12. Applicability of Section 625

Parties argued over the applicability of Pub. Util. Code § 625 to PG&E's proposed project and alternatives and over the impact on timing such applicability might have. A public utility that offers competitive services may not condemn any property for the purpose of competing with another entity unless the commission finds that such an action would serve the public interest based on a hearing for which the owner of the property to be condemned has been noticed and the public has the opportunity to participate. (Pub. Util. Code §625(a)(1)(A).) However, an exception is made for condemnation actions that are necessary solely for an electric or gas company to meet a commission-ordered obligation to serve. Pub. Util. Code §625(a)(1)(B).) The question of applicability of § 625 turns on whether the installation of facilities by PG&E includes the provision of competitive services. In our case, the issue before the Commission is whether PG&E intends to provide a competitive service when it exercises its eminent domain authority to construct a commission-ordered obligation, and if so, what type of notice must be given.

PG&E argues that "any eminent domain proceedings will be necessitated solely by PG&E's efforts to fulfill its own regulatory obligation to serve by constructing needed transmission facilities, facilities that remain fully regulated and not subject to "competitive" conditions. The fact that the Project facilities may, by their design, allow for such additional telecommunications service uses at some unknown time in the future does not change this result. Any other use of the Tri Valley Project's facilities, for fiber optic cables, for example, are not part of this Project, and if added at some later date, would be secondary to the Project's electrical purposes for which the power of eminent domain would have been exercised. At most, Section 625 would require only that PG&E provide notice of any such future installation on the Commission calendar." (PG&E Opening Brief, pp. 28-29.)

Section 625 of the Public Utilities Code provides an exception to its requirements only for condemnation actions that are "solely" for an electric or gas company to meet a commission-ordered obligation to serve. The legislature deliberately used the word "solely" because commission-ordered obligations to serve were going to be the only exception to § 625 since it was enacted to prevent public utilities from abusing the power of eminent domain. Policy and Fiscal Impact Report: Hearing on SB 177 Before the Pub. Util. Comm'n (CA. 1999) (statement by Senator Peace). The legislature did not want to give the electric and gas corporation a complete exemption from § 625 because electric and gas corporations can use their rights of way to construct a telecommunications network and provide competitive services. Assembly Comm. on Utilities and Commerce: Hearing on SB 177 Before the Senate Comm (CA. 1999) (statement by Roderick Wright, Chair).

Cited as one example is the fact that Southern California Edison, an Electric Utility, has sought authority to offer telecommunication services over its facilities. Additionally, the Williams Company indicated that it used the rights of way of gas pipeline corridor in eight states to lay approximately 1,890 miles of fiber to construct a linear telecommunication system from Houston to Washington D.C...and that without eminent domain, one landowner could have prevented the system from being built. According to the legislature, while some instances may occur where the energy companies need to be absolved from this process, a blanket exception is not an appropriate manner. Id.

Because PG&E has no current intent to lease the fiber optic cables for telecommunication purposes, it argues that section 625 is inapplicable. However, § 625(a)(1)(B) of the Pub. Util. Code states that the electric or gas company shall provide notice if they intend to install telecommunication equipment on property for the purpose of providing competitive telecommunications services when land is acquired through eminent domain solely to meet its commission-ordered obligation. Section 625 is silent with regard to subsequent use of facilities for competitive services after the utility meets its commission-ordered obligation. But the statute focuses on what the gas or electric company intends to do, and PG&E currently states that it has no intention to install excess fiber optic cables to provide competitive services. Because PG&E states it has no current intention to provide a competitive service, C625 would be inapplicable.

On the other hand, not subjecting a public utility that installs excess capacity when carrying out a commission-ordered obligation to the requirements of § 625, allows § 625 to be circumvented. The electric or gas company carrying out a commission-ordered obligation would need only state it had no intention of leasing its facilities but could sign subsequent contracts with competitive carriers. Section 625(a)(1)(B), which requires the gas or electric company to give notice to the Commission when installing equipment for the purpose of providing competitive services would then be avoided.

Although PG&E argues it has no intent to install additional telecommunications facilities as part of its proposed project, we should look to PG&E's past practices to establish whether the company intends to provide competitive services through the excess capacity designed as part of the project. It has become a common practice for PG&E to lease out the excess capacity and it is also not economically sensible for PG&E not to utilize the excess capacity. If § 625 were inapplicable in all respects, gas and electric companies would be gaining a competitive as well as an economic advantage over new entrants into the market place desiring to construct a telecommunications network. Thus we conclude that PG&E's past practice indicates that it will likely lease out excess capacity for competitive purposes. Therefore, Pub. Util. Code § 625 is applicable to an electric transmission project that is designed to serve an electric demand, but could carry a competitive fiber/telco component.

Section 625 provides for two different levels of notice and oversight. The more difficult and time consuming standard requires that a public utility that offers competitive services may not condemn any property for the purpose of competing with another entity unless the commission finds that such an action would serve the public interest based on a hearing for which the owner of the property to be condemned has been noticed and the public has the opportunity to participate. Pub. Util. Code §625(a)(1)(A). The lesser standard requires that when condemning properties to carry out a commission-ordered obligation, § 625 (a)(1)(B) is applicable, which only requires notice be provided to the Commission Calendar. We conclude that the lesser standard, notice, applies here.