Joint use

Association of Louisiana Electric CooperativesJoint Use UpdateJuly 25-July 27, 2010

Baton Rouge, Louisiana

JOINT USE AND LICENSE AGREEMENTS

Wil Arnett, USS

Joint Use Discussion OutlineHistorical BackgroundCATV Contract UpdateTelephone Contract UpdateDiscussion of Next StepsQuestions and What If

Association of Louisiana Electric Cooperatives – LCTA Contracts

LPSC asserts jurisdiction over Pole Attachments in LA – 1980Unclear which Companies it applies to – Clearly the

Communications Companies are the BeneficiariesRental Rates frozen in 1999

LPSC Order U-22833 – To expire 12-31-2002LPSC Order U-14325 (Rental Rate method - 10-31-

1980)USS/RASR Begins Negotiations in 2007LPSC Opens Pole Attachment Docket and conducts

hearings in 2007 - 2008 on Pole Attachments

ALEC – LCTA Update(Continued)

ALEC Meets with LPSC Staff in 2007-2008First comments filed on behalf of ALEC March

2008LPSC conducts hearings and receives further

comments in 2008LPSC Provides Model Contract for Comments in

2008ALEC – USS Response to LPSC August 3, 2010ALEC – USS Additional Comments, along with

other Power Providers and Comm Companies October 3, 2008

ALEC – LCTA (Continued)

LPSC Consents to Negotiations between the Parties over Pole Attachments in LA

ALEC and Louisiana Cable Telecommunications Association began negotiations in 2008

ALEC – LCTA Finalized April 2009Model Agreement Based on Georgia EMC- CTAG

Statewide AgreementImproved Pole Attachment Terms and

ConditionsTarget Rental Rate of $15/Attachment with

Handy Whitman Escalator after Phase-In

ALEC – LCTA(Continued)

Charter Communications has signed ALEC-LCTA Model Agreement with all ALEC Companies (6)

Cable South has signed the Model Agreement with 2 ALEC Companies

Suddenlink has signed a slightly modified version of the Model Agreement with 2 Companies, 2 – 3 in processRental Rates are identical to ALEC Model

Agreement

ALEC – LCTA(Continued)

Still Awaiting Signatures from Cox and othersCox Discussion Scheduled following the

Conclusion of DEMCO’s in-progress pole inventory

Target Completion of all signatures in 2010

ALEC- Telephone AgreementsAT&T/BST Contracts

Several Different Forms of Agreement Exist between ALEC and BST/AT&T

3 ALEC Companies Have Recent Rental Rate Increases All Under the Existing Contract Terms One required Litigation (PCEMC) – Settled Out of Court Late 2009

Reasonable Rental Rates 2010 Rental Rates for AT&T = $Mid $20’s/pole

No Change in Operational Terms or Conditions


ALEC and BST/AT&T Met July 7 in Birmingham, AL Walt Sylvest along with USS/RASR representing ALEC

ALEC Proposed Alabama Rural Electric Association (AREA) 2010 Form of Agreement including the AREA – BST Rental Rate Increases

New Contract Terms Similar to GEMC-BST Joint Use Contract – not a Pole License Agreement Rental Rates “per pole” in the high $20’s for 2010 2’ of Normal Space for AT&T, but unlimited use for incremental cost

AT&T Proposed a Pole Setting Agreement with Limits on Emergency Pole Replacements by ALEC

AT&T Continues to be unable to contract “Work Aloft” because of its CWA Agreement


AT&T Representative with System-Wide Responsibility Stated they will no longer Pay “high rental rates”

AT&T Discussed CATV Rental Rates, and talked about the competition they are receiving from CATV

ALEC Explained that AT&T could have CATV rental rates with CATV (mere licensee) Terms and Conditions

AT&T wants to review the ALEC Model CATV Agreement (shop for the best deal)AREA Agreement sent to AT&T last week for CommentsPole Setting Agreement NextTargeted to complete this year

ALEC- Telephone AgreementsCenturyLink (CTL) Contracts

Essentially only one Form of Agreement Exists between ALEC and CTL

REA Form 263 with Appendix B Rental Increases 50 Year Old Contract Terms All Agreements predate LPSC Rate Freeze


CTL Discussions Held in June 201oCTL Asserts that the LPSC Rate Freeze Applies

CTL Asserts that the Rate Freeze is Still in Effect CTL Expects ALEC to Agree to CATV rental rates, but Telephone Co Terms and

Conditions i.e., CTL Expects to pay for One Foot of Space, but maintain contracts that allow

unlimited pole spaceCalculated Rental Rates under Appendix B (current contracts) are in the High $20’s

– Mid $30’s ALEC Rental Rates on CTL Poles = Mid $30’s/pole


ALEC Must Resolve the Following Before we Proceed Does the LPSC Rate Freeze Apply? Is the Rate Freeze Still in Effect? With respect to both AT&T and CTL, will ALEC consent to Pole License

Agreements for Telcos (ILECs)Rental Rates under ALEC Model Agreement is $15 “PER ATTACHMENT”

Operating Terms are much more restrictive than Joint Use AgreementsJoint Use Rates Under Current Contracts are in the High $20’s – Mid $30’s

“PER POLE”

So What is Happening in Other States with Joint Use – How are we doing?

