BILL ANALYSIS �
AB 1027
Page 1
Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 1027 (Buchanan) - As Amended: April 28, 2011
SUBJECT : Local publicly owned electric utilities: utility
poles and support structures.
SUMMARY : 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 cable television corporations, video
service providers, and telephone corporations. Specifically,
this bill :
1)Requires local publicly owned electric utilities (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 local publicly owned electric utility
available for use by a cable television corporation, video
service provider, or telephone corporation (service
providers).
2)Specifies that the provisions of the measure shall not apply
to existing contracts that were entered into prior to January
1, 2012.
3)Requires existing contracts to remain valid until the
contract, rate, term or condition expires or is terminated
according to its terms, or until the POU proposes a change in
the rate, term or condition in the contract. Annual rates
unspecified in an existing contract are subject to the
provisions in this bill.
4)Requires a POU to respond to a service provider's request for
use of a utility pole or support structure owned or controlled
by the local publicly owned electric utility within 45 days of
the request, or 60 days for requests to attach to over 300
poles. If the request is denied, the local publicly owned
electric utility shall provide the reason for the denial and
the remedy to gain access to the utility pole or support
structure.
5)Specifies that the timelines may be extended under special
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circumstances upon agreement
of the POU and the service provider.
6)Authorizes a POU to deny an application for use of a utility
pole or support structure because of insufficient capacity or
safety, reliability, or engineering concerns.
7)Clarifies that no additional authority is granted herein to a
local publicly owned electric utility to impose a fee that is
not otherwise authorized by law.
8)States that a POU may require an additional one-time charge
equal to three years of the annual fee for attachments
reasonably shown to have been made after January 1, 2012,
without authorization.
9)Limits the annual fee charged by a POU for the use of a
utility pole by a service provider by specifying that the fee
is not to exceed an amount determined 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.
10)Specifies that it shall be presumed, subject to factual
rebuttal, that a single attachment to a pole by a service
provider occupies one foot of usable space and that an average
utility pole contains 13.5 feet of usable space.
11)Prohibits that the annual fee charged by a POU for use of a
support structure by a service provider from exceeding 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 service provider.
12)Defines "annual cost 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.
13)Excludes jointly-owned poles from certain provisions in the
bill.
14)Requires a POU to hold at least one open and public meeting
as part of a regularly scheduled meeting before adopting or
increasing a fee, or adopting or changing the terms and
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conditions of access.
15)Authorizes oral or written presentations relating to the fee
or term or condition of access to be made during the meeting
16)Requires, at least 14 days prior to the meeting described
above in 14), the POU to mail notice of the time and place of
the meeting, including a general explanation of the matter to
be considered and a statement of the proposed costs, to any
person or entity that files a request to receive notice with
the POU.
17)States that at least 10 days prior to the meeting, a POU
shall make available to the public the data indicating the
amount of cost or estimated cost, required to make utility
poles and support structures available for use by a service
provider.
18)States that a POU shall make available data and rational for
adopting or changing the terms and conditions of access, if
adopting or changing those term or conditions.
19)Requires the legislative body of a POU to only act by
ordinance or resolution when adopting or changing the terms
and conditions of access.
20)Prohibits a legislative body of a POU from delegating the
authority to adopt or increase the fee or term or condition of
access to another entity or board.
21)Requires, no earlier than 30 days after the initial public
meeting, the ordinance or resolution to be adopted at a
subsequent open and public meeting as part of a regularly
scheduled meeting.
22)Prohibits the new or increased fee, or change in the terms
and conditions of access, adopted by a POU from going in to
effect until 60 days after the final adoption.
23)States that any person or entity may protest the adoption or
imposition of, or increase of, a fee or adoption or change in
the terms and conditions of access, by serving written notice
to the governing body of the local publicly owned electric
utility within 30 days of the action protested. The written
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notice shall contain a statement informing the governing body
of the factual elements of the dispute and the legal theory
forming the basis for the protest.
24)Prohibits the filing of protest from being a basis for the
local publicly owned electric utility to withhold approval of
the use of a utility pole or support structure.
25)Requires a judicial action or proceeding to attack, review,
set aside, void, or annul an ordinance, resolution, or motion
adopting, or increasing, a fee, or adopting or changing the
terms and conditions of access shall be commenced within 120
days of the effective date of the ordinance, resolution, or
motion.
