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Texas Electric CooperativesGovernment Relations1122 Colorado24th FloorAustin, Texas 78701Voice: (512) 454-0311Direct #: (512) 486-6221Fax: (512) 486-6225http://www.texas-ec.orgTestimony of Texas Electric Cooperatives (TEC)Senate Business & Commerce CommitteeAugust 14, 2012Eric CravenSenior Vice President, Government Relations & Legal Affairs

Texas Electric Cooperatives (TEC) is the statewide association for the 66distribution cooperatives and nine generation and transmission cooperativesserving Texas. Combined, the cooperatives serve more than two million meters in 241 of Texas’ 254counties with 300,000 miles of line. More than 3 million Texans benefit directly from the efficient and economical operationof our taxpaying, not-for-profit businesses. Member-consumers of each system control their own independent local electric businessin a democratic, truly American manner. The smallest system serves approximately 3,400meters, and the largest over 240,000. Co-ops average a low 5.68 meters per mile of line. The cooperative business model continues to prove itself to be reliable and accountable tomember-consumers. Residential and small commercial customers make up the bulk of electric co-op business. Being locally owned and governed, cooperatives still embody personalized service in atruly “hometown” environment.

Service Area Boundariesfor Texas Electric Distribution Cooperatives48 Dallam60Sherman43 ldhamHutchinsonPotterCollingsworthDeaf Smith15 RandallHEREFORDSwisher57 CastroParmer22WELLINGTON ChildressHallBriscoe25TULIA1 FloydLambMULESHOEBailey34 LITTLEFIELDHockleyCochran36 FLOYDADAHaleLubbock53 CottleWichitaKnoxCrosbyDickensGarzaKent37 sDawsonBordenScurry4 Jones59A Palo PintoStephensShackelfordMontagueMitchellHoward landEl sonCraneUptonReaganErathSomervell11 BrownCOMANCHE Hamilton sJeff DavisMcCullochTom Green56 San SabaRockwallKaufmanEdwardsKinney47 BRACKETTVILLEMaverick8 41Goliad28 42 FRANKLINHoustonBurlesonNAVASOTA MontgomeryVictoria52 San PatricioNueces44 WebbDuvalROBSTOWNKlebergZapataJim HoggBrooksKenedyStarrHidalgoWillacy38 MERCEDES1122 Colorado St., 24th Floor Austin, TX 78701(512) 454-0311 www.texas-ec.orgService areas shown include multiple certificated areasand generally correspond to service area boundariesapproved by the Public Utility Commission of Texas.NewtonJasperTyler31 LIVINGSTONSan JacintoSINTONJim WellsSabinePolk50 Madison7 40 16AngelinaGrimes WalkerRefugio AransasLive OakSAN AUGUSTINE TrinityBeeMcMullenSan AugustineCROCKETTCalhounLa SalleShelbyRUSK NacogdochesLeonBrazosKARNES CITY49 HENDERSON9 WashingtonWaller5KerrHays BastropKendallBASTROP Fayette Austin 51HarrisComalReal19 CaldwellBanderaBELLVILLELA GRANGE 2 BANDERAColoradoGuadalupe23MedinaWharton Fort BendBexar 39GONZALES Lavaca65UvaldeGonzales BrazoriaWilsonEL CAMPOHONDODewitt30Karnes64 EDNA Matagorda32AtascosaFrioZavalaJackson VICTORIADimmit TTFREDERICKSBURGSmithRuskWilliamsonGillespieVan ZandtKAUFMANRobertson46B JOHNSON CITYQUITMANLimestone3 Llano67Marion Wood 63 GILMERRains61 McLennanMCGREGOR FallsBurnetMasonKimble46AVal VerdeBrewster33 NavarroHill CORSICANABellSuttonPresidio 2726 CoryellLampasasMenardELDORADOTerrellITASCA EllisBosqueSAN ANGELOIrionDallas Comanche10 Coleman12 ReevesTarrantHood s13Lamar PARISMUENSTER Cooke 2117BLUEGROVEFannin BONHAMRed River Bowie 5466VANALSTYNEOLNEYDeltaWiseFranklin6 Morris CORINTH JackTitus18DECATUR 20HopkinsHunt14 CollinDOUGLASSVILLE herClay29 Cameron 2012Text and art copyrighted by Texas Electric Cooperatives Inc. Allrights reserved. No portion of the map may be reproduced withoutthe prior written permission of Texas Electric Cooperatives Inc.Original source map: C.H. Guernsey & ersGalveston

