Full Opinion

Filed 8/25/26 (unmodified opinion attached) CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE APPLIED MEDICAL RESOURCES CORPORATION, Petitioner, G065804 v. (Cal. P.U.C. Dec. Nos. 24-11-004, 25-06-067) PUBLIC UTILITIES COMMISSION, ORDER GRANTING Respondent. PETITION FOR MODIFICATION AND SOUTHERN CALIFORNIA EDISON MODIFYING OPINION; NO COMPANY et al., CHANGE IN JUDGMENT Real Party in Interest. The Real Parties in Interest have filed a petition to modify the opinion filed on August 4, 2026. The petition is GRANTED and it is ordered the opinion be modified as follows: 1. On page 5, delete the second full paragraph, which begins with “Section 218, subdivision (b) (section 218(b)) as relevant here,” and replace it with the following: Section 218, subdivision (b) (section 218(b)), as relevant here, states: “‘Electrical corporation’ does not include a corporation or person employing cogeneration technology or producing power from other than a conventional power source for the generation of electricity solely for any one or more of the following purposes: [¶] (1) Its own use or the use of its tenants. [¶] (2) The use of or sale to not more than two other corporations or persons solely for use on the real property on which the electricity is generated or on real property immediately adjacent thereto, unless there is an intervening public street constituting the boundary between the real property on which the electricity is generated and the immediately adjacent property and one or more of the following applies: [¶] (A) The real property on which the electricity is generated and the immediately adjacent real property is not under common ownership or control, or that common ownership or control was gained solely for purposes of sale of the electricity so generated and not for other business purposes.” 2. On page 29, delete the first full paragraph and the second paragraph, which continues onto page 30 for two lines, and replace them with the following single paragraph: AMR contends the PUC misinterpreted section 218 by finding that an entity selling electricity to more than two contiguous parcels or across a street must become a regulated electrical company. AMR argues that “[b]ecause AMR’s proposal was expressly limited to microgrids that do not sell electricity or otherwise violate Section 218, nothing in Section 218 justified rejecting the proposal. But assuming the PUC did misinterpret section 218 in that respect, AMR has failed to show the error was prejudicial. (Community Choice, supra, 103 Cal.App.5th at p. 860 [PUC decisions may be set aside if its failure to proceed in the manner required by law resulted in prejudice].) The PUC’s conclusion that AMR’s proposal violated section 218 was not based on whether AMR or another microgrid operator sells electricity, but upon the potential for the proposed rule changes to allow an unregulated microgrid operator to control a regulated utility’s distribution infrastructure. In addition, as we shall discuss, the PUC’s decisions were based on other factors, including sections 399.2 and 451 and the need to ensure system, worker, and public safety. In light of those factors, it is not reasonably probable the PUC would have reached a result more favorable to AMR in the absence of the presumed error. (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 800.) It is hereby ORDERED that the opinion filed on August 4, 2026 be further modified as follows: 1. In the caption, delete the period after “Respondent” and replace with a semicolon so it reads: “Respondent;” 3 2. Throughout the opinion, including the caption, delete the initial letter “D.” preceding the Public Utility Commission decision numbers. 3. On page 2, in the first sentence of the first paragraph under “INTRODUCTION,” between “Senate Bill No. 1339” and “(Stats. 2018, ch. 566),” add “(2017-2018 Reg. Sess.)” so the sentence reads: This writ of review1 proceeding arises out of a rulemaking2 instituted by the California Public Utilities Commission (the PUC) to begin the creation of a policy framework for facilitating the commercialization of microgrids under Senate Bill No. 1339 (2017-2018 Reg. Sess.) (Stats. 