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12/30/94 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY v.

December 30, 1994

CENTRAL ILLINOIS PUBLIC SERVICE COMPANY, COMMONWEALTH EDISON COMPANY AND UNION ELECTRIC COMPANY, PETITIONERS-APPELLANTS,
v.
ILLINOIS COMMERCE COMMISSION AND ILLINOIS CABLE TELEVISION ASSOCIATION ET AL., RESPONDENTS-APPELLEES.



Administrative Review of the Illinois Commerce Commission. Nos. 860192, 860228.

As Corrected January 27, 1994.

Presiding Justice Knecht delivered the opinion of the court: Honorable James A. Knecht, P.j., Honorable Frederick S. Green, J., Honorable John T. McCULLOUGH, J., Concurring

The opinion of the court was delivered by: Knecht

PRESIDING JUSTICE KNECHT delivered the opinion of the court:

Several electric utility companies (utilities) challenge an Illinois Commerce Commission (Commission) rule formulating a rental rate for cable television (CATV) attachments to poles owned by the utilities, promulgated pursuant to the Commission's authority under section 7-102(i) of the Public Utilities Act (Act) (220 ILCS 5/7-102(i) (West 1992)). We affirm.

I. FACTS

A pole attachment agreement is an agreement in which CATV operators lease space from utilities on existing utility-owned poles to attach CATV cables in that space. Although the Federal Communications Commission (FCC) is given jurisdiction to regulate pole attachment agreements, the States are free to regulate pole attachments on their own. (47 U.S.C. § 224(c) (1988).) In Illinois, the Commission's jurisdiction over pole attachments was upheld in Cable Television Co. v. Illinois Commerce Comm'n (1980), 82 Ill. App. 3d 814, 403 N.E.2d 287, 38 Ill. Dec. 199.

In 1980, the Commission began conducting hearings, and in 1985, adopted a rate formula which was reversed on appeal for reasons not pertinent here. (Commonwealth Edison Co. v. Illinois Commerce Comm'n (Cir. Ct. Cook Co.), No. 85-CH-3743.) The cause was remanded to the Commission, and the Commission decided to hold new hearings regarding pole attachments, beginning in 1986. After extensive hearings, the Commission proposed a new rule on September5, 1991. One issue in contention was the allocation of "neutral space" (safety clearance between wires on a pole). The Commission noted safety codes require a 40-inch clearance between electrical and communication wires, and then explained:

"The Commission, concludes from the evidence that: (1) the utility uses the neutral space and derives revenue from the use of the neutral space through installation of street lights in the neutral space and the sale of street lighting service; and (2) the CATV operator must pay to maintain the space through pole change outs if the neutral space is needed. The Commission is of the opinion that all parties attaching to a pole benefit to some extent from the clearances that are maintained between distribution lines which, in significant part, contribute to the safety of the workers. Therefore, it is fair and reasonable to assign 15% of the neutral space to the CATV operator; this results in an allocation of 6 inches of the 40[-]inch neutral space to the CATV operator."

The Commission then set a pole attachment rental rate as follows: "Rental Rate = (Cost per pole)x(CATV Space)x(Carrying Charge)

(Total Usable Space)."

"Cost per pole" is the utility's average pole cost. "Carrying charge" includes maintenance costs, administrative costs, depreciation, and taxes. "CATV space" is 1.5 feet of usable pole space, based on one foot of usable space physically occupied by CATV and a six-inch allocation of neutral space. "Total usable space" is based on a rebuttable presumption of 14 feet. See 83 Ill. Adm. Code § 315.20 (1994).

The Joint Committee on Administrative Rules (JCAR) failed to issue a statement of nonobjection to the rule, as required by the Illinois Administrative Procedure Act (Procedure Act) (5 ILCS 100/1-1 et seq. (West 1992)), so the proposed rule was republished on December 22, 1992. After additional comments, the Commission again proposed the rule in an order dated October 14, 1993. The Commission stated nothing during the first notice period had warranted a departure from the Commission's position that six inches of neutral space should be allocated to CATV.

Nevertheless, on December 14, 1993, JCAR voted to prohibit the filing of the proposed rule, declaring it:

"Is overburdensome for cable television companies, and will result in increased costs to cable television customers, constituting a serious threat to the welfare of the affected businesses and the citizens of this State.

The Filing Prohibition will be lifted if the ICC amends the rate formula to reflect the actual space used by CATV by removing from the formula the allocation of neutral space." 17 Ill. Reg. 22605 (1993).

On December 23, 1993, the Commission adopted a final rule. (See 83 Ill. Adm. Code § 315.10 (1994).) The rule was identical to the previous proposed rule except no neutral space was included in the definition of "CATV space." The Commission explained it had reevaluated the record, and found instructive the FCC's rejection of the allocation of neutral space to CATV under Federal law. The Commission also explained:

"The Commission is interested in establishing a rate which reflects the costs associated with the pole attachment, not the assorted benefits which the CATV operator derives from it. Users of poles arguably benefit from numerous governmental laws and regulations * * *. Merely because a regulation explicitly effects [sic] certain measurements on a pole does not mean that benefits derived from the regulation should be reflected in a rate formula which purports to allocate costs to pole users. Neutral space is required on a joint use pole even if the cable operator does not attach to the pole. The asserted safety benefit is non-economic, difficult to quantify and bears an attenuated and abstract relationship to the cost allocation purpose of the rule." (Emphasis in original.)

The Commission denied petitions for rehearing, and the utilities now appeal the Commission's rule, arguing the Commission's order is invalid because it (1) violates section 7-102(i) of the Act, (2) is not supported by substantial evidence, (3) is not supported by adequate findings, (4) is arbitrary and capricious, (5) did not comply with the Procedure Act requirements ...


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