Cooperative Map KeyMap Locations and Headquarters TownsCOOPERATIVEMAP NUMBERHEADQUARTERSBailey County ECA . . . . . . . . . . . 1. . . . . . . . . . . . . . . MuleshoeBandera EC . . . . . . . . . . . . . . . . . 2 . . . . . . . . . . . . . . BanderaBartlett EC . . . . . . . . . . . . . . . . . 3 . . . . . . . . . . . . . . BartlettBig Country EC . . . . . . . . . . . . . . 4 . . . . . . . . . . . . . . RobyBluebonnet EC . . . . . . . . . . . . . . 5 . . . . . . . . . . . . . . BastropBowie-Cass EC . . . . . . . . . . . . . . 6 . . . . . . . . . . . . . . DouglassvilleBryan Texas Utilities . . . . . . . . . 7 . . . . . . . . . . . . . . BryanCentral Texas EC . . . . . . . . . . . . 8 . . . . . . . . . . . . . . FredericksburgCherokee County ECA . . . . . . . . 9 . . . . . . . . . . . . . . RuskColeman County EC . . . . . . . . . . 10 . . . . . . . . . . . . . ColemanComanche EC . . . . . . . . . . . . . . . 11 . . . . . . . . . . . . . . ComancheConcho Valley EC . . . . . . . . . . . . 12. . . . . . . . . . . . . . San AngeloCooke County ECA . . . . . . . . . . . 13. . . . . . . . . . . . . . MuensterCoServ Electric. . . . . . . . . . . . . . 14. . . . . . . . . . . . . . CorinthDeaf Smith EC . . . . . . . . . . . . . . 15. . . . . . . . . . . . . . HerefordDeep East Texas EC . . . . . . . . . . 16 . . . . . . . . . . . . . San AugustineFannin County EC . . . . . . . . . . . . 17. . . . . . . . . . . . . . BonhamFarmers EC . . . . . . . . . . . . . . . . . 18 . . . . . . . . . . . . . GreenvilleFayette EC. . . . . . . . . . . . . . . . . . 19 . . . . . . . . . . . . . La GrangeFort Belknap EC . . . . . . . . . . . . . 20 . . . . . . . . . . . . . OlneyGrayson-Collin EC . . . . . . . . . . . 21. . . . . . . . . . . . . . Van AlstyneGreenbelt EC. . . . . . . . . . . . . . . . 22 . . . . . . . . . . . . . WellingtonGuadalupe Valley EC . . . . . . . . . 23 . . . . . . . . . . . . . GonzalesHamilton County ECA. . . . . . . . . 24 . . . . . . . . . . . . . HamiltonHarmon EA . . . . . . . . . . . . . . . . . 25 . . . . . . . . . . . . . Hollis, OKHeart of Texas EC. . . . . . . . . . . . 26 . . . . . . . . . . . . . McGregorHILCO EC. . . . . . . . . . . . . . . . . . . 27 . . . . . . . . . . . . . ItascaHouston County EC . . . . . . . . . . 28 . . . . . . . . . . . . . CrockettJ-A-C EC . . . . . . . . . . . . . . . . . . . 29 . . . . . . . . . . . . . BluegroveJackson EC. . . . . . . . . . . . . . . . . 30 . . . . . . . . . . . . . EdnaJasper-Newton EC . . . . . . . . . . . 31. . . . . . . . . . . . . . KirbyvilleKarnes EC . . . . . . . . . . . . . . . . . . 32 . . . . . . . . . . . . . Karnes CityLamar County ECA . . . . . . . . . . . 33 . . . . . . . . . . . . . ParisLamb County EC . . . . . . . . . . . . . 34 . . . . . . . . . . . . . LittlefieldCOOPERATIVE . . . . . . . . . . . . NUMBER . . . . . . HEADQUARTERSLea County EC . . . . . . . . . . . . . . 35 . . . . . . . . . . . . . Lovington, NMLighthouse EC. . . . . . . . . . . . . . . 36 . . . . . . . . . . . . . FloydadaLyntegar EC. . . . . . . . . . . . . . . . . 37 . . . . . . . . . . . . . TahokaMagic Valley EC . . . . . . . . . . . . . 38 . . . . . . . . . . . . . MercedesMedina EC. . . . . . . . . . . . . . . . . . 39 . . . . . . . . . . . . . HondoMid-South Synergy . . . . . . . . . . 40 . . . . . . . . . . . . . NavasotaNavarro County EC. . . . . . . . . . . 41. . . . . . . . . . . . . . CorsicanaNavasota Valley EC. . . . . . . . . . . 42 . . . . . . . . . . . . . FranklinNorth Plains EC . . . . . . . . . . . . . 43 . . . . . . . . . . . . . PerrytonNueces EC. . . . . . . . . . . . . . . . . . 44 . . . . . . . . . . . . . RobstownPanola-Harrison EC . . . . . . . . . . 45 . . . . . . . . . . . . . MarshallPedernales EC . . . . . . . . . . . . . . 46 A, B . . . . . . . . . Johnson CityRio Grande EC. . . . . . . . . . . . . . . 47 . . . . . . . . . . . . . BrackettvilleRita Blanca EC . . . . . . . . . . . . . . 48 . . . . . . . . . . . . . DalhartRusk County EC . . . . . . . . . . . . . 49 . . . . . . . . . . . . . HendersonSam Houston EC. . . . . . . . . . . . . 50 . . . . . . . . . . . . . LivingstonSan Bernard EC . . . . . . . . . . . . . 51. . . . . . . . . . . . . . BellvilleSan Patricio EC. . . . . . . . . . . . . . 52 . . . . . . . . . . . . . SintonSouth Plains EC . . . . . . . . . . . . . 53 . . . . . . . . . . . . . LubbockSouthwest Arkansas . . . . . . . . . 54 . . . . . . . . . . . . . Texarkana, ARSouthwest Rural EA . . . . . . . . . . 55 . . . . . . . . . . . . . Tipton, OKSouthwest Texas EC. . . . . . . . . . 56 . . . . . . . . . . . . . EldoradoSwisher EC . . . . . . . . . . . . . . . . . 57 . . . . . . . . . . . . . TuliaTaylor EC . . . . . . . . . . . . . . . . . . . 58 . . . . . . . . . . . . . MerkelTri-County EC . . . . . . . . . . . . . . . 59 A,B. . . . . . . . . . AzleTri-County EC, OK . . . . . . . . . . . 60 . . . . . . . . . . . . . Hooker, OKTrinity Valley EC . . . . . . . . . . . . . 61 . . . . . . . . . . . . . KaufmanUnited Cooperative Services. . . 62 . . . . . . . . . . . . . CleburneUpshur Rural EC. . . . . . . . . . . . . 63 . . . . . . . . . . . . . GilmerVictoria EC . . . . . . . . . . . . . . . . . 64 . . . . . . . . . . . . . VictoriaWharton County EC . . . . . . . . . . 65 . . . . . . . . . . . . . El CampoWise EC . . . . . . . . . . . . . . . . . . . . 66 . . . . . . . . . . . . . DecaturWood County EC . . . . . . . . . . . . 67 . . . . . . . . . . . . . Quitman

