Tag Archives: utility regulation

California lawmakers bury bills to bury electric lines

by Steve Blum • , , , ,

In the wake of last year’s deadly wildfires, California lawmakers proposed legislation to reduce future risk by reducing electric line exposure. Those ambitions didn’t amount to much, though. Two bills to encourage utilities to move lines off of poles and place them underground, particularly in high fire risk areas were scrapped. A third one was neutered, but is still moving forward.

Senate bill 70 was passed unanimously by the senate and is awaiting its fate in the assembly. Authored by Jim Nielsen (R – Tehama), it’s less ambitious than first drafted. It establishes a “working group” to “promote the undergrounding of electrical infrastructure and the implementation of a statewide joint trenching policy”. Any money to pay for it, though, would have be found later. Originally, it included stronger language that would have required utilities to put lines underground when rebuilding or cleaning up after a wildfire.

That said, it could be useful. Anything that encourages cooperation between electric and telecoms companies, and local and state agencies, when trenching projects are planned, is a good thing.

SB 584, authored by John Moorlach (R – Orange) was killed behind closed doors by the senate appropriations committee. It began the most ambitious undergrounding bill, earmarking $400 million a year to pay for utility line relocation. It was subsequently watered down to “an unspecified amount”, and finally left behind when legislative leaders cleared the appropriation committee’s suspense file.

Assembly bill 281, by Jim Frazier (D – Contra Costa) didn’t go anywhere either. It died without a hearing in the assembly utilities and energy committee. New rules this year allow committee chairs to simply ignore legislation they, or the lobbyists that stuff cash in their pockets provide them with sage advice, don’t like. In its various forms it would have loosened environmental reviews of undergrounding projects and/or given the California Public Utilities Commission the job of requiring utilities to move lines underground in high fire risk areas.

Cal Fire pins Camp Fire blame on PG&E, but won’t release investigation details yet

by Steve Blum • , , , ,

Camp fire landsat

PG&E equipment started the deadly Camp Fire in Butte County last year, but the details of how and, perhaps, why are still under wraps. On Wednesday, Cal Fire announced that its investigation found that PG&E started two fires near the town of Paradise on 8 November 2018…

CAL FIRE has determined that the Camp Fire was caused by electrical transmission lines owned and operated by Pacific Gas and Electricity (PG&E) located in the Pulga area.

The fire started in the early morning hours near the community of Pulga in Butte County. The tinder dry vegetation and Red Flag conditions consisting of strong winds, low humidity and warm temperatures promoted this fire and caused extreme rates of spread, rapidly burning into Pulga to the east and west into Concow, Paradise, Magalia and the outskirts of east Chico.

The investigation identified a second ignition sight near the intersection of Concow Rd. and Rim Rd. The cause of the second fire was determined to be vegetation into electrical distribution lines owned and operated by PG&E.

That conclusion is backed by a full report, but consistent with past practice it’s been forwarded to the Butte County district attorney’s office for use in the ongoing criminal investigation into the blaze.

That doesn’t necessarily mean that Cal Fire thinks PG&E broke the law. Butte County DA Michael Ramsey started his own criminal investigation last November, and the full report was sent to him. According to a Bay City News Service story, he won’t release it “until a final decision is made on whether to file criminal charges”.

Cal Fire’s conclusion comes as no surprise to PG&E, which has been working under the assumption that it will be held responsible for the Camp Fire, given the way California utility liability laws work. Even if PG&E (or any other electric or telecoms company that uses utility pole routes) did everything it was supposed to do, if its equipment started the fire, it has to pay the full damages.

San Francisco considers taking over PG&E’s electric business

Sfpuc pge report graphic 13may2019

The City and County of San Francisco is a small step closer to taking over the electric half of Pacific Gas and Electric’s utility operations. A report produced by the City’s local public utilities commission, at the request of mayor London Breed, airs many grievances with PG&E, extolls the benefits of a municipally owned electric utility and glosses over the hard questions of how and how much.

San Francisco’s options, according to the report, range from continuing to arm wrestle with PG&E, to building some limited extensions of existing city-owned electric distribution lines, to simply taking over PG&E assets and operations…

The City can completely remove its reliance on PG&E for local electricity services through purchasing PG&E’s electric delivery assets and maintenance inventories in and near San Francisco, and operating them as a public, not for profit service. The City will pay PG&E a fair price for the assets that reflects asset condition. In this option, the City will also offer jobs to PG&E’s union and other employees who currently operate the grid.

