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Agenda Packet 05/07/2001
PUBLIC WORK5 CONFERENCE ROOM PORT ANGELE5~ WA MAY 7~ 2r'101 ~ .' E} 0 P,M. ABENDA I. ~ALL TO ORDER II. ROLL ~ALL Ill. APPROVAL OF MINUTE~ DF APRIL ~ IV. DI~C~iON iTEM~ VI. ~XT ~TINffi - ~MN~ ~ I ~ ~ 1 UTILITY ADVISORY COMMITTEE Port Angeles, Washington April 9, 2001 I. Call to Order: Chairman Reed called the meeting to order at 3:00 p.m. ~ IL Roll Call: Members Present: Chairman Reed, Mayor Doyle, Orville Campbell, Larry Williams, Allen Bentley Members Absent: None StaffPresent: Craig Knutson, Glenn Cutler, Scott McLain, Gary Kenworthy, Larry Dunbar, Mark Hughey, Cate Rinehart Others Present: None III. Approval of Minutes: Chairman Reed asked if there were any changes or additions to the agenda. Scott MeLain, Deputy Director of Power Systems, added an additional item under j. - Contribution to Electric Utility Rural Economic Development Revolving Fund for 2001. Chairman Reed then asked if there were any additions or corrections to the meeting minutes of March 5, 2001. Councilman Campbell moved to approve the minutes. Allen Bentley seconded the motion, which carried unanimously. IV. Discussion Items: A. Surplus Equipment and Materials Gary Kenworthy, Deputy Director of Engineering Services, advised the City has three substation transformers, a substation control center, fifty-six tons of bentonite from the landfill and silica sand from the downtown project that can be sold. A short discussion followed. Allen Bentley moved to recommend to the City Council that the transformers, bentonite, and silica sand be declared surplus and that the Director of Public Works and Utilities be authorized to proceed with advertising for bids for their sale. Councilman Campbell seconded the motion, which carried unanimously. B. Conservation Program Larry Dunbar, Power Resources Manager, introduced Mark Hughey, the new Commercial Energy Analyst. Mr. Dunbar reviewed the history of the conservation programs indicating some measures could be implemented now that would qualify for BPA renewable credits in October of 2001. Mr. Dunbar explained the a Regional Technical Forum had been established to validate savings and credit amounts for each qualifying measure. A discussion followed with concerns expressed over BPA correctly crediting the City. UTILITY ADVISORY COMMITTEE April 9, 2001 Councilman Campbell moved to recommend to City council that the Director of Public Works and Utilities be authorized to implement conservation program measures that qualify for the Bonneville Power Administration conservation and renewables credit. Mayor Doyle seconded the motion, which carried unanimously. C. Compact Fluorescent Lamp Campaign Larry Dunbar, Power Resources Manager, reviewed a new BPA ENERGY STAR compact fluorescent lamp coupon rebate program. Coupons would be distributed to customers allowing them to purchase lamps at a savings of six dollars apiece. The program is scheduled to begin sometime in May and will be offered three times. A short discussion followed with suggestions for various means of distribution. Mayor Doyle moved to recommend to City Council that the Mayor be authorized to sign the ENERGY STAR Labeled Compact Fluorescent Lamp Coupon Rebate Agreement. Allen Bentley seconded the motion, which carried unanimously. D. Landfill Site Permit Glenn Cutler, Director of Public Works and Utilities, announced that the County had approved the permit with no vocal objection from the FAA. There was no discussion. No action taken. Information only. E. Telecommunications and Related Ordinances Final Report Larry Dunbar, Power Resources Manager, summarized the steps that had been taken to reach the final report indicating that the various concerns had been addressed. A short discussion followed. Councilman Campbell moved to recommend to City Council adoption of the new Telecommunications Pole Attachment and Wireless Telecommunication Tower and Facilities ordinances and adoption of telecommunications related updates to existing Fees, General Provisions, Public Utility Tax, Construction or Excavation Work Within Right-of-Way, and Right-of-Way Use ordinances. Allen Bentley seconded the motion, which carried unanimously. F. Pole Attachment Fee Larry Dunbar, Power Resources Manager, indicated that since fees had not been adjusted in seventeen years rates were substantially below cost. Mr. Dunbar reported an analysis had been completed with the final results pending BPA's rate announcement. Scott McLain, Deputy Director of Power Systems, explained the different methodologies and various reasons why the increase was necessary. A discussion followed with concerns regarding fee amounts. Staff agreed to bring additional information to the City Council. Mayor Doyle moved to recommend to City Council that the pole attachment fee be adjusted annually, beginning in the year 2002 through year 2005, in the amounts of $8.50, $9.00, $9.50, and $10.00 2 UTILITY ADVISORY COMMITTEE April 9, 2001 respectively. Councilman Campbell seconded the motion, which carried unanimously. G. Proposed Electric Franchise Ordinance Chairman Reed noted the packet was missing a number of pages. Mayor Doyle moved to place the item on the May 7~h UAC agenda. Councilman Campbell seconded the motion, which carried unanimously. H. Fiber Optic Backbone Business Plan Update Larry Dunbar, Power Resources Manager, indicated around 1,500 business received a direct invitation to participate in expressing concerns and opinions at a Means/Interest workshop. Mr. Dunbar indicated the first draft of the plan had arrived however there hadn't been enough time for staff to go through it. The plan will be reviewed and distributed to UAC members as soon as possible. A special meeting was set for April 30, 2001 at 3 p.m. to discuss the business plan. L Olympic National Park Franchise Permits Scott McLain, Deputy Director of Power Systems, noted permits for electrical service in the Park Headquarters area and Visitor center area and for the road appurtenances along Park Street had expired. Mr. McLain gave an overview of the new permits which will be valid for ten years. A short discussion followed. Allen Bentley moved to recommend to City Council that the Mayor sign the right-of-way permits with the National