Pole Attachment Service (PAS) Staff Directory
Many community-owned utilities cannot dedicate time, resources or personnel to manage pole attachment contracts. These contracts contain cumbersome details that often require more staff to manage than a city can justify. ECG’s Pole Attachment Service (PAS) is designed to alleviate the workload associated with enforcing agreements in pole attachment contracts. Often, this leads to untapped revenue streams for the city.
Benefits of Pole Attachment Service (PAS):
- Manage and enforce Joint Use and Attachment Agreements with cable and telephone companies
- Enforcement of late transfer fees, pole removal fees, make-ready reimbursements, or any other expenses covered by the Licensee per the terms of your agreements
- Create and maintain NJUNS (National Joint Use Notification System) tickets
- Handle all permits, including engineering and make-ready cost estimates
- Prepare all invoicing to Licensees
- Improve the safety and appearance of your system by notifying the appropriate Licensee of safety violations and pole transfers
Check out the resource center links in the menu on the left of this page for more information about the basics of pole attachments.
Model Agreement Status
ECG has negotiated on behalf of our communities to establish a uniform Pole Attachment Model Agreement with cable companies operating in Georgia. These negotiations have been ongoing for over two years, and finally a substantive, equitable agreement has been reached.
This link is a red-lined draft for comparison. It reflects the changes made since the last draft was released in February 2012.
Red-lined Model Agreement Final Draft (revised to include final Participant changes)
Once finalized, this agreement will be effective January 1, 2012. It is posted here for review of ECG Communities.
If you have any comments or questions, please contact ECG's Pole Attachment Service (PAS) at the Staff Directory link in the menu on the left.
Recovery of Space on a Jointly Used Pole
by: David McCullough, USS
Are you in need of more space on your pole? Do you need to install a transformer, service, or other facilities, but telephone or cable TV attachments are in the way? This is a common occurrence for the electrical service provider. The ultimate question is “Who pays for any necessary rearrangements on the distribution system or the installation of a taller pole if needed?”
Attachments belonging to a party of a Joint Use or Pole Attachment Agreement are typically assigned to a certain area of the pole. This will be referred to in your agreement as ”Normal Space” or ”Allocated Space.” Since the electrical service provider owns the more hazardous equipment, it is assigned to an area at the top of the pole ranging from 4 to 9 feet. The telephone company usually has 2 or 3 feet of space at the bottom of the pole, beginning at the point needed to provide for the required ground clearances. If one party has facilities located outside of its assigned space, or is using more than its assigned space, then that party will be responsible for the make-ready costs, if it prevents the other party from utilizing their assigned space. Make Ready costs are those necessary expenses incurred by the electrical service provider and other existing parties on the pole, to prepare for the Joint User’s or Licensee’s new, additional or modified attachments, including, but not limited to, the costs of materials, labor, engineering, supervision, overheads, and tree trimming costs. Let’s examine the contract language from two different agreements.
If the Allocated Space is subsequently needed and the provisions of the Code and standards of the Owner cannot be met, then the Party to whom the space is not allocated, but who is utilizing the space allocated to the other Party pursuant to section A of this Article, shall be responsible, at its sole expense, for the cost of Rearrangement or Pole Replacement when necessary in order to accommodate the Party having the Allocated Space.
If one party installs Attachments that encroach or needs to install Attachments that would encroach upon the other party’s use of its own Normal Space (sometimes known as “building down”), the party installing or needing to install such Attachments must pay the Make-ready costs necessary to permit the other party to use its own Normal Space.
Although both of these excerpts say basically the same thing, they use entirely different wording to do so. If the attachments, which prevent full utilization of space, belong to a company which is under a Pole Attachment or Licensee Agreement then, we may take a simple test. Is there satisfactory space on your pole for your additional needs if the other party’s attachments were not present? If the answer is yes, then the Licensee is responsible for the replacement cost of a new taller pole or may remove their attachments at their own cost. This is referred to as the ‘but for’ test. Below is the typical agreement language.
In the event any Pole or Poles of Licensor to which Licensee has made its Attachments would, but for the Attachments of Licensee, be adequate to support additional facilities desired by Licensor, Licensor’s subsidiary or affiliate, or by a Joint User with whom Licensor has a prior agreement and which Joint User is either occupying space or has requested to attach or reserve space on such Pole(s) prior to the placement of Licensee’s Attachment on such Pole(s), then Licensor shall notify Licensee of any changes necessary to provide an adequate Pole or Poles and the estimated costs thereof. Upon receipt of such notice, Licensee shall remove its Attachments at its sole expense or reimburse Licensor, on demand, for all reasonable costs incurred by Licensor in making such changes.
