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HomeMy WebLinkAboutAgenda Packet 02/11/2003 PUBLIC WORKS CONFERENCE ROOM PORT ANGELES~ WA cJB3~2 FEBRUARY 1 1 t 20r'13 3:00 P.M. AGENDA I. CAL1 TO ORDER II. ROLL I"t ALL III, APPROVAL OF MINUTES FOR JANUARY I I ~ 2003 IV. LATE ITEMS V. DIBCUSESlON ITEMS VI. NEXT MEETING DATE - MARCH 5~ 20r13 (NOTE DATE CHANGE FROM MARCH 1 I TH) VII. ADJOURNMENT UTILITY ADVISORY COMMITTEE Port Angeles, Washington January 14, 2003 I. Call to Order: Chairman Bentley called the meeting to order at 3:10 p.m. ~.~v II. Roll Call: Members Present: Chairman Bentley, Councilman Campbell, Dean Reed, Councilmember Er/ckson, Councilman Williams Members Absent: Councilmember Rogers Staff Present: Michael Quirm, Craig Knutson, Glenn Cutler, Scott McLain, Larry Dunbar, Steve Sperr, Jim Harper, Bill Beverford, Cate Rinehart Others Present: Brian Gawley - Daily News Ivan Cowles - City of Forks Water Dept. Tim Smith - City of Forks Water Dept. Tim Hockett - Olympic Community Action Programs Mike Glenn - Olympic Medical Center Todd Irwin - Olympic Peninsula Dental Society Tom Locke - Clallam County Health and Human Services Steve Chapman - Pen'msula Childrens Clinic Bette Schueler - Floridation Committee Jim Leskinovitch - OMC Board Member Cyndi Newman - Clallam County Oral Health Program Craig Johnson - Capacity Provisioning Pete Grigorieff- Northland Cable TV III. Approval of Minutes: Chairman Bentley asked if there were any additions or Corrections to the meeting minutes of December 10, 2002. Councilman Campbell moved to approve the minutes. Councilmember Erickson seconded the motion. Councilman Williams abstained due to absence at the meeting. IV. Elections Of Officers: Councilman Campbell moved to nominate Councilmember Erickson as Chairman. Allen Bentley seconded the motion, which carried unanimously. Councilmember Erickson moved to nominate Councilman Campbell as Vice Chairman. Allen Bentley seconded the motion, which carried unanimously. UTILITY ADVISORY COMMITTEE January 14, 2003 V. Discussion Items ,4. Fluoridation Presentation By Olympic Medical Center Jim Leskinovitch, Olympic Medical Center Board Member, gave a brief introduction regarding the need to introduce fluoridation into the City system. Mike Glen, Olympic Medical Center, Dr. Todd Irwin, Olympic Peninsula Dental Society, Steve Chapman, Peninsula Childrens Clinic, Tim Hockett, Olympic Community Action Programs, Tom Locke, Clallam County Health and Human Services, and Cindy Newman, Clallam County Oral Health Program, each gave a short presentation. Olympic Medical Center and its affiliates have noted a marked increase in the admittance of people suffering from tooth decay and oral pain. Their findings indicate a cost of approximately fifty cents per person per year could decrease the problem as much as sixty percent. A grant is available through the Washington Dental Service Association to help offset the cost to the City. A presentation will be made at the February 18th Council meeting. A brief discussion followed. Councilmember Erickson moved to recommend City Council make a decision to hold a public hearing with the possibility of a public vote. Dean Reed seconded the motion, which carried unanimously. B. Design Agreement Amendment - Substation Circuit Switcher Project 21-27, 21-28, and 21-29 James Harper, Electrical Engineering Manager, explained that the mechanical relays are over twenty five years old, require frequent maintenance, and provide no diagnostic or analysis data. New digital units will provide more reliable operation of the feeders and valuable information when trips do occur. TriAxis Engineering is currently designing circuit switcher installation and has completed similar designs in th4e past. There was a brief discussion. Dean Reed moved to recommend City Council authorize the Mayor to sign an agreement amendment with TriAxis Engineering of Corvallis, Oregon to add the design of new feeder relays to Projects 21-27, 21-28, and 21-29 for $45,000, for a revised total for the agreement not to exceed $103,600. Councilman Campbell seconded the motion, which carried unanimously. C. Analysis Of Need For Morse Creek Water Line As Domestic Emergency Water Supply Stephen Sperr, Utility Engineer, reported there are sections of the Morse Creek water line that are not an integral part of the City's Water System and it is no longer needed as an emergency back-up water supply conveyance. A review of the status of the pipeline followed with comments concerning the various sections. A brief discussion follows with a request to amend the recommendation to replace the word delete with investigate and to include the word upgrading. Dean Reed moves to recommend staff investigate options for selling, abandoning, and/or upgrading sections of the Morse Creek water line outside the City and UGA, for presentation to 2 UTILITY ADVISORY COMMITTEE January 14, 2003 the Committee at a later date. Councilman Campbell seconded the motion, which carried unanimously. D. Fiber Optic gr'ide .4rea Network Use .4greement ,~mendments Larry Dunbar, Power Resources Manager, summarized the amendments which included the dark fiber policy (allowing Northland to use dark fibers for private wide area networks either before or after bandwidth is available from a commercial service provider), network intcrcormection (postponement until mutually acceptable terms and conditions are negotiated to interconnect the I-Net to the Clallam County Public District network), and node access (physical access to enclosurers). A discussion followed. Dean Reed moved to forward a favorable recommendation to the City Council to approve thc proposed amendments to the Fiber Optic Wide Area Network Use Agreement. Couneilmember Erickson seconded the motion, which carried unanimously. E. Fiber Optic Wide ~trea Network Use ~tgreement Final ~tcceptance Larry Dunbar, Power Resources Manager, described the inspection, testing, and acceptance by staff and Metropolitan Communications Consultants as being complete. It was noted that Northland completed the project in a prompt fashion and significantly below budget. A discussion followed with a review of the fiber use. Dean Reed moved to forward a favorable recommendation to the City Council to formally accept the dark fiber link and nodes, initial proof of performance, and authorize the release of the project management fee to Northland in the amount of $55,000. Councilmember Eriekson seconded the motion, which carried unanimously. F. Institutional Network Services Agreement Completion Larry Dunbar, Power Resources Manager, observed that although there was a six week delay in completing the fiber link and nodes, Capacity Provisioning constructed the fiber optic site drops, including installation of node equipment and customer premises equipment only one week beyond the original time line. A brief discussion followed. No action taken. Information only. FI. Late Items Lower Elwha Klailam Tribe Sanitary Sewer Connection To City Waste Waster Treatment Plant Glenn Cutler, Director of Public Works and Utilities, pointed out that removal of the Elwha Dam will increase the water table at the Lower Elwha Klallam Tribe Reservation requiring development of a plan to treat sewage from residential and non-residential facilities located at the reservation. Alternatives to UTILITY ADVISORY COMMITTEE January 14, 2003 be considered are a community drain field with individual septic tanks, a community treatment plant with disposal to a constructed wetland, and a sewer main connection to the City's Wastewater Collection System with treatment at the City's Wastewater treatment Plant with a tie into the system at 18th and Milwaukee Drive. A discussion followed addressing various issues including Treatment Plant capacity, overflow impacts, service outside th urban growth area, fee structures, joint use of the bridge across Dry Creek, and ownership, operation and maintenance of pump stations and pressure mains. Staff was directed to research the connection with the Industrial Park at the airport, pipe line capacity at 18~ and Milwaukee Drive, and legal issues regarding serving outside the UGA. Information only. No action taken. Y~holesale }Vater Contract Scott McLain, Deputy Director of Power Systems, presented a draft contract with the Clallam County Public Utility District for review and comment. Contract highlights included rates and water use limits, development of a water shortage response plan, reimbursement for maintenance of the transmission line, new construction or replacement facilities to meet the urban services standards, emergency water limitation, prior approval when usage is projected to increase over certain limits, use of access roads and the bridge across Morse Creek for access to City facilities, maintenance of service for backup emergency to the Elwh~/pump station, and a pre-annexation agreement. Staffwas directed to have the District ' provide a water shortage plan within ninety days of the signing of the contract. No action taken. Information only. VII. Reports Franchise Transfer Status Rayonier Leachate - Quarterly No action taken. Information only. VIII. Next Meeting: The next regular meeting will be February 11, 2003. IX. Adjournment: The meeting adjourned at 5:45 p.m. Allen Bentley, Chairman Cate Rinehart, Administrative Assistant 4 W A $ H ~ N C~ T 0 N, U. $. A. UTILITY ADVISORY COMMITTEE MEMO DATE: February l 1, 2003 TO: UTILITY ADVISORY COMMITTEE FROM: Stephen Sperr, P.E., Utility Engineer RE: Lower Elwha Klallam Tribe Request for Sewer Connection Summary: The Lower Elwha Klallam Tribe (LEKT) has requested the City consider accepting wastewater from the Reservation for treatment at the City's Wastewater Treatment Plant (WWTP). Recommendation: Forward a favorable recommendation to the City Council to approve the concept of the LEKT connecting to the City sewer system and accepting sewage from their Reservation subject to the following conditions: 1. Negotiating an acceptable agreement which shall be reviewed by the UAC and approved by the City Council. 2. A sewer force main connection/~om the Reservation would be routed over Kaycee Road and the Milwaukee Drive right of way to a catch basin near 18th street. 3. Construct facilities to result in no-impact and no-contribution to the City's ongoing CSO. 4. LEKT and/or Clallam County designating the Reservation as a more intense rural development area where the future land use is not planned to remain rural. 