Park Service to allow City facilities along Park Street and within the Park headquarters and Visitor Center area. Councilman Campbell seconded the motion, which carried unanimously. J. Contribution to Electric Utility Rural Economic Development Revolving Fund for 2001 Scott McLain, Deputy Director of Power Systems, pointed out the past funding traditionally was a part of the budget process and explained the City can receive a $25,000 credit on excise taxes owed to the State. Glenn Cutler, Director of Public Works and Utilities, pointed out the rationale was to attract new businesses while retaining old business. There was a discussion regarding the justification. Councilman Williams moved to recommend City Council authorize the transfer of $75,000 from the Electric Fund to the Electric Utility Rural Economic Development Revolving Fund. Councilman Campbell seconded the motion. A vote was taken on the motion which carried four to one with Chairman Reed in opposition. V. Late Items VII. Next Meeting: A special meeting has been set for April 30, 2001 in the City Council Chambers. 3 UTILITY ADVISORY COMMITTEE April 9, 2001 The next regular meeting will be held May 7, 2001, at 3:00 p.m. in the Public Works Conference Room. VIII. Adjournment: The meeting adjourned at 5:05 p.m. Dean Reed, Chairman Cate Rinehart, Administrative Assistant NSPWKS~LIGHTxCONS\CATE~apr9meet.wpd 4 WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 TO: UTILITY ADVISORY COMMITTEE FROM: Gary W. Kenworthy, P.E., Deputy Director of Engineering/City Engineer SUBJECT: Stormwater Gap Analysis The City's Wastcwater/Stormwatcr Consultant, Brown & Caldw¢ll, is preparing an analysis of thc City's shortfall (Gap) in meeting current and pending Federal and State stormwater requirements. At thc May 7, 2001 meeting they will bc making a presentation regarding an evaluation of thc current stormwatcr management program, future needs, and consideration of creating a stormwatcr utility. With UAC approval this presentation will be repeated as a workshop session with City Council at the June $, 2001 meeting. N:h~ROJECTS~20-25B&C\Conslutant\uac.wpd City of Port Angeles Utility Advisory Committee Evaluation of Current Stormwater Management Program/ Consideration of Creating a Stormwater Utility May 7, 2001 Presentation Outline · Today's Objective · Recent Regulations and Requirements · City Performance 'Gap Analysis' Finmngs · Recommended Programs and Activities · Cost Implications · Organization and Funding Considerations · Benefits of a Stormwater Utility · Creating a City Stormwater Utility Recent Regulations and Requirements · Endangered Species Act (ESA) - NMFS, USFWS - effective January 2001 · National Pollutant Discharge Elimination System (NPDES) Phase II Stormwater Pemfitting - U.S.E.P.A. - permit by March 2003 · Government Accounting Standards Board Statement 34 (GASB 34) - Reporting required by July 2003 Endangered Species Act (ESA) · Prohibits activities that "harass, harm, pursue, hunt, shoot, wound, trap capture, or collect, or attempt to engage in any such conduct" · Prohibits any intentional/negligent act that could injure wildlife · Prohibits any activity that could degrade habitat · Above prohibitions apply to all City activities 2 National Pollutant Discharge Elimination System (NPDES) · Public education and outreach · Public involvement and participation · illicit discharge detection and elimina~n · Construction site storrnwater runoff c · Post-construction stormwater runoff control · Pollution prevention for municipal operations · Organization and funding mechanisms Government Accounting Standards Board - Rule 34 (GASB 34) ° Annual reporting of asset values of infrastructure · Develop inspection/condition assessment program to define condition 3 City Stormwater Management Performance re: Recent Regulations Gap Analysis Recommendations · Expand erosion and sediment control (ESC) program · Establish water quality guidelJnes/reqmrements for new and redevelopment · Provide formal documentation of City activities · Expand facility inspection/condition assessment program City Stormwater Management Performance re: Recent Regulations Gap Analysis Recommendations (continued) · Formalize training program for City personnel · Implement public education and involvement program · Establish dedicated source of funding · Create a single responsible entity for stormwater 4 Cost Considerations of Findings and Recommendations Existing Stormwater , Expenditure FTEs Cost, $ Program Expenditures PW/Eng/Streete Labor 2.5 142,00C Services/Equipment 0 110,00C Department of Community Dev. Labor 0.2 11,00( Capital Fund Expenditures CIP Program 0 Small Works Projects 0 Total 2.7 $263,00( Note: FTE = ful~ time equivalent Expanded Program-Setup Costs Initial Program Setup ~q~.at.~ vr~ co,~$ PW/Eng/Stmets Costs for Compliance Labor 1.0 68,00( Sen4ces/Equiplmnt 0 240,00( Department of Commungy Dev. Labor I .2 13,00( ?ther Depamnents (Finance, Par~, Po~e, md Fre) Labor t .13I 9,00( Fetal 1 $330,0~ Note: FIE = fu~ t~me equivalent Expanded Program-Annual Costs Additional Annual Program Expenflitur~ Costs for Compliance Other Deparfmenls (Finance, Parks, Police, and Fire) Labor _.2 16,000I Services/Equipment 0 13,000 Total 2.5 $245,000 Note: FTE = full time equivalent Expanded Stormwater Program Summary 700 600 soo 400 300 200 100 0 Existing New Additional Total Operating Program Annual Annual Activities Setup Operating Program Activities 6 Stormwater Responsibilities Split Between Several Departments Current Organization [ City Manager Communi~y and Utilities Oepartments Development Administration Utility Management Mana~lement Existing Stormwater Program is Funded from Several Sources · Solid Waste Revenues · Wastewater Revenues · Building Department Fees · General Fund Forming a SW Utility Addresses Organization and Funding Needs · Single point of responsibility for addressing complex stormwater management issues · A stable and known (quantity) revenue source to fund capital and operational activities · Greater flexibility for equitably assessing charges that are proportional to the impact on environment and/or benefits received · Increase City and public awareness of stormwater related activities and management requirements Creating a Stormwater