AEP seeks $5 million from Verizon for shared poles

CHARLESTON - Two of the state's largest utility companies are on opposite ends of a $5 million lawsuit.

Appalachian Power Company and Wheeling Power Company, jointly known as American Electric Power filed a lawsuit March 21 against Verizon West Virginia.

The suit, filed by Gina Mazzei-Smith, says Verizon violated a contract between the two companies, where the companies split costs of utility poles on poles they shared. AEP seeks more than $5 million in compensation for a breach of contract concerning the shared poles.

In an agreement dated July 1, 1986, AEP and Verizon, which was then the Chesapeake and Potomac Telephone Company of West Virginia, have been sharing the cost and operations of building and maintaining a utility pole system in territories where their services overlap.

The agreement required the parties to compensate each other, using a three-factor rate formula.

The first factor requires the parties to determine their annual pole-related costs; the second requires the parties to determine the number of affected poles; and the third requires the parties to apply the cost allocation percentages specified in the agreements, the suit states.

The Space Allocation Percentage for AEP is 55.625 percent, which means AEP must compensate Verizon each year for that percentage. The Space Allocation for Verizon is 44.375 percent.

In 2002, Verizon drafted a letter in which it proposed a temporary proxy to determine the first factor, the annual pole-related costs. AEP agreed to the proxy, which was in place until it was terminated by Verizon in 2006, the suit says.

However, the letter agreement did not terminate the underlying agreement, and Verizon now is refusing to compensate AEP for the use of the utility poles, the suit says.

In June 2006, AEP sent an invoice to Verizon for annual joint use rental due for 2006, totaling more than $7.9 million, the suit says. According to the lawsuit, Verizon paid only $2.6 million, leaving $5,216,040.34 due.

AEP seeks the remaining $5 million, plus interest and court fees used to attain the remaining rent.

The case has been assigned to Judge Louis Bloom.

Kanawha Circuit Court case number 07-C-506

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