V. Positions of the Parties

After reviewing the draft workshop report prepared by ED, the transcripts from the eight PPHs, and the comments and reply comments submitted by the participants, we can generalize some of the recurring themes expressed. In brief, the municipalities want more autonomy; the utilities want to keep control to ensure that local control is exercised within the framework of a statewide policy and that there is quality control on the projects; and the consumer advocates want 1) to insure demographic and social equity; 2) to explore cheaper ways to achieve undergrounding; and 3) to achieve the aesthetic advantage, along with the perceived safety and reliability benefits ¾ but at no additional rate payer cost.

A. General Characterization of Parties' Positions

Munis want more control Utilities want control Consumers want more beauty at no more cost Others want a chance to do the work at cheaper cost

This section represents only an overview and does not attempt to capture all of the variations or nuances presented by individual participants. It should also be recognized that positions evolved during this process. For example, many individuals initially advocated increasing the amount ratepayers would contribute to the statewide conversion program, but by the last round of comments, there was almost no promotion of increasing ratepayer contributions. Instead, the emphasis shifted to using the current allotment of funds in a more efficient and cost-effective manner. The overview below is intended to provide a flavor of the debate, rather than a definitive presentation of each party's position.

Many parties, in addition to participating in the proceeding and providing comments, also filed comments and replies to the Draft Decision.⁸ The input furnished in these papers provided the Commission with further guidance on the wording and issues for the interim order, and presented additional topics for consideration in Phase 2. Many of the suggestions from the comments and replies are incorporated in this revised decision. Some of the recommendations were echoed by numerous parties, while others were proposed by a single party. Because of the large number of comments and replies, specific reference to the author of the adopted changes was not practical.

B. Municipalities

Oakland: On June 19, 2000, Oakland filed a Petition to Amend Electric Tariff Rule 20 (Rule 20) that set forth proposed changes to expand the criteria for Rule 20A (20A) projects and give the local governing agencies more flexibility and control.⁹ Specifically, Oakland proposes relaxing and expanding the existing 20A criteria to include public safety, service reliability, economic development, and aesthetics, and to give local agencies sole discretion for the allocation of 20A funds within their jurisdiction.

Oakland also advocates 1) annual reporting requirements for the utilities; 2) regular meetings between utilities and the local governments in their jurisdiction; 3) the creation of undergrounding districts; 4) an Ombudsperson position for problem-solving; 5) allowing local governments to accrue 20A funds over several years; and 6) using redevelopment money towards placing utilities underground.

Anaheim: Anaheim has its own local publicly owned utility, and therefore is in a unique posture relative to California's other cities. Anaheim suggests that the Commission require the utilities to participate in programs in communities (such as Anaheim) in which it has no retail customers, but has overhead facilities that serve and benefit its customers in adjoining communities. In addition, Anaheim recommends that the legislature adopt alternative funding mechanisms to provide an ongoing and predictable source of funds for conversion projects.

Berkeley: Berkeley, like its neighbor Oakland, proposes that the Commission add service reliability, economic development, aesthetics, and public safety to 20A criteria. Berkeley suggests more flexibility so 20A funds could be used in the following ways: 1) to assist low income residents with their share of costs; 2) to subsidize low-income 20B projects with 20A funds, with a lien on the property to repay the expended 20A funds at the time of sale; 3) to apportion 20A funds among the conversion recipients with residents paying a proportional share based on their economic ability, so that residents who can pay more, will; 4) to put together city-wide plans for undergrounding, subject to Commission approval; and 5) to use 20A funds for lateral extensions, panel conversions, design and inspection services, street light conversions, undergrounding of transformers, and engineering studies. In addition, Berkeley recommends that the Commission promote cooperation and coordination between electric and telecommunications utilities, audit utilities' records to determine how conversion funds were spent and to identify delays, and asks the legislature to increase sources of funding for conversion projects.

San Diego: San Diego already has a funding mechanism in place to provide for long term planning and defined undergrounding projects. Based on its experience with undergrounding projects, San Diego urges the Commission to amend 20A criteria to 1) allow cities to make 20A determinations and prioritizations without any veto by the utilities; 2) permit cities to mortgage future 20A allotments as cities see fit; 3) authorize cities to use a competitive bidding process for the design and construction aspects of the project; and 4) build in incentives for utilities to undertake and complete projects in a timely fashion.

City and County of San Francisco: The City and County of San Francisco advocates more accountability from the utilities for maintaining adequate staffing for undergrounding projects and adhering to schedules; having the utilities spend all money allocated for undergrounding; and giving more authority and discretion to the local governing body to make 20A determinations and prioritizations.

City of San Ramon: The City of San Ramon proposes that the Commission 1) review the actual costs of conversion projects; 2) allow 20A funds to be leveraged for implementing larger projects that realize economies of scale; 3) encourage competitive bidding for the design and construction of conversion projects ¾ with Commission guidelines/standards; 4) investigate the equity of having transmission customers contribute to undergrounding; 5) allow the transfer of 20A funds between cities and counties, with a repayment plan; and 6) establish a "breakpoint" for requiring conversion of burdened overhead lines to underground.

League of California Cities: The League supports the municipalities' position that local governments should have more control to prioritize projects based on public safety, aesthetic, and economic and community development considerations. In addition, the League proposes the following changes: 1) 20A funds should be allowed for design and inspection expenses, street light conversion, and undergrounding of transformers and can be leveraged with other funds, including public and private sources; 2) increase cost effectiveness through innovative design and construction practices; 3) require the utilities and cities to meet once a year (including telecommunication utilities) to discuss potential and ongoing projects; 4) direct the utilities to send annual reports on undergrounding projects to cities and CPUC; 5) allow cities to mortgage allocations for up to five years; and 6) provide incentives to all utilities to adhere to undergrounding schedules.

