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Order Adopting Terms of Joint Settlement Agreements

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Order Adopting Terms of Joint Settlement Agreements STATE OF NEW YORK PUBLIC SERVICE COMMISSION At a session of the Public Service Commission held in the City of Albany on August 12, 2021 COMMISSIONERS PRESENT: John B. Howard, Chair Diane X. Burman James S. Alesi, recusing Tracey A. Edwards David J. Valesky John B. Maggiore Rory M. Christian CASE 20-M-0360 – Proceeding on Motion of the Commission of Greenlight Networks' Pole Attachments in the Service Territory of Rochester Gas and Electric Corporation and Frontier Communications. ORDER ADOPTING TERMS OF JOINT SETTLEMENT AGREEMENTS (Issued and Effective August 12, 2021) BY THE COMMISSION: INTRODUCTION On November 20, 2020, the Public Service Commission (Commission) issued its Order Instituting Proceeding and to Show Cause (OTSC) directing pole owners Rochester Gas and Electric Corporation (RG&E) and Frontier Telephone of Rochester, Inc. (FTR), and pole attacher Greenlight Networks, LLC (GLN) to show cause why the Commission should not commence a penalty action pursuant to Public Service Law (PSL) §251 for apparent violations of the Commission’s 2004 Order Adopting Policy Statement on Pole 1 For RG&E, the Commission also alleged violations under PSL Section 25-a and imprudence. CASE 20-M-0360 Attachments (Pole Order)2 and, by incorporation therein, the National Electric Safety Code (NESC)3 and the pole owners’ Standard Pole Attachment Agreements (SPAAs).4 As part of the Pole Order, the Commission required pole owners to develop Commission approved standard terms and conditions through the SPAAs.5 The Pole Order governs the relationship between pole owners and attachers unless mutually agreed upon otherwise, such as in an SPAA.6 RG&E, FTR, and GLN all submitted multiple requests for extensions to respond to the OTSC and tolling agreements to the Commission Secretary due to pending settlement negotiations with the Department of Public Service (Department). The Secretary granted numerous extensions to all three respondents. While settlement was reached between the Department and RG&E and FTR, settlement negotiations between the Department and GLN did not result in acceptable terms, and the Secretary appropriately rejected GLN’s latest request for an extension and GLN responded to the OTSC on May 17, 2021. By this Order, the Commission adopts the terms and conditions of two Joint Settlement 2 Case 03-M-0432, Proceeding on Motion of the Commission Concerning Certain Pole Attachment Issues, Order Adopting Policy Statement on Pole Attachments (issued August 6, 2004). 3 The NESC is a United States standard for the safe installation, operation, and maintenance of electric power and communication systems, including power substations, power and communication overhead lines, and power and communication underground lines. 4 Pole Order, p. 2. 5 Id. Following the Pole Order, Frontier and RG&E (through a trade group) submitted their SPAAs to the Commission on October 6, 2004. 6 Case 03-M-0432, Proceeding on Motion of the Commission Concerning Pole Attachment Issues, Order Granting Extension of Time for Completion of Audit (issued December 19, 2007) (applying treble pole back rent for unlicensed attachers). -2- CASE 20-M-0360 Agreements (Agreements), attached here as Appendix A and Appendix B respectively, that resolve penalty amounts for apparent violations alleged in the body of the OTSC against RG&E and FTR regarding their alleged failures to comply with the terms and conditions of the Commission's Pole Order, and by incorporation therein, the NESC, and the respective utilities' SPAAs, as applicable. BACKGROUND On or about September 2019, joint pole owners RG&E and FTR both informed the Department of alleged unauthorized network attachments made to their poles by GLN in western New York. GLN, in turn, alleged to the Department, among other things, that RG&E and FTR failed to review and approve GLN’s applications in a timely manner required by the Pole Order, and thereby, in GLN’s opinion, giving GLN the unilateral right to attach fiber-optic cable to RG&E and FTR’s utility poles. The Department undertook a six-month investigation, which revealed that GLN deployed its network on thousands of RG&E and FTR utility poles without their authorizations and in apparent violation of the Commission’s 2004 Pole Order, the NESC, and the SPAAs. In turn, the Department’s investigation also showed that FTR and RG&E apparently allowed GLN’s non-conforming pole attachments (as well as pre-existing non-conforming pole attachments) to remain in place on their respective utility poles without remediation, also in apparent violation of the Pole Order and NESC safety standards. The Department engaged all three parties in separate settlement negotiations. The Department was unable to find agreement with GLN; RG&E and FTR, however, both agreed to settlements as detailed