Debate sharpens over who pays as PG&E’s Rule 30 and SB 57 bring cost allocation into focus
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Summary
PG&E’s proposed Rule 30 interconnection tariff and CPUC’s SB 57 study were central to a hearing debate on how to allocate interconnection and generation costs, with PG&E arguing for customer‑funded interconnection and the Public Advocates office warning assumptions risk shifting costs to ratepayers.
The California State Assembly hearing moved from technical forecasting to a policy debate over who will pay to serve large AI data center loads.
PG&E representatives described their Rule 30 proposal as a means to accelerate connections while protecting existing customers. "Large load customers are required to fund the cost of their interconnection facilities upfront based on actual, not estimated cost," said Mike Maderos, PG&E’s vice president for strategic commercial solutions. PG&E said its Rule 30 package includes minimum demand charges, minimum contract terms (PG&E told the committee it proposed a 15‑year contract term), early termination fees and refund mechanisms so interconnection costs advanced by a customer can be returned over time if the load materializes.
The CPUC framed its role around ensuring ratepayer protection and noted two active tracks: (1) an interim Rule 30 tariff that establishes structures for expedited energization, and (2) SB 57, legislation requiring a CPUC study of ratepayer impacts and mitigation strategies. Luam Tesfaye (CPUC) said the commission is also opening an advanced rate design rulemaking to explore price signals that could influence when compute‑intensive tasks are scheduled.
Public Advocates Office warned the savings PG&E projected are sensitive to assumptions. Karen Haida said the office’s modeling found that if data centers exited early (for example, at year three), an average residential bill could increase by about $6 per month—countering PG&E’s estimate of multi‑thousand‑dollar reductions over a decade. "Revenue continuity is necessary to ensure adequate cost recovery and discourage speculation," Public Advocates told the committee and urged deposit, minimum demand and exit fee mechanisms.
Municipal utilities provided contrasting practical examples. Silicon Valley Power described direct developer contributions for substations, line extensions and a load development fee (a 50 MW data center in its model could pay about $25 million in development fees), and said such arrangements, along with local procurement, have kept rates comparatively low in its territory.
What lawmakers were asked to consider: whether cost responsibility should be determined by (a) what a particular customer directly causes (causal allocation), (b) socialized treatment of network upgrades that serve many customers, or (c) a hybrid with stronger contractual guarantees and minimum revenue protections for utilities and ratepayers.
Next steps: The Rule 30 proceeding remains open at the CPUC; the commission expects additional testimony and stakeholder comment on cost allocation questions and will fold SB 57 study results into a broader consideration of strategic rate design.