SCE says fiber deal with Verizon is dead, and the CPUC killed it

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Southern California Edison and CPUC commissioner Clifford Rechtschaffen exchanged shots on Thursday, as the battle over electric company fiber continues. Rechtschaffen released a new version – an “alternate” – of a draft decision that required SCE to give up 75% of the gross revenue it would have received from a fiber master lease agreement (MLA) it reached with Verizon. He cut that down to 50%, which is still significantly more than the 10% that the existing rules, which have been in effect for almost 20 years, require.

Whether or not SCE knew Rechtschaffen’s revisions were coming, it filed a preemptive motion asking to withdraw the application that kicked off the proceeding almost a year and half ago. That application was initially given a green light in a proposed decision that was issued in June 2017, and then pulled back for what turned out to be a year of wasted argument.

SCE said that while the CPUC dithered, Verizon found fiber elsewhere and the agreement and the application are now irrelevant…

In the seventeen months since SCE filed its application, Verizon Wireless has continued to obtain the additional infrastructure it requires from its existing providers. While there may be future business opportunities with Verizon Wireless for dark fiber lease transactions independent of the MLA, at this time, the volume of lease route orders SCE would be able to enter into under the MLA is less than what SCE had planned when it filed the application. Had the Commission adopted the June 5, 2017 proposed decision, SCE may have been able to carry out the MLA, but at this juncture the original justification for the application is no longer economically viable.

No doubt, the proposed revenue split – whether it’s 75/25 or 50/50 – is a factor too. Under the current 10/90 formula, SCE says it wasn’t making very much money. It claims ratepayers were already getting 74% of the profit from fiber leases. If that’s the case, then either of the new formulas would have shoved its fiber business deep into the red. That’s not economically viable either.

The California Public Utilities Commission is scheduled to vote on, well, something on Thursday. Whether it does or not is another question – last week’s back and forth could mean it’ll be delayed again.