Utility Requires the Following Steps · City Council actions · Public education process · Public Works organizational changes within current structure · Development of 2 to 5 year stormwater management and Capital Program · Rate structure development/billing option City Council Actions · Draft a city ordinance to create the stormwater utility within the legal authority of RCW 36.89 · Policy direction on rate structure design and rate levels · Conduct public hearings · Adopt the final stormwater utility enabling ordinance A Well Informed Community Increases Prospects for Implementation · City Council · City Manager · Community-at-large · Special Interest Groups Some Special Interest Groups Will Have Their Own Unique Concerns · Special interest groups: - Home builders - Realtors - Large industry - Daishawa, K-Ply, others - Large institutions - schools, churches, hospitals, others - Service organizations -- Chamber of Commerce, Kiwanis, Rotary, Lions, others - Environmental groups and river keepers Example Organization Structure Consistent with Other Utilities L Public Works and Utilities I Administration Electric Utility Water Utility Management ~ Management I Stormwater services provided by existing organizational structure 10 The Initial 2-Year SW Management Program Yields Early Results The imtial Srormwater Program includes following components: · Education · Capital program · Training · Funding and rates · Enforcement · Billing mechamsm · Operating program The short-term program results include: · Compliance with regulations · Visibil/ty with public Rate Structure Development and Billing Features · Revenue sufficiency · Equitable · Practical · Acceptable · Implementable 11 Stormwater Utility Initial Revenue Requirements Current annual expenditures: $263,000/year Cost of additional activities: Initial program development $330,000/2-years Additional annual program costs $245,000/year Cost of ongoing program annual costs: $508,000/year Stormwater Utility Future Revenue Requirements 1996 SMP: Short Term Long Term (0-2 years) (3-10 years) Annual O&M $541,500 $934,800 Capital Program $199,500 $1,054,500 Total Annual Program $741,000 $1,989,300 12 Potential Revenue from Stormwater 'Flat Rate' Charge 12,500 Single Family Dwelling Unit Accounts Standard Rate Must Be Equitable Equitably distribution of costs for water quantity, water quality, and ESA related activities 13 Key Factors for Determining Equitable Customer Rates · IVater quanti[y - impervious area iLot Size] x [Runoff Coefficient] · ~Vater qua/i~y [Lot Size] x [Runoff Coefficient] x [Quality Coefficient] [Lot Size] x [Quality Coefficient] [Quality Coefficient] The Rate Structure Must be Implementable · Practical- easy to understand · Acceptabk - fees proportional to service provided · l~asj to collect -- include with samtary wastewater bill - include with County property tax 14 Policy Considerations · Spec/al charges for churches, schools, City streets, City facilities, elderly, low inco ,ilies? - Flat rate versus specific mc - Link imperviousness to zomng: - Credits for on-site storage and/or - Other? Comparison with Typical Single Family Monthly Charge 15 Schedule for Utility Development [ 26o~ -- 2002 Activity Istaff Develop Utility ~ -- · Utility Advisory Corn mittee 7 10 Council bdeting 5 16 Council meeting (to set public hearing) Public hearing 6 Council meeting 20 (to adopt SW Utility Ordinance) Implement Stormwater Utility 1 City of Port Angeles Stormwater Program Questions 16 WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 To: UT1LITY ADVISORY COMMITTEE FROM: Jim Harper, Electrical Engineering Manager SUBJECT: Net Metering Procedure ummary: The State Legislature approved RCW 80.60 in 1998 mandating net metering by all electric utilities. Net metering allows customers with qualifying generation to be billed only for the "net" amount of electrical energy delivered by the City. The attached Policy and Procedure, and ordinance provides for the safe interconnection and metering of these customers. Recommendation: The UAC recommend City Council approval of the implementation of Net Metering, the attached Net Energy Metering Connection Agreement form and the Ordinance authorizing the Manager of Electric Engineering to sign net metering agreements Background / Analysis: To encourage private investment in renewable energy resources the State Legislature adopted RCW 80.60 in 1998. This RCW mandates that electric utilities have a net metering program available to its customers. This program requires the electric utility accept generation in excess of a customer's electric demand and store that power for later use by that customer. A net metering customer is one which has an approved net metering agreement with the City for customer generation fueled by fuel cell, solar, wind or hydro power and is 25 kW or less in size. Net metering agreements will be administered on a first come, first served basis up to a maximum capacity of 0.1% of the 1996 system peak load (119 kW). The customers generation equipment is required to automatically synchronize with the City's distribution system. If the power generated exceeds that being used by the customer the excess will flow into the City system turning the meter backwards and deducting that power from the power previously registered by the meter. If the monthly generation exceeds the customer's usage the customer will be billed only the monthly customer service charge and the bill will show a net power usage credit. At the end of the calendar year any remaining unused kilowatt-hour credit accumulated by the customer during the previous year shall be granted to the City without compensation. The first serious inquiry was received for a 3 kW photo voltaic installation proposed at 1322 East 8~h Street in early March of this year. Since that time three additional calls have been received regarding the possible installation of net metering. This procedure will provide the interested customers and City employees involved with the net metering information necessary to assure the customer installation is safe and the agreement is properly administered. The attached ordinance authorizing the Manager of Electrical Engineering to sign the Net Energy Metering Agreements will expedite the processing of agreements. This individual will be responsible for determining if the proposed installation meets the technical and safety requirements. The UAC is requested to recommend the City Council approve the implementation of Net Metering, the Net Energy Metering Connection Agreement form and the ordinance authorizing the Electrical Engineering Manager sign Net Energy Metering Connection Agreements on behalf of the City. ~'°"~ PUBLIC WORKS DEPA._~RTMEN'r_- POLIC_____~Y.AND PROCEDURES i~l NET ENERGY METERING for CUSTOMER FUEL CELL, SOLAR, WIND, or HYDROPOWER ELECTRIC GENERATING FACILITIES of NOT MORE THAN 25 KILOWATTS PW-1201 1.0 PURPOSE: 1.1 To provide instruction to engineering and office staff on procedures and requirements for the application of net metering to customer installations of small renewable generation facilities. 