PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
E-4
ENERGY DIVISION RESOLUTION G-3320
December 11, 2001
Resolution G-3320. Southern California Gas Company ("SoCalGas") requests Commission authorization to implement a new service allowing telecommunication carriers and cable TV companies ("Carriers") to place fiber optic cable in SoCalGas' active gas pipelines under a tariffed rate. SoCalGas' request is denied without prejudice.
By Advice Letter 3040 filed on July 13, 2001.
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SUMMARY
SoCalGas filed Advice Letter 3040 on July 13, 2001, requesting Commission authorization to implement a new category of tariffed service allowing telecommunications carriers and cable television companies ("Carriers") to place fiber optic cable in SoCalGas' active gas pipelines. SoCalGas also submitted as part of AL 3040, a new rate schedule, Schedule No. G-FIG, "Fiber Optic Cable in Gas Pipelines" and a new pro forma contract, "Master Services Contract, Rate Schedule No. G-FIG, Fiber Optic Cable in Gas Pipelines" (Form No. 6597-13).
The Commission issued its rules governing access to the right-of-ways of electric utilities by telecommunications firms in D.98-10-058. This Decision specifically excludes gas utilities from inclusion under the Access rules. Even though the telecommunications and cable service proposed by SoCalGas is similar to that discussed in D.98-10-058, in numerous ways, it is distinguishable. The proposed service by SoCalGas is unlike any other brought before the Commission, which warrants a full evaluation and Commission decision.
This Resolution denies the advice letter without prejudice. This Resolution also grants the protest of Office of Ratepayer Advocates ("ORA") to the extent it recommends the Commission deny SoCalGas's advice letter without prejudice and the protest of California Cable Television Association ("CCTA") is moot. The advice letter proposes a new form of service that, raises significant policy issues, has potential safety, environmental and service implications, seeks to expand the scope of the Commission's decision on access to an electric utility's right-of-ways (D.98-10-058), involves affiliate issues and includes aspects that necessitate discovery and more formal rulings. Therefore, if SoCalGas wishes to obtain approval of this service, it must file an application with the Commission. Because the proposed service in the advice letter suggests potential CEQA issues, SoCalGas should include with its application a Proponent's Environmental Assessment consistent with Rule 17.1 of the Commission's Rules of Practice and Procedure.
BACKGROUND
SoCalGas filed Advice Letter 3040 on July 13, 2001, requesting Commission authorization to implement a new category of tariffed service allowing telecommunications carriers and cable television companies ("Carriers") to place fiber optic cable in SoCalGas' active gas pipelines. SoCalGas also submitted as part of this filing, a new rate schedule, Schedule No. G-FIG, "Fiber Optic Cable in Gas Pipelines" and a new pro forma contract, "Master Services Contract, Rate Schedule No. G-FIG, Fiber Optic Cable in Gas Pipelines" (Form No. 6597-13). Under G-FIG, SoCalGas will recover all out-of-pocket costs for making its pipelines ready for installation of fiber optic cable and on-going operating and maintenance costs, plus a recurring annual charge. SoCalGas is not providing the technology for the placement of fiber optic cable in its pipelines, yet they will install and own all facilities necessary to place cable in its pipelines. SoCalGas will not own the cable itself and all technology used must meet specific criteria acceptable to SoCalGas. The utility asserts that it is not liable for any damage to Carrier's cable from the actions of third parties. SoCalGas states, "In general, SoCalGas believes that opening its pipelines to installation of fiber optic cable is consistent with the intent of the Federal Telecommunications Act of 1996.
NOTICE
Notice of AL 3040 was made by publication in the Commission's Daily Calendar. SoCalGas states that a copy of the Advice Letter was mailed and distributed in accordance with Section III-G of General Order 96-A.
PROTESTS
Advice Letter AL 3040 was protested by ORA on August 1, 2001 and CCTA on August 2, 2001.
SoCalGas responded to the protests of ORA and CCTA, on August 8, 2001.
In its protest, ORA alleges that SoCalGas' proposal to allow fiber optic cable to be installed inside active gas pipelines raises significant questions regarding the impacts of this service on pipeline safety, capacity, and future capacity expansions. ORA also notes that due to the fact that this is a unique offering, setting the appropriate market rate will be an issue. Finally, ORA believes SoCalGas' interaction with its affiliate needs to be assessed. CCTA protests that, the proposed advice letter highlights potential for preferential access to affiliates, SoCalGas has failed to justify its proposed prices, and SoCalGas' suggestion that it is retaining for itself the authority to increase its rates for this new service by advice letter.
