Agenda ID#____
Alternate to Agenda ID#5349
Quasi-Legislative
Decision ALTERNATEDRAFT DECISION OF COMMMISSIONER BROWN
(Mailed 3/14/06)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking concerning Broadband Over Power Line deployment by electric utilities in California. |
Rulemaking 05-09-006 (Filed September 8, 2005) |
OPINION IMPLEMENTING POLICY ON BROADBAND OVER POWER LINES
I. Summary
This decision implements the Commission's policy on deployment of Broadband Over Power Lines (BPL). In order to implement our BPL policy, we are: 1) conditionally exempting BPL-related transactions from the requirements of Public Utilities Code section 851 pursuant to our authority under Public Utilities Code section 853(b); 2) allowing electric utility affiliates to provide BPL services (subject to our existing Energy Affiliate Rules); 3) providing non-discriminatory access to utility poles and rights of way for BPL and other broadband providers via our existing pole attachment and right-of-way rules; 4) aligning financial risks and rewards and protecting ratepayers; 5) adopting a mechanism for sharing any additional revenues received from BPL providers; and 6) maintaining the safety and reliability of the electric distribution system.
A. BPL Provides High Speed Digital Communications Over Existing Power Lines
In this decision, we principally discuss what the Federal Communications Commission (FCC) calls "Access BPL" systems, which carry high speed data signals to neighborhoods from a point where there is a connection to a telecommunications network.1 BPL data is transmitted at a much higher frequency than electricity, so the BPL signal can occupy the electric wires without interfering with electric transmission. The power delivery system does, however, potentially interfere with the BPL signal. A variety of BPL technologies have been developed to address these technical challenges.2
B. Benefits of BPL
1. BPL Provides an Opportunity to Increase Broadband Competition
This Commission is taking the proactive step to set up a "BPL-friendly" regulatory framework because of our belief that BPL has the clear potential to bring valuable, additional competition to the California broadband market. At present, the California broadband market is principally dominated by digital subscriber line (DSL) service on conventional phone lines and cable modem services over upgraded cable television lines.3 This Commission believes that more broadband competition will bring lower prices, innovative services, and the potential for new rate plans to consumers.
BPL has the potential to provide a new broadband pipe to California's communities because existing electrical wires run to each home and business (the so-called critical "last mile"). Thus, electric utilities own valuable rights-of-way to consumers. The nation's power grid may be an untapped resource to provide another path for the delivery of broadband service to citizens.
Based on our review of current technology, technical and economic constraints may initially limit the potential of BPL to serve dispersed populations in rural areas.4 We believe, however, that technology advances where there is a need. New strides in BPL technology soon may bring additional advanced broadband services to underserved areas in California. In general, we believe that increasing the number of broadband delivery platforms and facilitating broadband competition is one of the best ways to extend broadband access to rural areas. While some broadband providers may focus on urban markets, it is conceivable that others may adopt a business plan to serve niche markets which may include rural or other underserved communities. The support given for rapid BPL deployment by rural electric and telephone utilities in the FCC's BPL rulemaking reaffirms this potential.5 By encouraging new facilities-based broadband platforms in our state, the Commission will enable our state to continue as a technology leader.
3. BPL Provides Reliability and Cost Savings to Electricity Consumers
BPL technology also can provide benefits to electrical customers by enabling valuable "smart grid" applications that could improve electrical system reliability and support the implementation of money-saving energy management systems. Potential utility applications include automatic meter reading, voltage control, equipment monitoring, remote connect and disconnect, power outage notification and the ability to collect data on time-of-day power demand.6 We strongly encourage electric utilities to study BPL as a way to provide "smart grid" applications to California consumers.
C. Federal and State Agencies Have Recognized BPL's Potential
Federal regulatory agencies and a number of forward-looking state agencies have recognized BPL's potential and adopted policies to address key regulatory issues. The FCC's Report and Order noted that "this new technology offers the potential to give rise to a major new medium for broadband service delivery."7 In its Report and Order, the FCC issued a change to its Part 15 rules for measures to mitigate radio interference caused by BPL. In general, BPL must operate on a noninterference basis relative to wired services.8
On October 14, 2004, the Chairmen of the FCC and the Federal Energy Regulatory Commission (FERC) issued an unusual joint statement, stating that "national policies should facilitate rapid deployment of all broadband technologies, including BPL"9 They agreed that "[p]olicymakers at all levels should coordinate their efforts to promote a minimally intrusive policy framework for such technologies."10
The National Association of Regulatory Utility Commissioners (NARUC) convened a BPL Task Force in December 2003 to examine the potential of BPL and issued a report in February 2005. The NARUC BPL Task Force noted that "it will be primarily up to individual states to tailor appropriate regulatory roadmaps and responses."11 The Task Force members also agreed that the regulatory issues surrounding broadband technologies should be encouraged through a "minimally intrusive approach," and that "the long term resolution of the various outstanding issues should not favor any technology over another."12
Individual states have begun addressing the regulatory issues surrounding BPL. Recent legislation in Texas addressed many of the most important regulatory issues slowing BPL deployment in that state.13 Similarly, on January 25, 2006, the New York Public Service Commission initiated a proceeding to identify and address key regulatory issues.14 This Commission recognized the need to provide regulatory certainty to encourage the deployment of BPL to our citizens, and issued an Order Instituting Rulemaking (OIR) on September 8, 2005.15
D. Goal of Decision is to Provide Regulatory Certainty to Attract BPL Investment
Electric Power Research Institute (EPRI) noted in its BPL White Paper that "regulatory action or inaction could have a significant impact on the business case for BPL, pointing to the need for a proactive approach with regulators on this issue."16 At present, the Commission is only aware of one BPL pilot program in California, which is SDG&E's pilot program in San Diego, California that commenced on September 1, 2005. This limited deployment is in contrast to greater levels of activity within states where policymakers have addressed the regulatory issues surrounding BPL.17 We have heard from utilities and BPL providers that the cloud of regulatory uncertainty may be causing them to decide not to initiate projects in California.
