bill's reversal of Federal legislative policy by subjecting them to the FCC's regulation of the use of their property by others. Congress, having decided not to assert Federal jurisdiction over the use of these same facilities for their primary functions of power distribution, should not now assert jurisdiction over those same facilities in peripheral matters, or vest such jurisdiction in FCC, an agency having no responsibility for power supply and, in doing so, breach the congressional policy of excluding publicly owned utilities from Federal regulation. This is a local matter properly subject to regulation by local governments, not from Washington. The affairs of more than 1,400 publicly owned systems presently governed by city councils or boards of commissioners should not be regulated by Washington. For the foregoing reasons, we believe that S. 1546, or any bill like it, should not be enacted. If, however, such a bill is to pass, we strongly urge that facilities owned by States and their political subdivisions and electric cooperatives and other consumer-owned entities, be excluded from the jurisdiction of the Federal Communications Commission to the same extent that Congress has heretofore excluded them from the jurisdiction of the Federal Power Commission. Mr. Chairman, may I place in your record a resolution adopted by the American Public Power Association, the resolving clause of which says: Resolved: That the American Public Power Association opposes enactment of legislation to extend FCC jurisdiction over CATV joint pole attachment agreements to public power systems, and urges that the legislation be amended to exclude publicly owned systems from FCC jurisdiction. May I add that I am informed that the National Rural Electric Cooperative Association has adopted a resolution to the same effect, and when I receive it I will ask that it be placed in the record with my testimony. Senator SCHMITT. We will do that. Mr. ELY. Thank you. [The resolution follows:] CATV POLE ATTACHMENT AGREEMENTS Whereas, S. 1547 and H.R. 7442 would extend Federal Communications Commission regulation over joint pole attachment agreements between cable television operators and utilities, and Whereas, the legislation does not exempt public power systems from such regulation, and Whereas, Congress has specifically withheld the power to regulate any phase of local distribution of electricity from the Federal Power Commission (Federal Power Act, Sections 201(b) and (f)), leaving such regulation in the hands of States and local governments, and it would be inconsistent to give FCC jurisdiction over a peripheral use of the same facilities, and Whereas, public power systems are units of local government, owned by consumers, controlled by city council or boards, responsive to the interests of the communities through the local political process, and Whereas, interjecting FCC into the process would only result in the addition of an unnecessary bureaucratic layer, and Whereas, pole attachment problems are local in nature, based on local ordinances, climatic conditions, cost of poles, safety requirements, and maintenance, and Whereas, pole attachment problems are local in nature, based on local ordinances, climatic conditions, cost of poles, safety requirements, and maintenance, and Whereas, many communities with public power systems are located in areas where CATV is important for improving television performance, where consumers of the public power system have sought the CATV service, and where the city has no incentive to exploit CATV, but has an interest in insuring that CATV is provided at reasonable cost and under equitable conditions; now, therefore, be it Resolved, That the American Public Power Association opposes enactment of legislation to extend FCC jurisdiction over CATV joint pole attachment agreements to public power systems, and urges that the legislation be amended to exclude publicly owned utility system from FCC jurisdiction. Senator SCHMITT. We appreciate your testimony very much and in particular for emphasizing the possible conflict between the bill under consideration and certain aspects of the Federal Power Act. That will be considered very carefully. In your statement you indicate that you feel that S. 1547 would compel electric utilities to provide space on their poles for CATV cables. Would you explain why you feel there is compulsion? Mr. ELY. Yes. Since the FCC would have subject matter jurisdiction, I suppose it would have jurisdiction over a complaint by a CATV operator that the local utility, public or private had either declined to make its property available or was demanding an excessive price for it. As an example, I may say, not altogether facetiously, that last year, as I was preparing to testify before the House committee on this subject, it happened that on that day a client who is the president of a group of cooperatives in Texas was in the office and I mentioned to him my appearance on the Hill. He said, this is a very sensitive subject with his co-op. They have CATV lines strung on our poles in his rural area. The CATV company has strung them at the height that they think is just above the minimum clearance required. Farmers in the area have a different idea about the legal height of their loads, and on some occasions their trucks, heavily loaded, have collided with these CATV cables, and pulled down the poles on either side, bringing the high tension lines down to a dangerous proximity to the CATV cable. The Co-op