This option would also involve bundling in the City’s limited municipal electric system and customers from the City’s community choice aggregator, one of many such county and regional-level agencies created in California to serve as a middle man between investor-owned utilities, such as PG&E, and electric customers.

The three biggest questions – how to convince PG&E to sell, how much would it cost and how would it be paid for – are left hanging. Presumably, the federal bankruptcy judge in charge of PG&E’s restructuring will have something to say about it all. The price of a buyout is described as “dependent on fair market value analysis; could be a few billion dollars initially”. The report is even more opaque about what happens after “initially”.

The money “would be revenue bond‐funded by the SFPUC using its borrowing authority”. That means that the City would repay bond obligations with the revenue collected from electric customers, after it pays its own expenses. The report estimates that gross revenue would be in the $500 million to $750 million range, but doesn’t try to figure out how much of that would be available to pay back the “few billion dollars” it would have to borrow.

Broadly speaking, there are two kinds of revenue bonds: those that are backed by taxpayer money and those that aren’t. If the former, any shortfall in revenue (or cost overruns) would come out of the City’s budget. If the latter, the bondholders could, ultimately, be stiffed. Which might seem like a fine thing to some, except that the greater risk is offset by higher interest rates on the money that’s borrowed, which in turn will be paid by electric customers through higher rates. Although it would technically be a not-for-profit business, it would have to generate a sufficient surplus – a profit in everything but name – to make those payments.

This is the second time in as many years that the City and County of San Francisco has looked at operating a major utility. Last year, the City floated a proposal to build and operate a citywide fiber to the premise broadband system, that would have cost a couple of billion dollars. That project was shelved shortly after Breed won the mayor’s job in a special election.

Crown Castle won’t have to wait for new PG&E pole attachment terms, CPUC says

by Steve Blum • , , ,

PG&E wants a do-over on a utility pole access decision by the California Public Utilities Commission, but it’ll have to comply with it in the meantime. Wednesday, the CPUC’s executive director refused to delay execution of an arbitrated contract between PG&E and Crown Castle while commissioners decide what they’re going to do with the appeal filed by PG&E last month.

The CPUC’s decision gives PG&E 45 days to approve or deny Crown Castle’s pole attachment requests. If the shot clock expires, Crown Castle can move ahead without permission and install fiber lines on PG&E poles. It also requires PG&E to keep Crown Castle informed of other attachment requests, but allows Crown Castle to work on its own lines without giving PG&E advance notice, so long as no electrical shutoffs are needed. A few days after the commission unanimously approved those new contract terms, PG&E asked for a rehearing, citing safety concerns.

The decision gave PG&E two weeks to sign the deal, which are long gone. Crown Castle wants the commission to forget about any rehearings and “take all enforcement measures possible, including penalties and other measures” to force PG&E to get on with it. Which is what, it seems, PG&E will have to do. Wednesday’s letter from CPUC executive director Alice Stebbins said there will be no delay because “merely making a general statement of irreparable harm and referencing the filing of an application for rehearing are insufficient grounds for me to grant the requested extension”.

All this is happening while the CPUC slowly considers whether pole attachment and route management rules need to be changed – it began an inquiry more than two years ago – and while federal are moving more quickly to resolve PG&E’s bankruptcy filing and potential violations of criminal probation terms. It could get more complicated.

Ad hoc decisions will make utility pole safety problems worse, PG&E tells CPUC

by Steve Blum • , , ,

PG&E doesn’t like the pole attachment terms Crown Castle was granted by the California Public Utilities Commission, and is asking for a do-over. At its recent meeting, commissioners unanimously approved contract terms decided by a CPUC administrative law judge who was acting as an arbitrator in a dispute between the two companies.

It’s more than just a simple contract dispute, though. Pole route management policy is getting a hard look by the CPUC and by federal courts that are dealing with PG&E’s bankruptcy filing and criminal probation in the wake of deadly fires sparked by overhead lines. PG&E argues that piecemeal decision making will only make things worse.

