IV. Procedural History

AB 1149 required the Commission to study ways to amend, revise, and improve the rules for the conversion of existing overhead electric and communications lines to underground. We were specifically asked to study ways to: 1) eliminate barriers to undergrounding and to prevent uneven patches of overhead facilities; 2) enhance public safety; 3) improve reliability; and 4) provide more flexibility and control to local governments.

On January 6, 2000, the Commission issued R.00-01-005 to implement this mandate. In R.00-01-005, the Commission process focused on hearing from interested parties. This was carried out in two ways. Initially, the Energy Division (ED) convened workshops to encourage discussion among parties on the required AB 1149 issues as well as to discuss which other issues should be addressed. Concurrently, eight public participation hearings were held throughout the state. We proceeded without hearings in this phase of our rulemaking in order to meet the legislative deadline, and to more quickly address those non-controversial actions the Commission could take in order to improve the undergrounding process. We defer to phase 2 of this rulemaking, the Commission's ruling on such matters as third party bidding, incentive mechanisms, unbundled charges on the utility bill, and telecommunications recovery mechanisms because these clearly require hearings. Overtaking events in the electric industry required the Commission to manage and control its resources such that these important issues had to be deferred to a later phase.

A. Workshops

Attached to the initiating OIR, was a White Paper prepared by the ED. Respondents and interested parties were directed to submit pre-workshop comments on the White Paper, as these comments were going to help shape the scope of the workshops. ED held eight days of workshops where the attendees⁷ included respondent utilities and telecommunications companies, as well as representatives from local governments, interest groups, and concerned citizens. The topics covered in the workshops included the following: 1) identifying the goals of the undergrounding program; 2) quantifying the costs and benefits of undergrounding; 3) identifying the resultant effects of undergrounding on telecommunication and electric competition; 4) exploring the impacts of completion delays; 5) identifying potential tariff rule changes to Rules 20 and 15; and 6) quantifying the funding and rate impacts of changes.

Following the ED workshops, participants were invited to submit comments on what issues the Commission should include in its report to the Legislature. The list of those who commented can be found in Attachment B.

B. Public Participation Hearings

Concurrently with the ED workshops, the Assigned Commissioner and Administrative Law Judge (ALJ) held eight Public Participation Hearings (PPHs) in San Diego, Los Angeles, Fresno, Sacramento, Eureka, Monterey/Carmel, Oakland/Berkeley, and San Francisco. The CPUC jurisdictional utilities and phone companies disseminated notice of these PPHs by way of billing inserts in their customers' monthly utility bills. Over 140 individuals and organizations presented comments orally at these PPHs and an equal number of people submitted written comments in response to the billing insert notices of the PPHs. These hearings were valuable as a tool to hear from citizens, utility workers, consumer advocacy groups, elected local officials, public works officials, and the utilities (both electric and telecommunication). In summary, the overwhelming percentage of participants spoke in favor of continuingbut improving ¾ the undergrounding program. The major concerns raised by the speakers were the cost of conversion projects and the equitable issue of how to balance those who receive the benefits of undergrounding against those who pay the cost. Other concerns were put forward concerning construction delays associated with the start and completion of underground conversion projects.

More particularly, the citizens talked about their desire to see more of their own neighborhoods and communities undergrounded for safety, reliability, and aesthetic reasons. The most frequent concern raised was the fear that downed power lines created fire and safety hazards as well as contributing to loss of service.

Other citizens discussed equitable issues. Some people complained that they will pay their entire lifetime as ratepayers for undergrounding, yet never live in a neighborhood that will qualify for Rule 20A funding. Other participants brought up the significant demographic and social equity issues that are involved in a city's choice as to what neighborhoods are chosen for Rule 20A funding.

Mayors, city council members, fire chiefs, public works directors, and other city officials attended and advocated giving the local governing agencies more authority to implement undergrounding within their jurisdiction. Not everyone, however, was in favor of giving the cities more flexibility and control over Rule 20A funds. The utilities and consumer advocates expressed a widely held worry that the cities would direct the funds to the benefit of neighborhoods where influential private individuals resided.

Numerous participants, from all of the groups represented at the PPHs¾ especially the local governments ¾ voiced their opinion that more undergrounding could be accomplished within the current ratepayer allocations if competitive bidding was allowed for the design, engineering, and construction of undergrounding projects. The utilities' primary expressed concern with competitive bidding was ensuring quality control since the utility is responsible for maintenance, safety, and reliability of the project once it is put into service.

The consumer advocacy groups wanted the Commission to consider the temporal, distributive, and demographic inequities involved in the current Rule 20A criteria, as well as the equitable issues that would arise with many of the proposed revisions to the criteria. In summary, their message was that since Rule 20A and B funds come from all distribution ratepayers throughout the state, the funds must be used for the benefit of the public good, and not for the enhancement of private property.

The utilities themselves, though present at all of the PPHs, did not participate as speakers. Instead, they reserved their suggestions for the written comments.

Following the final PPH, a Preliminary Summary of Issues was distributed by hand and via mail. Parties were invited to submit comments on the summary, as well as to propose suggested amendments to the existing underground rules. A list of those filing comments is included as Attachment B.

C. Letter to the Legislature in Lieu of a Report

On April 24, 2001, Commissioner Duque submitted a letter to every legislator with his recommendations and a summary of the study results. This is included as Attachment C. The letter proposes four recommendations for legislative consideration and lists actions the Commission could undertake quickly to improve the current UG program. Finally, it highlights the topics ripe for Commission exploration in phase 2 of this proceeding.