cured this problem with a pair of wire clippers. Senator SCHMITT. You mentioned that you are representing 1,400 local publicly owned utilities. At the present time do you know what percentage of these or how many are subject to review by State commissions? Mr. ELY. Virtually none of them, except in Texas, I believe. There may be another State or two. Almost universally the State legislature, like the Congress, has left the determination of local rates and charges for electric service to the local government, that is, a city operating through its city council, or a public utilities board of some kind. Senator SCHMITT. Do you think the States should assume a greater role than they have? Mr. ELY. With respect to rates charged by local public agencies; no, sir. It is working very well. It works well for several reasons. Different cities have different policies about revenues. Some will look to the electric power system for a large share of the cost of local government. Others believe in low-cost power, and they exact a minimum of take from the revenues of the local power system. This should be a grassroots determination. We are not hostile to CATV, but this is one of the rare examples, the only one that occurs to me, where a private industry, operated for profit, which would not have the right of eminent domain to acquire land on which to put up its poles, seeks to take advantage of our exercise of eminent domain in the city's acquisition of land, paid for by the city, on which to locate the city's distribution lines. In effect, the bill would clothe this profitmaking industry, CATV, with the right of eminent domain against our public property, the right to move in on poles we own and erect their cables for their profit. If the Government is to regulate this aspect of the CATV industry, namely, this element of their costs, then Congress might very well consider going the whole way and regulating the whole CATV industry, including what they pay for the programs that they broadcast. I understand they pay nothing. The testimony of a gentleman yesterday for the CATV industry was that they have gross revenues of $894 million derived from the use of a $2 billion investment. The total charges made for use of poles, he said, is of the order of $35 million, something like 4 percent of the gross revenues. So, it would appear that this very difficult policy question of the intrusion into the autonomy of local ratemaking agencies, the utility boards, which is a huge policy issue, is like a great big dog being wagged by a very small tail. Senator SCHMITT. Well, the other part of that dog has been under consideration by this subcommittee and I think we will continue to be doing so. It is a very important issue and in fact is being considered. Do most of your member utilities have the power to grant franchises to cable television companies if they so desire. Mr. ELY. I can't give a categorical answer, but at least one-third of them have done so, and, I presume that the answer to your question would be yes, in general. it. I know of no instance in which cities have taken a hard line against Senator SCHMITT. Do you intend to offer space service, if you will, to other communications systems, besides cable, telephone, fire department, police? Mr. ELY. Yes. Last year, before the House Committee a representative from Memphis testified the extent to which their poles carry police, fire communication cables and other public service cables. In Snohomish County, Washington, the subject of Mr. Hansen's testimony, my understanding is that the Public Utility District carry on its poles cables for a total of some 22 other agencies, utilities, fire departments, CATV and so on. This is a common practice. Senator SCHMITT. Do you find the kind of problems that you have described arising from cable television to apply to these other communications systems? Mr. ELY. I don't know the answer to that question, Senator. Senator SCHMITT. Is there anything special about cables of CATV that provides potentially greater problems? Mr. ELY. There is a difference in this, referring to Memphis, for example. The other use of the poles in that case are all for public agencies of the State or city. That is about the extent of the information I can give to answer your question. Senator SCHMITT. At this point Senator Stafford of Vermont asked me to include a letter from him to the full committee and, to which is attached a letter from the Vermont Electric Cooperative, Inc., Johnson, Vt., relative to the possibility of excluding municipal and cooperative utilities from the bill, S. 1547 and we will include that statement without objection in the record. [The letter follows:] Hon. WARREN G. MAGNUSON, Hon. JAMES B. PEARSON, U.S. SENATE, Washington, D.C., June 15, 1977. Commerce, Science and Transportation Committee, U.S. Senate, Washington, D.C. GENTLEMEN: Enclosed is a copy of a letter from Walter N. Cook, Executive Manager of Vermont Electric Cooperative of Johnson, Vermont. I would like to call your attention to his concern that municipal and cooperative utilities have not been exempted from the provisions of S. 1547, which would authorize the FCC to regulate pole attachments. I think Mr. Cook's comments are valuable and would appreciate your consideration of them. Thank you for your assistance. Sincerely yours, ROBERT T. STAFFORD, U.S. Senator. VERMONT ELECTRIC COOPERATIVE, INC., DEAR BOB: The subject bill, introduced by Senator Ernest F. Hollings would allow the Federal