Tapping Power to Boost Broadband

For years, phone and cable lines have been the way most people hook up to the Internet.

Now, California regulators want to encourage the development of high-speed Internet access over power lines.

The proposal to be considered Thursday by the Public Utilities Commission would allow power utilities to create separate entities to develop and sell broadband over power line, or BPL, service to consumers. Critics contend that the plan would, in effect, force electricity customers to subsidize the still nascent technology.

Worse, they said, the proposal contains an option that allows a utility to give those entities free access to their networks.

Commissioner Rachelle Chong, who has been revising parts of the proposal, said that encouraging the development of broadband over power lines “is one more way to cover that last mile into the home.”

“We’re giving the utilities the freedom to take any approach they want,” she said.

But so far only the smallest of the major utilities, San Diego Gas & Electric Co., a subsidiary of Sempra Energy, supports the free-access provision.

The provision is “a giveaway of ratepayer assets to utilities and affiliates, primarily to Sempra because it’s the only company that would benefit by setting up an affiliate to provide BPL,” said Michael Shames, executive director of the Utility Consumers’ Action Network.

The push for power-line broadband relies on a technology that may not be ready to compete with digital subscriber line and cable modem service, whose combined control of the market could deter any new entrant. Only a handful of locales -- Manassas, Va., parts of Cincinnati and a few small areas elsewhere in the U.S. -- are using the power grid to sell high-speed Internet access commercially.

“There are hard questions about whether BPL is going to be able to compete with two very entrenched competitors,” said Paul S. Phillips, senior policy analyst at the PUC’s Division of Ratepayer Advocates.

Sempra has said that it would set up a unit to operate power-line broadband service and its utility, San Diego Gas & Electric, would give that entity free access to its network forever.

In addition to selling Internet access, the unit would sell San Diego Gas & Electric broadband services to help it run more efficiently. Those services would include remote meter reading, video monitoring of sites and electronic troubleshooting to determine outages before customers start calling.

Although they could save the utility money, the services’ costs would be passed on to San Diego Gas & Electric ratepayers, and the profit would end up with Sempra and its shareholders.

And because the access would be free forever, there wouldn’t be any future review of an increase in value. The Chong proposal would waive hearings on exempting utilities from bans on dealings with affiliates.

Under the free-access provision, the cost of the high-speed lines would be set at zero, avoiding any requirement to share profits with ratepayers.

“The BPL signal rides for free on the power line because it imposes no additional cost,” Chong said.

Bill Nusbaum, chief telecom counsel at the Utility Reform Network, said the proposal was “a gift, an absolute gift, but not to ratepayers.”

Strong objections from Southern California Edison Co. and Pacific Gas & Electric prompted Chong on Tuesday to add an option that would let utilities charge more for access and split fees with ratepayers.

Edison, a unit of Rosemead-based Edison International, and Pacific Gas & Electric, a subsidiary of PG&E; Corp., want to be able to negotiate contracts with third parties in a sort of landlord-tenant arrangement and get paid for the use of the power lines, passing some profit on to consumers in the form of lower electricity rates.

“We’re pleased the PUC is looking at a decision that encourages BPL by removing obstacles and uncertainty,” Pacific Gas & Electric spokesman Paul Moreno said. “But we embrace the landlord model.”