SoCalGas blocked from passing hydrogen pipeline costs to residential customers

State regulators have denied the Southern California Gas Company’s (SoCalGas) request to fund a planned hydrogen pipeline in Los Angeles by charging residential customers.

SoCalGas’s Angeles Link project had planned to connect green hydrogen production with industrial end-users across the region, with early development costs recovered from ratepayers – residential customers of the utility.

Formal intervenors in the California Public Utilities Commission (CPUC) proceedings – including Air Products, Cal Advocates, and California Environmental Justice Alliance – denied the request, rejecting that the project “would directly benefit SoCalGas natural gas ratepayers.”

The regulators stated that while the decision denies subsidising the project through ratepayer recovery, it does not impede SoCalGas from deploying other funding methods, like shareholder funds.

Proposed in 2022 as a way to help decarbonise hard-to-abate heavy industry, SoCalGas claimed the pipeline could displace over 11,000 tonnes of diesel per day and provide clean fuel to convert four natural gas power plants to green hydrogen.

Non-governmental organisation Environmental Defense Fund (EDF) said the decision reinforces the principle that ratepayers should not bear the risk of speculative infrastructure investments.

“The decision protects residential customers from paying for infrastructure designed primarily for large industrial users,” EDF said.

SoCalGas has been pursuing various hydrogen projects across the state for years, having undertaken various blending trials.

Alongside other utilities, it has also for broader hydrogen blending schemes, which critics claim could raise annual tariffs.