The Ontario Energy Board (“OEB”) has commenced a process to determine the approach to be used to set wireline pole attachment fees across Ontario.2 In a November 2015 letter, the OEB initiated a “comprehensive policy review” of miscellaneous rates and charges.3 The OEB indicated that the first component of the review will address wireline pole attachment fees. This review follows a number of rate proceedings where pole attachment fees have been an issue (including the recent Toronto Hydro4, Hydro One5 and Hydro Ottawa6 rate applications).
The CCTA case
The rates to be charged to Canadian “Carriers” (as defined by the Telecommunications Act7) for pole attachments were previously approved by the OEB in a generic proceeding in 2005 (the “CCTA” case).8 That case was an application by the Canadian Cable Television Association (“CCTA”) for an order requiring Ontario electricity distributors to provide uniform terms of access for attaching cable television transmission lines to power poles. The case arose because Carriers were unable to reach agreement with distributors about the charges (rates) for such attachments.
Over the objections of electricity distributors, the OEB decided that regulatory intervention was appropriate to remove uncertainty over the terms under which pole attachments would be permitted. The OEB decided that all licensed electricity distributors shall provide access to their power poles to all Canadian Carriers (including cable companies). The OEB also decided that the same “pole attachment rate” should apply for all distributors, and to all Carriers.
There was significant debate about the method to be used to calculate the appropriate “pole attachment rate.” The OEB decided that the rate should take account of the “incremental or direct” costs of attachment, as well as a portion of the fixed or common costs of each power pole. The fixed costs are to be allocated on the assumption that there is an average of 2.5 communications attachments per pole, as well as one power attachment. Taking all of this into account, the OEB ordered that the “pole attachment rate” would be $22.35 per pole per year.9 This was to be included as a condition to each electricity distributor’s licence.
The CANDAS case and the subsequent decision to allow competitive rates for wireless attachments
In the 2011 “CANDAS” proceeding10, the OEB was asked by the Canadian Distributed Antenna Systems Coalition (“CANDAS”) to confirm that the CCTA decision applied equally to “wireless” attachments, as it did to “wireline” attachments. The distinction is that “wireless” equipment includes components of distributed antenna systems (not just cable lines). At that time, some distributors had taken the position that pole access did not need to be granted for “wireless” attachments. In its decision on a preliminary motion in the CANDAS proceeding, the OEB confirmed that the findings in the CCTA decision, including the pole attachment rate and the associated requirement on distributors to provide access apply to both wireline and wireless attachments.11
Subsequently, Toronto Hydro brought an application to the OEB requesting that the OEB forbear from regulating the terms, conditions and rates for wireless attachments.12 This would allow Toronto Hydro to charge competitive rates. A Settlement Agreement was reached and approved by the OEB, under which Toronto Hydro was permitted to provide access for wireless attachments to its poles on commercial terms normally found in a competitive market.13 Toronto Hydro agreed that it would credit net revenue from wireless attachments against its revenue requirement.
The OEB then convened a separate process to amend electricity distributors’ licences to allow market-based rates to be charged for attachment of wireless telecommunications devices to utility poles.14 In a recent decision, the OEB has amended the electricity distribution licences for each distributor to allow them to charge market rates for wireless pole attachments.15
Recent applications to increase pole attachment charges
In their recent rate filings, Toronto Hydro and Hydro One have sought increases to the wireline pole attachment charge that had been set in the 2005 CCTA decision. In the Toronto Hydro case, the increase was to a level around four times the existing charge (it was subsequently revised to around three times the existing charge). This was met by objections from a wide range of cable companies. Among other things, the cable companies argued in both the Toronto Hydro and Hydro One cases that the OEB does not have jurisdiction to set the charges for pole attachments pursuant to the rate setting provisions of the OEB Act (section 78). The cable companies argued that this is not an electricity rates issue, and that any increases to the charges must be achieved through licence amendments (under section 74 of the OEB Act). Given that the Toronto Hydro and Hydro One rate applications were made pursuant to section 78 of the OEB Act, the cable companies argued that the OEB has no jurisdiction to approve the requests to increase their pole attachment charges. The OEB decided in the Toronto Hydro case that it does have jurisdiction under section 78 because pole attachment rates are incidental to the distribution of electricity as the poles are an essential facility properly considered while setting rates.16
The recent rate applications have not determined the question of whether the methodology for determining wireline pole attachment fees, and the amounts of the fees, should be updated from the level that was set in the 2005 CCTA decision. Generally speaking, distributors support raising the rates (as seen in the Toronto Hydro, Hydro One and Hydro Ottawa rate applications) and Carriers object to the magnitude of the increases being sought.
The OEB’s “comprehensive policy review”
As noted, in a November 2015 letter, the OEB initiated a “comprehensive policy review” of miscellaneous rates and charges.17 In its letter, the OEB has asked interested parties to apply to be part of a Pole Attachments Working Group (“PAWG”). Around 15 parties applied to be part of the PAWG. In a letter dated February 9, 2016, the OEB appointed representatives of nine organizations to participate in the PAWG.18 According to the OEB’s letters, the PAWG will provide advice on technical aspects and related details for pole attachment charges. The meetings of the PAWG will begin in March 2016, and an expert consultant appointed by the OEB will assist. During or after this process, the OEB will consider the methodology to be used to determine pole attachment charges, including the appropriate treatment of revenues that the Carriers may receive from third parties for allowing additional cables to be attached to existing cables (referred to as “overlashing”). It is not clear how long the OEB’s “comprehensive policy review” will take.
It will not be surprising if the planned comprehensive review of pole attachment charges in Ontario leads regulators in other jurisdictions to review the same items.
