Protecting California Electricity Customers - CPUC Transmission Advocacy at FERC

Every dollar spent on electricity matters to California families, businesses, and communities. A significant portion of what Californians pay in their utility bill supports the transmission system - the high-voltage network of power lines that moves electricity across regions and state lines. Because transmission infrastructure is part of an interstate network, the Federal Energy Regulatory Commission (FERC) regulates transmission rates. These federal decisions influence the costs that eventually show up on the electric bills of customers of investor-owned utilities, which are regulated by the California Public Utilities Commission (CPUC).

The CPUC’s Energy and Legal Divisions participate in FERC transmission proceedings on behalf of California’s utility customers to ensure that transmission costs are transparent, justified, and fairly reflected in what customers pay. Over the last decade, the CPUC’s intervention in transmission owner rate cases at FERC has saved ratepayers more than $5 billion, while the transmission stakeholder processes initiated by the CPUC have yielded more than $1 billion in additional long-term ratepayer savings.

Why This Matters to Californians

Transmission costs are large and long-lasting. Transmission investments are typically paid for by utility customers over many years in rates. If transmission costs are not carefully reviewed and justified, they can become a greater long-term burden on customers than they already are, especially if utilities seek recovery of costs that are premature, misclassified, or unsupported.

Because FERC sets interstate transmission rates, Californians rely on state-level oversight and advocacy by the CPUC to make sure those federal decisions don’t result in unnecessary or unreasonable charges for electricity customers in California. The CPUC serves as the guardian of California customer interests in these multi-jurisdictional regulatory environments.

What is FERC and What Does It Do?

FERC is the federal agency that:

• Regulates transmission rates for electric utilities whose facilities operate across state lines

• Reviews and approves cost recovery mechanisms for transmission owners at the wholesale level

• Oversees reliability standards for the bulk power system

• Regulates wholesale power markets

FERC’s authority is fundamentally different from the CPUC’s authority. While FERC sets interstate transmission rates, the CPUC is responsible for retail electric rates in California, the part of the bill that customers pay for the local electric distribution system.

Because transmission costs approved at FERC ultimately flow into state rates, the CPUC tracks and participates in these federal proceedings to represent California customers and advocate for fair cost outcomes.

CPUC’s Role in FERC Cost Recovery Proceedings

The CPUC, in collaboration with wholesale transmission customers, participates in FERC transmission rate cases as a formal party with the goal of ensuring that costs are just and reasonable for California customers. This includes:

• Reviewing utility cost filings submitted at FERC

• Challenging claims that do not have adequate justification

• Providing technical analysis on cost classifications and project status

• Advocating for rate limits, credits, or adjustments for customers when appropriate

Under California statute, the CPUC is charged with representing the interests of retail electric customers in federal cost recovery. This means that CPUC staff bring expert scrutiny to complex federal filings on behalf of California customers.

“FERC presumes that the costs utilities include in their rate cases are prudent,” said Simon Hurd, Program and Project Supervisor in the CPUC’s FERC Cost Recovery Section. “As a result, the CPUC needs to advocate on behalf of ratepayers to make sure that the costs that utilities are able to recover from Californians are just and reasonable.”

Transmission Project Review Process

To support its oversight work, the CPUC established the Transmission Project Review (TPR) Process to improve transparency and data availability for transmission projects that are subject to cost recovery at FERC.

The TPR Process:

• Creates a uniform method for investor-owned utilities to report information semi-annually on capital transmission projects

• Provides standardized transmission project data from utilities on status, cost, schedules, and scopes

• Supports stakeholder review and questions through a structured inquiry process

• Requires the utilities to convene stakeholder meetings

The goal is to provide robust, consistent data on transmission investments so that regulators, stakeholders, and the public can assess whether projects are proceeding as expected and are justified before costs are filed for recovery at FERC.

This process allows CPUC staff and stakeholders to identify potential issues early, such as scope and status of projects, cost increases, or project delays that may impact ratepayers, and potentially raise these issues in cost recovery proceedings for informed decision-making at FERC.

With tens of billions of dollars in new transmission investment needed in the next 20 years to meet forecasted load and clean energy goals, the ability to monitor the progress and costs of projects in the TPR Process is an important step in the efforts to control transmission costs and keep achievement of California’s environmental goals affordable for customers.

How the Process Works Together

When utilities file transmission rate cases at FERC, CPUC staff participate as intervenors on behalf of California investor-owned utility customers, who bear the burden of approximately 90 percent of the approved transmission costs in California. In an effort to keep overall transmission costs just and reasonable, the CPUC works collaboratively with wholesale transmission customers, such as the California Department of Water Resources State Water Project; the Six Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside; and the Northern California Power Agency. They review filings, question unsupported costs, and submit technical and legal arguments.

Meanwhile, the TPR Process provides project tracking data that strengthens that review by giving the CPUC and stakeholders a reliable dataset on historical, current, and forecast transmission investments.

“This multi-stage framework of data collection and oversight through the TPR Process coupled with advocacy at FERC forms a comprehensive effort to protect California customers,” said Hurd.

Bottom Line

Transmission cost recovery is a complex area of federal jurisdiction outside of state regulation. While FERC sets transmission rates, the CPUC represents California retail customers by:

• Participating in federal proceedings

• Reviewing federal cost recovery filings

• Tracking projects and costs through the TPR Process

• Advocating for utilities to meet legal standards before costs are passed on to customers

Through this work, CPUC advocacy helps ensure that transmission costs reflected in California electric bills are fair, justified, and appropriately supported. The CPUC works to deliver real, measurable protection for California households and businesses.

Learn More

• Transmission Project Review Process

• Electric Transmission Rates and FERC Proceedings

By Adam Cranfill, Public Information Officer