What is a “pole attachment?” It is hardware attached to our poles – our property – that is notfor electric service, but rather cable and telecommunications service. Holes are drilled into ourpoles and their equipment is attached to the pole. They are “renting” space on our pole. In somelimited cases they use our easements, but in other situations, the cable company must secure itsown easements, as many of our easements are on private property and for electric service only.Who is responsible for the property? As owner of the poles, a cooperative is responsible fortheir placement and maintenance. The cooperative is also responsible for the safety ofemployees who work on and around the facilities, as well as the public, as they walk, ride anddrive under and around the poles, wires and other equipment.A cooperative’s procedures for pole attachments involve steps that are necessary to ensure thereliability and safety of the cooperative’s distribution system, including:1. Verifying that adequate space and mechanical strength is present to safely accommodatethe proposed attachments;2. Verifying that the proposed attachments do not reduce the integrity and reliability of thecooperative’s electric system;3. Verifying that attachments installed on our poles comply with the National ElectricSafety Code requirements and construction standards; and4. Processing costs for any modifications to our facilities necessary to accommodate theproposed attachments.How do cooperatives and attaching companies handle their business today? By contract.There are literally hundreds of such contracts. We negotiate a contract with the attachingcompany that sets out the procedures for attaching, as well as the rate – or rent – for the use ofour property. The contracts set out the procedures for making lawful attachments. After thecontract takes effect, the attaching company is supposed to make requests for attachments andthe cooperative is supposed to respond within the time frame set out in the contract.Some cooperatives have only one or two companies attaching to their facilities, while othershave multiple companies and multiple cables per company attached to their poles. There is apoint at which installing more attachments cannot be accommodated on a particular pole orcostly upgrades to the facilities become necessary.The statewide average annual rate per attachment for cooperatives is a modest 8.47. The ratesare lowest in the areas of the state with the lowest population density.Does the Federal Communications Commission (FCC) regulate pole attachments forelectric cooperatives? No. While the FCC regulates pole attachments for large investor-ownedutilities, electric cooperatives are not subject to FCC jurisdiction. Since cooperatives aremember-owned and controlled and our members receive both electric and communicationsservices, Congress determined that electric cooperatives were better positioned than the FCC to

