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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION RESOLUTION E-4329

RESOLUTION

Resolution E-4329. Southern California Edison (SCE).

PROPOSED OUTCOME: SCE's proposal to delete the applicant and customer option of placing new or modified distribution system terminal equipment (not conductors) underground under Tariff Rules 2, 15 and 16 is partially approved as requested in AL 2334-E-A, for premises of nongovernmental applicants and customers (private property), as described, and for other property only with the agreement of local authorities on a case by case basis. SCE's proposal to modify current practices to delete the underground equipment option, with respect to public rights of way and all other locations is denied without prejudice.

ESTIMATED COST: None.

By Advice Letter 2334-E filed March 27, 2009 and Supplemental Advice Letter 2334-E-A Filed on March 12, 2010.

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SUMMARY

SCE's proposal to delete the applicant and customer option of placing new or modified distribution system terminal equipment underground under Tariff Rules 2, 15 and 16 (effectively requiring above-ground equipment) is partially approved as requested in AL 2334-E-A. The change is approved only on private property in cases of new construction or when use or occupancy changes, and for public property only as agreed with the local public authority in each case. These rule changes apply to equipment such as transformers, switches, capacitors, and junction bars (Equipment) on applicant and customer premises only. Rule 20 concerning conversion of overhead conductors to underground is unaffected.

SCE's current practices to consider or actually place or retain equipment underground are unchanged by this resolution where not specifically approved, for example with respect to public rights of way and public locations.

Protests to SCE's advice letter raise a number of factual, legal, and policy questions that are inappropriate for resolution via an informal advice letter process. If SCE wishes to propose application of its proposed rule changes where not specifically approved by this resolution, it must file a formal application with the CPUC.

BACKGROUND

Current Tariff

Currently, when applicants request new service, SCE's standard design calls for distribution system components, such as transformers, switches, capacitors, and junction bars (Equipment), to be located above ground. However, SCE's Rule 15, Distribution Line Extensions, and Rule 16, Service Extensions, allow for applicants to choose underground installation of conductors and Equipment at additional cost to the applicant.

Proposed Tariff Changes

SCE proposes to eliminate the option for customers to elect underground installation of Equipment. SCE proposes to insert the following language into Rule 2 - Description of Service, Rule 15 - Distribution Line Extensions, and Rule 16 - Service Extensions.

Under SCE's proposal, the distribution conductors themselves will still be located above or below ground according to existing Rules 15, 16, and 20.

Past Commission support of pad mount design

Prior to the Commission's approval of Rule 16 language identifying pad mount Equipment as part of SCE's standard installation, the Commission issued Decision (D.) 92-03-065 which supported SCE's position concerning pad mount Equipment by stating that SCE's "standard transformer in a residential subdivision is a pad mount transformer." Thus, the Commission has already approved above-ground facilities as the default option, but has allowed underground equipment where requested at additional cost.

Advice Letter AL 2334-E

The original AL 2334-E dated March 27, 2009 proposed elimination of the Equipment undergrounding option for all distribution system Equipment. AL-2334 was protested by 24 cities, several State Assembly and Senate members, and various governmental agencies and associations. These and new parties filed comments on the Commission's withdrawn draft resolution E-4241.

The Commission encouraged SCE to address those comments and concerns, and sponsored a workshop at its Los Angeles offices on November 13, 2009 for these purposes. On February 25, 2010 the CPUC withdrew draft resolution E-4241 awaiting a modified proposal from SCE.

Following that workshop and additional communications among interested parties that followed it, SCE has submitted supplemental Al 2334-E-A (Supplemental filing). That Supplemental filing reduces the scope of the approval SCE requests. Therefore the Commission will only address in this resolution : 1) new construction situations, 2) circumstances in which capacity upgrades, conversions, and relocations are required due to customer driven renovations of existing structures, or due to other building activities resulting in a change of use or occupancy as defined in state of local law, and 3) situations in which above ground retrofit of above ground Equipment previously installed underground is technically feasible and is agreed to by the local authority on a case by case basis.

