CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
______________________________________________________________________________
CPS Energy’s Response to Comments Received Related
To the Standard Pole Attachment License Agreement
July 22, 2016
On May 19, 2016, CPS Energy held its second Pole Attachment Workshop in which it
invited stakeholders to file comments in response to CPS Energy’s revised pro forma
Standard Pole Attachment License Agreement (the “Agreement”). The deadline for filing
comments was June 10, 2016. CPS Energy received comments from Southwestern Bell
Telephone Company, LLC d/b/a AT&T Texas1 (“AT&T”), Conterra Broadband Services2
(“Conterra”), Google Fiber, Inc.3 (“Google”), Grande Communications Networks, LLC4
(“Grande”), Guadalupe Valley Telephone Cooperative5 (“GVTC”), Mobilitie, LLC6
(“Mobilitie”), and Time Warner Cable Texas, LLC7 (“TWC”). Following the receipt of
comments, CPS Energy’s legal staff met with several stakeholders to discuss their
concerns including, AT&T, TWC, Google, Mobilitie, and CommZoom. In addition,
during the same time period, CPS Energy’s engineering staff answered many clarifying
questions from stakeholders related to the Standards by telephone, email, and in
individual meetings.
At the May 19th workshop, CPS Energy explained that it was making available for
comment the draft Agreement which was revised in response to the Texas Supreme Court
decision in Wheelabrator Air Pollution Control, Inc. v. City of San Antonio Acting Through the
AT&T submitted the Agreement with redlined edits, received via email from Michael Sullivan to Brian
Bartos on June 10, 2016 (hereinafter, “AT&T Comments”).
2 Conterra submitted the Agreement with redlined edits, received via email from Maria Browne (Davis,
Wright Tremaine LLP) to Brian Bartos on June 10, 2016 (hereinafter “Conterra Comments”).
3 Google submitted letter comments, received via email from Kristine Laudadio Devine (Harris, Wiltshire
& Grannis) to Brian Bartos on June 10, 2016 (hereinafter, “Google Comments”).
4 Grande submitted letter comments, received via email from Dale Schneberger to Brian Bartos on June
10, 2016 (hereinafter, “Grande Comments”).
5 GVTC submitted letter comments, received via email from Jason Forsberg to Brian Bartos on June 10,
2016 (hereinafter, “GVTC Comments”).
6 Mobilitie submitted the Agreement with redlined edits, received via email from Ethan Rogers to Brian
Bartos on June 10, 2016 (hereinafter, “Mobilitie Comments”).
7 TWC submitted the Agreement with redlined edits, received via email from John D. Thomas (Sheppard,
Mullin, Richter & Hampton, LLP) to Brian Bartos on June 10, 2016 (hereinafter, “TWC Redlined
Comments”). In addition, TWC also timely submitted via email written comments (hereinafter, “TWC
Comments”).
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CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
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City Public Service Board of the City of San Antonio, Texas, which was issued on April 15,
2016. In Wheelabrator, the court ruled that CPS Energy is not protected by governmental
immunity in relation to breach-of-contract claims, among other requirements. The
Wheelabrator decision forced CPS Energy to reevaluate its risk profile across all contracts,
including the proposed Agreement. The revisions to the Agreement focused on the scope
of the contract, rates, liability protections, and indemnification, as well as clarifications in
several other areas. Not surprisingly, there were comments from several stakeholders to
some of the revisions.
CPS Energy has carefully reviewed and considered all arguments and positions
concerning the Agreement communicated through written comments and personal
meetings, including proposed redlined edits to the Agreement submitted by several
communications providers. In this document, CPS Energy summarizes and discusses the
comments that highlighted objections and concerns to specific provisions in the draft
Agreement, as well as CPS Energy’s decisions with respect to the substantive issues
raised by stakeholders. This process has resulted in further revisions and clarifications
to the Agreement.
As a point of clarification, the Agreement is limited to wire Attachments and does not
authorize the installation of any wireless equipment onto or supported by CPS Energy
poles. There are practical considerations that support the development of a separate set
of wireless standards applicable to wireless installations. As CPS Energy discussed at the
last two Wireless Workshop held on June 2, 2016 and July 11, 2016, some of these
considerations include, but are not limited to the following: (1) a wireless installation
uses more space on a pole than a wire Attachment; (2) a wireless installation on a pole
creates safety concerns; (3) a wireless installation is capable of interfering with CPS
Energy, municipal, and public safety wireless systems; (4) a wireless installation requires
electricity; (5) a wireless installation places more load on a pole compared to a wire
Attachment; (6) wireless equipment installed on top of a utility pole would displace
electric insulators; (7) a wireless installation may interfere with the use of the pole by wire
Attachments; (8) a wireless installation needs access to backhaul telecommunications
facilities; (9) a wireless installation is not subject to the provisions of PURA §§ 54.204 or
66.010; and (10) as a municipally-owned utility, CPS Energy is not subject to the federal
Pole Attachment Act or the FCC’s implementing regulations as they related to wireless
installations. For these reasons, CPS Energy will develop a separate set of standards and
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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pole license agreement applicable to wireless installations. The proposed wireless
standards will be incorporated into the Pole Attachment Standards at Section V.
Discussion and Position on Stakeholder Comments
Standard Pole Attachment License Agreement
1. CPS Energy’s Ability to Amend Standards
Recital B. All of Licensee’s Attachments shall be installed and maintained
pursuant to the procedures and regulations set out in CPS Energy’s Pole
Attachment Standards, which are incorporated herein by reference as if fully set
forth in this Agreement;
Stakeholders’ Comments:
In its comments, Conterra states that the Pole Attachment Standards (the “Standards”)
include terms and conditions that typically would be negotiated and included in a pole
attachment agreement. Conterra objects to CPS Energy’s ability under the Standards to
“amend the Standards at any time for any reason,” and opines that the Standards “should
only be amended pursuant to a written agreement between the parties.” 8 For its part,
TWC would incorporate the Standards as an exhibit to the Agreement subject to
amendment only by the mutual written consent of both parties.9
CPS Energy’s Response:
As a result of growth and innovation in the telecommunications industry, demand for
CPS Energy utility poles has increased dramatically in recent years for wire Attachments
and wireless equipment installations. Today, CPS Energy is host to over 35 Attaching
Entities, and that number continues to grow. CPS Energy must be able to respond to
continued changes in the telecommunications industry with flexibility in a manner that
takes into account the interests of all Attaching Entities as a class. While CPS Energy is
aware that the Standards include terms and conditions that frequently are found in a pole
attachment agreement, this way of doing business has become obsolete. Under this
business custom, as soon as CPS Energy makes a contractual pole attachment concession
Conterra Comments at 3.
TWC Redlined Comments at 1, see also proposed amendment to definition of “Pole Attachment
Standards” at 3.
8
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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to one service provider, it could be accused of discriminatory treatment by another
service provider pursuant to Sections 54.204 or 66.010 of the Public Utility Regulatory Act
(“PURA”).
To avoid such a conundrum, the Standards have been developed to mirror the way CPS
Energy does business in other parts of its operations. CPS Energy has developed Electric
Service Standards, Gas Service Standards, and Customer Service Standards applicable to
all residential or commercial customers that want to connect to the CPS Energy electric
and/or gas distributions systems for the purpose of receiving service. In all instances,
residential and commercial customers are required to execute service agreements that
adopt by reference the Electric, Gas, and Customer Service Standards. The creation of
the Standards applicable to all Attaching Entities that wish to access CPS Energy poles
for the purpose of connecting their communications network facilities is no different. As
was explained in the last two pole attachment workshops, the Agreement will focus on
typical contractual commercial provisions while the terms and conditions for accessing
poles will be found in the Standards. This is consistent with CPS Energy’s obligations
under state law.
Under the relevant provisions of PURA, CPS Energy may not discriminate against a
certificated telecommunications provider regarding “a municipal pole attachment rate or
term,” or against a holder of a state-issued certificate of franchise authority regarding “a
municipal utility pole attachment term.”10 In addition, CPS Energy must charge a
uniform pole attachment rate no higher than would be charged based on the Federal
Communications Commission’s (“FCC”) pole attachment formula applicable to
telecommunications providers under 47 U.S.C. §224(e).11 Beyond these requirements, the
law does not prohibit CPS Energy from incorporating the terms of access to its poles into
the Standards or from amending such Standards from time-to-time provided it does not
engage in discriminatory treatment. Both Conterra and TWC argue that all the terms and
conditions for accessing CPS Energy’s poles should be included in bilateral contracts
which may only be amended by the mutual consent of the contracting parties. While this
historical way of doing business may be beneficial to Conterra and TWC, it is not in the
best interest of CPS Energy, and there is no legal requirement that CPS Energy make
access to its poles to dozens of Attaching Entities in this manner.
10
11
TEX. UTIL. CODE ANN. §54.204(b) (1997), and §66.010(b) (Supp. 2005).
Id. at §54.204(c).
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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Conterra and TWC should also consider the business relationship between the parties.
Attaching Entities such as Conterra and TWC are in the role of licensees, seeking to obtain
space on CPS Energy poles to attach components of their communications networks.
Conversely, CPS Energy as the pole owner is in the role of licensor. As the infrastructure
owner, CPS Energy is entitled to protect its employees and property as appropriate by
amending the Standards “in response to market conditions and as necessary to comply
with changes in applicable engineering and/or safety standards or changes in local, state
or federal law,” provided such changes are “applied in a non-discriminatory manner
with respect to similarly situated entities and facilities.” 12 Moreover, in developing its
Standards, CPS Energy sought and considered input from all Attaching Entities, and CPS
Energy has committed to continue this collaborative process for making changes to the
Standards, by “conduct[ing] quarterly workshops for the benefit of all Attaching Entities”
where any party may discuss “proposals for making amendments [to the Standards] to
improve operations, procedures, and/or administration of pole attachment activities.” 13
Further, CPS Energy has modified the procedures applicable to the adoption of
amendments to the Standards that accommodate the interests of Attaching Entities.
2. Removal of Attachments Following Contract Termination
Recital F. This Agreement has an initial term of five (5) years and will
automatically renew for successive one-year terms unless and until it is
terminated by either Party pursuant to the terms hereof. Upon the expiration or
termination of this Agreement, Licensee shall have a duty to remove its
Attachments. Any Attachments, whether previously authorized or not, that are
not timely removed shall be subject to the terms and conditions of the Pole
Attachment Standards, including removal by CPS Energy at Licensee’s expense.
Stakeholders’ Comments:
In response to this recital, AT&T argues that it is not reasonable for AT&T to enter into
the Agreement under which it would have to remove Attachments from CPS Energy’s
poles following contract termination, while CPS Energy would maintain its Attachments
on AT&T’s poles. AT&T asserts that these obligations “need to be mutual,” and
12
13
Standards at Sec. I, p. 2.
Standards at Sec. II.G.1, p. 18.
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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recommends that the Agreement “limit the party’s rights to make new attachments under
these circumstances.”14 In other words, AT&T proposes that at contract termination, the
Licensee would have no right to make new Attachments, but existing Attachments would
remain in place subject to the terms of the Agreement. In effect, AT&T argues for
incorporating into the Agreement an “evergreen clause” or “perpetual contract term”
which would continue the Agreement indefinitely as to the Attachments in place at the
time of termination. Mobilitie makes the same argument by proposing to amend the
recital to include that following contract termination, the Licensee’s existing Attachments
would be permitted to remain on CPS Energy’s poles subject to the terms and conditions
of the Agreement and the Standards.15
CPS Energy’s Response:
The legal relationship between CPS Energy and Attaching Entities is in the nature of
licensor and licensee.16 As such, CPS Energy is within its rights to require an Attaching
Entity to “vacate” its premises (i.e., remove Attachments from its poles) upon contract
termination. AT&T’s and Mobilitie’s position would create the equivalent of a holdover
tenancy under which the tenant (attaching entity) would continue to hold possession of
property (space on CPS Energy’s poles) with the preexisting consent of the landlord (CPS
Energy). CPS Energy will not create that arrangement.
3. Incorporate Wireless Equipment into Agreement
Section 1. Definitions


Communications Facilities shall have the meaning set forth in the Pole
Attachment Standards.
Communications Services shall have the meaning set forth in the Pole
Attachment Standards.
Stakeholders’ Comments:
Conterra asserts that the definition of “Communications Facilities” should be amended
to include “antenna and radio equipment,” and the definition of “Communication
Services” amended to include “any communications transmitted wirelessly.” 17 In short,
AT&T Comments at 3.
Mobilitie Comments at 3-4.
16 See Tri-Country Elec. Coop., Inc. v. GTE Southwest Inc., 2016 Tex. App. LEXIS 1466.
17 Conterra Comments at 4.
14
15
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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Conterra wants the Agreement to apply to the installation of wireless equipment under
the same terms applicable to wire Attachments.
CPS Energy’s Response:
Conterra’s position fails to take into account several important legal and practical
considerations. From a legal perspective, Conterra has not demonstrated that it has the
authority to use municipal rights-of-way for the installation of wireless equipment. A
holder of a certificate of authority (“COA”) or a state-issued certificate of franchise
authority (“SICFA”) issued by the Texas Public Utility Commission (“PUC”) does not
grant a service provider the authority to use municipal rights-of-way for wireless
installations. Moreover, Conterra’s position ignores the practical considerations outlined
in the introductory remarks to this responsive documents. As CPS Energy has informed
all Attaching Entities, it is in the process of developing new wireless pole attachment
standards applicable to wireless installations. CPS Energy held wireless workshops on
June 2, 2016 and July 11, 2016 and plans to post the draft wireless standards for comments
on August 19, 2016.
4. The Term “Licensee’s Facilities” Is Not Defined
Section 1. Definitions

Licensee’s Facilities shall have the meaning set forth in the Pole
Attachment Standards.
Stakeholders’ Comments:
In their comments, Mobilitie18 and Conterra19 point out that the term “Licensee’s
Facilities” is not defined in the Standards.
CPS Energy’s Response:
Mobilitie and Conterra are correct in pointing out this oversight. The term “Licensee’s
Facilities” should be defined as “means the Communications Facilities owned by
Licensee.” CPS Energy will make this correction in the final version of the Agreement.
18
19
Mobilitie Comments at 5.
Conterra Comments at 4.