Communications Commission to regulate the rates charged CATV companies for rental of utility poles. A similar bill reported out last year by the House Interstate and Foreign Commerce Committee exempted municipal and cooperative utilities. The current bill does not. If passed, the legislation would subject Vermont's municipals and cooperative utilities to yet another layer of bureaucratic jurisdiction which will serve no purpose other than to increase the expense of electricity. Pole rental rates are determined by a mathematical calculation of the savings to each utility by utilizing a joint pole line instead of each utility building separate lines. These savings are passed on directly to rate payers. The CATV company results with a lower capital investment and thus its rate base and rate of return result in lower rates than otherwise. The municipal or cooperative utility applies rental revenue received against its overall revenue needs and thus requires less revenue from its ratepayers. The subject bill would result in consumer-owned utilities coming under regulatory review by an agency which has no understanding of how consumer-owned systems function. Even the Federal Power Commission has not been granted regulatory authority over consumer-owned electric systems, except in a very limited way. We trust that if the Senate believes S. 1547 should pass in some form, that municipal and cooperative electric utilities will be exempted. Sincerely yours, WALTER N. COOK, [The following information was subsequently received for the record:] QUESTIONS OF THE SUBCOMMITTEE AND MR. ELY'S ANSWERS Question 1. "Of the 1,400 local publicly owned electric utilities you represent, how many are subject to review procedures of state PUC's or other regulatory bodies?" Answer. Most of the 1,400 local publicly-owned electric utilities represented by the American Public Power Association are not subject to review procedures of State PUC's. The regulatory bodies governing a majority of publicly-owned systems are local in nature, such as city councils or boards of commissioners. Only 8 state commissions assert full regulatory authority over the retail rates of non-profit publicly owned electric systems. Those State commissions are Indiana, Maine, Maryland, Mississippi, Rhode Island, Vermont, West Virginia, and Wisconsin. The total number of publicly owned systems in those States is 221. In most cases, the same local entity-the city council-is ultimately responsible for granting CATV franchises, setting pole use rates, and setting electric rates. Question 2. "How many local municipalities or other subdivisions of local government which own electric utilities also have power to grant franchises to CATV companies?" Of the 2,228 jurisdictions owning local public power systems, 2,112 have authority to grant franchises to CATV companies. "How many have granted CATV franchises?" Answer. About half or 1,008 jurisdictions owning public power systems have granted CATV franchises. (Information on franchising authority is taken from a Federal Communications Commission report, entitled, "Cable Television State Regulation: A Survey of Franchising and Other State Law and Regulation on Cable Television," by Sharon A. Briley, Cable Television Bureau, Policy Review and Development Division, March 17, 1977. Information on the jurisdictions with cable television systems is from the National Cable Television Association.) Question 3. "Is there a uniform basis that public power agencies use for determining pole rentals?" Answer. No. Accordingy to an informal survey of APPA members this year, charges for pole attachments are based on local costs, including costs of poles, maintenance, labor, local safety requirements, local ordinances, and climatic conditions. Unlike a private power or telephone company, the local government has a common interest with the CATV entity since citizens of the community have sought the service, and the city has a responsibility to insure that CATV is provided at reasonable cost and under equitable conditions. Senator SCHMITT. We will have Mr. Peter Anthanas testify next, board of directors, Community Antenna Television Association. You can summarize or Mr. ATHANAS. I just flew in on short notice because of the illness of Kyle Moore, president of the association. Mr. Chairman, members of the committee, on behalf of the membership of the Community Antenna Television Association, I would first like to thank you for the opportunity to appear before you today. In that regard, you will find my testimony somewhat different than that presented by Mr. Moore. Seated with me is our counsel, Richard Brown. As you already know, we represent over 600 members throughout the United States. Our association's primary goal is to make sure the voice of the small businessman is heard and considered in Washington before new laws or rules and regulations are suddenly thrust upon us. Too often the rules and laws are written without any realistic thought of their impact on our mostly rural subscribers. We try to make sure their interests are protected, too. Senator SCHMITT. If I may interrupt, I will add an amen to your last paragraph. Mr. ATHANAS. Senators, you have two different proposals in the bill before you today that have nothing to do with each other execpt, I guess, in a strange political way that I do not fully understand. But, please, do understand that we do not view the proposals as tradeoffs for one another. The two proposals, one on pole attachment legislation, |