The URL can be used to link to this page

Home My WebLink About11 - Attachment 1 - ATT Protest LetterApril 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 Truckee, CA 96161 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 Bob Ellis Director, Truckee Donner Public Utility District 11570 Dormer Pass Road Truckee, CA 96161 Tony Laliotis Director, Truckee Donner 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 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, terns 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 annual 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, inclusion 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 annual 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 attachment, AT&T has received no documentation that would substantiate 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 715827266.2 15-Apr-15 10:06 09178802 Mayer Brown LLP April 15, 2015 Page 3 reserves the right to raise additional arguments as more detailed information is provided by TDPUD. Finally, pursuant 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 ).natters 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) 7158272662 15-Apr-I5 10:06 09178802