Discussion

Section 625 provides 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. (§ 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. (§ 625(a)(1)(B).)

The Commission's rationale in the Tri-Valley decision (D.01-10-029) provides useful guidance for an analysis of § 625 applicability in this case. This question turns on whether the installation of facilities by PG&E includes the provision of competitive services. Therefore, 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.

Section 625 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." This is true because Commission-ordered obligations to serve were 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 corporations a complete exemption from § 625 because electric and gas corporations can use their rights of way to construct telecommunications networks 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).

PG&E maintains that it has no current intent to lease the fiber optic cables for telecommunication purposes, thus it argues that § 625 is inapplicable. However, § 625(a)(1)(B) 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. 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, we agree that § 625 would be inapplicable.

On the other hand, not subjecting a public utility to the requirements of § 625 if that utility installs excess capacity when carrying out a Commission-ordered obligation, allows § 625 to be circumvented. The electric or gas company 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 will 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, as we did in the Tri-Valley decision. We have previously noted that 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. Accordingly, we conclude that PG&E's past practice indicates that the potential exists that it may lease out excess capacity for competitive purposes. Section 625 is therefore, applicable to an electric transmission project that is designed to serve an electric demand, but could carry a competitive fiber/telecommunications 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. (§ 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 that notice be provided in the Commission's Daily Calendar. Congruent with our Tri-Valley decision, we conclude that the lesser standard, notice, applies here.