San Francisco Chronicle

PG&E’s funds to bury lines diverted

- By David R. Baker

As the North Bay rebuilds from October’s deadly wildfires, many residents would like to see more power lines buried undergroun­d, where raging windstorms can’t touch them.

But Pacific Gas and Electric Co. has a history of doing less of this work, year by year, than city officials and state regulators want. Instead, money earmarked for “undergroun­ding” power lines often gets diverted to other uses.

Last year, for example, regulators approved spending $60 million to move existing electrical lines undergroun­d, according to the California Public Utilities Commission. PG&E spent less than half that amount — $28.3 million.

The ratio was worse in 2016, when PG&E spent $31.1 million of its $75 million undergroun­ding budget. Since 2000, the utility has

spent all the money allocated for undergroun­ding in only three years: 2000, 2005 and 2006.

The company undergroun­ds around 30 miles of overhead lines in a typical year.

PG&E funds all undergroun­ding projects once they’re “shovel ready,” and uses the rest of the money on “other high-priority system improvemen­ts,” said company spokeswoma­n Lynsey Paulo.

The utilities commission, however, has ordered an audit to track where the money goes. The commission has also started a process to consider making changes to the way undergroun­ding programs work at all of the state’s investorow­ned utility companies, not just PG&E.

Meanwhile, city officials fume about long project timelines, which can stretch seven years or more.

“PG&E has been a slowpoke delivering projects,” said Morad Fakhrai, who recently retired as Hayward’s public works director. “It’s a very one-sided process where local agencies don’t have much say. PG&E says, ‘It is what it is — take it or leave it.’ ”

The process needs to speed up, say some North Bay officials. They want more electrical lines buried, in cities and rural areas alike.

Although state fire investigat­ors have not yet announced the causes of any of last fall’s Wine Country wildfires, PG&E’s power lines, felled or damaged in a powerful windstorm, are considered a strong possibilit­y. Mendocino, Napa and Sonoma counties have sued PG&E over the damage. And Sonoma County Supervisor Susan Gorin said that extra funding to bury power lines could be part of a settlement agreement with PG&E, if one is reached.

“Yes, undergroun­ding is very expensive, but the estimate is $10 billion damage from the fires,” said Gorin, who lost her home in one of the blazes. “Is undergroun­ding less expensive than that? Probably. And there were (45) lives lost.” The costs are considerab­le. By PG&E’s estimate, moving an overhead line undergroun­d costs an average of $2.3 million per mile, while stringing up an overhead line costs $800,000 per mile. It can be more expensive in a big city: When San Francisco moved 46 miles of overhead lines undergroun­d, from 1996 through 2006, the costs averaged $3.8 million per mile.

PG&E earns the same profit rate on undergroun­d and overhead lines, Paulo said. Almost one quarter of PG&E’s 107,000 miles of electrical distributi­on lines now lie undergroun­d — largely a product of requiremen­ts since the late 1960s that new housing developmen­ts be built with undergroun­d lines, with most costs borne by the developers. Such new projects are less complex than undergroun­ding existing lines and therefore cheaper, averaging about $1.16 million per mile.

Paulo said PG&E is ready to discuss with North Bay officials the possible increased use of undergroun­ding, as communitie­s rebuild. The long timelines that so frustrate city government­s, she said, are due to the complexity of the work, not foot-dragging by PG&E. The utility has “half a dozen” employees dedicated to the program, plus managers for individual projects.

“Sometimes these projects are delayed or don’t even materializ­e, and it can be for factors outside of PG&E’s control,” Paulo said. “Sometimes there are delays on our end as well, and that could be due to higher priority work that constrains our resources.”

In contrast, San Diego and the electric utility that serves it — San Diego Gas & Electric Co. — have made placing lines undergroun­d a high priority. In 2003, for reasons including reliabilit­y and aesthetics, city officials adopted a special surcharge on residents that helps fund the work. As a result, almost 65 percent of SDG&E’s electric distributi­on lines, in both the city and the countrysid­e, run undergroun­d.

California’s process for replacing overhead power lines with undergroun­d ones began in 1967 and, at first, had nothing to do with preventing fires. Instead, in the wake of first lady Lady Bird Johnson’s beautifica­tion efforts, state officials saw it as a way to fight the visual blight of poles and wires.

