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- Telephone AgreementsAT&T/BST Contracts
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
ALEC- Telephone AgreementsAT&T/BST Contracts
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
ALEC- Telephone AgreementsCenturyLink (CTL) Contracts
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- Telephone AgreementsCenturyLink (CTL) Contracts
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
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50
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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 Poles
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
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