Crown Castle wanted to attach fiber optic cables to PG&E’s poles, and buy the necessary space instead of leasing it, as PG&E prefers when a company only wants to occupy one vertical foot of pole space. It claimed that being able to buy the space gives it comparable privileges to big incumbents, such as AT&T, that typically buy all of the pole space available – the communications zone – and then manage attachments for all telecoms users.

The ALJ, Patricia Miles, ruled that PG&E didn’t have to sell space but, in a baseball-style arbitration decision, imposed lease terms that mimic many of the advantages of ownership that Crown Castle sought. Acting unusually quickly, the commission gave her decision a final blessing ten days later.

Both the speed and the substance of the CPUC’s action didn’t sit well with PG&E, which filed a request for a rehearing on Friday. Many of its objections revolve around what it regards as conflicts with the CPUC’s basic rules for managing pole attachments by telecoms companies and other issues involving the use of the public right of way by utilities, which were laid down in a 1998 decision.

Those rules are being reexamined in excruciating detail in a separate CPUC proceeding involving all of California’s major electric and telecoms companies, and many smaller ones. PG&E told the commission that this is a bad time to make decisions on the fly…

In the current environment of the ‘new-normal’ and the imperative to maintain the safety of PG&Es infrastructure these increased and expedited access and attachment terms are imprudent. Such increased access affects safety, which is a concern of the public, the CPUC, and both electric and telecom utilities. All parties need time for full exploration of requirements and risks that would be the outcome of such changes.

Pole route safety is a complicated, high stakes issue in California right now. After two years of massive wildfires started by overhead electric lines that killed dozens of people and caused billions of dollars of damage, everything is on the table, including a possible state takeover of electric utilities. At the same time, fiber construction is accelerating to support upgrades of residential, commercial and mobile broadband service. Speed matters for both, but optimal decisions for either often run in opposite directions. Ad hoc tinkering, like the PG&E/Crown Castle decision, will make the problem worse. The better course is for the CPUC to focus its resources on the bigger proceeding and wrap it up in a timely manner.

Collected documents from the Crown Castle/PG&E pole attachment arbitration at the CPUC are here.

Conduit, right of way, pole attachment, dark fiber and franchise agreement documents are here.

Four California counties say “no criminal charges” for PG&E

by Steve Blum • , , , ,

Pacific Gas and Electric won’t face criminal charges for its role in starting several northern California fires in 2018. District attorneys in Sonoma, Napa, Humboldt and Lake counties announced that they can’t prove a case. According to a press release from Sonoma County district attorney Jill Ravitch, the necessary evidence burned up along with everything else…

The cases that were referred for prosecution all required proof that PG&E acted with criminal negligence in failing to remove dead and dying trees. Under California law, criminal negligence requires proof of actions that are reckless and incompatible with a proper regard for human life, and any charges must be proven unanimously to a jury beyond a reasonable doubt. Proving PG&E failed in their duty to remove trees was made particularly difficult in this context as the locations where the fires occurred, and where physical evidence could have been located, were decimated by the fires.

Last year, Cal Fire determined that some of the many fires that roared through California’s wine country began when trees or other vegetation came into contact with PG&E electric lines. The deadliest fire – the Tubbs fire – which killed 22 people and spread as far as city neighborhoods in Santa Rosa, was not linked to PG&E’s equipment according to Cal Fire. That one was apparently started by electric lines strung across private property by the landowners.

So far, prosecutors in other counties affected by fires linked to PG&E infrastructure have declined to charge PG&E with crimes. But that’s cold comfort. Ravitch was careful to point out that “PG&E remains on federal criminal probation and is a defendant in many private civil cases arising out of the wildfires”, including one that the County of Sonoma is pursuing. The combined liability PG&E faces from those fires as well as last year’s even deadlier Camp Fire is expected to top $30 billion. Who gets paid and how much is now in the hands of a federal bankruptcy court.

PG&E faces pole attachment shot clock, as CPUC arbitrator hands Crown Castle a win

by Steve Blum • , , ,

White road attachment

An administrative law judge gave Crown Castle a victory of sorts in a dispute over terms for attaching fiber optic cable to utility poles that Pacific Gas and Electric owns. Assuming the California Public Utilities Commission signs off on the finding, the arbitrated decision by ALJ Patricia Miles leaves PG&E’s leasing model and most of its standard terms in place. But, in effect, it also establishes a 45 day shot clock for responding to attachment requests and allows Crown Castle to do some work on poles without notifying PG&E and to be notified, in some circumstances, if work affecting its cables is planned.