establish fair and reasonable attachment arrangements. Cooperatives have a strong incentive tosee that their member-consumers receive communications service and that they do not overlysubsidize the business of the cable and telecommunications industries.Has a cable provider ever been denied access to a cooperative’s poles? No. We do requirethat a contract be in place and we do expect the attaching companies to live up to the terms of thecontract.Our discussions have thus far focused on six issues (these are all matters currently handledthrough contracts between the interested parties): Rate Formula - The cable companies want electric cooperatives to set their attachment ratesusing the Federal Communications Commission formulas which the FCC revised in 2010 toreduce the rate electric utilities are allowed to charge for attachments. Cooperatives believethat the FCC formulas require electric utilities to subsidize the large cable and telecomcompanies by setting pole attachment fees artificially low.We have instead proposed that a single “Texas formula” apply in the event that cooperativesand attachers are unable to agree on a negotiated rate within a reasonable time. The “Texasformula” we proposed more accurately captures the true cost to our consumers of using theirproperty and is currently being used by some Texas cooperatives to calculate pole attachmentrates.While the large investor-owned electric utilities in Texas are under the jurisdiction of theFCC and are thus required to subsidize cable and telecom interests, AEP, Entergy and Oncorhave appealed the new federal rule to the U.S. Court of Appeals in Washington, along with anumber of other electric utilities from around the country.The Legislature established the FCC telecom formula as a cap for municipally-ownedutilities in SB 5 in 2005. This FCC telecom rate produced a significantly higher rate than thenew FCC formula. It would be best to ask the municipally-owned utilities how the newformula affects their systems’ finances. Unauthorized & Unsafe Attachments – We proposed several provisions to address thewidespread problem of cable companies placing unauthorized and unsafe attachments oncooperative property. Those include requiring a contract and permit before attachment, awritten plan of correction for unpermitted or problem attachments, and the imposition ofcosts and sanctions for non-compliance.Abandoned Attachments – We proposed that the cable companies help resolve thewidespread problem of abandoned attachments by agreeing to post a bond to pay for theremoval of abandoned attachments and agreeing to a provision authorizing cooperatives todispose of those attachments after notice to the attaching company.

Make-Ready Timeline - The cable companies asked that co-ops follow the FCC make-readytimeline. We proposed following the FCC make-ready timeline with some adjustments toaccount for the operations of smaller systems.Periodic Audit & Back Charges– The cable companies asked that pole attachment audits beconducted by an independent third party auditor and that back charges (charges applied afterunauthorized attachments are spotted) be limited to a set period of time. Discussions havefocused on the timing of the audits and who should pay for the audits. We have proposedthat back charges be limited to the audit period and that there should be a pole countbenchmark set at the end of each audit.Enforcement of Make-Ready & Contract Disputes – The cable companies asked the coops to agree to binding third party arbitration for make-ready disputes. We proposed that alldisputes over technical matters that might delay the attachment process go to non-bindingarbitration, allowing other disputes to go directly to state district court. TEC and the cablerepresentatives agreed to consider the pros and cons of binding vs. non-binding arbitrationfor time-sensitive attachment issues.Easements – The cable companies are responsible for obtaining their own easements andthey shouldn’t be relying on electric service easements (a pole attachment agreement allowsaccess to the poles and facilities but does not cover the land over which the cable runs). Wewould like to have an indemnity provision to protect cooperatives against liability for anattaching company’s failure to secure its own easement from the property’s landowners.

Texas Electric Cooperatives (TEC) is the statewide association for the 66 . Upshur Gaines Dawson Borden Scurry Jones Shackelford Stephens Fisher Rains Rockwall Tarrant Dallas Parker Palo Pinto Wood Camp Cass Morris Hopkins . Original source map: C.H. Guernsey & Company. Cooperative Map Key Map Locations and Headquarters TownsFile Size: 863KB