Pipeline Safety
ORA argues that SoCalGas has not properly addressed the issue of safety. SoCalGas proposes to drill holes into its pressurized gas pipelines in order to circumvent the valves used to shut off a particular line. ORA states that SoCalGas does not offer evidence that it has demonstrated that such holes can be created and sealed safely or that these holes will not degrade over time and further increase the possibility of leaks. ORA further argues that SoCalGas has not acknowledged the impact of leaks in more densely populated areas where the potential for leaks could be greater and offer more inconvenience to the public.
In response to ORA's comments about the frequency with which fiber optic cable will exit and re-enter the gas pipelines, SoCalGas states that it is requiring that there be such an exit and entry at least every 500 feet in the most dense areas of SoCalGas' service territory, and that such pipelines are not transmission pipelines, but rather distribution lines, which typically operate at pressures of 60 pounds per square inch (psi) or less, running in most streets. Furthermore, SoCalGas states that these distribution mains already have "holes carved" (to use ORA's language) into them for the taps for gas services running to individual consumers.1
SoCalGas also emphasizes that it is seeking no modifications in existing safety regulations in order to accommodate this service. Rather, any carrier wishing to place fiber optic cable in SoCalGas' pipelines must provide and demonstrate to SoCalGas a technology for doing so that meets all existing safety regulations.2 SoCalGas, by letter dated November 7, 2001, submitted that Sempra Communications and Sempra Fiber Links have satisfied SoCalGas that their technology for placing fiber optic cable in steel gas pipelines meets SoCalGas' critieria.
SoCalGas further argues that ORA's protest does not introduce any specific way in which placing fiber optic cable in SoCalGas' pipelines would violate any existing gas safety regulations. Absent showing of some specific violation or inconsistency, the Commission should not deny the proposed service on safety grounds.
Capacity
ORA protests that SoCalGas has not properly addressed the impacts on operations, existing capacity and future expansion. ORA believes that any maintenance required on the conduit or fiber optics will necessitate shutting off of the respective gas pipeline, which will impose a cost on the ratepayers either through disruption or curtailment of service. ORA states that there must be some "offsetting" benefit to the SoCalGas' ratepayers that would justify the cost and inconvenience. SoCalGas responds to the issue of shutting off gas service by stating that they did not mention such impact because SoCalGas does not expect that there will be any such impact. SoCalGas plans to require that such technology would not necessitate the interruption of gas service either upon the initial installation or subsequent maintenance. In the case that installation of fiber optics cable could interfere with pipeline capacity needed for service, SoCalGas has drafted special conditions upon which this potential is taken into account.3
ORA also believes that the current flowing capacity will decline as a direct result of offering the proposed tariff service and questions the prudence of introducing a tariffed service that necessarily obstructs gas pipelines.4 In response to this argument, SoCalGas emphasizes only pipelines that operate at 60 psi or less will be eligible for this service thereby rendering ORA's protest completely inapplicable to SoCalGas' major transmission pipeline system and there would be no impact whatsoever on SoCalGas' general system pipeline capacity. SoCalGas further reemphasizes any possible impact would be very local in nature, affecting only a particular distribution line.
Future Capacity
Finally, ORA foresees this installation hastening the day when capacity of the distribution system must be expanded and thus merely shifting the burden of trenching from the telecommunications carriers to SoCalGas. ORA suggests that the Commission should consider whether it is necessary for the public's convenience to make such extreme accommodations to allow telecommunication carriers to bring fiber optics into urban areas along "the last mile."5
SoCalGas responds to future expansions by stating that, if after a fiber optic cable is installed gas load growth more than 12 months in the future creates the need to add pipeline capacity, then the Carrier will be offered the choice of paying the proportionate share of adding capacity needed or removing its cable and conduit from the pipeline. Thus, in the case of capacity constraints more than 12 months in the future, the Carrier may elect to terminate service or relocate its route, such that no additional pipeline construction or trenching would occur. SoCalGas reassures that in most cases, the placement of fiber optic cable in gas pipeline will reduce trenching. SoCalGas suggests that in the unusual cases in which this placement results in addition, more than a year later, of gas pipeline capacity requiring trenching, there will be no more trenching than if the carrier had originally trenched and installed fiber optic cable in its own facilities separate from SoCalGas' pipeline.
