HomeMy WebLinkAbout2021-07-08; Utility Undergrounding Program Study Update (Districts 1 & 2); Gomez, PazTo the member~ of the:
CITY COUNCIL
Date1'l'B l:21 CA ✓ CC L
CM .ll.,_ACM .:L_ DCM (3) v
July 8, 2021
Council Memorandum
To: Honorable Mayor Hall and Members of the City Council
From: Paz Gomez, Deputy City Manager, Public Works
Via: Geoff Patnoe, Assistant City Manager(G?
{cityof
Carlsbad
Memo ID #2021133
Re: Utility Undergrounding Program Study Update (Districts 1 & 2)
This memorandum provides an update to a previous memorandum dated Jan. 14, 2021, on the
Utility Undergrounding Program Study (Attachment A).
Background
The City Council initially approved the Utility Undergrounding Program Study (study) as part of
the fiscal year 2016-17 Capital Improvement Program (CIP) budget for CIP Project No. 6083 in
the amount of $100,000. The scope of the project was to investigate and analyze funding
alternatives for undergrounding overhead utilities, such as telecommunications and electrical
power, and removing existing poles and wires.
As described in Attachment A, the CIP study has not started, and CIP funding for the study has
been re-allocated to fiscal year 2022-23.
Discussion
As discussed in Attachment A, San Diego Gas & Electric (SDG&E) collects and holds funds for
cities to pursue undergrounding of overhead utilities per the California Public Utilities
Commission's Rule 20A. However, the Rule 20A funding falls well short of the actual cost to
underground overhead utilities. As part of Rule 20A, the city receives an annual allocation of
work credits that can be used or saved and accumulated to fund utility underground projects.
The city's current 20A allocation balance is over $1.4 million, and the city receives
approximately $160,000 per year in additional 20A allocation;
The city received a letter from SDG&E dated July 2, 2021 (Attachment B), which described that
the California Public Utilities Commission, or CPUC, recently issued its Phase I Decision Revising
Electric Rule 20 and Enhancing Program Oversight as part of Rulemaking 17-04-010 to Consider
Revisions to Electric Rule 20, Decision Rule 26-06-013.
In the letter, the city was identified as an active community as it pertains to participation in
SDG&E's Rule 20A program and confirmed a current allocation balance of over $1.4 million . This
funding allocation has been set aside for the utility undergrounding activities as part of the
Valley Street and Magnolia Avenue Complete Streets Project (CIP Project No. 6019), which is
currently estimated to cost $2.4 million to complete. It should be noted that the CIP Project No.
Public Works Branch
Transportation Department
1635 Faraday Avenue I Carlsbad, CA 92008 I 760-602-2730 t
)
Council Memo -Utility Undergrounding Program Study Update (Districts 1 & 2)
July 8, 2021
Page 2
6019 is currently estimated at $4.8 million, of which approximately $2.4 million is for ,
undergrounding work, per SDG&E's most recent cost estimate.
Though the CIP Project No. 6019 is in District 1, the remaining 35 miles of overhead lines that
require undergrounding in the city are in both Districts 1 and 2.
In the CPUC's final decision, the CPUC confirmed that new Rule 20A credits for allocation would
not be authorized after Dec. 31, 2022. Rule 20A also allows for reallocation of work credits from
inactive communities to communities in need. The CPUC further noted that the reallocation
provision in Rule 20A shall only be invoked for communities with projects already underway,
within existing undergrounding districts, that experience unforeseen funding shortfalls, and
have demonstrated that all alternatives for obtaining project funding have been exhausted. This
provision does not allow for unrestricted reallocation of work credits for active communities.
In addition to the city's current 20A allocation balance of $1.4 million, the city still needs
approximately $1 million for utility undergrounding near Valley Street and Magnolia Avenue.
This unforeseen funding shortfall may qualify the city for possible reallocation of work credits
from inactive communities. Staff will work with SDG&E to pursue this reallocation of work
credits.