5. LEKT will own, operate and maintain all facilities from the Reservation to the 18th and Milwaukee Drive intertie. Also property owners inside the City and UGA be permitted to connect into the line now or in the future for a reasonable fee. 6. Payment of the System Development Charge of $745/ERU. 7. Payment of the Milwaukee Drive latecomer fee of $240/ERU. 8. Monthly sewer charge based upon residential water consumption of over 430 cubic feet per month/ERU. 9. Not imposing a 150% surcharge on the monthly sewer charge. Background/Analysis: The Lower Elwha Klallam Tribe (LEKT) has requested the City consider accepting wastewater from the Reservation for treatment at the City's Wastewater Treatment Plant (WWTP), and a reduction in the established fees listed in the Port Angeles Municipal Code (PAMC). The LEKT is considering altematives to the current use of on-site septic systems in the lower Elwha Valley on the Reservation due to anticipated rising groundwater following removal of the Elwha River dams. The LEKT is currently evaluating three options, includin~ formation of a sewer district that would connect to the City's sewer collection system at 18 Street via the Milwaukee Drive Right-of-Way (ROW). They are also seeking the elimination of the 150% surcharge on connections from outside of the City. February 11, 2003 Utility Advisory Council RE: LEKT Request for Sewer Connection Page 2 The LEKT has indicated that for their 20-year planning period, a wastewater treatment facility would need to have the capacity to treat sewage from the equivalent of 400+/- family units and commercial facilities. The wastewater would only be for family units and facilities on the Reservation such as the Tribal Center, Housing Office, etc. Representatives including the Tribal Chairman, Executive Director and project personnel of the LEKT, and Councilman Campbell, Michael Quinn, Glenn Cutler and other City staff met on January 13, 2003 to discuss the findings of a feasibility study for the LEKT options available for wastewater disposal. The options, in the initial ranked order, were as follows: 1. Community treatment plant with disposal to a constructed wetland. 2. Treatment at the WWTP delivered through a force main connection to the Port Angeles wastewater collection system. 3. Community drain field with individual septic tanks. During the value engineering process treatment at the WWTP was chosen as the preferred alternative. The treatment at the WWTP option was found to have the most balanced solution to all of the project criteria. This was based upon factors such as the level of environmental health protection, operations and maintenance, and the ability to support long term growth. In the next two months the LEKT will discuss the various options with their community and then select a preferred alternative. The LEKT desires an indication from the City concerning acceptance of the wastewater and the costs associated with treatment at the WWTP prior to their community meetings. The decision, in part, will be based upon the City Council's determination if treatment at the WWTP is still the preferred solution. City staff has reviewed the request from the LEKT and summarized below the issues that should be considered in addressing their request: Issue #1: What is the impact on the WWTP capacity and collection system? Discussion: A wastewater force main connection from the Reservation would be routed over Kaycee Road and the Milwaukee Drive right of way to a catch basin near 18a~ Street. Based on their current and projected design flows, it would increase average flows to the WWTP by 1% at first, and 4% within 20 years to final build out. Currently, the WWTP operates at about 31% of design capacity at average flows. The 12 inch Milwaukee collection line is adequately sized to connect additional city property owners in the west end if the area is built out in the future. This line was installed to accommodate the leachate ponds at the Port Angeles Landfill and service property owners along its route. Issue #2: What is the impact on sewer pump stations 1, 3 & 4 and the potential for increased combined sewer overflow (CSO) incidents? Discussion: The LEKT has indicated that they would agree to construct their facilities to result in no-impact and no-contribution to the ongoing CSOs. This would likely include adequate storage capacity in the LEKT's collection system and the capability to regulate flows into the City's wastewater system. Approval from the Washington State Department of Ecology would be needed for any changes to the collection system that would impact CSOs. February 1 I, 2003 Utility Advisory Council RE: LEKT Request for Sewer Connection Page 3 Issue #3: Do existing regulations and/or laws permit acceptance of wastewater from outside the City's Urban Growth Area (UGA)? Discussion: City services are normally not permitted to extend beyond their UGAs. The Growth Management Act [RCW 36.70A. 110(4)] prohibits governments from extending or expanding urban governmental services (especially sanitary sewer systems per RCW 36.70A030(19)) into rural areas outside an urban growth area with some exceptions. Those exceptions are (1) when it is necessary to protect basic public health and safety and the environment and (2) where the County has designated the area for more intense rural development and/or'where future land use of the area is not planned to remain rural. In the opinion of the Director of Community Development, the LEKT and/or Clallam County could designate the Reservation as a more intense rural development area where the future land use is not planned to remain rural, and this would allow acceptance of wastewater. Issue #4: Which organization will operate and maintain the transmission line between the LEKT Reservation and the connection point? Discussion: It is proposed that the pressured sewer line from the Reservation to the 18th and Milwaukee Drive intextie be owned, operated and maintained by the LEKT. It is recommended that any agreement reached permit the City to authorize connection into the line for properties inside the City/UGA, now or in the future. Fees should be established such that the LEKT could be repaid in a fashion similar to the Connection Charges-Milwaukee Drive Trunk Sanitary Sewer, PAMC 13.67. Issue #5: What fees should be assessed to the LEKT? Discussion: Fees that may be assessed by the City for sewer connection (from the Port Angeles Municipal Code): a. System Development Charge (currently $745/connection), per PAMC 13.69.040 should be assessed. This rate is reevaluated from time to time to reflect increased infrastructure costs. b. Milwaukee Drive latecomer fee, including 10 years of interest ($240/Equivalent Residential Unit (ERU)), per PAMC 13.67.020 and 13.67.060 should be assessed. c. The LEKT has requested they be charged rates as a commercial/industrial customer. The LEKT justification is in the attached document provided by the LEKT. In summary they are basing the request upon the following: i. LEKT will construct, operate, maintain and be a single point of contact for issues and payment. ii. LEKT will have a single connection point. iii. LEKT will ensure that they will not add to the City's CSO challenges. Monthly per unit wastewater charge would be $32.60 or $36.25 (less than 430 cubic feet of metered water consumed, or greater than 430 cubic feet, respectively) if residential rates are charged per PAMC 13.65.010. Commercial/industrial rates are $8.45 per month plus $2.39 per 100 cubic feet for the amount of metered water consumed by the user, per PAMC 13.65.020. Using an estimated average residential water use of 970 cubic feet per month, the charge would be approximately $31.63 per ERU. These rates are reviewed every three years. It is recommended that the monthly fee of $36.25 be assessed. N:\UAC\Ohginal\ LEKTsewer C.wpd February I 1, 2003 Utility Advisory Council RE: LEKT Request for Sewer Connection Page 4 d. 150% surcharge for connections from outside of the City per PAMC 13.65.040. The LEKT has requested that the City not impose a 150% surcharge on the monthly sewer fees. See item c above and attached LEKT justification. It is recommend that the surcharge not be imposed. This is because the LEKT will operate, maintain and administer the system as well as not contribute to the City's CSO situation. The City overhead cost is reduced by not performing the multiple billing function, dealing with only one entity and not performing maintenance on additional infrastructure. The LEKT is seeking a response fi.om the City not later than February 19, 2003 that would indicate the City is willing to accept the wastewater, that the surcharge would be reduced or eliminated, and that the commercial rate would be utilized for cost compensation. If approved by the City Council, it would be proposed to enter into negotiations and return to the UAC and City Council with a proposed agreement within a few months. The staff supports connection of the LEKT sewer district. The connection would have minimal impact on the capacity of the WWTP. The system development charge and Milwaukee connection fee would be paid upon hook up to the Sewer District at the prevailing rates at the time of hook up. It would provide additional revenue in the amount of approximately $70,000 per year initially for 150 ERUs, and eventually $175,000 per year for 400 ERUs upon build out. Also, it would contribute initially approximately $150,000 ($1,000 x 150 ERUs) to our capital fund for fees collected, and eventually total $400,000 ($1,000 x 400 ERUs) in today's dollars. This would contribute to our infrastructure fund and help to minimize rate increases. It is recommended that the UAC forward a favorable recommendation to the City Council to support the sewer connection request contingent on reaching agreements on the issues outlined above. Attachments: LEKT Justification Statement dated February 3, 2003 PAMC Code 13.65 PAMC Code 13.67 PAMC Code 13.69 N:\UAC~O~iginal\LEKTsewcr_C.wpd February 3, 2003 Justification St~ement Utility R~e Review: Lower Elwha V~ley Sewer District The Lower glwha Klallam Tribe proposes the creation of the Lower Elwha Sewer District. (Please, refer to background information provided to City on January 13, 2003) Due to rising groundwater expected on the Lower Elwh~ Reservation following removal of the Elwha Dams, the Tribe must consider alternatives to the current use of on-site septic systems in the lower Elwha Valley. The Tribe is currently considering three options, including connection to the City of Port Angeles sewer system. Connection to the City of Port Angeles sewer system, similar to the other alternatives being considered by the Tribe, would improve and protect water quality of the lower Elwha River groundwater and estuarine environment for public health and aquatic biota. In Value Engineering review sponsored by the Tribe in November 2002, this option was chosen as the preferred alternative. In the next two months the tribal community will consider the preferred option. Due to the low income status of many community members monthly rates will be a primary concern. Prior to community meetings the Tribe requests preliminary discussions on the whether the City wants to have the additional customers and if there is room to negotiate some existing rate premiums. The Tribe requests that the City consider the following approach to the rates as designated in the Port Angeles Municipal code: o Charge the sewer district as a single commercial connection with a per gallon rate equal to other commercial customers o Suspend the 1.5 multiplier rate for this connection from outside the city limits due to the Tribe's ongoing responsibility for operation, maintenance and billing. Justification for reduction of sewer surcharges found in the Port Angeles Municipal Code: ?? Construction, operation, maintenance, and general administration of the sewer district will be the responsibility of the Tribe. ?? The sewer district will have a single service connection to the City of Port Angeles collection system located at the intersection of the Milwaukee Rail Road right-of-way and 18th Street. ?7 Washington State Department of Ecology will require an amendment to the Port Angeles General Sewer Management Plan to implement this service connection. The Tribe agrees to implement design and construction specifications that result in no-impact and no- contribution to the ongoing Combined Sewer Overflow problem. Chapter 13.65 SEWER SERVICE - RATES Sections: 13.65.010 Single Residential Unit Monthly Rate. 13.65.020 Commercial and Industrial Rate. 13.65.030 Commercial and Industrial Equivalent Plumbing Fixture Rate. 13.65.040 Rate for User Outside City Limits. 