below. -3- CASE 20-M-0360 APPLICABLE LEGAL STANDARDS Under PSL §25(2), the Commission is authorized to commence a case in New York State Supreme Court against a public utility company to assess a civil penalty of $100,000 for each and every offense and, in the case of a continuing violation, each day shall be deemed a separate and distinct offense, upon a showing that such company “knowingly” failed or “neglected to obey” or comply with a provision of the PSL or an order or regulation adopted under the PSL. PSL §25-a(3) authorizes the Commission to commence an administrative penalty proceeding against a combination gas and electric corporation to determine whether it violated the PSL or an order or regulation adopted pursuant to the PSL. Under PSL §25-a(3), the Commission may assess a civil penalty in an amount not to exceed the greater of $100,000 or “two one-hundredths of one percent of the annual intrastate gross operating revenue of the corporation, not including taxes paid to and revenues collected on behalf of government entities, whichever is greater.” FTR is a duly authorized telephone corporation pursuant to PSL §99(1) and, as such, must also comply with the PSL, any applicable related statutes, and the Commission's rules and regulations, including the Pole Order. Finally, RG&E is a New York combination gas and electric corporation duly authorized to provide service under the PSL to engage in the transmission, distribution, and sale of electricity in a nine-county area surrounding Rochester, New York. As such, RG&E must fully comply with the PSL, any applicable related statutes, and the Commission's rules and regulations, including the Pole Order. The Commission is also authorized to initiate a prudence proceeding against a combination electric and gas -4- CASE 20-M-0360 corporation (e.g., RG&E). Prudence is an essential component of utility regulation that is determined by judging whether the utility acted reasonably, under the circumstances at the time, "considering that the company had to solve its problems prospectively rather than in reliance on hindsight." JOINT SETTLEMENT AGREEMENTS Under the terms of the two Joint Settlement Agreements, both RGE and FTR in agreement with DPS Staff agree to settle all matters related to the alleged violations described in the OTSC. In accordance with the OTSC Clause 4, both RG&E and FTR submitted a “Joint Pole and Inspection Plan” (Pole Plan) which was approved by the Chief of the DPS Office of Telecommunications on April 5, 2021. The Pole Plan will ensure that RG&E and FTR will audit all poles within their respective service territories, this will include safety inspections of all poles deemed to have unauthorized attachments, and provides for quarterly reporting to the Department on the findings and progress of the audit and inspections. The two Settlement Agreements incorporate the Pole Plan and require RG&E and FTR to implement the Pole Plan.7 Thus, the Pole Plan will be fully enforceable by the Commission through this Order. In addition to the above outlined terms, RG&E agrees to invoice for, and collect, any back rent owed to it by Greenlight and any other unlicensed attachers identified by the pole audit as outlined in the Pole Plan. The delinquent rent collected shall be used by RG&E and in the same manner that the original revenue would have been used, namely, at a minimum, for the recovery of related pole attachment expenses as prescribed by PSL §119-a. 7 Frontier Settlement Agreement, at ¶1; RG&E Settlement Agreement at ¶2. -5- CASE 20-M-0360 Further, in order to resolve all allegations against it, and in order to forego further litigation of this matter involving RG&E, the Department and RG&E propose a negotiated resolution consisting of the commitment by RG&E to contribute $2.5 million, from shareholder funds, into an escrow fund to be administered by the New York State Broadband Program Office (BPO) and allocated by the BPO for the construction of wireline broadband in New York State. There is an additional $2.5 million in suspended payments pending satisfaction of certain remedial metrics, as outlined in the Agreement attached to this Order. In addition to abiding by the Pole Plan, and in order to resolve all allegations against FTR, the Department and FTR propose a negotiated resolution consisting of the commitment by FTR to contribute $5 million into an escrow fund to be administered and allocated by the BPO for the construction of wireline broadband in New York State. FTR will have right of first refusal for locations served by FTR or its New York affiliates in future BPO public bids. The two Agreements will deposit $7.5 million into a fund to be administered by the BPO to expand wireline broadband in the state to those who need it most. These agreements will also ensure that all known safety violations will be remediated immediately, and that all poles in the service territories will be inspected and made safe by December 2022.
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