Expansion Options and Fiber Line Extension Policy

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1 Expansion Options and Fiber Line Extension Policy Nov. 2, 2015 No Action Required Information and Feedback Requested

2 Today s Discussion Public Power Benefit - Fiber Expansion Options Background for determining options Comparison of options Line Extension Policy Proposed concepts for update 2

3 Public Power Benefit Fiber Expansion Options 3

4 Background Public Power Benefit approved April 6, 2015, as part of 2015 Strategic Plan Expansion of Fiber network to 85-90% of electric customers in next 11 years Estimated total cost of $25 million based on average of 40% take rate $3.7 million budgeted for Engineering, design and materials procurement in

5 Background Construction will start in 2016 in adjacent areas as previously communicated No major construction (no new nodes or backbone) primarily extension of existing distribution facilities Scheduling of FDT zones for construction in future years will be dependent on: Availability of Public Power Benefit funds Included as part of annual budget process Consistent with operational priorities (District projects, material availability, permit availability and other factors) 5

6 Background Fiber Topic Team analysis confirmed plan for 85-90% premises passed at a total cost of $25 million Further analysis was needed to refine and select potential Fiber Distribution Terminal (FDT) Zones to include in construction Seven regions were designated for operational and construction management 6

7 Fiber network today Lit Premises % Lit Premises Unlit Premises Total Premises Cashmere 40% 1,559 2,324 3,883 Chelan 74% 3,974 1,400 5,374 Entiat 47% 934 1,059 1,993 Lake Wenatchee 68% 2,359 1,101 3,460 Leavenworth 68% 3,433 1,612 5,045 Wenatchee 83% 16,722 3,346 20,068 Manson 29% 1,209 2,989 4,198 *Benchmark data from 2012 Strategic Planning analysis 69% 30,190 13,831 44,021 7

8 Expansion Options Three options considered: Option 1: Ranked by total FDT zone construction cost Option 2: Ranked by average line cost within an FDT zone Option 3: Distributed funds as equally as possible within the seven regions 8

9 Option 1 Lowest Capital Cost per FDT Zone Share of Allocated Dollars $ 25,000,000 Additional Premises Premises Passed Cashmere 16% $ 3,932,447 1,872 88% Chelan 11% $ 2,615, % Entiat 4% $ 1,068, % Lake Wenatchee 9% $ 2,208, % Leavenworth 13% $ 3,200,226 1,020 88% Wenatchee 31% $ 7,412,642 2,344 95% Manson 17% $ 4,050,509 1,886 74% $ 24,487,980 8,970 89% 9

10 Option 2 Lowest Capital Cost per Premise Share of Allocated Dollars $ 25,000,000 Additional Premises Premises Passed Cashmere 14% $ 3,395,736 1,735 85% Chelan 7% $ 1,694, % Entiat 4% $ 1,068, % Lake Wenatchee 6% $ 1,453, % Leavenworth 13% $ 3,092,866 1,102 90% Wenatchee 37% $ 8,820,673 2,849 98% Manson 19% $ 4,474,752 2,014 77% $ 24,000,152 9,256 90% 10

11 Option 3 Equal Funding Allocated to Regions $ 3,500,000 Additional Premises Funding Allocation % Premises Passed Cashmere $ 3,395,736 1,735 15% 85% Chelan $ 3,360, % 89% Entiat $ 3,038, % 83% Lake Wenatchee $ 3,053, % 91% Leavenworth $ 3,200,226 1,020 14% 88% Wenatchee $ 3,596,004 1,384 16% 90% Manson $ 3,553,029 1,724 15% 70% $ 23,197,299 8, % 87% 11

12 Comparison of Options 9400 Premises Passed Connections Option #1 Option #2 Option #3 Option #1 Option #2 Option #3 Option 2 produces highest revenue through the higher number of connections 12

13 Commission Feedback Thoughts? Suggestions? Input? 13

14 Line Extension Policy Concepts for updating Fiber LE Policy 14

15 Why Update Now? Good practice to review before initiating construction under the Public Power Benefit Consistency for customer improve alignment with electric LE policy and Telecom Industry Policies Shorten, simplify fiber line extension process Construction policy will continue to provide drop and facilities during expansion construction. 15

16 Fiber Line Extension Policy Current Fiber Line Extension Policy District contributes $1,500 to line extension Customer is responsible for all costs over $1,500 Most requests require initial estimate by Customer Service Engineer Many require detailed analysis and final estimate District builds and owns the facilities 16

17 Comparison to other policies Chelan PUD electrical line extension policy requires customer to pay 100% of cost in general Customer has option to construct or have constructed facilities to District s specifications Customer must buy specific materials from District Telecommunications line extension rule from the Washington Utilities and Transportation Commission Telecommunications company must extend service (not including trenches, conduits, or other support structures) at company cost up to 1,000 feet from existing distribution facilities Customer is responsible for any trenching, conduits, or other support structures necessary to place company facilities on customer property Customer is responsible for all costs for extending service beyond 1000 feet 17

18 Fiber Line Extension Policy Update Line extension policy under consideration District will furnish drop and equipment Up to a maximum length (TBD) District will use overhead, electrical or other facilities if available and usable Customer will be responsible for facilities if not available or usable Constructed to District specifications If Distribution fiber is not available it would be Special Construction and customer would be responsible for 100% of cost 18

19 Benefits Overall savings to program Simple conceptual structure that will promote quick and accurate understanding by customers and by employees in the field Substantial alignment with other utility line extension policies both internally and externally Provides equitable treatment across broad categories of customers Expected savings of $725 per drop under this policy Allows reallocation of resources to install additional lines Provides incentive to sign up for services before or during construction and benefits the customer by the District providing facilities during the construction period 19

20 Next Steps Seek Advisory Group feedback week of Nov 9 Seek final Commission input on construction options Nov. 16 Present updated Fiber Line Extension Policy to Commission on Nov. 16 Seek Commission approval of updated Fiber Line Extension Policy on Dec. 7 20