1.2 To ~rovide uniform customer information on requirements and procedures to connect small renewable generation facilities to the City electric system. 1.3 To provide customers with uniform requirements for net metering agreement. 2.0 ORGANIZATIONS AFFECTED: 2.1 Public Works Engineering staff 2.2 Electric utility field personnel 2.3 Customer Billing staff 2.4 City building and electrical inspectors. 2.5 Customers wishing to apply for net metering. 3.0 POLICY: 3.1 The customer's generator system must be less than 25 kilowatts (kW) in size. 3.2 The customer's generator system must be fueled by solar, wind, hydropower or be a fuel cell. 3.3 Owner provides power conditioning, connection, and safety equipment. 3.4 Applications will be considered on a first come first served basis to a limit of 0.1 pement of the City's 1996 peak demand (119 kW). Projects in excess of this amount may be allowed with the approval of the Director of Public Works and Utilities. 4.0 DEFINITIONS: 4.1 net metering: The metering of net power flow during a billing cycle, by allowing the meter to turn backwards during any period in which the customer is generating more than he is consuming. 4/19/01 I of 2 Glenn A. Cutler, Director NET ENERGY METERING CONNECTION AGREEMENT PW-1201 5.0 PROCEDURE: 5.1 Applications for net metering generation are available at the Electrical Permit Counter in the lobby at City Hall, 321 East Fifth Street. 5.2 The Customer completes the Application for Net Metered Electrical Generation. Be sure the Customer and Inst~ller Information and the appropriate section for the "type of generation" proposed to be installed is completed. The Customer must include a one-line diagram and/or manufacturer's literature and a description of the protection equipment to be used. 5.3 The Customer may be provided with a list of inverters meeting NEC and IEEE standards and other materials City may be collecting or developing. 5.4 The Customer must take out an Electrical Permit. "Net Metering" should be noted on the permit. A building permit will also be required if any structures are added or modified. 5.5 The staff person receiving the application will make copies and distribute them to the Electric Engineering Manager and the Power Manager. 5.6 The Power Manager will determine if the proposed installation is within the 0.1 percent limit and Electric Engineering Manager will determine if the proposed installation meets the net metering connection requirements. The Customer should allow at least ten working days for processing the application. A Connection Agreement is then prepared and signed by the Customer and the Electrical Engineering Manager. 5.7 After the Customer notifies the City that the installation is ready for inspection and connection, an electrical inspection is performed and the meter shop installs a meter capable of registering the flow of electricity in two directions. 5.8 The name, telephone number, address, account number and transformer number is identified and flagged on the System Operating Map. 5.9 The Customer Service Section is notified and a notation is placed on the customer's file. Special billing procedures are also noted. 5.10 Questions may be directed to the Electrical Engineering Manager at (360) 417-4702. The response(s) will be communicated to the interested parties. 6.0 APPENDIX: 6.1 Net Energy Metering Connection Agreement ........................................... PW1201-01 [5/01] 6.2 Application for Net Metered Electrical Generation .................................. PW1201-02 [4/01] (Appendix A) 6.3 Connection Standards for Customer Electric ............................................ PW1201-03 [4/01] Generation Facilities of not more than 25 Kilowatts (Appendix B) 4/19/01 2 of 2 Glenn A. Cutler, Director NET ENERGY METERING CONNECTION AGREEMENT for CUSTOMER FUEL CELL, SOLAR, WIND, or HYDROPOWER ELECTRIC GENERATING FACILITIES of NOT MORE THAN 25 KILOWATTS This Net Energy Metering Connection Agreement is executed in duplicate this __ day of ,200 between (hereinafter referred to as "Customer"), and the City of Port Angeles, Electric Utility, a Municipal Corporation of the State of Washington (hereinafter referred to as the City). Both parties, who may be herein further referred to collectively as "Parties" and individually as "Party", agree as follows: 1. CUSTOMER ELECTRIC GENERATING FACILITY 1.1 Customer has elected, in accordance with RCW 80.60 et seq., to operate either a net energy metering fuel cell, solar, wind or hydropower electric generating facility, with a generating capacity of not more than twenty~five kilowatts, in parallel with the City's transmission and distribution facilities. This generating facility is intended to offset either part or all of the Customer's electrical requirements. 1.2 Customer's Application for Net Metered Electrical Generation, including the location of the electrical generating installation and details on the electrical generating unit(s) is hereby incorporated into this agreement as Appendix A. 1.3 The installation is identified by the City with the following designators: Transformer No. (feeder and phase) , Customer Utility Account No. 1.4 A separate agreement shall be entered into for each Customer's electrical service location(s). 