CITY OF DANA POINT. FINANCIAL REVIEW COMMITTEE Agenda Report
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1 01/23/18 Page 1 Item #3B CITY OF DANA POINT FINANCIAL REVIEW COMMITTEE Agenda Report DATE: JANUARY 23, 2018 TO: FROM: FINANCIAL REVIEW COMMITTEE MIKE KILLEBREW, ASSISTANT CITY MANAGER SUBJECT: UTILITY UNDERGROUNDING ASSESSMENT DISTRICT POLICY AND OTHER BACKGROUND INFORMATION RECOMMENDED ACTION: That the Financial Review Committee receive and discuss the attached information provided regarding the City s existing Underground Power Lines Procedures and Policies, prior activities, and assessment activities. BACKGROUND: Financial Review Committee (FRC) member Rolapp requested that an item be agendized at the November 28, 2017 meeting regarding the Rule 20A Program related to utility undergrounding. The following was provided at that meeting: The Rule 20A program defines policies and processes for the conversion of overhead power lines and other equipment to underground facilities, where there is a public interest to do so. Types of common undergrounding projects include: Elimination of unusually heavy concentration of overhead power lines; Major thoroughfare or arterial roads with a high volume of traffic, or Benefits a public recreation area or scenic areas such as open spaces where wildfires are a threat. The program strives to reduce urban blight to preserve and protect the natural and urban landscape. The program is administered by the three, large, investor-owned electric utilities: Pacific Gas & Electric (PGE), Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E). Each utility administers their Rule 20A programs independently and provides program and project management support to all local jurisdictions within their service territories. Utilities submit their Rule 20A allocation budgets to the California Public
2 01/23/18 Page 2 Item #3B Utilities Commission (CPUC) each year and it amounts to approximately two percent of their electric revenue. The Rule 20A program is essentially a credit system for local governments, not actual funds. It allows utility companies to be reimbursed for planning, design and construction costs. Credits are allocated by municipality based on a formula that takes into account the number of utility meters within the city compared to the utility s service territory. When the cumulative balance of credits is sufficient to cover the cost of a conversion project, the city and the Utility can move forward with planning, design and construction. The City Council, when 20A funds had been available in the past, established a Utility Undergrounding Subcommittee that set criteria and prioritized areas for undergrounding. Typically, higher-profile locations such as scenic or arterial highways took priority over local street undergrounding. A city develops an overhead lines conversion plan and establishes an underground utility district which is approved by their city council. The Utility is responsible for working with the city to manage its account, track credits and recover revenue. Upon completion of an undergrounding project, the utility records the project cost for inclusion in its rate base. The CPUC authorizes the utility to recover the cost from ratepayers. SDGE currently has approximately $1.5 million in credits available to Dana Point. An updated statement from SDGE with an exact amount will be available in the next two months. The cost of underground projects are high, and even a small one would exceed the current credit available to Dana Point. There are options to augment the available credits with direct contributions from cities or through special assessments voted on by beneficiaries/assessed property owners. Property owners are responsible for paying to connect individual properties to the new underground electric line. Currently, the CPUC is evaluating the administration of the Rule 20A programs to consider changes to the allocation methodology and annual credits to communities. The 180 day information gathering period and audit period of utilities began in October The CPUC will update jurisdictions as the review period progresses. DISCUSSION: The FRC discussed this item at their meeting in November 2017 and took the following action: IT WAS MOVED BY VICE-CHAIR HILL AND SECONDED BY MEMBER ROLAPP THAT STAFF PROVIDE MORE INFORMATION REGARDING UNDERGROUND POWER LINES POLICY AND PROCEDURES, PRIOR ACTIVITIES AND ASSESSMENT DISTRICTS, AND TO AGENDIZE THE ITEM ON THE NEXT FINANCIAL REVIEW
3 01/23/18 Page 3 Item #3B COMMITTEE AGENDA FOR DISCUSSION AND POSSIBLE RECOMMENDATION TO CITY COUNCIL The following information is being provided at the request of the FRC: A. Utility Undergrounding Policy and Procedures Guide (Assessment Districts) B. List of Projects Completed to Date under the Rule 20A Program C. City Council Report from 2002 on Method to Evaluate Undergrounding Projects SUPPORTING DOCUMENTS PAGE#: A. Utility Undergrounding Policy and Procedures Guide... 4 B. Citywide Utility Undergrounding Project Summary C. 07/09/02 City Council Meeting Agenda Report No
4 01/23/18 Page 4 Item #3B Supporting Document A Utility Undergrounding Policy and Procedures Guide
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54 01/23/18 Page 54 Item #3B Supporting Document B Citywide Utility Undergrounding Project Summary
55 01/23/18 Page 55 Item #3B Supporting Document C 07/09/02 City Council Meeting Agenda Report No. 16
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