C. Utilities

PG&E, Southern California Edison Company (Edison), and San Diego Gas & Electric Company (SDG&E) filed Joint Comments, raising the concern that a "reasonable balance [must] be maintained between gaining the advantages of underground service and controlling expenditures so that unreasonable burdens do not fall upon the general ratepayer." (67 CPUC 490, 510.) In this context, the utilities were cautious about giving the cities more flexibility and control and cautioned that public funds should not be spent purely for private benefit.

In light of these considerations, the utilities rewrote 20A expanding the public interest criteria to include collector roads and intersecting block patches. The utilities also suggested that the Commission explore the following: 1) revisiting the current allocation formula; 2) allowing 20A funds to fund 20B project engineering costs, with the 20A account reimbursed if the project is completed, or charged against the 20A account if the project is abandoned; 3) allowing cities to leverage three years worth of allocation; 4) allowing 20A funds for street light conversions that are owned by the utilities; 5) addressing cost-recovery ratemaking for telecommunications and cable companies so that their funding constraints do not cause any delays to conversion projects; 6) encouraging cities to work with Rule 20B and C neighborhoods to coordinate Rule 20A projects; 7) having regular meetings between utilities and cities; and 8) when undergrounding projects are underway, having meetings to establish a completion date, discuss delays, and meet and confer on any issue thwarting timely completion.

D. Consumer Advocacy Groups

CAUSE: California Alliance for Utility Safety and Education (CAUSE) wants hearings on complete line life cycles so consumers can know whether the costs of undergrounding are justified on safety and reliability grounds. CAUSE also suggests that 20A criteria should be expanded to include schools, sensitive areas, tree-lined streets, and historic districts; urges a new Planning Guide;¹⁰ the creation of an Ombudsperson program; the development of an audit procedure; and a review of any utility waivers on undergrounding new construction projects.

CCAE and FUND: Citizens Concerned About EMFS (CCAE) and Fund for the Environment (FUND) advocate the following: 1) require the utilities to keep data on undergrounding costs, life cycle costs, service reliability, and safety; 2) allow local governments to be the sole determiners of what projects are in the "general public interest;" 3) approve the merger of 20A and B funds as long as they are distributed fairly to the rich and poor neighborhoods; 4) permit cities to engage in competitive bidding and to choose lowest bidder; and 5) the legislature should promote alternative sources of financing.

The Utility Reform Network (TURN), California Small Business Roundtable (CSBRT), and California Small business Association (CSBA), filed a Joint Comment and Joint Reply: In its comments TURN, CSBRT, and CSBA suggest having the utilities identify the monthly charge for undergrounding on each customer's bill as a separate line item and allocating the conversion costs on a cents per kilowatt hour basis. In general, they reject any proposals that could lead to cost increases for ratepayers, or break down the critical differences between 20A and B projects [public interest], and instead encourage the Commission to focus on ways to reduce costs and improve accountability.

OFFICE OF RATEPAYER ADVOCATES (ORA): ORA recommends a moratorium on any rate increase in this current time of high electric rates, and in fact, suggests that conversion projects should be tied to rates ¾ when rates are low, conversion can go forward, when high, impose a moratorium. ORA voices support for the Commission considering the following proposals that were suggested by others: 1) establishing a flat universal 20% credit for 20B projects; 2) revamping revenue allocation formulas so that 20A funds are based on overhead meters; 3) allowing cities to trade allocated funds with a referendum vote; 4) requiring a city to use, or lose, designated funds within a five year period; 5) using a generation-based collection method for funds; 6) giving new communities a credit [since they have already paid for their own undergrounding]; 7) permitting affected telecommunication carriers to seek rate recovery for undergrounding as a limited exogenous expense; 8) having the Commission promote coordination and cooperation by establishing loose guidelines; 9) providing an appeal process for delays and performance problems, and some redress for citizens affected by delays in 20B and C projects; and 10) authorizing competitive bidding for projects as long as the utilities have control of the design and specifications and all projects are subject to utility review and approval.

E. Telecommunications

PacBell; California Cable Television Association; AT&T Communications of California, Inc. and Worldcom, Inc.; and Verizon California Inc., and Verizon West Coast: Each of the above telecommunications and cable companies submitted individual comments. However, the sum and substance of the individual comments was that the Commission needs to devise a competitively neutral compensation mechanism to ensure that all service providers that incur conversion costs are compensated.

F. Others

Comments from others, including private citizens of community and neighborhood groups, ranged from concerns over downed power lines in fire and earthquakes disasters and their impediment to emergency response, to advocating competitive bidding for the engineering, design, and construction of conversion projects. Additional issues raised by these commenters include allowing 20A money to be pooled with other public and private funds; authorizing the increase of 20B funding from 20% to 80%; allowing 20A funds to seed 20B projects; allowing ratepayer money to seed the first 25% of any conversion project (A, B, or C); and exploring alternative methods of financing conversion projects. Many questioned why overhead pole and line installation is still continuing, and in fact, proceeding at a faster pace than conversion projects, which results in a sum loss each year of undergrounding. In addition, some inquired into whether 20A funds were ever intended for purely residential streets, or whether the primary purpose was always public interest.