20020923Verizon Response.pdf

HERSHKER
HUKTER
AKDREIVS
KE!LL
SMITH, LLP
):.a II 8YfleES
180 E." 11~ Avenue
O. Box 1475
Eugene, O'egon 97440
[phone]
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L~,Marlin C. Ard (Oregon State Bar No. 93145)
Willard L. Forsyth (Oregon State Bar No. 99262)
Hershner, Hunter, Andrews, Neill & Smith, LLP
180 East Eleventh Avenue
PO Box 1475
Eugene, OR 97440-1475
541 549 1787
541 5494537 (Fax)
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Case No. GNR-02-IN THE MATTER OF THE
INVESTIGATION BY THE IDAHO
PUBLIC UTILITIES COMMISSION TO
DETERMINE A POLE ATTACHMENT
RATE FORMULA PURSUANT TO
IDAHO CODE SEe. 61-538
FURTHER COMMENTS OF VERIZON
NORTHWEST INc.
By a letter dated September 6, 2002, Staff has requested further comments on its proposed
formula for pole attachments. Verizon Northwest Inc. (Verizon) appreciates Staff's efforts to
resolve this matter without hearings, and provides its further comments below.
Verizon s central concern, expressed at the August 27 2002 workshop, is the size of the
increase in pole attachment rate that could result under Staff's proposal. Verizon inquired whether
this increase was due to increased costs or significant changes in operational procedures by the pole
providers (essentially, Idaho Power Company) that might justify raised rates. The answer at the
workshops, at least as understood by Verizon, was "the cost of attaching to Idaho Power
pole have not increased, nor are there any significant changes in operating procedures. Instead
Page I-FURTHER COMMENTS OF VERIZON NORTHWEST INc.
COpy
HERSHKER
HUKTER
AKDREWS
KE!LL
Si\IJHI, LLP
ll 6YYleiES
lBO E." 1 1" Avenue
O, Box 1475
Eugene, O'egon 97440
[phone]
Verizon understood the position of parties supporting raised rates to be that , while there are no
increased costs to justify higher rates, "the rates haven t changed in some time and it seemed like a
good idea to take them up. "
For the smaller Idaho business operations affected by the change , including Verizon, this
seemed like an odd and very insufficient reason for raising rates. The poles of Idaho Power
remain in its rate base, and it continues to earn on that investment as well as receiving pole
attachment revenues from pole users. Given that there is, as Verizon understands the facts, no
earnings crisis or cost recovery issue facing Idaho Power , and given its size and frnancial strength
in relation to other smaller attaching Idaho entities, the equities do not present any compelling case
for increasing rates. To the contrary, since the smaller business operations of users could be
heavily affected by increased rates, a far stronger case can be made to preserve the status quo.
For years it appears that pole providers and attaching entities have followed this
Commission s decision in Washington Water Power v. Benewah Cable Company, Order No.
19229 (dated November , 1984) in negotiating pole attachment rates. Verizon did not perceive
from the workshops that any changed conditions merited revisiting and revising this formula
particularly to make revisions that double (or more) current rates. And, while Verizon appreciates
Staff's sensitivity to the size of the increase and its efforts to reduce that outcome somewhat by its
new proposal (set forth in its letter dated September 9), the amount of reduction (compared to what
Staff presented at the workshops) is modest. Even with Staff's new proposal, its adjustments to the
formula used in Benewah result in significant rate increases.
Verizon is also concerned about the exact nature of the proposed formula, in particular
questions regarding its future application. Staff has indicated that this is not a rulemaking
proceeding, and the formula it proposes will not become a new Commission rule. Instead, as
Verizon understands Staff, the new formula would be a "default" approach the Commission would
look to in resolving the current dispute between certain users and Idaho Power, and any future
disputes over pole attachment rates. If that is case , Verizon remains troubled by the notion of a
default" formula and how it might be applied under Idaho Code Sections 61.514 and 61.538, both
Page 2-FURTHER COMMENTS OF VERIZON NORTHWEST INc.
