Connecticut regulator probing Frontier pole transfer
In the past year, Frontier Communications has sought to shore up its financial foundation by auctioning off assets, from dispatch centers in Connecticut to entire telecommunications territories on the opposite end of the country.
Now, Connecticut’s chief utilities regulator wants to know if that auction will extend all the way out to Frontier’s telephone poles stringing wires to every corner of the state.
The Connecticut Public Utilities Regulatory Authority has scheduled a conference this month to get answers from Frontier on its financial condition, and what contingency plans the Norwalk company may have — if any — to divest additional assets in the state.
Specifically, PURA wants to know whether Frontier is contemplating the sale of elements of the Southern New England Telephone utility pole system that the company inherited in its 2014 acquisition of AT&T’s operations in its home state. The meeting is scheduled for Monday at 1:30 p.m. at PURA’s main office in New Britain.
A Frontier spokesperson did not respond immediately to Hearst Connecticut Media about whether it has contemplated the sale of any Connecticut assets beyond service depots in the state that it has been selling with PURA approval, taking leases on the facilities after cashing out of those properties while it scouts for alternate locations.
Frontier came under PURA scrutiny last year after informing investors of a loan agreement that included as collateral elements of its Connecticut business, with PURA asserting the right to review any such plan in the interest of the state.
Frontier subsequently reported a $5.3 billion loss in the second quarter of this year, on the heels of reaching a $1.4 billion deal to sell off operations in the northwestern United States. CEO Dan McCarthy and his finance lieutenant Sheldon Bruha are trying to dig Frontier out of a deficit of more than $17 billion in debt coming due in the coming years even as a string of quarterly losses persists.
PURA now wants to probe further the precariousness of Frontier’s financial underpinnings, and whether it is contemplating the sale of any assets subject to PURA purview. In April, Gov. Ned Lamont appointed Marissa Gillett to chair PURA, with Gillett’s background largely in energy regulation and government affairs.
Frontier is sole owner of more than 13,000 utility poles of some 875,000 statewide, according to a PURA analysis published this past July, with Frontier sharing ownership with Eversource of more than 610,000 and another 130,000 with Avangrid.
Eversource spokesman Mitch Gross did not state whether the company is negotiating to buy out Frontier’s investment equity in utility poles, in response to a Hearst Connecticut Media query. He confirmed that a dispute is ongoing between the companies with respect to the past costs of storm recovery work, with PURA reporting last spring that Eversource is seeking $6 million from Frontier for its share of those expenses. PURA added that if Eversource is unsuccessful collecting the money, the company could ask state permission to have its ratepayers pick up the tab — essentially shifting that burden from Frontier’s customers to its own.
“We plan to attend the meeting next week at PURA to get a better understanding of Frontier’s current views on utility pole ownership in Connecticut,” Gross told Hearst Connecticut Media. “PURA agreed that we should continue to try to collect the money.”
An Avangrid representative indicated the company has not had formal discussions with Frontier on any transfer.
“Obviously, if we were, we would have to review it carefully and determine whether it would be in the interest of our customers,” Avangrid spokesman Ed Crowder said.
As of last December, Frontier estimated the value of its Connecticut poles at $127 million and its cables and wires at $700 million, with other conduits carrying a value of $151 million.
Frontier charges cable companies an annual “attachment rate” of about $7.50 for the poles it owns, according to PURA.
PURA has been pressuring the utilities to eliminate tandem poles that were installed to accommodate extra cable infrastructure,fining Frontier $70,000 in July for removing double poles at too slow a pace.