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Independent regulatory commissions

Federal Energy Regulatory Commission Orders San Diego Gas & Electric Company to Refund RTO Adder Citing State Law Involuntary Participation Requirement

Strategic Insights

— 2 min read

The Federal Energy Regulatory Commission has issued an order requiring San Diego Gas & Electric Company (SDG&E) to refund a 50-basis-point transmission owner formula rate case adder to the California Independent System Operator (CAISO) due to its involuntary participation in CAISO as mandated by state law. The order was issued on July 2, 2025, in response to a petition filed by the California Public Utility Commission, the California Department of Water Resources, and several California cities, which argued that SDG&E's participation in CAISO was involuntary and therefore it was no longer eligible for the RTO Adder.

Key Takeaways:

  • The Federal Energy Regulatory Commission has ordered San Diego Gas & Electric Company (SDG&E) to refund a 50-basis-point transmission owner formula rate case adder to the California Independent System Operator (CAISO).
  • The order was issued due to SDG&E's involuntary participation in CAISO, as mandated by state law, and cites a provision in the 2019 TO5 Settlement that requires the refund if the Commission issues an order ruling that California investor-owned utilities are no longer eligible for the CAISO adder.
  • The order is in line with previous decisions, including the PG&E Adder Order and the Viridon case, which found that California IOUs are required to participate in CAISO under state law.
  • The Commission declined to consider arguments from SDG&E and other California IOUs that they were eligible for the RTO Adder under California law, finding that this would constitute a collateral attack on the PG&E Orders.
  • The refund is triggered by the PG&E Orders and the Viridon case, which found that California IOUs are no longer eligible for the RTO Adder.
  • The order also found that the Adder Refund Provision of the 2019 TO5 Settlement has been triggered, as the Commission has issued orders finding that California investor-owned utilities are no longer eligible for the CAISO adder.

Statistics:

  • SDG&E will refund a 50-basis-point adder to CAISO.
  • The refund is triggered by the PG&E Orders and the Viridon case.
  • The Commission has issued orders finding that California investor-owned utilities are no longer eligible for the CAISO adder.
  • The order was issued on July 2, 2025.
  • The 2019 TO5 Settlement requires a refund if the Commission issues an order ruling that California investor-owned utilities are no longer eligible for the CAISO adder.

Sources:

  • Federal Energy Regulatory Commission, Opinion, Document Accession #: 20250702-3036, Filed Date: 07/02/2025.
  • California Public Utilities Code, section 362(c).
  • California Assembly Bill 209, Chapter 251 of the Statutes of 2022.

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