HERSHKER
HUKTER
AKDRE\"S
KE!LL
SMITH, LLP
~1 6YYleES
18DE." 11. Avenue
O, Box 1475
Eugene, O'egon 97440
(541)686,"511
of which indicate the Commission should step in to resolve pole attachment disputes only after
negotiations between the parties have failed. If the Commission chooses to adopt a default formula,
it should not be employed in a manner that replaces the negotiation process required by the statutes.
Given the above circumstances and concerns, we make the following recommendations:
The current approach to establishing pole attachment rates, codified in Idaho Code
Sections 61.514 and 61.538 and as interpreted by the Commission in Benewah
should remain in place. The Commission should continue to encourage parties to
negotiate pole attachment rates that meet their respective business requirements.
new formula that could double (or more) current rates should not be adopted.
Idaho Power and other parties to the current dispute should be encouraged to settle
their dispute on this basis, avoiding any Commission intervention.
If the Commission is inclined to adjust the Benewah formula for prospective use, it
should do so in the following manner:
Any change in the formula should remain a "guide" to resolving future
disputes, not stand as a default formula that would be automatically applied if
pole providers and users cannot reach agreement on applicable rates. Using
an "automatic default" formula violates the spirit if not the letter of Idaho
Code Sections 61.415 and 61.538, replacing statutorily-mandated
negotiations with an automatic formula. Instead, any changes to the current
formula should be used to guide resolution of future disputes, or, at most, the
new formula should be a rebuttable formula. In future disputes, parties
should be permitted to present relevant facts showing why the new formula
should not be used and, instead, other approaches considered and adopted.
Any change in the Benewah formula that significantly increases rates should
be phased in over five years, as the FCC did when it changed its approach
pole attachment rates (see 47 USC 9 224(e)(4)), and In the Matter of
Amendment of Rules and Policies Governing Pole Attachments, CS Docket
Page 3-FURTHER COMMENTS OF VERIZON NORTHWEST INc.
HERSHKER
HUKTER
AKDREWS
KEILL
SMITH, LLP
11 6YYIiOES
1BOE"'t11~Ave"ue
O, Box 147\
Eugene, O'egon 97440
[phone]
No. 97-98, Report and Order 15 FCC Rcd 6453 (adopted March 29,
2000). That is , taking rates under the current formula and applying any new
formula approved by the Commission that increases rates, the increase
should be phased in gradually over a five year period. Additionally, any
such increase should stand only as a rebuttable presumption that could be
overcome by a relevant showing in a proceeding to resolve a future dispute.
Verizon does not recommend or see a need for evidentiary hearings, and believes
that the issues raised in this matter can be submitted for resolution by the filing of
written briefs and, if appropriate and necessary in the view of the Commission, oral
argument. However, should any party contest the facts and policies stated and
recommended above, Verizon is prepared to present them in greater detail through
evidentiary hearings.
Verizon appreciates this opportunity to submit these further comments, and urges the
Commission to adopt the recommendations set forth above.
Pursuant to IDAP A Rule 41 of the Commission s Rules of Procedure, Verizon designates
the following two representatives for this matter: its counsel , Marlin D. Ard, whose address and
telephone number are shown on the first page of this pleading, and Mr. Dean Randall, Verizon
Northwest Inc., PO Box 1100 , Beaverton, Oregon 97075-1100.
DATED this 20th day of September 2002.
HERSHNER, HUNTER, ANDREWS
NEILL & SMITH , LLP
/s/ Willard L. Forsyth
Marlin D. Ard , O B No. 93145
Willard L. Forsyth, OSB No. 99262
Hershner, Hunter , Andrews, Neill & Smith, LLP
Of Attorneys for Verizon Northwest Inc.
Page 4-FURTHER COMMENTS OF VERIZON NORTHWEST INc.