13.65.010 Single Residential Unit Monthly Rate. A. Each residential unit and each living unit connected with the City water system shall be charged a monthly customer charge during months in which water is consumed. B. The rate for customers whose monthly water consumption equals or exceeds 430 cubic feet shall be as follows: 1. $30.00 per month on bills beginning July 1, 1996. 2. $32.40 on bills beginning January 1, 2000. 3. $ 34.65 on bills beginning January 1, 2001. 4. $36.25 on bills beginning January 1, 2002. C. The rate for customers whose monthly water consumption falls below 430 cubic feet shall be as follows: 1. $27.00 on bills beginning July 1, 1996. 2. $29.15 on bills beginning January 1, 2000. 3. $31.20 on bills beginning January 1, 2001. 4. $32.60 on bills beginning January 1, 2002. (Ord. 3065, 12/06/2000; Ord. 3030 81 (part), 11/26/99; ord. 2872 81 (part), 6/30/95; ord. 2819 81, 7/6/94; Ord. 2685 81, 4/19/92; ord. 2643 81, 7/15/91; ord. 2571 81, 4/1/90; Ord. 2526 81, 4/1/89; Ord. 2482 §1, 4/1/88; Ord. 2437 81, 3/1/87; Ord. 2394 Ch. VI 81, 6/2/86) 13.65.020 Commercial and Industrial Rate. Each commercial and industrial discharger connected with the City water system shall be charged monthly as follows: 1. A customer charge of $7.00 per month plus $1.98 per 100 cubic feet for the amount of metered water consumed by the user in the billing period on bills beginning July 1, 1996. 2. A customer charge of $7.55 per month plus $2.14 per 100 cubic feet for the amount of metered water consumed by the user in the billing period on bills beginning January 1, 2000. 3. A customer charge of $8.10 per month plus $2.29 per 100 cubic feet for the amount of metered water consumed by the user in the billing period on bills beginning January 1, 2001. 4. A customer charge of $8.45 per month plus $2.39 per 100 cubic feet for the amount of metered water consumed by the user in the billing period on bills beginning January 1, 2002. (Ord. 3065, 12/06/2000; Ord. 3030 81 (part), 11/26/99; Ord. 2872 §1 (part), 6/30/95; Ord. 2643 81, 7/15/91; Ord. 2571 81, 4/1/90; Ord. 2482 §2, 4/1/88; Ord. 2437 81, 3/1/87; Ord. 2394 Ch. VI §2, 6/2/86) 13.65.030 Commercial and Industrial Equivalent Plumbing Fixture Rate. Commercial and industrial dischargers which have a lower water or wastewater discharge into the public sewers than is reflected by their water consumption may apply in writing to the Department of Public Works to have their sewer charges calculated at the following rate: 1. $2.30 times the total number of equivalent plumbing fixtures on bills beginning July 1, 1996. 2. $2.48 times the total number of equivalent plumbing fixtures on bills beginning January 1, 2000. 3. $2.66 times the total number of equivalent plumbing fixtures on bills beginning January 1, 2001. 4. $2.78 times the total number of equivalent plumbing fixtures on bills beginning January 1, 2002. The total number of Equivalent Plumbing Fixtures shall be calculated, based upon the following table, which is hereby adopted fi.om the United States of America Standards Institute National Plumbing Code, USASI, A40.8-1955: EQUIVALENT PLUMBING FIXTURE UNITS EQUIVALENT PLUMBING FIXTURE TYPE FIXTURE UNITS One bathroom group consisting of tank-operated water closet, lavatory, and bathtub or shower stall 6 Bathtub (with or without overhead shower) 2 Bidet 3 Combination sink-and-tray 3 Combination sink-and-tray with food-disposal unit 4 Dental unit or cuspidor 1 Dental lavatory 1 Drinking fountain ½ Dishwasher, domestic 2 Floor drains 1 Kitchen sink, domestic 2 EQUIVALENT PLUMBING FIXTURE TYPE FIXTURE UNITS Kitchen sink, domestic, with food waste grinder 3 Lavatory 1 Lavatory 2 Lavatory, barber, beauty parlor 2 Lavatory, surgeon's 2 Laundry tray (1 or 2 compartments) 2 Shower stall, domestic 2 Showers (group) per head 3 Sinks Surgeon's 3 Flushing rim (with valve) 8 Service (trap standard) 3 Service (P trap) 2 Pot, scullery, etc. 4 Urinal, pedestal, syphon jet, blowout 8 Urinal, wall lip 4 Urinal stall, washout 4 Urinal trough (each 2-ft. section) 2 Wash sink (circular or multiple) each set of faucets 2 Water closet, tank-operated 4 Water closet, valve-operated 8 In addition to the above units, the following fixture types shall be assigned equivalent plumbing fixture units as follows: EQUIVALENT PLUMBING FIXTURE TYPE FIXTURE UNITS 400-lb. commercial washer 89.6 200-lb. commercial washer 44.8 50-lb. commercial washer 11.2 35-1b. commercial washer 7.8 25-1b. commercial washer 5.6 18 lbs and under commercial washer 4.0 (Ord. 3065, 12/06/2000; Ord. 3030, 81 (part), 11/26/99; Ord. 2872 81 (part), 6/30/95; Ord. 2819 81, 7/6/94; Ord 2643 81, 7/15/91; Ord. 2571 81, 4/1/90; ord. 2482 83, 4/1/88; Ord. 2526 81, 4/1/89; Ord. 2437 §1, 3/1/87; Ord. 2394 Ch. VI 83, 6/2/86) 13.65.040 Rate for User Outside City l.imits. All sanitary sewage disposal furnished to a user outside the City limits shall be charged at the rate of 150% of the schedule for rates and charges as set forth herein or as amended. (Ord. 2571 81, 4/1/90; Ord. 2437 § 1, 3/1/87; Ord. 2394 Ch. VI 84, 6/2/86) CHAPTER 13.67 CONNECTION CHARGES - MILWAUKEE DRIVE TRUNK SANITARY SEWER Sections: 13.67.010 Milwaukee Drive Trunk Sewer Connection Charge Established~ 13.67.020 Milwaukee Drive Trunk Sewer Connection Charge - Amount. 13.67.030 Addition to Other Charges. 13.67.040 Milwaukee Drive Trunk Sewer Connection Charge o When Collected. 13.67.050 Milwaukee Drive Trunk Sewer Connection Charge - Distribution of Funds Received. 13.67.060 Interest Charge. 13.67.070 Notice. 13.67.010 Milwaukee Drive Trunk Sewer Connection Charge Established. There is hereby established a charge for connection to the Milwaukee Drive trunk sanitary sewer, which will be charged for all new sewer service connections to the sanitary sewer trunk line constructed by the City in Milwaukee Drive between 10th Street and 18th Street. (Ord. 2618 §1, 11/16/90) 13.67.020 Milwaukee Drive Trunk Sewer Connection Charge ~ Amount. The Milwaukee Drive trunk sewer connection charge shall be $150, multiplied by the equivalent water meter factor as defined in PAMC 13.69.050. (Ord. 3008 §2, 1/29/99; Ord. 2618 §2, 11/16/90) 13.67.030 Addition to Other Charges. The Milwaukee Drive trunk sewer connection charge imposed pursuant to this Chapter shall be in addition to the connection charge for the actual cost of connecting to the City's sewer system, the tapping fee, the secondary sewer assessment, and to all other charges imposed by ordinance. (Ord. 2618 §3, 11/16/90) 13.67.040 Milwaukee Drive Trunk Sewer Connection Charge - When Collected. The Milwaukee Drive trunk sewer connection charge shall be paid upon application for a sewer permit. Connection to the system shall not be made until the Milwaukee Drive trunk sewer connection charge, standard connection charges, the tapping fee, the secondary sewer assessment, and any other charges imposed by ordinance have been paid. (Ord. 2618 §4, 11/16/90) 13.67.050 Milwaukee Drive Trunk Sewer Connection Charge - Distribution of Funds Received. The proceeds from the Milwaukee Drive trunk sewer connection charge shall be deposited in the Solid Waste Utility Fund until the sum of $125,000 has been deposited; thereafter, such charges shall be deposited in the Water/Sewer Utility Fund. (Ord. 2618 §5, 11/16/90) 13.67.060 Interest Charge. Pursuant to RCW 35.92.025, there shall be added to the amount of trunk sewer connection charge provided for in this Chapter, a charge for interest on the amount of each charge, from the date of construction of the trunk sewer line until payment of the trunk sewer connection charge, not to exceed ten years. The interest charged shall be calculated at a rate determined by the Finance Director. The interest charged shall be calculated at a rate which is commensurate with the rate of interest applicable to borrowing by the City at the time of construction of said trunk sewer line. The interest rate shall not exceed ten percent per year unless authorized by amendment of applicable State law. The total interest charge shall not exceed the amount of the trunk sewer connection charge unless authorized by amendment of applicable State law. (Ord. 2618 §6, 11/16/90) 13.67.070 Notice. The City shall record appropriate notice with the County Auditor concerning real property which has been specifically identified by the City Engineer and approved by the City Council as property for which the Milwaukee Drive Trunk Sewer Line has been constructed, for which a special connection charge will be levied upon connection of such property to the City sewer system, pursuant to the requirements of RCW 65.08.170 and RCW 65.08.180. Such notice shall be effective until there is recorded with the County Auditor a certificate of payment and release executed by the City, which certificate shall be recorded by the owner at the owner's expense within thirty days of full payment of such special connection charge. (Ord. 2618 §7, 11/16/90) CHAPTER 13.69 SYSTEM DEVELOPMENT CHARGE Sections: 13.69.010 Purpose. 13.69.020 Definition. 13.69.030 Water System Development Charge. 13.69.040 Sewer System Development Charge. 13.69.050 Equivalent Water meter Factors. 13.69.060 Addition to Other Charges. 13.60.070 Collection of System Development Charges. 13.69.080 Exemption. 13.69.090 Credit for Inclusion of Property in Local Improvement District. 13.69.100 Review of System Development Charge Rates 13.69.110 Penalty. 