2018, ch. 566), Public Utilities Code section 8370 et seq. 4. On page 8, the last full paragraph, which begins with “The PUC disputes” replace “PUC” with “SCE” so the sentence reads: SCE disputes AMR’s claim that it denied AMR’s request without legal bases and believed it had unfettered discretion to do so. 5. On page 10, first paragraph, lines 7 through 11, delete “(3) SCE, PG&E, and SDG&E to ‘each form a new microgrid tariff for their respective service territories’; (4) SCE, PG&E, and SDG&E to ‘jointly develop a Microgrid Incentive Program’; and (5) SCE, PG&E, and SDG&E ‘to develop pathways for the evaluation and approval of low-cost, reliable electrical isolation methods’” and replace it with the following: (3) SCE, PG&E, and SDG&E to (a) “each form a new microgrid tariff for their respective service territories” (b) “jointly develop a Microgrid 4 Incentive Program” (c) “to develop pathways for the evaluation and approval of low-cost, reliable electrical isolation methods.” 6. On page 14, the last full paragraph, first two sentences starting with “The CUE,” delete the word “The” so the sentences read: CUE also submitted comments to AMR’s tariff proposals. CUE asserted that any proposal that allowed a nonutility to control the power grid was “totally and unequivocally unacceptable” because “[t]o ensure that ‘system, public, and worker safety are given the highest priority,’ regulated utilities absolutely must operate and control their distribution grid, including microgrids serving multiple properties that connect to or disconnect from larger portions of the grid.” (Fn. omitted.) 7. On page 18, first full paragraph, delete the word “that” after “the statutory requirements of section 8371 and” so the sentence reads: As to AMR’s second ground for rehearing, the PUC found it had satisfied the statutory requirements of section 8371 and “AMR fails to point to any provision of section 8371 that mandates the adoption of its proposal.” (Boldface omitted.) 8. On page 23, the second full paragraph, replace the word “arise” with the word “arose” so the paragraph reads: It is not entirely clear whether AMR’s grievance against SCE arose from its denial of an interconnection request or of a request to accommodate a connection between AMR’s two properties independently of SCE’s distribution system. 5 9. On page 24, the first full paragraph, second sentence replace “the mistake is” with “the mistakes are” so the paragraph reads: But even if the PUC misstated the record in the way AMR describes, the mistakes are immaterial because the supposedly misstated facts were unnecessary to the PUC’s decisions. In track 5 the PUC was neither determining whether AMR’s project should go forward nor adjudicating the dispute between AMR and SCE. The issue before the PUC was whether to adopt AMR’s proposed rule changes, and those changes were not limited in application to AMR’s project or its dispute with SCE. Those proposed rule changes were of universal application and do not stand or fall on the specific facts relating to AMR and its microgrid project. 10. On page 41, in the signature block, delete “ACTING” after “MOTOIKE” so the signature line reads: “MOTOIKE, P. J.” There is no change in the judgment. SANCHEZ, J. WE CONCUR: MOTOIKE, P. J. MOORE, J. 6 Filed 8/4/26 (unmodified opinion) CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE APPLIED MEDICAL RESOURCES CORPORATION, Petitioner, v. G065804 PUBLIC UTILITIES COMMISSION, (Cal. P.U.C. Dec. Nos. D.24-11-004, D.25-06-067) Respondent. OPINION SOUTHERN CALIFORNIA EDISON COMPANY et al., Real Parties in Interest. ORIGINAL PROCEEDINGS; petition for a writ of review of decisions by the California Public Utilities Commission. Decisions affirmed. Request for Judicial Notice. Granted. Knobbe, Martens, Olson & Bear, Mark D. Kachner, Ben Shiroma and Stephen C. Jensen for Petitioner. Christine Hammond, Sophia J. Park, C. Willie Duhart and Shanna Foley for Respondent. Munger, Tolles & Olson, Henry Weissmann and Jeffrey Y. Wu for Real Parties in Interest Southern California Edison Company, Pacific Gas & Electric Company and San Diego Gas & Electric Company. Adams Broadwell Joseph & Cardozo, Rachael E. Koss and Darion N. Johnston for Real Party in Interest Coalition of California Utility Employees. * * * INTRODUCTION This writ of review 1 proceeding arises out of a rulemaking 2 instituted by the California Public Utilities Commission (the PUC) to begin the creation of a policy framework for facilitating the commercialization of microgrids under Senate Bill No. 1339 (Stats. 2018, ch. 566), Public Utilities Code section 8370 et seq. The rulemaking proceeded in five tracks. In track five, the PUC issued decision No. D.24-11-004 adopting the multi-property microgrid tariffs 3 submitted by Southern California Edison (SCE), Pacific 1 “A petition for a ‘writ of review’ is the procedural device for obtaining judicial review of final decisions of the Agricultural Labor Relations Board, Alcoholic Beverage Control Appeals Board, Public Utilities Commission, and Workers’ Compensation Appeals Board.” (Superior Court v. Public Employment Relations Bd. (2018) 30 Cal.App.5th 158, 169, fn. 4; see generally Pub. Util. Code, § 1756, subd. (a).) 