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Joint use


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Joint use

  1. 1. Association of Louisiana Electric Cooperatives Joint Use Update July 25-July 27, 2010 Baton Rouge, Louisiana
  3. 3. Joint Use Discussion Outline <ul><li>Historical Background </li></ul><ul><li>CATV Contract Update </li></ul><ul><li>Telephone Contract Update </li></ul><ul><li>Discussion of Next Steps </li></ul><ul><li>Questions and What If </li></ul>
  4. 4. Association of Louisiana Electric Cooperatives – LCTA Contracts <ul><li>LPSC asserts jurisdiction over Pole Attachments in LA – 1980 </li></ul><ul><ul><li>Unclear which Companies it applies to – Clearly the Communications Companies are the Beneficiaries </li></ul></ul><ul><li>Rental Rates frozen in 1999 </li></ul><ul><ul><li>LPSC Order U-22833 – To expire 12-31-2002 </li></ul></ul><ul><ul><li>LPSC Order U-14325 (Rental Rate method - 10-31-1980) </li></ul></ul><ul><li>USS/RASR Begins Negotiations in 2007 </li></ul><ul><li>LPSC Opens Pole Attachment Docket and conducts hearings in 2007 - 2008 on Pole Attachments </li></ul>
  5. 5. ALEC – LCTA Update (Continued) <ul><li>ALEC Meets with LPSC Staff in 2007-2008 </li></ul><ul><li>First comments filed on behalf of ALEC March 2008 </li></ul><ul><li>LPSC conducts hearings and receives further comments in 2008 </li></ul><ul><li>LPSC Provides Model Contract for Comments in 2008 </li></ul><ul><li>ALEC – USS Response to LPSC August 3, 2010 </li></ul><ul><li>ALEC – USS Additional Comments, along with other Power Providers and Comm Companies October 3, 2008 </li></ul>
  6. 6. ALEC – LCTA (Continued) <ul><li>LPSC Consents to Negotiations between the Parties over Pole Attachments in LA </li></ul><ul><li>ALEC and Louisiana Cable Telecommunications Association began negotiations in 2008 </li></ul><ul><li>ALEC – LCTA Finalized April 2009 </li></ul><ul><ul><li>Model Agreement Based on Georgia EMC- CTAG Statewide Agreement </li></ul></ul><ul><ul><li>Improved Pole Attachment Terms and Conditions </li></ul></ul><ul><li>Target Rental Rate of $15/Attachment with Handy Whitman Escalator after Phase-In </li></ul>
  7. 7. ALEC – LCTA (Continued) <ul><li>Charter Communications has signed ALEC-LCTA Model Agreement with all ALEC Companies (6) </li></ul><ul><li>Cable South has signed the Model Agreement with 2 ALEC Companies </li></ul><ul><li>Suddenlink has signed a slightly modified version of the Model Agreement with 2 Companies, 2 – 3 in process </li></ul><ul><ul><li>Rental Rates are identical to ALEC Model Agreement </li></ul></ul>
  8. 8. ALEC – LCTA (Continued) <ul><li>Still Awaiting Signatures from Cox and others </li></ul><ul><ul><li>Cox Discussion Scheduled following the Conclusion of DEMCO’s in-progress pole inventory </li></ul></ul><ul><li>Target Completion of all signatures in 2010 </li></ul>
  9. 9. ALEC- Telephone Agreements AT&T/BST Contracts <ul><li>Several Different Forms of Agreement Exist between ALEC and BST/AT&T </li></ul><ul><li>3 ALEC Companies Have Recent Rental Rate Increases </li></ul><ul><ul><li>All Under the Existing Contract Terms </li></ul></ul><ul><ul><li>One required Litigation (PCEMC) – Settled Out of Court Late 2009 </li></ul></ul><ul><li>Reasonable Rental Rates </li></ul><ul><ul><li>2010 Rental Rates for AT&T = $Mid $20’s/pole </li></ul></ul><ul><li>No Change in Operational Terms or Conditions </li></ul>