1.5 The electrical generating system used by the Customer shall be located on the Customer's premises. It shall include all equipment necessary to meet applicable safety, power quality, and connection requirements established by the National Electrical Code (Articles 690 and 705), National Electrical Safety Code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, and the City's Connection Standards, as set forth in Appendix B, which is attached hereto. 1.6 The City shall have the sole authority to determine which connection requirements set forth herein are applicable to Customer's proposed installation. 2. PAYMENT FOR NET ENERGY 2.1 The City shall measure the net electricity produced or consumed by the Customer during each billing period, in accordance with normal metering practices. 2.2 If the electricity supplied by the City exceeds the electricity generated by the Customer and fed back to the City during the billing period, or any portion thereof, then the Customer shall be billed for the net electricity supplied by the City together with the appropriate customer charge paid by other customers of the City in the same rate class. 1201-01.WPD{5/3/01} Page 1 of 5 NET ENERGY METERING CONNECTION AGREEMENT 2.3 If the electricity generated by the Customer and distributed back to the City during the billing period, or any portion thereof, exceeds the electricity supplied by the City, then the Customer shall be: a) billed for the appropriate customer service charge as other customers of the City in the same rate class; and b) credited for the net excess kilowatt-hours generated during the billing period, with this kilowatt-hour credit appearing on Customer's bill for the following billing period. 2.4 At the beginning of each calendar year, any remaining unused kilowatt-hour credit accumulated by the Customer during the previous year shall be granted to the City without any compensation to the Customer. 2.5 Customer shall pay any amount owing for electric service provided by the City in accordance with applicable rates and policies. Nothing in this Section 2 shall limit City's rights under applicable Rate Schedules, Customer Service Policies, and General Provisions. 3. INTERRUPTION OR REDUCTION OF DELIVERIES 3.1 The City may require Customer to interrupt or reduce deliveries as follows: a) when necessary in order to construct, install, maintain, repair, replace, remove, investigate, or inspect any of its equipment or part of its system; or b) if it determines that curtailment, interruption, or reduction is necessary because of emergencies, force or compliance with prudent electrical practices. 3.2 Whenever possible, the City shall give Customer reasonable notice of the possibility that interruption or reduction of deliveries may be required. 3.3 Notwithstanding any other provision of this Agreement, if at any time the City determines that either: a) the facility may endanger City personnel, or b) the continued operation of Customer's facility may endanger the integrity of the City's electric system, The City shall have the right to disconnect Customer's facility from the City's electric system. Customer's facility shall remain disconnected until such time as the City is satisfied that the condition(s) referenced in (a) or (b) of this section 3.3 have been corrected. 4. CONNECTION 4.1 Customer shall deliver the excess energy to the City at the City's meter. 4.2 Customer shall pay for designing, installing, inspecting, operating, and maintaining the electric generating facility in accordance with all applicable laws and regulations and shall comply with the City's Connection Standards set forth in Appendix B, which is attached hereto. 4.3 Customer shall pay for the City's standard watt-hour meter electrical hook-up, if not already present. 4.4 Customer shall not commence parallel operation of the generating facility until written approval of the connection facilities has been given by the City. Such approval shall not be unreasonably withheld. The City shall have the right to have representatives present at the initial testing of Customer's protective apparatus. 12014)I.WPD{5/3/01 } Page 2 of 5 NET ENERGY METERING CONNECTION AGREEMENT 5. MAINTENANCE AND PERMITS 5.1 Customer shall: a) maintain the electric generating facility and connection facilities in a safe and prudent manner and in conformance with all applicable laws and regulations, including, but not limited to, the City's Connection Standards, Appendix B, and b) have the system inspected by a qualified technician after 5, 8, 10 years of operation and every two years thereafter, the latest inspection and test report to be available for review by the City on request. c) obtain any governmental authorizations and permits required for the construction and operation of the electric generating facility and connection facilities. Permit requirements, for this project, include: [] Electrical permit [] Building permit [] Clearing and grading permit [] SEPA [] Joint Aquatic Resources Permit. 5.2 Customer shall reimburse the City for any and all losses, damages, claims, penalties, or liability it incurs as a result of Customer's failure to obtain or maintain any governmental authorizations and permits required for construction and operation of Customer's generating facility or failure to maintain Customer's facility as required in (a) of this Section 5. 6. ACCESS TO PREMISES The City may enter Customer's premises or property to: a) inspect, with prior notice, at all reasonable hours, Customer's protective devices; read meter; and b) disconnect at the City's meter or transformer, without notice, the connection facilities if, in the City's opinion, a hazardous condition exists and such immediate action is necessary to protect persons, or the City's facilities, or property of others from damage or interference caused by Customer's electric generating facilities, or lack of properly operating protective devices or inability to inspect the same. 7. INDEMNITY AND LIABILITY 7.1 The Customer assumes the risk of all damages, loss, cost and expense and agrees to indemnify the City, its successors and assigns, and its respective directors, officers, employees and agents, from and against any and all claims, losses, costs, liabilities, damages and expenses including, but not limited to, reasonable attorney fees, resulting from or in connection with performance of the agreement or which may occur or be sustained by the City on account of any claim or action brought against the City for any reason including but not limited to loss to the electrical system oft.he Customer, caused by or arising out of an electrical disturbance. 