13.69.010 Purpose. The City Council has determined that it is reasonable and in the public interest to enact and impose a "system development charge" pursuant to RCW 35.92.025 for the purpose of recovering a proportionate share of the actual capital costs of water and sewer facilities from those properties within the utility service area which, as a part of their development and use, create needs for those facilities. (Ord. 2746 §1, 2/12/93) 13.69.020 Definition. "Equivalent water meter" shall mean a water service connection to a residential unit, commercial use, or industrial use, consisting of a 3/4" diameter service line with a 5/8" or 3/4" meter. (Ord. 2746 §2, 2/12/93) 13.69.030 Water System Development Charge. A. The City Council hereby finds and determines that the capital cost of the City's water system including pumps, well, distribution and transmission lines, reservoirs, rights of ways and easements, has been borne by the City and its water system users. Pursuant to RCW 35.92.025, since such water system will be utilized by newly connecting properties, it is appropriate to establish a reasonable connection charge in order that such property owners bear their equitable share of the capital cost of the system. B. The City Council further determines that $1,025.00 per equivalent water meter represents a reasonable basis for a fair water system development charge that property owners newly connecting to the City's water system should bear as their equitable share of the capital cost of the system. C. In addition to other fees imposed by ordinance or pursuant to agreements, there is hereby imposed, upon the owners of property seeking to provide water service to their property by connecting to the City's water system, a water system development charge determined by multiplying the total number of equivalent water meter factors for the service(s) to be installed by $1,025.00. (Ord. 3068, 12/06/2000; Ord. 3035 §1 (prat), 11/26/99; Ord. 2888 §1, 9/29/95; Ord. 2746 §3, 2/12/93) 13.69.040 Sewer System Development Charge. A. The City Council hereby finds and determines that the capital cost of the City's sewer system including the treatment plant, collection lines, pump stations, rights of ways and easements, has been borne by the City and its sewer system users. Pursuant to RCW 35.92.025, since such sewer system will be utilized by newly connecting properties, it is appropriate to establish a reasonable connection charge in order that such property owners bear their equitable share of the capital cost of the system. B. The City Council further determines that $745.00 per equivalent water meter represents a reasonable basis for a fair sewer system development charge that property owners newly connecting to the City's sewer system should bear as their equitable share of the capital cost of the system. C. In addition to other fees imposed, by ordinance or pursuant to agreements, there is hereby imposed upon the owners of property seeking to provide sewer service to their property by connecting to the City's sewer system, a sewer system development charge determined by multiplying the total number of equivalent water meter factors for the water service, which contributes to sewer system loadings, to be installed by $745.00. (Ord. 3068, 12/06/2000; Ord. 3035 §1 (part), 11/26/99; Ord. 2888 §2, 9/29/95; Ord. 2746 §4, 2/12/93) 13.69.050 Equivalent Water Meter Factors. The equivalent water meter factors for determining the proportional equivalent of various sizes of water meters to a 3/4" diameter service line with a 5/8" meter shall be in accordance with the following data provided in AWWA Standard C700-77: Meter Size Operating Equivalent Water (inches) Capacitv(anm) Meter Factor 5/8 20 1.00 3/4 30 1.50 I 50 2.50 1 - 1/2 100 5.00 2 160 8.00 3 300 15.00 4 500 25.00 6 1,000 50.00 8 1,600 80.00 If the actual water meter size installed is increased to provide for fire sprinkler installation, then the Director of Public Works shall determine the appropriate equivalent water meter factor based upon a standard installation for the use without fire sprinklers. (Ord. 2746 §5, 2/12/93) 13.69.060 Addition to Other Charges. The system development charge for water and sewer imposed pursuant to this Ordinance shall be in addition to any permits and the connection charge or tap charge for the actual cost of connecting to the City's water and/or sewer systems and to all other charges imposed by ordinance. (Ord. 2746 §6, 2/12/93) 13.69.070 Collection of System Development Charges. The system development charges imposed in this Ordinance shall be payable at the time application for a sanitary sewer service and/or water service connection is made. Charges so collected shall be considered revenue of the water/wastewater utility to be used solely for capital improvements. The connection shall not be made until all charges have been paid. (Ord. 2746 §7, 2/12/93) 13.69.080 Exemption. No such charge shall be made where the owner or previous owner of the property paid for the water main or sewer line giving service to the property by special assessment or lump sum payment. (Ord. 2746 §8, 2/12/93) 13.69.090 Credit for Inclusion of Property in Local Improvement District. If the property for which a system development charge has been paid is subsequently included in a local improvement district for the construction of sewers and/or water mains of a similar nature, the amount so paid shall be credited to the assessment against such property and such amount shall be paid from the water/sewer fund to such improvement district fund. (Ord. 2746 §9, 2/12/93) 13.69.100 Review of System Development Charge Rates. The system development charge for water and sewer imposed by this Ordinance shall be periodically reviewed by the City Council and the rates charged shall be revised to reflect changes in the capital cost of the systems occurring since the preceding review. (Ord. 2746 §10, 2/12/93) 13.69.110 Penalty. In the event any connection to the City water or sewer system is made without paying the fees required by this Ordinance, the owners of the property to which the connection is made shall be required to pay a fine in the amount of two hundred dollars. Utility service shall be terminated until all fees and penalties owing have been paid. (Ord. 2746 § 11, 2/12/93) p_ ORTANGEEES W A S H I N G T O N, U. Si A. UTILITY ADVISORY COMMITTEE MEMO DATE: February 11, 2003 TO: UTILITY ADVISORY COMMITTEE FROM: Glenn A. Cutler, Director Public Works and Utilities RE: Dry Creek Water Association Water Supply Mitigation Feasibility Study Summary: The Dry Creek Water Association is directly impacted by the removal of the Elwha River dams. The Federal government is obligated to mitigate the impacts of the dam removal on their water system. The Federal government has completed an appraisal level evaluation (evaluates the alternatives based on issues identified during site visits and meetings and develops capital cost estimates). Recommendation: No action required. Provided for information only. Background/Analysis: The Dry Creek Water Association (DCWA) is directly impacted by the removal of the Elwha River dams. The Federal government is obligated to mitigate the impacts of thc dam removal on their water system per the Elwha River Ecosystem and Fisheries Restoration Act, EREFRA. Thc Federal government has completed the appraisal level evaluation. An appraisal level evaluation evaluates the alternatives based on issues identified during site visits and meetings and develops capital cost estimates. The DCWA Water Supply Mitigation Feasibility Study has identified 3 alternatives (see attached): 1) Flood proof existing well field, 2) Develop an alternative well field ( 5 variations), and 3) Connect to the City of Port Angeles. Enclosed is a summary (see attached) of the capital only costs associated with each alternative. Thc alternatives range in cost from $720,000 to $2,110,000. The City alternative is estimated at $740,000. The Olympic National Park Superintendent has directed the Bureau of Reclamation to further develop alternatives 1 and 3 for additional consideration. However, thc City has not been officially approached by either the National Park Service (NPS) or DCWA to connect to the City system. City staff has advised NPS and DCWA that additional information is required for review before the issue will bc brought to the UAC and thc City Council. This issue is presented for information only. Attachments: DCWA Water Supply Mitigation Evaluation (Table 1) Cost Estimate Summary N:\UAC\DepDir~DCWA Water Supply Mitigation Feasibility Study_A.wpd pORTANOELES 9V A $ H I N I3 T O N, U. S. A. UTILITY ADVISORY COMMITTEE MEMO DATE: February 11, 2003 TO: UTILITY ADVISORY COMMITTEE FROM: Scott McLain, Deputy Director for Power Systems RE: Morse Creek Hydroelectric Project Status Report Summary: The Morse Creek Hydroelectric Project discontinued operation in 1997 due to an extensive leak that had developed in an area that was difficult to access of the water transmission pipeline, coupled with extremely low power prices during that time. Higher wholesale power rates present today, along with interest from private operators, makes operation of the plant feasible again. This report summarizes the actions taken to date, and the remaining steps to be accomplished to reactivate the facility. Recommendation: No recommendation, information only. Background/Analysis: The Morse Creek Hydroelectric Project has been on hold since last summer when the City Council decided to fast track the fiber optics project. Now that the fiber optics fast track project is nearly complete, more time is being devoted to reactivating the project. The Morse Creek Hydroelectric Project discontinued operation late in 1997 after a substantial leak developed in the water transmission pipeline that carries water to the powerhouse. The leak was at a point where the pipeline crossed under a tributary stream to Morse Creek, with a steep slope at the point of the break, along with being buried twelve feet deep at that point. Due to the low power prices at the time, along with the Bonneville Power Administration's promise of low prices in the future (two cents in 2000), it was decided to discontinue generating power fi.om the project. Power prices have increased considerably in the past few years, and the plant can again be operated profitably. The City was approached a few years ago by a private company that was interested in either leasing or purchasing the facility from the City. The City also contracted with Kleinschmidt and Associates to determine a reasonable value for the project. Nine prospective companies have come forward or have been identified as being interested in operating the hydro project since the Kleinschmidt evaluation. Several items must be completed before the project can begin operations again. The major break Morse Creek Hydroelectric Project Status Report February 11, 2003 Page 2 in the pipeline was repaired last fall, so the water transmission pipeline is intact and ready for operation. A permanent tailrace barrier is required and must be constructed prior to operation. Preliminary plans for a barrier have been submitted to the Washington Department offish and Wildlife for approval. The Fish and Wildlife engineer reviewing the plans visited the site on January 28~ and indicated our tailrace design would work very well for the Morse Creek project. With this preliminary approval, final drawings will be prepared for the approval of the WDF&W. The Endangered Species Act applies to two species of fishes in Morse Creek, Chinook