ALJ/CAB/avs

Decision 01-12-009 December 11, 2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Into Implementation of Assembly Bill 1149, Regarding Underground Electric and Communications Facilities.

Rulemaking 00-01-005

(Filed January 6, 2000)

INTERIM OPINION REVISING THE RULES FOR
CONVERTING OVERHEAD LINES TO UNDERGROUND

TABLE OF CONTENTS

Title Page

INTERIM OPINION REVISING THE RULES FOR
CONVERTING OVERHEAD LINES TO UNDERGROUND 1 1

I. Summary 3 3

II. Background 4 4

III. Tariff Rules Governing the Conversion
of Overhead Lines to Underground Lines 4 4

IV. Procedural History 7 7

A. Workshops 8 8

B. Public Participation Hearings 8 8

C. Letter to the Legislature in Lieu of a Report 11 11

V. Positions of the Parties 11 11

A. General Characterization of Parties' Positions 11 11

B. Municipalities 12 12

C. Utilities 15 15

D. Consumer Advocacy Groups 16 16

E. Telecommunications 18 18

F. Others 18 18

VI. Discussion 19 19

A. Commission Recommendations 20 20

1. Limited Expansion of the Definition of the Public Interest: 21 21

2a. Increased Leverage of 20A and 20B Funds: 21 21

2b. Allow Cities to Mortgage Rule 20A Allocations
For Up to Five Years 22 22

3. Improve Communication on the
Status of Undergrounding Projects: 22 22

4. Improve the Collection of Cost Data
Through Standardized Reporting: 23 23

5. Improve Coordination Among the Utilities,
the CPUC, Municipalities and the Residents
Through an Updated Undergrounding Planning Guide 25 25

B. Issues for Phase 2 25 25

VII. Public Review and Comment 26 26

Findings of Fact 27 27

Conclusions of Law 28 28

ATTACHMENT A
ATTACHMENT B
ATTACHMENT C

INTERIM OPINION REVISING THE RULES FOR
CONVERTING OVERHEAD LINES TO UNDERGROUND

I. Summary

This Decision revises the rules governing the State's program to convert overhead electric and communications distribution and transmission lines to underground. In brief, this order expands Rule 20A criteria; extends the use of rule 20A funds; allows cities to mortgage 20A funds for five years; requires standardized reporting from the utilities; improves communication between utilities and residents; and orders the creation of an up-dated Undergrounding Planning Guide.

This decision also identifies issues for a Phase 2 proceeding. In Phase 2, we will address issues that we were unable to fully cover in Phase 1 without hearings. Some issues we will explore in Phase 2 are: 1) whether or not to establish standards for conversion projects so third parties can competitively bid on projects with no compromise of quality, safety, or reliability; 2) whether incentive mechanisms are an effective cost management tool; 3) whether there should be a "breakpoint"¹ in allowing new overhead pole and line installations; or whether the current exemption process is working; 4) whether there are benefits to listing the charges for undergrounding as a line item on utility bills; 5) whether there is a fair and equitable, competitively neutral recovery mechanism for telecommunications carriers and cable companies to recover their undergrounding costs; 6) whether adjustments in the Rule 20A allocation formula is appropriate; 7) whether there are reforms to the statewide conversion program that are more properly within the legislative domain.²

¹ In this context, a break point would denote where there would be no further installations of overhead lines. The granting of exemptions for new construction is frustrating the overall goals of the program. ² Possible reforms to suggest to the legislature include the creation of an Ombudsperson to oversee all conversion projects; designing different financing mechanisms for communities for Rule 20B and C projects including addressing the tax implications associated with these projects; the funding of an appeal process at the Commission for any aspect of the conversion project; and identifying the state's goal for the undergrounding program and determining if the current level and method of funding the program is sufficient.