2 A rulemaking is a quasi-legislative proceeding which establishes rules affecting an entire industry. (Pub. Util. Code, § 1701.1, subds. (a), (d)(1).) 3 Tariffs set forth the terms and conditions of service to a utility’s customers and may refer to a utility’s individual rates, tolls, rentals, charges, classifications, special conditions, and rules. (Cal. Pub. Util. Com. General Order 96-B, General Rule 3.15; see Pub. Util. Code, § 489, subd. (a); Bullseye Telecom, Inc. v. Public Utilities Com. (2021) 66 Cal.App.5th 301, 317, fn. 17; Cal. Pub. Util. Com., Tariff Filing Requirements 2 Gas & Electric (PG&E), and San Diego Gas & Electric (SDG&E). In that decision, the PUC also declined to adopt a proposed tariff by Applied Medical Resources Corporation (AMR), which had sought to amend three of SCE’s existing tariff rules. The PUC later denied AMR’s application for rehearing in PUC decision No. D.25-06-067. AMR brought a petition for writ of review to challenge PUC decision Nos. D.24-11-004 and D.25-06.067. We directed the issuance of a writ in order to review those decisions. AMR contends the PUC decisions must be reversed because the PUC made statements unsupported by the record and failed to proceed in the manner required by law. We conclude otherwise. The PUC’s decisions are consistent with controlling law, most notably Public Utilities Code sections 218 and 8371, 4 and are not arbitrary, capricious, or lacking in evidentiary support. Accordingly, we affirm the PUC’s decisions. THE PARTIES The petitioner is AMR, a California corporation with its principal place of business in Rancho Santa Margarita. AMR makes “high quality medical devices in cutting edge manufacturing facilities in Southern California.” The respondent is the PUC, a state agency created by article XII of the California Constitution. (Cal. Const., art. XII, §§ 1, 2.) <https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/carrier- reporting-requirements/tariff-filing-requirements#:~:text=General%20Order %2096%2DB%20%C2%A7%203.15,publish%20as%20directed%20by%20the> [as of Aug. 4, 2026], archived at: <https://perma.cc/7WT5-3VEL>.) 4 Further code references are to the Public Utilities Code unless otherwise indicated. 3 Real parties in interest SCE, PG&E, and SDG&E are public utilities under section 216, subdivision (a)(1) and subject to PUC regulation under section 701. (See Cal. Const., art. XII, § 3.) SCE, PG&E, and SDG&E refer to themselves collectively as the Investor-Owned Utilities or IOU’s. We shall do the same. Real party in interest Coalition of California Utility Employees (CUE) is a coalition of labor unions that represent workers employed by the IOU’s. BACKGROUND LAW The PUC’s Authority “‘The Constitution confers broad authority on the [PUC] to regulate utilities, including the power to fix rates, establish rules, hold various types of hearings, award reparation, and establish its own procedures.’” (San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 914–915, citing Cal. Const., art. XII, §§ 2, 4, 6.) In addition to the PUC’s constitutional powers, the Legislature has authorized the PUC to “supervise and regulate every public utility” in California and to “do all things, whether specifically designated in [the Public Utilities Act] or in addition thereto, which are necessary and convenient” in the exercise of its jurisdiction over public utilities. (§ 701, italics added.) The PUC’s authority is therefore to be liberally construed. (Southern California Edison Co. v. Peevey (2003) 31 Cal.4th 781, 792.) Sections 216 and 218 Sections 216 and 218 are of particular importance to this matter. Section 216, subdivision (a) defines the term “‘Public utility’” to include “every . . . electrical corporation . . . where the service is performed for, or the commodity is delivered to, the public or any portion thereof.” 