NOTICE

Notice of AL 2334-E and AL 2334-E-A was made by publication in the Commission's Daily Calendar. SCE states that a copy of the Advice Letter was mailed and distributed in accordance with Section 3.14 of General Order 96-B.

PROTESTS

SCE requests that the CPUC not reopen the protest period because this supplemental AL reduces the scope of SCE's proposal and addresses protests that have already been filed on its previous, more expansive proposal. We have considered the protests on the previous version of the AL and the comments on the withdrawn draft resolution, E-4241, in drafting this resolution. Because the supplemental AL does not raise any new issues beyond the scope of the original AL, the protest period is waived for the supplemental advice letter. This resolution, however, was recirculated for a full comment period by interested parties.

DISCUSSION

Energy Division has reviewed the supplemental AL 2334-E-A. The section below presents analysis and rationale for Commission disposition of the issues raised in the advice letter, as well as a discussion of issues raised by protests to the original advice letter and by comments on the withdrawn Draft of this Resolution.

Advisability of Installing Underground vs. Above-Ground Equipment

In general, SCE's proposal to eliminate the customer option to have Equipment placed below ground is advisable, as discussed further below.

Disadvantages of below-ground equipment installations

Distribution Equipment in underground enclosed spaces (vaults, enclosures, etc.) is generally more difficult to install and maintain than above-ground Equipment. Although rare, Equipment failures in these underground spaces can occur and require significant safety precautions to repair.

Operating, maintaining and repairing below-ground Equipment in confined underground enclosures is difficult work. Electric service outages last longer than those occurring above ground since it takes longer to locate and repair a failed underground component. Once located, complex safety procedures are required for vault entry including heat scans for hot spots and testing for gases.

Often water or contaminants must be trucked away, and the facilities steam or pressure washed before electrical work starts.

Equipment degradation is more likely below-ground because of corrosion when Equipment is submerged in run-off water and contaminants.

Advantages of above-ground equipment installations

Electrical service may be restored sooner when Equipment is located above ground than when it is installed in below-ground structures. Routine maintenance takes longer, for example when multiple vaults are accessed for circuit switching each one must be opened and tested for gases.

While underground installations are relatively safe with proper precautions, transformers and other Equipment failures involving high pressures and hot gas can be catastrophic. Moving away from underground installations advances safety goals and reduces concentration of contaminants.

Some SmartGrid technologies, which enhance reliability, require that controls and antennas be located above ground, to support integrating them into SCE's electrical system.

Existing underground Equipment operating normally will remain below ground

Where SCE has existing underground primary voltage distribution Equipment installed in below-ground structures, the Equipment will and should continue to be operated and maintained below ground. Should existing below-ground Equipment fail and result in an unplanned outage, service will be restored on an emergency basis using below-ground Equipment when replacement Equipment is available.

Aesthetic Considerations

SCE says that it has assembled a team to research various options which would make pad mounted Equipment better blend, visually, into the surrounding landscape. Other utilities, vendors, and cities have been surveyed for relevant ideas. Safety, Equipment performance (heat dissipation, corrosion, etc.), operability, inspection, installation and replacement are issues that must be considered simultaneously for this Equipment.

SCE has developed a catalog of various approved aesthetic improvement options available to customers and developers for above-ground pad mounted Equipment. The catalog (Above Ground Equipment Initiative Aesthetic Improvement Manual or AIM) includes aesthetic treatments and enhancements for above-ground Equipment, such as use of certain colors, screening and landscaping. Aesthetic treatments may be available, at the customer's expense, subject to tariffs and applicable safety laws and regulations. SCE states it is open to suggestions from its customers and will evaluate them and include them in the catalog as options, upon approval.

In addition, several parties raise the issue of graffiti abatement for above-ground facilities. In all cases, SCE is responsible for the abatement of any graffiti on its facilities. SCE should respond within 48 hours (two business days) to any requests for graffiti abatement, absent inclement weather or other extenuating circumstances.