Affiliate Issues
ORA argues that this proposal raises significant affiliate issues in that SoCalGas' affiliate, Sempra Fiber Links and Sempra Communications may be the only entities to use this service. ORA further believes that before the Commission approves the service, SoCalGas should be required to demonstrate whether any entity other than an affiliated carrier could provide the necessary technology to utilize the proposed service.
SoCalGas believes its proposed tariff provisions and its criteria for evaluating a technology for safety are nondiscriminatory. Also, SoCalGas understands that its affiliated companies are interested in licensing their technologies to other telecommunications companies requesting the proposed service. SoCalGas also admits such unaffiliated companies have contacted them.
CCTA protests that the proposed advice letter provides for preferential access to affiliates. SoCalGas has proposed a method of `first-come/first-serve" in order to determine the order applications will be reviewed and thus service awarded or denied. CCTA feels that since Sempra Fiber Links has already begun demonstrating this service to SoCalGas, that they have their "foot in the door" in regard to being awarded rights to the proposed service.
SoCalGas cites Special Condition 2, which provides that all requests for service within 30 days of the date the schedule first becomes effective will be considered as received at the same time and requests for the same space will be awarded by lot. SoCalGas intends that any requests must be for a specific route.6
Pricing
ORA also disagrees with the pricing mechanism SoCalGas has proposed. SoCalGas proposes cost-based rates, as set forth in D. 98-10-058, issued in R.95-04-043. ORA contests this by noting the distinguishable difference between the rights of way and the sole means by which SoCalGas services its captive customers: the inside of the pipelines. ORA believes this current proposal does not grant access to the rights of way, but rather sharing of gas pipeline space. SoCalGas disagrees with ORA in light of Commission precedent. In D.98-10-058, the Commission adopted cost-of-service pricing for the attachment of fiber optic cable to electric utility conduit. Furthermore, SoCalGas feels if ORA disagrees with this required pricing methodology, it should petition the Commission to open a new investigation on this subject.
CCTA protests that SoCalGas has failed to justify its proposed prices. They feel the list of maintenance and up-keep (to-do list) 7 does not constitute proof that the proposed $3000.00 per month charge is cost-based. Similarly, SoCalGas does not provide cost data to justify the proposed annual recurring charge of $347.57 per mile. Regarding the $3000.00 per month charge, SoCalGas agrees that there is not a precise derivation of this charge, which is a fixed per-carrier charge that does not vary with the number of miles used by the carrier. SoCalGas notes however, that under this tariff, it will not make separate charges for its cost for copies and preparation of maps, drawing, or plans necessary for evaluating the availability of space for carriers in SoCalGas' pipeline facilities, or other information related to responding to requests for access. In this manner, SoCalGas hopes to avoid the piece-mealing of charges. Regarding the annual recurring charge of $347.57, SoCalGas submitted work papers showing a calculation on traditional, utility cost-of-service basis. SoCalGas proposes to charge according to the Commission's adopted cost-of-service rate for poles and supporting anchors.8
CCTA also maintains that SoCalGas does not assert the proposed charges are cost-based despite the fact that cost and pricing principles governing rights of way facilities requires charges to be cost-based. SoCalGas made no comment.
Procedural
Finally, CCTA disagrees with SoCalGas' suggestion that it is retaining for itself the authority to increase its rates for this new service by advice letter, pursuant to General Order 96-A VI, which sets forth the procedure for filing increased rates. 9 SoCalGas contradicts CCTA by stating they are not proposing that such an advice letter could become effective with out issuance of Commission resolution approving such an increase. Furthermore, CCTA is forced to concede that G.O. 96-A, Section VI allows advice letter filings where the increases are minor in nature. SoCalGas submits that this exception may well apply to this service. SoCalGas also believes that the charges for SoCalGas' earthquake valve installation service, which are provided for in SoCalGas' tariff rule 10, are precedent for authorizing an advice letter filing for SoCalGas to propose increases in a tariffed SoCalGas "ancillary" service that is comparable to the proposed service here (see D.96-09-044).