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CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
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5. Separate Grant of License from Compliance with Standards
Section 2.1. Grant of License. Subject to the provisions of the Pole Attachment
Standards, as they may be amended from time to time, which are incorporated
herein and made effective to Licensee pursuant to this Agreement, the duties
outlined in this Agreement, and to the extent allowed by law, CPS Energy hereby
grants Licensee a revocable, nonexclusive license authorizing Licensee to install
and maintain permitted Attachments to CPS Energy Poles. The grant of this
license to access available Poles is contingent on Licensee following the
procedures and regulations in the Pole Attachment Standards at all times.
Licensee’s failure to follow the Pole Attachment Standards shall not result in the
grant of any license, right, or privilege to access any Pole, or to install or
maintain an Attachment to any Pole under this Agreement, but shall give rise to
one or more Unauthorized Attachments.
Stakeholders’ Comments:
In its comments, TWC proposes to delete the last two sentences of Section 2.1, which
provide that the grant of a license “to install and maintain permitted Attachments to CPS
Energy Poles” is contingent on compliance with the Standards, as well as the condition
that failure to comply with the Standards “shall give rise to Unauthorized
Attachments.”20 Similarly, Conterra would amend the section by reducing the
circumstances that would give rise to Unauthorized Attachments to instances of
Licensee’s failure to obtain a permit.21
CPS Energy’s Response:
TWC and Conterra raise a significant issue in highlighting that the language in the last
sentence in Section 2.1 could be interpreted to revoke the license granted under the
Agreement. This is not the intent of this section. In particular, Conterra’s comments
capture CPS Energy’s intention. Accordingly, CPS Energy will revise the last sentence in
Section 2.1 to read as follows: “The installation of any Attachments by Licensee without
obtaining a Permit pursuant to the Pole Attachment Standards, or otherwise installing
Communications Facilities in violation of the Pole Attachment Standards, shall give rise
to one or more Unauthorized Attachments.”
20
21
TWC Redlined Comments at 3.
Conterra Comments at 5.
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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6. CPS Energy’s Right to Amend Standards
Section 2.2. Applicability of Pole Attachment Standards. In order for Licensee
to enjoy the privilege of installing an Attachment onto an available Pole,
Licensee must obtain a Permit for every Attachment pursuant to the procedures
and requirements of the Pole Attachment Standards. Licensee agrees that CPS
Energy has the right to amend the Pole Attachment Standards from time to time
in response to changing conditions in the local market, technological advances,
business requirements, policy initiatives, or changes in federal, state, or local
law, and that the amended Pole Attachment Standards will be incorporated in
this Agreement as of their effective date. As provided in the Pole Attachment
Standards, any amendments will be preceded by an appropriate notice period.
Stakeholders’ Comments:
In their comments, both TWC and Conterra assert that any amendments to the Standards
should only occur by the mutual written consent of the contracting parties.22 Conterra
also explains that this section “would give CPS [Energy] carte blanche to change key pole
attachment terms and conditions, making any promises illusory.”23 AT&T argues that
amendments to the Standards should only apply to new Attachments, not retroactively
to existing Attachments.24 Along similar lines, Mobilitie would make an addition to the
section to clarify that Licensee should have a “reasonable amount of time” to bring
existing Attachments into compliance with any amendments to the Standards.25
CPS Energy’s Response:
CPS Energy has already addressed the issue of CPS Energy’s right to amend the
Standards under section 1 above (see discussion on pages 3-5). Regarding Conterra’s
point related to “illusory” promises, the argument is made that under Section 2.2, CPS
Energy could unilaterally amend the Standards without Conterra’s consent as
contracting party resulting in an illusory contract – an agreement that is modified without
the consent of one contracting party resulting in an unenforceable contract.
Notwithstanding the collaborative procedures incorporated into the Standards for
amending the Standards, CPS Energy was concerned that Section 2.2 could be interpreted
TWC Redlined Comments at 3 and Conterra Comments at 5.
Conterra Comments at 5.
24 AT&T Comments at 5.
25 Mobilitie Comments at 7.
22
23
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CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
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as Conterra explains. For this reason, Section 13.1 was added to require Licensee to
affirmatively accept any amendments to the Standards. (See discussion below at pages
44-45.)
The issue of retroactive application of amendments to the Standards raised by AT&T and
Mobilitie is addressed in the Standards. The Standards provide that “an Attaching Entity
shall adhere to the revised Standards for new Applications on their effective date … [and]
no revisions to the Applicable Engineering Standards shall be retroactive to existing
Permitted Attachments and/or Overlashings, unless required by city, county, state, or
federal law or if the Attachment is modified.”26
In addition, Section 13.1 of the Agreement will be changed to state, “Amendments to Pole
Attachment Standards. CPS Energy reserves the right to amend the Pole Attachment
Standards in accordance with their terms. Any amendment to the Pole Attachment
Standards shall apply prospectively, except to the extent required by federal, state, or
local law.”
7. Authority to Attach
Section. 2.3. Licensee’s Privilege to Attach. Licensee must obtain a Permit
pursuant to the procedures and requirements of the Pole Attachment Standards
for each Attachment Licensee desires to undertake. The issuance of such Permits
is subject at all times to CPS Energy’s right to provide core electric utility
services, including any and all internal communications service essential to the
proper operations of such core electric utility services, using its Poles. Nothing
in this Agreement, other than a Permit properly issued under the Pole
Attachment Standards, shall be construed as granting Licensee any
authorization to install an Attachment to any specific Pole.
Stakeholders’ Comments:
TWC suggests adding a sentence to this section clarifying that Licensee may overlash any
existing Attachment and make service drop attachments without obtaining a permit
pursuant to Sections III.C and IV.B of the Standards.27
26
27
Standards at Sec. II.G.1, p. 18.
TWC Redlined Comments at 3-4.
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CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
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CPS Energy’s Response:
The purpose of the Agreement is to include appropriate contractual terms defining the
business relationship between the parties and commercial clauses that offer appropriate
protections from potential liability given such business relationship. Therefore, it is not
necessary or appropriate to include terms in the Agreement related to the pole attachment
process that are already captured in the Standards.
8. Franchise
Section 2.6. Franchise. CPS Energy does not have the power to grant Licensee the
right to conduct business within the City of San Antonio or other cities or
jurisdictions within the CPS Energy service area. This Agreement does not
constitute a franchise or license to use municipal rights-of-way within the City
of San Antonio or any other local jurisdiction within the CPS Energy service
area. It is the obligation of Licensee to obtain (a) a franchise or other authority
by ordinance or state law authorizing Licensee to erect and maintain Licensee’s
Facilities within the public streets, highways, alleys, utility easements, and
other public thoroughfares directly from the applicable governing authority; and
(b) any other necessary permits, authority, and consents from federal, state,
municipal or other public authorities.
Stakeholders’ Comments:
Regarding this section, Conterra suggests a revision to provide that “where CPS Energy
owns or controls divisible utility easements, CPS Energy agrees to allow Licensee to use
such easements to the extent permissible under governing law.” Along this line of
reasoning, TWC points out that “Texas law requires that a municipality shall allow the
holder of a state-issued certificate of franchise authority to install, construct, and maintain
a communications network within a public right-of-way and shall provide the holder with
open, comparable, nondiscriminatory, and competitively neutral access to the public
right-of-way. Tex. Util. Code §66.010(a).” This is stated by way of urging CPS Energy to
accept TWC’s proposed revisions to the Agreement, which according to TWC “are
designed to provide Attaching Entities with access to CPS Energy’s Poles under
reasonable terms and conditions in accordance with Texas law.”28
28
TWC Comments at 2.
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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CPS Energy Response:
It is not clear what Conterra means by a “divisible utility easement,” but CPS Energy will
assume it is means a “common easement” which is defined by Black’s Law Dictionary as
“[a]n easement allowing the servient landowner to share in the benefit of the easement.” 29
CPS Energy does not acquire “common easements” for the installation of its utility
facilities. All easements are prescriptive in nature limited to the installation of electric
and/or gas utility facilities. To the extent that Conterra and TWC assert or imply that CPS
Energy should grant them access to municipal rights-of-way, CPS Energy has no
authority to grant such access. CPS Energy is managed by an independent Board of
Trustees appointed by the San Antonio City Council. Pursuant to Section 1502.070 of the
Texas Government Code, the Board of Trustees is vested by the City Council with the
limited authority over the management and control of the utility electric and gas systems
by way of city ordinances. All other municipal powers, including the authority to grant
franchises and licenses for the use of municipal rights-of-way remain with the San
Antonio City Council, unless otherwise provided by state statute. In addition, with
regard to the other thirty-one (31) suburban cities in and around San Antonio within the
CPS Energy service area, CPS Energy has executed franchise agreements with each of
those municipal governments for the installation of its utility facilities within their
respective municipal rights-of-way. Those franchise agreements do not authorize CPS
Energy to grant any third-party access to municipal rights-of-way in those communities.
Accordingly, CPS Energy has no legal authority to grant any Licensee the use of its utility
easements and/or any municipal rights-of-way.
9. Permitted Uses
Section 2.7. Permitted Uses. Licensee shall only use Attachments to provide
Communications Services or permitted Private Networks, and shall not engage
in any illegal practices, anticompetitive behavior, or collusion with regard to
construction activities related to the installation, operation, maintenance,
transfer, relocation, or removal of its Attachments. Licensee shall fully and
timely cooperate with CPS Energy and Other Attaching Entities, as prescribed
in the Pole Attachment Standards, with regard to the transfer and relocation of
Attachments. Licensee understands that preventing or unreasonably delaying
any Other Attaching Entity from installing, transferring, or relocating an
Attachment on a Pole or interfering with the quiet enjoyment of any Other
29
BLACK’S LAW DICTIONARY, 7th Ed., 1999.
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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Attaching Entity’s Attachment privileges will constitute a material breach of
this Agreement. Nothing in this Agreement shall be construed to require CPS
Energy to allow Licensee to use any Pole after the termination of the Agreement.
Stakeholders’ Comments:
Several stakeholders raised concerns regarding this section. TWC would delete the
requirement that a license granted by the Agreement is limited to the installations of
“Attachments to provide Communications Services or permitted Private Networks.” 30
Under this amendment, the license granted could be used to install Attachments used to
provide any services or engage in any activity that is not an illegal practice. Conterra
would delete the prohibition on Licensee to engage in “anticompetitive behavior or
collusion” with regard to construction activities related to pole attachments. According
to Conterra, anticompetitive behavior or collusion are covered in the in phrase “illegal
practices.”31
There was agreement among AT&T, TWC and Mobilitie in the recommendation to revise
the paragraph to eliminate the condition that at contract termination Licensee would no
longer have access to any pole. All three stakeholders would amend the Agreement to
provide that at contract termination Licensee would not be allowed to install any new
Attachments.32
CPS Energy’s Response:
TWC’s suggestion to expand the scope of a pole attachment license to include any
permitted use that is not an illegal practice is unacceptable. CPS Energy hosts Attaching
Entities that install wire Attachments that fall into two categories: (1) communications
service providers, and (2) private networks. Moreover, nothing in federal or state law
requires CPS Energy to grant access to its poles to any third-party. However, if CPS
Energy chooses to allow such access, state law requires that it treat certificated
communications service providers in a non-discriminatory fashion with regard to pole
attachment rates and terms.33 Because such use of its poles can be a material benefit to
CPS Energy’s customers, CPS Energy chooses to grant access to its poles to
TWC Redlined Comments at 4.
Conterra Comments at 7.
32 AT&T Comments at 6; TWC Redlined Comments at 4; and Mobilitie Comments at 9.
33 TEX. UTIL. CODE ANN. §54.204(b) (1997), and §66.010(b) (Supp. 2005).
30
31
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CPS Energy’s Response to Comments
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communications service providers for the limited purpose of providing Communications
Services and to private or public sector entities for the purpose of operating a Private
Network. The scope of the license granted by the Agreement is not intended to grant any
other rights, including the authority to install Attachments in connection with providing
wireless services.
As to Conterra’s proposal to delete the phrase “anticompetitive behavior or collusion,”
not all forms of anticompetitive behavior, including collusion, are considered illegal
practices. For this reason, the suggested recommendation is not appropriate.
Regarding the joint recommendation from AT&T, TWC, and Mobilitie to limit access to
poles to new Attachments, the implication from such revisions would be that
Attachments in place at the time of contract termination could remain on the poles. In
effect, Licensee’s Attachments could remain perpetually. As explained under section 2
above (see pages 5-6), CPS Energy is not interested in creating such a contractual
arrangement.
10. Pole Attachment Fees
Section 3.1. Pole Attachment Fees. Pursuant to this Agreement and the
incorporated Pole Attachment Standards, CPS Energy shall assess, and Licensee
shall pay, fees and charges for the privilege of installing Attachments onto Poles
within forty-five (45) days of Licensee’s receipt of a statement from CPS Energy.
Notwithstanding any other provision of this Agreement, the Attachment Rate
shall be assessed at the highest rate permitted under applicable law as set forth
in the Pole Attachment Standards. Licensee’s failure to timely pay statements
or invoices for Attachments or other applicable fees or charges in accordance
with their terms shall constitute a breach of this Agreement.
Stakeholders’ Comments:
Regarding pole attachment fees, CPS Energy has agreed to “make available on its Pole
Attachment webpage relevant information and inputs required for calculating the
Attachment Rate.”34 TWC now insists that CPS Energy provide “back-up information as
to how each input was derived” otherwise the Attaching Entities will not be able to
confirm the pole attachment rate is in compliance with Texas law. 35 Therefore, TWC
34
35
Standards at Sec. II.I.4, p. 25.
TWC Comments at 6-7.
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would amend this section to provide that “CPS Energy shall provide” backup cost data,
rate calculations, and identify the source of all data inputs as part of the annual pole
attachment rate invoice. Moreover, under TWC’s proposed revisions, the time period for
payment would be tolled until all backup information was provided in full.36
Conterra makes three suggested revisions with regard to pole attachment fees: (1) that
that the annual pole attachment rate be assessed “on a per pole basis” (as opposed to per
attachment); (2) that CPS Energy provide no less than sixty (60) days advance notice of
any change in the Pole Attachment Fee; and (3) that breach of contract for failure to pay
only apply to “undisputed” invoices.37 Conterra is joined by TWC in recommending the
third point.38 For its part, GVTC requested clarification on whether the Agreement
established a fixed annual rate, or whether the pole attachment rate may change from
year-to-year.39
In individual discussions, AT&T objected to the third sentence of Section 3.1 arguing that
the language “as set forth in the Pole Attachment Standards” precludes Attaching Entities
from challenging the Attachment Rate once the Agreement is executed.