Issues Related to Placement of Above-Ground Facilities in Public Rights of Way (ROW)

Protesters to the original advice letter and commenters on the withdrawn Draft Resolution E-4241 raise legal, policy, and factual issues with respect to the application of SCE's new above-ground proposal to public property and public rights of way. As summarized below, these issues relate to compliance with local, state, and federal laws, CPUC authority, easement costs, and aesthetic considerations. Due to the complexity of these issues and the significant number of protests, disposition of such matters is inappropriate for the informal advice letter process with respect to public property and the public right of way.

Thus, at this time this Resolution denies SCE's requested rule changes for above-ground Equipment installations in public areas and rights of way, except where local authorities consent to the placement of Equipment above ground. Application of the proposed rule changes is only authorized via this Resolution as specified in the Findings and Order, generally limiting the above ground requirement to new construction, changes of use or occupancy, and case by case to the public areas and rights of way if the local authority agrees. If SCE wishes to propose application of the rule changes to public property and public rights of way, or to other situations not explicitly addressed in this Resolution, SCE must file an application to do so.

Compliance with local, state and federal laws governing vehicular and pedestrian safety

Protesters of the original AL stated that use of the public ROW for pad mounted Equipment could impede traffic, restrict parking, impede sight at intersections and driveways, and be exposed to vehicle strikes. Furthermore, cities are obligated to comply with the Americans with Disabilities Act (ADA) for clearances. Natural disasters may increase the liability from damage to above-ground Equipment.

SCE responded that these concerns arise where its concept of "technically feasible" is not understood. Sometimes there is no room for above-ground Equipment and SCE's Supplemental AL repeats that, since it holds public safety paramount, it will neither place Equipment above ground where there is not enough space, nor in areas that would impede traffic or ADA compliance. The size of SCE's Equipment is comparable to other utility equipment, such as telecommunication cabinets, and some of it is smaller than a traffic signal control box.

SCE prefers private easements from the requesting applicant for service over public ROW installations, and states that its pad mounted Equipment enclosures meet rigorous industry standards for the safety and security of employees and the public. It asserts that these considerations are not new since more than 80% of all SCE service connections made over the last two years for example have been above ground.

Where SCE is choosing to move Equipment above ground, SCE states it would not bring an eminent domain action to obtain an easement but would negotiate with a property owner. If an easement cannot be obtained at a reasonable price, there is often more than one candidate property where Equipment can be electrically located. Otherwise SCE states that it will reach agreement with the city for an acceptable location before making an installation above ground in the public ROW.

Aesthetic Considerations

Protesters stated that the underground clearance requirements of General Order (G.O.) 128 could prevent effective visual screening of above-ground facilities and that graffiti would be unsightly. Their suggestions include sufficient set back from the curb, and placement of Equipment in side yards.

SCE agreed to take aesthetic considerations into account. SCE stated that when located in new developments, Equipment can be designed outside public areas and screened with plantings. SCE stated these means will be incorporated in its Aesthetic Improvement Manual. Where relocating Equipment to above ground, SCE states that it plans to continue close consultation with affected stakeholders and to evaluate new industry trends , including film application of landscape scenes and use of portable planters for camouflaging. SCE has contracted with an abatement vendor for removal of graffiti blight within 48 hrs of notification.

SCE believes that most of the concerns of Protesters are sincere but misplaced or misinformed. SCE states that safety of employees and the public is paramount and SCE says that Protesters seek to force a choice between aesthetics and safety of SCE employees. According to SCE, where Equipment serves multiple customers, the aesthetic concerns of a few could adversely impact service reliability for many.