4 Section 218, subdivision (a) (section 218(a)) defines “‘Electrical corporation’” to include “every corporation or person owning, controlling, operating, or managing any electric plant for compensation within this state, except where electricity is generated on or distributed by the producer through private property solely for its own use or the use of its tenants and not for sale or transmission to others.” SCE, PG&E, and SDG&E are electrical corporations under section 218(a). Section 218, subdivision (b) (section 218(b)) as relevant here, also defines an electrical corporation as not including a corporation which produces power from other than a conventional power source for generating electricity for at least one of the following purposes: 1. “[The corporation’s] own use or the use of its tenants”; 2. “The use of or sale to not more than two other corporations or persons solely for use on the real property on which the electricity is generated or on real property immediately adjacent thereto.” (§ 218, subd. (b)(1), (2).) As to the second purpose, if there is an intervening public street constituting the boundary between the real property on which the electricity is generated and the immediately adjacent property, then the corporation is not deemed to be an electrical corporation if “[t]he real property on which the electricity is generated and the immediately adjacent real property is not under common ownership or control, or that common ownership or control was gained solely for purposes of sale of the electricity so generated and not for other business purposes.” 5 (Id., subd. (b)(2)(A).) 5 There are two other factors determinative of whether the corporation would be an electrical corporation in the case of an intervening public street, but they are not relevant here. 5 Senate Bill No. 1339 Recognizing the potential benefits of microgrids, the Legislature in 2018 enacted Senate Bill No. 1339 (Stats. 2018, ch. 566, § 2), which added sections 8370, 8371, and 8372 to the Public Utilities Code. (See Historical and Statutory Notes, 57C West’s Ann. Pub. Util. Code (2026 supp.) foll. § 8370, p. 31.) Section 8371 directed the PUC, in consultation with the Energy Commission and the Independent System Operator, to undertake certain specified actions by December 1, 2020 “to facilitate the commercialization of microgrids for distribution customers of large electrical corporations.” (§ 8371, subd. (a).) Those actions included “develop[ing] methods to reduce barriers for microgrid deployment” and “develop[ing] separate large electrical corporation rates and tariffs, as necessary, to support microgrids, while ensuring that system, public, and worker safety are given the highest priority.” (Id., subds. (b), (d).) A microgrid is statutorily defined as “an interconnected system of loads and energy resources, including, but not limited to, distributed energy resources, energy storage, demand response tools, or other management, forecasting, and analytical tools, appropriately sized to meet customer needs, within a clearly defined electrical boundary that can act as a single, controllable entity, and can connect to, disconnect from, or run in parallel with, larger portions of the electrical grid, or can be managed and isolated to withstand larger disturbances and maintain electrical supply to connected critical infrastructure.” (§ 8370, subd. (d).) 6 6 A simpler definition of microgrid is found in the June 27, 2018 Assembly Committee on Utilities and Energy Analysis of Senate Bill No. 1339: “Generally, a microgrid is understood to be a self-contained, small, electricity system with the ability to manage critical customer resources, disconnect from the electric grid when the need arises, and provide the 6 The term “‘[d]istributed energy resource’” is defined to mean “an electric generation or storage technology” that complies with State Air Resources Board emissions standards. (§ 8370, subd. (b).) BACKGROUND FACTS This proceeding arises out of a dispute between AMR and SCE over electrically connecting a microgrid between two AMR-owned properties that are separated by a public street. In its petition for review, AMR alleged it “generates electricity solely for its own consumption on its properties using private resources and does not export or sell electricity to others. . . . AMR employs these microgrids at several of its properties that are interconnected to [SCE]’s distribution grid.” 7 According to AMR, since June 2015 “AMR has been attempting to build a microgrid, by utilizing private facilities, i.e., its own resources and equipment, not utility-owned facilities, to electrically connect two AMR- owned properties across a public street.” AMR’s goal was to electrically connect its two properties using an “AMR-owned distribution line” or “private distribution facilities.” AMR also intended its microgrid to be interconnected to SCE’s distribution grid using facilities installed and owned by SCE. AMR thus customer with different levels of critical support.” (Assem. Com. on Utilities and Energy, Analysis of Sen. Bill No. 1339 (2017–2018 Reg. Sess.) as amended June 11, 2018, p. 2.) 