GEMC – BST/AT&TFinalized April 20042009 Rental Rate paid by AT&T to GEMC = $27.68/pole Operating Terms Similar to ALEC-LCTA Model Agreement

Fees for Unauthorized AttachmentsFees for Late TransfersRecovery of Costs to Return to Remove Old Poles

TVPPA – BST/AT&T (4 State) Finalized December 2009

Reasonable Rental Rates$25/Pole in 2009, $27 in 2010, $29 in 2011,

then HWISatisfactory Operational Terms and

ConditionsMinor changes to original language late in

December 2009 (to match some of the GEMC Language)

Alabama Rural Electric Association - AREA

CenturyTel Statewide settled in 2009 – Rent = Approximately $27

Charter– Statewide Agreements- Settled in May 2010

AREA-AT&T Statewide Settled May 2010 – Rental Rates of $28 for 2010 (paid in January 2011)

Verizon in NC – MOUs and Coops

Currently in litigation with Murphy Electric Power Board over Rental Rates

Currently in litigation with French Broad Electric Cooperative over Rental Rates

Litigated with Progress Energy-Carolina over rental rates in 2009

VZ is currently advocating that they should be subject FCC (cable/telecom) type rental rates

FCC NATIONAL BROADBAND TASKFORCE RECOMMENDATIONS ISSUED

Recommended Elimination of the Cooperative and MOU Exemption with respect to Pole Attachments

Originally targeted the Cooperatives and the Municipals for “uniform treatment”. The Cooperative and MOU Exemption remains for the time being, but

The FCC’s Task Force Recommended a Single, Low “Broadband” Attachment Rate For All Communications Companies That Provide “Broadband Service”

CTL Website July 25, 2010 Indicates that 93% of their lines in Louisiana are currently Broadband Enabled. They also report that only 1 in 3 of its subscribers are taking Broadband Services

FCC’s Introduction states: “… both its pole attachment orders and FNPRM are for the

purpose of beginning "the process of revising the Commission's pole attachment rules to lower the costs of telecommunications, cable, and broadband deployment and to promote competition, as recommended in the National Broadband Plan”.

FCC ORDER and Further Notice of Proposed Rule Making

FCC Cable rate is $10,000,000 subsidy - each year for every 500,000 poles (for IOU’s).(Coalition of Concerned Utilities- 2010, Keller & Heckman, LLP)

1984 -2009 Index of the Changes in Cost of Goods and Services – US Bureau of Labor Statistics

1984 - 2009 Index of Changes in Cost of Goods and Services

US Bureau of Labor Statistics

0

50

100

150

200

250

300

350

400

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Cable TV Electricity Gasoline All Items

“A” x “B” x “C”

THE FORMULA

THE FORMULA

A = HISTORICAL

AVERAGE INSTALLED COST OF POLES

= APPROXIMATELY

$250 - $300 FOR AN EMC

THE FORMULA

B=THE ANNUAL CHARGES

ASSOCIATED WITH OWNING AND MAIN TAINING POLES

=APPROXIMATELY

25% OF THE

INSTALLED COST

“A” x “B” = $75/yr (@$300 pole cost)

THE FORMULA

THE FORMULA

C =THE PERCENTAGE OF THE

JOINT USE POLES ALLOCATED TO EACH OF THE PARTIES (ORIGINALLY 50%

for BOTH POWER AND TELCO)

NOW TYPICALLY 45% for TELCO and 55 % for Power

LPSC Formula = 2/13.5, or approximately 15%, based on 1’ for attachments and 1’ of “Safety Space”

$33.75 FOR TELCO

$41.25 FOR THE POWER COMPANY @ 45/55

POSITIONING FOR THE FUTUREDeal with the LPSC Rental Rate Freeze and Contract

Terms for Communications Attachments, i.e. Cable Rental Rates Yield Cable Terms and Conditions

Complete Pole Inventories to Verify AttachmentsUpdate Statewide Historical Pole Data (Requested Last

Month)Rethink accounting provisions for pole retirementsRe-evaluate the “benefits” of Pole OwnershipGet the Communications Companies in the pole businessRedirect Account 364 (poles) $ to other projects, i.e.

smart grid, re-conductoring, growthPost Joint Use Updates on the ALEC Website

The Joys of Owning Poles

The Joys of Owning PolesSafety Concerns – Public, Contractors and EmployeesNESC Requirements for Strength & LoadingLiability ConcernsPole space continues to be a desired commodityCapital constraints – some movement to smaller class poles

when applicable

Hot topic in Florida after 2004-2005 Hurricane Seasons Resulted in Florida PSC Rulemaking and reporting

requirements - includes Electric Cooperatives Already being considered in other states, including Louisiana

and Texas

Questions?Thank you very much,

Wil Arnett, Utility Support Systems, Inc.RASR Associates, LLC

Joint use

Documents

Transcript of Joint use