The Ontario Energy Board (“OEB”) has commenced a process to determine the approach to be used to set wireline pole attachment fees across Ontario.2 In a November 2015 letter, the OEB initiated a “comprehensive policy review” of miscellaneous rates and charges.3 The OEB indicated that the first component of the review will address wireline pole attachment fees. This review follows a number of rate proceedings where pole attachment fees have been an issue (including the recent Toronto Hydro4, Hydro One5 and Hydro Ottawa6 rate applications).
The CCTA case
The rates to be charged to Canadian “Carriers” (as defined by the Telecommunications Act7) for pole attachments were previously approved by the OEB in a generic proceeding in 2005 (the “CCTA” case).8 That case was an application by the Canadian Cable Television Association (“CCTA”) for an order requiring Ontario electricity distributors to provide uniform terms of access for attaching cable television transmission lines to power poles. The case arose because Carriers were unable to reach agreement with distributors about the charges (rates) for such attachments.
Over the objections of electricity distributors, the OEB decided that regulatory intervention was appropriate to remove uncertainty over the terms under which pole attachments would be permitted. The OEB decided that all licensed electricity distributors shall provide access to their power poles to all Canadian Carriers (including cable companies). The OEB also decided that the same “pole attachment rate” should apply for all distributors, and to all Carriers.
There was significant debate about the method to be used to calculate the appropriate “pole attachment rate.” The OEB decided that the rate should take account of the “incremental or direct” costs of attachment, as well as a portion of the fixed or common costs of each power pole. The fixed costs are to be allocated on the assumption that there is an average of 2.5 communications attachments per pole, as well as one power attachment. Taking all of this into account, the OEB ordered that the “pole attachment rate” would be $22.35 per pole per year.9 This was to be included as a condition to each electricity distributor’s licence.
The CANDAS case and the subsequent decision to allow competitive rates for wireless attachments
In the 2011 “CANDAS” proceeding10, the OEB was asked by the Canadian Distributed Antenna Systems Coalition (“CANDAS”) to confirm that the CCTA decision applied equally to “wireless” attachments, as it did to “wireline” attachments. The distinction is that “wireless” equipment includes components of distributed antenna systems (not just cable lines). At that time, some distributors had taken the position that pole access did not need to be granted for “wireless” attachments. In its decision on a preliminary motion in the CANDAS proceeding, the OEB confirmed that the findings in the CCTA decision, including the pole attachment rate and the associated requirement on distributors to provide access apply to both wireline and wireless attachments.11
Subsequently, Toronto Hydro brought an application to the OEB requesting that the OEB forbear from regulating the terms, conditions and rates for wireless attachments.12 This would allow Toronto Hydro to charge competitive rates. A Settlement Agreement was reached and approved by the OEB, under which Toronto Hydro was permitted to provide access for wireless attachments to its poles on commercial terms normally found in a competitive market.13 Toronto Hydro agreed that it would credit net revenue from wireless attachments against its revenue requirement.
The OEB then convened a separate process to amend electricity distributors’ licences to allow market-based rates to be charged for attachment of wireless telecommunications devices to utility poles.14 In a recent decision, the OEB has amended the electricity distribution licences for each distributor to allow them to charge market rates for wireless pole attachments.15
Recent applications to increase pole attachment charges
In their recent rate filings, Toronto Hydro and Hydro One have sought increases to the wireline pole attachment charge that had been set in the 2005 CCTA decision. In the Toronto Hydro case, the increase was to a level around four times the existing charge (it was subsequently revised to around three times the existing charge). This was met by objections from a wide range of cable companies. Among other things, the cable companies argued in both the Toronto Hydro and Hydro One cases that the OEB does not have jurisdiction to set the charges for pole attachments pursuant to the rate setting provisions of the OEB Act (section 78). The cable companies argued that this is not an electricity rates issue, and that any increases to the charges must be achieved through licence amendments (under section 74 of the OEB Act). Given that the Toronto Hydro and Hydro One rate applications were made pursuant to section 78 of the OEB Act, the cable companies argued that the OEB has no jurisdiction to approve the requests to increase their pole attachment charges. The OEB decided in the Toronto Hydro case that it does have jurisdiction under section 78 because pole attachment rates are incidental to the distribution of electricity as the poles are an essential facility properly considered while setting rates.16
The recent rate applications have not determined the question of whether the methodology for determining wireline pole attachment fees, and the amounts of the fees, should be updated from the level that was set in the 2005 CCTA decision. Generally speaking, distributors support raising the rates (as seen in the Toronto Hydro, Hydro One and Hydro Ottawa rate applications) and Carriers object to the magnitude of the increases being sought.
The OEB’s “comprehensive policy review”
As noted, in a November 2015 letter, the OEB initiated a “comprehensive policy review” of miscellaneous rates and charges.17 In its letter, the OEB has asked interested parties to apply to be part of a Pole Attachments Working Group (“PAWG”). Around 15 parties applied to be part of the PAWG. In a letter dated February 9, 2016, the OEB appointed representatives of nine organizations to participate in the PAWG.18 According to the OEB’s letters, the PAWG will provide advice on technical aspects and related details for pole attachment charges. The meetings of the PAWG will begin in March 2016, and an expert consultant appointed by the OEB will assist. During or after this process, the OEB will consider the methodology to be used to determine pole attachment charges, including the appropriate treatment of revenues that the Carriers may receive from third parties for allowing additional cables to be attached to existing cables (referred to as “overlashing”). It is not clear how long the OEB’s “comprehensive policy review” will take.
It will not be surprising if the planned comprehensive review of pole attachment charges in Ontario leads regulators in other jurisdictions to review the same items.