Next Steps
Staff will continue to work with SDG&E on addressing the $1 million funding shortfall for the
utility undergrounding near Valley Street and Magnolia Avenue.
The CIP project for the Utility Undergrounding Program Study will be re-initiated in fiscal year
2022-23 when CIP funding becomes available, as prioritized by the City Council.
Attachments: A. Council Memorandum dated Jan. 14, 2021 (without attachments)
B. SDG&E letter dated July 2, 2021
cc: Scott Chadwick, City Manager
Celia Brewer, City Attorney
Gary Barberio, Deputy City Manager, Community Services
Laura Rocha, Deputy City Manager, Administrative Services
Robby Contreras, Assistant City Attorney
Tom Frank, Transportation Director/City Engineer
Ryan Green, Finance Director
Jason Haber, Intergovernmental Relations Director
Jeff Murphy, Community Development Director
Kristina Ray, Communication & Engagement Director
Hossein Ajideh, Engineering Manager
John Kim, City Traffic Engineer
Nathan Schmidt, Transportation Planning and Mobility Manager
Scott Lyle, Senior Engineer
2
To the members of the:
cnY COUNCIL
Date'h.Y-12.t CA v1 cc _:....
CM ACM _!C. DCM (3) ___:_
Jan. 14,2021
Council Memorandum
To: Honorable Mayor Hall and Members of the City Council
From: Paz Gomez, Deputy City Manager, Public)lll.orks
Via: Geoff Patnoe, Assistant City Manager ~
Attachment A
{city of
Carlsbad
Memo ID #2021009
Re: Utility Undergrounding Program Study Update (Districts 1 and 2)
This memorandum provides an update on the Utility Undergrounding Program Study, Capital
Improvement Program (CIP) Project No. 6083. A previous Council Memorandum was provided
on the topic of utility undergrounding on Nov. 26, 2019 (Attachment A).
Background
The Utility Undergrounding Program Study was initially approved by the City Council as part of
the fiscal year 2016-17 CIP in the amount of $100,000. The scope of the project was t o
investigate and analyze funding alternatives for undergrounding overhead utilities, such as
telecommunications and electrical power, and removing existing poles and wires.
Discussion
As discussed in Attachment A, San Diego Gas & Electric (SDG&E) collects and holds funds for
cities to pursue undergrounding of overhead utilities per the California Public Utilities
Commission's Rule 20A. However, the Rule 20A funding falls well short of the actual cost to
underground overhead utilities.
For example, SDG&E's most recent cost estimate to underground approximately 0.25 miles of
overhead utilities along a portion of Valley Street and Magnolia Avenue is $3.4 million (their
previous estimate for the same project was $1.4 million). At this rate, it will cost approximately
$476 million to underground the estimated 35 miles of overhead lines in the city listed in
Attachment A. Though the Valley Street and Magnolia Avenue project is in District 1, the
remaining 35 miles of overhead lines are in both Districts 1 and 2.
The city's current Rule 20A allocation balance is $1.2 million and the city receives approximately
$1601000 per year in additional Rule 20A allocation. At this current rate of allocation, it will take
almost 14 more years to receive enough Rule 20A funding from SDG&E to pay for the Valley
Street and Magnolia Avenue project, unless another funding source is identified. It should be
noted that last year's allocation was only $82,265, as shown in Attachment A.
Because of insufficient Rule 20A funding, the Utility Undergrounding Program Study was
included in the CIP to identify and assess funding alternatives for placing the city's overhead
Public Works Branch
Transportation Department
1635 Faraday Avenue I Carlsbad, CA 92008 I 760-602-2730t
Council Memo -Utility Undergrounding Program Study Update (Districts 1 and 2)
Jan. 14, 2021
Page 2
Attachment A
utilities underground. Due to staff capacity limitations and other City Council priority projects,
the Utility Undergrounding Program Study has not been initiated. In the adopted CIP for fiscal
year 2019-20, funding for the Utility Undergrounding Program Study was re-allocated to fiscal
year 2022-23 based on City Council priorities and funding constraints.