  10. 10. ALEC- Telephone Agreements AT&T/BST Contracts <ul><li>ALEC and BST/AT&T Met July 7 in Birmingham, AL </li></ul><ul><ul><li>Walt Sylvest along with USS/RASR representing ALEC </li></ul></ul><ul><li>ALEC Proposed Alabama Rural Electric Association (AREA) 2010 Form of Agreement including the AREA – BST Rental Rate Increases </li></ul><ul><ul><li>New Contract Terms Similar to GEMC-BST </li></ul></ul><ul><ul><li>Joint Use Contract – not a Pole License Agreement </li></ul></ul><ul><ul><li>Rental Rates “per pole” in the high $20’s for 2010 </li></ul></ul><ul><ul><li>2’ of Normal Space for AT&T, but unlimited use for incremental cost </li></ul></ul><ul><li>AT&T Proposed a Pole Setting Agreement with Limits on Emergency Pole Replacements by ALEC </li></ul><ul><ul><li>AT&T Continues to be unable to contract “Work Aloft” because of its CWA Agreement </li></ul></ul>
  11. 11. ALEC- Telephone Agreements AT&T/BST Contracts <ul><li>AT&T Representative with System-Wide Responsibility Stated they will no longer Pay “high rental rates” </li></ul><ul><li>AT&T Discussed CATV Rental Rates, and talked about the competition they are receiving from CATV </li></ul><ul><li>ALEC Explained that AT&T could have CATV rental rates with CATV (mere licensee) Terms and Conditions </li></ul><ul><li>AT&T wants to review the ALEC Model CATV Agreement (shop for the best deal) </li></ul><ul><li>AREA Agreement sent to AT&T last week for Comments </li></ul><ul><li>Pole Setting Agreement Next </li></ul><ul><li>Targeted to complete this year </li></ul>
  12. 12. ALEC- Telephone Agreements CenturyLink (CTL) Contracts <ul><li>Essentially only one Form of Agreement Exists between ALEC and CTL </li></ul><ul><li>REA Form 263 with Appendix B Rental Increases </li></ul><ul><ul><li>50 Year Old Contract Terms </li></ul></ul><ul><ul><li>All Agreements predate LPSC Rate Freeze </li></ul></ul>
  13. 13. ALEC- Telephone Agreements CenturyLink (CTL) Contracts <ul><li>CTL Discussions Held in June 201o </li></ul><ul><li>CTL Asserts that the LPSC Rate Freeze Applies </li></ul><ul><ul><li>CTL Asserts that the Rate Freeze is Still in Effect </li></ul></ul><ul><ul><li>CTL Expects ALEC to Agree to CATV rental rates, but Telephone Co Terms and Conditions </li></ul></ul><ul><ul><li>i.e., CTL Expects to pay for One Foot of Space, but maintain contracts that allow unlimited pole space </li></ul></ul><ul><li>Calculated Rental Rates under Appendix B (current contracts) are in the High $20’s – Mid $30’s </li></ul><ul><ul><li>ALEC Rental Rates on CTL Poles = Mid $30’s/pole </li></ul></ul>
  14. 14. ALEC- Telephone Agreements CenturyLink (CTL) Contracts <ul><li>ALEC Must Resolve the Following Before we Proceed </li></ul><ul><ul><li>Does the LPSC Rate Freeze Apply? </li></ul></ul><ul><ul><li>Is the Rate Freeze Still in Effect? </li></ul></ul><ul><ul><li>With respect to both AT&T and CTL, will ALEC consent to Pole License Agreements for Telcos (ILECs) </li></ul></ul><ul><li>Rental Rates under ALEC Model Agreement is $15 “PER ATTACHMENT” </li></ul><ul><ul><li>Operating Terms are much more restrictive than Joint Use Agreements </li></ul></ul><ul><li>Joint Use Rates Under Current Contracts are in the High $20’s – Mid $30’s “PER POLE” </li></ul>
  15. 15. So What is Happening in Other States with Joint Use – How are we doing?