CPS Energy’s Response:
Pursuant to Section 54.204 of PURA, CPS Energy is required to charge no more than the
annual pole attachment rate that would be calculated under the FCC’s telecom formula.
CPS Energy’s pole attachment rates for years 2005 to 2010 were established by the Texas
PUC in Docket No. 36633. In that proceeding, the PUC outlined its authority with
regard to the pole attachment rates of a municipally-owned utility. The PUC found:
“[T]he [Public Utility] Commission has the authority to review and modify
each input to that [FCC telecom] formula, including defaults and rebuttable
presumptions, used to calculate the maximum allowable rate under the
rules adopted by the FCC. Furthermore, in this proceeding, CPS Energy
has the burden of proving the reasonableness of its calculated inputs by a
preponderance of the evidence. Finally, the Commission has determined
that the maximum allowable rate for a given year should be calculated by
inputting data specific to that year, and that the Commission may therefore
TWC Redlined Comments at 7.
Conterra Comments at 7.
38 TWC Redlined Comments at 7.
39 GVTC Comments.
36
37
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determine the correct maximum rate for years in which it has data for those
time periods following the effective date of the 2005 amendments of PURA
§54.204(c). Additionally, the Commission held that it may determine the
pole-attachment rate calculation method CPS Energy must comply with on
a going-forward basis, but the Commission cannot in this proceeding state
what the correct maximum allowable rate would be for future years
because the Commission does not have the necessary data for those years.40
For Attachments installed as of December 1, 2015, CPS Energy has calculated the annual
pole attachment rate at $18.76 per Attachment based on the pole attachment rate formula
calculation requirements, reasonableness findings related to formula inputs, and
methodology determined by the PUC in Docket No. 36633.41 CPS Energy agrees with
TWC’s request for more detailed cost data and, consistently with the requirement stated
in the Standards, will post on its website the pole attachment rate calculations with
relevant formula inputs, back-up data associated with such inputs, and the associated
FERC accounts or other sources for the formula inputs. The relevant formula inputs are
based on CPS Energy’s audited financial statements and on the PUC’s findings in Docket
36633 establishing formula default inputs. CPS Energy, however, finds that it is not
necessary to adopt the proposed revisions to Section 10 proposed by TWC given that the
Standards already establish this requirement.
CPS Energy also rejects TWC’s proposal to toll the period for paying annual rent until all
backup information is provided to Licensee in full. All Attaching Entities will have access
to the annual pole attachment formula calculations and backup cost data at the same time
when posted on CPS Energy’s website. It is not necessary or appropriate to connect
access to these data and tolling the time period for timely paying annual pole attachment
rent. The rate information will be posted on the CPS Energy website at least 60 days in
advance of sending out the annual pole rent invoices.
Regarding Conterra’s proposed amendment that the annual pole attachment rate be
assessed on a “per pole basis,” CPS Energy rejected this position in adopting the
Petition of CPS Energy for Enforcement Against AT&T Texas and Time Warner Cable Regarding Pole
Attachments; Texas PUC Docket No. 36633; SOAH Docket No. 473-09-5470; Order on Rehearing at 22-23
(Summarizing several orders by the Commission throughout the proceeding and conclusions of the
administrative law judges in the Proposal for Decision.)
41 Id., see generally Findings of Fact 33 to 83 at pp. 34-40.
40
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Standards explaining that both the FCC and PUC have determined that the pole
attachment rate should be assessed on a “per attachment basis.”42 As to Conterra’s
request that CPS Energy provide sixty (60) days advance written notice of any changes
to the pole attachment fee, CPS Energy finds no objection to substantive request for
advance notice. In the Standards, CPS Energy committed to posting on its website the
annual pole attachment rate calculations, formula inputs, and back-up data well in
advance of sending annual invoices.43
As for Conterra’s and TWC’s recommendation to revise Section 3.1 to limit instances of
breach of contract only for failure to pay “undisputed” invoices. Such a proposal is
unacceptable as it could lead Licensee to refusing to pay annual rent in full without legal
consequence simply by raising a billing dispute regardless of its merit. As stated in
Docket No. 36633, the appropriate method to challenge CPS Energy’s pole attachment
rates is bringing a claim before the Texas PUC, not raising a billing dispute. Finally, in
response to GVTC request for clarification, CPS Energy’s annual pole attachment rate
may vary from year-to-year given that the pole attachment formula inputs change on an
annual basis. As the PUC found in Docket No. 36633, “the Commission has determined
that the maximum allowable rate for a given year should be calculated by inputting data
specific to that year.”44
Concerning AT&T’s argument that the third sentence in the Section 3.1 would preclude
Attaching Entities from challenging the Attachment Rate, that is not the intention of this
provision. The process available to an Attaching Entity that wants to contest the
application of the rate resulting from the terms of the Standards, however, is before the
Public Utility Commission of Texas, and the conditions of the Agreement do not permit
an Attaching Entity to grant itself the self-help remedy of withholding payment to protest
the rates imposed. Failure to pay in full CPS Energy’s statement or invoice for pole rental
See CPS Energy Response to Pole Attachment Workshop Request for Comments, April 29, 2016 at 36-37.
(Explaining that the FCC telecom formula assumes that an attaching entity only occupies on foot of
usable space on a pole as determined in Finding of Fact #46, Order on Rehearing in Docket No. 36633.
Therefore, under the Standards a pole attachment fee will be assessed for each Attachment occupying a
separate foot (or increment of one foot) of usable space on a pole.)
43 Standards at Sec. II.I.1, p. 22; and Appendix A.
44 Petition of CPS Energy for Enforcement Against AT&T Texas and Time Warner Cable Regarding Pole
Attachments; Texas PUC Docket No. 36633; SOAH Docket No. 473-09-5470; Order on Rehearing at 23, and
Ordering Paragraph No. 1 (“CPS Energy’s maximum allowable pole-attachment rates must be calculated
using inputs specific to a given year.”), p. 45.
42
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Pole Attachment License Agreement
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fees is a breach of the Agreement. CPS Energy will amend the language to address
AT&T’s concern.
11. Necessary Authorizations
Section 4.1. Necessary Authorizations. Licensee shall be responsible for
obtaining from the appropriate public and/or private authority or other
appropriate persons any required authorization to construct, operate, and/or
maintain its Communications Facilities on public and/or private property before
it occupies any portion of CPS Energy’s Poles. Licensee must provide CPS
Energy with evidence that appropriate authorization has been obtained before
any Permit is issued to Licensee. Licensee’s obligations under this Section 4
include, but are not limited to, its obligation to obtain all necessary approvals
to occupy public/private rights-of-way and to pay all costs associated
therewith, and to maintain such approval for the term of a Permit.
Stakeholders’ Comments:
AT&T, TWC, and Mobilitie concur in recommending that Licensee should only have to
provide CPS Energy evidence of authority to access public or private property to install
Communications Facilities upon request from CPS Energy.45 GVTC adds that this
requirement should not apply to “established providers.”46 As for Conterra, it raises a
separate issue with its proposal to include a sentence to this section under which Licensee
would have access to CPS Energy’s divisible and/or dedicated easements or rights-ofway to install its Communications Facilities.47
CPS Energy’s Response:
Under the Standards, each Attaching Entity is required as part of the registration
procedures to provide CPS Energy with a license, franchise, certificate of authority, or
other authorization that grants access to municipal rights-of-way for the purpose of
installing Communications Facilities.48 CPS Energy, however, has erected poles in other
locations, including state rights-of-way, country roads, local government property,
municipal park land, and federal government property. Therefore, the requirement in
Section 4.1 that Licensee provide evidence of proper authority to use public or private
AT&T Comments at 7; TWC Redlined Comments at 7; and Mobilitie Comments at 9-10.
GVTC Comments.
47 Conterra Comments at 9.
48 Standards at Sec. II.B.1, p. 14.
45
46
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CPS Energy’s Response to Comments
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property where CPS Energy’s pole is located is proper and should remain in the
Agreement. Nevertheless, CPS Energy finds that it is reasonable to revise Section 4.1 to
require Licensee to provide evidence of authority to access public or private property
upon CPS Energy’s request in relation to instances not covered by a certificate of
authority or license to access municipal rights-of-way. However, CPS Energy cannot
accept GVTC’s recommendation to exempt incumbent providers from this requirement
because that would constitute discriminatory treatment of other service providers.
Turning to Conterra’s request, CPS Energy explained in Section 8 herein (pages 11-12)
that it does not have the legal authority to grant any third-party access to municipal
rights-of-way, or to other public or private property, by way of state law, local ordinance,
franchise agreement, or utility easement. Thus, CPS Energy will not accept Conterra’s
proposed revision to Section 4.1.
12. Lawful Purpose and Use
Section 4.2. Lawful Purpose and Use. Licensee’s Communications Facilities
must at all times serve a lawful purpose, and the use of such facilities must
comply with all applicable federal, state, and local laws. The use of Attachments
for any illegal or unauthorized purpose shall constitute a breach of this
Agreement.
Stakeholders’ Comments:
Concerning this section, TWC’s proposed redlined edits would eliminate the requirement
that Communications Facilities be used only for a lawful purpose, and the use of such
facilities for any illegal or unauthorized purposes would not constitute breach of
contract.49
CPS Energy’s Response:
Because of the concern that TWC’s proposal would unnecessarily open CPS Energy to
potential liability associated with Licensee’s illegal or unauthorized activities, the
proposal is rejected. For instance, if a potential Licensee were to install its network
facilities on CPS Energy poles without the consent of the owner of public or private
property from whom CPS Energy has obtained an easement limited to the installation of
electric distribution facilities, the Licensee’s illegal actions could lead to a claim against
49
TWC Redlined Comments at 7.
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CPS Energy’s Response to Comments
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Pole Attachment License Agreement
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CPS Energy for violation of its own easement and potentially complicity in Licensee’s
trespass on such property. Alternatively, Licensee could attach its facilities onto CPS
Energy poles without obtaining a pole attachment permit pursuant to the terms and
conditions of the Standards. Under this scenario, Licensee could impose hundreds or
thousands of Unauthorized Attachments, and under TWC’s proposal, such violations
conceivably would not rise to breach of contract. CPS Energy finds this proposal
unacceptable.
13. Forfeiture of CPS Energy’s Rights
Section 4.3. Forfeiture of CPS Energy’s Rights. Any Permit, which on its face
covers Attachments that would result in forfeiture or diminution of CPS Energy’s
rights (as determined by any order, decision, action, or ruling by a court or other
governmental authority of competent jurisdiction), shall be deemed invalid as to
such Attachments as of the date of the order, decision, action, or ruling. Further,
if any of Licensee’s existing Communications Facilities, whether installed
pursuant to a valid Permit or not, would cause such forfeiture or diminution (as
determined by any order, decision, action, or ruling by a court or other
governmental authority of competent jurisdiction), Licensee shall promptly
remove its Facilities upon receipt of written notice from CPS Energy of such
order, decision, action, or ruling. If Licensee does not remove its Facilities after
the expiration of forty-five (45) calendar days from CPS Energy’s issuance of the
written notice, CPS Energy will perform such removal at Licensee’s expense. If
the rights of CPS Energy and/or Other Attaching Entities to occupy the real
property on which CPS Energy Poles are located are terminated solely as a result
of Licensee’s Unauthorized Attachment or the failure to remove Licensee’s
Facilities within the 45-day period set forth in this Section 4.3, Licensee shall use
best efforts to restore CPS Energy and/or other Attaching Entities to their
original status before such Unauthorized Attachment was installed.
Stakeholders’ Comments:
With regard to Section 4.3, TWC comments that any Attachments that would result in
forfeiture of CPS Energy’s rights should be limited to “material” diminution of such
rights, and Attachments should be removed after 90 days following written notice,
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instead of 45 days.50 Conterra goes beyond TWC’s recommendation and adds that the
“diminution of CPS Energy’s rights” should be deleted all together because the phrase is
too broad.51 Mobilitie suggests that when forfeiture of CPS Energy’s rights results in CPS
Energy removing Licensee’s infringing Attachments, Licensee should only be held liable
for CPS Energy’s “reasonable and documented expenses.”52 For its part, AT&T adds that
it should be CPS Energy’s duty to notify Licensee of any proceeding resulting in the
forfeiture of CPS Energy’s rights caused by Licensee’s Attachments. AT&T also
comments that 45 days is not long enough to remove the infringing Attachments.
CPS Energy’s Response:
Both TWC and Conterra propose revisions to this section that would make it impossible
for CPS Energy to be made whole following a forfeiture of its legal rights cause by
infringing Attachments. In the case of TWC’s proposal, CPS Energy’s remedy would be
limited to the “material” diminution of its legal rights, while under Conterra’s proposed
revision, remedy would only be applicable for a complete loss of legal rights – a partial
loss of rights would not be actionable. These proposals are unacceptable. If Licensee’s
Attachments result in the partial or complete loss of CPS Energy’s legal rights, Licensee
should be responsible for making CPS Energy whole.
Mobilitie complains that Licensee should only be liable for the “reasonable and
documented expenses” incurred by CPS Energy in the removal of the infringing
Attachments. This is also unacceptable as it could easily result in a dispute over the
“reasonableness” of the cost to remove the infringing Attachments. The result would be
the same as under TWC’s and Conterra’s proposed revisions, CPS Energy would not be
made whole for an injury caused by Licensee.
Regarding AT&T’s comment concerning notice, CPS Energy agrees that it should provide
notice to Licensee, but only in cases where it is aware of a proceeding that could result in
the forfeiture of CPS Energy’s rights. Unfortunately, there may be instances when CPS
Energy is not aware of the proceeding where its legal rights may be infringed because
notice of the proceeding or claim has gone to Licensee. In such cases, Licensee should
provide notice to CPS Energy of the proceeding. As to whether 45 days is sufficient to
remove the infringing Attachments, CPS Energy will expect Licensee to remove any
Id.
Conterra Comments at 9.
52 Mobilitie Comments at 11.
50
51
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infringing Attachments as soon as possible in order to limit potential damages to CPS
Energy. Therefore, it will not accept AT&T’s recommendation. In the event 45 days is
insufficient to remove infringing Attachments, Licensee may notify CPS Energy and the
parties may reach an alternative time period for removal of the infringing Attachments
subject to Licensee mitigating any further additional damages to CPS Energy caused by
the delay and making CPS Energy whole for Licensee’s actions.
