BILL ANALYSIS Ó AB 1027 Page 1 Date of Hearing: May 18, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1027 (Buchanan) - As Amended: May 11, 2010 Policy Committee: UtilitiesVote:13-0 Local Government 9-0 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill requires local publicly owned utilities (POUs) to make appropriate space and capacity on and in utility poles and support structures available for use by other entities and limits utility charges for use of this space. Specifically, this bill: 1)Requires (POU), which includes irrigation districts, to make appropriate space and capacity on and in a utility pole and support structure owned or controlled by the POUs available for use by a cable television corporation, video service provider, or telephone corporation. 2)Stipulates that the annual fee charged by a POU for the use of a utility pole shall not exceed an amount determined by multiplying the percentage of the total usable space occupied by the pole attachment by the annual costs of ownership of the pole and its supporting anchor. 3)Establishes a presumption, subject to factual rebuttal, that a single attachment to a pole by a telecommunications provider occupies one foot of usable space and that an average utility pole contains 13.5 feet of usable space. 4)Stipulates that the annual fee charged by a POU for use of a support structure shall not exceed the POU's annual costs of ownership, as defined, of the percentage of the volume of the capacity of the structure rendered unusable by the telecommunications provider's equipment. AB 1027 Page 2 5)Requires the POU board to ensure that neither its customers nor the telecommunications providers' customers are subsidized by implementation of the bill's provisions. FISCAL EFFECT Negligible state fiscal impact. Any costs of this bill would be borne by POU and telecommunications provider customers. POUs are able to recover their costs through rates charged to their utility customers. COMMENTS 1)Background . In 1978, to ensure that telephone companies and electric utilities would not stifle the growth of the then-fledgling cable television industry by charging excessive rates for essential pole attachments, Congress enacted the Pole Attachment Act 1978. The Act did not require utilities to give cable operators access to their facilities but merely limited the rates they could charge if they chose to give such access. Municipal utilities' and co-ops' pole attachments are not subject to the FCC's jurisdiction because they are exempt from the federal Pole Attachment Act. On April 7, 2011, the FCC reformed its pole attachment rules for regulated utilities to "streamline access and reduce costs for attaching broadband lines and wireless antennas to utility poles. 2)Purpose . POUs currently have the sole discretion over the rates they charge communications providers for pole attachments. AB 1027 creates a process for POUs to determine pole attachment rates by multiplying the percentage of the total usable space which is occupied by the pole attachment by the annual costs of ownership of the pole and its supporting anchor. The provisions of this bill requiring a POU to determine a reasonable relationship between the amount of the fee and the cost of the pole attachment, and the provisions regarding notice, protest, and judicial remedy are almost identical to what is required for cities and counties to set development fee costs under the Mitigation Fee Act. According to the author, this bill, sponsored by the California Cable and Telecommunications Association (CCTA), creates a public and transparent process for local publicly AB 1027 Page 3 owned utilities and irrigation districts to establish fair and reasonable pole attachment rates. Under the current process, cable and telephone companies are often charged very different pole attachment rates, for poles in similar locations, based solely on whether or not the pole is owned by a local publicly owned utility or investor owned utility. 3)Opposition . The Northern California Power Authority and the California Municipal Utilities Association claim the cost cap provision would not provide flexibility to determine actual costs, and if their costs exceed the cap, they would essentially be subsidizing the cable or telecommunication equipment provider. According to the Sacramento Municipal Utility District (SMUD), this bill would prohibit POUs from recovering the costs associated with the specialized attachments for cell phone antennas that are placed on top of the utility poles, resulting in higher costs to SMUD ratepayers. The most recent amendments have attempted to address these subsidy concerns. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081