For communitie­s that have overhead lines and wanted to move them undergroun­d, regulators created several options, with the most commonly used process referred to as Rule 20A. In it, cities and counties receive annual allotments of credits — overseen by the utilities commission — that city officials liken to an airline’s frequent flier miles.

Once a city accumulate­s enough credits to cover the cost of an undergroun­ding project, the city will assemble a proposal, and PG&E will vet it to see if it meets the state’s criteria. The process favors projects along heavily traveled streets and roads as well as places with an unusually high concentrat­ion of overhead wires. Cities can borrow against their future credit allotments for particular­ly large projects.

PG&E currently has more than 120 projects that have met the criteria and are either in planning or active constructi­on, nine of them in Napa and Sonoma counties.

They can spend a long time in that queue. San Leandro has an undergroun­ding project on East 14th Street that was first proposed in 2003, said Keith Cooke, the city’s engineerin­g and transporta­tion director. City officials substantia­lly expanded the project in 2010, and that larger version is now in the engineerin­g phase, with constructi­on possibly beginning in December.

The undergroun­ding program, Cooke said, does not seem to be a priority for PG&E.

“We’ve done projects before,” he said. “It’s just since the 2000s that PG&E’s been really slow.”

Paulo said the San Leandro project was particular­ly complex and at one point was held up by a change in federal energy regulation­s that required PG&E to revise its engineerin­g plans. At first, PG&E didn’t have the staffing resources to redo those plans, Paulo said. The company finally completed its revisions by the end of 2016, she said, and is now waiting for the city to finish the civil engineerin­g designs.

“There were a number of factors that added to the length of that project, some on our end,” Paulo said.

Santa Rosa officials gave up several years ago on an undergroun­ding project, on College Avenue, because they didn’t think PG&E would move quickly enough. The city was working with Caltrans on widening the street, and “there was no way we could coordinate it with PG&E’s timeline,” said Jason Nutt, the city’s director of transporta­tion and public works.

Cooke and Nutt expressed frustratio­n with a relatively recent change to the way Rule 20A works.

From 2006 through 2010, PG&E distribute­d a total of $81 million each year in undergroun­ding work credits to the cities and counties in its territory. But in 2011, the utilities commission cut the annual allotments roughly in half to just over $41 million, to let PG&E catch up on its backlog of projects. After debate last year, the commission decided to keep it at that level for now.

City officials complain that the lower annual allotments won’t keep pace with the rising cost of constructi­on. Rather than slowly building up enough credits to cover the cost of their projects, they fear they’ll actually lose ground the longer their projects languish in line.

“How do I say this nicely? We can use all the help we can get, and more credits would help us do more of this work,” Nutt said. “More credits won’t help speed up PG&E’s process, however. It’s a two-pronged issue.”

Meanwhile, some public officials say they want to improve not just the pace, but also the scope of undergroun­ding, tweaking the program to include more rural areas. The biggest October fires, after all, started in the countrysid­e before burning their way into Santa Rosa and the city of Sonoma. Santa Rosa’s Coffey Park neighborho­od, destroyed by the flames, had undergroun­d lines.

“It’s something we need to consider both in the burned areas and what I call the as-yetunburne­d areas,” said Sonoma County Supervisor Lynda Hopkins. “I represent the West County, and it’s a matchbox waiting to go up.”

Partly to make the costs more palatable, she wants the work combined with bringing broadband Internet service to more rural communitie­s, something she considers a critical need.

“There’s a potential for synergy there,” Hopkins said. “Broadband today is what electricit­y was a century ago, where the cities are lit up, but the rural areas aren’t.”

 ?? Michael Macor / The Chronicle ?? Zach Braun with Pinnacle Power installs PG&E power lines undergroun­d along Old Country Road near Harbor Way in Belmont. PG&E often redirects its funds for undergroun­ding.
Michael Macor / The Chronicle Zach Braun with Pinnacle Power installs PG&E power lines undergroun­d along Old Country Road near Harbor Way in Belmont. PG&E often redirects its funds for undergroun­ding.

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