Bills aim to fix California’s long delays in connecting construction projects to the grid

Significant delays in connecting construction projects to the power grid are emerging at hundreds of projects in the North Coast and across California, raising alarms for some state lawmakers who fear long delayed or abandoned projects will harm local economies.

The issue, which also threatens the state’s accelerating push to add housing and shift to zero-carbon energy, has spawned a flurry of recent bills in Sacramento aiming to not only to define the scope of the problem but also to push utilities and their regulators to fix them.

On Friday, State Sen. Scott Wiener, D-San Francisco, updated his Senate Bill 82, introduced Jan. 13, to require utilities to hook up power to a new or existing development project within eight weeks of its getting a local government go-head to do so.

If the utility doesn’t meet that timeframe, it would have to pay a penalty to the project applicant, according to a news release on the update.

As of February, Pacific Gas & Electric Co. had tracked 134 construction-ready projects — with hundreds of housing units and other “critical priorities” — that had been awaiting the state’s largest investor-owned utility’s completion of their interconnections to the electrical grid for longer than eight weeks, according to a data request obtained by Wiener’s office.

Of those projects, 95 had been waiting more than 12 weeks, and some affordable-housing projects have been kept waiting over a year and a half. Eighty of the projects are multifamily properties, mostly in Santa Clara, San Francisco, San Mateo and Alameda counties.

Sonoma Clean Power, a power provider for customers in Sonoma and Mendocino counties across PG&E’s lines, told the Business Journal that local permitting agencies reported “unusually long delays” to secure electricity interconnections to hundreds of homes and buildings across the state.

In the North Bay, two such local projects include two additional warehouses at the Billa Landing development near Sonoma County airport and a 477,000-square-foot, four-warehouse project in Shiloh Business Park along the west side of Highway 101 also by the airport.

As the Business Journal reported in October, at issue for both projects is needed capacity and distribution-line upgrades at PG&E’s Fulton substation just south of the airport industrial area. In December, the timeframe for completion of the upgrades was mid-2024, and now the utility is telling current applicants for interconnections that the new capacity is anticipated by the end of that year, a spokesperson told the Journal.

“Timelines are subject to change based on emergency and other priority work,” wrote spokesperson Lynsey Paulo in an email.

At Billa Landing, the project team is figuring out in coming weeks whether to pursue some form of temporary alternative power that would allow the buildings to get a local-government green light for occupancy as basic warehouses, rather than electricity-heavy uses such as indoor cannabis cultivation or related production, according to project general contractor Nordby Construction of Santa Rosa.

“General warehouses do not have a lot of power requirements, especially with the new LED lighting,” said Craig Nordby, CEO.

If it’s not economically feasible to hook up another energy source until the full interconnect is completed, then the project may be put on hold, he said.

At the Shiloh Business Park project, the goal remains to break ground on all the buildings this summer then complete them in the third quarter of next year, according to project general contractor Devcon Construction. The project team submitted its application for interconnection a year ago and was told to check in again after the developers, Brennan Investment Group and New York Life, purchased the 75-acre property, which happened in September.

That’s when the team started to hear rumors about interconnection delays in the airport area. The word from PG&E was that alternative power wouldn’t be needed to fit the project timeline, as the late 2024 estimate for Fulton substation upgrade completion would work, said Danny Garon, North Bay project manager.

“Officially, we haven’t slowed our schedule yet,” Garon said Danny Garon, North Bay project manager.

The usual process for power interconnections for commercial buildings Devcon has worked on take less than a year form application to electrification, Garon said. The typical process after application involves hearing from the PG&E technical team within a couple of weeks then payment of a fee to cover the utility’s engineering design. A recent major North Bay project for Devcon was the Straus Family Dairy facility in an existing Rohnert Park industrial building, and that took less than a year from application to completed interconnection.

“PG&E has been good at responding to us,” Garon said.

Another major North Bay project that narrowly avoided construction delays because of power grid capacity recently is Midway Commerce Center. The 1.53 million-square-foot, three-warehouse Vacaville project in northern Solano County was under construction on target for completion by this summer when the project team found out that the requested power for Midway’s 1.23 million-square-foot building, soon to be the North Bay’s largest, would max out nearby the Vaca Dixon substation until capacity upgrades there were completed in 2025, according to the city.

“We had a meeting with GO-Biz, the developer and PG&E to move power around,” said Don Burrus, city economic development director. GO-Biz, Gov. Gavin Newsom’s Office for Business and Economic Development, has been tracking the power interconnection issue statewide, Burrus said.

A spokesperson GO-Biz didn’t confirm it’s keeping such tabs on this issue, but she did say that the organization often gets involved with business, economic development and workforce issues.

“Delays and uncertainty threaten any project, including issues such as power availability, reliability and access,” said Heather Purcell, deputy director of communications, in an email.

PG&E said the power crunch at the big Vacaville project was resolved by comparing the requested electrical load with power demand at similar-sized buildings and industries, then asking the project team to revise the request. About three weeks ago, as the roof was going on the cavernous warehouse, the utility confirmed it could supply power to the Midway project.

