BACK IN DECEMBER 1995, THE CALIFORNIA PUBLIC Utilities Commission launched a two-year pilot program to test the idea of letting builders and contractors design lateral distribution facilities for residential gas and electric service. Private firms would consult with utilities, who would credit contractors for costs saved by outsourcing. More than 250 subdivisions participated.
Late last year, the PUC declared the program an unqualified success. "Builders, design firm, and the utilities have proven that they can coordinate the necessary resources¼ saving builders as much as two months on an otherwise seven-month design process." The commission then instructed the state's six major investor-owned gas and electric utilities to file tariffs to set out a bidding process for the private design of electric and gas distribution lines. (Decision 97-12-099, Dec. 16, 1997).
Nevertheless, the PUC worried that, in helping private firms design lateral lines, utilities might end up giving away transformers, meters or other services or line facilities (TSM) to construction firms at below cost. To address the problem, the commission issued a second decision, limiting the size of any free dollar allowances for TSM to the revenue the utility might expect to receive from the load to be served by the new distribution facilities. (Decision 97-12-098, Dec. 16, 1997).
Does this new program mark the beginning of the end of distribution as a regulated monopoly?