salmon and Bull trout. The Endangered Species Act requires thc City to consult with the United States Fish and Wildlife Service, the Washington Department of Fish and Wildlife, and other agencies to identify any possible project related impacts to listed species. Several meetings with the agencies have taken place, the last on May 10, 2002, to discuss possible impacts. The main focus of the agencies has been on establishing higher minimum stream flows for all months of the year. We have not been able to come to agreement on new flow levels with the agencies yet, as the proposals that have been forwarded by the agencies would have an adverse affect on the economics of the project. The City has requested that FERC become involved in the informal consultations with the agencies to come to agreement on changes to project operation that are acceptable to the agencies and the City. The current plan is to continue to consult with the agencies while we get the project operational. A punch list of small items has been prepared, along with the main project of construction of the tailrace barrier to bring the project back on line. Once the project is running, the City can consider the various options for operating the project. These options include selling the facility, leasing the facilities, or continuing operation of the project by the City. W A S H ~ N (~ T 0 N~ U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: FEBRUARY 11, 2003 TO: UTILITY ADVISORY COMMITTEE FaOM: Larry Dunbar, Power Resources Manager RE: Cable Television Franchise Transfer Ordinance Summary: WaveDivision HI, LLC and WaveDivision Holdings, LLC appears to have the qualifications to operate successfully under thc Cable Television Franchise Ordinance No. 3116. The change in ownership should have little to no impact on the community, cable television services will continue to be provided, new entertainment and information services are planned after the network upgrade is finished, and completion of the institutional network is expected. Recommendation: Forward a favorable recommendation to the City Council to approve the proposed ordinance consenting to the transfer of ownership of the Cable Television Franchise Ordinance No. 3116 and the Fiber Optic Wide Area Network Use Agreement from Northland Cable Television, Inc. to WaveDivision III, LLC and the subsequent transfer to WaveDivision Holdings, LLC. Background / Analysis: On November ] 8, 2002, the City received a request to approve the transfer of the Cable Television Franchise Ordinance No. 3116 (Franchise) from Northland Cable Television, Inc. (Northland) to WaveDivision III, LLC and the subsequent transfer to WavcDivision Holdings, LLC (Wave). The transfer request was made to comply with the Cable Communications Act (Act) and the Franchise. The Fiber Optic Wide Area Network Use Agreement (WAN Use Agreement) and the amendment approved by City Council on January 21, 2003 are also included in the transfer request. Wave was founded in December 2001 by Mr. Steven B. Weed, a former Millennium Digital Media executive. In accordance with the Act, the City has 120 days to act upon a complete transfer request, and if there is no City action such a request will be deemed granted. Northland and Wave submitted their initial application on November 18, 2002 and a complete application was received on January 24, 2003 which would provide a City response deadline of March 18, 2003. Since the desired closing of the transaction is anticipated no later than February 28, 2003, Northland and Wave requested that the City approve the transfer request during the month of February 2003. The Franchise amendments sought by staffwere not negotiated with Wave. The sought amendments included the dark fiber policy, assurances that the chaunel use agreement for locally produced programming will be continued, and changes to the Franchise to become consistent with the WAN Use Agreement. February 11, 2003 Utility Advisory Committee RE: Cable Television Franchise Transfer Request Page 2 Financial Qualifications: In order to be assured that Wave has the financial qualifications to meet its Franchise obligations in the short time period requested, the firm of Fox, Smolen & Associates (FSA) was retained to provide financial services to the City. On November 26, 2002, the Utility Advisory Committee was advised that such additional consulting services may be necessary. FSA provides fmancial and technical services to muuicipalities during cable television franchise sale and transfer processes. Ms. Marilyn J. Fox, CPA, of FSA is an experienced accountant and expert on municipal finance and cable television regulation. Ms. Fox reviewed Wave's financial proformas, supporting assumptions, including testing its logic and reasonableness, and prepared a report of their observations and recommendations. The consultant contract is in an amount not to exceed $2,340. A copy of FSA's report is available upon request. FSA's analysis of Wave's financial proformas concluded that Wave has identified cash resources to accomplish the cable network upgrade. The upgrade will enable bi-directional cable television services (basic and digital cable and video on demand) as well as information services (Intemet access) to be provided. Wave plans to provide bi-directional broadband Intemet access offering · several tiers of downstream and upstream speeds. The premium offering is anticipated to be 1.5 million bits per second (Mbps) both upstream and downstream. Interact access over the cable network is currently only broadband downstream with a telephone upstream connection. After the cable network is bi-directional the City could implement automatic meter reading and utility load monitoring and control, if the charges for such use of the cable network and other costs are economically justified. The main Franchise requirements that must still be met in order to obtain a fifteen (15) year Franchise term include the completion of a network upgrade and the institutional network (I-Net) including reserve fibers by May 31, 2004 and February 22, 2004, respectively. The network upgrade includes completion of the fiber optic backbone providing a downstream capacity of 750 MHz and fiber optic nodes to subscribers providing an activated downstream capacity of 550 MHz. Another main franchise requirement is cable modem service which is currently being provided by Northland and will need to be maintained by Wave in the future. Wave's financial proformas indicate that by the end of 2004 its network upgrade will be complete at an estimated investment of more than $3,000,000 (based on an estimated $400 capital investment per each Port Angeles home passed). The financial proformas do not indicate that the network upgrade, I- Net and reserve fibers will be complete in accordance with the Franchise required deadlines. However, FSA's report indicates that the resources are available to do so. Wave's financial proformas also do not appear to include Franchise fees and access channel support in accordance with the Franchise. In an effort to ensure Franchise compliance in the above areas, staff requested and received a letter from Wave (Attachment A). On January 20, 2003, the City received a copy of a commitment letter from Wells Fargo Bank to provide $37,500,000 of the senior credit facilities included in Wave's financial proforma. On January 24, 2003, the City received a copy of the WaveDivision Holdings, LLC agreement demonstrating $32,500,000 in owners equity was established. N:\UAC~OriginalXcablewlmm ferordinance, wlxl February 11, 2003 Utility Advisory Committee RE: Cable Television Franchise Transfer Request Page 3 Wave's financial pro formas identify increases to cable television service rates in the amount of 5 percent per year. The City's rate regulation authority is limited to the basic service tier, which include broadcast channels and the local access channel. In context, the rate increases will most likely be applied to tiers outside of the City's rate regulation authority representing the majority of all channels offered. Based on its limited rate regulation authority the City decided to waive its rate regulation rights until May 31, 2007 as part of the negotiation of the Franchise. Network Upgrade/I-Net Compliance: Wave has indicated its intent to include the 1-Net and reserve fibers in its network upgrade. However, Wave is not required to upgrade its network or provide the I-Net and reserve fibers as a condition of the current Franchise or to obtain the City's consent to the proposed change in ownership. There are consequences in the event Wave does not invest in a network upgrade that includes the I-Net and reserve fibers. According to the Franchise, the Franchise term will only be five (5) years if the network upgrade and the I-Net including the reserve fibers are not complete by May 31, 2004 and February 22, 2004, respectively. Liquidated damages may also apply under the Franchise if the I-Net and reserve fibers do not comply with all Franchise requirements. According to the WAN Use Agreement, if the I-Net is not complete by February 27, 2004, the City or its assignee will be able to use two (2) reserve fibers at no additional or continuing costs through May 31, 2017 (the duration of the extended fifteen year Franchise term). Telecommunications Services: Prior to providing telecommunications services such as data transfer and voice over Interact protocol, Wave will have to comply with the City's Telecommunications Facilities Within Rights Of Way Ordinance. The City requires service providers to obtain municipal consent and comply with all of the City's lawful telecommunications related requirements (e.g. business license regulations, public utility tax, right-of-way construction, and pole attachments). Cable television services and cable modem service (Intemet access) are not considered telecommunications services and Wave would be required to obtain a separate municipal consent prior to providing telecommunications services. Transfer Ordinance Acceptance: In accordance with the Franchise, Wave will provide a performance bond and insurance as part of their acceptance of the proposed Franchise transfer ordinance. Northland and Wave have agreed to reimburse $5,900 of the City's expenses incurred as part of the transfer request. Subject to a favorable recommendation from the Utility Advisory Committee to City Council, Northland and Wave will provide their acceptance of the Franchise transfer ordinance after City Council approval, which would be requested at their regular meeting on February 18, 2003. Mr. Clarence A. West, retained by the City for legal services, prepared the proposed Franchise transfer ordinance and assisted City staff throughout the Franchise transfer process. A copy of the proposed Franchise transfer ordinance is included as Attachment B. Attachments: A. Wave letter dated February 7, 2003 B. Proposed Franchise transfer ordinance N:~UAC~OfiginaBcabl¢ivtram ferordinance.wpd Attachment A WaveDivision Holdings, LLC 14100 SE 36~` Street, Suite 201 Bellevue, WA 98006 Phone: 206.321.5405 February 7, 2003 Mike Quinn City Manager City of Port Angeles P.O. Box 1150 Port Angeles, WA 98362 Re: City of Port Angeles Cable TV Franchise Transfer Dear Mr. Quinn, This letter is intended to confirm that WaveDivision Holdings, LLC understands the City of Port Angeles' Cable TV franchise requirements. Further, we have an interest in supporting the community by investing in a broadband infrastructure while cooperating with the local business community. WaveDivision Holdings intends to: 1. Complete the Network Upgrade: WaveDivision Holdings has secured the funding necessary to complete the upgrade of its system in Port Angeles in order to meet or exceed the City's franchise requirements. WaveDivision Holdings intends to begin the system upgrade process as soon as practical after the close of sale of the system and, assuming a prompt closing date, complete the upgrade of the system in advance of the date required to allow its franchise to remain in effect for the full 15 years. 