7.2 Such indemnity, protection, and hold harmless includes any demand, claim, suit or judgement for damages, death or bodily injury to all persons, including officers, employees or agents, and subcontractors of either Party hereto including payment made under or in connection with any Worker's Compensation Law or under any plan for employees' disability and death benefits or property loss which may be caused or 1201-01.WPD{5/3/01 } Page 3 of 5 NET ENERGY METERING CONNECTION AGREEMENT contributed to by the connection, maintenance, operation, use, presence, or removal of Customer's equipmem. The only exception will be liability occasioned by the sole negligence or willful misconduct of the City or its employees acting within the scope of their employment and liability occasioned by a partial negligence of the City or its employees acting within the scope of their employment to the extent that such partial liability is fixed by a court of competent jurisdiction. 7.3 The provisions of Section 7 shall not be construed to relieve any insurer of its obligations to pay any insurance claims in accordance with the provisions of any insurance policy. 7.4 The City shall have no liability, ownership interest, control or responsibility for the Customer's Electric Generating Facility or its connection with the City's electric system, regardless of what the City knows or should know about the Customer's Electric Generating Facility or its connection. 7.5 Customer recognizes that it is waiving immunity under Washington Industrial Insurance law, Title 51 RCW, and further agrees that this indemnification clause has been mutually negotiated. This indemnification shall extend to and include a~torney's fees and the costs of establishing the right of indemnification hereunder in favor of the City. 8. INDEPENDENT CONTRACTORS The Parties hereto are independent contractors and shall not be deemed to be partners, joint venturers, employees, franchisees or franchisers, servants or agents of each other for any purpose whatsoever under or in connection with this Agreement. 9. GOVERNING LAW This Agreement shall be interpreted, governed, and constructed under the laws of the State of Washington as if executed and to be performed wholly within the State of Washington. Venue of any action arising hereunder or related to this agreement shall lie in Clallam County, Washington. 10. AMENDMENTS, MODIFICATIONS OR WAIVER Any amendments or modifications to this Agreement shall be in writing and agreed to by both Parties. The failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later tlme to enforce the same. No waiver by any Party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, shall be deemed to be construed as a further or continuing waiver of any such breach or waiver of the breach of any other term or covenant unless such waiver is in writing. 11. APPENDICES The Agreement includes the following appendices attached and incorporated by reference: Appendix A: Customer's Application for Net Metered Electrical Generation to City of Port Angeles. Appendix B: City's Connection Standards for Customer Electric Generating Facilities of 25 Kilowatts or Less. 1201-01.WPD{5/3/01} Page 4 of 5 NET ENERGY METERING CONNECTION AGREEMENT 12. NOTICES All written notices shall be directed as follows: City of Port Angeles: Electrical Engineering Manager 321 East 5~ Street P.O. Box 1150 Port Angeles, WA 98362 Customer: NalTle Address City, State & Zip Customer notices to the City, pursuant to this Section 13, shall refer to the Service Address set forth in Appendix A. 14. TERM OF AGREEMENT This Agreement shall be in effect when signed by the Customer and the City and shall remain in effect thereafter month to month unless terminated by either Party on thirty (30) days' prior written notice in accordance with Section 13. 15. SIGNATUR. ES IN WITNESS WHEREOF, the Parties hereto have caused two originals of this Agreement to be executed by their duly authorized representatives. This Agreement is effective as of the last date set forth below. CUSTOMER: CITY OF PORT ANGELES: Signature Signature Print name Print name Title Title Date Date 1201-01.WPD{5/3/01 } Page 5 of 5 APPENDIX A Application for Net Metered Electrical Generation Thank you for your interest in establishing a renewable energy or fuel cell connection with City of Port Angeles, Electric Utility. Please note generation systems must meet certain requirements to be considered. · The project must be not morea than 25 kilowatts (kW) in size. · Generation must be fueled by solar, wind, hydropower or be a fuel cell. Owner provides power conditioning, connection, and safety equipment. · Projects will be considered on a first come first served basis. Please complete Customer and Installer Information and the appropriate section for the type of generation proposed to be installed. In addition, include a one-line diagram and description of protection equipment. Please allow at least ten working days for processing your application. Questions may be directed to Electrical Engineering Manager, at telephone number (360) 417-4702. Customer Information Owner Name: Mailing Address: City, State & Zip: Email Address: Service Address: (lf different than Mailing Address) Daytime Telephone: Electric Utility Account No.: Expected System Operational Date: Installer Information {If different from Customer Information) Installer Name: Mailing Address: City, State & Zip: Email Address: Daytime Telephone: Drawin s Attached: D one line, El manufacturers literature, r3 design drawings. 120'I.02.WPD{4J20/01} 1 of 3 Fuel Cell Information Fuel Cell Manufacturer: Fuel Cell Model Number: Fuel Cell's Rated Power Output (kW): (AC cominuous) Inverter Manufacturer: Inverter Model Number: Inverter's Power Rating (kW): (AC cominuous) Describe the protection equipment to be used and the physical location of the installation: ~Attached: o one line, [] manufacturers literature, [] design drawings. Photovoltaic Solar System Information PV Module Manufacturer: Number of Modules: PV Module Model Number: Total Output: DC Watts PV Power Rating per Module: DC WaRs Inverter Manufacturer: Inverter Model Number: Inverter's Power Rating (kW): (AC continuous) Describe the protection equipment to be used and the physical location of the installation: Drawings Attached: [] one line, [] manufacturers literature, [] design drawings. 