IX. Ex Parte Communications

Per Rule 7(d) of the Commission's Rules of Practice and Procedure, ex parte communications are allowed without restriction or reporting requirement in any quasi-legislative proceeding. Therefore, there are no such restrictions or reporting requirements applied to this proceeding.

ORDER

Therefore, IT IS ORDERED that:

1. The Commission hereby institutes this rulemaking on its own motion to encourage the deployment of Broadband Over Power Line (BPL) projects in the state.

2. The issues to be considered in this proceeding are set forth in the Preliminary Scoping Memo as draft rules designed to encourage BPL projects in the state.

3. Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) are Respondents in this proceeding.

4. The Executive Director shall cause this Order Instituting Rulemaking (OIR) to be served on Respondents and parties to the following service lists: A.04-06-024, A.04-12-014, A.02-12-027, A.02-12-028, R.04-04-003, R.03-04-003, R.05-04-005.

5. Within 15 days from the date of mailing of this order, any person or representative of an entity interested in monitoring or participating in this rulemaking shall send a request to the Commission's Process Office, 505 Van Ness Avenue, San Francisco, California, 94102 (or ALJ_Process@cpuc.ca.gov) asking that his or her name be placed on the official service list for this proceeding. This service list will be posted on the Commission's website, www.cpuc.ca.gov, prior to the time comments are served pursuant to Ordering Paragraph 9.

6. All parties shall abide by the Commission's new electronic service rules contained in Rule 2.3.1 of the Commission's Rules of Practice and Procedure.

7. We preliminarily determine the category of this rulemaking to be "quasi-legislative" and preliminarily determine that hearings are unnecessary. Parties objecting to these determinations shall include their objections in their opening comments.

8. Any party who believes that an evidentiary hearing is required shall file a motion requesting such a hearing no later than October 6, 2005. Any such motion must identify and describe (i) the material issues of fact, (ii) the evidence the party proposes to introduce at the requested hearing, and (iii) the schedule for conducing the hearing. Any right that a party may otherwise have to an evidentiary hearing will be waived if the party does not submit a timely motion requesting an evidentiary hearing.

9. Respondents shall, and other parties may, file opening comments on the issues identified in this rulemaking by October 6, 2005, and reply comments by October 17, 2005.

10. The Assigned Commissioner and Administrative Law Judge will set the schedule for this proceeding.

This order is effective today.

Dated September 8, 2005, at San Francisco, California.

I reserve the right to file a concurrence.


/s/ GEOFFREY F. BROWN
Commissioner

R.05-09-006

Broadband Over Power Lines

Order Initiating Rulemaking

Concurrence of Commissioner Geoffrey Brown

Broadband Over Power Lines technology affords an opportunity to bring competition to a broadband market. The market now appears to be a functional duopoly with active competition for market share, before the inevitable unarticulated truce that generally occurs when there are only two major competitors in a discrete market. In our broadband report, we failed to consider the extent of broadband competition, notwithstanding our obligation under §709 and caselaw to do so.

This proposed order does not contemplate any hearings. I view this as a substantial error. Because this order contemplates permitting the unexamined and irrevocable conveyance of assets that might provide billions of dollars of rate relief to electricity ratepayers, hearings on the feasibility of both the technology and the business plans contemplated by the utilities are appropriate. To the extent that commentators on this OIR have opinions on the benefits, if any, of evidentiary hearings, I would hope they will articulate with particularity their reasons for so believing. Commentators should map out with some care what an intellectually honest inquiry would entail and how long it should take.

I view this order's proposal to abandon in all cases our §851 supervisory authority as appalling and recklessly imprudent. This order fails to distinguish between routine sales and leases and those that irrevocably give away a technology that may be worth billions. It fails to do so in order to falsely paint §851 as an impediment to progress. The evidence that §851 is an insuperable burden to BPL deployment is not just unpersuasive; it is non-existent.

§851 was enacted to prevent the imprudent or irregular disposition of assets that had been financed by captive ratepayees. The Legislature recognized the possibility that utility monopolies might attempt to remove regulated properties from regulatory control. For that reason the, the Legislature empowered the PUC to supervise any sale or transfer of useful assets. That we would now abdicate such authority when the utilities themselves have not asked to do so is simply incomprehensible. I would hope that commentators would comment on the scope of the waiver of §851 contemplated in this order. Similarly, I would hope that commentators would address the potential for abuse by affiliated entities of the utilities involved.

Perhaps, the point of this order is to allow a giveaway of valuable assets as a way to lower electricity. If that is so, we should say so clearly. The Legislature of Texas has authorized utilities to give away their broadband assets, but it has done so in clear, public view. What we have done at the PUC is to allow a transfer of ratepayer-financed assets without public vetting.

R05-09-006

Prior to this order, the utilities apprised us that they were going to conduct some experiments with a technology that may help in their operations and also may compete in telecommunications. However, as far as I know, no substantive business plan is even close to being considered. Nevertheless, we are already considering permitting the transfer of a potentially invaluable asset by eliminating §851 oversight on irreversible sales and licenses. I am apprehensive that this course is premature, ill-considered and imprudent. I would hope that commentators would deal with the potential abuses that might obtain if such oversight is eliminated.

We should examine this exciting technology, with evidentiary hearings and cross-examination of experts, and perhaps we should minimize scrutiny over short-term leases, licenses and the like. If evidentiary testimony is deemed unnecessary, I would hope that commentators would explain how we can get a comprehensive view on a new technology that apparently has never been used commercially without such inquiry.

Absent a clear and comprehensive understanding of the economic and technological implications involved, we should not permit utilities to irrevocably give away a license (or an analogous legal vehicle) to use BPL over their lines. I am afraid this order will do that. Commentators should address whether the particulars are known yet or can be known yet.

I encourage all parties to involve themselves in this proceeding, to comment fully, to use discovery processes as appropriate, and to do everything in their power to assure that there will be a full record. I am not optimistic that a rulemaking which does not contemplate hearings and anticipates its conclusion by the end of the year can provide such a record.

Dated September 8, 2005, at San Francisco, California.

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