CPUC authority over design location

A number of Protesters claim that:

SCE disputed the claims by local governments of absolute authority in matters relating to the broad authority given by the California Constitution to the CPUC to supervise and regulate public utilities, and it asserted that, relative to local governments, the CPUC's jurisdiction is paramount and exclusive. California courts have held that matters of "statewide concern," such as the design and construction of a utility's electrical infrastructure, are not subject to a "checkerboard of regulations" by local governments. The CPUC has implemented legislative mandates with rules and policies governing the construction and operation of above and below-ground electric facilities, such as General Orders (G.O.) 95, 96, 128, 131-D, and policy documents.

SCE stated that two CPUC decisions affirmed the CPUC's exclusive jurisdiction over power lines and other distribution facilities which local government cannot preempt. D.88642 denied Woodside's authority to require PG&E to underground a distribution system while upgrading it. D.96-02-024 denied the City of Santa Barbara's regulation of lower voltage lines, because the CPUC had "fully occupied the field of electric power line regulation," including all "transmission lines, power lines, distribution lines, substations and facilities." With regard to the electric facilities at issue in the Decision, the Commission stated that "local permit regulation[s] [are] preempted."

SCE also cited California appellate court decisions to refute the Protesters' claims. SCE cited Southern California Gas Co. versus City of Vernon, which rejected the City of Vernon's broad claim to regulate facilities in the public ROW. The Court interpreted PU Code Section 2902 to give the city authority over the location of facilities, control of traffic, and the repair of public streets, but not over the design, type, or construction of the distribution facilities themselves.

SCE also cited Leslie versus Superior Court, where the court ruled that Ventura County could enforce against SCE the grading standards in the county code because state housing law expressly required the cities to adopt minimum standards for it. The court found that the state housing law and the CPUC's mandate were of "equal dignity" and noted that the CPUC had never "purported to exercise its authority over" the construction, maintenance or grading of access roads.

Therefore SCE stated that these cases show that the municipalities can neither mandate the design and construction of Equipment, nor whether those facilities are placed above or below ground. The CPUC's jurisdiction is exclusive because there is no statewide law or policy of "equal dignity."

Nevertheless, pursuant to PU Code Section 6294, SCE states it would comply with local jurisdiction regulations that pertained to health and safety relating to the above-ground installation of electrical distribution Equipment. For example, SCE would: comply with local regulations prohibiting the installation of facilities that would impair a motorists' vision around corners, it would comply with the ADA when locating facilities within the public ROW, and would obtain non-discretionary local permits and approvals for construction and operation of electrical facilities, where not inconsistent with the CPUC's areas of exclusive jurisdiction.

SCE concluded that the CPUC has affirmed its primary jurisdiction over distribution facility construction standards. SCE has also committed to continuing consultations with local governments about where to place facilities. The Commission has made clear on numerous occasions that utilities are expected to engage in meaningful dialogue with local agencies before finalizing the location of facilities.

Easement costs

Protesters of the original AL are also concerned that SCE wants to save money by locating Equipment on public ROW, especially in retrofit projects. Protesters say that SCE has the means to acquire private easements and to enforce eminent domain.

SCE countered that, while it has the right to install Equipment in the public ROW under franchise agreements; it tries to avoid it because it has greater rights on private easements, which applicants must provide at no cost as a condition of service under existing Rules 15 and 16.

We note that a lower rate base and rates result from any capital cost savings that accrue to SCE from placing Equipment in the public ROW instead of acquiring easements. SCE would pay for an easement only when relocating Equipment not dedicated to a specific customer.

As stated above, due to the complexity of the legal, factual, and policy issues raised by the protesters with respect to applicability of the rule changes in the public areas and rights of way, this aspect of SCE's proposal is generally denied without prejudice in this Resolution. At this time SCE's proposed rule changes are approved for applicability only to new construction, to changes of use, and to public property only where the public authority agrees in each case.

SCE should consult with Building Industries Association (BIA)

BIA is not opposed to SCE's proposal, but in response to the original AL asked SCE to clarify these issues:

SCE largely responded to BIA's grandfathering (transitioning) concerns, but made no commitment to extend grandfathering to match certain pending legislation on tentative tract maps expiration.