14. Liability
Section 5.1. Liability. CPS Energy reserves to itself the right to maintain and
operate its Pole system in such manner as will best enable it to fulfill its service
requirements. AS A MATERIAL PART OF THE CONSIDERATION OF THIS
AGREEMENT, LICENSEE TAKES AND ACCEPTS CPS ENERGY POLES “AS IS”
IN THE CONDITION IN WHICH LICENSEE FINDS THE CPS ENERGY POLES,
WITH ANY AND ALL LATENT AND PATENT DEFECTS AND WITH NO
EXPRESS OR IMPLIED WARRANTIES BY CPS ENERGY OF
MERCHANTABILITY, FITNESS, SUITABILITY, OR THAT THE POLES ARE FIT
FOR ANY PARTICULAR PURPOSE. LICENSEE ACKNOWLEDGES THAT IT IS
NOT RELYING UPON ANY REPRESENTATION, STATEMENT, OR OTHER
ASSERTION WITH RESPECT TO THE CONDITION OF THE CPS ENERGY
POLES, BUT IS RELYING UPON ITS OWN EXAMINATION OF THE CPS
ENERGY POLES. CPS ENERGY shall NOT be liable to Licensee, its customers,
or anyone else for any interruption to service of Licensee or any interference with
the operation of Licensee’s Facilities, except where caused by CPS Energy’s gross
negligence or willful misconduct. CPS Energy shall not be liable to Licensee for
any indirect, special, incidental, or consequential damages suffered by Licensee
such as, but not limited to, loss of any anticipated profits, claims of customers,
loss of revenue, loss of use of Licensee’s Facilities or system, cost of capital,
increased expenses or operation of other facilities, or cost of replacement
equipment, facilities, or power. The aggregate liability of CPS Energy to Licensee,
in any fiscal year, for any fines, penalties, claims, or damages shall not exceed the
amount of the total annual Attachment Connection Fees paid by Licensee to CPS
Energy for that year as calculated under the relevant provisions of the Pole
Attachment Standards.
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CPS Energy’s Response to Comments
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Stakeholders’ Comments:
AT&T, TWC, and Mobilitie are all in agreement in recommending that liability protection
for indirect, special, incidental, or consequential damages be mutual in nature.53 TWC
and Grande suggest that neither party’s aggregate liability in any fiscal year for damages
and other losses should exceed the total annual pole attachment rent paid by Licensee,54
whereas AT&T and Mobilitie would delete the requirement limiting CPS Energy’s
liability for damages to the annual rental payments paid by Licensee in any given year.55
CPS Energy’s Response:
Given the nature of the Agreement, CPS Energy concludes that AT&T, TWC, and
Mobilitie make a fair point in calling for neither party to incur liability for the indirect,
special, incidental, or consequential damages of the other party in most circumstances.
CPS Energy will revise the Agreement accordingly.
With regard to TWC’s and Grande’s suggestion that both parties’ aggregate liability for
damages to the other party should be limited to the annual rent paid by Licensee in any
given fiscal year, such suggestion would unfairly benefit Licensee. The effect of accepting
the proposed revision to section 5.1 would be to cap Licensee’s liability obligations to CPS
Energy at no more than Licensee’s annual rent irrespective of the loss a Licensee’s
activities cause to CPS Energy. Given that the purpose of the Agreement is to allow
Licensee or its contractors to engage in construction activities in order to attach Licensee’s
Facilities to CPS Energy’s poles, the vast majority of instances of damages will be to CPS
Energy’s infrastructure. CPS Energy will not accept this recommendation. However,
while it is patterned on many limitations of liability found traditionally in tariffs for
services, CPS Energy finds that the proposal made by AT&T and Mobilitie to delete the
provision altogether is fair to both parties. Therefore, CPS Energy will accept this
recommendation.
15. Indemnification
Section 5.2. Indemnification. Licensee and any agent, contractor, or subcontractor
of Licensee shall defend, indemnify, and hold harmless CPS Energy and its
officials, officers, board members, council members, commissioners,
AT&T Comments at 7; TWC Relined Comments at 8; and Mobilitie Comments at 11-12.
TWC Redlined Comments at 8 and Grande Comments.
55 AT&T Comments at 9 and Mobilitie Comments at 13.
53
54
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representatives, employees, agents, and contractors (each an “Indemnitee,” and
collectively, the “Indemnitees”) against any and all liability, costs, damages
(including indirect or consequential damages), fines, taxes, special charges by
others, penalties, payments (including payments made by Indemnitees under any
Workers’ Compensation Laws or under any plan for employees’ disability and
death benefits), and expenses (including reasonable attorneys’ fees of Indemnitees
and all other costs and expenses of litigation) of every kind or character arising in
any manner, connected with, occurring incident to, or in the performance of this
Agreement, including any act, omission, failure, negligence, or willful misconduct
in connection with the construction, maintenance, repair, presence, use,
relocation, transfer, removal, or operation by Licensee or Licensee’s officers,
directors, employees, agents, or contractors of Licensee’s Attachments and
Communications Facilities, the Communications Facilities of any Other
Attaching Entity, or CPS Energy Facilities (“Covered Claims”). Licensee’s
indemnification obligations for Covered Claims shall apply irrespective of any
negligence or alleged negligence of Indemnitees except to the extent that CPS
Energy’s gross negligence or willful misconduct gives rise to such Covered Claims.
Except when resulting from CPS Energy’s gross negligence or willful misconduct,
Covered Claims include, but are not limited to, the following:
Stakeholders’ Comments:
Google objects to the indemnification clause covering agents, contractors, or
subcontractors of Licensee. Google argues that requiring Licensee’s agents, contractors,
or subcontractors to indemnify CPS Energy would create obligations on entities that are
not parties to the Agreement.56 In addition, AT&T, Google, Mobilitie, and Conterra in
different variations all oppose indemnifying CPS Energy for damages and other losses
arising “in any manner connected with, [or] occurring incident to” the performance of
the Agreement.57 Next, Mobilitie and Conterra would eliminate the obligation to
indemnify CPS Energy for damages and other losses to CPS Energy resulting from
Licensee’s relocation or transfer of the “Communications Facilities of any Other
Attaching Entity.”58 Further, Conterra would eliminate indemnification of CPS Energy
for damages or losses to CPS Energy resulting from its own construction, use, relocation,
Google Comments.
AT&T Comments at 9, Google Comments, Mobilitie Comments at 13, and Conterra Comments at 13.
58 Mobilitie Comments at 13 and Conterra Comments at 13.
56
57
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transfer, or removal of CPS Energy Facilities.59 Moreover, AT&T, Mobilitie, and Conterra
in various degrees object to indemnification of CPS Energy for its own negligence. 60
Finally, TWC proposes to completely replace the indemnification clause protecting CPS
Energy with a clause under which both parties would have an obligation to indemnify
each other.61
CPS Energy’s Response:
In response to Google’s point that the indemnification clause should not cover Licensee’s
agents, contractors, or subcontractors because these entities are not parties to the contract,
CPS Energy is persuaded that the Agreement cannot bind entities that are not parties to
the Agreement, and without placing further obligations on Licensee to procure such
agreements, is of limited utility. However, eliminating that clause nevertheless leaves
Licensee responsible for damages and other losses to CPS Energy caused by Licensee’s
agents, contractors, or subcontractors. Elsewhere in Section 5.2 Licensee is bound to
indemnify CPS Energy for damages and losses arising from the performance of this
Agreement, including any act or omission in connection with the construction and other
activities by Licensee’s agents or contractors that result in such damages or losses. To be
clear, CPS Energy will look exclusively to Licensee for indemnification from damages
and other losses caused by Licensee’s agents and contractors. CPS Energy understands
Google’s view that CPS Energy need not dictate to Licensee how to manage liability
related to its own agents and contractors for damages to CPS Energy caused by such
agents and contractors. But on the other side of that coin, Google or any other Licensee is
not shielded from liability to CPS Energy for damages caused by Licensee’s agents or
contractors on the basis that such agents or contractors are not themselves directly liable
to CPS Energy for the damages they have caused. In the past, some Attaching Entities
have attempted to avoid liability for losses that their contractors caused. Because CPS
Energy does not have contractual privity with Licensee’s agents and contractors acting
on behalf of Licensee, it will look exclusively to Licensee for indemnification protection
related to Licensee’s contractors. This is consistent with the claims provisions in the
Standards that provide that when Licensee fails to pay an undisputed claim for damages
caused by Licensee or its contractors, Licensee is in violation of the Standards, resulting
Conterra Comments at 8.
AT&T Comments at 9, Mobilitie Comments at 13, and Conterra Comments at 13.
61 TWC Redlined Comments at 8.
59
60
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in the suspension of any existing pole attachment applications and rejection of any future
applications until such time as the claim is satisfied. 62 Claiming that Licensee’s agent or
contractor is directly liable to CPS Energy for a loss is not an appropriate basis for
disputing a claim. CPS Energy will accept Google’s recommended revision and leave
Licensees to arrange for their own liability protection with regard to their agents and
contractors.
Concerning AT&T’s, Google’s, Mobilitie’s, and Conterra’s position that including the
phrase “in any manner connected with, [or] occurring incident to” unreasonably expands
the scope of covered claims for damages and other losses to unforeseeable territory, CPS
Energy is sympathetic to this claim. Accordingly, CPS Energy will delete this phrase
limiting the section to the indemnification of CPS Energy for damages and other losses
“of every kind or character arising from the performance of this Agreement, including
any act, omission … by Licensee, or Licensee’s … contractors.” This language is broad
enough to protect CPS Energy from damages and other losses resulting from Licensee’s
performance of the Agreement or Licensee’s contractors’ performance of Licensee’s
activities authorized under the Agreement.
Turning to Mobilitie’s and Conterra’s argument that the indemnification clause should
not protect CPS Energy for damages caused by Licensee or Licensee’s contractors related
to the relocation or transfer of the “Communications Facilities of any Other Attaching
Entity,” CPS Energy finds this recommendation unacceptable. Under the Standards,
every Licensee will benefit from the installation of new Attachments subject to the
“simple transfers” of Communications Facilities of Other Attaching Entities. Therefore,
the inclusion of the language objected to by Mobilitie and Conterra is intended to protect
CPS Energy from losses resulting from the one-touch process, which benefits Attaching
Entities. Further, Conterra would go beyond this proposal and eliminate indemnification
of CPS Energy for damages caused by Licensee or Licensee’s contractors related to
construction, use, relocation, transfer, or removal of CPS Energy Facilities. In effect,
Conterra wants to use CPS Energy’s poles for the installation of its Attachments and
engage in the construction make-ready process necessary for Attachments which may
include the relocation or transfer of CPS Energy’s electric distribution and/or
communications facilities, including the removal and replacement of CPS Energy poles
to accommodate Conterra’s Attachments, but in the event of a loss occurring in the
62
See Standards at Sec. II.J.4, p. 28.
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CPS Energy’s Response to Comments
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process, it does not want to indemnify CPS Energy for such damage. CPS Energy does
not accept Mobilitie’s or Conterra’s suggested revisions to Section 5.2.
With respect to AT&T’s, Mobilitie’s, and Conterra’s objection to indemnification of CPS
Energy for its own acts of gross negligence, CPS Energy agrees to eliminate the word
“gross” from the phrase “gross negligence” from Section 5.2 as well as Section 5.1.
However, once the word “gross” is eliminated, the intent that Licensee not be responsible
for Covered Claims to the extent of Indemnitee’s negligent conduct is not expressed in
the clearest grammar. By removing the word “gross,” it is CPS Energy’s intent to limit
Licensee’s liability for Covered Claims to its pro rata share when CPS Energy’s “negligent
or willful misconduct gives rise to such Covered Claim.” CPS Energy will revise Section
5.2 the sentence to express this intention. Consequently, Licensee’s indemnification
obligations for covered claims will apply to all claims, except to the extent that CPS
Energy‘s actual negligence or willful misconduct gives rise to such Covered Claims.
Finally, TWC’s proposal to replace the indemnification clause with a version under which
both parties would indemnify each other is inappropriate under the Agreement. The
purpose of the Agreement is for CPS Energy to grant Licensee access to its electric
distribution poles to attach Communications Facilities—access it has no obligation to
grant. In effect, Licensee is leasing one foot of space on a CPS Energy pole for every wire
Attachment. The make-ready construction process necessary to install such Attachments
places CPS Energy’s facilities at risk of damage and its customers’ services at risk of
interruption as a result of the construction activities undertaken by Licensee and its
contractors. Accordingly, the Agreement includes an indemnification clause to protect
CPS Energy in the event of losses caused by Licensee or its contractors. Therefore, TWC’s
proposed revision is rejected.
16. Covered Claims
Section 5.2.1. Claims related to intellectual property infringement, libel and
slander, trespass, cybersecurity breaches, cyber-attacks, loss of digital or online
data, and infringement of patents;
Stakeholders’ Comments:
Google complains that Section 5.2.1 includes indemnification claims where Licensee’s
“obligations are not cabined by any relation to design, construction, installation, or
maintenance” of its Communications Facilities attached to CPS Energy poles, such as
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claims related to cybersecurity breaches, loss of data, and intellectual property
infringement.63 Google would limit Section 5.2.1 to claims related to the design,
construction, installation, or maintenance of its Communications Facilities.
CPS Energy’s Response:
First, of greatest importance, Sections 5.2.1 through 5.2.8 are illustrative, not limiting, of
the scope of indemnification provided.
Second, specifically in response to Google’s concern, Google fails to account for the nexus
between its installations and potential harm to CPS Energy. In the case of Section 5.2.1,
Google would presumably limit covered claims to those for intellectual property
infringement related to the installation of its Communications Facilities, eliminating
claims for cybersecurity breaches or cyber-attacks, as well as claims for trespass, on the
basis that there is no relationship between these types of claims and Licensee’s
Attachments of Communications Facilities. This is an incorrect assumption. For instance,
in order for Google and other Licensees to deploy or expand their communications
networks, CPS Energy will provide access to internal GIS data and software applications
related to pole locations and the identification of underground utility facilities (utility
locates) to use in the make-ready engineering design process. This will give Licensees
access to portions of CPS Energy’s internal cyber-systems that could be maliciously
leveraged to initiate cyber breaches or launch a cyber-attack on a myriad of internal cyber
systems, including potentially placing the electric grid in jeopardy throughout the CPS
Energy service area. This is not a far-fetched scenario, as other utilities across the country
have discovered, especially when such access is granted to leading edge companies such
as Google and other Attaching Entities within the communications industry. Regarding
trespass, Licensee’s Communications Facilities installed on CPS Energy’s poles could
result in trespass claims against CPS Energy where Licensee fails to obtain the necessary
legal authorization to install its facilities on private or public property where CPS Energy
has properly installed poles. Such illustrative trespass claims are covered in Section 5.2.5
and therefore need not be included here. Again, while the clause is merely illustrative
of the broader obligation to indemnify, CPS Energy will nevertheless revise this section
to limit its illustration of claims related to intellectual property infringement,
63
Google Comments.
