XIII. Comments on Draft Decision

The alternate draft decision of Commissioner Brown in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed ______________.

1. Findings of Fact

1. BPL systems use electric power lines to carry high-speed data signals to neighborhoods.

2. BPL data transmit at a much higher frequency than electricity, so the BPL signal can occupy the electric wires without interfering with electric transmission.

3. A variety of BPL technologies have developed to address the potential of the power delivery system interfering with the BPL signal.

4. BPL has the potential to provide many benefits, including increased broadband competition, additional access to broadband, and cost savings to electric customers through "smart grid" applications.

5. Technical and economic constraints may initially limit the potential of BPL to serve dispersed populations in rural areas.

6. The FCC October 14, 2004 Report and Order on BPL encouraged "rapid development of all broadband technologies, including BPL."

7. The NARUC BPL Task Force in a February 2005 report encouraged states to tailor appropriate regulatory roadmaps for the implementation of BPL.

8. An Electric Power Research Institute (EPRI) BPL White Paper notes regulatory action or inaction could have a significant impact on the business case of BPL.

9. SDG&E began its pilot program on September 1, 2005.

10. The regulatory framework in this decision is intended to protect ratepayers from risks associated with BPL investment, protect the reliability and safety of the electric system and provide incentives for utilities to encourage BPL development.

11. In a landlord-tenant model for BPL, an energy utility acts as the owner of power lines and a third party provides the BPL service.

12. Under the landlord-tenant model, a utility and a third-party BPL provider negotiate a contractual arrangement in which the BPL provider obtains access to the utility infrastructure.

13. The Commission has chosen to allow regulated affiliates to have unregulated affiliates subject to affiliate transaction rules.

14. The rules adopted by the Commission in OIR 92-08-008, among other commission decisions, are rules governing the reporting of transactions between electric, gas, and telephone utilities and their affiliates.

15. BPL is a communications platform that is dependent upon the use of the electric distribution infrastructure of energy utilities.

16. Ratepayer dollars should not be invested in risky emerging technologies.

17. Shareholders and third parties will not assume the risks of pursuing BPL deployment without some expectation of rewards.

18. Even if utility shareholders are not investing in the BPL system, shareholders could still incur financial risks related to BPL.

19. Insulating ratepayers from financial risk is an essential objective.

20. Providing direct financial benefits to ratepayers is only desirable to the extent that shareholder incentives to pursue BPL are not significantly weakened.

21. SCE proposes applying its existing revenue-sharing mechanism for OOR, with a 90/10 shareholder/ratepayer split for an active service and a 70/30 shareholder/ratepayer split for a passive service.

22. SCE's OOR mechanism (adopted in D.99-09-070) protects ratepayers from financial risk.

23. In D.98-10-058, Appendix A, or ROW Order, the Commission has established rules governing access to public utility rights of way and support structures by telecommunications carriers and cable TV companies.

24. An essential element of the ROW Order is the requirement that a utility not discriminate in its fees for pole attachments.

25. The ROW Order describes the methodology for determining fees for pole attachments.

26. Electrical equipment problems, unrelated to BPL, may be identified in the process of installing a BPL system.

27. The safety and reliability of the electric delivery system is a principal concern of the Commission.

28. BPL poses unique safety issues since it is attached directly to energized electric wires.

29. Utilities must determine whether BPL equipment can be installed on their system and the manner in which it will be installed and operated.

30. Pub. Util. Code § 851 protects the quality of utility service provided to ratepayers and protects ratepayers' investment in utility assets.

31. A lengthy § 851 proceeding would simply be inconsistent with our stated policy goal of not impeding in the rapid deployment of BPL technology.

32. The plain language of § 853(b) does not limit its application to extraordinary circumstances.

33. The Commission has granted a number of § 853(b) exemptions without any finding of extraordinary circumstances. In the following cases the granting of an § 853(b) exemption results from a policy determination from this Commission: D.05-07-039, D.05-06-016, D.04-03-020, D.02-10-008, D.05-10-013, D.02-01-055, and D.04-07-021.

34. The public interest is best served by the speed of deployment of BPL technologies, rather than by a lengthy review process of individual BPL-related transactions

35. CEQA guidelines 15301 grants a categorical exemption for the minor alteration of and additions to existing facilities of utilities and additions to exiting structures, the exact situation that we will have as California deploys broadband over power lines.

36. If appropriate alternatives are present, there is no need to require filing of an advice letter for approval of utility/BPL contracts.

37. The FCC authorizes and licenses transmitters and facilities that generate radio frequency radiation and has addressed the potential biological effects of radiofrequency electromagnetic fields.

Conclusions of Law

1. We should not preclude direct utility provision of BPL, but such service should be approved under existing Commission procedures.

2. It is reasonable to allow BPL services to be provided by independent third parties under landlord-tenant contractual arrangements with electric utilities.

3. It is reasonable to allow BPL services to be provided by affiliates of electric utilities.

4. The affiliate reporting requirements adopted by the Commission in its Energy Affiliate Rules should be applied to transactions between an electric utility and BPL affiliate.

5. The direct provision of BPL services by a regulated electric utility is not governed by this decision and would be subject to existing Commission procedures.

6. Transactions between an electric utility and BPL affiliate should be subject to the Commission's existing Energy Affiliate Transaction Rules (D. 97-12-088 and D. 98-08-035).

7. Ratepayer funds should not be used to research, develop or operate a BPL system.

8. BPL expenditures should be financed only with shareholder or third-party funds, and all financial risks and reasonable rewards from BPL projects should accrue to the shareholders or third-party investors.

