Commissioner Chong's View: Landmark FCC Order

Deck: 

Impacts Every U.S. Electric Utility

Fortnightly Extra Edition - May 14 2020

When Commissioner Rachelle Chong speaks, everyone listens, being that rare double Commissioner, having served at the federal and state levels, at the FCC and the California PUC. Her experience says a lot, and here she explains why the FCC's 900 megahertz spectrum order is a game-changer, and what forward-looking utilities might do next.

PUF's Steve Mitnick: You're a rare person who's had experience in regulation from both telecom and energy. How did you become a double Commissioner?

Rachelle Chong: Double Commissioners have double the fun! I started out as a Commissioner on the Federal Communications Commission at the tender age of thirty-four and then moved to the state level as a Commissioner for the California Public Utilities Commission at age forty-seven. I'm a career telecom regulatory lawyer, but I painfully learned energy regulation as a Cal PUC Commissioner mid-career.

Here's the story. I started out as a young FCC practice lawyer in '84. I represented broadcasters and some of the early cellular pioneers in the nation. I was drawn to D.C. for my first law job because the FCC was working to license the first cellular phones. I was fascinated by the idea of a mobile wireless phone. I pictured in my mind a Star Trek communicator; you know the one that Captain Kirk wears on his uniform. That's what I thought a mobile phone was going to look like. It took a while, but smartphones are small now. In fact, I am wearing one on my wrist. I've got an Apple watch that I can speak into just like Captain Kirk.

At the FCC, we held the first spectrum auctions, launched many new wireless services, and implemented the 1996 Telecom Act, which brought new local competition to the telephone marketplace.

After the FCC, I served on the California PUC. I was brought in because of my deep telecom and Internet expertise. But when I arrived in 2006 under Governor Arnold Schwarzenegger, I was thrust into this forward-looking energy regulatory world. At that time, the California PUC was leading the nation in terms of climate change work, integration of renewable energy, and encouraging electric vehicles.

It was hard work to learn a whole new industry quickly - especially with all these difficult energy acronyms. I was drinking from a firehose but learning from some of the nation's best minds on how to combat climate change for the energy sector. Due to my communications technology background, I was given - as the assigned Commissioner - the nation's first electric vehicle docket and the nation's first smart grid docket. I also had the broadband over power line dockets, which was a complete waste of time, in retrospect.

But being a double Commissioner - at the federal and state levels with both communications and energy expertise - has given me a unique perspective on how advanced communications and technology can assist with revolutionizing the twenty-first century electric grid. Technology enables grid modernization, integrating renewable energy, and other innovations. 

Wireless communications spectrum can make the grid more resilient, efficient, smarter, and provide a forward path for innovations that are happening across the globe.

PUF: The FCC is making big headlines with this new order. Is that going to make a difference for the utilities and customers in California, or anywhere?

Rachelle Chong: Absolutely. This FCC order impacts every electric utility in the nation. I see the FCC's order as nothing short of a game changer for energy utilities. What the FCC order did is to allow 900 megahertz spectrum to be converted from a voice-only service to a private, licensed wireless broadband service and, best yet, it's reserved for critical infrastructure and other private enterprise industries.

This FCC initiative launches electric utilities into the twenty-first century communications and broadband (fast Internet) era to build the foundation they'll need for the next several decades to modernize their electric grid. Utilities and regulators should move fast to take advantage of the FCC's order.

There are so many benefits. Private licensed wireless networks will improve the reliability of the electric grid. Customers will have a more reliable network underlying their electricity delivery, instead of the mishmash of various fleet dispatch voice networks, unlicensed Wi-Fi spectrum, and leasing commercial mobile spectrum. The latter is attached to the public internet and thus at risk of hacking.

The FCC order also will provide tools to improve grid resilience. By that, I mean guarding against the almost daily cyberattacks that electric utilities suffer. This is a real threat - one that keeps C-Suite folks up at night. Because the 900 megahertz spectrum is private and licensed, it is more cybersecure.

Finally, 900 megahertz spectrum will improve efficiency - utility workers can do their work easier and faster on an integrated broadband network. For example, safety is enhanced using a wireless broadband network. 

A field operator can take a picture or video of a safety incident out on a remote power line and immediately text or email that picture or video back to the headquarters over the wireless network. The headquarters supervisor can take a look and say, oh, this is serious, and immediately send a repair truck to the exact location to fix the problem before the issue worsens. That's what I mean by efficient.