Tariffing
ORA questions why SoCalGas is proposing to tariff this service as opposed to offering it as a nontariffed service. They state that there is no apparent reason why this is a service that should be tariffed, and also that it has no connection whatsoever to providing natural gas service to captive customers. ORA feels that SoCalGas relied upon principles for similar tariffed services developed in R.95-04-043, the Commission's rulemaking on access and use of rights of way by telecommunication firms. ORA believes the rulemaking, however, applied access policies to the rights of way of Incumbent Local Exchange Carriers, Competitive Local Exchange Carriers, and electric utilities. Further, the rulemaking contemplated the use of structures and property.10 ORA advises the introduction of a secondary and competing use of the inside space of SoCalGas' pipelines would effectively undermine SoCalGas' primary responsibility to serve its captive customers within its franchise service territory under terms of its original certificate of public convenience and necessity.
SoCalGas disagrees that their proposal ought to be a nontariffed service. They feel the nontariffed product or service process and authorization to which ORA refers is apparently that adopted by the Commission in D.97-12-088, as subsequently modified, in Rule VII of the affiliate transaction rules appended to that decision. SoCalGas cites Rule VII C. of the affiliate transaction rules, which list four ways a utility may offer service. The third way listed is, "New products and services that are offered on a tariffed basis..." Furthermore, SoCalGas feels it is clear from Rule VII that the Commission does not make nontariffed status the only way that a utility may offer a service.
SoCalGas asserts that a tariffed approach maximizes the Commission's regulation of the service and requires the greatest degree of Commission oversight over any changes in the terms and conditions of the service. They also recommend that because they are willing to accept the higher level of Commission regulation of its proposed service, there is no reason to require a lower level of regulation by requiring the service to be nontariffed. Finally, in response to ORA's comment that this service will interfere with SoCalGas' primary responsibility to provide gas service, SoCalGas admits that this is more of a reason to have this service tariffed, and not less.
ORA contends that SoCalGas should have to demonstrate that the use of its pipelines by carriers is permissible under the terms of SoCalGas' franchise agreements with cities and counties in its service territory. SoCalGas refutes this point by implying that this is not an issue there is any need or reason to address because it is not in the Commission's concerns to enforce utility compliance with city and county franchises. In addition, ORA overlooked the fact that SoCalGas' proposed tariff clearly provided that its franchise agreements will not and cannot be relied on by carriers for the right to place their fiber optic cables in SoCalGas' pipelines.
DISCUSSION
In AL 3040, SoCalGas is requesting Commission authorization to implement a new category of tariffed service allowing Carriers to place fiber optic cable in SoCalGas' active gas pipelines. We do not believe that an advice letter process is the suitable forum to allow thorough review of a new tariffed service that has possible impacts on the utilities primary service of providing gas to its customers. A more formal application process is required to determine whether this service is reasonable, in the public convenience and necessity, and free of anti-competitive characteristics. Although, D.98-10-058 is referenced by SoCalGas in providing justification for proposing this service, this reference does not provide an applicable precedent for SoCalGas' proposal. SoCalGas has not provided sufficient information showing why this Decision is applicable. Furthermore, protests have raised a number of issues that warrant a more thorough review and evaluation than is possible through the advice letter process. Lastly, the proposed activities may raise potential environmental concerns that SoCalGas has not addressed and should be reviewed under the California Environmental Quality Act.
Authority of Advice Filing
SoCalGas indicates that it is filing this advice letter under the authority of the Commission's General Order 96-A. Typically, however, tariffs have been approved in Commission proceedings initiated by application to the Commission, or similar appropriate vehicle. It is important that, if the Commission authorizes a schedule of rates, charges, and terms of service, this request be given the thorough review afforded by the application process. SoCalGas is instructed that, if it wants to offer this service, the company should file an application with the Commission.
Description of New Rate Schedule
SoCalGas states, "Under the new rate schedule in this filing, SoCalGas will offer to allow Carriers to place fiber optic cables in SoCalGas' active gas pipelines. Carriers of this service will pay a monthly charge of $3,000. SoCalGas will also charge an up-front fee for all out-of-pocket costs and will finally charge an annual recurring charge per mile of its pipelines used by a Carrier.
