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Home My WebLink About9-1 AttachmentsApril 15, 2015 VIA UPS AND EMAIL Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96161 Joseph R. Aguera Director, Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96161 Jeff Bender Director, Truckee Donner Public Utility District 11570 Donner Pass Road 1►�=X010HM �Z01LAWA Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606-4637 Main Tel +1 312 782 0600 Main Fax +1 312 7017711 www.mayerbrown.com Mike Sullivan Direct Tel +1 312 7017251 Direct Fax +1 312 706 8689 msullivan@mayerbrown.com Bob Ellis Director, Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96161 Tony Laliotis Director, Truckee Domler Public Utility District 11570 Donner Pass Road Truckee, CA 96161 Paul Warmerdam Director, Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96161 Truckee, CA 96161 Re: Notice of Protest and Request for Documents Dear Sirs: I am writing on behalf of my client, Pacific Bell Telephone Company d/b/a AT&T California ("AT&T"), regarding the $19 per foot annual pole attachment rate and the one-time processing fee of $110 per pole attachment adopted by Truckee Donner Public Utility District ("TDPUD") at its March 18, 2015 Regular Meeting of the TDPUD Board of Directors. At the outset, it is AT&T's hope that AT&T and TDPUD can resolve any disputes about the appropriate pole attachment rates and fees without the need for formal litigation. My understanding is that the parties are continuing to discuss this matter and nothing in this letter is intended to suggest that AT&T is not committed to that course. Nevertheless, as you may know, state law provides that a party who wishes to protest a decision relating to pole attachment rates, terms and conditions must take certain actions in order to preserve its ability to protest. Among those deadlines, AT&T is required pursuant to Section 9517 of the California Public Utilities Code to send written notice of protest within 30 days of the decision which AT&T may seek to challenge. This letter serves as such written notice of Mayer Brown LLP operates in combination with other Mayer Brown entities with offices in Europe and Asia and is associated with Tauil & Chequer Advogados, a Brazilian law partnership. Mayer Brown LLP April 15, 2015 Page 2 AT&T's protest of the adoption of the pole attachment rate of $19 per foot and the one-time processing fee of $110 per pole attachment that was approved by TDPUD on March 18, 2015. TDPUD has not adequately supported its rate increase. Pursuant to Section 9512(a)(1) of the Public Utilities Code, the annual fee for use of a pole "shall not exceed an amount determined by multiplying the percentage of the usable space that would be occupied by the amlual costs of ownership of the pole and its supporting anchor." TDPUD's calculations fall short in several ways. First, the restatement of TDPUD's investment in poles does not comport with the requirement of Section 9512(a)(3) that pole investment be the historical capital costs less depreciation and that the historical capital costs include a credit for all reimbursed capital costs. A backward -looking restatement to exclude the effects of capital reimbursements from booked investments to reflect the adoption of Government Accounting Standards Board ("GASB") Statement No. 33 as proposed by TDPUD does not conform to statutory requirements. Further, supposing TDPUD has followed GASB Statement No. 33 since approximately 2001, and excluded capital reimbursements from booked investments, TDPUD's books of account may be overstated. Second, illchision of a "Cost of Borrowing" in addition to a "Rate of Return" is duplicative as "Rate of Return" typically reflects the weighted average cost of debt and equity. In addition, as a Public Utility District, TDPUD has no required return on equity. AT&T observes that the previously provided partial balance sheets and income statements show almost no asset -related debt or debt cost. Therefore, TDPUD's claimed "rate of return" of 10% is excessive. AT&T believes an overall rate of return should be no more than TDPUD's identifiable actual cost of debt. Third, pole attachment rates should not be rounded to whole dollars but instead should be stated in dollars and cents. Based on the foregoing, AT&T believes that the appropriate amlual pole attachment rate per foot is no more than $4.40 and possibly significantly less. With respect to the one-time processing fee per pole attaclnnent, AT&T has received no documentation that would stubstantiate that the fee does not exceed the actual cost of processing a pole attachment request as required by Section 9514 of the Public Utilities Code It is AT&T's position that the documentation that TDPUD has presented that purports to supports its rate increase is deficient and lacks the requisite detail necessary to demonstrate that TDPUD's approved rate and fee comply with Sections 9512 and 9514. Insofar as TDPUD has not provided adequate back-up documentation and information to support its new rate and fee, including documentation sufficient to satisfy its obligations under Section 9516(a), there may be additional bases for AT&T's protest of TDPUD's new attachment rate. AT&T specifically 715527266.2 IS-Apr-15 10:06 09178502 Maier Brown ALP April 15, 2015 Page 3 reserves the right to raise additional arguments as more