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cybersecurity breaches, and cyber-attacks related to the design, installation, or
construction of Licensee’s Communications Facilities.
17. Duty to Inform and Protect
Section 6.3. Duty to Inform and Protect. Licensee further warrants that it
understands the imminent dangers, INCLUDING
SERIOUS
BODILY
INJURY
OR
DEATH
FROM ELECTROCUTION, inherent in the work
necessary to make installations on Poles by Licensee’s employees, servants,
agents, contractors or subcontractors, and Licensee accepts as its duty and sole
responsibility to notify, inform, and keep informed Licensee’s employees,
servants, agents, contractors or subcontractors of such dangers, and to keep them
informed regarding same. Licensee also warrants that it will implement all
precautions, procedures, and measures in the Pole Attachment Standards to
protect public safety and the safety of personnel working close to electrified
lines.
Stakeholders’ Comments:
Mobilitie, AT&T, and TWC object to the obligation to “warrant” that they understands
the imminent dangers, including seriously bodily injury or death from electrocution,
inherent in pole attachment work, and to inform their employees and contractors of such
imminent dangers.64 Mobilitie goes farther and opposes its duty to “warrant” that it will
implement “all” precautions, procedures, and measures in the Standards to protect
public safety and the safety of personnel working close to electrified lines. In addition,
Mobilitie would remove the duty to inform and keep informed its employees and
contractors of the dangers of electrocution.65
CPS Energy’s Response:
CPS Energy finds Mobilitie’s, AT&T’s, and TWC’s objections without merit and
dangerous to the lives of their employees, contractors, and public safety in general.
Sections 6.2 and 6.3 area the only provisions throughout the Agreement where Licensee
is required to make any “warranty,” in this case to warrant that it understands the
dangers associate with working in the vicinity of electrified lines and has undertaken the
duty to inform its employees and contractors of such dangers. Requesting the removal
64
65
Mobilitie Comments at 17, AT&T Comments at 11, and TWC Redlined Comments at 9.
Mobility Comments at 17.
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of these obligations is troubling and CPS Energy will not be a party to such treatment.
Mobilitie’s further objections rise to the level of showing little respect for the lives of its
employees and contractors. In effect, Mobilitie would eliminate its obligation to gain the
requisite understanding of the dangers associated with working in close proximity to
electrified lines, the duty to inform its employees and contractors doing such work, and
the duty to properly train and equip its employees and contractors in order to protect
themselves from electrocution. By its proposed revisions, Mobilitie would pick and
choose the safety requirements in the Standards that it concluded were appropriate to
protect the safety of employees and contractors working close to electrified lines from the
perspective of an uninformed observer. This is unacceptable. AT&T would comply with
all safety requirements in the Standards, but would limit their application to “Licensee’s”
personnel. This modification could be interpreted to include AT&T’s employees but
exclude its contractors. Section 6.3 in intended to cover all personnel representing
Licensee, including employees and contractors. All of these proposals would limit the
safety obligations of Licensee to inform, train, and protect personnel working in close
proximity to electrified lines. Therefore, Mobilitie’s, TWC’s, and AT&T’s recommended
revisions are rejected.
18. Protection of Utility Data
Section 6.4. Protection of Utility Data. During the term of this Agreement,
Licensee may have access to CPS Energy’s geodatabase electronic records of Pole
locations, strand and underground routes, substation locations, and other
pertinent information related to CPS Energy’s electric distribution system. Such
electronic records consist of proprietary and confidential CPS Energy
information related to critical infrastructure and shall be treated as confidential
by Licensee and protected from public disclosure. Licensee shall implement
physical and cybersecurity measures to protect the geodatabase information
from public disclosure, theft, and widespread internal distribution in compliance
with the Federal Trade Commission’s “Start with Security” cybersecurity
guidelines.
Stakeholders’ Comments:
Conterra opposes the obligation on Licensee to implement the physical and cybersecurity
measures outlined in the Federal Trade Commission’s “Start with Security” guidelines
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on the basis that the guidelines are not intended to be enforced as binding requirements.66
AT&T, TWC, and Mobilitie would make this section mutually applicable whereby both
parties would protect the confidential data of the other party.67 In particular, AT&T and
TWC suggest additional revisions to recognize that CPS Energy will receive network
information from these parties that is proprietary and confidential.68
CPS Energy’s Response:
CPS Energy finds merit in the positions of Conterra, AT&T, and TWC. It is appropriate
to recognize that under the Standards, any Licensee that is a communications provider
will be subject by default to the pole attachment permitting process under the
Competitive Provider – Standard Process.69 Moreover, any communications provider
may choose to operate under the Competitive Provider – Network Upgrade Process70 or
the Competitive Provider – Area Wide Network Deployment Process.71 Those Licensees
that choose to operate under either of these two processes will be required to submit a
“Deployment Plan” as defined in the Standards which shall include proprietary and
confidential network deployment information. A Licensee, such as Conterra, expected
to operate under the default Competitive Provider – Standard Process, will not be
required to provide CPS Energy proprietary and confidential network deployment plan.
However, such Licensee may provide CPS Energy proprietary and/or confidential
information in the course of doing business. All Licensees are expected to protect CPS
Energy’s proprietary and confidential geodatabase information, such as GIS data of CPS
Energy’s electric distribution facilities and the underground location of electric and gas
facilities. A change to the language respecting the data of Licensees is appropriate. Thus,
CPS Energy will divide Section 6.4 into two subsections. The first subsection will be
applicable to Licensees and will require Licensee to protect CPS Energy utility data. The
second subsection will apply to Licensees and permit them to designate confidential
information on a reasonable basis and acknowledge CPS Energy’s obligation to follow
the strictures of the Texas Public Information Act in the event that a third party requests
access to the data of a Licensee.
Conterra Comments at 15.
AT&T Comments at 11, TWC Redlined Comments at 9, and Mobilitie Comments at 17.
68 Id.
69 Standards at Sec. IV.B.
70 Id., at Sec. IV.E.
71 Id., at Sec. IV.D.
66
67
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Conterra is correct in pointing out that the Federal Trade Commission’s Start with
Security” guidelines are best practices not intended to be enforced. Therefore, CPS
Energy will amend Section 6.4 to require Licensee to implement physical and
cybersecurity measures to protect CPS Energy’s geodatabase information “such as the
best practices outlined in the Federal Trade Commission’s ‘Start with Security’
cybersecurity guidelines.”
19. Insurance Coverage
Section 7.2. Insurance Coverage. Licensee agrees at all times to carry and
maintain in full force insurance sufficient to fully protect CPS Energy and its
directors, officers, employees and agents from and against any and all claims or
demands for damages, corresponding with Licensee’s option under Appendix A.
The appropriate insurance requirements applicable to Licensee based on the
option selected in Appendix A are listed on Appendix B. Licensee understands that
failure to maintain the appropriate insurance coverage at any time during the
term of this Agreement shall constitute a breach of this Agreement.
Stakeholders’ Comments:
AT&T proposes revisions to limit insurance coverage to Licensee’s indemnification
obligations.72 TWC would eliminate CPS Energy’s option to procure an insurance policy
on behalf of Licensee and at Licensee’s expense for failure to obtain or renew insurance
coverage.73 Grande finds burdensome the requirement that Licensee provide CPS Energy
a copy of its insurance policy and opines that providing a certificate of insurance should
be sufficient proof of insurance.74
CPS Energy’s Response:
AT&T proposal to limit insurance coverage to Licensee’s indemnification obligation is
without merit. In response to the indemnity section, AT&T proposed to revise the
indemnification clause to limit the liability of both parties in any given fiscal year at no
more than the annual pole attachment rental payments made by Licensee irrespective of
the potential damage to CPS Energy’s facilities caused by Licensee’s acts and omissions.
Here, AT&T would limit insurance coverage to its annual rental payments regardless of
AT&T Comments at 13.
TWC Redlined Comments at 28.
7474 Grande Comments.
72
73
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the amount of damages to CPS Energy caused by AT&T’s acts and omissions. The
purpose of insurance coverage is to protect against unforeseen and catastrophic events.
AT&T’s proposal would defeat this purpose. Thus, this proposal is not appropriate.
Likewise, TWC’s proposal to eliminate CPS Energy’s option to reinstate an insurance
policy at the expense of Licensee when Licensee has allowed its insurance coverage to
lapse is also without merit. See further discussion on this issue in section 42 herein (page
56).
Grande, however, points to an insurance requirement that is mechanically burdensome
and offers an appropriate alternative. CPS Energy will amend the insurance provisions
to provide that Licensee may provide an insurance certificate as proof of insurance
coverage.
20. Optional Self-Insurance
In individual discussions, AT&T expressed a desire that the Agreement include an option
for a Licensee to meet the insurance requirements, in whole or in part, through selfinsurance. CPS Energy has no objection to this request provided it does not in any
manner result in a reduction of rights and benefits otherwise available to CPS Energy
under the requirements of Appendix B and certain financial responsibility criteria is met.
Accordingly, CPS Energy will include a self-insurance provision in the Agreement
applicable to any Attaching Entity to select this option provided it meets certain objective
credit rating criteria.
21. Authorization Not Exclusive
Section 8. Authorization Not Exclusive. CPS Energy shall have the right to
grant, renew and extend nondiscriminatory rights and privileges to others not
party to this Agreement, by contract or otherwise, to use CPS Energy Facilities.
Such rights shall not interfere with the privileges granted to Licensee by the
specific Permits issued pursuant to the Pole Attachment Standards. Licensee’s
privileges under a Permit issued pursuant to the Pole Attachment Standards
shall not interfere with the privileges of any Other Attaching Entity that has
been issued a Permit. In the event of a conflict between the privileges of Licensee
and any Other Attaching Entity that cannot be resolved by reference to the Pole
Attachment Standards, CPS Energy shall resolve the conflict as the Pole owner
based on non-discriminatory principles.
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Stakeholders’ Comments:
TWC asserts that Licensee has a legal right to attach to CPS Energy’s poles. Therefore,
the term “privilege” in Section 8, and throughout the Agreement, should be replaced with
“right.” Moreover, TWC proposes to revise Section 8 by providing that in the event of a
conflict between the privileges of Licensee and those of any Other Attaching Entity that
cannot be resolved by reference to the Standards, instead of CPS Energy resolving the
dispute, “the Attaching Entities may avail themselves of remedies provided by law.”75
CPS Energy’s Response:
Regarding TWC’s assertion that Attaching Entities have a legal right to attach to CPS
Energy’s poles, there is no statutory authority that requires a municipally-owned utility
to grant a communications provider access to its utility poles. Under Chapter 283 of the
Texas Local Government Code, a certificated telecommunications provider (“CTP”),
which includes “a person who has been issued a certificate of convenience and necessity,
certificate of operating authority, or service provider certificate of operating authority by
the [Texas Public Utility] Commission to offer local exchange telephone service or a
person who provides voice service,”76 that meets the requirements of this chapter is
granted access to municipal rights-of-way. Specifically, a CTP that complies with
applicable statutory and regulatory requirements of Chapter 283 "may erect poles or
construct conduit, cable, switches, and related appurtenances and facilities and excavate
within a public right-of-way to provide telecommunications service.”77 Similarly,
pursuant to Chapter 66 of the Texas Utilities Code, a holder of a state-issued certificate of
franchise authority receives “a grant of authority to provide cable service or video
service” and the “authority to use and occupy the public rights-of-way in the delivery of
that service.”78 Accordingly, “[a] municipality shall allow the holder of a state-issued
certificate of franchise authority to install, construct, and maintain a communications
TWC Redlined Comments at 10.
TEX. LOCAL GOV’T CODE ANN. §283.002(2).
77 Id. at §283.052(a)(1). Note that the term “public right-of-way” is defined as “the area on, below, or
above a public roadway, highway, street, public sidewalk, alley, waterway, or utility easement in which
the municipality has an interest. The term does not include the airwaves above a right-of-way with
regard to wireless telecommunications.” Id. at §283.002(6).
78 TEX. UTIL. CODE ANN. §66.003(c). Note that the term “public right-of-way” is defined as “the area on,
below, or above a public roadway, highway, street, public sidewalk, alley, waterway, or utility easement
in which the municipality has an interest.” Id. at §66.002(8).
75
76
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network within a public right-of-way and shall provider the holder of a state-issued
certificate of franchise authority with open, comparable, nondiscriminatory, and
competitively neutral access to the public right-of-way.”79 These statutory provisions
grant communications providers access to municipal rights-of-way, not access to the
utility poles of municipally owned utilities.
TWC does not have a legal right under either Chapter 283 of the Local Government Code
or Chapter 66 of the Utilities Code to access CPS Energy’s utility poles. However, if CPS
Energy grants such a privilege to it or a competing provider, Section 54.204 of the Utilities
Code prohibits CPS Energy from “discriminat[ing] against a certificated
telecommunications provider regarding … a municipal utility pole attachment rate or
term,” and from charging any Attaching Entity, “a pole attachment rate … that exceeds
the fee … permitted to charge under the rules adopted by the Federal Communications
Commission under 47 U.S.C. Section 224(e). Moreover, CPS Energy must “charge a
single, uniform pole attachment … rate” to all qualifying Attaching Entities.”80 In
addition, with regard to a holder of a state-issued certificate of franchise authority, once
CPS Energy has granted access to its poles it is prohibited from discriminating regarding
“a municipal utility pole attachment term.”81
The relevant statutory provisions cited above, do not specify the legal instrument under
which a municipally owned utility may grant access to its utility poles. CPS Energy may
grant such access by way of generally applicable Pole Attachment Standards, contracts,
or a combination thereof. CPS Energy finds that there is no basis for TWC’s assertion that
it has a legal right, as opposed to a privilege, to access CPS Energy’s utility poles, but
once access is granted, CPS Energy understands it must comply with the applicable
statutory obligations. It is also understood that once the Agreement is executed, Licensee
does have contractual rights to access CPS Energy poles subject to the terms and
conditions of the Standards and the Agreement.