Pricing
ORA disagrees with SoCalGas' derivation of cost-based rates, as set forth in D. 98-10-058, which determined pricing for sharing of the rights-of-ways when no disruption of the fundamental service was an issue. ORA believes this current proposal grants sharing of gas pipeline space which is completely dedicated to public service. CCTA protests that SoCalGas has failed to justify its proposed prices. SoCalGas responded to CCTA's protest with its justification for prices and charges.
We acknowledge the protests of ORA and the response of SoCalGas. Although the proposed service by SoCalGas is similar to those services discussed in D.98-10-058, they are not contemplated or addressed by this Decision. The Commission in D.98-10-058, p. 2 states:
"We adopt rules herein governing the nondiscriminatory access to the poles, ducts, conduits and rights-of-way ("ROWs") applicable to all CLCs competing in the local exchange market within the service territories of large and mid-sized ILECs...At this time, we shall not apply these rules to other categories of investor-owned public utilities such as gas, water and other steam utilities. We will consider expanding the scope of the rules at a later time to cover additional classes of utilities." (emphasis added)
D.98-10-058 specifically states those utilities for which the Decision applies and a gas utility is not among them. The fact the Commission decided that expanding the scope of the above referenced rules was not applicable to gas utilities provides a strong reason to conclude that such new services should not be filed through an advice letter process.
SoCalGas asserts that there is Commission precedent for its proposed cost and pricing mechanism. In D.98-10-058, the Commission adopted cost-of-service pricing for the attachment of fiber optic cable to electric utility conduit. However, D.98-10-058 did not set a precedent for cost-of-service pricing for the insertion of fiber optic cable into active gas pipelines. First, the above referenced Decision was intended for specific classes of utilities: electric and telecommunication. Secondly, the Commission did not set precedent for cost-of-service pricing in this Decision. On page 50, the Commission specifically discusses cost-of-service pricing as it pertains to this Decision and states, "Our prescribed standards are not intended to create a disincentive for parties to negotiate their own arrangements tailored to individual circumstances, but rather are intended to provide default prices and terms in the event parties fail to reach agreement."11 (emphasis added)
D.98-10-058, p. 51, also summarizes the Commission's view as applicable to any situation regarding rights-of-ways by saying, "Given the inherent bargaining advantage of incumbents, the next question is what pricing basis will promote a more competitively neutral outcome." We therefore recommend that SoCalGas' pricing method be an issue taken up in the application process in order to determine a method of pricing that will produce a competitively neutral outcome.
Affiliate Issues/Awarding Procedure
SoCalGas has proposed a method of `first-come/first-serve' in order to determine the order applications will be reviewed and service will be eventually awarded or denied. ORA argues that this proposal raises significant affiliate issues in that SoCalGas' telecommunications affiliate, Sempra Communications, may be the only entity to use this service. CCTA notes the proposal highlights potential for preferential access to affiliates. CCTA feels Sempra Fiber Links has a competitive advantage since it has begun demonstrating this service to SoCalGas and thus may be awarded rights in a discriminatory manner.
SoCalGas asserts it will apply its tariffs and criteria in a nondiscriminatory manner and would welcome the qualification of technologies by persons other than affiliates. Also, SoCalGas understands that its affiliated companies are interested in licensing their technologies to other telecommunications companies requesting the proposed service. SoCalGas addresses CCTA's protest citing that Special Condition 2 provides that all requests for service within 30 days of the date the schedule first becomes effective will be considered as received at the same time and requests for the same space will be awarded by lot. SoCalGas intends that any requests must be for a specific route.12
We believe that SoCalGas' request for the method of `first-come/first-serve' on awarding the service should be determined through an application because it is not clear whether the proposed awarding procedure is equitable and nondiscriminatory. It is important to understand that this service is similar to awarding pipeline capacity to a firm, but also, once one company has been awarded access to a specific pipeline route, no other companies will be allowed to compete within this pipeline. An unregulated company will have a monopoly in this market. An application would provide the Commission a full record to decide this issue.
Tariff vs. Nontariff Arguments
ORA questions why SoCalGas is proposing to tariff this service as opposed to offering it as a nontariffed service. They state that there is no apparent reason why this is a service that should be tariffed, and also that it has no connection whatsoever to providing natural gas service to captive customers. SoCalGas feels that a tariffed approach maximizes the Commission's regulation of the service and requires the greatest degree of Commission oversight over any changes in the terms and conditions of the service.
