VIII. Appeal of the Presiding Officer's Decision (POD)

On November 26, 2001, SDG&E filed an appeal of the POD stating that it was not appealing the overall decision, but merely seeking a minor correction in the formula for calculating an overhead charge for transmission ROW. SDG&E bases its appeal on the grounds that the POD either contains an ambiguity or it erroneously misinterprets previous Commission decisions defining shared and common costs.

Specifically, SDG&E claims the formula set forth in the POD to establish a ROW overhead charge is unclear. SDG&E is uncertain whether the denominator for the formula should be "net transmission plant" or "total net electric plant" based on statements in the POD that transmission ROW costs should be treated as "shared" costs. SDG&E claims that common costs are typically spread to all aspects of service, but a shared cost is allocated only to those outputs for which the shared cost is incurred. SDG&E maintains that the only outputs that use transmission ROW are transmission service, pole attachments, and other ROW users. Therefore, the formula in the POD allocates ROW as a common cost and should be corrected to allocate ROW as a shared cost. This correction entails dividing by net transmission plant rather than total net electric plant.

SDG&E further states that if the Commission disagrees with this correction, and believes that the costs of transmission ROW should be spread to all electric functions, then the formula for a distribution pole charge must also be changed to include a charge for transmission ROW. SDG&E doubts the Commission wants to pursue this change. Therefore, it recommends the Commission modify the formula to allocate transmission ROW only to net transmission plant.

In addition to the clarification to the overhead formula, SDG&E proposes some additional sentences to be added to the POD. The proposed language is as follows:


"As a shared overhead cost, it is reasonable to allocate transmission rights of way costs to those aspects of electric service which share the costs. This is only electric transmission service and those functions that make use of the transmission ROW. These costs will reach all electric customers through the FERC approved transmission rates included in their rates."

In response to the appeal, Complainants state that they do not object to SDG&E's proposed modification of the overhead formula. They accept the change to Attachment A and to the first sentence of the text proposed by SDG&E. Complainants do not agree, however, with the other two sentences proposed by SDG&E because they contend the additional verbiage proposed by SDG&E would create further ambiguity. In addition, Complainants state that if the Commission modifies the POD, the Commission must affirm that SDG&E's investment in ROW for transmission towers is excluded from the ROW overhead formula and that the proposed overhead applies only to transmission poles in private ROWs.

We agree with SDG&E that the language in the original POD may have been unclear. We have modified the POD to clarify that transmission ROW costs are shared costs and should be allocated to those aspects of service which share the costs. The formula in line 2 of Attachment A has been corrected. ROW overhead is calculated by dividing investment in transmission ROW for poles by total net transmission plant, excluding land and buildings. Land and buildings are excluded from the denominator in this formula because these are the costs being assigned as an overhead and because this is the generally accepted method of calculating an overhead rate. (Tr. at 342 and 352-353.)

We have not incorporated the additional sentences that SDG&E suggests (and that Complainants dispute) because the sentences are not necessary. We note that line 2 of the formula specifically describes "investment in transmission ROW for poles" (emphasis added), so it is clear that the formula for calculation of ROW overhead should not include investment in transmission towers. In addition, SDG&E has already stated that it will not charge a fee for attachment to transmission poles on public land. (Tr. at 414-415.) Therefore, it is only logical that the formula adopted by this order derives a fee for poles on private land. The POD has been clarified in this regard.

Findings of Fact

1. Complainants request that the Commission prohibit SDG&E from imposing additional charges for access to SDG&E poles and rights-of-way (ROW) beyond the pole attachment fee negotiated between Daniels and SDG&E in their 1986 Pole Attachment License Agreement (1986 Agreement).

2. Pursuant to the 1986 Agreement, Daniels has attached its coaxial and fiber optic cable to transmission poles on private ROW and did not have to pay any fees or sign any additional agreements for the use of SDG&E transmission easements and ROW.

3. SDG&E now requests that Daniels enter into two new agreements, a Transmission Pole Attachment Agreement and a License to Use Rights of Way, in order to gain permission for attachments to transmission poles.

4. SDG&E will not charge for use of distribution or transmission ROWs on public land.

5. Part VI.A of the Commission's ROW rules require a utility to grant access to its ROW and support structures on a nondiscriminatory basis.

6. According to the ROW Order, parties to pre-existing arrangements for access to utility ROW and support structures are bound by the terms of such arrangements.

