Dive Brief:
- The California Public Utilities Commission on Thursday approved a long-term power line undergrounding program allowing major utilities to propose 10-year plans designed to harden the state’s electric grid against wildfire risks while driving down costs through economies of scale.
- Moving power lines underground can reduce the risk of wildfire ignition by 98%, according to Pacific Gas & Electric, but critics of the practice argue there are cheaper methods such as reconductoring lines in at-risk areas. California utilities say burying their lines can cost from $1.85 million to $6.1 million per mile, depending on the location.
- Under the new program, utilities with at least 250,000 customers can submit undergrounding plans to the state’s Office of Energy Infrastructure Safety, which must approve or deny the plan within nine months. The CPUC will then have nine months to approve the costs.
Dive Insight:
Regulators stood up the new undergrounding program just four months after PG&E’s last general rate case was approved, which included authorization to bury more than 1,200 miles of power lines.
In that decision “we found that increased investments in hardening the grid would provide great value to Californians,” CPUC Commissioner John Reynolds said in a statement. “The rules adopted today build on those investments, ensuring that long-term undergrounding promotes a safer grid in the most cost-effective way.”
The new undergrounding program was authorized by legislators in 2022, in Senate Bill 884. It requires utilities to apply for available federal, state and other funding to help pay for the projects, and it calls for periodic audits led by an independent monitor selected by the Office of Energy Infrastructure Safety.
The CPUC said any approval of undergrounding costs must include certain conditions including annual cost caps, unit cost caps, a cost-benefit threshold and requirements for third-party funding to be applied to reduce the annual cost cap.
“This program creates a process for expedited undergrounding ... while also incorporating oversight and ratepayer protection measures,” said Commissioner Darcie Houck.
PG&E in 2021 set a goal to move 10,000 miles of power lines underground and in December said it had completed about 600 miles of that work while also reducing costs from $4 million per mile to below $3 million per mile.
PG&E filed for bankruptcy in 2019 after fires caused by its power lines burned hundreds of thousands of acres in Northern California and led to more than 100 deaths. It paid out $25.5 billion to resolve its fire-related liabilities.
The utility said it plans to file its 10-year undergrounding plan by the middle of this year. Critics say customers can not afford more rate increases, however.
PG&E’s general rate case approved by the CPUC in November added about $34 per month to average bills, according to local news sources. And regulators gave interim approval to a smaller increase on Thursday, which also included more than $500 million for upgrades including undergrounding.
“This situation is untenable for many of PG&E's residential customers, who have seen rates balloon by over 80% over the last three years, making PG&E the most expensive power provider in the state,” Assemblymember Dawn Addis, D, and other lawmakers said in a letter to the CPUC last week.
