VII. Whether Line Extension Allowances Should Continue to be Offered in Portions of the Utilities' Service Territories Where POUs are Offering Service

Currently, the investor-owned utilities (IOUs) provide the same line extension allowances throughout their individual service territories regardless of whether POUs are also offering service. The issue, as addressed herein, is whether the IOUs should be allowed to offer any line extension allowances in portions of their service territories where POUs are offering service.

A. Positions of Parties

PG&E

PG&E wishes to continue offering line extension allowances in areas served by POUs. It says that prohibiting it from doing so would be discriminatory and eliminate any meaningful choice for developers.

SCE

SCE recommends that line extension allowances not be eliminated where customers can receive POU service because the City and County of San Francisco (CCSF) and MID have not presented any quantification that would justify treating such customers differently from other customers.

SDG&E

SDG&E states that allowances should be continued in areas served by POUs, but takes no position on whether they should be different than elsewhere in the IOU's service territory.

TURN

TURN argues that the allowance calculation should be consistent across the IOUs' service territories, and the utilities should be prohibited from using ratepayer money to compete with the POUs.

CCSF

CCSF recommends that PG&E not be allowed to offer line extension allowances in areas where POUs offer service, because it has not demonstrated that it should be allowed to compete with POUs. CCSF also argues that PG&E has not shown that continuing to offer such allowances is a benefit to current ratepayers.

MID

MID takes no position on whether PG&E should be allowed to offer line extension allowances in areas where POUs offer service. However, MID states that PG&E should be allowed to do so only if PG&E demonstrates that doing so would provide an appropriate contribution to margin. MID also points out that the Commission, in D.98-06-020 expressed its support for POU-IOU competition.

CBIA

CBIA states that IOUs should be allowed to provide allowances in order to compete with POUs as long as there is a positive contribution to margin and existing ratepayers are held harmless.

B. Discussion

Our existing policy is that the IOUs are to offer uniform residential line extension allowances throughout their service territories regardless of whether a POU can provide service. The question is whether that policy should change.

POUs have the ability to offer line extension allowances. For example, the Modesto Irrigation District offers line extension allowances. Thus, prohibiting IOUs from offering line extension allowances, while the POUs can do so, would inhibit their ability to compete for new customers in those areas. As pointed out by MID, the Commission has indicated its support for such competition in the past.¹⁹ The record does not demonstrate a need to inhibit the IOUs' ability to do so. Additionally, the record does not provide a reason to discriminate between applicants for IOU line extensions based on whether a POU may offer service. Therefore, we do not prohibit the utilities from offering the same line extension allowances that are allowed in the rest of their service territories in areas where service is offered by POUs.

¹⁹ D.98-06-020, COL 1.