April 30, 2024
David Rebensdorf
City of San Clemente | Director of Public Works
100 Avenida Presidio
San Clemente, CA 92672
SUBJECT: California Public Utilities Commission Electric Rule 20A Update and Work Credit Summary
Dear David,
Thank you for your continued partnership with San Diego Gas & Electric (SDG&E) to underground our overhead electric power lines and meet our commitment to provide clean, safe, and reliable energy to our customers. This letter is intended to provide an explanation concerning the recent California Public Utility Commission (CPUC) Rule 20 Decision (D. 23-06-008) and the consequences to the City of San Clemente’s Rule 20A program.
Rule 20A Background and CPUC D. 23-06-008 Summary:
Rule 20A is a subprogram of Rule 20 under which the CPUC permits utilities to allocate ratepayerfunded work credits to cities and unincorporated counties for electric facility undergrounding projects that meet eligibility criteria focused on aesthetic purposes. In 2017, the CPUC opened a Rulemaking, R.17-05-010, to review issues related to the undergrounding of electric distribution lines, and specifically to consider the possibility of modifying the undergrounding programs pursuant to the Electric Tariff Rule 20 which is applicable to the investor-owned utilities in California. The rulemaking was separated into two phases. The Phase 1 Decision (D.21-06-013) was released in June 2021 and the Commission issued the Phase 2 Decision (D.23-06-008) approving a revised Electric Rule 20, on June 8, 2023. The second closed Rulemaking 17-05- 010.
As directed by D.23-06-008 SDG&E submitted modifications to its Electric Rule 20A Tariff in Advice Letter 4253 and in Advice Letter 4254 (approved on September 13, 2023), which was served on all communities with Rule 20A programs.
The revised Electric Rule 20A Tariff has been updated to the following:
(a) An Active Rule 20A project shall be defined as a project with a signed resolution that the utility has designated as either “active” or on “hold.” Whereas Resolution E-4971 defines an “inactive” community as a community that has not (i) formally adopted an undergrounding district ordinance which expires at completion of work within the district boundaries, (ii) started or completed construction of an undergrounding conversion project since 2011, or (iii) received Rule 20A allocations from the utility for only 5 years or fewer due to recent incorporation. An “underserved” community is defined as any city, unincorporated county, or tribal jurisdiction that has not completed a Rule 20A project since 2004.
(b) A Rule 20A project that a utility has designated as on “hold” is a project that was initiated but has stopped for an indeterminate amount of time due to the community possessing insufficient work credits to fund the entire project.
(c) Any Rule 20A work credit that has not been allocated to a community with an Active Rule 20A project within two years of the effective date of this decision shall be deemed expired. (d) Communities shall have the option to contribute financially to any Rule 20A project that has insufficient work credits for completion.
(e) Any Rule 20A work credit that has not been deducted from a community’s work credit balance by December 31, 2033, shall be deemed expired.
For any questions, please refer to the documents at
https://www.sdge.com/major-projects/Rule20Undergrounding.
Work Credit Allocations Balance:
Work Credit Balance as of January 1, 2023 $2,750,543
2023 Adjustments to previously reported projects $0
2023 Closed Projects $0
2024 Allocation $0
Work Credit Allocation Balance Total $2,750,543
Underground Utility Districts Status Summary:
San Clemente City Council has established Utility Underground Districts (UUD) as listed. o District 02-01 – Del Mar Phase 1 | including:
o Avenida Cabrillo from El Camino Real to the San Clemente Library; o Avenida Del Mar from El Camino Real to the San Clement Library; and o El Camino Real from Avenida Cabrillo to Avenida Mateo SDG&E completed a preliminary design for District 02-01 to underground electrical facilities along El Camino Real, Avenida Del Mar, and Avenida Cabrillo as outlined above. The current design for Del Mar Phase 1 20A project exceeds the City of San Clemente’s $2.75M work credit allocation balance. Therefore, the City of San Clemente will need to revise the UUD to reduce the boundary to be within the work credit allocation budget and return it to SDG&E for consideration no later
than December 1, 2024. This is to allow SDG&E time to review and allocate to the Project within two years of the effective date (by June 2025) as per item (c) listed above. Alternatively, the City of San Clemente may choose to proceed with the 2023 design and provide additional funding sources with the execution of a Mixed-Use Agreement as per item (d) listed above.
It is important to note that effective December 22, 2017, any Contributions in Aid of Construction (CIAC) and any contribution by any governmental entity or civic group shall be treated as taxable income to SDG&E, unless a specific exemption under the law applies. Therefore, if a Mixed-Use Agreement alternative is utilized, the CPUC has authorized SDG&E to collect from the participating community a charge to cover SDG&E’s estimated liability for income taxes related CIAC, also known as the Income Tax Component of Contributions and Advances (ITCCA).