1201-02.WPD{4/20/01} 2 of 3 Wind System Information Wind Turbine Manufacturer: Wind Turbine Model Number: Rotor Diameter: feet Wind Turbine Tower Height: feet Wind Turbine Rated Power Output (kW): (Peak at 30 mph wind speed, or specify) AC Source (check one): [] Inverter [] Synchronous Generator [] Induction Generator Inverter Manufacturer (if using): Inverter Model Number: Inverter's Power Rating (kW): (AC continuous) System Rated Output (kW): (AC continuous) Describe the protection equipment to be used and the physical location of the installation: Drawings Attached: [] one line, [] manufacturers literature, [] design drawings. Small Hydro Power Information Turbine Manufacturer: Turbine Model Number: Turbine Power Output (kW): (AC cominuous) AC Source (check one): [] Inverter [] Synchronous Generator [] Induction Generator Inverter Manufacturer (if using): Inverter Mode/Number: Inverter's Power Rating (kW): (AC continuous) System Rated Output (kW): (AC continuous) Describe the protection equipment to be used and the physical location of the installation: Drawings Attached: [] one line, [] manufacturers literature, [] design drawings. 1201-02.WPD{4/20101} 3 of 3 APPENDIX B CONNECTION STANDARDS for CUSTOMER ELECTRIC GENERATING FACILITIES of not more than 25 KILOWATTS A. General This Appendix sets forth the requirements and conditions for interconnected non-utility- owned electric generation where such generation may be connected for parallel operation withthe service of City of Port Angeles, Electric Utility (the City). For purposes ofthis Appendix, the interconnecting entity shall be designated Customer. B. Connection Requirements 1. Customer shall conform to all applicable National Electric Code (NEC) requirements [NEC Articles 690 and 705] and building codes, and shall obtain electrical permit(s) for the equipment installation. 2. Customer shall have a dedicated Iockable disconnect device between sources of alternating-current, (i.e. between inverter(s) or other power conditioning unit(s)) and the City's distribution system._The Iockable disconnect must be accessible to_the City at all times and only the City's lock may be used on it. 3. Customer's over current device at the service panel shall be marked to indicate power source and connection to the City's distribution system. 4. Customer's power production control system shall comply with NEC Articles 690 and 705, institute of Electrical and Electronics Engineers (IEEE) Standard P929 minimum specifications, and standards for parallel operation with the City, In particular, the: a. Power output control system shall automatically disconnect from the City's source upon loss of the City's voltage and not reconnect until the City's voltage has been restored by the City. b, Power output control system shall automatically disconnect from the City's source if Customer's voltage fluctuates beyond plus or minus 10 percent. c, Power output control system shall automatically disconnect from the City's if Customer's and the City's frequency fluctuates plus or minus 2 cycles per second (Hertz). d. Inverter output distortion shall meet IEEE Standard 519. C. Safety AIl safety and operating procedures for joint use equipment shall be in compliance with the Occupational Safety and Health Administration (OSHA) Standard 29, CFR 1910.269, the NEC, WAC rules, the Washington industrial Safety and Health Administration 0NISHA) Standard, the City Service Requirements, and equipment manufacturer's safety and operating manuals. 1201-03.WPD{4/20/O1} ORDINANCE NO. AN ORDINANCE of the City of Port Angeles, Washington, establishing policies and procedures for customers of the City's electric utility to operate electric generated facilities of not more than 25 kilowatts and amending Ordinance 2341 as amended and Chapter 13.10 of the Port Angeles Municipal Code. THE CITY COUNCIL OF THE CITY OF PORT ANGELES DOES HEREBY ORDAIN as follows: .Section 1. Ordinance 2341 as amended and Chapter 13.10 of the Port Angeles Municipal Code are hereby amended to read as follows: Chapter 13.10 LIGIIT ELECTRIC UTILITY DEPARTMENT Sections: 13.10.010 Light Electric Utility E~epamm~ Established. 13.10.020 Li~h~ D~v,~h,~.tDirector of Public Works and Utilities Department. 13.10.030 Access to Facilities. 13.10.040 Connections. 13.10.050 Prohibitions and Requirements. 13.10.060 Meters. 13.10.065 Net Energy Metering 13.10.070 Department Employees and Agents. 13.10.080 Duties and Liabilities. 13.10.090 Penalties. 13.10.010 - Light Electric Utility t3epartmerrt Established. For the purpose of carrying into effect the provisions of this Chapter and for the purpose of operating and regulating the light and power system utility of the City of Port Angeles, there is created and established an Electric Utility to be operated by the City's Department of Public Works and Utilities, ~-~,}Jasb, neii~ tu *C,~ ]saiowii tis uxb, x~[y J-,x~;s~[ s~lJaxuu~u[ aiid which, for the purposes of this Chapter, shall also be referred to as the "Department". (Ord. 2341 §1, 5/28/85) 13.10.020 - Light Director of Public Works and Utilities Department. A. The City Manager shall appoint a suitable and qualified person as Director of the Ck3 Light Department. ~1- B. The word "Director", as used in this Chapter, shall mean the Director of the City L-igttt Public Works and Utilities Department, or his designated agent or employee. C. The Director shall have full charge and control of all work provided for and contemplated by this Chapter subject to the ultimate control and authority of the City Manager and the City Council. D. The Director shall have authority to adopt and file, as appropriate, rules, regulations, policies, and procedures relating to the Department's performance of the provisions of this Chapter and to the operation of the City's light and power system. E. The Director shall have the authority to restrict the use of loads, generation, and/or services during an emergency when the Director determines that the continued use of the loads