gov