SoCalGas further disagrees with whether this service should be nontariffed. They feel the nontariffed product or service process and authorization to which ORA refers is apparently that adopted by the Commission in D.97-12-088, as subsequently modified, in Rule VII of the affiliate transaction rules appended to that decision. SoCalGas cites Rule VII C. of affiliate transaction rules, which list four ways a utility may offer service. The third way listed is, "New products and services that are offered on a tariffed basis..." Furthermore, SoCalGas feels it is clear from Rule VII that the Commission does not make nontariffed status the only way that a utility may offer a service. Again we believe that the issue of tariffed versus nontariffed service should be resolved through an application process.
Safety and Environmental Issues
A number of activities related to the proposed service suggest potential environmental impacts should be considered. Also, ORA contends SoCalGas has not properly addressed the issue of safety. ORA states that SoCalGas does not offer evidence that it has demonstrated that holes can be created and sealed safely or that these holes will not degrade over time. ORA further argues that SoCalGas has not acknowledged the impact of leaks in more densely populated areas where the potential for leaks could be greater and offer more inconvenience to the public. SoCalGas states that these distribution mains already have holes in them for the taps for gas services running to individual consumers.13 Any carrier wishing to place fiber optic cable in SoCalGas' pipelines must provide and demonstrate to SoCalGas a technology for doing so that meets all existing safety regulations.14 SoCalGas, in a Final Report dated September 28, 2001, conducted an analysis of the Fiber-In-Gas technology for active steel natural gas pipelines. This report was provided under Section 583 of the Public Utilities Code because it includes technical information proprietary to Sempra Communications/Sempra Fiber Links.
The issue of safety will not be decided in this Resolution and thus submits that safety be one of the topics of debate, if SoCalGas wishes to file an application. In addition, if SoCalGas submits an application for approval of the proposed service, it shall include a Proponents Environmental Assessment (PEA) consistent with Rule 17.1 of the Commission's Rules of Practice and Procedure.
Revenue and Accounting Treatment
SoCalGas states that, "The service will also provide a source of additional miscellaneous revenues, which like other miscellaneous revenues, can be used to reduce the cost of gas service." We submit that SoCalGas has neglected to address a requirement as set forth in General Order 96-A, III C which requires that, "If the tariff schedules as filed will result in an increase or decrease in revenues, the advice letter should give an estimate of the annual revenue effect thereof. Such estimate should be by areas, schedules and classes of customers where practicable." If we are to conduct a cost/benefit analysis, such benefits should be specifically addressed in the application. Concurrently, SoCalGas has not documented any costs that may be incurred by the captive customers of natural gas. If SoCalGas would like to propose this service they should document how their customers will benefit with appropriate figures in an application.
Benefits of New Rate Schedule
SoCal believes that opening its pipelines to installation of fiber optic cable is consistent with the intent of the Federal Telecommunications Act of 1996.
The Commission's view is clearly discussed in D.98-10-058:
The FCC adopted rules governing access to ROW in its Interconnection Order, FCC 96-325, adopted August1, 1996, in conformance with the Act. As set forth in § 224(c)(1), however, the FCC does not have "jurisdiction with respect to rates, terms, and conditions, or access to poles, ducts, conduits, and rights-of-way as provided in subsection (f) for pole attachments in any case where such matters are regulated by a State." This Commission, therefore, has jurisdiction to exercise reverse preemption, setting our own rules governing access to ROW, and we are not obligated to conform to the FCC rules. The discretion of state and local authorities to regulate in the area of pole attachments is circumscribed by § 253 which invalidates all state or local legal requirements that "prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service."
SoCalGas' assertion that the opening up of gas pipelines is consistent with the intent of the Federal Telecommunications Act of 1996 is incorrect. Accordingly, it is within the CPUC's authority to determine whether the proposed service is in the customer's best interests.
COMMENTS
The comment period on the draft Resolution G-3320 was shortened in order to expedite the Commission's voting on this Resolution. Comments were initially due on November 15, 2001, with reply comments due on November 19, 2001. On November 14, 2001, the California Cable Television Association (CCTA) requested an extension to November 21, 2001 to file comments on Draft Resolution G-3320, which was mailed to parties on November 9, 2001. CCTA's request was granted. The due date for reply comments was then changed to November 27, 2001.