26)Requires, if an ordinance, resolution, or motion provides for
an automatic adjustment of a fee, and the automatic adjustment
results in an increase in the amount of a fee, a judicial
action or proceeding to attack, review, set aside, void, or
annul the increase, be commenced within 120 days of the
effective date of the increase.
27)Prohibits a person or entity from initiating an action or
proceeding unless both of the following requirements are met:
a) The fee or requirement will be directly imposed on the
person or entity as a condition for the use of a utility
pole or support structure; and,
b) At least 30 days before initiating the action or
proceeding, the person or entity requests the local
publicly owned electric utility to provide a copy of
documents that purport to establish that the fee does not
exceed the amount reasonably necessary to cover the cost of
the use of the utility pole or support structure, or that
the term and conditions of access or change to the terms
and conditions of access are reasonable.
28)States that any person can request an audit in order to
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determine whether any fee levied by a POU exceeds the amount
reasonably necessary to cover the costs to the utility of the
use of a utility pole or support structure.
29)Requires the person requesting the audit to pay for the
direct costs associated with the audit.
30)States that the use of a utility pole or support structure by
a cable television corporation,
video service provider, or telephone corporation shall comply
with PUC General Order 95 and all other applicable provisions
of law.
31)Makes findings and declarations that local publicly owned
electric utilities should provide access to utility poles and
support structures with a recovery of actual costs without
subsidizing for-profit service providers.
32)Specifies that the oversight of other requirements imposed by
POUs as a condition of providing the space or capacity is of
statewide concern, and therefore, this measure shall apply to
charter cities.
EXISTING LAW :
1)Exempts locally owned electric utilities from federal
regulations of pole attachment rental rates.
2)Mandates that pole rental rates must be just, reasonable,
nondiscriminatory and sufficient.
3)Defines "surplus space" as that portion of the usable space on
a utility pole which has the necessary clearance from other
pole users, as required by the orders and regulations of the
California Public Utilities Commission (PUC), to allow its use
by a cable television corporation for a pole attachment.
4)Defines "usable space" as the total distance between the top
of the utility pole and the lowest possible attachment point
that provides the minimum allowable vertical clearance.
5)Defines "annual cost of ownership" as the sum of the annual
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capital costs and annual operation costs of the support
structure which shall be the average costs of all similar
support structures owned by the public utility.
6)States the "basis for computation of annual capital costs"
shall be historical capital costs less depreciation. The
accounts upon which the historical capital costs are
determined shall include a credit for all reimbursed capital
costs of the public utility. It shall not include costs for
any property not necessary for a pole attachment.
7)States "depreciation" shall be based upon the average service
life of the support structure.
8)Mandates that a utility provide a cable television system or
any telecommunications carrier with nondiscriminatory access
to any pole, duct, conduit, or right-of-way owned or
controlled by it.
9)States, under the Mitigation Fee Act, that in any action
imposing a fee as a condition of approval of a development
project by a local agency, the local agency shall determine
how there is a reasonable relationship between the amount of
the fee and the cost of the public facility or portion of the
public facility attributable to the development on which the
fee is imposed.
10)Provides a time frame for notice relating to an increase or
change in fees levied under the Mitigation Fee Act and
establishes procedures for requesting an audit of those fees.
11)States, under the Mitigation Fee Act, that any party may
protest the imposition of any fees, dedications, reservations,
or other exactions imposed on a development project by a local
agency by meeting both of the following requirements:
a) Tendering any required payment in full or providing
satisfactory evidence of arrangements to pay the fee when
due or ensure performance of the conditions necessary to
meet the requirements of the imposition.
b) Serving written notice on the governing body of the
entity, which notice shall contain all of the following
information:
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i) A statement that the required payment is tendered or
will be tendered when due, or that any conditions which
have been imposed are provided for or satisfied, under
protest; and,
ii) A statement informing the governing body of the
factual elements of the dispute and the legal theory
forming the basis for the protest.
12)States, under the Mitigation Fee Act, that compliance by any
party with filing a protest shall not be the basis for a local
agency to withhold approval of any map, plan, permit, zone
change, license, or other form of permission, or concurrence,
whether discretionary, ministerial, or otherwise, incident to,
or necessary for, the development project.
