8. Proposed Rulemaking Proceeding re: Electric Tariff Rule 20

8.1. Background

Electric Tariff Rule 20 provides a process for placing overhead power-line facilities underground for aesthetic reasons. The Commission authorizes funding and cost recovery for Tariff Rule 20 projects in GRC proceedings.141

Tariff Rule 20 contains a formula for allocating the available funds for undergrounding projects among cities and counties. Each jurisdiction saves its allocation, and can "borrow" ahead for 5 years' worth of allocations in order to fund a project. Because projects are expensive, it may take many years for a smaller jurisdiction to afford even a small project.

Tariff Rule 20 prescribes a multi-stage process for local jurisdictions to obtain and use the available funds for undergrounding projects. The governing body of the city or county must consult with the electric utility, hold public hearings, makes a determination that undergrounding is in the public interest, and create an undergrounding district. The project is then designed, scheduled, and executed by the IOUs. Projects usually take several years at a minimum.

The CIPs must place their aerial communication lines underground at the same time as the electric utilities. However, unlike the electric IOUs, the CIPs do not have a regulatory mechanism to fund their share of undergrounding projects. The CIPs must pay for undergrounding projects from general revenues.

The Phase 2 Scoping Memo determined that Phase 2 "may consider adding fire risk to the list of reasons to permit undergrounding under Tariff Rule 20.142" On February 9, 2010, the CIP Coalition filed a motion to exclude from this proceeding any proposed changes to the existing tariff rules governing the conversion of aerial facilities to underground facilities. The CIP Coalition argued that the proposed changes were subject to Pub. Util. Code § 1708, which requires notice before a Commission decision is changed. The CIP Coalition observed that no notice had been provided to the parties in prior proceedings where the Commission had rejected proposals to revise Tariff Rule 20 to allow aerial electric facilities to be placed underground for the purpose of reducing fire risk.

On April 6, 2010, the assigned ALJ, in consultation with the assigned Commissioner, issued a ruling that granted the CIP Coalition's motion to exclude Tariff Rule 20 issues from this proceeding. However, the ruling also authorized parties to file comments on whether the Commission should open a new rulemaking proceeding to consider if fire risk should be added to the list of reasons to permit undergrounding under Tariff Rule 20 and how to provide notice of this new proceeding in conformance with Pub. Util. Code § 1708.

Opening comments were filed on May 7, 2010, by Facilities Management Specialists LLC (FMS), SDG&E, TURN, and collectively by the CCTA, Comcast, Time Warner, tw telecom, and the Verizon companies.143 Reply comments were filed on May 21, 2010, by CPSD, FMS, LADWP, PG&E, SDG&E, and collectively by AT&T, CCTA, Comcast, CoxCom, Inc., Cox, Time Warner, tw telecom, and the Verizon companies (collectively, "the Commenting CIPs").

8.2. Position of the Parties

CPSD, FMS, LADWP, and SDG&E support a new rulemaking proceeding to consider if fire risk should be added to the list of reasons to permit undergrounding under Tariff Rule 20. They believe the Commission should consider all options for preventing power-line fires.

SDG&E states that regardless of whether the Commission decides to open a new rulemaking proceeding, SDG&E intends to file an application that would establish a new Tariff Rule 20D for allocating funds among cities and counties to place overhead power-line facilities underground for fire-prevention purposes. The proposed Tariff Rule 20D would apply only to SDG&E, and not to other electric IOUs or CIPs.

The proposed rulemaking proceeding is opposed by the Commenting CIPs and TURN. The Commenting CIPs assert that the Commission must first address the issue of CIP cost recovery for undergrounding projects. The Commenting CIPs are concerned that a new rulemaking proceeding would result in the expansion of undergrounding projects under Tariff Rule 20, resulting in greater costs for the CIPs. Unlike the electric IOUs, the CIPs do not have captive ratepayers to pay for undergrounding projects. The Commenting CIPs argue that the failure to address the issue of CIP cost recovery would raise an equal protection challenge, as there is allegedly no rational basis for making the electric IOUs whole but not the CIPs.

TURN states there are several reasons why Tariff Rule 20 is a poor vehicle for addressing fire risks. First, Tariff Rule 20 is not designed to address fire risks in an urgent manner, as projects usually take several years from conception to completion. While this leisurely pace is suitable for beautification projects, it may be too slow to address known fire risks.

Second, the fire risk associated with overhead power-line facilities is generally much lower in Northern California. Thus, there is not a statewide need to amend Tariff Rule 20 to address fire risk.

Third, the allocation of funds under Tariff Rule 20 is not appropriate for fire-prevention purposes. The majority of funding currently goes to cities. This is the opposite of the allocation that would be needed to address fire risk.

