The recent landmark ruling on transmission planning cost allocation, known as “Order 1000,” and issued by the U.S. Federal Energy Regulatory Commission in late July 2011, could well produce an...
Transmission Rights Row
Fiber optic lines expose grid companies to class action lawsuits.
One of the trickiest issues confronting the electric transmission industry today is the controversy over who owns the transmission corridors that traverse the United States. Property owners are banding together and filing class-action lawsuits against utility companies they perceive as having usurped property rights without compensation.
This controversy arises from changes in technology, and the debate is being driven by certain misconceptions about the laws and policies affecting utility rights of way.
Utility companies supply electricity to residential, commercial and industrial customers throughout North America using transmission corridors that connect with vast distribution networks. The companies assembled these corridors years ago by negotiating easement agreements with millions of property owners that, in effect, granted them the right to conduct business on the owner’s property. To be more precise, these agreements were designed to entitle the electric company to transmit over, under, or through someone else’s fee ownership. Once the corridors were assembled, utilities incurred substantial costs to construct electrical lines and other necessary equipment and structures on the easements to enable them to transmit electric current from the points of generation to locations for distribution.
In addition to the transmission of electricity, the easements granted the companies the right to utilize the lines for internal communication. As technologies advanced, the utility companies replaced the original lines with fiber-optic cable that has a much higher capacity for transmission. As a result, the utility companies began to use the fiber for external communications or sold the excess capacity to third-party users such as telecommunication companies. This recent expansion of easement rights has become an increasingly controversial issue.
Transmission companies now face costly and time consuming litigation that could have severe economic impacts for both the companies and the consumers they serve. What is it that the utility companies failed to foresee when they acquired the easement agreements for transmission rights of way? The answer is technological advances and the development of fiber- optic communications.
Because the quantum leaps in communications technology were unimaginable when the original easement agreements were negotiated, utility companies never anticipated the capabilities that are available today. However, the same progress that has benefited consumers also has created a financial opportunity for industrious class-action attorneys, litigation experts, and those who granted the easements or their successors.
Misconceptions about the ownership of corridor rights represent a protracted nuisance and financial threat to the electric transmission industry. But easement holders are well positioned to defend themselves in lawsuits demanding compensation for using transmission corridors for communications networks.
Orzo and Spaghetti
The basis of the complaints by the property owners derives from their belief that commercial fiber optics go beyond the rights granted by them or their predecessors to the utility companies in the original easement agreements. By and large, the terms found in these easements significantly encumber the