San Francisco Chronicle - (Sunday)
Building projects delayed by PG&E
Advocates, builders say issue worsening
Hundreds of newly constructed apartment buildings and businesses in Northern California are sitting empty at any given time because the projects must wait on one entity, Pacific Gas and Electric Co., to turn on the lights.
PG&E, the state’s largest utility, has long had a bad reputation among builders for the pace at which it connects buildings to the electrical grid, a process known as interconnection that occurs before a finished building can be occupied. But housing advocates and developers say those delays have grown increasingly worse in recent years, forcing many to leave buildings vacant for months amid the state’s worsening housing shortage.
There were 319 commercial and multi-family buildings waiting for PG&E to turn on power as of late February, according to PG&E data obtained by state Sen. Scott Wiener’s office. Of those, 134 buildings had been waiting for more than two months and 95 had been waiting for more than three months.
Even worse, builders in some rural counties are being told they may have to wait many months or even years to connect new homes and businesses to the grid.
“It’s completely unacceptable for completed projects to just sit there gathering dust because PG&E can’t get it together to turn on the power,” Wiener, DSan Francisco, told The Chronicle. “We’re in the middle of a housing crisis.”
The issue is drawing deeper scrutiny at the state Capitol this legislative session as pro-housing advocates and builders examine how the state could force PG&E and other utilities to provide hookups in a quicker timeframe.
Wiener said he plans to unveil a bill Friday that would require investor-owned utilities to complete interconnection within eight weeks after a building is “green tagged,” meaning local
officials have inspected construction work and signed off on connecting it to the grid.
Under the measure, Senate Bill 83, utilities that don’t turn the power on for new and existing buildings within that timeframe would be required to financially compensate the project developer.
PG&E said it’s working to speed up electric connections for new customers. But the company’s resources have been taxed by urgent work preventing wildfires that have “required significant financial and workforce resources,” PG&E spokeswoman Lynsey Paulo said. The company’s service territory covers much of Northern and Central California.
“We do understand there are real-world impacts that delays have on our customers,” Paulo said. “We’re committed to making it right.”
But Wiener and supporters of SB83 say the utility must do both — prevent its equipment from sparking wildfires and provide timely connections to help California address the housing shortage. “PG&E can’t just throw up their hands, which is what they’ve been doing,” Wiener said.
Since 2018, the San Francisco Public Utilities Commission has tallied nearly 140 projects it claims have been delayed by PG&E. Some are small, like new traffic signals, but others are significant affordable housing projects.
Barbara Hale, assistant general manager of power for the commission, said PG&E has routinely approved projects then balked once it’s time to energize them, causing delays.
“That’s a core function — planning and managing your assets,” Hale said. “And it seems like they are failing at that.”
San Francisco’s accounting of these projects is part of a case the city is building to take over PG&E’s power lines and other electric infrastructure within its jurisdiction. Wiener said the delays bolster the city’s case to form its own utility. A $2.5 billion offer has been on the table since 2019, but PG&E has rejected it, saying its assets are worth far more.
Meanwhile, the delays have cost ratepayers, taxpayers and the city an estimated $28 million in the form of lost revenue in the past four years, according to the commission.
PG&E company representatives meet with the city almost weekly to discuss projects and priorities, Paulo said. “We make every effort to respond promptly to all requests,” she said.
Sam Moss, executive director of Mission Housing Development Corporation, one of the city’s most prolific nonprofit builders, said egregious delays have become the norm, even when builders do everything right. For instance, he said Mission Housing recently completed construction of three accessory dwelling units for senior housing on 18th Street, which PG&E has known about for two years, but the utility could take months longer to turn on the power.
“The only thing you can count on with PG&E is obtuseness and not being direct and not being helpful,” Moss said. “The most frustrating thing is the black box nature of it.”
He said another Mission Housing project, Kapuso at the Upper Yard, a 130-unit affordable project next to the Balboa Park BART station, was forced to use fuel-powered generators during the construction process because PG&E wouldn’t provide a temporary hookup from its power junction on the street. Moss said such hurdles have cost the nonprofit “hundreds and hundreds of thousands of dollars.”
