BPL activity pushed in California and Texas through regulatory and legislative changes

With deployment of broadband-over-power-line service lagging in Texas and California, legislators and regulators in those states have advanced initiatives designed to speed up BPL activity from utilities.

Texas Gov. Rick Perry signed Senate Bill 5, a telecommunication reform measure containing BPL provisions, and the California Public Utilities Commission approved a proposed rule aimed at minimizing regulatory intervention in utility BPL efforts. Officials in both states highlighted the steps taken to promote economic development and bring advanced technologies to utility customers.

"California has been AWOL on developing BPL while other states have been forging ahead with testing and commercial development of this new technology," said CPUC President Michael Peevey. The proposed rule approved by the PUC "begins to move California back to the leading edge of the technology frontier," he said in a statement.

The PUC's proposal would allow utilities to lease their facilities for BPL projects "without going through the lengthy review and approval process that such leases are normally subject to," the commission said. It would also give utility shareholders the right to keep the proceeds of any BPL project as long as ratepayer funds were not used to finance it.

The proposal reaffirms that advanced telecommunications services like broadband are not subject to state regulatory authority as are electric utility services or other traditional phone services, and makes clear that the PUC would not assert regulatory authority over BPL projects or services offered.

The PUC's proposal "is a critical step toward clearing a regulatory path for developing BPL in California," said Commissioner Susan Kennedy. "This puts California back on the map in developing new broadband technologies," she said.

According to the commission, about 26 other states have utilities engaged in BPL projects.

Pacific Gas and Electric last year had planned to partner with AT&T in what was the only BPL pilot project in California at the time, but AT&T pulled the plug on that effort late last year (EUW, 17 Jan, 1). Earlier this month, San Diego Gas & Electric launched a BPL pilot, the PUC said. Meanwhile, PG&E, Southern California Edison and the Los Angeles Dept. of Water and Power are considering BPL projects.

The proposed rule will be released for comment, and the proposed scheduled calls for a final decision by the end of this year.

"BPL has the potential to offer head-to-head competition with cable and DSL someday, and the fact that electric power lines already reach virtually every home in the state makes BPL an important tool in our effort to make broadband accessible to every household in California," Peevey said.

In Texas, Perry signed the telecom reform bill that includes rules for utilities interested in pursuing BPL, along with new rules for cable television and other broadband providers. "I'm proud Texas is taking the national lead in bringing choice to cable customers, offering broadband over power lines, and investing in new telecommunications innovations," Perry said in a statement.

The legislation says BPL services shall not be regulated by any state agency, municipality or local government, with a few exceptions. The state or a municipality can impose a charge on the provision of BPL services, but the charge can not be greater than the lowest charge that the state or municipality imposes on other providers of broadband services for use of the public rights-of-way within its jurisdiction. And if a municipality or local government is already collecting a charge from the electric utility for the use of public rights-of-way for the delivery of electricity to retail customers, the municipality or local government is prohibited from requiring a charge, fee or tax on a BPL system.

The measure allows utilities to tackle BPL projects through various business models, such as having an affiliate own or operate a BPL network on their system, having an unaffiliated company own or operate a BPL network or having either type of company provide Internet service on a BPL system. The utility and BPL operator shall determine what Internet service providers may have access to broadband capacity on a BPL system.

Utilities are allowed to charge a fee to BPL providers for using the utility network, but they also may pay a BPL provider for use of the system to accommodate utility applications such as enhanced system monitoring or automated meter reading, according to the legislation. Utilities cannot charge affiliates less than they would unaffiliated companies for the same services and they can not pay affiliates more than they would unaffiliated companies.

The revenues of an affiliated BPL operator or an affiliated Internet service provider shall not be deemed the revenues of the utility for purposes of setting utility electricity rates.

Cost recovery for BPL systems has been a challenge at the state level since BPL involves both regulated and unregulated services. The Texas law says any utility investment in BPL that supports BPL utility applications or otherwise is deemed "used and useful in providing electric utility service" shall be eligible for inclusion as invested capital, and any fees or operating expenses that are reasonable and necessary shall be included as utility operating expenses. "The invested capital and expenses described in this section must be allocated to the customer classes directly receiving the services," the law states.

To ensure electricity reliability is not compromised by BPL systems, the law says the provision of broadband services shall be secondary at all times to the reliability of the utility distribution system.

There are also provisions for paying pole attachment fees to telecommunications companies if any part of a BPL network is attached to their poles.

One of the few BPL pilots taking place in Texas is in the CenterPoint Energy territory in Houston. CenterPoint partnered with IBM in offering free Internet and voice over Internet protocol telephone service to pilot project customers. IBM in turn was working with several companies, including Idacomm, Cisco and others to provide BPL service.

CenterPoint has said it had no time frame on when it would make a decision regarding whether to offer BPL service at the end of the pilot.