7 AMR refers to its connection to SCE’s distribution grid as an “interconnection.” According to AMR, its proposed electrical connection between its two properties is not an interconnection because the connection would not go through SCE’s distribution grid. SCE also uses the term interconnection to refer to “the interconnection of a generating facility to SCE’s electrical grid.” We shall follow the same distinction between interconnection and connection. 7 alleged, “[a]though AMR endeavors to generate enough power to be self- sustaining for most days, at times its load exceeds its generation capabilities, and an additional power source is needed. At these times, AMR relies on interconnection to [SCE]’s distribution grid for supplemental power.” (Fn. omitted.) In filings with the PUC, AMR claimed that “[d]espite AMR obtaining the necessary local approvals and acknowledging there were no Section 218 issues applicable to AMR’s microgrid proposal, SCE declined to take further action to support AMR’s microgrid deployment arguing that it had unfettered discretion to decline to add any facilities to its system or make any adjustments to its facilities to effectuate AMR’s microgrid—even if AMR agreed to pay for all such facilities.” AMR also argued to the PUC that “SCE apparently believes it can refuse to interconnect AMR’s Section 218 compliant microgrid and refuse to identify any specific basis for the refusal.” AMR alleged in its petition for writ of review that since 2018 “SCE has denied without legal basis AMR’s requests to . . . electrically connect AMR’s two properties using AMR’s privately owned equipment.” Such electrical connection, AMR claimed, was necessary for it to most efficiently utilize its microgrid. The PUC disputes AMR’s claim that it denied AMR’s request without legal bases and believed it had unfettered discretion to do so. In comments filed as part of the PUC rulemaking, SCE stated it had denied AMR’s request for these reasons: “AMR[’s] . . . project, which sought to distribute electricity to eight of its 14 buildings, would require electric connections that travel under public streets pursuant to SCE’s franchise agreement. To enable this, AMR’s proposal would result in SCE’s existing facilities beyond the meter, including underground cables, transformers, and 8 related equipment being sold to AMR, removed, or abandoned in place. As SCE currently uses those facilities to serve other customers, as well as AMR, it would impair SCE’s abilities to service those customers or require construction of new facilities to serve them and could make those SCE customers more vulnerable to an outage or other electrical event. Under state law and [ ]PUC regulation, the utility is the entity responsible for the safe operation of the grid, and it is therefore appropriate for the utility to have discretion to decline to accept an added facilities proposal or decline to accept a proposal that requires the abandonment, sale, and/or replacement of existing assets.” PROCEDURAL HISTORY I. PUC’s Rulemaking Proceeding to Facilitate Commercialization of Microgrids, Tracks 1-4 In September 2019, the PUC issued an order instituting Rulemaking 19-09-009 to begin creating “a policy framework surrounding the commercialization of microgrids” with a “focus on implementation of Senate Bill (SB) 1339.” The scope of the rulemaking extended to “all microgrid policy framework issues,” including “programs, rules, and rates related to microgrids that will help accomplish the state’s broader policy goals.” The PUC divided the rulemaking into five tracks. Track 1 addressed “the [PUC]’s goal of deploying resiliency planning in areas that are prone to outage events and wildfires, with the goal of establishing key microgrid and resiliency strategies as soon as possible.” The PUC issued its track 1 decision (No. D.20-06-017) in June 2020. In track 2, the PUC was required “to implement microgrid standards, protocols, guidelines, methods, rates, and tariffs as well as reduce 9 barriers to microgrid deployment statewide.” The PUC issued its track 2 decision (No. D.21-01-018) in January 2021. In that decision, the PUC adopted “microgrid rates, tariffs, and rules for large investor owned electrical corporations.” The PUC directed (1) SCE “to revise its Rule 2 to permit installing added or special facilities microgrids”; (2) SCE and PG&E “to revise their Rule(s) 18, and [SDG&E] to