A2504006

Key events and scheduled submissions in the Southern California Gas Company (SoCalGas) microgrid optional tariff (MOT) proceeding are as follows:

- Application filing date: April 16, 2025
- Responses/protests due: 30 days after daily calendar notice (mid-May 2025)
- Replies to responses/protests: Within 10 days of responses/protests
- Prehearing conference: July 15, 2025 (SoCalGas proposal), or July 23, 2025 (SBUA proposal)
- Opening intervenor testimony: October 15, 2025 (SoCalGas proposal), or October/November 2025 (alternative proposals suggest up to one month extension)
- Concurrent rebuttal testimony: November 14, 2025
- Evidentiary hearings (if needed): December 2025–January 2026
- Opening briefs: January–March 2026
- Reply briefs: February–April 2026
- Proposed decision: May 2026
- Final decision: June 2026

The schedule may be further addressed or modified at the prehearing conference, and some parties have requested more time for evaluations, discovery, and stakeholder participation 1, 2, 1, 3, 3.

This docket concerns Southern California Gas Company's (SoCalGas) application to the California Public Utilities Commission (CPUC) for approval of a Microgrid Optional Tariff (MOT). The MOT would allow SoCalGas to offer customized, behind-the-meter and off-grid microgrid solutions to eligible non-residential customers in its service territory, targeting sectors such as data centers, EV charging, airports, hospitals, wastewater facilities, and other facilities needing high reliability and price consistency. Customers would pay a negotiated service fee that covers all costs, including capital and operations, with no subsidies or business risk borne by general utility ratepayers 1.

SoCalGas proposes to capitalize MOT assets as non-utility plant, excluding them from the general rate base to ensure that only MOT customers bear associated costs. The application includes mechanisms to track and credit back any ratepayer-funded costs used in developing the tariff, aiming to keep base ratepayers financially neutral 2. While SoCalGas claims the MOT will not increase rates for general ratepayers and will be solely funded by participating customers, parties such as Cal Advocates have protested, raising concerns about potential use of ratepayer-funded resources and the need for strict oversight to prevent unintended subsidies or risks to the broader ratepayer base 3. The docket is currently under review, with motions for party status granted to several advocacy groups and stakeholders 4.

The docket outlines several financial and timeline risks and concerns regarding SoCalGas's proposed Microgrid Optional Tariff (MOT):

Financial Risks and Concerns:
- There is concern that SoCalGas could use ratepayer-funded resources, approved for regulated utility operations, to support its for-profit microgrid business, potentially conflating utility obligations and commercial interests. This could result in unjustified subsidies or business risks being shifted to ratepayers if tracking, crediting, and repayment mechanisms are not strictly enforced or transparent 1, 1.
- The proposed approach allows privately negotiated rates between SoCalGas and MOT customers, which may lack sufficient commission oversight. This raises the risk that ratepayers could be under-credited or unintentionally subsidize portions of the microgrid business, particularly if a customer defaults on payments or in cases of cost misallocation 1.
- The structure introduces financial risk to ratepayers if reimbursement mechanisms are unclear or ineffective, and if appropriate risk mitigation (such as insurance requirements to protect ratepayers from customer nonpayment) is not implemented 1.
- Additional concerns include whether SoCalGas’s dual role as a regulated utility and market participant could cross-subsidize its for-profit microgrid activities, suppress fair competition, or require the commission to dedicate extra regulatory resources for oversight, which may not be justified for a primarily commercial venture 1, 1.

Timeline Risks and Concerns:
- The docket's proceeding timeline includes several steps: a prehearing conference (July 15, 2025), opening intervenor testimony (October 15, 2025), possible evidentiary hearings (December 2025), and a final CPUC decision expected in June 2026 2.
- Timeline risks arise from the need for further discovery and analysis, as new issues or concerns may be identified, which could delay the proceeding or require additional investigation and regulatory oversight 1, 1.
- The uncertainty around regulatory compliance, safety standards enforcement, and the evolving scope of issues to be addressed could introduce further procedural delays 1, 1.

In summary, the primary financial risks relate to possible cross-subsidization by ratepayers, insufficient tracking and repayment mechanisms, customer default, and the need for clear separation between utility and commercial operations. Timeline risks stem from the lengthy regulatory process, potential for new concerns to arise, and the complexity of ensuring adequate oversight.

