BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1027|
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THIRD READING
Bill No: AB 1027
Author: Buchanan (D)
Amended: 7/13/11 in Senate
Vote: 21
SENATE ENERGY, UTILITIES & COMMUNIC. COMM. : 10-0, 7/05/11
AYES: Padilla, Fuller, Berryhill, Corbett, DeSaulnier,
Pavley, Rubio, Simitian, Strickland, Wright
NO VOTE RECORDED: De León
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 70-4, 6/3/11 - See last page for vote
SUBJECT : Local publicly owned electric utilities:
utility poles and
Support structures
SOURCE : California Cable & Telecommunication
Association
DIGEST : This bill requires local publicly owned electric
utilities, including irrigation districts, to make
appropriate space and capacity on and in their utility
poles and support structures available for use by
communication service providers.
ANALYSIS : Existing federal law directs the Federal
Communications Commission (FCC) to ensure that rates,
terms, and conditions for telecommunications attachments to
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utility poles are just and reasonable but exempts publicly
owned utilities (POUs).
Existing law requires the California Public Utilities
Commission (PUC) to regulate pole attachment rates charged
by investor-owned utilities (IOUs) and establishes a
formula consistent with the FCC formula for setting that
rate if an IOU and cable company cannot agree on a rate.
This bill:
1. Requires a POU to make appropriate space and capacity on
and in its utility poles and support structures
available for use by a communication provider.
2. This bill specifies that its provisions do not apply to
pole attachment contracts entered into prior to January
1, 2012, unless a contract does not specify a fee.
3. Specifies that its provisions do not apply to a jointly
owned pole if the joint owner other than the POU has
sole control of the space requested.
4. Requires a POU to respond to a request for a use of a
pole or support structure within 45 days of receipt of
the request or 60 days if the request is for more than
300 poles, and, if it denies a request, to provide a
reason for the denial and remedy to gain access.
5. Specifies a timeline for a POU to provide a cost
estimate to a requester, for a requester's response to
that estimate, for notice to existing attachers, and for
completion of make-ready work prior to the attachment,
and provides that the timeline dates may be extended
under special circumstances upon agreement of the
parties.
6. Authorizes a POU to deny a request because of
insufficient capacity or safety, reliability, or
engineering concerns, which may take into account the
impact of granting the request on an approved project
for future use by the POU of its utility poles or
support structures for delivery of its core utility
services.
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7. Provides that, if it becomes necessary for the POU to
use space or capacity on or in a support structure
occupied by the cable company, the cable company shall
either pay all costs for rearrangements necessary to
maintain the pole attachment or remove its equipment at
its own expense.
8. Requires the governing body of a POU to determine the
annual pole attachment fee pursuant to the formula
specified in this bill.
9. Specifies that a POU's annual pole attachment fee shall
not exceed an amount determined by multiplying the
percentage of the total usable space that would be
occupied by the attachment by the annual costs of
ownership of the pole and its supporting anchor, with a
rebuttable presumption that a single attachment occupies
one foot of usable space and an average pole contains
13.5 feet of usable space.
10.Specifies that a POU's annual fee for use of a support
structure not exceed the POU's annual costs of ownership
of the percentage of the volume of the capacity of the
structure rendered unusable by the equipment of the
cable company.
11.Defines "annual costs of ownership" as the sum of the
annual capital costs and annual operation costs of the
pole or support structure, which shall be the average
costs of all similar utility poles or structures owned
or controlled by the POU.
12.Prohibits a POU from charging a fee that exceeds actual
costs and requires the governing body of a POU to ensure
that neither customers of the POU or cable company are
subsidized by that fee.
13.Authorizes a POU to charge a one-time fee to process a
request for attachment based on actual costs and a
one-time fee for a rearrangement requested by a cable
company and to impose a penalty for unlawful attachment.
14.Requires the governing body of a POU, before adopting or
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increasing a fee, or changing terms and conditions of
access, to hold at least one open and public meeting,
provide notice of the meeting least 14 days prior to the
meeting, make available at least 10 days prior to the
meeting data indicating its cost to grant a request and
rationale for any changes in terms and conditions of
access.
15.Requires that action to adopt or increase a fee or adopt
or change terms and conditions of access be taken solely
by an ordinance or resolution or contract approved by
the governing body and prohibits the governing body of
the POU to delegate the authority to another entity or
board.
16.Requires that an action adopting or increasing a fee be
at a regularly scheduled public meeting no earlier than
30 days after the initial public meeting and that the
action be effective no sooner than 60 days after the
action.
17.Specifies that any person or entity may protest the
adoption of a fee or terms and conditions of access with
written notice within 30 days of the action that
specifies the facts and legal theory of the protest.
18.Provides that a person or entity subject to a fee, term
or condition of access, or a trade association
representing them, may bring legal action challenging
the fee, term, or condition and that this action be
commenced within 120 days of the effective date of the
action adopting it.
19.Authorizes a person or entity subject to a pole
attachment fee, or trade association representing them,
to request an audit in order to determine whether a fee
exceeds the amount reasonably necessary to cover the
costs of use of the pole or support structure, requires
the requester to pay for the audit, and authorizes the
person or entity to retain an independent auditor for
this purpose, and requires the POU to adjust the fee if
the audit determines it does not meet the requirements
of this bill.
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ÝExisting law and General Orders of the PUC establish
standards for overhead and underground utility structures.
20.Requires any use of a utility pole or support structure
by a cable company to comply with PUC General Orders 95
and 128 and all other applicable provisions of law.
Background
History of Shared Use of Poles . Since providers of
electric and telephone service first began stringing wires
on poles across America, shared use of poles and other
utility infrastructure has been the most efficient and
practical way for both providers to reach their customers.