SCE reiterated the need for developers to convene early meetings with the utility and city to reduce the possibility of last-minute issues, and SCE committed to continue working with cities and developers to coordinate solutions. This process would include optimally locating and sizing of transformers.

We note that BIA's concerns deal primarily with the logistics and timing of the proposed tariff changes. SCE responded adequately to these concerns but SCE's tariffs must also specify the events in project schedules after which Equipment must be placed above ground, and they must use the same terminology as SCE's filed forms.

SDG&E and IBEW support SCE's proposal

SDG&E supports SCE's AL based on its own decades-long experience with pad mounted Equipment for new services. SDG&E notes that subsurface Equipment often must be de-energized for servicing and therefore requires longer and geographically larger outages. According to SDG&E, the number of submersible Equipment manufacturers has declined, affecting availability. They also state that reliability of subsurface Equipment is negatively affected by the collection of water with contaminants, which also poses environmental hazards and breeding grounds for mosquitoes, and that subsurface Equipment is 3 to 4 times more expensive than pad mounted Equipment.

The International Brotherhood of Electrical Workers (IBEW) also supports SCE's AL in the interests of safety for its members, and shorter outages, and stated that it raised these issues with SCE in the first place. IBEW states that the changes would avoid high risk environments where members have experienced life-changing or fatal injuries from working inside electrical vaults. IBEW echoed SCE's commitment to working with cities and developers to minimize the visual impact of pad mounted Equipment, and mentions that the utilities of the Cities of Riverside and Azusa are among many utilities that have changed or are changing to pad mounted Equipment designs only.

Transition plans for above-ground installations on private property as authorized in this Resolution

Upon Commission approval of this Resolution, the types of above-ground equipment described above for installation will be required to be located in above-ground pad mounted structures in new installations when technically feasible, whether designed by SCE or third-party developers.

Following a transitional grace period of 90 days after the effective date of this filing, SCE will no longer accept customer or developer requests for underground distribution system installations that call for specific pieces of electrical equipment (all primary-voltage electrical distribution system equipment, including, but not limited to, transformers, switches and fuses, capacitors, and junction bars) to be installed in below-ground structures in circumstances where it is technically feasible to install the equipment above ground in instances of new construction or changes of use on private property, and where agreed to by the local authority on public property or in public rights of way.

SCE believes the proposed Transitional Grace Period of 90 Days, coupled with Stakeholder Outreach activities, will allow customers ample time to prepare for this change and meet above-ground equipment design requirements on private property. SCE should implement this change in an effective and orderly manner.

Implementation will consist of a change in design requirements that will, following the Transitional Grace Period of 90 Days after the effective date of this filing, apply to new residential and commercial developments, as well as customer- and applicant-driven capacity increases (such as remodels and changes of use).

Comments received

The County of LA and others named below filed the following comments:

SCE commented that the draft resolution did not adequately reflect the following points negotiated between SCE and protesters:

SCE's Reply

COMMENTS

Public Utilities Code section 311(g) (1) provides that this resolution must be served on all parties and subject to at least 30 days public review and comment prior to a vote of the Commission. Section 311(g) (2) provides that this 30-day period may be reduced or waived upon the stipulation of all parties in the proceeding.

The 30-day comment period for the draft of this resolution was neither waived nor reduced. Accordingly, this draft resolution was mailed to parties for comments on Tuesday, March 23, 2010 and placed on the Commission's agenda for voting no earlier than 30 days from that date.

Comments were timely received from the cities of Cerritos, Whittier, West Hollywood, Culver City and San Francisco, and County of Los Angeles and SCE.

A Reply was timely filed by SCE.

The content of the comments is discussed above.

FINDINGS AND CONCLUSIONS

THEREFORE IT IS ORDERED THAT:

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on April 22, 2010; the following Commissioners voting favorably thereon:

PRESIDENT

Commissioners

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