20020731Avista's First Production Response.pdf

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Avista Corp.
1411 East Mission PO Box3727
Spokane. Washington 99220-3727
Telephone [phone]
Toll Free 800-727-9170
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July 30, 2002
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Weldon B. Stutzman, Deputy Attorney General
State of Idaho
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, Idaho 83720-0074
RE:Case No. GNR-02-
A vista s responses to pole attachment rate questions.
Dear Mr. Stutzman:
Below per your request, are Avista s responses to your letter dated July 15 2002, regarding Case
No. GNR-02-2 to review and determine a formula for cable television companies to attach
equipment to utility company poles.
Question 1.
Please provide, expressed as aformula, your proposed methodology for calculating cable television
pole attachment rates. Provide a narrative discussion of the legal, policy or economic justifications
for your proposed formula.
Cable TV Rate =
Space Occupied Net Pole Investment x CarryingUsable Space Total Number of Poles Charge
The formula above is applied to communication attachments that provide cable TV service , and is
in compliance with the latest federal guidelines. Currently, Avista Utilities is charging an annual
pole attachment fee of $5.00 in Idaho for TV companies that belong to the Idaho Cable Television
Association (ICT A). The ICT A members represent the vast majority of cable TV providers in
Idaho using Avista facilities. The $5.00 rate is the result of a negotiated agreement that expires
after 2003.
IPUC - Pole Attachment Workshop
July 29 , 2002
Page 2 of 5
Question
For each of the following elements, please provide a worksheet showing your proposed methodfor
calculating and including the element in a pole attachment formula. If you believe an element
should not be included, indicate that as your response.
Net Investment Per Bare Pole (include the data source and methodology for
determining number of poles in the utility s inventory).
Administrative Carrying Charge.
Maintenance Carrying Charge
Depreciation Carrying Charge
Tax Carrying Charge
Return on Investment
Total Annual Cost per Distribution Pole
The attached two-page "A vista Utilities Financial Data" spreadsheets provide the elements that are
used in the formula. The numbers in bold are updated annually and the rate is modified each year
a result. The source column notes the resource or how the data was derived. For example, (line A)
in the source column FFl, P200113 refers to FERC Form No., page 200, line 13. The attached
Exhibit B for TV Cable in Idaho" shows how the "Data" information is applied. The main three
components are then calculated to determine the rate. The billing rate may be less than the
calculated rate as determined by A vista Utilities.
Net Investment Per Bare Pole - The Net Investment is determined by starting with the FFI
Distribution Plant in Service in Idaho for account 0364 for Poles, Towers, and Fixtures (line E),
and subtracting the Depreciation (line M) and the Accumulated Deferred Income Tax (line T) for
the same account. This becomes the Net Investment in Poles (line X).
Since FERC account 0364 includes poles, crossarms and hardware, an estimate is made of the
portion that represents the pole investment only. A factor of 85% is used to adjust for this.
We have counted the number of distribution poles on our system in Idaho and separated the
counts by county. The counts are modified each year by reviewing construction as-bui It
drawings. The as-built drawings are separated by county and adjustments are made for the
installation of additional poles and the permanent removal of poles on our system.
The Net Investment in Poles (line X) adjusted by the 85% factor is divided by the Number or
Poles (line AK) and the result is the Net Investment per Bare Pole.
Administrative Carrying Charge - The Administrative charge is determined by starting with the
FFI A&G expenses (line Z) and dividing by the Net Electric Plant (line V).
Maintenance Carrying Charge - The Maintenance charge is determined by starting with the FFI
account 0593 Overhead Line Maintenance expense (line AJ) and dividing by the Net Overhead
Distribution Plant (line Y).
IPUC - Pole Attachment Workshop
July 29, 2002
Page 3 of 5
Depreciation Carrying Charge - The Depreciation charge is determined by multiplying the
depreciation rate (line AA) times the Gross-to-Net Investment Ratio (line AB).
Tax Carrying Charge - The Tax charge is determined by starting with the total Tax expense (line
AI) and dividing by the Net Electric Plant (line V).
Return on Investment - The rate allowed by the IPUC is used.
The Total Annual Cost per Distribution Pole is determined by adding up the total Carrying
Charge expenses above including the Return on Investment. This total percentage factor is then
applied to the Net Investment per Bare Pole.
Question
If your proposed formula requires a determination of how much space on a pole should be
assigned to cable television attachments, describe your proposed methodology for determining
space assigned to cable television attachments per pole. Include references to data sources
necessary to make the determination.