You can see how this will improve the safety of our electric networks. And right now, safety is at the top of mind in California because of over a decade of terrible wildfires we've been suffering, some of which have been caused by electric utility facilities. Wildfire liability has put our largest California utility into Chapter 11 bankruptcy.

If electric utilities adopt licensed wireless broadband, it will help them be more effective in fighting fires, preventing fires, and reducing long lasting public safety power shut offs. Much of California suffered a two- to eight-day public safety power shut off last year in the fall. It was devastating to the economy as electricity is the lifeblood of our economy and our community life.

PUF: How will it do that? How will it help to have this special broadband communications? How will that help keep down the wildfire problem?

Rachelle Chong: The idea that I've had, I call it, The Big Idea, is to stand up a public-private partnership of government, utilities, and private tech companies for the express purpose of a wireless broadband network devoted to California wildfire prevention. 

I serve on the board of a company called Anterix, a company that will help make private wireless broadband available for electric utilities nationwide. We have been speaking with the leadership of the state of California government agencies about The Big Idea, including CAL FIRE, Office of Emergency Services, the Controller's office, and the Governor's office.

This public-private partnership will enable some of the following applications.

Utilities can deploy mountain top cameras that will be able to watch their vast, rural high fire risk areas at all times. The camera network can use artificial intelligence to spot a fire quickly, identify the location quickly, and alert senior executives. Then senior executives can alert the fire authorities of the fire location to send out an aircraft to dump water on the fire.

Another use of a wireless broadband network is to deploy a comprehensive network of wireless sensors throughout the high fire risk areas to detect dangerous weather conditions. Sensors can detect moisture, rainfall, and wind continually. All that data can flow back to the network brain and then be crunched to produce an accurate weather forecast for the high fire risk areas, and again alert senior utility executives in advance if there's a weather situation that's conducive to sparking a wildfire. This enables readiness.

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Finally, I want to mention San Diego Gas & Electric. This California utility has developed an amazing technology where, using a wireless broadband network, it can sense when an electric line is falling, like when a tree falls on a powerline in a windstorm. San Diego Gas & Electric can detect that, and then can, in 1.4 seconds, send back a signal to turn the electricity off on that line. By the time the power line falls and hits the dry brush on the ground, there's no electricity in the line to spark a wildfire. 

This technology works in the lab, but it could be deployed widely in the high fire risk areas of California. These are just some of the public benefits of a private licensed wireless broadband network using advanced technology.

A key aspect about this particular 900 megahertz radio spectrum is that it has good propagation qualities, which means the radio waves travel very far. That characteristic is a positive, because most utilities have large service territories, and this spectrum will serve large areas effectively.

PUF: You know your colleagues across NARUC. Is there a role for state regulators? Is there some way they can get involved and make sure the potential benefits of this decision by the FCC in broadband can be used for the customers' benefit?

Rachelle Chong: Absolutely. In fact, state regulators have an important role at this moment. The FCC made this 900 megahertz spectrum available, but critical infrastructure industries other than electric utilities will also be vying for it. 

Time is of the essence for electric utility action to secure the spectrum for their service areas. As a result, some forward looking electric utilities will want to immediately enter into long-term leases to obtain the benefits of the spectrum. One problem from a regulatory point of view is that electric utilities usually get funded in a three-or four-year rate case cycle.

Due to that, utilities might feel like they have to wait until their next rate case comes up before they propose a new private licensed wireless broadband network for initiatives. One issue I've been talking to regulators about at the NARUC meetings, is the need to make some type of regulatory procedure available to the electric utilities, so they could file out of cycle with their rate case, and obtain the benefits of getting this type of foundational network for their operations without having to wait for their rate case cycle.

There are several ways you can do that. I'm familiar with mechanisms that you can use to take up expenditures that are out of rate case cycle. For example, in California, we have a mechanism that allows utilities to put certain expenses in "memorandum accounts." Those expenses in the memo accounts are subject to further scrutiny by the Commission before they're recoverable in rate base. But if the underlying facilities are approved in the rate base, then those expenses in the memo accounts are allowed to be placed in the rate base.

Another recent example is the Florida Public Service Commission has put in new rules that break out resilience services from the traditional ratemaking process. The resilience project can be financed through a specific authorized customer surcharge. That would help streamline the process and let the utilities move ahead with critical resilience projects that would benefit consumers and make the electric grid system safer.

Another issue is regulatory treatment of a wireless spectrum lease. Regulators will want to make sure utilities know that a long-term spectrum lease is allowed into rate base, so that accounting issue does not stand in the way of quickly deploying a wireless network.