State legislators have passed dozens of bills in the past five years aimed at speeding up construction of new housing, most of which have focused on eliminating barriers to construction at the city level.
Builders and housing advocates say those efforts to stop political opposition from blocking new housing at the local level have helped expose utilities’ roles in delaying interconnections. While PG&E is the most notorious, data provided by Wiener’s office also shows delays among another large utility.
Southern California Edison Corp., which services much of the Los Angeles metro area, had 17 commercial and multi-family projects waiting for more than one month for power hookups as of late February, according to data the company provided to Wiener’s office. San Diego Gas & Electric Co. did not provide data, though it said most buildings are energized within 30 days after all requirements are met, with “few exceptions.”
Delays getting power for new buildings are often the most glaring outside the state’s major population centers.
Last fall, PG&E told Humboldt County that it wouldn’t connect any new projects in the southern part of the county — no new houses, no new commercial properties — and even told local officials they would face significant delays for smaller projects like backup batteries.
State Sen. Mike McGuire, who represents the area, said the utility was essentially barring any growth for a region that is desperate for new economic activity and preparing to welcome a major offshore wind project. The county is also required, by the state, to build 3,390 new homes by 2027.
“We were blown away,” said McGuire, D-Healdsburg. “It’s become clear (PG&E) can’t keep up with current and growing capacity for electricity.”
The utility, which, according to local news reports, originally blamed cannabis farms for the energy pinch, has since met with outraged Humboldt County officials and promised to boost the region’s energy capacity within 36 to 48 months, McGuire said.
Paulo, with PG&E, said the company is working to overcome challenges presented by the region’s remote and rugged terrain and has committed to increasing service over the next several years.
In the Central Valley, where the state’s population is growing the fastest, a group of builders last fall accused PG&E of imposing “a de facto moratorium on new home construction in Fresno and Madera counties.” In a letter to state utility regulators, the Building Industry Association’s Fresno and Madera counties chapter said PG&E had furloughed all contract crews that would have energized new residential subdivisions and said new connections would take five months.
“We can’t build enough homes as it is,” Mike Prandini, president of the association chapter, told The Chronicle. “And it’s making it worse with the slowdown caused by PG&E.”
A home must be energized in order for a sale to go through. If the deadline for closing escrow has passed, a buyer must re-apply for a new loan. That can have devastating implications when mortgage interest rates are rising — putting homebuyers at risk of not qualifying for a loan with higher interest rates.
Meanwhile, many buyers had already given notice to landlords, sold current homes, made moving plans and would be devastated by further PG&E connection delays, the Building Industry Association wrote to state regulators.
After the association’s letters, PG&E fast-tracked the most critical cases where home sales in new developments were at risk of falling through, Prandini said. The group’s members are tentatively encouraged that PG&E executives seem to be aware and attentive to the problem, he said.
PG&E said it was working closely with developers, builders and others, including the California Building Industry Association, to streamline and speed up new electric interconnections.
Still, the frustration over slow utility hookups is growing in Sacramento.
Some lawmakers said California’s push can’t rely on piecemeal negotiations between local officials and utility executives, especially as most of the state struggles to meet its housing targets.
The state has about 2 million fewer housing units than its population needs. It must construct 180,000 units each year to keep pace with existing demand, but California is building only about 80,000 units per year.
McGuire said he wants the state to conduct a systemwide capacity analysis of PG&E to learn about issues like insufficient transmission infrastructure and head off problems like those that occurred in Humboldt County. He’s drafting a bill to that effect.
Including SB83, six measures have been proposed at the state Capitol this year to require utilities to speed up interconnections. Most of the bills are still being drafted and include only intent language. Wiener’s bill is the most sweeping measure on the table so far.
His bill is sponsored by the Housing Action Coalition, an advocacy group, and several unions for construction workers, including the Housing Action Coalition.
Corey Smith, executive director of the Housing Action Coalition, helped write SB83 and spoke with many builders and labor groups about what timeframe is reasonable for utilities to provide connections. He said the eight-week deadline in the bill is a generous timeline for utilities when most hookups could be completed within days.
“It’s worse today than it’s ever been,” Smith said. “Finding projects that are being delayed is easier than finding projects that are not being delayed.”