SoCal Gas ratepayers should not pay for company’s ‘green’ hydrogen, state regulators say

State regulators voted Thursday to stop Southern California Gas Co. from charging customers to help pay for planning miles of pipelines that would bring hydrogen gas to the L.A. Basin.

The company says the project would reduce the region’s reliance on methane gas.

Southern California Gas estimates it would cost about $266 million to study and plan the project — called Angeles Link — and asked the state Public Utilities Commission to allow it to recover those costs through customer rates. The company had proposed a monthly increase of $0.35 on the average residential customer bill over the course of three years.

The commission unanimously rejected the request, saying the company had not proved any direct benefit to customers. The decision effectively halts the project for now, and comes amid a stall in federal funding for hydrogen projects under the Trump administration.

Local environmental groups involved in the community advisory process had also grown frustrated by negotiations that they said, in a letter to state regulators, “does not prioritize genuine community engagement.”

As global pollution levels continue to climb, the commission’s decision also highlights the growing challenge of transitioning to a cleaner energy supply amid rising utility bills and open questions about the safety and true environmental cost of largely untested technology.

Why hydrogen?

Hydrogen is a colorless gas that is considered "clean" because it doesn’t involve carbon, which — when burned to create energy — becomes carbon dioxide, a major planet-heating gas.

But it takes energy to produce hydrogen, and most hydrogen these days is created by burning fossil fuels. “Green” hydrogen is created by using clean energy sources like solar and wind to split water into oxygen and hydrogen.

SoCal Gas said the Angeles Link project would prioritize green hydrogen.

Most experts see green hydrogen as an important clean-burning fuel for hard-to-electrify industries, such as long-haul trucking and gas-fired power generation. The city of Los Angeles, for example, wants to retrofit its Scattergood Power Plant near El Segundo to burn hydrogen instead of methane gas to generate electricity.

There are many open questions about how safe the highly-combustible gas is for proposed uses and how much water it will require to make. At the same time, extracting and burning fossil fuels for electricity and fuel also takes water — a growing problem as climate change drives longer and hotter droughts.

Experts say, if done right, hydrogen can reduce that water intake and not have a major impact on water supplies.

Also, burning hydrogen could actually worsen local, lung-damaging nitrogen-oxide air pollution, at least with the technology as it currently stands, according to energy researchers.

Reactions to the decision

SoCal Gas will now have to turn to shareholders or other sources of funding if the company wants to proceed. The company did not directly answer LAist’s questions about whether it would.

“We continue to believe that hydrogen—including clean renewable hydrogen—can help advance California’s energy and climate goals while supporting the long‑term affordability, security and reliability of energy service for customers,” SoCal Gas spokesperson Brian Haas wrote in an email to LAist.

Environmental groups celebrated the vote, while emphasizing they see green hydrogen playing a role in the state’s future.

“Residential customers should not subsidize speculative infrastructure for large industrial users,” said Michael Colvin, director of the California Energy Program at Environmental Defense Fund, in a statement.

“We look forward to working with regulators, utilities and large customers to build a credible, cost-effective strategy to cut climate pollution from sectors that are hardest to electrify,” the statement read.