In many agreements the recovery of space may occur after the installation of the Licensor’s additional facilities. However, there are agreements where the cost to correct code violations are borne by the party who created the violation. Thus it is much better to get the necessary rearrangements done prior to installations and assign the costs and responsibilities to the appropriate party.
The ABCs of Joint Use Rental Rates
by: Wil Arnett, USS
Pole rental rates are either negotiated between the parties involved, or they are the result of a cost-based rental formula. The agreements between two pole owners, such as the telephone company and the electric service providers, are known as “joint use agreements.” Non pole-owning companies are granted access to attach their facilities through a “pole attachment agreement” or a “pole license agreement.” There are significant differences in the terms of the two types of agreements.
A licensee that owns no poles (a pole “attacher”, or “licensee”) is responsible for all costs incurred by the pole owner to accommodate an “attacher’s” new or additional attachment, including pre-attachment inspections, rearrangements of conductors to accommodate
the new facilities, post-inspections, etc. The licensee can be ejected from the pole, at no risk to the pole owner, when the space occupied by the licensee is required by the pole owner for a valid business purpose.
In this first newsletter, we will focus on the joint use agreements between two pole owners, since they are the oldest form of joint use, and were negotiated and developed by the telephone companies and the electric companies decades ago in a spirit of mutual cooperation.
Generally, a joint user is in a better position to negotiate favorable terms than a non pole-owning licensee (the pole attacher only), as the terms generally apply to both parties (they both accommodate the other company’s attachments on their respective poles). The primary underlying principle in joint use agreements is that each party installs, and maintains, essentially the same number of jointly-used poles on that system (typically referred to as parity), so that at year end, the rental billing between the two pole-owning companies (telephone and electric) is equal, and the net rental payment is zero.
Joint use of poles was first negotiated on a national level in 1926 by the National Electric Light Association, or NELA, (representing the power providers) and AT&T on behalf of the nation’s telephone companies. NELA later became known as the Edison Electric Institute. Under “joint use” contracts, each entity owns - and makes available - poles with enough space for the “normal” facilities of both utilities. In fact, most joint use agreements define, in the first articles of the contract, the “normal space” (in feet) for each of the joint use parties. Typical space allocations of 3 feet for the telephone company and 4 feet for the power provider (on a 35’ joint use pole) were common in early joint use contracts. The remainder of the pole, or the “common space,” is of equal value to both parties and the related costs are therefore shared on a 50/50 basis by both parties (telephone and electric). Reciprocal rates, with each party paying the other $1.00 to $2.50 per pole were common in early joint use agreements. However, one should realize that when rental rates were $1.00 per pole, the installed cost of a new joint use pole was approximately $25. The annual rental rate, therefore, was approximately 4% of the installed cost of a new joint use pole. The concept of “parity” of ownership is a cornerstone of joint use agreements, and each party is expected to install and maintain their fair share of the joint use pole “universe” so that neither party owed rental to the other at year end.
The formulae used to develop the rental rates in joint use are generally A x B x C calculations, where:
A = The annual charges for a bare pole (or the annual costs incurred each year associated with owning and maintaining poles). These costs normally include maintenance costs, depreciation, cost of funds, administrative and general costs, and taxes as appropriate. These cost range from 15% to 25% annually, and that percentage is multiplied by,
B = The installed cost of an average pole (some agreements use the costs of a new pole, but it is more typically the “average” installed cost of a bare pole in plant), multiplied by
C = The cost sharing ratio (sometimes referred to as the “space allocation” or “cost allocation” for each pole).
As an example, if the universe of all distribution poles had an average installed value of $350, and the pole owner’s annual charge rate was 20%, the average annual cost to own and maintain a typical pole would be $70 ($350 x 20% = $70). In this example, the annual cost of $70 is then multiplied by the percentage of joint use poles each party is supposed to own. As an example, if the parties agreed to each own half the joint use poles, the ratio would be 50/50 (or 50% each). Multiplying 50% (for each party), yields a rental rate of $35 for each party to attach to the other’s poles. When each party owns its “parity” share, or 50% each, the year-end billing for joint use will be equal for both parties, and the end result will be that no rental will be paid by either party.
So to recap, the first financial topic, for JOINT USE POLES, the rental rates are based on The Three Components:
a. Installed “Bare” Pole Costs (normally average costs)
b. Annual Charge Rate
i. A & G
ii. O & M
v. ROR, or Cost of Funds
c. Space Allocations – Or how much of the pole’s annual cost is each party responsible for?
When we multiply A x B x C, we should arrive at a representative JOINT USE rental rate.