2. Complete the Institutional Network: WaveDivision Holdings also has the funding necessary to complete the I-Net (including reserve fibers) as required in the City's Cable TV franchise. WaveDivision Holdings intends to complete this project in accordance with the franchise requirements. 3. Comply with Franchise Fees: WaveDivision Holdings will comply with the franchise fee and access channel support requirements in the franchise. Page 2 Letter to Mr. Mike Quinn Re: City of Port Angeles' Cable TV Franchise Transfer In addition to the Franchise requirements, I want to express our desire to support the community as outlined below. We intend to invest in the broadband infrastructure and work with local businesses to provide the best service to our customers. 1. Continue carriage of Peninsula News Network: WaveDivision Holdings is aware of the interest that this community has for this unique local service. We intend to maintain the current level of support provided for this popular local channel. 2. Support the WAN: WaveDivision Holdings is aware of the fiber optic wide area network use agreement involving the City and Capacity Provisioning, Inc. We very much support providing enhanced broadband services to area businesses and institutions and expect to continue this relationship with the City and CPI to provide services. 3. Provide broadband Internet service: WaveDivision Holdings is aware of the arrangement with two local ISPs to provide Internet service. We expect to continue this relationship in addition to upgrading our technical and service capabilities. Please be aware that this letter is not intended to change or modify any of our current regulatory or contractual obligations and that WaveDivision Holdings, LLC reserves all of its rights under state and federal laws. I appreciate the City's effort to facilitate the approval of the cable TV system franchise transfer to WaveDivision Holdings. We look forward to next week's meeting with the Utility Advisory Committee and worldng with the local community. Sincerely, Steven B. Chief Executive Officer Cc Glenn Cutler, Public Works and Utilities Director Larry Dunbar, Power Resources Manager Attachment B ORDINANCE NO. An Ordinance of the City of Port Angeles, Washington approving the transfer and assignment of the Cable Television Franchise Ordinance No. 3116 to operate a cable television system in the City of Port Angeles and the Fiber Optic Wide Area Network Use Agreement to fast- track construction of a portion of the institutional network by Northland Cable Television, Inc. to WaveDivision III, LLC and the subsequent transfer of control to WaveDivision Holdings, LLC. WHEREAS, by Ordinance No. 3116, the City of Port Angeles City Council acting on behalf of the City of Port Angeles, Waslfington (the "City") adopted that certain Franchise Ordinance, passed May 21, 2002, granting to Northland Cable Television, Inc. ("Northland") the authority to install, construct, operate and maintain a cable communications system within the City of Port Angeles (the "Franchise"); and WHEREAS, by entering into the Fiber Optic Wide Area Network Use Agreement, dated as of August 27, 2002 and as amended by First Amendment to Fiber Optic Wide Area Network Use Agreement (the "First Amendment"), dated as of January 21, 2003 (collectively, as so amended, the "WAN Use Agreement") with Northland the City and Northland agreed to complete a portion of the institutional network pennitting commercial and noncommercial uses in advance of the Franchise required completion date; and WHEREAS, Northland has entered into a purchase and sale agreement (the "Purchase Agreement") with WaveDivision Networks, LLC, a Washington limited liability company, for the sale of Northland's cable television system serving the City of Port Angeles, Washington, and for the assignment and transfer of the Franchise and WAN Use Agreement to WaveDivision Il/, LLC, a Washington limited liability company ("Wave" or "Transferee") and the subsequent sale of all of the ownership interests in Wave to WaveDivision Holdings, LLC, a Delaware limited liability company ("Holdings" or "Transferee"), such assignment and transfer of the Franchise and the WAN Use Agreement to Wave and the subsequent sale of the ownership interests in Wave to Holdings being collectively hereinafter referred to as the "Transaction", which Transaction is expected to close within forty-five (45) days of the adoption of this Ordinance; and WHEREAS, an FCC Form 394, proforma financial statements, and documents providing evidence of owner's equity and debt financing were filed with the City that demonstrate Wave's and/or Holdings' financial, technical and legal qualifications to satisfy all Franchise obligations; and Page 1 WHEREAS Northland, Wave and Holdings request that the assignments and transfers of the Franchise to Wave and the ownership interests in Wave to Holdings be approved in accordance with the Franchise. NOW THEREFORE, the City Council of the City of Port Angeles (the "Franchising Authority") does hereby ordain as follows: Section 1. The City hereby approves and consents to the assignment and transfer of the Franchise and the WAN Use Agreement from Northland to Wave, effective as of the date of the actual transfer, and the subsequent sale of all of the ownersh/p interests in Wave to Holdings, subject to the terms of this Ordinance. Section 2. The City hereby consents to and approves Wave's granting a security interest in all of Wave's rights, powers and privileges under the Franchise, the WAN Use Agreement and all of its other properties to such lender or lenders (as may be designated by Wave) for financing purposes, and Holdings' grant of a security interest in its rights in and to Wave to such lender or lenders, under which such lender or lenders shall have the fights and remedies of a secured party under the Uniform Commercial Code of this State. Section 3. Except as specifically set forth herein, the assignments and transfers of the Franchise and WAN Use Agreement and ownership interests in Wave shall not alter, affect or otherwise change any of the terms or conditions of the Franchise or the WAN Use Agreement. The terms and conditions of the Franchise and the WAN Use Agreement shall include the First Amendment to the WAN Use Agreement. Section 4. In connection with the assignments and transfers described in Section 1, the City certifies to Northland, Wave and Holdings that: (a) The Franchise, the WAN Use Agreement, and the First Amendment to the WAN Use Agreement were duly and validly issued by the City, and upon their assignment to Wave, the duly authorized franchisee will be Wave. (b) The Franchise and the WAN Use Agreement, as amended by the First Amendment, are in full force and effect as of the date hereof, are valid and enforceable in accordance with their terms, and will not expire until May 31, 2017 and April 27, 2004, respectively. (c) No event of default under the Franchise or the WAN Use Agreement, and no event which could become an event of default with the passage of time or the giving of notice, or both, have occurred or are continuing as of the date hereof. Section 5. The Franchise, the WAN Use Agreement and this Ordinance were and are made, passed or adopted in accordance with the notice and procedure requirements of the laws of the State of Washington governing cities, and with the notice and procedure requirements prescribed by the City, and do not conflict with the laws, ordinances, resolutions and other regulations of the City, as presently in effect or as the same were in effect at the time the particular action was taken. Page 2 Section 6. This Ordinance shall be deemed effective upon the closing of the assignment of the Franchise fi.om Northland to Wave. Section 7. The Franchising Authority does hereby consent to the Transaction, effective immediately upon the closing of the Transaction, subject to: a. Strict compliance with the conditions set out in the acceptance form attached as Exhibit "A" to this Ordinance. b. Written acceptance of this Ordinance by Northland and Wave and Holding as follows: i. Within either ten (10) days after passage of this Ordinance by the City Council or ten days (10) days after the Closing, whichever is later, Wave and Holdings and Northland shall file their written acceptance of this Ordinance with the City Manager. The acceptance shall be in the form attached hereto as Exhibit "A". ii. Wave's and Holdings' and Northland's acceptances shall be contingent only upon the final closing of the Transaction, as provided in Subsection (d) below. Such acceptance shall be otherwise unqualified and shall be construed to be an acceptance of all the terms, ~conditions and' restrictions contained in this Ordinance. iii. Wave's and Holdings' or Northland's failure, refusal or neglect to file such written acceptance within such time shall constitute an abandonment and rejection of the rights and privileges conferred hereby. c. Denial of Consent to Transaction. If for any reason Wave and Holdings or Northland fails, refuses or neglects to file the written acceptance as provided in Subsection (b) including the performance bond and insurance as provided in Subsection (f), the City denies Wave's and Holdings' request for a change in control of the Franchise and/or consent to the Transaction, for failure to provide the completed acceptance, the performance bond or insurance in a satisfactory form as required herein and by the Franchise, as applicable. d. Automatic Nullification in Event of Failure to Close the Transaction or Closure on Materially Different Terms. In the event the Transaction which is the subject of this Ordinance is not consUmmated or does not reach final closure for any reason, or in the event such closure is reached on terms substantially and materially different to the terms described in the FCC Form 394 and subsequent information provided by Northland, Wave and Holdings and relied upon by the City, then this Ordinance, together with the written