With regard to TWC’s idea to eliminate CPS Energy’s obligation to resolve conflicts
between Attaching Entities that cannot be resolved by reference to the Standards and
instead allow the Attaching Entities to resort to any remedies available by law for conflict
resolution, it would appear that this proposal would only increase disputes. CPS Energy
TEX. UTIL. CODE ANN. §66.010(a).
Id. at §54.204(a) and (c).
81 Id. at 66.010(a).
79
80
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understands that its poles are viewed as essential facilities by communications providers
for expanding existing, and deploying new, broadband networks. Among some
competitive communications providers, having first access to utility poles, while denying
or delaying a competitor’s access, may be viewed as an acceptable business strategy to
protect their share of the lucrative communications market. TWC’s proposal would have
the effect of encouraging such behavior, or at least leaving the option open for the threat
of such behavior, which would pin CPS Energy as the facilities owner between the
competing interests of two providers before some third-party tribunal. This is not
acceptable to CPS Energy. It would be equivalent of one tenant bringing a legal action
against another tenant over the use of available building space without consulting the
building owner/landlord. TWC’s suggestion is rejected.
22. Assignment
Section 9.2. Obligations of Assignee/Transferee and Licensee. Notwithstanding
any provision in this Agreement to the contrary, Licensee shall have the privilege
to assign this Agreement to any parent, subsidiary, Affiliate, or any person, firm,
or corporation that shall control, be under the control of, or be under common
control with Licensee, or to any entity into which Licensee may be merged or
consolidated or which purchases all or substantially all of the assets of Licensee
that are subject to this Agreement. No assignment or transfer under this Section
9 shall be allowed, however, until the assignee or transferee becomes a signatory
to this Agreement and assumes all obligations of Licensee arising under this
Agreement. Licensee shall furnish CPS Energy with prior written notice of the
transfer or assignment, together with the name and address of the transferee or
assignee. Notwithstanding any assignment or transfer, Licensee shall remain
fully liable under this Agreement and shall not be released from those claims that
arose under this Agreement for the time period Licensee operated pursuant to the
Agreement.
Stakeholders’ Comments:
TWC commented that Licensee should be able to assign the Agreement without the
consent of CPS Energy and without prior written notice. 82 In addition, TWC and Grande
object to Licensee remaining fully liable under the Agreement following its assignment
82
TWC Redlined Comments at 11.
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to a third-party. They assert that liability should be limited to claims that arose during
the time period Licensee operated under the Agreement.83
CPS Energy’s Response:
CPS Energy finds merit in the position expressed by both TWC and Grande with regard
to limiting Licensee’s liability to claims that arose during the time period Licensee
operated under the Agreement. CPS Energy believes this to be the proper interpretation
of Section 9.2. However, this position is contradictory to TWC’s initial proposal to Section
9.2 that Licensee be able to assign the Agreement without the consent of CPS Energy and
without prior written notice, for Licensee could assign the Agreement to a third-party
that refuses to accept the terms of the Agreement in their entirety. In addition, Licensee
could assign the Agreement unbeknown to CPS Energy to a third-party that does not
have authority to use municipal rights-of-way within CPS Energy’s service area or that
uses wireless technology outside the scope of the Agreement. Accordingly, CPS Energy
agrees that Licensee’s liability under the Agreement should be limited to claims that arose
during the time period Licensee operated under the Agreement and will revise Section
9.2 to make this clarification, but CPS Energy does not accept TWC’s recommendation to
assign the Agreement without the consent of CPS Energy.
23. Sub-Licensing
Section 9.3. Sub-licensing. Licensee shall not sub-license space on a CPS Energy
Pole to any third- party, or place an Attachment or Overlash for the benefit of
any third-party, including an Affiliate, on a Pole or Attachment Arm. Any such
action shall constitute a material breach of this Agreement. The use of Licensee’s
Communications Facilities by third-parties (including, but not limited to, leases
of dark fiber) that involves no additional Attachment or Overlash is not subject
to the provisions of this Section 9.3.
Stakeholders’ Comments:
Conterra takes the position that the entire section should be eliminated, and argues that
as long as Licensee complies with CPS Energy’s permit requirements it should be able to
sublease capacity on its own facilities to another entity. Mobilitie calls for modifying the
section to allow subleasing with the consent of CPS Energy.
83
Id. and Grande Comments.
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CPS Energy’s Response:
Conterra appears to misunderstand the purpose of this section. CPS Energy has no
objection to a communications provider offering network capacity on its own facilities to
a third-party as a “leased” telecommunications service or dark fiber. Nevertheless, we
will revise the parenthetical in the second sentence to read “(including, but not limited
to, the lease of dark fiber or leased telecommunication services).” Mobilitie’s proposal to
allow subleasing with CPS Energy’s consent would create an exception to the general
rule that is unacceptable to CPS Energy.
The intention of this section is to prohibit Licensee from subleasing the one foot of pole
space per Attachment on CPS Energy’s poles to a third-party. This should be self-evident
in that the Standards and NESC regulations require at least one foot of clearance between
Attachments belonging to different Attaching Entities.
24. Termination of Agreement
Section 11.1. CPS Energy shall have the right, pursuant to the procedure set out
in Section 11.2, to terminate this entire Agreement, or any Permit issued pursuant
to the Pole Attachment Standards, and to pursue any and all remedies provided
in this Agreement, whenever Licensee is in default of any term or condition of
this Agreement, including, but not limited to:
Stakeholders’ Comments:
AT&T and Grande object to CPS Energy’s ability to terminate the “entire Agreement” as
opposed to only a specific permit, whenever Licensee is in default of any term or
condition of the contract.84 AT&T would require a “material breach of this entire
Agreement” as a condition for termination.85 Mobilitie and TWC would require an
“uncured” default, to which TWC would add of a “material” term of the contract, as a
condition of termination.86
AT&T Comments at 15, and Grande Comments.
AT&T Comments at 15.
86 TWC Redlined Comments at 11, and Mobilitie Comments at 21.
84
85
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CPS Energy’s Response:
The concerns of AT&T, Grande, Mobilitie, and TWC all amount to the concept of having
an opportunity to cure an event of default prior to CPS Energy exercising contract
termination. The right to cure is addressed in Subsections 11.2 to 11.4.
25. Conditions of Termination
Subsection 11.1.1. Construction, operation or maintenance of Licensee’s
Attachments or Communications Facilities in violation of law or in aid of any
unlawful act or undertaking;
Stakeholders’ Comments:
AT&T suggests that CPS Energy should only be able to terminate the Agreement for
Licensee’s failure to meet contractual obligations related to construction, operation, or
maintenance of its Attachments or Communications Facilities for “knowingly” aiding
any unlawful act or undertaking.87
CPS Energy’s Response:
AT&T’s position implies that ignorance of contractual and statutory legal obligations is
an acceptable defense to breach of contract. It is well established that ignorance of law is
not a defense against a civil finding of violation of a statutory or contractual duty by a
legal tribunal. CPS Energy finds this proposal unreasonable and unacceptable.
26. Conditions of Termination
Subsection 11.1.4. Failing to accept amendments to the Pole Attachment
Standards;
Stakeholders’ Comments:
There is agreement among AT&T, TWC, Mobilitie, and Conterra in opposition to written
affirmative acceptance of amendments to the Pole Attachment Standards. All parties
87
AT&T Comments at 15.
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recommend deleting this subsection.88 Conterra adds that Licensee must have access to
“a method for challenging a proposed pole attachment standard amendment.”89
CPS Energy’s Response:
CPS Energy agrees with the recommendation to delete this clause. Written compliance
with future amendments to the Standards is addressed under Section 12, including
potential contract termination.
27. Conditions of Termination
Subsection 11.1.5. Failing to pay in full an invoice for any charge, fee, penalty,
or interest as provided in this Agreement or the Pole Attachment Standards; or
Subsection 11.1.6. Failing to promptly and fully perform any other covenant,
condition, provision, or agreement contained in this Agreement, including
without limitation the Pole Attachment Standards.
Stakeholders’ Comments:
TWC and Mobilitie proposed to delete Subsection 11.1.5.90 TWC would also delete
Subsection 11.1.6.91 Whereas, AT&T and Conterra would limit contract termination
under Subsection 11.1.5 to Licensee’s failure to pay an “undisputed” invoice.92
Concerning Subsection. 11.1.6, Mobilitie would limit contract termination for failure to
comply with a “material” condition of the Agreement or Standards.93 With regard to
these subsections, TWC argues these contractual termination and default provisions are
“unreasonably punitive, subjecting Licensee to forced removal of its Attachments for any
infraction of the Agreement or Standards if any such default is not cured within 15 days
(any extension requires CPS Energy’s agreement).”94
AT&T Comments at 15, TWC Redlined Comments at 12, Mobilitie Comments at 21, and Conterra
Comments at 17.
89 Conterra Comments at 17.
90 TWC Redlined Comments at 12, and Mobilitie Comments at 21.
91 TWC Redlined Comments at 12.
92 AT&T Comments at 15, and Conterra Comments at 17.
93 Mobilitie Comments at 21.
94 TWC Comments at 5.
88
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CPS Energy’s Response:
As a matter of fundamental fairness, an owner of property is entitled to collect the full
contractual rent or fee from a tenant or licensee for the use of its property. AT&T and
Conterra would place the burden on CPS Energy to file a legal claim against Licensee,
while Licensee continues to enjoy the use of the CPS Energy’s property, in order to
recover charges in full. In the context of pole attachments, the Licensee is not without a
remedy if it believes CPS Energy is imposing an unreasonable pole attachment rent.
Pursuant to Section 54.204 of PURA, the Licensee has the right to file a petition before the
Texas PUC challenging CPS Energy’s calculation of the pole attachment rate. Thus, CPS
Energy will not delete Subsection 11.1.5. With regard to Subsection 11.1.6, CPS Energy
agrees with TWC’s concern over the limited time period to cure an event of default.
Consequently, CPS Energy will increase the time period to cure starting with Subsection
11.2.
28. Process to Cure an Event of Default
Section 11.2. CPS Energy will notify Licensee in writing within fifteen (15)
calendar days, or as soon as reasonably practicable, of any default under Section
11.1, above. Licensee shall take immediate corrective action to cure such default
within fifteen (15) calendar days or such longer time as may be agreed by the
parties in writing. Licensee shall confirm in writing to CPS Energy that the
default has been cured.
Section 11.3. If Licensee fails to cure such default within the applicable time,
CPS Energy may immediately terminate this Agreement or any Permit and
provide written notice to Licensee of such termination.
Section 11.4. In the event of termination of this Agreement or any of Licensee’s
privileges or authorizations hereunder, Licensee shall remove its Attachments at
Licensee’s expense pursuant to the Pole Attachment Standards If Licensee fails
to remove its Attachments as provided in the Pole Attachment Standards, the
Attachments shall be deemed abandoned, and CPS Energy may remove the
Attachments at Licensee’s expense.
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Stakeholders’ Comments:
TWC and Mobilitie both suggest that the cure period be extended from 15 days to 30 days
from receipt of notice of default from CPS Energy.95 In addition, TWC requests that the
agreement to extent the cure period “not be unreasonably withheld,” and Mobilitie
suggests that the cure period be extended if the default cannot be accomplished in such
time period, provided that the Licensee has commenced and is pursuing such cure.
AT&T argues that it is not reasonable to require that it remove its facilities in the event of
a termination for breach unless such a requirement would also apply to CPS Energy’s
attachments on AT&T’s poles. AT&T also argues that it would be more reasonable to
suspend the right to make new attachments going forward.96 Grande renews its
argument that CPS Energy should limit its remedy to the termination of specific permits
rather than the entire agreement in cases where the default is relatively minor involving
a small number of poles.97 TWC wants to assert the right to invoke the dispute resolution
requirements to challenge a finding that it is in default. 98 Finally, Mobilitie wants to
require that any removal of its facilities by CPS Energy in the event of a default will only
be at CPS Energy’s reasonable and documented costs.99
CPS Energy’s Response:
CPS Energy believes that in most instances it will be possible for an Attaching Entity to
cure a default within 15 days of notice, however, it recognizes that in some instances the
nature or scope of the default may require additional time to cure. CPS Energy is revising
the provision to address this concern, in addition CPS Energy agrees with TWC that in
such instances it will not unreasonably withhold its agreement to extend the period of
time for cure and will revise Section 11.2 accordingly. The addition of this clarification
should remove the need for Mobilitie’s suggested revision.
CPS Energy believes that Grande’s concern is misplaced. The Agreement provides CPS
Energy the discretion to terminate individual permits rather than the entire Agreement
when such remedy is more appropriate given the scale and nature of the default. CPS
Energy is not in the practice of routinely terminating pole attachment agreements for
TWC Redlined Comments at 12, and Mobilitie Comments at 21.
AT&T Comments at 16.
97 Grande Comments.
98 TWC Redlined Comments at 12.
99 Mobilitie Comments at 23.
95
96
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cause until after significant efforts have been exhausted on its part to work with the
defaulting party to remedy the default. In addition, the dispute resolution procedure is
aimed at ensuring that dispute and instances of default can be quickly and reasonably
resolved without resort to a termination. That being said, CPS Energy needs to have the
legal right to terminate an agreement for a default, and is not in a position to spell out in
advance every instance that could give rise to such a situation.
With respect to AT&T’s argument that a party should be allowed to remain on a pole
after an agreement is terminated for cause, CPS Energy has already addressed the fact
that it has no intention of creating an “evergreen” clause that effectively grants perpetual
attachment rights and insulates a party from the consequences of its breach. While any
agreement between CPS Energy and AT&T concerning CPS Energy’s attachments to
AT&T’s poles is beyond the scope of this document, CPS Energy is willing to live by the
terms of any pole attachment agreements that relate to its own rights as an attaching
entity.
CPS Energy agrees that a party would be able to invoke the dispute resolution procedures
in the event of a default but sees no need to restate this point. Finally, in the event of
default and termination, if the Attaching Entity has not removed its facilities in a timely
manner the costs of moving such facilities by CPS Energy would be assessed in
accordance with Section III of the Standards.
