Power connection work delays Kern Co. development projects

Frustration is mounting in Kern County lately over a growing backlog of real estate development projects waiting to be hooked up to the power grid.

Developers and government officials complain that everything from new homes to solar power plants has faced unusually long delays since about the start of this year. They say the delays have crashed sales, raised costs and even threatened California’s goal of becoming carbon neutral by 2045.

The problem has been attributed to several factors, including growing demand for electricity, supply-chain bottlenecks that have limited the availability of electric transformers and a lack of personnel at utility companies busy juggling competing priorities.

While individual developers have largely resisted speaking out for fear doing so will bring repercussions, industry groups and senior officials say the situation is dire enough to merit political intervention.

It rose to that level recently in Fresno, where city leaders demanding faster connections from Pacific Gas and Electric Co. won concessions from the utility after threatening to launch a municipal power company.

“This is getting a lot of political attention,” said Dave Dmohowski, executive officer of the Homebuilders Association of Kern County. “It’s a real serious issue.”

Residential and commercial construction projects do not qualify for a certificate of occupancy until they are energized with an electrical connection, a process Dmohowski said used to be done within weeks of a request but which now takes many months, and sometimes more than a year.

He noted that some local home sale purchases have been canceled because of delays.

Executive Director Stephen Pelz of the Housing Authority of the County of Kern said by email the setbacks contribute to “the most challenging development environment we’ve seen in years” as the agency awaits electrification of residential developments that are already built.

“While they sit unoccupied, we are paying thousands of dollars per day in construction loan interest,” he said, adding that developers cannot simply make up lost revenue by charging higher rents.

Commercial developers, too, are feeling the pinch from lengthening timetables. The cost of building a new shopping center, for example, is already much higher than it was three years ago because of rising interest rates and inflation, and now building owners have to wait longer than before to start collecting rent.

Bakersfield developer Anthony Olivieri pointed to ripple effects from longer lead times and missed deadlines because of power connection holdups.

“Overall, like many aspects of new development, everything is taking longer to process and/or complete,” Olivieri said by email, “and with these (energization) delays, costs will continue to rise for the developer and ultimately the end user.”

The slowdown has set back expansion plans at one of Kern’s most successful real estate developments, the Wonderful Industrial Park in Shafter, said the city’s business development director, Bob Meadows. (Project owner The Wonderful Co. did not respond to requests for comment.)

In October, development delays became a big enough concern in Fresno that the mayor and members of the City Council spoke publicly about the possibility of forming a municipal power company that would compete with PG&E.

Mayor Jerry Dyer said in a statement that the utility’s inability to energize local building projects was harming city homebuyers, taxpayers and business owners — “in short, our entire economy.”

He was joined by Councilman Garry Bredefeld, who in the statement accused PG&E of being “non-responsive and unaccountable.” But after a meeting between PG&E executives and representatives of the California Building Industry Association, an agreement was reached in which the utility pledged to reallocate $86 million to bring back furloughed contractors.

Power was to be hooked up, before the end of this year, to any home for which a buyer has locked in a mortgage rate at risk of expiration. PG&E also said, in a statement following talks with the CBIA, that it had approved a deal in which a Korean manufacturer will deliver electric transformers to the utility’s territory starting early next year.

The San Francisco-based utility has come under pressure, as well, from its regulators at the California Public Utilities Commission, which has expressed concern that power connection delays could cause the state to miss its carbon neutrality deadline.

On March 11, CPUC President Alice Busching Reynolds sent PG&E a letter asking the utility to prioritize the interconnection of power generation projects to electrical transmission or distribution grids.

After thanking PG&E for bringing on more than 100 new clean power plants during the preceding 18 months, Reynolds’ five-page letter called on the utility to make sure it has sufficient resources, “including increasing staffing as necessary,” to support power interconnections deemed critical to grid reliability. She acknowledged PG&E is working concurrently on wildfire safety investments and other priorities, but said it is important that energy developers receive progress updates on interconnection jobs.

“Navigating complex interconnection processes at the utilities is a frequently cited issue for new generators,” Reynolds wrote. “Time is of the essence.” CPUC spokeswoman Terrie Prosper said in an email Wednesday that utilities have an obligation to serve their customers and that none of the agency’s regulations prevent them from doing so.

“We are assessing strategies to ensure that utilities are appropriately handling interconnection issues,” Prosper stated.

Delays have come not only from PG&E but also from Southern California Edison, said Director Lorelei Oviatt of the Kern County Planning and Natural Resources Department.

Concerned the slowdown could hurt the county’s ability to attract business investment, she said Kern is interested in pursuing legislative and CPUC hearings next year on how to shorten interconnection timetables.

“What we are hearing from the utilities is that these new business connections (are) not a priority for them,” Oviatt said.

PG&E said in an email statement that the company recognizes recent delays in powering up new projects creates challenges, and that it is working to increase the number of customers it can connect through the end of this year.

In October, PG&E said, it shifted some work crews away from new business connections in order to focus on wildfire work, which it noted was in line with safety being the company’s top priority. It blamed increased demand and higher costs for gas and electric service, along with supply chain challenges and difficulties securing adequate labor and materials.

The utility said it is securing additional resources to energize an additional 2,000 new customers systemwide, including about 80 projects in Kern that represent an estimated 6,031 hours of construction work.

Meanwhile, it is talking directly with impacted customers and developers to understand their immediate needs, and working with the building industry and others on “creative solutions to accelerate new business connections next year and beyond.”

“We understand that the impact this has had on new business connections has been unacceptable,” the company stated. “We know that any delay is frustrating, and we remain committed to taking the necessary steps to complete our customers’ projects and continue to keep them informed.” SoCal Edison said in a statement.