detailed information is provided by TDPUD. Finally, ptusuant to Section 9518 of the California Public Utilities Code, AT&T requests that TDPUD provide a copy of all documents that purport to establish that the rate and fee TDPUD has approved does not exceed the amount reasonably necessary to cover the cost of the use of the utility pole or support structure, and that the rate and fee proposed by TDPUD are reasonable. Without limiting the scope of the foregoing request, AT&T specifically requests that TDPUD provide its income statement, balance sheet and trial balance information as of December 31, 2014. Given the 120 day deadline to commence a judicial action of the TDPUD's March 18 decision (per Section 9518(a) of the Public Utilities Code) and the fact that that deadline cannot be extended by the parties, AT&T hopes that the parties can resolve the above matters promptly. Sincerely, Michael T. Sullivan MTS/ds enclosure cc: Steven C. Gross (via email) John di Bene, General Attorney, AT&T Services (via email) Joshua A. Mathisen, Area Manager, AT&T Technology and Operations (via email) 715827266.2 15-Apr-15 10:06 09178802 May 12, 2015 VIA U.S. MAIL AND EMAIL Shanna Kuhlemier, CMC Truckee Donner Public Utility District 11570 Donner Pass Road Truckee, CA 96161 Re: Supplemental Request for Documents Dear Ms. Kuhlemier: MAYER•BROWN Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606-4637 Main Tel +1 312 782 0600 Main Fax +1 312 7017711 www.mayerbrown.com Mike Sullivan Direct Tel +1 312 7017251 Direct Fax +1 312 706 8689 msullivan@mayerbrown.com Thank you for the information from Truckee Donner Public Utility District ("TDPUD") in response to my April 15, 2015 letter. The information provided by TDPUD supports AT&T's position that the pole attachment rate should be approximately $4.40 or possibly less. In addition to the bases set forth in the my April 15 letter, the information provided by TDPUD suggests that Truckee Donner is receiving capital contributions that are flowing directly to its net income instead of reducing net investment as required by Section 9511.5(3) of the California Public Utilities Code which states in relevant part that "the accounting upon which the historical capital costs are determined shall include a credit for all reimbursed capital costs." AT&T believes that accounting for this will further reduce the resulting rate. In addition, while the per pole processing fee proposed by TDPUD is potentially reasonable for a single pole application, TDPUD has not provided sufficient information to demonstrate that the per pole processing fee is reasonable in cases where an attacher requests attachment to multiple poles at one time. It also is not clear how the overhead factors used in the processing fee charge were developed and therefore there is uncertainty as to whether the fee was properly calculated. Based on the information provided by TDPUD in response to my April 15 letter, AT&T requests that following additional information: Please provide a complete breakdown of the December 31, 2013 balance in accounts 108.1 and 108.2 (Accumulated Depreciation) into the constituent parts related to the primary plant account from which the accumulation of depreciation arises (e.g., identify the amount of accumulated depreciation attributable to Account 364 Poles/Towers/Fixtures and each other plant account out of the total accumulated depreciation of $13,605,355.64 as of December 31, 2013.) Mayer Brown LLP operates in combination with other Mayer Brown entities with offices in Europe and Asia and is associated with Tauil & Chequer Advogados, a Brazilian law partnership. Mayer Brown LLP May 12, 2015 Page 2 2. "Capital Contributions" in the amount of $269,548 were identified for the year 2013 on the document titled "Required Supplemental Information" identified as "Page 52." Please identify all "Capital Contributions" received by year since the time at which Truckee Donner began showing Capital Contributions as an increase in the net change of position, but in no instance less than from 2001 through 2013. Please provide a copy the "Required Supplemental Information" report or equivalent for December 31 of each such year. 3. For each annual number provided in response to Request No. 2 above, please identify the amount of "Capital Contribution" that was attributable to or received for work related to Poles/Towers/Fixtures (Account 364). 4. On the document titled "Resolution No. 2011-23 Adopting The Budget and Overhead Rates for FY12 and FY13," overhead rates for labor, transportation, inventory, administration and construction are identified. Please provide workpapers or other backup to the FYI values shown that demonstrate how the overhead rates were derived including a description of what the values in the numerator and the denominator represent as used in the development of each overhead rate. Please also provide a description of how the overhead rates are applied in the normal course of business. Given the upcoming hearing on AT&T's protest scheduled for June 8, AT&T respectfully requests a response to this request by Friday, May 22. Sincerely, Michael T. Sullivan MTS/ds enclosure cc: Steven C. Gross (via email) John di Bene, General Attorney, AT&T Services (via email) Joshua A. Mathisen, Area Manager, AT&T Technology and Operations (via email) 716205373.1 11-May-15 15:56 09208823