PG&E to work with Citizens Energy through transmission lease program

Published on March 20, 2024 by Dave Kovaleski

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Pacific Gas and Electric Company (PG&E) is seeking approval from the California Public Utilities Commission (CPUC) for a transmission lease program with nonprofit Citizens Energy, which could invest as much as $1 billion through the program.

The program would allow PG&E to accelerate work on its electric system to further improve safety, reliability, capacity, and infrastructure health. Further, it would enable new interconnections to clean-energy projects that support decarbonization. The program is designed so that customers would pay no more for electric system work on the leased transmission assets than they would without the program.

If Boston-based Citizens Energy invests the full $1 billion, it expects the program to generate hundreds of millions of dollars in charitable benefits over the lives of the leases.

“At PG&E, we have a responsibility to build a better future for everyone whose lives we touch,” PG&E Corporation CEO Patti Poppe said. “We’re committed to finding innovative and affordable new ways to ensure that the transformation of California’s energy system benefits all the state’s residents. We’re excited and honored to partner with Citizens to help some of our most vulnerable communities build resilience against climate change.”

Through the program, PG&E would offer Citizens options to lease portions of PG&E electric transmission assets. PG&E would offer five separate leases of 30 years each, for a total investment of up to $1 billion. Citizens would make an upfront payment to PG&E as prepaid rent. It would then lease the rights through a wholly owned subsidiary that would be a CAISO participating transmission owner.

The nonprofit would recover the costs of its investments through the California Independent System Operator (CAISO) high-voltage Transmission Access Charge, after Federal Regulatory Energy Commission review and approval to ensure the costs are just and reasonable. And as mentioned, Citizens will contribute 50 percent to start, increasing to 90 percent, of net after-tax profits from its investments in the program to low-income and disadvantaged communities in Central and Northern California in need of clean energy investments.

Further, the transmission assets would remain under PG&E ownership and under the operational control of the CAISO. PG&E would remain responsible for the development, design, permitting, engineering, procurement, construction and operations and maintenance of the relevant assets.

“Our vision is a safe, reliable and clean energy system that leaves no one behind,” Citizens President and former U.S. Congressman Joseph Kennedy said. “This partnership with PG&E will advance our march toward a just and equitable clean-energy transition. We look forward to working closely with local communities in need across PG&E’s service area to hear their ideas about the investments that would most benefit them.”

Pending regulatory approvals, PG&E and Citizens expect to close on the first lease option in early 2025, with up to four more to follow through 2030.

CPUC and FERC have approved two similar programs between Citizens and San Diego Gas & Electric (SDG&E). One is the 117-mile Sunrise PowerLink transmission line, which connects SDG&E’s grid to renewable energy generated in the Imperial Valley, and the other is the Sycamore-Penasquitos transmission line, which links two substations in San Diego via partially undergrounded lines for improved safety and reliability.