Those are examples of how an enlightened state regulator could make regulatory procedures available to help utilities move more quickly to build new foundational broadband networks.

PUF: What should utility leaderships be looking at? It's unusual for our industry to say the FCC did something that's monumental. What should a CEO be saying to the teams? What should we be doing in reaction to this to grasp the potential?

Rachelle Chong: Typically, utilities have left telecommunications systems to the IT department. This FCC order presents much bigger strategic opportunities for the utility. It's clear to me that the C-Suite should study this development immediately and decide whether this unique spectrum opportunity is one in which they will immediately invest. 

A foundational wireless broadband network will change and enhance the entire company's operations in significant ways. It's sort of like how smart meters revolutionized how utilities gathered customer usage data, and empowered things like demand response and time of use rates. A smart network for electric utilities is the future, and that future is here.

I haven't even talked about how 900 megahertz will enhance ongoing grid modernization by utilities. If you're going to go from a one-way grid to a two-way grid integrating distributed renewables, you have to have a network that can manage two-way flows of energy coming in and out of the grid. This requires secure advanced technology.

The CEOs and the C-suite need to examine closely this rare spectrum opportunity and decide how it could enhance their grid modernization, disaster recovery, efficiency, resiliency, and cybersecurity concerns, all of those things.

They need to decide right now on whether this is something that they would want to approach regulatory Commissioners about to say, "Hey, we want to take advantage of this spectrum opportunity. How can you help us do it quickly before we lose the spectrum to other critical infrastructure players who may snap it up in our service territory?"

I should preface that remark by again noting that the FCC did not reserve this spectrum only for electric utilities. The FCC is allowing any critical infrastructure player or major enterprise entity to deploy systems on this spectrum. That could include airports, manufacturing facilities, and package delivery companies. It could include well-heeled national companies like Amazon and UPS.

The 900 megahertz spectrum is not something that the FCC only reserved for electric utilities. That's why electric utilities need to seize upon the opportunity and evaluate it for their company and get right on it with their regulator if they think this is something they need in the coming decades.

PUF: Yes, because it could get used up by somebody else.

Rachelle Chong: That's right. Suppose you're UPS, with nationwide operations. UPS could go in and lease the spectrum from Anterix in a number of states or major metro areas for its operations. Then the electric utilities in those areas would miss out on this spectrum opportunity for the benefit of their customers. 

There are a million things an electric utility could do with the spectrum. This is sort of like the iPhone when it was invented. We had no idea what the apps would do when it was invented, but just twelve years later, there's two million plus iPhone apps and the variety of things they can do to enhance our lives is mind boggling.

Similarly, we're at that moment with the electric utilities. They're now going to be looking at this beautiful swath of beachfront broadband wireless spectrum and say, holy cow, what can I do with this and make my operations more resilient, safe, and efficient? 

I want to emphasize that in my view, it's a once-in-a-lifetime opportunity, similar to the FirstNet emergency responder spectrum after 9/11, which was the result of legislation. I'm excited for the electric utilities and the possibilities this 900 spectrum will bring them.

PUF: Assume our industry, regulators, policymakers, and utilities seize upon this. What's this going to look like in five to seven years as far as use of this specialized broadband? In particular, the benefit for the public, what could it look like?

Rachelle Chong: We will see the largest most forward-looking electric utilities using the foundational wireless broadband networks to play many roles in their grid modernization. For example, we will see rooftop solar, electric vehicle charging, and storage going into their systems. These wireless systems will be supporting fast broadband data exchange.

They will be using the private licensed network to send their most sensitive signals controlling the grid, and to protect the grid from hacking and other cybersecurity attacks by the bad guys.

They will be using a large sensor system distributed across their electric grid to predict weather conditions to prevent damage from natural disasters such as wildfires, hurricanes or tornadoes. In major disasters, the wireless broadband network will help efforts to find and repair the damage. 

They will be using these systems to have more efficient safety inspections of all of their lines, particularly out in the field. The wireless systems will enable faster repairs and help utilities prioritize the repairs by delivering photos or videos by email or text of the anomalies found in the field equipment.

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In the future, utility leaders will be meeting up at UBBA, the Utility Broadband Alliance, which is a new utility run association that has just formed. At UBBA conferences, utility leaders will be comparing notes about various new applications on these wireless broadband systems and challenging each other to develop more innovative applications to solve the knotty energy issues of the twenty-first century. They will be giving each other awards for the innovations that best improved grid operation. The FCC's order was the spark that lit this storm of activity.

 

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