9. It is reasonable to allow a utility and BPL company to agree to appropriate terms for access to utility infrastructure in a manner that gives utility shareholders an incentive to enter into such negotiations.

10. A revenue-sharing mechanism for allocation of revenues received by a utility from a BPL provider should protect ratepayers from financial risk, align shareholder risks and rewards, and provide direct financial benefits to ratepayers.

11. It is reasonable to apply the existing revenue-sharing mechanism for OOR as adopted in D.99-09-070 with the understanding that the BPL investments are to be considered "passive".

12. The existing revenue-sharing mechanism for OOR should be adopted for all electric utilities for the treatment of any access fees that the utilities received in the context of BPL deployment.

13. A utility should not be permitted to discriminate or cross subsidize in its fees for pole attachments by BPL providers.

14. The Commission should at this time adopt rules requiring entities that acquire BPL rights on a utility system to begin implementing BPL service within five years.

15. Pursuant to Pub. Util. Code § 853(b), it is reasonable to exempt BPL projects and transactions from Pub. Util. Code § 851, so long as those projects do not exceed twenty years or the year 2031.

16. As a result of the use of 853(b) exemption, this Commission will not be reviewing individual BPL transactions and therefore the Commission's requirement of a CEQA review is not triggered

17. CEQA guideline 15301 grants a categorical exemption to those limited BPL transactions where equipment is installed in or on existing utility structures as long as all the BPL-related construction and installation is performed consistently with any and all applicable existing environmental mitigation measures, particularly those measures applicable to the utility infrastructure on which it is constructed or installed.

18. Under Pub. Util. Code § 853(b), it is lawful for the Commission to subject BPL projects to specific conditions, even when exempted from Pub. Util. Code § 851.

19. It is reasonable to require a CEQA review of those BPL projects and transactions if and when such projects result in trenching, excavation, boring or drilling, or other digging.

20. No sale of utility assets with respect to a BPL transaction should be permitted under this § 853(b) exception.

21. Since it is important for this Commission to have notice of the existence of a BPL contract and its general terms, we will require utilities to provide the Telecommunications Division Director and Energy Division Director, notice of any lease or other financial arrangement with a BPL company, including the name of that company, the nature of the services to be provided, and date entered.

22. To the extent that a utility or BPL provider needs to access existing facilities, the responsible companies should be required to maintain rights of way or alternative paths of travel that are accessible for people with disabilities.

ORDER

IT IS ORDERED that:

1. It is the policy of this Commission to encourage development and competition in the broadband market by providing regulatory certainty to California companies seeking to provide broadband over power lines (BPL).

2. Regulated California energy utilities are authorized to enter into contracts through which BPL service may be provided by independent third parties using energy utility infrastructure.

3. Affiliates of regulated California energy utilities are authorized to provide BPL service using energy utility infrastructure and shall at all times be subject to the Commission's affiliate reporting requirements.

4. The direct provision of BPL by a regulated utility, as a tariffed or non-tariffed service is not governed by this decision. Should a regulated energy utility wish to provide BPL service on a tariffed or non-tariffed basis it should seek Commission approval to do so under existing Commission procedure.

5. Regulated utilities in California are precluded from using ratepayer funds to research, develop or operate a BPL system unless the expenditures can be justified solely on the basis of utility benefits.

6. Fees received by a regulated utility from BPL providers (other than the standard pole attachment fees that flow through to ratepayers) are to be allocated under the revenue-sharing mechanism for other operating revenues (OOR) as adopted in Decision (D.) 99-09-070 and will be categorized as "passive".

7. In installing a BPL system in connection with a regulated utility, costs directly related to the repair and maintenance of existing electrical equipment for the purposes of electric service reliability shall be allocated to electricity operations, while costs directly related to BPL installation or operation shall be allocated to the BPL operator.

8. Regulated electric utilities involved with BPL services are directed to continue to comply with the rules, requirements and standards promulgated by the Commission's General Order (GO) No. 95, which applies to the construction of overhead lines, and GO 128, which applies to the construction of underground electric supply and communication systems. If in the course of implementing BPL projects, utilities identify a need to revise applicable Commission rules or General Orders, the utilities are encouraged to request appropriate relief from the Commission, and the Commission will address the request expeditiously. Utilities shall ensure that their compliance with the Commission's GO 95 and GO 128 and their setting and application of additional safeguards and conditions is performed in a competitively neutral manner with respect to other communications and information providers who seek similar access.

9. Pursuant to Pub. Util. Code § 853(b), we exempt from the requirements of Pub. Util. Code § 851 all BPL transactions. However, no sale of utility assets is permitted under this Section 853(b) exemption. BPL equipment subject to this exemption may only be installed in or on existing utility structures, and all BPL-related construction and installation must be performed consistently with any and all applicable existing environmental mitigation measures, particularly those measures applicable to the utility infrastructure on which the BPL is constructed or installed. Leases for the provision of BPL shall not exceed twenty years in length or extend beyond the year 2031 without § 851 review.

10. Pursuant to Pub. Util.Code § 853(b), we impose a condition on those transactions that result in trenching, excavation, boring or drilling, or other digging. Such transactions, albeit still exempt from § 851 reviews, must undergo a CEQA review and obtain approval from this Commission.

11. Utilities shall provide the Telecommunications Division Director and Energy Division Director notice of any lease or other financial arrangement with a BPL company, including the name of that company, the nature of the services to be provided, and date entered.

12. To the extent that a regulated utility or BPL provider needs to access existing facilities, whether underground or above ground, the responsible companies are directed to maintain rights of way or alternative paths of travel that are accessible for people with disabilities.

This order is effective today.

Dated _________________, 2006, at San Francisco, California.