Currently, ITCCA tax is collected at a rate of 24% of the collectible value of the project. Please refer to the attached appendices if the City elects to request a waiver of ITCCA tax as a cost saving measure.
Please refer to the next several pages for an overview of the City’s current 20A project, including the associated boundary map. Please note, SDG&E is providing the following cost estimates for reference purposes only and makes no representations, warranties, or promises regarding the accuracy, timeliness, quality, or completeness of the estimates. Estimates are based on known, current information and existing circumstances. Actual costs may change as the project or circumstances change. If work is billed, such bills will be based on actual costs, not estimates.
SDG&E will not be liable for any damages, causes of action, or losses arising or claimed to arise out of the use of these estimates.
For any outstanding UUD Resolution that is not completed within the Rule 20A work credit allocation budget, SDG&E asks that City staff notify us if said resolution will be cancelled or proceed as a Rule 20B.
Lastly, SDG&E utilizes a vendor to assist with community outreach prior to and during construction. The assigned vendor responsibilities are, but not limited to, prepare a Community Outreach Engagement Plan, prepare fact sheets in English and Spanish, send e-blasts monthly, post on Nextdoor.com at least quarterly, prepare and distribute door hangers, and attend community meetings. If City staff has resources and prefers to manage these items, please notify SDG&E so that our vendor, and the associated costs, will not be assigned to said project.
Del Mar Phase 1 (Current Design)
Municipal Civil Contractor (Trench & Conduit) $ 11,000,000 SDG&E Electrical Contractor (Cable Poles, Cable and Connections, Services, OH Removal) & Community Outreach
$ 8,056,727
TOTAL $ 19,056,7271
1$19 Million estimate assumes the project will provide additional funds since the available Rule 20A Work Credits are insufficient to offset the entire cost of the project. Therefore, ITCCA tax (24%) was applied to the expected collectible value.
Underground Utility District 02-01: Del Mar Phase 1
Next Steps:
The City will need to provide a finalized, detailed boundary map, and updated resolution to ensure the SDG&E conversion design aligns with City expectations.
Other items to note include,
• The City will need to work with the Communication Infrastructure Providers (CIPs) to secure joint trench agreements and provide copies of the CIP’s designs for SDG&E reference.
• The City will need to provide its streetlighting design, so SDG&E can confirm proper service to these service points.
• The City will need to confirm the Community Outreach Engagement Plan. • Please contact me with any questions.
Sincerely,
Kelli Fitzgerald
Franchise Planning Manager
[email protected]
cc:
Michael McEachern – SDG&E | Design & Proj Mgmt | Project Manager II Erik Weigand – SDG&E | Regional Public Affairs | Regional Public Affairs Manger Engineering Inbox – City of San Clemente
Attachments:
• 2023 Rule 20A Conversion Report - SUMMARY
• ITCCA Letter | Exemption Qualification
• SDG&E ITCCA Exemption Request Form | Master Development Plan • SDG&E ITCCA Exemption Request Form | Section 1033
2023 Rule 20A Conversion Report - SUMMARY
City of San Clemente
Work Credit Allocation Balance
Work Credit Balance as of January 1, 2023 $2,750,543
2023 Adjustments to previously reported projects $0
2023 Closed Projects $0
Work Credit Allocation Balance Total $2,750,543
Estimated Allocation Expenditures**
2023 Projects in Construction $0
2023 Closing Projects $0
Estimated Allocation Expenditures** Total $0
Waitlisted Projects (Estimates)
Active Allocated Projects in Design With Resolution ($19,056,727) On Hold Projects With Resolution $0
Waitlisted Projects (Estimates) Total ($19,056,727)
City of San Clemente Total ($16,306,184)
2023 Rule 20A Conversion Report - DETAIL
City of San Clemente
Work Credit Expenditures
2023 Adjustments to previously reported projects
None $0
2023 Closed Projects
None $0
Work Credit Expenditures Total $0
Estimated Allocation Expenditures**
2023 Projects in Construction
None $0
2023 Closing Projects
None $0
Estimated Allocation Expenditures** Total $0
Waitlisted Projects (Estimates)
Active Allocated Projects in Design With Resolution
SC AV DEL MAR 20A ($19,056,727)
On Hold Projects With Resolution
None $0
Waitlisted Projects (Estimates) Total ($19,056,727)
City of San Clemente Total ($19,056,727)
** Footer referenced on summary page