29. Term of Agreement
Section 12.1. Initial Term and Renewal. This Agreement shall become effective
on August 1, 2016, and, shall have an initial term of five (5) years. Following the
expiration of the initial term, the Agreement shall automatically renew for
successive one-year terms until such time that the Agreement is terminated by
either Party upon giving the other Party six (6) months’ written notice of
termination or pursuant to the other terms of this Agreement.
Stakeholders’ Comments:
Grande raises the question of whether the six-month written notice of termination should
be given by a certain date prior to the expiration of the initial term or applicable renewal
period. 100
100
Grande Comments.
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CPS Energy’s Response:
It is CPS Energy’s intent that a written notice of termination should be given at least six
months prior to expiration of the initial terms or any successive one-year terms, based on
the effective date of the Agreement. Accordingly, if the effective date of the Agreement
is August 1, 2016, then a notice of termination at the expiration of the initial five-year
term would have to be provided in writing sometime on or before February 1, 2021.
30. Amending Agreement and Pole Attachment Standards
Section 13.1. CPS Energy reserves the right to amend the Pole Attachment
Standards in accordance with their terms. Within thirty (30) days of notice of
CPS Energy’s amendment of the Pole Attachment Standards, Licensee shall
submit in writing a letter in form and substance acceptable to CPS Energy in its
reasonable discretion accepting the amendments to the Pole Attachment
Standards as an amendment to this Agreement (“Amendment Acceptance
Letter”). Failure of Licensee to provide the Amendment Acceptance Letter within
the time required shall constitute an event of default under Section 11, CPS
Energy may terminate this Agreement, and Licensee shall remove all
Attachments in accordance with the Pole Attachment Standards.
Section 13.2. Notwithstanding other provisions of this Agreement, the terms and
conditions of this Agreement shall not be amended, changed, or altered except in
writing signed by authorized representatives of both Parties or upon CPS
Energy’s adoption of amendments to the Pole Attachment Standards and
Licensee’s acceptance thereof in accordance with the terms of this Agreement.
Stakeholders’ Comments:
Both TWC and Mobilitie would strike the requirement that Attaching Entities send a
letter accepting revisions to the Standards, and both have redlined Section 13.2 of the
draft to indicate that the terms and conditions of the Agreement shall not be amended,
changed, or altered except in writing by both parties, which would include amendments to the
Standards.101 For its part, Conterra, while not objecting to the requirement, requests that amendments
to the Standards be subject to the dispute resolution process.102
101
102
TWC Redlined Comments at 13, and Mobilitie Comments at 23.
Conterra Comments at 15.
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CPS Energy’s Response:
As discussed above, the combination of the State’s non-discrimination requirement
coupled with large number of Attaching Entities seeking access to CPS Energy’s facilities
has compelled it to develop uniform Standards that will apply to all Attaching Entities.
At the same time, given the rapidly shifting/evolving communications environment,
CPS Energy must necessarily have the flexibility to adopt reasonable changes to these
Standards to meet these changes. The large number of Attaching Entities using CPS
Energy’s facilities, however, makes it impractical for CPS Energy to enter into renewed
negotiations with every Attaching Entity every time it needs to amend its Standards.
CPS Energy did not unilaterally impose its Standards, but instead sought, considered
and relied up on the input of Attaching Entities in developing them, and CPS Energy
intends to continue to utilize this collaborative process in shaping any future revisions
to the Standards. This commitment on the part of CPS Energy when coupled with and
State law limitations on discriminatory treatment gives Attaching Entities ample
protections.
Moreover, unless required by changes in applicable federal, State or local law, or
applicable national codes, such the NESC, revisions to the Standards would only apply
on a prospective basis; therefore, as a contractual matter, revisions to the Standards will
not impair any existing contractual rights of Attaching Entities.
Finally, in an effort to accommodate concerns expressed by Attaching Entities, CPS
Energy will revise Sections 13.1 and 13.2 to incorporate a process initiated by CPS
Energy prior to the effective date of an amendment to the Standards whereby a form
will be sent by CPS Energy requesting whether Licensee accepts or rejects the
amendment to the Standards. If the form is not received within the specified period,
CPS Energy will stop processing Licensee’s pole attachment applications and follow-up
with a reminder letter. If Licensee notifies CPS Energy that is rejects the amendment to
the Standards, upon confirmation of such selection the parties will agree to meet within
a specified period to discuss terms for contract termination and removal or other
disposition of Licensee’s Attachments. By way of example, this should cover instances
where Licensee has made the decision to sell its communications assets, has filed a
petition for bankruptcy, or made the decision to install its own poles.
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31. Dispute Resolution
Section 14.1. Any disputes related to the day-to-day administration of
the permitting process shall be governed by the dispute resolution
provisions of the Pole Attachment Standards. In the event a dispute arises
between the Parties related to the legal interpretation of any provision of
this Agreement, or any potential conflict between the provisions of this
Agreement and the Pole Attachment Standards, prior to the filing of any
suit or administrative proceeding with respect to such a dispute, the Party
believing itself aggrieved (the “Invoking Party”) shall give written notice
to the other Party. Such a notice will be without prejudice to the Invoking
Party’s right to any other remedy permitted by this Agreement.
Stakeholders’ Comments:
The Standards contain a dispute resolution procedure for addressing the day-to-day
administration of the permitting process. Conterra has requested that the Agreement be
modified to make clear that the dispute resolution procedures contained in the Standards
also addresses issues related to “charges, fees, penalties or interest.”103
CPS Energy’s Response:
CPS Energy does not agree with Conterra’s proposal. The dispute resolution process in
the Standards is limited to addressing operational issues. Any concerns over “charges,
fees, penalties or interest” are contractual matters that should be addressed under the
dispute resolution provisions of the Agreement prior to Licensee taking legal action,
which is Licensee’s right under state law.
32. Notices
Section 15.2. Emergency Contact. CPS Energy and Licensee shall
maintain a staffed 24-hour emergency telephone number, not available
to the general public, at which either Party can report damage to
Attachments or other situations requiring immediate communications
between the Parties. The contact person for each Party shall be qualified
and able to respond to the other Party’s concerns and requests. Failure of
Licensee to maintain an emergency contact shall eliminate CPS Energy’s
103
Conterra Comments at 18.
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liability to Licensee for any actions that CPS Energy deems reasonably
necessary given the specific circumstances of the emergency or other
damage to Attachments requiring notice under this Section 15.2.
Stakeholders’ Comments:
TWC would strike the last clause of the provision which exempts CPS Energy for liability
in an emergency for actions that it reasonably takes given the circumstances if the
Attaching Entity fails to maintain an emergency contact.104
CPS Energy’s Response:
CPS Energy disagrees that this clause should be eliminated. It is the Licensee’s
responsibility to maintain an emergency contact, and if it fails to do so CPS Energy should
not be held liable for actions that it reasonably takes given the circumstances of an
emergency. This remedy is consistent with the reality of round the clock operation of an
electric utility and with the nature of the relationship between the parties. The primary
function of utility poles is to support the provision of electric service. When CPS Energy
has to respond to an emergency concerning a downed pole, it will take whatever actions
are reasonably necessary to restore service. Under these circumstance, CPS Energy’s
actions cannot be held subordinate to a non-responsive Licensee that fails to respond to
the emergency in order to secure its own Communications Facilities.
33. Receivership, Foreclosure or Act of Bankruptcy
Section 16.1. Licensee shall notify CPS Energy in writing not later than
thirty (30) days after the filing or imposition of a receivership,
reorganization, bankruptcy or other such action or proceeding by or
against Licensee.
Section 16.2. The privileges granted to Licensee hereunder, at the option
of CPS Energy, shall cease and terminate one hundred twenty (120) days
after the appointment of a receiver or receivers, or trustee or trustees, or
debtor-in-possession to take over and conduct the business of Licensee
whether in a receivership, reorganization, bankruptcy or other action or
proceeding unless such receivership, trusteeship, or bankruptcy shall have
104
TWC Redline Comments at 15.
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been vacated or dismissed prior to the expiration of said one hundred
twenty (120) days, or unless:
Subsection 16.2.1. To the extent permitted by law, within one hundred
twenty (120) days after their election, appointment, or imposition
such receivers, trustees, or debtor-in-possession shall have complied
fully with all the terms and provisions of this Agreement granted
pursuant hereto, and the receivers, trustees, or debtor-in-possession
within said one hundred twenty (120) days shall have remedied all
defaults under the Agreement, if any; and
Subsection 16.2.2. To the extent permitted by law, within said one
hundred twenty (120) days, such receivers, trustees, or debtor-inpossession shall execute an agreement duly approved by CPS Energy,
whereby such receivers, trustees, or debtors-in-possession assume and
agree to be bound by each and every term, provision and limitation of
this Agreement.
Section 16.3. In the case of foreclosure or other judicial sale of the plant,
property and equipment of Licensee, or any part thereof, including or
excluding this Agreement, CPS Energy may serve notice of termination
upon Licensee, in which event the Agreement herein granted and all
privileges of the Agreement hereunder shall cease and terminate thirty (30)
days after service of such notice, unless:
Subsection 16.3.1. CPS Energy shall have approved the transfer of this
Agreement, as and in the manner this Agreement provides; and
Subsection 16.3.2. The successful bidder shall have agreed with CPS
Energy to assume and be bound by all the terms and conditions of this
Agreement.
Stakeholders’ Comments:
TWC would strike nearly the entirety of Section 16 related to bankruptcy, insolvency and
foreclosure. TWC proposes to limit CPS Energy’s relief in the bankruptcy or insolvency
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to filing a lawsuit or collecting under the performance bond, and does not appear to even
want to recognize an act of foreclosure.105
CPS Energy’s Response:
TWC alone, among all stakeholders, has objected to a relatively routine bankruptcy
provision requiring the Agreement to terminate unless a receiver or some other debtorin-possession on trustee remedies all existing defaults and agrees to be bound to the terms
of the Agreement. Not only do TWC’s proposed remedies impose additional burdens on
CPS Energy, there is no guarantee that they will make CPS Energy whole for existing
obligations, let alone give CPS Energy any assurance going forward. CPS Energy cannot
agree with these proposed changes.
34. Performance Bond
Section 17.1. Prior to making any Attachments under this Agreement, Licensee
shall provide to CPS Energy a performance bond in an amount corresponding
with the requirements of Appendix C. The bond shall be executed with a proper
surety through a company licensed and qualified to operate in the State of Texas
and listed with the U.S. Department of the Treasury as published in the Federal
Register. In addition, the bond shall not be for an amount greater than the
surety's approved limit as referenced in the current Federal Register and be
accompanied by a certified power-of-attorney document, all still subject to the
final approval of CPS Energy. The purpose of the bond is to ensure Licensee’s
performance of all of its obligations under this Agreement and for the payment
by Licensee of any damages, claims, liens, taxes, liquidated damages, penalties,
or fees due to CPS Energy which arise by reason of the construction, installation,
operation, maintenance, transfer, relocation or removal of Licensee’s
Attachments or Communications Facilities on or about CPS Energy’s Poles. This
shall include claims for damages to CPS Energy Facilities caused by Licensee, or
its contractors and agents. CPS Energy shall have the right to draw funds from
the bond to recover damages to CPS Energy Facilities caused by Licensee, its
contractors, or agents. Provision shall be made to permit CPS Energy to draw
against the bond. Licensee shall not use such bond for other purposes and shall
not assign, pledge or otherwise use the bond as security for any other purpose.
Section 17.3. Actions after Draw-Down. Within thirty (30) days after notice to
105
TWC Redline Comments at 15-16.
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Licensee that CPS Energy has drawn any amount against the bond, Licensee shall
take action to replenish the bond to its prior amount.
Section 17.4. Cancellation or Replacement. Licensee shall provide CPS Energy
with thirty (30) days prior written notice of any cancellation or replacement of
the bond. Failure to maintain the bond throughout the term of the Agreement
shall constitute a material breach of the Agreement retroactive to the date of the
notice of cancellation of the bond.
Stakeholders’ Comments:
AT&T acknowledges the importance of a performance bond for “less established”
providers but suggests that there is no such need for entities that exceed a certain financial
threshold.106 Similarly, GVTC suggests that there is no need for a performance bond with
entities with whom CPS Energy has significant experience.107
Conterra objects to the requirements in 17.1 as to the qualifications of the surety, and
Conterra objects to statements in 17.1 that the performance bond may be utilized to pay
damages and/or penalties owed to CPS Energy under the Agreement.108
TWC objects to the requirement in 17.3 that the Licensee replenish a bond after it is drawn
down upon by CPS Energy. Conterra indicates that a party should only have to replenish
a bond if it does not dispute the initial draw down.
Conterra would also strike the provision in 17.4 that makes it a breach of the Agreement
not to maintain the performance bond.
In individual discussions with CommZoom, the company explained the financial burden
to a small business of complying with the performance bond requirement, which includes
a lien on the company’s infrastructure. Investor concerns prevent management from
making such commitment. Therefore, CommZoom and other small businesses must rely
on letters of credit to meet performance bond obligations, which effectively freeze capital
in the amount of the letter of credit that must be set aside as collateral. As an alternative
to the performance bond requirements in the Agreement, CommZoom recommends
AT&T Comments at 19.
GVTC Comments.
108 Conterra Comments at 16.
106
107
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establishing an eight-tier schedule under which the performance bond amounts escalate
with the increasing number of Attachments owned by Licensee.109
CPS Energy’s Response:
CPS Energy cannot agree with AT&T or GVTC that it should only apply the performance
bond requirement on smaller or less established entities since such a distinction would
run counter to the non-discrimination requirements of state law. Moreover, the
requirement for the bond is not simply to ensure that the entity has sufficient funds but
also to ensure that CPS Energy actually gets paid all amount owed, including default
payments and penalties with a minimum of delay and without resort to litigation.
Similarly, for the same reason CPS Energy cannot agree with Conterra that the
performance of bond should not cover the payment of penalties and damages.
CPS Energy disagrees with TWC’s suggestion that the Licensees should not be required
to replenish their bonds after they are drawn down upon. Otherwise, CPS Energy would
have no assurance of being paid going forward, despite the fact that an entity who had
to make a payment from the performance bond will have by definition already
demonstrated the need for maintaining such a bond. Finally, if the failure to maintain a
bond does not constitute a default, as suggested by Conterra, then it defeats the purpose
of requiring a performance bond.