Vacaville is currently working on planning and infrastructure documents so that it can have about 1,400 acres of additional commercial land to the northeast of the city ready for developers when the expanded substation is finished in 2025, Burrus said. Five warehouses currently under construction in the city would virtually tap out industrial park land, and only 30 acres remain in the city’s biotechnology-focused business park.

“We’re trying to do (the expansion-area planning) in three years to capitalize on demand and continue growth,” Burrus said.

MCE, a clean-power provider in Marin, Napa, Solano and Contra Costa counties, said in its service area a a fact-finding effort by the state trade group for such agencies, California Community Choice Association., also turned up stalled projects, some delayed for a year or more.

“MCE has received several responses so far and is finding that these delays are happening across our communities and are delaying both standard system upgrades and health and safety upgrades like street lighting on dark roads and for public service buildings,” the San Rafael-based agency said in a statement.

Assemblymember Jim Wood, D-Healdsburg, whose district stretches from north Santa Rosa along the North Coast to Oregon, on Monday updated his Assembly Bill 50, introduced Dec. 5, 2022, to reevaluate and update the planning process that utilities use, according to Wood’s office. The goal is to help local and state governments have more precise information on power capacity behind the “will serve” letters utilities provide to project applicants about availability of power when the job is finished.

“It’s not just a Northern California issue either,” Wood said in an interview. “It's a challenge statewide. If we're going to meet our green energy goals, we have to make sure we have the transmission and interconnection capacity to do that. And right now, we are struggling with that.”

State Senate Majority Leader Mike McGuire, D-North Coast, told the Business Journal that he plans to update his SB 319, introduced Feb. 6, to require utilities to analyze challenges with providing service to individual customers and what shortfalls they have in capacity to provide power across their service area.

He’s concerned that North Coast capacity issues could prove challenging with connecting clean-energy projects, such as a major offshore wind effort off the Humboldt coast, to the rest of the grid in California.

“It's become abundantly clear that PG&E has some pretty significant constraints … surrounding capacity and an antiquated transmission system,” McGuire said.

Some lawmakers began to see the issue based on an issue which came up on the North Coast last fall.

PG&E, which serves Northern and Central California, in September told communities in southern Humboldt County that elevating the gird capacity in some isolated areas could take over seven years and cost more than $900 million. That affected the cities of Fortuna, Rio Dell and Garberville, impacting projects such as expansion of a major legal cannabis operator and a replacement for Jerold Phelps Community Hospital.

Those communities reached out to McGuire and Wood, whose districts includes Humboldt County. McGuire said his office worked with the utility to commit to adding 21 megawatts of power supply capacity, a 62% increase, in the Eel River Valley over the next three years.

“It shouldn't have to take the state and these communities to get involved to hold PG&E accountable to do their damned job,” McGuire said in an interview. “It's become abundantly clear that PG&E has put profit over the needs of their customers.”

The senator blamed PG&E for underinvesting in its infrastructure, including protecting its equipment and putting power lines underground. Investigators faulted the company for both of those in sparking certain wildfires in the North Bay and Northern California over the past several years.

In a statement to the Business Journal, PG&E said it is “committed to doing all we can to serve customers and support the economic growth within our hometowns, as well as support California’s clean energy goals. We are working closely with developers, builders, and other leaders in the housing industry, including the California Building Industry Association, to streamline and speed up new electric customer interconnections.

“However, critical safety and risk mitigation work to keep customers safe in the face of the state’s wildfire threat and extreme weather has required significant financial and workforce resources. This work, compounded with a significant growth in electric demand after decades of flat demand, has resulted in some projects being delayed or rescheduled.”

The San Francisco-based company said it is “working to meet growing customer and energy demand while continuing to invest in our system to mitigate wildfire risk and complete safety-related work. As the state continues to advance housing, transportation and building electrification goals, we will continue to work with lawmakers to ensure the right policy and regulatory frameworks are included to support the state’s goals.”

Here are other bills related to electricity supply working their way through the Legislature:

• AB 643 by Marc Berman: Timeliness for interconnection of customer-owned solar and storage resources, reporting obligations and a new ability for the California Public Utilities Commission to fine utilities for failing to meet timelines.
• AB 772 by Corey Jackson: Timeliness for interconnection of residential electric-vehicle charging infrastructure.
• AB 914 by Laura Friedman: Updated to exempt from environmental impact analysis under the California Environmental Quality Act certain electrical infrastructure projects intended to provide capacity or enhance reliability to accommodate the increased electrical demand or forecasted electrical demand associated with transportation electrification, building electrification and distributed-energy projects. These include energy storage projects, or the interconnection of a renewable generation source.
• AB 1293 by Jacqui Irwin: Electrical interconnections placeholder bill.
• AB 1623 by Al Muratsuchi: Electrical interconnection timeline acceleration for clean-energy projects.
• SB 410 by Josh Becker: Reporting on interconnection response times for solar, EV charging, building electrification and electrical-panel upgrades.

Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at jquackenbush@busjrnl.com or 707-521-4256.