Finally, the Commission currently requires that aerial communication lines be placed underground at the same time that power lines are placed underground pursuant to Tariff Rule 20. TURN states there is usually no need to place communication lines underground to mitigate fire risks.

TURN opines that GRCs are a better venue for considering the merits of undergrounding projects for fire-prevention purposes. There, the Commission can consider the costs and benefits of different measures for mitigating fire risk and allocate limited ratepayer funds to the most cost-effective fire-prevention measures and the highest priority fire-prevention projects.

SDG&E agrees with TURN that funding for fire-prevention measures, including undergrounding projects, should be decided in GRC proceedings. But SDG&E also believes that a new Tariff Rule 20D for fire-safety undergrounding could help SDG&E implement Commission-authorized fire safety undergrounding activities by making the affected cities and counties an integral part of the undergrounding process. This is because the new Tariff Rule 20D would (1) provide for greater municipal and public input on selection, prioritization, schedules, and cost; (2) allow for better coordination with municipalities on issues such as land rights acquisition and public improvements; (3) provide an equitable distribution of projects among municipalities; and (4) establish rules that do not need to be litigated each GRC.

PG&E neither supports nor opposes a new rulemaking proceeding to consider if fire risk should be added to the list of reasons to permit undergrounding under Tariff Rule 20. If the Commission decides to open a new proceeding, PG&E urges the Commission to ensure that the entire panoply of costs, risks and benefits is fully explored and that all stakeholders are invited.

8.3. Discussion

The overarching purpose of Tariff Rule 20 is to place overhead power lines underground for aesthetic reasons. To this end, the tariff rule contains a formula for allocating the available funds among cities and counties, and prescribes a process that cities and counties must use to obtain funds.

The purpose of Tariff Rule 20 is unrelated to fire prevention. We see no reason to clutter the rule with new and unrelated provisions regarding fire prevention. We agree with TURN that GRCs, and not Tariff Rule 20, should be used to allocate ratepayer funds for fire-prevention projects.

The GRC process has several advantages over Tariff Rule 20 in terms of allocating funds for fire-prevention purposes. First, a GRC enables the utility, the Commission, and interested parties to identify the highest priority fire-prevention projects and to allocate ratepayer funds to those projects. In contrast, Tariff Rule 20 contains no procedures for identifying high priority fire-prevention projects and no mechanism for ensuring that such projects are funded. Each city and county would have discretion to use its allotted funds for lower priority fire-prevention projects in its own jurisdiction ahead of higher priority projects in other jurisdictions.

Second, the only fire-prevention measure available under Tariff Rule 20 is placing overhead power-line facilities underground. This is perhaps the most expensive fire-prevention tool available. There are many other fire-prevention options, such as line spacers, wire insulation, and vegetation management. A GRC proceeding would allow the Commission to consider a range of fire-prevention options and select the most cost-effective solutions.

Finally, fire risk should be assessed from the standpoint of the utility's entire service territory, and not from the piecemeal and narrow geographical perspectives of individual jurisdictions. The utility can assess wind conditions, vegetation type, population density, and other factors to identify the portions of its service territory where the risk of power-line fires is greatest. While this can be done in a GRC proceeding, it is not possible with Tariff Rule 20.

We conclude for the preceding reasons that there is no need to open a new rulemaking proceeding to consider adding fire risk to the list of reasons to permit undergrounding under Tariff Rule 20. Our decision to forego a new rulemaking proceeding does not signal any reduction in our concern about fire prevention. To the contrary, we believe that GRCs are a superior regulatory mechanism for selecting and funding fire-prevention measures compared to the ad hoc allocation of ratepayer funds for fire-prevention projects under Tariff Rule 20.144

141 D.01-12-009 at 5, Fn. 5. Individual customers may be required to pay a portion of the cost to underground electric facilities from the street to the customer's meter. (D.01-12-009 at 5 - 6.)

142 Phase 2 Scoping Memo at 8.

143 The Verizon companies include MCI Communications Services, Inc., d/b/a Verizon Business Services (U-5378-C), MCI Metro Access Transmission Services, d/b/a Verizon Access Transmission Services (U-5253-C), TTI National, Inc., d/b/a Verizon Business Services (U-5403- C), Verizon California Inc. (U-1002-C), and Verizon West Coast (U-1020-C).

144 Today's decision does not prejudge any application that SDG&E may file for authority to establish a new Tariff Rule 20D to allocate funds for undergrounding power lines for fire-prevention purposes, much like Tariff Rule 20 allocates funds for beautification projects.

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