Originally, Crown Castle wanted the CPUC to force PG&E to sell space on utility poles by the foot. Typically, PG&E either sells all the space available for telecoms cable attachments – the communications zone – to one company, such as AT&T, and then relies on that company to manage attachment requests by other carriers. Or it will lease out space by the foot to telecoms attachers, such as Crown Castle, and manage the communications zone itself.

The rent versus buy financial analysis aside, the main operational difference between owning and leasing space is that pole space owners can add cables and maintain them with less administrative overhead, and can expect a greater degree of coordination from PG&E. Crown Castle wanted those privileges, but didn’t want to – perhaps legally couldn’t – take on the responsibility of owning and managing the entire communications zone.

Using an expedited arbitration process established by the CPUC, Crown Castle challenged PG&E’s standard procedure, but Miles rejected its argument that state law and CPUC rules require by-the-foot sales of attachment space. She then told the two companies to negotiate an agreement on that basis.

That didn’t happen. In her draft decision, Miles said “the parties inexplicably failed to submit such an agreement”. Instead of coming back to her with a settlement, the companies each offered their preferred contract language: PG&E filed its standard contract; Crown Castle proposed changes to that contract giving it many of the privileges of ownership.

In a baseball-style arbitration decision, Miles chose Crown Castle’s version, saying “PG&E has not objected to Crown Castle’s revisions to its license agreement”.

Key elements of the changes to PG&E’s standard attachment contract include:

  • Crown Castle needs written permission to attach cables to PG&E owned pole space, “unless 45 days have run from the time of request of access and Company has provided no response”. Neither the ruling or the contract define what, exactly, constitutes a response, but silence certainly doesn’t qualify.
  • Crown Castle does not have to give PG&E 48 hour notice if it’s doing routine repair or maintenance that doesn’t require electricity to be shut off.
  • PG&E has to notify Crown Castle when another telecoms company wants to attach to a pole that Crown Castle is already occupying.
  • When that happens, PG&E needs Crown Castle’s permission to rearrange cable attachments or replace poles if needed.

Since this was a one-off arbitration of a particular dispute between two companies, the decision won’t affect any existing pole attachment contracts or necessarily serve as a template for future ones. But it might.

The CPUC is scheduled to vote on the draft decision at its 14 March 2019 meeting.

Collected documents from the Crown Castle/PG&E pole attachment arbitration at the CPUC are here.

PG&E admits responsibility for deadly Camp Fire, pegs liability at $10.5 billion and climbing

by Steve Blum • , , , ,

Carr fire 2018

Cal Fire’s official investigation isn’t over, but Pacific Gas and Electric has concluded that it was at least partly to blame for the Camp Fire in Butte County in November, which killed 86 people. In a financial filing yesterday, PG&E laid out the evidence from the transmission tower where the fire began, and the financial consequences…

The company believes it is probable that its equipment will be determined to be an ignition point of the 2018 Camp Fire…

On November 14, 2018, the company observed a broken C-hook attached to the separated suspension insulator that had connected the suspension insulator to a tower arm, along with wear at the connection point. In addition, a flash mark was observed on Tower :27/222 near where the transposition jumper was suspended and damage to the transposition jumper and suspension insulator was identified…

Based on these facts, the company is including a $10.5 billion pre-tax charge related to third-party claims in connection with the 2018 Camp Fire in its full-year and fourth-quarter 2018 financial results…

The company has taken a total of $14.0 billion in pre-tax charges related to the 2018 Camp Fire and the 2017 Northern California wildfires to date, which reflects the lower end of the range of estimated losses the company faces from such wildfires. The charges represent a portion of the previously announced estimate of potential wildfire liabilities, which could exceed more than $30 billion.

The bottom line: PG&E’s management and auditors believe there is “substantial doubt” about its and its parent corporation’s “ability to continue as going concerns”.

The disclosures come a day after a story appeared in the Wall Street Journal that reported PG&E knew about problems on that particular transmission line, but delayed fixing them for several years.