Next steps
This project will be re-initiated in fiscal year 2022-23 when CIP funding becomes available, as
prioritized by City Council.
Attachment: A. Council Memorandum dated Nov. 26, 2019 (due to the size of this attachment a
hardcopy is available on file in the Office of the City Council)
cc: Scott Chadwick, City Manager
Celia Brewer, City Attorney
Gary Barberio, Deputy City Manager, Community Services
Laura Rocha, Deputy City Manager, Administrative Services
Tom Frank, Transportation Director
Ryan Green, Finance Director
Kristina Ray, Communication & Engagement Director
Hossein Ajideh, Engineering Manager
John Kim, City Traffic Engineer
Nathan Schmidt, Transportation Planning and Mobility Manager
Jonathan Schauble, Senior Engineer
2
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A ~ Sempra Energy utility"'
July 2, 2021
VIA EMAIL
City of Carlsbad
Scott Chadwick
City Manager
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Scott.Chadwick@carlsbadca.gov
Dear Mr. Chadwick,
Attachment B
On June 3, 2021 , the California Public Utilities Commission (Commission) issued its Phase 1
Decision Revising Electric Rule 20 and Enhancing Program Oversight as part of Rulemaking
17-05-010 to Consider Revisions to Electric Rule 20, Decision 26-06-013 (Decision).
Rule 20 governs the replacement of overhead facilities with underground electric facilities.
While the Rule has multiple parts, part A concerns undergrounding at the utility's expense. As
part of the program, each year City of Carlsbad is provided an annual allocation of work credits
that can be used by City of Carlsbad or saved and accumulated by City of Carlsbad to fund utility
underground conversion projects in accordance with Rule 20A.
We sent you a letter on April 26 regarding the Proposed Decision (PD) in this proceeding
because the PD recommended termination of new work credit allocations under Rule 20A after
2022. We wanted to ensure our cities and counties were aware of the significant modification to
Rule 20A given the potential impact to your current and future undergrounding projects. In the
final Decision, the Commission confirmed that new Rule 20A work credits for allocation
would not be authorized after December 31, 2022.
Rule 20A also allows for reallocation of work credits from inactive communities to communities
in need. In the Decision, the Commission further explained the implications of Rule 20A
Section 2.c, as follows: "When amounts are not expended or carried over for the community to
which they are initially allocated, they shall be assigned when additional participation on a
project is warranted or be reallocated to communities with active undergrounding programs."
The Commission fu1iher noted:
Attachment B
... The reallocation provision in Rule 20A is only to be invoked for communities with
projects already underway, within existing undergrounding districts, that experience
unforeseen funding shortfalls, and have demonstrated that all alternatives for obtaining
funding for the project have been exhausted. This provision does not allow for
unrestricted reallocation of work credits to active communities. (emphasis added)
(Decision, p. 20)
The Commission therefore directed SDG&E to notify each community of their status as either
"active" or "inactive"; the community's existing work credit balance, and if the community is
inactive, how the community can change its status.
The Commission defines inactive communities as communities that do not meet any of the
following criteria:
1. Formally adopted an undergrounding district ordinance which expires at
completion of work within the district boundaries; or
2. Has started or completed construction of an undergrounding conversion project
within the last 8 years; or
3. Has received Rule 20A allocations from the utility for only 5 years or fewer due
to recent incorporation.
Accordingly, City of Carlsbad is identified as an active community as it pertains to participation
in SDG&E's Rule 20A Program. Additionally, City of Carlsbad has a current allocation balance
of $1,459,519 as previously communicated earlier this year in our Rule 20A annual status report
to City of Carlsbad.
If you have any questions or need further clarification or assistance, please reach out to us.
Sincerely,
Joe Gabaldon
CC Jason Haber, Director of Intergovernmental Relations
Jason Geldert, Engineering Manager
Warren Ruis, Director of Regional Public Affairs
Nathan Bruner, Planning & Project Management Manager