V. Revenue Sharing

The initial term of the lease to Telecom Licensing is 20 years. The lease agreement is expected to generate revenues of $3,864, 814 over the initial 20-year period. Revenues from the lease are to be treated as Other Operating Revenue (OOR). Under the gross revenue sharing mechanism adopted for SCE,⁹ all applicable gross revenues recorded from non-tariffed products and services subject to the mechanism are split between shareholders and ratepayers after the Commission-adopted annual threshold level of OOR has been met. Products or services offered under the Use of Communications and Computing Systems category are deemed "active" for revenue sharing purposes. Thus, consistent with the sharing mechanism for non-tariffed products and services deemed "active," revenues in excess of the threshold will be split 90%-10% between shareholders and ratepayers, respectively.

Under the payment arrangement, Telecom Licensing has agreed to make an initial, non-refundable payment of $200,000 for Route A (43 miles) and $370,000 for Route B (128 miles). Although the Agreement sets out a schedule of one-time payments corresponding to certain events,¹⁰ SCE and Telecom Licensing agreed upon a lump sum payment of $3,294,814 as consideration for the use of the 171 mile fiber optic network ring.