revise its Rule 19, to allow microgrids to serve critical customers on adjacent parcels”; (3) SCE, PG&E, and SDG&E to “each form a new microgrid tariff for their respective service territories”; (4) SCE, PG&E, and SDG&E to “jointly develop a Microgrid Incentive Program”; and (5) SCE, PG&E, and SDG&E “to develop pathways for the evaluation and approval of low-cost, reliable electrical isolation methods.” Following the decision on track 2, the PUC proceeded to track 3. In its decision on track 3 (No. D.21-07-011), issued in July 2021, the PUC directed PG&E, SCE, and SDG&E “to provide rate schedule(s) that suspend the capacity reservation component of their standby charge for eligible microgrids that meet the California Air Resources Board air pollution standards for generation.” Track 4 proceeded in two phases. In its decision on the first phase of track 4 (No. D.21-12-004), issued in December 2021, the PUC adopted “enhanced summer 2022 and summer 2023 requirements” for PG&E and SDG&E. In its decision on the second phase of track 4 (No. D.23-04-034), issued in April 2023, the PUC adopted implementation rules for the Microgrid Incentive Program, which was intended to encourage renewable microgrid development. The PUC announced that “issues pertaining to the microgrid multi-property tariff” would be resolved in track 5. 10 II. Track 5: Development of a Microgrid Multi-Property Tariff A. Scope of Track 5 The purpose of track 5 was to develop a tariff for multi-property microgrids. In the scoping memorandum for track 5, 8 issued in July 2023, the PUC identified the issues for determination, which included, “[w]hat guiding principles should the [PUC] adopt to assist in the development of a microgrid multi-property tariff?” and “[w]hether PG&E should modify its Community Microgrid Enablement Tariff.” In August 2023, the assigned administrative law judge (ALJ) issued a ruling directing the IOU’s to prepare and submit a draft pro-forma standard multi-property microgrid tariff based upon PG&E’s Community Microgrid Enablement Tariff. The ALJ directed the IOU’s to follow certain requirements when forming those tariffs, including to “[c]omply with Section 218,” to “[a]ddress and prioritize safety and system reliability, including but not limited to, public and worker safety, utility system protection, and cybersecurity,” and to “[a]llow for the utility to always maintain control of its distribution system.” In October 2023, the ALJ modified the scoping memorandum to allow stakeholders, which included AMR, to submit draft proposed microgrid multi-property tariffs of their own. The ALJ directed the stakeholders to follow the same requirements imposed on the IOU’s for forming those tariffs. 8 A scoping memorandum “sets forth the issues, need for hearing, schedule, category, and other matters necessary to scope this proceeding.” 11 B. SCE’s Proposed Tariff and AMR’s Proposed Tariff for Track 5 In October 2023, SCE, on behalf of the IOU’s, submitted a proposed tariff based on a revised version of the Community Microgrid Enablement Tariff. AMR and other stakeholders submitted comments on the IOU’s proposed tariff, tariff proposals of their own, and reply comments. Motivated by its experience with SCE, AMR submitted a proposed tariff in order “to remove barriers to the commercialization of multi- property microgrids pursuant to Public Utilities Code Sec. 8371.” According to AMR, SCE had claimed it had “unfettered discretion” under SCE Rules 2 and 16 of its tariff books9 “to decline to take any action to help AMR develop its microgrid.” To eliminate any such discretion, AMR proposed three “focused modifications” to SCE Rules 2, 16, and 18. SCE Rule 2 is entitled “Description of Service,” SCE Rule 16 is entitled “Service Extensions,” and SCE Rule 18 is entitled “Supply to Separate Premises and Use by Others.” (Capitalization omitted.) The following are portions of SCE Rules 2, 16, and 18, with AMR’s proposed rule changes bracketed and in italics. SCE Rule 2.H.1: “Added Facilities. [¶] 1. Where an applicant requests and SCE agrees to install facilities which are in addition to, or in 9 The IOU’s request we take judicial notice of SCE rules 2, 16, and 18 of its tariff books pursuant to Evidence Code section 451, subdivision (a). We grant this unopposed request. “A public utility’s tariffs filed with the PUC have the force and effect of law.” (Dollar-A-Day Rent-A-Car Systems, Inc. v. Pacific Tel. & Tel. Co. (1972) 26 Cal.App.3d 454, 457, citing Dyke Water Co. v. Public Utilities Com. (1961) 56 Cal.2d 105, 123 [Once a tariff is published and filed with the PUC, it has “the force and effect of a statute”].) SCE Rules 2, 16, and 18 are directly relevant to this writ of review proceeding. We are therefore required by Evidence Code section 451, subdivision (a) to take judicial notice of the SCE tariff rules 2, 16, and 18. We refer to an SCE tariff rule as “SCE Rule” followed by the number. 