If indeed there is evidence that PG&E was negligent, or even simply made poor choices, the company faces a triple whammy. It’ll be blood in the water for the predatory bar, which no doubt expects to get the shark’s share of $30 billion plus, and it’s sure to test, if not break completely, the patience of the federal judge who is supervising PG&E probation, which stems from an earlier criminal conviction for deadly safety lapses.

And then there’s the ongoing bankruptcy proceeding, which PG&E hopes will keep it in the electric and gas business in northern California. The more money that goes toward civil damages and criminal penalties though, the less there will be to keep the lights and heat on. That’s not just a problem for PG&E – increasingly, it’s looking like a problem that the California legislature will have to solve.

Telecoms takes a backseat in Sacramento, but PG&E could end up a hood ornament

by Steve Blum • , , , ,

Skull hood ornament

Telecommunications in general, and broadband in particular, aren’t getting much attention at the California capitol this year. Friday was the deadline for introducing new bills for this year and, aside from privacy issues, nothing regarding telecoms that’s particularly substantive landed in the hopper.

Pacific Gas and Electric company and the California Public Utilities Commission, on the other hand, are in the gunsights of senator Jerry Hill (D- San Mateo). He floated a bill on Friday that would take much of the job of regulating PG&E away from the CPUC, and give it to the California legislature (h/t to Fred Pilot at the Eldo Telecom blog for the pointer). Senate bill 549 simply says…

The commission shall not approve any capital structure change or increase in rates for the Pacific Gas and Electric Company unless the Legislature, by statute, authorizes the capital structure change or increase in rates.

It’s a placeholder bill, introduced to meet the deadline, with details to be worked out later. That’s my read anyway. Micromanaging the rates and capital structure of privately owned utilities, as the CPUC does, is a detailed and time consuming job. Giving it to legislative committees guarantees chaos.

His objective, judging from his press release, is to give the legislature, or at least Hill, a seat at the table as a federal judge disposes with PG&E’s request for bankruptcy protection. The gambit might work. A credible threat to subject PG&E to direct and overt political control could create enough financial uncertainty to kill any reasonable bankruptcy settlement.

Hill introduced two other utility related bills on Friday. SB 548 would increase requirements for private electric companies to inspect high voltage transmission lines – such as those suspected as the cause of the deadly Camp Fire – and SB 550 would require that a merger involving a gas or electric company “improves the safety of the utility service provided”.

Crown Castle, PG&E punt fiber attachment dispute back to CPUC

by Steve Blum • , , ,

Crown Castle and PG&E failed to reach agreement on pole attachment terms, as directed by the California Public Utilities Commission administrative law judge (ALJ) arbitrating their ongoing dispute. Instead, PG&E submitted its standard pole space leasing agreement, and Crown Castle submitted the same, with several modifications that make it more to its liking.

The heart of their dispute is that Crown Castle wants to buy attachment space on poles, and PG&E just wants to lease it to them. Incumbent telecoms companies, like AT&T, can buy space, but they have to buy all of the communications zone, which is section of the pole, typically three or four vertical feet, that’s suitable for attaching telecoms cables. Once they buy the whole zone, they’re then responsible for leasing out attachment space by the foot to competitive telecoms companies like Crown Castle.

Crown Castle isn’t interested becoming the telecoms landlord on PG&E poles, and there’s some doubt as to whether CPUC rules allow them to do it in the first place. The ALJ heard both sides’ arguments, as well as comments from other interested parties, and decided that there’s nothing in the CPUC rules that says PG&E has to sell pole attachment space by the foot.

So now Crown Castle is telling the ALJ that 1. commissioners should disregard her ruling and give it what it wants anyway, and 2. if they don’t do that, they should change PG&E’s standard pole space leasing agreement to, among things, create a 45 day shot clock for PG&E to approve or reject a request to attach to a particular pole. If PG&E has “provided no response” within that time, Crown Castle could attach its fiber at will. It also wants to know when other companies ask to lease any remaining space, wants to be able to work on poles without notifying PG&E and doesn’t want PG&E to rearrange any of its cables without its permission. Which add up to many of the privileges that come with pole space ownership, without the responsibility of managing leases with other telecoms companies.

Collected documents from the Crown Castle/PG&E pole attachment arbitration at the CPUC are here.