acceptance provided hereunder, shall be null and void. If the closure is upon terms which are Page 3 substantially and materially different, Wave and Holdings shall resubmit their request for a change of control of the Franchise and the WAN Use Agreement. e. Reimbursement of Costs. Either Northland or Wave shall within thirty (30) days of the closing of the Transaction reimburse all direct, out-of-pocket costs of the City incurred in analyzing and acting upon Transferee's request to consent to the Transaction, in an amount up to $5,900, based upon invoices. f. Performance Bond and Insurance. Wave and/or Holdings shall obtain and maintain at their cost and expense a performance bond and insurance in accordance with Sections 10.3 and 10.4 of the Franchise, respectively. Wave and/or Holdings shall provide the performance bond and insurance, in the form which has been previously approved by the City Attomey, concurrent with the filing of Exhibit A with the office of the City Clerk. g. Franchise Term. In the event Wave and/or Holdings fails to meet the requirements listed in Subsections 4.2.1 (1) (a-c) and 4.2.1 (2) of the Franchise, the term of the Franchise term shall be reduced from fifteen (15) years to five (5) years, in accordance with subsection 12.3 of the Franchise. h. Telecommunications and Cable Modem Services. Wave and/or Holdings may provide Cable Modem Services in accordance with the Franchise subsection 5.3.3 and dark fiber services to retail service providers who have been authorized to provide such service pursuant to the City's Telecommunications Facilities Within Rights Of Way Ordinance without obtaining other City approvals. Before Wave and/or Holdings have the authority to provide telecommunications services, as defined under applicable federal and state law, Wave and/or Holdings will have to obtain the City's approval, to the extent required by applicable law, in accordance with Chapter 11.14 of the Port Angeles Municipal Code, Telecommunications Facilities Within Rights Of Way. In the event the law is revised as to the characterization of Cable Modem Service either by the FCC, courts or congress the City reserves the right to exercise its revised authority to regulate Cable Modem Services. Section 8. The Franchising Authority confirms (a) that the Franchise and the WAN Use Agreement held by Northland are valid and are in full force and effect, and (b) that Northland is materially in compliance with the Franchise and the WAN Use Agreement, and (c) the Franchise and the WAN Use Agreement including the First Amendment to the WAN use Agreement supersede all other agreements between Northland and the Franchising Authority and represent the entire understandings of the parties. Page 4 PASSED by the city council of the City of Port Angeles at a regular meeting of said Council held on the ~ day of February, 2003. Glenn Wiggins, Mayor APPROVED AS TO FORM: ATTEST: Craig D. Knutson, City Attomey Becky J. Upton, City Clerk PUBLISHED: By Summary EXHIBITS Exhibit A - Written Acceptance of Consent to Change of Control of Ordinance No. 3116 Page 5 Exhibit A Written Acceptance of Consent to Change of Control of Ordinance No. 3116 TO: City of Port Angeles, Washington Ms. Becky Upton, City Clerk 321 East 5th Street Port Angeles, Washington, 98362 This is to advise the City of Port Angeles, Washington that WaveDivision I1/, LLC, a Washington limited liability company ("Wave") and WaveDivision Holdings, LLC, a Delaware limited liability company ("Holdings") (both referred to as the "Transferee") and Northland Cable Television, Inc. or its successor entity ("Northland"), hereby unqualifiedly accept Ordinance No. , passed by the City Council on February ,2003, regarding the change in control of the Franchise (Cable Television Franchise Ordinance No. 3116) and the Fiber Optic Wide Area Network Use Agreement to the Transferee under the following terms and conditions: 1. Compliance with Franchise and Fiber Optic Wide Area Network Use Agreement. Subject to Washington state law and federal law and in all respects and without exception, the Transferee shall comply with the requirements of the Franchise, including all applicable ordinances, orders, contracts, agreements, commitments, side letters, and regulatory actions taken pursuant thereto, inehiding, but not limited to, compliance with the Fiber Optic Wide Area Network Use Agreement, dated as of August 27, 2002 and as amended by First Amendment to the Fiber Optic Wide Area Network Use Agreement ("First Amendment"), dated as of January 21, 2003 (collectively, as so amended, the "WAN Use Agreement"). The Transferee acknowledges that the change of control will not affect, diminish, impair or supercede the binding nature on Wave of the documents set forth in this paragraph. In all instances, the Transferee will continue with all current obligations of the existing franchise and the WAN Use Agreement and continue to provide the level of service provided for therein. Further, neither the services currently provided nor the service area currently served by Northland will be changed or altered in any significant manner by this transfer. 2. No City Waiver for any Unknown Pre-Closing Non-Compliance. Northland and the Transferee agree that the City does not waive and expressly reserves all legal rights and authority in regard to any and all undiscovered non-compliance under the Franchise and the WAN Use Agreement that may now exist or may later be discovered to have existed during the term of the Franchise prior to the transfer to Transfereee, even if whether discovered prior to or al~er the closing of the Transactions that are the subject of this acceptance. Transferee and Northland specifically accept the City's reservation of rights as set forth above. 3. In the event the transfer, which is the subject of this Acceptance, is not consummated or does not reach final closure for any reason, or in the event such closure is reached on terms substantially and materially different to the terms described in the FCC Form 394 and subsequent information provided by the Transferee and relied upon by the City, then Transferee acknowledges that the City's Ordinance, together with the written acceptance provided hereunder, shall be automatically null and void without further action by either party. If the closure is upon terms which are substantially and materially different, Transferee shall resubmit its request for a transfer in order to be in compliance with the Franchise. Page 6 4. Reimbursement of Costs. Either Northland or the Transferee shall within thirty (30) days of the Closing reimburse all direct, out-of-pocket costs of the City incurred in analyzing and acting upon Transferee's request to consent to the Transaction, in an amount up to $5,900.00, based upon invoices. 5. Performance Bond and Insurance. Wave and/or Holdings shall provide the performance bond and insurance in accordance with Section 7 of Ordinance No. in the form as previously approved by the City Attorney concurrent with filing its acceptance of this Exhibit A with the office of the City Clerk. 6. Acceptance. Northland, Wave and Holdings shall file their acceptance of this Exhibit A and Ordinance No. __, with the office of the City Clerk including all terms and conditions thereof, which shall be signed and acknowledged by its proper officers. .Northland Cable Television, Inc., Or its Successor ("Northland") By: Name: Title: Date: WaveDivision m, LLC, a Washington limited liability company ("Transferee") By: Name: Title: Date: WaveDivision Holdings, LLC, a Delaware limited liability company ("Transferee") By: Name: Title: Date: Page 7 pORT/ 'qGELES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: FEBRUARY 11,2003 TO: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager RE: Energy Star Utility Participation Agreement Summary: The Northwest Energy Efficiency Alliance has offered the City an agreement to participate in the Energy Star Home Products Program. The program is available to help ~romote energy efficient clothes washers as part of a national spring appliance promotion effort. ~ecommendation: Forward a favorable recommendation to the City Council to approve the Energy Star Utility Participation Agreement. Background / Analysis: The Energy Star Home Products Program is provided by the Northwest Energy Efficiency Alliance (NEEA). As part of a national spring appliance promotion, NEEA has formed a partnership with eight manufacturers that will provide a $50 rebate on energy efficient Energy Star clothes washers. The "Double Your Savings" campaign promotes the combined energy/water savings Energy Star clothes washers provide. Energy Star qualified clothes washers can reduce energy and water use by up to 50% per load, actual savings vary. The City currently provides a $150 rebate for energy efficient Energy Star clothes washers under the Bonneville Power Administration Conservation and Renewable Credit (C&RD) Program. By combining the regular $150 rebate available through the C&RD and the temporary $50 rebate available from participating manufacturers, customers could receive a total of a $200 rebate for a limited time. Thc promotional period would be available for purchases after April 15, 2003 as long as the rebate application is received by NEEA no later than July 31, 2003. As part of the City's responsibilities it would insert a coupon into utility bills this April to promote the program. The coupons will be provided at no cost to the City by NEEA. Customers that purchase a qualifying clothes washer would submit the coupon along with the original purchase receipt to NEEA. NEEA or the manufacturer will provide a $50 rebate to the customer and notify the City that a customer has purchased a qualifying clothes washer. NEEA will notify the City of approved customer applications on a weekly basis. The City would provide the $150 rebate available through the C&RD program to the customer. NEEA will be contacting local retailers to offer field support, training sessions, and point-of- purchase displays. Retailers will also be offered cooperative advertising funds through NEEA. pORTANGELES WASHINGTON, U.S.A. L UTILITY ADVISORY COMMI'I-I'EE MEMO DATE: FEBRUARY 11, 2003 TO: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager RE: Energy Star Utility Participation Agrcemant Summary: The Northwest Energy Efficiency Alliance has offered the City an agreement to participate in the Energy Star Home Products Program. The program is available to help ~romote energy efficient clothes washers as part ora national spring appliance promotion effort. Recommendation: Forward a favorable recommendation to the City Council to approve the Energy Star Utility Participation Agreement. Background / Analysis: The Energy Star Home Products Program is provided by the Northwest Energy Efficiency Alliance (NEEA). As part of a national spring appliance promotion, NEEA has formed a partnership with eight manufacturers that will provide a $50 rebate on energy efficient Energy Star clothes washers. The "Double Your