When Governor Schwarzenegger recently proposed his comprehensive infrastructure investment plan, he emphasized that "[o]ur plan must not only expand the concrete highways that connect Los Angeles to San Francisco and Stockton-but the digital ones that connect Stockton to Shanghai, Sydney and Seoul."18 To that end, today this Commission is taking the initiative to establish a BPL-friendly regulatory framework to ensure that we have the most advantageous regulatory climate to attract major infrastructure investment in California's broadband infrastructure.
E. Proposed Regulatory Framework Protects Ratepayers, Aligns Shareholder Risks and Rewards and Provides Ratepayer Benefits
We believe that the regulatory framework in this decision protects ratepayers from the business risks associated with investment in BPL and protects the reliability and safety of the electric system. At the same time, we align shareholder risks and rewards in order to provide incentives for utility shareholders to take the financial risks associated with negotiating arrangements with BPL developers or developing a BPL system themselves through an affiliate.
1 "BPL" in this decision refers to "Access BPL" as defined by the FCC: "A carrier current system installed and operated on an electric utility service as an unintentional radiator that sends radio frequency energy on frequencies between 1.705 MHz and 80 MHz over medium voltage lines or low voltage lines to provide broadband communications and is located on the supply side of the utility service's points of interconnection with customer premises." In the Matter of Amendment of Part 15 regarding new requirements and measurement guidelines for Access Broadband over Power Line Systems, ET Docket No. 04-37, and Carrier Current Systems, including Broadband Over Power Lines, ET Docket 03-104, FCC No. 04-245, Report and Order, (rel. Oct. 28, 2004) at para. 29 (FCC R&O):
2 "Within a residential neighborhood, some system implementations complete the connection between the medium voltage lines and subscriber homes or businesses by using wireless links. Other implementations employ a coupler or bridge circuit module at the low-voltage distribution transformers to transfer the Access BPL signals across (thereby bypassing) these devices. In such systems, the BPL signals are brought into homes or businesses over the exterior power supply cable from the coupler/bridges, either directly, or via Access BPL adaptor modules. Typically, the medium voltage lines are carried overhead on transmission poles or tower mountings; however, in a large number of locations, and in newer subdivisions and neighborhoods, these lines are enclosed in underground conduits and the distribution transformers are mounted above ground on a pad, inside a metal housing." (FCC R&O, at para. 6.)
3 Other broadband competitors include dedicated high speed lines, unlicensed wireless Internet access services, and fixed and mobile radio services.
4 See Report of the Broadband Over Power Lines Task Force, the National Association of Regulatory Utility Commissioners (Feb. 2005) (NARUC Report), at p.13.
5 The National Rural Telecommunications Cooperative and the National Rural Electric Cooperative Association filed joint comments supportive the goal of rapid BPL development. (FCC R&O, at para. 14.)
6 NARUC Report, at 13-18. "The term `smart grid' refers to an electricity transmission and distribution system that incorporates elements of traditional and cutting-edge power engineering, sophisticated sensing and monitoring technology, information technology, and communications to provide better grid performance and to support a wide array of additional services to consumers." NARUC Report, at 13.
7 FCC R&O at para. 13.
8 Id, at para. 2.
9 NARUC Report, at 2.
10 Id.
11 Id , at 3.
12 Id, at 4.
13 See TX S.B. No. 5, Use of Electricity Delivery System for Access to Broadband and Other Enhanced Services, Including Communications, § 43.001(c) (2005).
14 New York State PSC, Case 06-M-0043, Proceeding on Motion of the Commission to Examine Issues Related to the Deployment of Broadband over Power Line Technologies, effective 1/25/06..
15 Order Instituting Rulemaking concerning Broadband Over Power Line Deployment by Electric Utilities in California, Rulemaking (R.) 05-09-006 (September 8, 2005).
16 Broadband Over Powerline 2004: Technology and Prospects. EPRI White Paper, November 2004, p. 3.
17 TXU and Current Communications to Create Nation's First Multipurpose Smart Grid, TXU Corp. and Current Communications Group News Release, December 19, 2005. See http://www.txucorp.com/media/newsrel/detail.aspx?prid=916..
18 State of the State Speech by California Governor Arnold Schwarzenegger, January 5, 2006. See http://www.governor.ca.gov/state/govsite/gov_htmldisplay.jsp.