Stakeholders in this docket include:

SoCalGas (Southern California Gas Company)
- Proposal: Seeks approval for a Microgrid Optional Tariff (MOT) to provide microgrid services to non-residential customers, funded only by enrolled customers.
- Position: Proponent of the MOT proposal.

California Hydrogen Business Council (CHBC)
- Position: Supports the MOT application. Cites benefits like reliability, resilience, environmental advantages, and minimal ratepayer impact 1.

Small Business Utility Advocates (SBUA)
- Position: Intervenor representing small commercial customers. Supports categorizing the proceeding as "ratesetting" and argues that evidentiary hearings may be needed. Seeks more meaningful access for small businesses and changes to the application to address barriers for small commercial customers 2, 2, 3.

Cal Advocates (Public Advocates Office at the CPUC)
- Position: Raises concerns about the use of ratepayer-funded resources, potential barriers to competition, and lack of clarity around safety and regulatory issues. Requests a more expansive schedule and more oversight 4, 5.

First Public H2 (First Public Hydrogen)
- Position: Opposes the MOT as currently structured. Argues SoCalGas is too dominant in the market, which could stifle innovation and competition. Prefers microgrid services be offered through an affiliate or under alternative frameworks to support emerging competitive markets 6, 6.

UCAN (Utility Consumers' Action Network)
- Position: Opposes the MOT, claiming it may be outside CPUC's jurisdiction and raises oversight/audit concerns 5.

SCGC (Southern California Generation Coalition)
- Position: Raises concerns about potential ratepayer funding of the program and insufficient oversight 5.

Bloom Energy Corporation and The Utility Reform Network (TURN)
- Position: Granted party status. Their specific positions are not detailed in the provided excerpts 7.

Summary Table:

- Supportive: SoCalGas, CHBC, SBUA (conditional, focusing on small business access)
- Opposed/Critical: Cal Advocates (concerns/oversight), First Public H2 (against current structure), UCAN (jurisdiction, oversight), SCGC (oversight)
- Neutral/Undisclosed: Bloom Energy, TURN (positions not specified in excerpts)

The main division is between proponents of the MOT (SoCalGas, CHBC) and parties seeking modifications or opposing the proposal due to competition, oversight, or access concerns (Cal Advocates, First Public H2, UCAN, SCGC, SBUA with conditions).

Areas of Growth Identified:
- Electrification: There is significant projected growth in electricity demand due to the electrification of the residential and commercial sectors, driven by state decarbonization goals and zero-emission appliance standards. This includes increased demand from the transportation sector (electric vehicle charging) and the expansion of data centers. For example, the California Energy Commission (CEC) forecasts a 33% increase in electricity sales in Southern California Edison’s territory by 2040 1.
- Critical Market Sectors: Key sectors expected to drive demand for microgrids include data centers, electric vehicle (EV) charging infrastructure, commercial and industrial facilities, educational and research institutions, critical facilities (such as hospitals and emergency services), and governmental facilities 2, 1.

Key Considerations for Each Area:
- Electrification:
- Infrastructure Challenges: The rapid increase in electric demand is leading to delayed interconnections, costly upgrades, and reliability challenges during peak periods 1.
- Affordability: Rising electric rates and infrastructure costs could impact affordability for customers. Microgrids are proposed as a solution to provide more price certainty and potentially mitigate increases in ratepayer costs for new infrastructure 2, 1.
- Reliability and Resilience: Increased electrification exposes customers to risks from grid outages and extreme weather events. Microgrids can provide backup power and improve resilience 2.
- Critical Market Sectors:
- Unmet Demand: There is currently unmet potential for microgrids in sectors such as data centers and EV charging, which require large and reliable power supplies 2.
- Economic Development: Enabling timely development of facilities with high energy needs (like data centers and EV charging infrastructure) is seen as a driver of local economic growth and job creation 1.
- Environmental Benefits: Microgrids can reduce reliance on diesel backup generators and gasoline vehicles, leading to air quality improvements in local communities 1.
- Policy Alignment: There is broad policy support for microgrid deployment as a means to support sustainability goals, provide reliability, and address affordability—all without additional costs to other ratepayers 2, 2.

In summary, the docket identifies electrification and growth in critical market sectors as key areas, with primary considerations being infrastructure readiness, affordability, reliability, local economic impact, and environmental benefits.