13)Requires, under the Mitigation Fee Act, a protest filed to be
filed at the time of approval or conditional approval of the
development or within 90 days after the date of the imposition
of the fees, dedications, reservations, or other exactions to
be imposed on a development project.
14)States, under the Mitigation Fee Act, that any person can
request an audit in order to determine whether any fee or
charge levied by a local agency that is a city, county, or
city and county exceeds the amount reasonably necessary to
cover the cost of any product, public facility, or service
provided.
15)Specifies, under the Mitigation Fee Act, that the local
agency shall retain an independent auditor to conduct an audit
only if the person who requests the audit deposits with the
local agency the amount of the local agency's reasonable
estimated costs of the independent audit.
FISCAL EFFECT : Unknown
COMMENTS :
1)In 1978, to ensure that telephone companies and electric
utilities would not stifle the growth of the then-fledgling
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cable television industry by charging excessive rates for
essential pole attachments, Congress enacted the Pole
Attachment Act 1978 (the "Pole Attachment Act"). The Act added
a new Section 224 to the Communications Act of 1934 to
authorize the Federal Communications Commission (FCC) to
regulate the rates that utilities could charge cable
television systems for pole attachments. The Act did not
require utilities to give cable operators access to their
facilities but merely limiting the rates they could charge if
they voluntarily chose to give such access.
Municipal utilities' and co-ops' pole attachments are not
currently subject to the FCC's jurisdiction because they are
exempted from the federal Pole Attachment Act.
2)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."
The FCC recognized that "�r]ather than insisting upon a single
regulatory method for determining whether rates are just and
reasonable, courts and other federal agencies with rate
authority similar to its own evaluated whether an established
regulatory scheme produces
rates that fall within a 'zone of reasonableness.' For rates
that fall within the zone of reasonableness, the agency rate
must undertake a 'reasonable balancing' of the 'investor
interest in maintaining financial integrity and access to
capital markets and the consumer interest in being charged
non-exploitative rates."
The FCC also opened an inquiry into how the Commission could
work with other government entities and the private sector to
improve polices for access to other physical spaces where
wires and wireless broadband can be deployed, including
rights-of-way on other locations for wireless facilities.
3)Currently, local publicly owned electric utilities have the
sole discretion over the rates they charge communications
providers for pole attachments. AB 1027 would create a
process for local publicly owned electric utilities to
determine pole attachment rates by multiplying the percentage
of the total usable space which is occupied by the pole
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attachment by the annual costs of ownership of the pole and
its supporting anchor. In other words, this basis for
calculating the fee is equal to 7.45% (1 feet divided by 13.5
feet = 7.45). However, it is unclear if this assumption would
allow the local publicly owned electric utilities full cost
recovery for pole attachment agreements since the bill places
a cap on the costs that can be recovered.
The provisions of this measure requiring a POU to determine
how there is 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.
However, the one major difference is that AB 1027 creates a
specific methodology of how the fee is calculated and under
the Mitigation Fee Act the Legislature is silent on the
methodology and only requires the city or county to determine
the reasonable relationship. The Committee may wish to
consider if the provisions regarding methodology are not
necessary and that the ultimate goal of reaching equity in the
fee can be reached by just requiring a reasonable relationship
test that can be challenged if necessary. Moreover, since
municipal utilities are not subject to the Pole Attachment
Act, the Committee may wish to consider if it is appropriate
for the Legislature to come in now and regulate them on this
issue federal issue 33 years later.
4)According to the author, this bill creates a public and
transparent process for local publicly 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.
5)Support arguments: 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
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requirements is essential for good government."
Opposition arguments: The Northern California Power Authority
and the California Municipal Utilities Association claim this
cap provision would not give them flexibility to determine
actual costs. For instance, the POU/IOU 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.
6)This bill was heard in the Committee on Utilities and Commerce
on April 25, 2011, where it passed with a 13-0 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
CA Cable & Telecommunications Association �SPONSOR]
Comcast Cable
Opposition
CA Municipal Utilities Association
City of Riverside
Northern CA Power Agency (unless amended)
Modesto Irrigation District
Southern CA Public Power Authority
Turlock Irrigation District
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958