As data centers and other large load customers seek to connect to California’s power grid, the California Public Utilities Commission (Commission) is rethinking how—and when—those customers should be refunded for costly transmission infrastructure upgrades.
Historically, distribution-level interconnection customers paid up front and received swift refunds under PG&E’s Base Annual Revenue Calculation (BARC) methodology. But the growing scale of transmission-level projects has prompted the Commission to take a closer look at refund timing and methodology.
In the absence of a finalized framework, recent Commission decisions on agreements with STACK Infrastructure (STACK) and Microsoft suggest a shift toward more conservative refund policies—potentially setting the tone for future interconnections under PG&E’s proposed Electric Rule 30.
Key takeaways:
- Interim Rule 30 approved—but with caveats. The Commission conditionally approved PG&E’s new Electric Rule 30 for transmission-level interconnections, requiring customers to pay up front, with refund rules still under review.
- Refunds paid back slower. In the STACK and Microsoft cases, the Commission capped annual refunds at 75% of net revenues and extended the refund window to 15 years—delaying recovery compared to traditional BARC terms.
- Precedent not yet set. The Commission emphasized that these cases do not set precedent for the ongoing Electric Rule 30 proceeding, nonetheless they may offer clues about the direction the Commission may take.
- Google next in line. PG&E’s proposal for Google’s 250 MW data center requests use of the traditional BARC model but faces opposition from the Public Advocates Office, which urges consistency with the STACK and Microsoft resolutions.
- Final Rule 30 decision pending. Parties will file briefs this spring, with the CPUC expected to weigh in on cost allocation and refund methodology later this year.
Read the full article for a deeper dive into how California is balancing grid expansion with cost recovery for large transmission-level interconnections.