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Enhance Your Revenue Pole Attachments – The Forgotten Revenue Source Lani Williams, Consultant, lwilliams@virchowkrause.com Historically, pole attachment fees have not been considered a major revenue source and are often ignored by electric utilities. However, a new method for calculating these fees was developed as part of the Telecom- munications Act of 1996 (TA 96) which was enacted by the Federal Communications Commission (FCC). This act allows for a substantial increase in revenues and clarifies inconsistencies with previous formulas. Although not required, municipal utilities may follow TA 96 since many are finding that adopting this new standard allows for revenue increases. History of Pole Attachment Fees To understand the changes in TA 96, it is helpful to review the history of pole attachment fees. In the early 1900s, utilities and telephone companies employed joint use agreements for pole installation and attachment, avoiding the waste and expense of having two sets of poles. The utilities, already having poles in place, allowed telephone use in exchange for rental fees. Pole attach- ments were not addressed until 1978 when cable television providers were also becoming major pole attachers. Because of rising concern that utilities would abuse their power concerning attachment fees, congress enacted the Pole Attachment Act of 1978 giving regulatory authority of the “rates, terms, and conditions governing pole attachments” to the FCC. Even after the Pole Attachment Act of 1978 was enacted, the process of calculating pole attachment fees was difficult and raised objections from cable providers and telephone companies. Both argued they should only have to pay for the portion of the pole they were attached to and nothing more. The communication companies argued if they only use 40 inches of the pole, they should only have to pay for 40 inches and the rest should be the responsibility of the utility. This ongoing dispute between electric utilities and communica- tion providers is put to rest by TA 96. TA96: A “Just and Reasonable” Pole Attachment Fee Calculation Method TA 96 helped clear up previous fee objections by amending the right of access and calculation of pole attachment fees. Right of access was extended to all telecommunication carriers, not just cable providers and telephone companies, opening a new client base for pole attachments. The new calculation, which goes into effect on February 8, 2001, apportions the carrying costs associated with owning and maintaining a utility owned pole between the attaching company and the utility. Public power utilities are exempt from following FCC mandates, but may apply this FCC formula to its attachment rates if desired. In all likelihood, rates developed under the FCC method may become benchmark rates for pole attachment negotiations. There are benefits to following the “just and reasonable” rules established by the FCC in TA 96. The change in calculation under the TA 96 method may result in revenue increases for public power systems that have rates established under the 1978 Act or other methods. In a restructured, competitive electric utility market, pole attachments can provide additional, needed revenue. examples, utilities are encouraging customers to own DG. However, the benefits described can be achieved only if control of the DG units is retained by the utility. Utility associations will need to monitor developments in this area and be prepared to act accordingly. Industry Issues: The benefits from DG may span the transmission, distribution and power supply sectors. Since these three sectors are increasingly separated into distinct companies, issues of control and benefit sharing will need to be addressed and solved before the full benefit of DG can be realized. This is likely to delay broad implementation of DG, as more pressing restructuring issues are being addressed. Environmental Issues: The generators being installed under the program referenced here are natural gas or propane fueled units, claimed to be environmentally friendly. However, many low cost units can be fueled with diesel or gasoline. A proliferation of these units, perhaps spawned by an anomalous regional outage event, could lead to unsafe, noisy, and environmentally disastrous installations. Municipalities may want to consider passing ordinances which include environmental standards and a permit process for distributed generator installations. 4 ■ Remember,WIPSCChapter113isnow in effect. Please review your electric service rules to ensure compliance. tages for Your Utility enior Accountant owkrause.com Section 16.957(1)(h) of Act 9 as “a program for reducing the demand for natural gas or electricity or improving the efficiency of its use during any period”. To qualify for an energy conservation program, a utility could install equipment in the interest of energy efficiency such as high efficiency water pumps at well stations, more efficient pumps at low-lift sewer pump stations or even high efficiency heating and air conditioning systems in administrative offices. Nonelectric utilities should contact their local electric provider to inquire about new opportunities created by the Wisconsin Energy Reliability Act.PDF Image | Utility Lines Creating Advanced Telecommunications In Your Community: Where to Begin
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