7. The 1986 Agreement does not directly refer to "distribution poles" and refers to connections "above and below 600 volts."

8. The Commission's ROW Rules are "guidelines" for negotiation of agreements between utilities, telecommunications carriers, and cable companies.

9. According to Rule 1.A of the ROW Rules, SDG&E has the burden of proving a deviation from the guidelines.

10. The ROW Order concluded that electric utilities have a significant bargaining advantage with respect to ROW access and a truly competitive market for alternative means of access does not yet exist.

11. Daniels is seeking a revocable license for access to SDG&E's transmission ROW, rather than any of the rights that traditionally accompany ownership.

12. SDG&E retains ownership of its ROW and may remove Daniels should Daniels' presence interfere with SDG&E's responsibilities as a public utility.

13. The Commission's ROW rules preempt FCC rules and implement Sections 767.5 and 767.7.

14. The costs of SDG&E's transmission easements and ROW are included in SDG&E's regulated revenue requirement and recovered in electric rates.

15. The Commission's ROW rules do not allow a utility to exclude cable corporations from use of a utility's ROW if the property is privately owned by the utility.

16. SDG&E has significant bargaining advantage as the monopoly provider of the ROW and easements at issue in this case, and a competitive market for alternative means of access to ROW does not yet exist.

17. The costs of transmission ROW do not vary directly with output because for each additional kilowatt served, SDG&E does not necessarily have to purchase additional transmission ROW.

18. Transmission ROW costs are closer to shared costs than common costs, and a shared cost should not translate into a direct charge.

19. Transmission ROW charges should be treated as an overhead component of the pole attachment fee.

20. In order to provide immediate guidance to the parties in this long-standing dispute, this order should be effective immediately.

Conclusions of Law

1. This is a complaint case filed pursuant to Section 767.5.

2. CCTA has standing as a party to this action under Section 767.5.

3. SDG&E may not condition attachment to transmission poles on the payment of additional fees for use of easements or ROW while the 1986 Agreement remains in effect.

4. If parties exercise their right to terminate the 1986 Agreement, SDG&E may charge for use of its ROW under the provisions of Section 767.7.

5. This case involves access to ROW by a cable TV company and the Commission should apply the policies set forth in the its ROW Rules.

6. The Commission's conclusions in the ROW order regarding access to ROW and support structures apply to the transmission ROW at issue in this case.

7. The Commission is authorized to ensure just compensation for utility pole attachments and use of ROW and easements for the installation of fiber optic cable under Sections 767.5 and 767.7.

8. The Commission should not deviate from the policies set forth in the ROW Order and should use historical embedded costs to price access to transmission ROW and easements.

9. It is not appropriate to use a market-based formula for pricing access to assets linked to bottleneck facilities when the Commission has crafted explicit rules for access to these facilities and ROW.

10. A market-based formula for pricing SDG&E's transmission ROW is inappropriate given the language of Section 767.5(b) which states that it is in the public interest to make surplus space and excess capacity available to cable corporations.

ORDER

IT IS ORDERED that:

1. The complaint in this proceeding is granted in part. San Diego Gas & Electric Company (SDG&E) may not charge Daniels Cablevision, Inc. (Daniels) a License to Use Rights of Way (ROW) fee of $6,080 per mile as long as the 1986 Pole Attachment License Agreement (1986 Agreement) remains in effect.

2. Should the parties exercise their right to terminate the 1986 Agreement, SDG&E may impose upon Daniels a cost-based fee for use of its transmission ROW on private land. Any fee for use of transmission ROW on private land shall be calculated as an overhead component of the transmission pole attachment fee, as set forth in the formula in Attachment A of this decision.

3. Within 45 days of the effective date of this order, SDG&E and Complainants shall either:

a. File and serve a letter to the assigned Administrative Law Judge that they have reached agreement on a transmission ROW charge; or

b. SDG&E shall file its proposed transmission ROW charge using the formula in Attachment A.

4. The assigned Administrative Law Judge shall set a schedule to consider SDG&E's proposed transmission ROW charge in a second phase of this proceeding, if necessary.

This order is effective today.

Dated March 21, 2002, at San Francisco, California.

ATTACHMENT A

POLE ATTACHMENT AND ROW
FEE WORKSHEET

Annual Fee per Pole

(END OF ATTACHMENT A)

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