12 substitution for the standard facilities SCE would normally install, the costs thereof shall be borne by the applicant. [Where the customer seeks to develop a microgrid that is compliant with Section 218, SCE shall agree to install facilities which are in addition to, or in substitution for the standard facilities SCE would normally install, and that meet nationally recognized safety and reliability standards, the costs thereof shall be borne by the applicant.] Unless otherwise provided by SCE’s filed tariff schedules, these added facilities (special facilities) will be installed, owned and maintained or allocated by SCE solely as an accommodation to the applicant.” 10 SCE Rule 16.F.2.b: “Applicant Convenience. Any relocation or rearrangement of SCE’s existing Service Facilities at the request of Applicant (aesthetics, building additions, remodeling, etc.) and agreed upon by SCE shall be performed in accordance with Section D above except that Applicant shall pay SCE its total estimated costs. [Where the customer seeks to develop a microgrid that is compliant with Section 218, SCE shall agree to relocate or rearrange SCE’s existing facilities in a manner that meets nationally recognized safety and reliability standards, the costs thereof shall be borne by the applicant.]” SCE Rule 18.C: “Other Uses or Premises. A customer shall not use electricity received from SCE upon other Premises for other purposes than those specified in the customer’s application or in the rate schedule applied except: [¶] 1. For SCE’s Operating Convenience as defined in SCE’s Rule 1, or [¶] . . . [¶] 2. Where, pursuant to Decision 21-01-018, behind-the- 10 The term “Added Facilities” is defined in SCE Rule 2.H.1 to include “all types of equipment normally installed by SCE in the development of its electrical transmission and distribution systems and facilities or equipment related to SCE’s provision of service to a customer . . . .” 13 meter microgrids owned by public agencies or a third-party that primarily serves a facility operated by, or on behalf of, a public agency are permitted to supply electricity to a critical facility. . . . (Fns. omitted.) [[3.] Where a customer operates a microgrid that serves the customer’s other Premises but that otherwise complies with Public Utilities Code Section 218].” C. Comments to AMR’s Proposed Rule Changes In comments to AMR’s proposed rule changes, SCE stated: “[AMR’s] project, which sought to distribute electricity to eight of its 14 buildings, would require electric connections that travel under public streets pursuant to SCE’s franchise agreement. To enable this, AMR’s proposal would result in SCE’s existing facilities beyond the meter, including underground cables, transformers, and related equipment being sold to AMR, removed, or abandoned in place. As SCE currently uses those facilities to serve other customers, as well as AMR, it would impair SCE’s abilities to service those customers or require construction of new facilities to serve them and could make those SCE customers more vulnerable to an outage or other electrical event.” SCE also asserted it is responsible for safe grid operation and “it is therefore appropriate for the utility to have discretion to decline to accept an added facilities proposal or decline to accept a proposal that requires the abandonment, sale, and/or replacement of existing assets.” SCE added that AMR could bring its particular case to the PUC for determination, as any complainant could do in a tariff dispute. The CUE also submitted comments to AMR’s tariff proposals. The CUE asserted that any proposal that allowed a nonutility to control the power grid was “totally and unequivocally unacceptable” because “[t]o ensure that ‘system, public, and worker safety are given the highest priority,’ 14 regulated utilities absolutely must operate and control their distribution grid, including microgrids serving multiple properties that connect to or disconnect from larger portions of the grid.” (Fn. omitted.) In response to SCE’s comments, AMR asserted the PUC “has a defined process to administer necessary facility transfers and valuations allowing the [PUC] to discharge the