Savings" campaign promotes the combined energy/water savings Energy Star clothes washers provide. Energy Star qualified clothes washers can reduce energy and water use by up to 50% per load, actual savings vary. The City currently provides a $150 rebate for energy efficient Energy Star clothes washers under the Bonneville Power Administration Conservation and Renewable Credit (C&RD) Program. By combining the regular $150 rebate available through the C&RD and the temporary $50 rebate available fxom participating manufacturers, customers could receive a total of a $200 rebate for a limited time. The promotional period would be available for purchases after April 15, 2003 as long as the rebate application is received by NEEA no later than July 31, 2003. As part of the City's responsibilities it would insert a coupon into utility bills this April to promote the program. The coupons will be provided at no cost to the City by NEEA. Customers that purchase a qualifying clothes washer would submit the coupon along with the original purchase receipt to NEEA. NEEA or the manufacturer will provide a $50 rebate to the customer and notify the City that a customer has purchased a qualifying clothes washer. NEEA will notify the City of approved customer applications on a weekly basis. The City would provide the $150 rebate available through the C&RD program to the customer. NEEA will be contacting local retailers to offer field support, training sessions, and point-of- purchase displays. Retailers will also be offered cooperative advertising funds through NEEA. pORTANGELES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: February 11, 2003 TO: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager RE: Institutional Network Implementation Consulting Services - Monthly Status Report This is an informational report on Metropolitan Communications Consultants activities during the month of January 2002. The fast-track backbone was completed in December (activity reported in January) and there were no services provided by MCC in January. This will be the last monthly status report until the remainder of the 1-Net is constructed (anticipated April of 2004). The total authorized budget is $45,000. l-Net east- i rack ~awsor ~erv~ces ~a, zu,uuu aumonzeu time ~ materials ouu~e~) T~ January Activity PriOr Current Total Project Management Support $11,157.50 $11,157.50 Agreement Development $5,000.00 $5,000.00 Service Agreement Negotiation $5,000.00 $5,000.00 Expenses $205.34 $205.34 Subtotals $21,362.84 $21,362.84 I-Net BacKoone construction AOVlSOry berv;ces [~,Z>,UUU aumonzea lump sum ouc ;et} Task January Activity prior Current Total Project Management Support $11,050.00 $11,050.00 Plans & Specifications Review $2,000.00 $2,000.00 Construction Phase Engineering $1,700.00 $1,700.00 Final Inspection & Acceptance $1,200.00 $1,200.00 Subtotals $15,950.00 $15,950.00 Totals $37,312.84 $37,312.84 Olypen, Inc. 315 East Washington St. Sequim, WA 98382 (360) 681-3130 Press Release: OlyPen Transcript of Press Conference February 1 lth 2003 Thank you all for being here today. This should only take a few minutes of your day. I am Greg Casad General Manager of Customer Care ~ Olypen. I am joined by the owners of Olypen, Mike Breen President & Terry Kennedy General Manager. Craig Johnson of Capacity Provisioning Incorporated will also be addressing you today. The purpose of this meeting is to express Olypen% thanks for the continued support of local community, commend those who are doing an outstanding job in our community and announce an agreement we have made with Capacity Provisioning Incorporated. Olypen began providing Intemet Access and support on the Olympic Peninsula in 1996. As the needs of the community have grown we have continued to expand our services. We will continue to do so. We have always provided the best service at competitive rates. In 1999, we purchased a Fiber-Optic Network to the Intemet Backbone. Since that time, we have continued to expand our Fiber-Optic Networks. Today, those Fiber-Optic Networks enable us to provide a variety of Internet services in Port Angeles, Sequim, Port Townsend, Forks and offer nation wide dial-up access. We believe in giving back to the community that has helped us become the successful ISP that we have become. We would like to make an announcement today about an agreement that Olypen has made with Capacity Provisioning Incorporated. First, we will take this opportunity to salute the agreement made between Capacity Provisioning Incorporated, the City of Port Angeles, & Northland Cable. Their approach for building a fiber network as a private enterprise, partnering with local government, rather than a publicly funded entity is unique and innovative. We believe that partnerships, such as this, formed between Government and private businesses are the key to a successful model. This solution, engineered by Capacity Provisioning Incorporated, the City of Port Angeles and Northland Cable is responsible, commendable and worth rewarding. There are two distinct problems to be solved in this endeavor. The first is known as the last mile problem. Most Interact access travels over copper phone lines that were not engineered to carry data. Fiber-Optic Networks overcome this limitation; however building Fiber-Optic Networks to the last mile is expensive and complex. With a Fiber-Optic Network akeady in place serving private business, Capacity Provisioning Incorporated partnership became a vital cost saving solution to the community. By investing and expanding in their existing infrastructure, Capacity Provisioning Incorporated has been able to provide the last mile cormecfion to local Government entities while at the same time expanding a network that will serve the private sector. This innovative concept saved the local community several million dollars. The second problem: Providing affordable High Speed Internet Access. To accomplish this goal, the Intemet Bandwidth must be bought in large enough quantities to make it affordable As an Intemet Service Provider, Olypen is very aware of these scales. At present our costs are in the tens of thousands of dollars per month. This is where our experience & involvement will benefit the community. To continue building on the success of this model and to answer the call to Economic Development, we are stepping up to the plate. Olypen has agreed to provide a Fiber-Optic lnternet Access to the Fiber Ring, through Capacity Provisioning Incorporated. Additionally, through the year 2004, Olypen will make Intemet access available to qualifying municipal and non-profit organizations at no charge. Those currently qualifying include: · Port Angeles School District · Peninsula College · Queen of Angels · OMH · North Olympic Library System · Peninsula Mental Health · City of Port Angeles · Port of Port Angeles · Clallam County Olypen believes this will result in a stronger community and a healthy economic future for all of us. ~ AAAA A ~ pORTANOELES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: February 11, 2003 To: UTILITY ADVISORY COMMITTEE FROM: Scott McLain, Deputy Director for Power Systems RE: Bonneville Power Administration implementation of Safety Net CRAC Summary: The Bonneville Power Administration (BPA) has just announced that it is starting the process to implement the safety net cost recovery adjustment clause (SN CRAC). This increase in wholesale power costs, along with increased costs due to the end of the power contract with LG&E Power Marketing will cause a substantial increase to retail electric rates for the City. Recommendation: No recommendation, for information only. Background/Analysis: The City has a wholesale power agreement with the Bormeville Power Administration to supply about 80% of the City's power supply. In October of 2003, BPA will supply 100% of the City's wholesale power. BPA has been losing more than $300 million in each of the last two years due to a combination of the 2001 drought, volatile market prices, and the West Coast energy crisis. The runoff picture for 2003 is projecting another drought with streamflows at only 70% of normal. Two extremely poor water years so close together have put BPA in a precarious financial position. A large portion of the revenue BPA receives comes from secondary power sales into the open power market. Secondary revenue is expected to be $200 million lower this year than projected in the 2001 rate case. In order to trigger a safety net CRAC, BPA must forecast a probability of treasury payment of 50% or less. BPA is currently projecting a treasury payment probability in 2003 of about 26%. In order to implement the Safety Net CRAC, BPA is required to perform a rate case under the provisions of section 70) of the Northwest Power Act. The rate case will set the level and design of the SN CRAC. The rate case is expected to begin in March or early April with any changes to rates taking place on October 1, 2003. Them are three CRAC's in effect on the wholesale power rates we receive from BPA. The Load Based CRAC (LB CRAC) and the Financial Based CRAC (FB CRAC) have been implemented previously. The LB CRAC is based on the actual costs of supplementary purchased power and is currently 31.88% above base rates. This rate is adjusted every six months and will go up to 38.53% in April, and back down again to about 29% in October of 2003. The FB CRAC has been implemented at its maximum cap, which is at 10.97% above base rates. BPA's initial proposal in the 7(i)rate case for the SN CRAC is expected to be at about 25% over base rates. The combination of the three CRAC's results in a total CRAC adjustment in October 2003 of about 65% over base rates. In addition to the CRAC adjustments to the wholesale rates in October, the City will also be faced with other increases to its power costs. The City's involvement with the Columbia Storage Power Exchange will be ending April 1, 2003. This represents a very small portion of the City's power needs, but will have to be replaced with BPA power. The City's contract with LG&E Power Marketing will be ending on September 30, 2003. This contract has been supplying about 20% of the City's power supply for the past seven years, and at a substantial savings compared to BPA rates. This contract represents about 11 Megawatts of power and replacing this power with BPA power in October under the projected wholesale rates will cost an additional $1.7 million per year. When the City set retail rates in October of 2001, the City Council agreed to reduce reserve levels in the electric fund to mitigate the level of the rate increase. No changes to retail rates have taken effect since October 2001. While this has provided Port Angeles with rates among the lowest in the Northwest, the City will not be able to continue to draw down its reserve levels. As you can see, several factors will be adversely affecting retail rates to our customers. I do not have estimates at this time on what changes will be necessary to retail rates. More information will be provided at future UAC meetings.