  16. 16. GEMC – BST/AT&T <ul><li>Finalized April 2004 </li></ul><ul><li>2009 Rental Rate paid by AT&T to GEMC = $27.68/pole </li></ul><ul><li>Operating Terms Similar to ALEC-LCTA Model Agreement </li></ul><ul><ul><li>Fees for Unauthorized Attachments </li></ul></ul><ul><ul><li>Fees for Late Transfers </li></ul></ul><ul><ul><li>Recovery of Costs to Return to Remove Old Poles </li></ul></ul>
  17. 17. TVPPA – BST/AT&T (4 State) <ul><li>Finalized December 2009 </li></ul><ul><li>Reasonable Rental Rates </li></ul><ul><ul><li>$25/Pole in 2009, $27 in 2010, $29 in 2011, then HWI </li></ul></ul><ul><li>Satisfactory Operational Terms and Conditions </li></ul><ul><li>Minor changes to original language late in December 2009 (to match some of the GEMC Language) </li></ul>
  18. 18. 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)
  19. 19. Verizon in NC – MOUs and Coops <ul><li>Currently in litigation with Murphy Electric Power Board over Rental Rates </li></ul><ul><li>Currently in litigation with French Broad Electric Cooperative over Rental Rates </li></ul><ul><li>Litigated with Progress Energy-Carolina over rental rates in 2009 </li></ul><ul><li>VZ is currently advocating that they should be subject FCC (cable/telecom) type rental rates </li></ul>
  20. 21. FCC NATIONAL BROADBAND TASKFORCE RECOMMENDATIONS ISSUED Recommended Elimination of the Cooperative and MOU Exemption with respect to Pole Attachments
  21. 22. 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”
  22. 23. 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 &quot;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
  23. 24. 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)
  24. 25. 1984 -2009 Index of the Changes in Cost of Goods and Services – US Bureau of Labor Statistics
  25. 26. “ A” x “B” x “C” THE FORMULA
  26. 27. THE FORMULA <ul><li>A = </li></ul><ul><li>HISTORICAL AVERAGE INSTALLED COST OF POLES </li></ul><ul><li>= </li></ul><ul><li>APPROXIMATELY $250 - $300 </li></ul><ul><li>FOR AN EMC </li></ul>
  27. 28. THE FORMULA <ul><li>B= </li></ul><ul><li>THE ANNUAL </li></ul><ul><li>CHARGES ASSOCIATED </li></ul><ul><li>WITH OWNING AND </li></ul><ul><li>MAIN TAINING POLES </li></ul><ul><li>= </li></ul><ul><li>APPROXIMATELY </li></ul><ul><li>25% </li></ul><ul><li>OF THE </li></ul><ul><li>INSTALLED COST </li></ul>
  28. 29. “ A” x “B” = $75/yr (@$300 pole cost) THE FORMULA
  29. 30. THE FORMULA <ul><li>C = </li></ul><ul><li>THE PERCENTAGE OF THE JOINT USE POLES ALLOCATED TO EACH OF THE PARTIES (ORIGINALLY 50% </li></ul><ul><li>for BOTH POWER AND TELCO) </li></ul><ul><li>NOW TYPICALLY 45% for TELCO and 55 % for Power </li></ul><ul><li>LPSC Formula = 2/13.5, or approximately 15%, based on 1’ for attachments and 1’ of “Safety Space” </li></ul>
  30. 31. $33.75 FOR TELCO $41.25 FOR THE POWER COMPANY @ 45/55
  31. 32. POSITIONING FOR THE FUTURE <ul><li>Deal with the LPSC Rental Rate Freeze and Contract Terms for Communications Attachments, i.e. Cable Rental Rates Yield Cable Terms and Conditions </li></ul><ul><li>Complete Pole Inventories to Verify Attachments </li></ul><ul><li>Update Statewide Historical Pole Data (Requested Last Month) </li></ul><ul><li>Rethink accounting provisions for pole retirements </li></ul><ul><li>Re-evaluate the “benefits” of Pole Ownership </li></ul><ul><li>Get the Communications Companies in the pole business </li></ul><ul><li>Redirect Account 364 (poles) $ to other projects, i.e. smart grid, re-conductoring, growth </li></ul><ul><li>Post Joint Use Updates on the ALEC Website </li></ul>
  32. 33. The Joys of Owning Poles
  33. 34. The Joys of Owning Poles
  34. 35. The Joys of Owning Poles
  35. 36. The Joys of Owning Poles <ul><li>Safety Concerns – Public, Contractors and Employees </li></ul><ul><li>NESC Requirements for Strength & Loading </li></ul><ul><li>Liability Concerns </li></ul><ul><li>Pole space continues to be a desired commodity </li></ul><ul><li>Capital constraints – some movement to smaller class poles when applicable </li></ul><ul><li>Hot topic in Florida after 2004-2005 Hurricane Seasons </li></ul><ul><ul><li>Resulted in Florida PSC Rulemaking and reporting requirements - includes Electric Cooperatives </li></ul></ul><ul><ul><li>Already being considered in other states, including Louisiana and Texas </li></ul></ul>
  36. 37. Questions? <ul><li>Thank you very much, </li></ul><ul><li>Wil Arnett, Utility Support Systems, Inc. </li></ul><ul><li>RASR Associates, LLC </li></ul>