Most utility poles are jointly owned by the local electric
utility and telephone local exchange carrier or are subject
to a joint pole agreement that allocates space for each
user and apportions costs pursuant to a formula. Electric
utilities with sole ownership of poles typically have
provided access to telephone companies and charge an annual
fee for use of specified "communications" space on the
pole.
The advent of the cable television industry in the 1970s
introduced a new player seeking access to utility poles for
stringing cables to reach customers. Concern that
utilities charging cable companies excessive pole
attachment rates would stifle the fledgling industry led
Congress to enact the Pole Attachment Act of 1978, adding
Section 224 to the Communications Act of 1934, which
directs the FCC to ensure that rates, terms, and conditions
for pole attachments by cable television systems are just
and reasonable, except where such matters are regulated by
a state. In response, the California Legislature enacted
Section 767.5 of the Public Utilities Code giving the PUC
responsibility to regulate pole attachment rates charged by
IOUs and establishing a formula for setting that rate if an
IOU and cable company cannot agree on a rate.
The Pole Attachment Act of 1978 exempted POUs, as does
California's law because POUs are not regulated by the PUC.
Thus, neither federal nor state law requires POUs to
provide access to their poles or restricts the amount a POU
can charge for attachment.
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Broadband Deployment Requires Access to Poles . In
recognition that access to broadband is essential to
virtually every aspect of modern life, breaking down
barriers to broadband deployment and adoption has become a
national and state priority. The FCC's National Broadband
Plan released in March 2010 identified the expense and
delay in obtaining access to utility poles as a major
barrier to broadband deployment and recommended that
Congress adopt a nationwide policy for access to poles,
ducts, conduits, and rights-of-way. Accordingly, in April
2011, the FCC reformed its pole attachment rules to
streamline access and establish attachment rates that
compensate utilities for their actual costs of providing
access. Although these rules continue to exempt POUs, the
FCC has recommended that Congress amend the Pole Attachment
Act of 1978 to eliminate this exemption. Several states,
including West Virginia, Colorado, Kentucky, North
Carolina, Oregon, Washington, Texas, and Virginia, have
enacted pole attachment laws making rate provisions similar
to the FCC's applicable to POUs.
POU Attachment Rates . While pole attachment rates charged
by IOUs generally range from under $3 to $15, the rates
some POUs charge cable companies have been as high as $75
in recent years. Cable companies claim that POUs are
charging rates beyond their actual costs and are using pole
attachment fees for general fund revenue, especially in
recent years during the economic downturn. However, some
POUs claim that their attachment rates are high due to
unique local requirements and lack of economies of scale
enjoyed by IOUs.
Comments
According to the author's office, this bill creates parity
by requiring POUs to provide cable and telephone companies
access to utility poles and support structures at rates,
terms and conditions the same as those applicable to IOUs,
ensures an open and public process for setting fair pole
attachment rates, and will increase affordable access to
broadband in communities served by POUs.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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SUPPORT : (Verified 8/16/11)
California Cable & Telecommunications Association
AT & T
California Association of Competitive Telecommunications
Companies
California Communication Association
Charter Communication
Comcast
Cox Communications
CTIA - The Wireless Association
Frontier Communications
Inland empire Economic Partnership
Time Warner Cable
OPPOSITION : (Verified 8/16/11)
California Municipal Utilities Association
City of Burbank
City of Glendale Water and Power
City of Los Angeles
City of Pasadena
City of Riverside
Modesto Irrigation District
Southern California Public Power Authority
Turlock Irrigation District
ARGUMENTS IN SUPPORT : The sponsors of the bill, the
California Cable and Telecommunications Association (CCTA)
claim that "California local publicly owned electric
utility pole attachment rates are unilaterally set by the
local governing bodies, allowing them to act in a
monopolistic manner without any redress if the rate is
clearly excessive. CCTA believes this bill is aimed at
developing an open and transparent process for the
establishment of fees that comply with state requirements
is essential for god government."
ARGUMENTS IN OPPOSITION : The California Municipal
Utilities Association writes, "On behalf of our consumers,
the California Municipal Utilities Association (CMUA)
regrettably remains OPPOSED to AB 1027 (Buchanan) regarding
publicly owned utilities (POU) pole attachment rates.
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However, we are working with the author and hope to find a
solution to address our concerns.
"While the goal of accelerating the pace of broadband
deployment and adoption is laudable, AB 1027 benefits
private companies at the expense of electric ratepayers and
publicly owned utilities.
"We appreciate the author's acceptance of recent
amendments, however we believe that they do not go far
enough to ensure that our ratepayers are protected against
subsidizing for-profit corporations.
"CMUA and the other POU organizations have provided
suggested amendments to the author that outline the
responsibility of the utilities to provide an open and
transparent process and ensure that the rates are based
upon actual costs."
ASSEMBLY FLOOR : 70-4, 6/3/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Campos, Cedillo, Chesbro,
Conway, Cook, Davis, Dickinson, Donnelly, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Galgiani, Garrick,
Gatto, Gordon, Grove, Hagman, Halderman, Hall, Harkey,
Hayashi, Hill, Huber, Hueso, Huffman, Jones, Knight,
Lara, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,
Mitchell, Monning, Nielsen, Norby, Pan, Perea, V. Manuel
Pérez, Portantino, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. Pérez
NOES: Jeffries, Mansoor, Morrell, Olsen
NO VOTE RECORDED: Charles Calderon, Carter, Beth Gaines,
Gorell, Roger Hernández, Nestande
RM:do 8/16/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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