Given the complexity of the legal and regulatory issues affecting pole attachments and the uncertainty of pole attachment cost recovery, it is little wonder that many electric cooperatives across the country have struggled with how best to manage the pole attachment activities of cable operators, telecommunications companies and others seeking to use the assets of the cooperative distribution network.
Yet with one in five electric cooperative utility poles now hosting an attachment, renewed care must be devoted to managing these vital distribution assets.
Many cooperatives, like their investor-owned brethren, have historically treated pole attachments as little more than a nuisance. Yet increasing numbers of cooperative distribution systems identify pole attachment regulation and management as an issue of growing concern. At the heart of this issue are important questions of competition, safety and reliability, cost recovery and looming prospects of regulation. On all of these questions, the host utility and attaching entities appear to be growing further apart each year.
Recognizing this growing concern about pole attachment issues, the members of NRECA, in a resolution passed in March 2003, directed NRECA to develop a set of tools to provide cooperatives with guidance to address the legal, regulatory, financial and safety issues associated with pole attachments. This article will briefly highlight the status of pole attachment regulation, identify the growing financial and operational challenges associated with pole attachment policies, and review some of the tools available to your cooperative.
REGULATION OF POLE ATTACHMENTS
To understand the scope of cooperative concern about this issue it is helpful to review how pole attachments currently are regulated. The Federal Communications Commission (FCC) regulates attachments to investor-owned utility (IOU) poles unless a state certifies to the FCC that it regulates such attachments. In that case, state regulation becomes exclusive in this area. (1) Eighteen states (2) and the District of Columbia have certified that they regulate pole attachments ("Certifying States"), and in most of these Certifying States rate regulations follow those established by the FCC. By statute, rural electric cooperatives are specifically exempt from FCC pole attachment regulation but may be subject to state regulation if a state asserts jurisdiction. (3) Thus, cooperatives are not guaranteed exemption from some form of pole attachment regulation.
Investor-owned utilities have expressed the view that the rates, terms and conditions of pole attachments imposed by the FCC unreasonably favor "attachers" at the expense of electric utilities. This perception springs from two facts: First, the federal Pole Attachment Act and the Telecommunications Act of 1996 were designed to promote the spread of cable and telecommunications services--not to preserve the nation's power grid. Second, the FCC is more accountable to cable and telecommunications companies who interact with the agency on a daily basis in the course of conducting their primary business--telecommunications service.
As a practical matter, the FCC's pole attachment formulas historically have established rates at levels that regulated utilities argue are too low to recover most pole attachment-related costs and are far lower than the actual value of access to the utility distribution system. As implemented by the agency, FCC pole attachment regulations do little to protect the safety and reliability of electric distribution systems. Regulated utilities argue the FCC formulas often fail to permit the minimum recovery of...