The space occupied by the attachment is one foot. This is divided by the total usable space of 12
feet. The result is a 0.083 Usable Space Factor.
Question
If your proposedformula requires a determination of what space on a pole should be considered
Usable Space, describe your proposed methodology for determining Usable Space. Include
references to data sources necessary to make the determination.
The 12 feet of Usable Space begins with the average pole height presumed to be 37.5 feet by
federal guidelines. Six feet plus eighteen feet are subtracted for burial depth and minimum
attachment height respectively, leaving 13.5 feet of space. Ten feet is considered usable space and
the 3.5 feet remaining is required for a safety zone separation between electric and communication
conductors. The IPUC determined in its Order No. 19229 that two feet of the safety zone should be
applied to the ten-foot usable space thereby totaling 12 feet of Usable Space.
Question
Describe your proposed methodology for determining the total number of cable television
attachments located on the utility s poles.
Agreements with cable television require that each company provide data to support the actual
number of their attachments on the electric pole facilities. The utility may perform sample or full
pole count audits to validate or rectify the data.
IPUC - Pole Attachment Workshop
July 29, 2002
Page 4 of 5
Question
If your proposedformula requires a determination of average pole height, describe your proposed
methodology for determining average pole height. Include references to data sources necessary to
make the determination.
To avoid a pole-by-pole rate calculation, federal guidelines presume an average pole height of 37.
feet and A vista Utilities has adopted this methodology.
Question
If you contend a pole attachment formula should include rate elements additional to those
identified above, please provide a worksheet setting forth your proposed method for calculating
Additional Rate Elements. Include references to data sources necessary to make the calculation( s).
Provide a narrative discussion of the economic, policy, legal or other justification for any
additional rate elements.
Many cable television companies are providing more than cable TV and expanding into other lines
of business, such as internet service providers. As a result, they are installing additional cable, and
thereby increasing the weight of conduit on the pole. This bundling of additional communication
cables uses more of the pole strength and capacity. We believe it is appropriate that these multiple
service companies be moved to the telecommunication rate below.
TelecomRate =
(Space Unusable Space
Occupied No. of Attaching Entities
Pole Height
Net Pole Investment
Number of Poles
CarrYing
Charge
Rate
Pole-by-pole calculations are not practical to determine whether a company is providing more than
cable TV service. What is needed is a practical methodology to define when a cable TV compan y
has expanded into other lines of business sufficiently to justify conversion to the telecom rate.
suggest that when the majority of cable TV customers of a specific company within the utilities
defined service territory have the capacity to provide internet and information services, whether or
not the services are leased or subleased to others, then all pole attachments by that company be
converted to the telecom rate. This would allow the smaller companies (or those that maintain their
existing sized conduit) in the more rural areas to stay on the cable TV rate. It would also allow
some time for those companies to invest in the internet market, but not pay the higher rate until the
majority of their customers have the expanded service available. It should be the responsibility of
the communication company to notify the pole owners when the majority of communication
IPUC - Pole Attachment Workshop
July 29, 2002
Page 5 of 5
customers have the expanded services , or upon an annual letter request by the utility. The pole
owners may challenge the data provided by the communications companies in this determination.
What constitutes as a "majority" could be determined or defined by the parties to the workshop.
Only one of the three main components of the rate formula differs between the Cable TV Rate and
the Telecom Rate, and this is the usage factor. The Net Investment per Bare Pole and the Carrying
Charges are the same. The Telecom Rate usage factor takes into account the unusable space on the
pole and shares this among the attaching entities. We recommend that the Average Number of
Attaching Entities not include the pole owner because this is already adjusted for in the 2/3
multiplier. The attached "Exhibit B-1 for Telecommunication Attachments in Idaho" includes the
pole owner as an attaching entity for now.
The effect of the change in the usage factor for 2002 changes the billing rate from $8.26 for Cable
TV to $21.59 overall for Telecom. A vista Utilities is currently implementing the increased rate to
telecom companies over five years in 20% increments. For example, in 2002, the difference
between the two rates is $13.33. 20% of $13.33 is $2.67. The amount of $2.67 is added to the
$8.26 rate to become $10.93 in the first year.
Thank you for your consideration on these matters.
Please call me at [phone] if you have any questions.
