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 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 and municipalities 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 ensure the rates that investor-owned 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. Currently in settlement discussions.
• 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.  Still awaiting a FERC Order. 

• PG&E TO18 Rate Case for March 2017 to February 2018 rate period (FERC Docket ER16-2320) – Protested and fully litigated. Numerous FERC Orders since October 2020 in favor of intervenors should result in refunds to ratepayers well in excess of $300 million.  A pending protest and rehearing requests are delaying issuance of refunds.
• PG&E TO19 Rate Case for March 2018 to April 2019 rate period (FERC Docket ER17-2154) – As the settled transmission revenue requirement for TO19 is 98.85% of the final non-appealable outcome of TO18, the eventual refunds to ratepayers from TO19 are dependent on resolution of TO18 and are expected to be even greater than those from TO18.
• 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.
• SCE TO2024 Annual Update filed November 17, 2023 (FERC Docket ER24-439) - Effective January 1, 2024. Final filing uncontested by the CPUC.
• 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.

 Stakeholder Processes:

• Transmission Project Review (TPR) Process, which was established with the passage of Resolution E-5252, began on January 2, 2024. PG&E will issue its first TPR Process data in May 2024 and SCE in June 2024.
• PG&E’s Stakeholder Transmission Asset Review (STAR) Process concludes in March 2024.
• SCE’s Stakeholder Review Process concluded in December 2023.

FERC Rulemakings, Technical Conferences and Policy Initiatives:

• 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. Awaiting a FERC order.
• 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.
• 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. Awaiting a FERC Order.
• Advance Notice of Proposed Rulemaking on Transmission Planning, Generator Interconnection, and Cost Allocation (FERC Docket RM21-17) - Comments and Reply Comments filed.
• 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).

Reliability Must Run and Black Start Agreements:

• Oakland RMR Agreement (FERC Docket ER23-254): On October 28, 2022, Oakland Power Company LLC filed an annual RMR agreement and informational filing for 2023.  CPUC filed a protest on November 18, 2022. Settlement in principle was reached, and Oakland filed an offer of settlement at FERC on February 5, 2024.  FERC accepted the settlement and interim rates on February 13, 2024.
• Sentinel Black Start Agreement (FERC Docket ER24-366): On November 8, 2023, Sentinel Energy Center, LLC filed a Black Start Agreement for the East Los Angeles Basin between CAISO and Sentinel to be effective January 8, 2024. CPUC filed a protest on November 29, 2023. FERC has set this proceeding for hearing and settlement procedures with the next settlement conference to be held on April 30, 2024.

Contact:

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