Comments were filed by SoCalGas and Sempra Communications on November 15th and by CCTA on November 26th. Reply comments were filed on November 27th by SoCalGas and Sempra Communications. Comments and reply comments have been incorporated in this Resolution.
FINDINGS
1. Southern California Gas Company (SoCalGas) filed Advice Letter 3140-G on July 13, 2001, requesting Commission authorization to implement a new category of tariffed service allowing telecommunications carriers and cable television companies ("Carriers") to place fiber optic cable in SoCalGas' active gas pipelines.
2. On July 13, 2001, SoCalGas also submitted as part of AL 3040, a new rate schedule, Schedule No. G-FIG, "Fiber Optic Cable in Gas Pipelines" and a new pro forma contract, "Master Services Contract, Rate Schedule No. G-FIG, Fiber Optic Cable in Gas Pipelines" (Form No. 6597-13).
3. Notice of AL 3040 was made available by mail to the parties listed in Attachment A of AL 3040 in accordance with Section III.G of General Order 96-A. Attachment A includes the parties who responded to the draft posting of this advice letter and requested a copy once it was filed.
4. Protests to AL 3040 were filed by Office of Ratepayers Advocates (ORA) on August 1, 2001, and California Cable Television Association (CCTA) on August 2, 2001.
5. Under this proposed service, SoCalGas will recover all out-of-pocket costs for making its pipelines ready for installation of fiber optic cable and on-going operating and maintenance costs, plus a recurring annual charge.
6. This service will not require SoCalGas to provide the technology for the placement of fiber optic cable in its pipelines, yet they will install and own all facilities necessary to place cable in its pipelines.
7. SoCalGas proposes they will not own the cable itself and all technology used must meet specific criteria acceptable to SoCalGas. Further, the utility is not liable for any damage to Carrier's cable from the actions of third parties.
8. SoCalGas indicates that it is filing this advice letter under the authority of the Commission's General Order 96-A.
9. Typically, tariffs have been approved in Commission proceedings initiated by application to the Commission, or similar appropriate vehicle.
10. SoCalGas is instructed that, if it wants to offer this service, the company should file an application with the Commission.
11. D.98-10-058, titled, "Order Instituting Rulemaking on the Commission's Own Motion into the Competition for Local Exchange Service" states, "Our prescribed standards are not intended to create a disincentive for parties to negotiate their own arrangements tailored to individual circumstances, but rather are intended to provide default prices and terms in the event parties fail to reach agreement."
12. SoCalGas calculated the charges for the proposed service in a manner consistent with the Commission's calculation in D.98-10-058 of annual ownership charges for the placement of similar cable in the underground conduits of major electric utilities.
13. ORA disagrees with SoCalGas' derivation of cost-based rates, as set forth in D. 98-10-058, which determined pricing for access to the right-of-ways when no disruption of the fundamental service was an issue.
14. SoCalGas responded to ORA's protest by citing D.98-10-058 as precedent.
15. D. 98-10-058 is not applicable to gas utilities.
16. CCTA protests that SoCalGas has failed to justify its proposed cost-based prices.
17. We do not believe D.98-10-058 is the proper Decision to reference because it was specifically intended for telecommunication utilities and electric utilities, therefore the Decision's applicability is better to be decided in an application, if one is sought.
18. Under this service, SoCalGas proposes a `first-come/first-serve' method of awarding the service to an applicant.
19. ORA argues that this proposal raises significant affiliate issues in that SoCalGas' affiliate, Sempra Fiber Links and Sempra Communications may be the only entities to use this service.
20. CCTA feels Sempra Fiber Links, an affiliate of SoCalGas, has a competitive advantage since it has begun demonstrating this service to SoCalGas and thus may be awarded rights in a discriminatory manner.
21. SoCalGas refutes CCTA's protest citing that Special Condition 2 provides that all requests for service within 30 days of the date the schedule first becomes effective will be considered as received at the same time and requests for the same space will be awarded by lot.
22. We acknowledge the protest of CCTA and submit that the issues of affiliate dealings and awarding of capacity are taken up in the application process.
23. We believe that the `first-come/first-serve' proposal on awarding the service should be filed in an application.
24. SoCalGas cites Rule VII C. of affiliate transaction rules, which list four ways a utility may offer service. The third way listed is, "New products and services that are offered on a tariffed basis..."
