HomeMy WebLinkAbout11 Power Point Protest Hearing Pole Attachment Fee
Protest Hearing Item # 11 June 8, 2015 Pole Attachment RatesRegarding Adopted for AT&T Hold a Protest Hearing
Protest Hearing 2 owned polesAB 1027 specified that its provisions do not apply to jointly –for use by third party service providersowned utilities (POU) to make space available on their
poles In late 2011, California AB 1027 passed, requiring publicly •Telephone and Telegraph Company for attachment to polesIn 1937, the District entered into an agreement with Pacific
•beginning of the District (1927)The District has owned its electric utility poles since the •Pole Attachment Rates
Protest Hearing 3 remain attached to the poles under the 1937 Agreementwould not pursue the new agreement and it wanted to On October 22, 2013, AT&T informed the District that it •sign
the agreementdrafted agreement with the understanding that AT&T would On July 17, 2013, the District’s Board approved a newly •the partial interest in the District’s existing utility
poleswith AT&T to prepare a “Purchase and Sales Agreement” for Starting in August 2012, the District worked cooperatively •Pole Association (NCJPA)In July 2012, the District joined
Northern California Joint •Background / History (cont.)Pole Attachment Rates
Background / History (cont.)Pole Attachment RatesProtest Hearing 4 rate and a $110 processing fee pursuant to AB 1027workshop discussing the proposed $28.84 pole attachment On January
21, 2015, the District Board held a public •annual rate would be $28.84 per foot of pole attachmentOn December 18, 2014, the District informed AT&T that the •District poles with an
annual rate pursuant to AB 1027 On October 22, 2014, AT&T requested to lease space on •interest in the District’s existing utility polesIn February 2014, AT&T verbally agreed to purchase
partial •written notice to terminate the 1937 Agreementyear -On October 23, 2013, the District gave AT&T a one•
Background / History (cont.)Pole Attachment RatesProtest Hearing 5$28.84 to $19.00 per foot of pole attachmentThe revised calculation reduced the annual rate from •—Cost of borrowing
included—Net pole investment increased—Administrative element lowered—Staff concluded four modifications were necessary•administrative elementthe annual pole attachment rate calculation
for the On February 9, 2015 AT&T identified a needed change to •
Background / History (cont.)Pole Attachment RatesProtest Hearing 6 time processing fee of $110-attachment rate plus the onePenalty for unauthorized attachments of three times the annual
—pole attachmenttime fee to process a request for new attachments of $110 per -One—Annual rate per foot of pole attachment of $19—proposed rates to be effective May 17, 201503 to implement
the -The Board adopted Resolution 2015•
New Information Pole Attachment RatesProtest Hearing 7 from AT&T asserting a $3.79 rate per foot of pole attachmentDistrict received a proposed calculation –On June 4, 2015 •attachment
rates and set a protest hearing for June 8, 2015 Board held in abeyance the pole –On May 20, 2015 •recordsDistrict responded to request for records and subsequent request for —pole
attachment ratesAT&T sent a formal letter protesting the –•
New Information Pole Attachment RatesProtest Hearing 8 Required rate of return should be 11.25%, not 8%—for contributed capital should be $0, not $4,280,498Downward adjustment to pole
and overhead facilities investment —Number of poles should be 3,386, not 5,442—District Staff disagrees with three values used in calculation•Progress should be excluded from calculation
-in-Construction Work—Accounting records should be used for pole investment value—Rounding to the nearest dollar should be eliminated—asserted by AT&TDistrict Staff does not contest
three adjustments •District Staff agrees with the method of calculation•AT&T’s asserted rate calculationDistrict Staff completed its review of –On June 5, 2015 •
New Information Pole Attachment RatesProtest Hearing 9 same source as the pole investment value, should be usedThe pole count of 3,386 from the District’s accounting records, the —accounting
investment valuethan the number of poles used as a basis for generating the the 5,442 pole count from the District’s total distribution system rather The AT&T rate calculation dilutes
the net investment per pole by using —Number of poles should be 3,386•
New Information Pole Attachment RatesProtest Hearing 10 investment is warrantedTherefore no adjustment to the pole and other overhead facilities —developers since 1995No overhead facilities
have been dedicated to the District by new —to install underground facilitiesIn 1995, the District adopted a resolution requiring new development —through 2013overhead facilities dedicated
to the District by developers from 2001 facilities downward by $4,280,498 to estimate the pole and AT&T adjusted the net investment of pole and other overhead —investment for contributed
capital should be $0Downward adjustment to pole and overhead facilities •
New Information Pole Attachment RatesProtest Hearing 11 11.25%District staff now recommends the FCC default industry rate of —budgeted revenue10% average ratio of budgeted net income
before capital improvements to total ——District uses a 14% aggregated rate of return—required rates of return of selected investor owned utilitiesAT&T used 8% required rate of returns
based on an average of —Required rate of return should be 11.25%•
Summary of Changes Pole Attachment RatesProtest Hearing 12
Fiscal Impact Pole Attachment RatesProtest Hearing 13 estimated to be $70,000 using the amended rateAT&T’s pole attachments on District owned poles is Annual revenue from AT&T to reimburse
the District for •
Recommendation Pole Attachment RatesProtest Hearing 14 pole attachmentin the pole attachment rate from $19.00 to $12.52 per foot of 03 to reflect the changes -Adopt amended Resolution
2015•
15 Pole Attachment RatesProtest Hearing
Background / History (cont.)Pole Attachment RatesProtest Hearing 16 attachments discovered on or after January 2012times the annual pole attachment rate for unauthorized AB 1027 permits
the District to impose a penalty of three •$22 Riverside Public Utilities—$19 City of Colton—$19 City of Azusa Light and Water—$19 City of Pasadena Water and Power—$18 Los Angeles Department
of Water and Power—$18 Sacramento Municipal Utility District—attachment ratesattachment was comparable to other utilities’ pole TDPUD’s revised annual rate of $19 per foot of pole •