In response to CommZoom’s proposed eight-tier schedule which would determine the
amount of the bond, such scheme would be too cumbersome to implement and
administer. However, CPS Energy is sympathetic to the financial challenges facing small
businesses. Therefore, CPS Energy will revise Section 17 and Subsections 7.1.1 to 7.1.4 to
establish different thresholds under Options A to D. These are the options that determine
Licensee’s insurance and performance bond requirements. The proposed revisions will
have no impact on the insurance requirements, but will alleviate some of the concerns of
small businesses. Section 7.1.1 related to Option A will be revised to apply to Licensees
that operate Private Networks regardless of their number of Attachments. The waiver of
the performance bond obligation for these entities will stay in place. Subsection 7.1.2
concerning Option B will be revised to apply to Licensees with Attachments ranging from
1 to 20,000, who will be required to post a performance bond in the amount of $25,000.
Subsection 7.1.3 referencing Option C will be amended to apply to Licensees with
See CommZoom letter dated March 18, 2016 in response to CPS Energy’s draft Pole Attachment
Standards.
109
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Attachments ranging from 20,001 to 50,000 with a corresponding performance bond
obligation in the amount of $100,000. Finally, Subsection 7.1.4 applicable to Option D
will be amended to apply to Licensees with 50,001 or more Attachments. Those Licensees
that fall into this category will be required to post a performance bond in the amount of
$500,000.
35. Entire Agreement
Section 18. Except as to any payments or credits due under previous
agreements as of the effective date of this Agreement, this Agreement
supersedes all previous agreements, whether written or oral, between CPS
Energy and Licensee for placement and maintenance of Licensee’s
Communications Facilities on CPS Energy’s Poles within the
geographical service area covered by this Agreement, and the incorporated
Pole Attachment Standards and there are no other provisions, terms or
conditions to this Agreement except as expressed herein.
Stakeholders’ Comments:
TWC has requested that this clause be modified to reference the fact that Attachments
that were previously authorized under a prior agreement will remain valid. 110 In
addition, in individual discussions, AT&T has suggested similar revisions to the
Agreement.
CPS Energy’s Response:
There is no need for the proposed modification because Section 22.3 already recognizes
the continuing validity of previously authorized pole Attachments. However, CPS
Energy is concerned that Section 18 could be interpreted to attempt to preclude claims
arising under prior agreements or claims related to the use of CPS Energy poles without
authorization. Therefore, CPS Energy will revise Section 18 to clarify that the Agreement
is not intended to have such preclusion effect.
36. Incorporation of Recitals, Appendices and Pole Attachment Standards
Section 21. The recitals stated above, all appendices to this Agreement, and the
Pole Attachment Standards are incorporated into and constitute part of this
Agreement.
110
TWC Redline Comments at 17.
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Stakeholders’ Comments:
TWC has requested that the provision be modified to state that the Pole Attachment
Standards are incorporated into the agreement as Appendix D.111
CPS Energy’s Response:
While incorporated by reference, there is no need to include the Pole Attachment
Standards as an appendix since they may be amended from time to time. The most
current version of the CPS Energy Pole Attachment Standards will be available online on
the CPS Energy website. However, Section 21 will be amended to include that the
Standards are incorporated into and constitute part of this Agreement “as they may be
amended from time to time.” In addition, Section 22.1 will be removed as it is redundant
with Section 21 concerning the incorporation of appendices.
37. No Waiver
Section 22.2. No Waiver. The failure of CPS Energy or Licensee to enforce or to
insist upon compliance with any of the terms or conditions of this Agreement
does not constitute a waiver or relinquishment of any terms or conditions of the
Agreement.
Stakeholders’ Comments:
Both AT&T and Mobilitie note that Section 22.2 addressing waiver is already addressed
in Section 10 of the Agreement.112
CPS Energy’s Response:
CPS Energy agrees and will remove Section 22.2.
38. Preexisting Agreements
Section 22.3. Preexisting Agreements. Licensee shall not be required to obtain a
new Permit for an Attachment authorized under a Permit obtained under prior
agreement between the Parties prior to the effective date of this Agreement.
However, such Attachments permitted by prior agreement are subject to all the
111
112
Id.
AT&T Comments at 20 and Mobilitie Comments at 29.
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terms and conditions of this Agreement and the Pole Attachment Standards from
the effective date.
Stakeholders’ Comments:
In individual discussions, AT&T objected to this section on the basis that it leaves exposed
a Licensee that has any Attachments “permitted” by prior agreement, but for which
“Permits” were not obtained. Given that permitted Attachments will be subject to the
terms and conditions of the Standards from the effective date of the Agreement, AT&T is
concerned that such permitted Attachments will be required under the Standards to
obtain Permits.
CPS Energy’s Response:
CPS Energy understands AT&T’s apprehension, but that is not the intention of this
section. CPS Energy sees no point in imposing the administrative burden on a Licensee
to submit pole attachment applications for preexisting permitted Attachments. This does
not mean that CPS Energy is waiving the right to information concerning Attachments
installed on its poles under prior agreement for which Licensee failed to obtain Permits.
Licensee continues to have an obligation to provide information to CPS Energy
concerning the location and nature of such Attachments. The pole inventory that CPS
Energy has commissioned should provide needed information concerning such
Attachments belonging to multiple Licensees. However, to the extent the pole inventory
does not reveal information that otherwise would have been provided in a pole
attachment application, CPS Energy is entitled to such information upon request. Section
22.3 will be amended to address AT&T’s concern.
39. New Attachments
Section 22.4. All Attachments made after the effective date of this Agreement are
and shall be authorized by the procedures, requirements, and limitations of this
Agreement, subject to Licensee’s compliance with all the terms and conditions of
the Pole Attachments Standards. Licensee’s failure to maintain all Attachments
in accordance with the Pole Attachment Standards shall be considered a default,
and Unauthorized Attachments shall be subject to removal at Licensee’s expense.
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Stakeholders’ Comments:
Mobilitie requests that a clause be added to the end of 22.4 that in in the case of
amendments to the Pole Attachment Standards, Licensee shall have a reasonable
amount of time to make existing Attachments comply with such amendments. 113
TWC seeks to strike the last clause entirely.114
CPS Energy’s Response:
As discussed above, the issue of the application of amendments to the Standards on
existing authorized Attachments is addressed in the Standards. The Standards provide
that “an Attaching Entity shall adhere to the revised Standards for new Applications on
their effective date … [and] no revisions to the Applicable Engineering Standards shall be
retroactive to existing Permitted Attachments and/or Overlashings, unless required by city,
county, state, or federal law or if the Attachment is modified.” 115 (Emphasis added.)
Thus, there is no need to revise the Agreement to address this issue.
It is not clear why TWC is seeking to remove the last clause of 22.4 which reiterates that
Attachments that are not made in compliance with the Standards are in default and
considered Unauthorized Attachments and subject to removal. To the extent that TWC
is concerned that a technical violation of the Standards will lead to an event of contract
default, CPS Energy reminds TWC that the Application review process in the Standards
includes an opportunity for feedback from the Attaching Entity as part of the make-ready
engineering design phase. There is a process in the Standards under which an Attaching
Entity may request a waiver or accommodation of a technical standard in order to
address a unique construction situation or challenge. In addition, any technical violation
identified during the post-construction inspection may be corrected during an applicable
grace period. The Standards also include a dispute resolution process to address
operational issues that may lead to technical non-compliance of the Standards. Only after
the exhaustion of these procedural remedies to address a potential technical noncompliance occurrence would CPS Energy turn to provide notice of contractual default,
and under the terms of the Agreement Licensee is entitled to cure such event of default
prior to any potential termination. In short, CPS Energy has no reason or incentive to
Mobilitie Comments at 29.
TWC Redline Comments at 18.
115 Standards at Sec. II.G.1, p. 18.
113
114
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assert its contractual right to terminate the Agreement for technical violations to the
Standards other than Licensee’s pattern of non-compliance.
CPS Energy also notes that Section 22.4 does not include a heading. The section will be
amended to include the subject heading: “Compliance with Agreement and Standards.”
40. Proposed Baseline Inventory
Stakeholders’ Comments:
TWC is proposing a new Section 22.4 that would require the parties to conduct an
inventory within the first 12 months of the effective date of the Agreement to establish
the baseline number of Attachments for each Attaching Entity.116
CPS Energy’s Response:
CPS Energy has already contracted with Davey Resource Group to conduct a pole
inventory and work has begun on the project. When completed, the pole inventory will
establish the baseline number of Attachments for each Attaching Entity that TWC
referenced in its comments. Therefore, there is no need to incorporate a new section into
the Agreement as proposed by TWC. With regard to future pole inventories, the
Standards include inventory provisions that cover the rights and obligations of Attaching
Entities during pole inventories, which may be conducted every five years.
41. Reciprocity of Terms and Conditions
Unlike its relationship with all other Attaching Entities, CPS Energy and AT&T each own
a substantial number of poles on which the other has attached facilities. Consequently,
AT&T will be required to execute the Agreement in order to continue to have access to
CPS Energy poles, and CPS Energy will have to execute a corresponding agreement with
AT&T in order to continue to access AT&T poles. As a result of individual meetings, CPS
Energy and AT&T have agreed that access to each other’s poles will be based on
reciprocal contractual terms, unless otherwise agreed to in writing. CPS Energy will
incorporate a new subsection under Section 22 of the Agreement to implement this
understanding. In turn, this provision will apply to any other Licensee that has existing
poles or erects poles within the CPS Energy service area.
116
TWC Redline Comments at 18.
56
CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
______________________________________________________________________________
42. Interest on Past Due Amounts
Section 23. In the event Licensee fails to pay an amount due within the period of
time set forth for payment, interest shall accrue on the unpaid balance at the rate
of one and 17/100ths percent (1.17%) per month (or such lesser rate as may be
required by law) for each month starting from the date the payment is due until
such time as payment is received.
Stakeholders’ Comments:
TWC proposes that the interest rate be revised to conform to Section 6621 of the Internal
Revenue Code.117 AT&T seeks a clarification that interest only accrues on a non-disputed
amount due and payable to CPS Energy.118
CPS Energy’s Response:
TWC is the only party to object to the use of the proposed language and there is no reason
to look to federal law on this matter.
CPS Energy also declines to adopt AT&T’s proposed limitation. While CPS Energy
acknowledges the ability of Licensee to dispute the amount owed, CPS is entitled to
accrued interest on any such amounts if, and when it is determined that the disputed
amounts were indeed owed.
43. Attorney’s Fees
Section 24. If CPS Energy brings any action at law or in equity to enforce any
provision of this Agreement, including the incorporated Pole Attachment
Standards, CPS Energy will be entitled to recover its reasonable attorney’s fees
in addition to any other relief to which it may be entitled.
Stakeholders’ Comments:
AT&T proposes that the attorney fee provision be made reciprocal with the losing party
paying the legal fees of the prevailing party. 119 In contrast, Conterra, Mobilitie, and TWC
all recommend striking the provision altogether.120
Conterra Comments at 28, Mobilitie Comments at 31, and TWC Redline Comments at 18.
AT&T Comments at 22.
119 AT&T Comments at 22.
120 TWC Redline Comments at 18.
117
118
57
CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
______________________________________________________________________________
CPS Energy’s Response:
CPS agrees to revise the provision to make it reciprocal with the prevailing party entitled
to its legal fees.
44. Appendix B. Minimum Insurance Requirements Corresponding with Option A
Stakeholders’ Comments:
Section 1.7. Rather than providing that CPS Energy be listed as an additional insured to
the maximum extent allowed by law, Conterra recommends that the coverage be as
specified in forms “CG 2010 (04/13) for on-going operations and CG 2037 (4/13) for
completed operations.”121
Section 1.7(b). Grande suggests that a certificate of insurance is sufficient to show
coverage rather than a complete copy of a policy.122
CPS Energy’s Response:
CPS Energy’s Risk Management Department has researched Conterra’s comments
regarding the use of the referenced insurance forms and finds merit in the
recommendation. Generally, the insurance requirements in Appendix B and more
specifically Section 1.7 applicable to Attaching Entities operating under Option A and
Section 1.08 applicable to those operating under Options B, C, or D, are broad enough to
cover the use of the referenced forms. Therefore, CPS Energy finds no inconsistency
between its insurance requirements and the use of these forms. Appendix B will be
amended to include the use of the referenced forms at Sections 1.7 and 1.08. Regarding
Grande’s recommendation, which is further discussed in Section 19 herein (pages 32-33),
CPS Energy agrees and will amend Appendix B at Section 1.7(b) (applicable to Attaching
Entities operating under Option A), and Section 1.08(b) (applicable to those operating
under Options B, C, or D), to remove the requirement to provide copies of insurance
policies. CPS Energy will accept a certificate of insurance as proof of insurance coverage.
121
122
Conterra Comments at 23.
Grande Comments.
58
CPS Energy’s Response to Comments
Received Related to the Standard
Pole Attachment License Agreement
______________________________________________________________________________
45. Appendix B. Minimum Insurance Requirements for Options B, C and D
Stakeholders’ Comments:
Section 1.03. Conterra is requesting that the minimum Commercial General Liability
Limits be adjusted from $2 million to $1 million for each occurrence, and that the general
aggregate be reduced from $5 million to $2 million.123
Section 1.05. Conterra is requesting that the minimum Excess Liability Coverage limits
be adjusted from $8 million to $10 million.124
Section 1.12. TWC is requesting that the provision be revised so that in the event that an
attaching entity fails to obtain or renew the required insurance coverage CPS Energy’s
sole remedy is to deem the attacher to be in material breach of the agreement. TWC
objects to draft agreement’s current alternate option that CPS Energy itself procure the
requisite insurance and “reduce the Agreement amount by the cost thereof.”125
CPS Energy’s Response:
Both TWC and Conterra propose revisions to the insurance requirements that if granted
would have the effect of reducing insurance protection to CPS Energy resulting from
events caused by the Licensee under the Agreement. Following the Wheelabrator opinion
by the Texas Supreme Court, CPS Energy posted the revised draft of the Agreement
specifically to incorporate additional protections from contractual claims. Those
revisions included modest increases in insurance requirements. TWC and Conterra are
the only stakeholders to propose reductions in the insurance coverage. In the case of
Conterra, the proposed reduction to the Commercial General Liability Limits would
reduce liability protection below the limits in place prior to the Wheelabrator decision.
TWC’s and Conterra’s proposals are not acceptable to CPS Energy.
Conterra Comments at 25.
Id.
125 TWC Redline Comments at 28.
123
124
59