requirements of Public Utilities Code Sec. 851.” Therefore, AMR claimed, “[r]emoving or transferring redundant or unnecessary facilities as part of an interconnection should not operate as a barrier to AMR’s planned microgrid.” AMR described as “vague and uncertain” SCE’s fears that its microgrid project “would require deployment of new facilities to avoid impairment to SCE’s continued service to its other customers.” As to CUE’s comments, AMR asserted there was “no factual basis” for the assumption that private distribution facilities are unsafe and that local authorities would ensure that AMR’s microgrid meets applicable safety standards. III. The PUC’s Decision on Track 5 The PUC issued its decision for track 5, No. D.24-11-004, in November 2024. In its decision, the PUC adopted, with some modifications, the multi-property microgrid tariffs submitted by the IOU’s. The PUC declined to adopt various stakeholder recommendations that would have “effectively exempt[ed] private microgrids that own, control, operate, or manage distribution grid assets or other electrical infrastructure from [PUC] jurisdiction.” The PUC made 92 findings of fact, including the following, generally applicable, findings: “13. To ensure system, public, and worker safety are given the highest priority, a regulated utility must control and 15 operate a multi-property microgrid if the multi-property microgrid uses the regulated utility’s distribution system. [¶] . . . [¶] 15. Worker safety and grid reliability are absent from the stakeholder proposals. [¶] 16. Regulated control of the distribution system is essential to public and worker safety and grid reliability. [¶] 17. After any outage, crews must perform restoration work to ensure that it is safe to reenergize the electric utility’s grid. [¶] 18. An unregulated third party cannot decide when a microgrid may begin actively discharging to the electric utility’s grid while utility employees may be working on the grid. [¶] 19. To ensure system, public, and worker safety are given the highest priority, regulated entities must operate and control their electric distribution grid.” The PUC declined to adopt AMR’s proposed rule changes. The PUC found that “AMR’s proposed tariff focuses on a narrow set of priorities and does not fit within the contours of Section 218” and “circumvents Section 218.” The PUC concluded: “1. The multi-property microgrid tariff proposals of AMR. . . should be rejected because each of the proposals fail[s] to comply with numerous statutory requirements of the California Public Utilities Code and the [PUC]’s regulatory authority established in the California Constitution. [¶] 2. AMR’s proposal should not be adopted because it does [not] comply with Section 218.” IV. AMR’s Application for Rehearing AMR applied for rehearing of the PUC’s decision. As relevant here, AMR’s grounds for rehearing were: (1) AMR’s proposals were limited to microgrids that were compliant with section 218 and therefore the PUC erred by finding those proposals were an attempt to circumvent section 218 and (2) the PUC’s decision violated section 8371. 16 The PUC denied AMR’s application for rehearing in its decision No. D.25-06-067. As to AMR’s first ground for rehearing, the PUC found: “AMR’s proposal involves delivering electricity between two AMR-owned properties separated by a public street, using SCE-owned infrastructure. . . . AMR’s proposed changes to [SCE] [R]ules 2, 16, and 18 were to enable AMR to carry out its specific, localized project, and interconnect its properties across public streets without investor-owned utility (IOU) interference. [¶] The Decision found that AMR’s proposal, which would allow an unregulated private party to control utility infrastructure and operate a multi-property microgrid independently, violates section 218. . . . The [PUC] also held that exclusive operational control over a microgrid, particularly the ability to enter islanding mode without prior authorization from the incumbent IOU, constitutes utility service requiring Commission oversight. . . . [¶] Indeed, AMR’s proposed configuration raises both legal and regulatory issues. The microgrid’s layout and ownership structure would effectively allow AMR to function as a de facto utility without being subject to the statutory and regulatory obligations imposed on electrical corporations. . . . In this context, the crossing of public streets is significant because it implicates utility franchise rights and easements and extends the microgrid beyond the boundaries typically associated with pri