Sincerely,
c0~ O~~
Liz Andrews
Rate Analyst
cc: Jean Jewell
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07-25-200210:07 AM RATES 2002 revised.xls TV 10
EXHIBIT B
Computation of Rate per Attachment for
TV CABLE Attachments
on A vista Utilities poles
In the State of Idaho
for contact year 2002
IDAHO
ITEM DESCRIPTION I SOURCE AMOUNT ISUBTOTA~TOTAL
USABLE SPACE FACTOR
SPACE OCCUPIED BY ATTACHMENT FCC
TOTAL USABLE SPACE UTC 12.
USABLE SPACE FACTOR 083
DEPRECIATION EXPENSE
DEPRECIATION CARRYING CHARGE DATA(AA)93%
GROSS TO NETINVESTMENT RATIO DATA(AB)546
DEPRECIATION EXPENSE DxE 98%
ADMINISTRATIVE AND GENERAL EXPENSE
TOTAL APPLICABLE A&G OAT A(Z)39,427 656
NET APPLICABLE PLANT OAT A(V)877,988 500
ADMIN CARRYING CHARGE GIH 49%
MAINTENANCE EXPENSE
TOTAL APPLICABLE MAINTENANCE DATA(AJ)592 368
NET DISTPLANT IN STATE OAT A(Y)373 186
MAINT CARRYING CHARGE J/K 98%
NORMALIZED TAXES
TOTAL ALLOCATED TAXES DATA(AI)964 502
NET ELECTRIC PLANT OAT A(V)877 988 500
TAX CARRYING CHARGE MlN 87%
RATE OF RETURN
ROR CARRYING CHARGE UTC 98%
TOTAL CARRYING CHARGE D+I+L+O+P 22.31%
NET INVESTMENT PER BARE POLE
NET INVESTMENT IN POLES OAT A(X)296 513
RATIO FOR BARE POLE FCC
NUMBER OF POLES DATACAK)301
NET INVESTMENT PER BARE POLE SIT 465.
2002 CALCULATED RATE PER POLE ATTACHMENT $8.
2002 BILLING RATE PER POLE ATTACHMENT $8.
Source of Data is FERC Forrn1 dated 12/31/01
Prepared By:
Title: '
Date:
Joint Use
June 27 , 2002
EXHIBIT B-
Computation of Rate per Attachment for
Telecommunication Attachments
on Avista Utilities poles
In the State of Idaho
for contact year 2002
IDAHO
ITEM IDESCRIPTION SOURCE AMOUNT ISUBTOTAL ITOTAL
USE FACTOR
SPACE OCCUPIED BY ATTACHMENT FCC
TOTAL USABLE SPACE UTC 12.
AVERAGE POLE HEIGHT UTC 37.
AVERAGE NUMBER OF ATTACHERS DATAIAL)
USE FACTOR 208
DEPRECIATION EXPENSE
DEPRECIATION CARRYING CHARGE DATA(M)93%
GROSS TO NET INVESTMENT RATIO DATA(AB)546
DEPRECIATION EXPENSE FxG 98%
ADMINISTRATIVE AND GENERAL EXPENSE
TOTAL APPLICABLE A&G DATA(Z)39,427 656
NET APPLICABLE PLANT DATA(V)877 988 500
ADMIN CARRYING CHARGE IIJ 4.49%
MAINTENANCE EXPENSE
TOTAL APPLICABLE MAINTENANCE DATA(AJ)592 368
NET DIST PLANT IN STATE DATA(Y)373,186
MAINT CARRYING CHARGE 98%
NORMALIZED TAXES
TOTAL ALLOCATED TAXES DATA(AI)964 502
NET ELECTRIC PLANT DATA(V)877,988,500
TAX CARRYING CHARGE OIP 87%
RATE OF RETURN
ROR CARRYING CHARGE UTC 98%
TOTAL CARRYING CHARGE F+K+N+O+R 22.31%
NET INVESTMENT PER BARE POLE
NET INVESTMENT IN POLES DATA(X)36,296,513
RATIO FOR BARE POLE FCC
NUMBER OF POLES DATAIAK)66,301
NET INVESTMENT PER BARE POLE 465.
2002 CALCULATED RATE PER POLE ATTACHMENT
ADJUSTED RATE 1 ST YEAR 20% OF DIFFERENCE
OVER TV RATE
$21.
FCC $10.
2002 BILLING RATE PER POLE ATTACHMENT $10.
Source of Data is FEAC Form 1 dated 12131/01
Prepared By:
Title:
Date:
Joint Use
July 23, 2002