25. ORA contends SoCalGas has not properly addressed the issue of safety.
26. SoCalGas states that these distribution mains already have holes in them for the taps for gas services running to individual consumers. Any carrier wishing to place fiber optic cable in SoCalGas'pipelines must provide and demonstrate to SoCalGas a technology for doing so that meets all existing safety regulations.
27. We acknowledge the issue of safety being a concern and would recommend this issue to be addressed in an application in order to build an appropriate record.
28. SoCalGas states that the service will also provide a source of additional miscellaneous revenues, which like other miscellaneous revenues, can be used to reduce the cost of gas service.
29. SoCalGas has not addressed the requirement as set forth in General Order 96-A, III.C which requires, "If the tariff schedules as filed will result in an increase or decrease in revenues, the advice letter should give an estimate of the annual revenue effect thereof."
THEREFORE IT IS ORDERED THAT:
1. SoCalGas' Advice Letter AL 3040 is denied without prejudice.
2. If SoCalGas desires to offer the proposed service, it must file an application with the Commission to do so.
3. The protest of ORA is granted to the extent it recommends the Commission deny the advice letter without prejudice. All other protests are moot.
4. This Resolution is effective today.
I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on December 11, 2001; the following Commissioners voting favorably thereon:
_____________________
WESLEY M. FRANKLIN
Executive Director
1 In both built-up areas and single-family residential areas, there are already "holes carved" into the distribution mains much more frequently than every 500 feet to connect with services to individual customers.
2 Special Condition 4 of SoCalGas' proposed tariff: Any technology provided to Utility by Carriers for placing fiber optic cable in gas pipelines (including supporting structures and equipment) must meet nondiscriminatory standards of the Utility for safety and reliability. Any such technology must also meet all applicable pipeline safety regulations of the United States Department of Transportation and safety regulations of the Commission.
3 Special Condition 12 of SoCaGas' proposed tariff: Utility may deny service under this schedule for a particular location or route if Utility determines that there is now or will be in the next 12 months, insufficient capacity in its pipelines to accommodate placement of fiber optic cable, or that placement of fiber optic cable would create a threat to the safety or reliability of the Utility's gas service. Utility may offer Carrier service for a particular location or route where there will be insufficient capacity within 12 months on condition that Carrier agrees to pay a portion acceptable to Utility of the cost of increasing the capacity of Utility's pipelines in that particular location of route.
4 A 1.2-inch diameter conduit reduces the cross-sectional area of a 6-inch distribution pipe by about 4%, and an 8-inch pipe will see a 2.2% reduction in area.
5 "The last mile" -- the space between the high-speed cables and office buildings and homes.
http://www.cnn.com/2001/TECH/science/02/24/cover.terabeam/
6 This means that if anyone requests space on a specific route within 30 days after the date the Commission authorizes the rate schedule to become effective, they will be on the same footing as any SoCalGas affiliate that has requested service on that route by that deadline.
7 This list includes: increased leak surveys of pipelines contain fiber optic cable mapping and tracking requirements, emergency response procedures and call-out coordination, training of crews and supervision route design and analysis.
8 The higher of $2.50 per pole per year or 7.4 percent of the utility's annual cost of ownership of the pole (D.98-10-058 Appendix A, Section VI. B. b. (1), p. 12)
9 G.O 96-A requires that a formal application be made in accordance with the Commission's Rules of Procedure, except where the increases are minor in nature.
10 Distribution poles and transmission towers
11 See also: D.98-10-058 Appendix B pps. 11-12
12 This means that if anyone requests space on a specific route within 30 days after the date the Commission authorizes the rate schedule to become effective, they will be on the same footing as any SoCalGas affiliate that has requested service on that route by that deadline.
13 In both built-up areas and single-family residential areas, there are already "holes carved" into the distribution mains much more frequently than every 500 feet to connect with services to individual customers.
14 Special Condition 4 of SoCalGas' proposed tariff: Any technology provided to Utility by Carriers for placing fiber optic cable in gas pipelines (including supporting structures and equipment) must meet nondiscriminatory standards of the Utility for safety and reliability. Any such technology must also meet all applicable pipeline safety regulations of the United States Department of Transportation and safety regulations of the Commission.