would jeopardize the City's generation, transmission, substation, or distribution system. F. During periods of power shortage, the Director may limit the use of electric space heating in any manner that may be deemed necessary. At any time, the Director may refuse to supply electricity to any customer whose demand therefor may seriously impair service to any other customer. (Ord. 2341 §1, 5/28/85) 13.10.030 - Access to Facilities. A. The Director shall have free access at any reasonable time to any and all premises furnished with electric current by the City for the purpose of inspection of any wires or electric devices on such premises, reading or installing meters, and removing or repairing any property of the City, or for any other reasonable purpose connected with the light and power system of the City. For the Department's systems in underground areas, 24-hour personnel access shall be provided to all vaults, switchgear rooms, or other facilities on customer property. B. All lamps, meters, wires and other electrical equipment or appliances supplied by the City shall be and remain the property of the City and may be removed, replaced or repaired whenever the D/rector may so elect. C. Upon request, the customer shall correct any condition that limits or restricts free and safe access to the Department's meters or service. Failure of the customer to comply within a reasonable time specified, as determined by the Director, shall subject the customer to disconnection of service. (Ord. 2341 §1, 5/28/85) 13.10.040 - Connections. A. All purchased electricity, other than emergency, standby service, or customer generation, used on the premises of the customer shall be supplied exclusively by the Li~,h~ Electri9 l, Jtili~ Dcp,~d,n¢~,t within the City. No person, finn, company, or utility shall directly or indirectly sell, sublet, assign or otherwise dispose of to another, electrical power received by him/her/them from the City. No person, firm, company or utility shall buy, lease or otherwise receive electrical power from any person, firm, company or utility other than the City except as authorized by the Director. Nothing herein shall be taken as forbidding landlords or marinas who pay for electricity used by their tenants from providing such electric service and charging a mutually agreed figure therefor. Purchases of electricity for resale are prohibited, except between electric utilities as authorized by the Director. B. Nothing contained in this Chapter shall be construed as requiring the City or the Director to enter into any contract or to furnish electric current to any person applying therefor. The Director is hereby authorized and empowered to refuse to enter into any such contract or to furnish such electric current. -2- C. The Director may, before connecting any premises with the City's circuits or furnishing electric current therefrom, cause the wiring, appliances and fixtures to be carefully inspected, and until such wiring, appliances and fixtures are put in proper condition satisfactory to the Director, decline to connect the service wires with the City's circuits and shall have the power at any time to disconnect the service from the premises when the wiring, appliances or fixtures shall become or are found to be defective or dangerous, until the same are repaired to the satisfaction of the Director. D. It shall be unlawful for any person other than the Director to connect any house, premise, wire, or other appliances with the City's electric current for the purpose of securing electric current therefrom, or for any other purpose whatsoever. E. No customer shall connect his service with that of any other customer, or in any way supply any other person or premises with electricity through his service, except as approved by the Department after the filing of a written application with the Department for the connection and receipt of a permit from the Department for connection. In the absence of a signed agreement or application for service, the delivery of electric service and the acceptance thereof by the customer shall be deemed to constitute an agreement that incorporates this Chapter. F. The customer shall provide a suitable service entrance to the premises at the point of easiest access to the distribution line that the Department proposes to connect to the customer's system. Such entrance shall be continuous and so arranged that the possibility of improper tampering or interference is minimized. G. The Depamnent may require customers to provide on their premises, at their own expense, additional protective devices deemed necessary by the Department to protect the Department's property or personnel, or the property or personnel of the Department's other customers. H. The Department shall not supply electricity for any new or larger service to multiple dwelling buildings for the purpose of master metering the energy usage of the dwelling units except for master metered services approved prior to December 1, 1984. I. The Department has the responsibility of providing electrical equipment of a suitable capacity to deliver power in accordance with the customer's load requirements. In the event that the customer changes his load materially, exceeding that initially provided, he shall notify the Department sufficiently in advance so that the Department may revise its facilities accordingly. In the event that the customer fails to notify the Department and, as a result, the City's equipment is damaged, the customer shall be liable for the costs of such damage. (Ord. 2341 §1, 5/28/85) 13.10.050 - Prohibitions and Requirements. A. Unless authorized by the Department, no person shall commit the following acts or cause others to commit the following acts: In any manner damage, mutilate, destroy, remove, connect, disconnect, or in any way interfere or tamper with any machinery, poles, wires, meters, seals, or other equipment belonging to, or in any manner connected with, the light and power system of the City. Whenever it becomes necessary to disconnect, remove, or relocate any poles, wires, underground facilities, or other equipment belonging to the City, the work shall be done by or under the direction of the Department. Prior notice shall be given to the Department by the person desiring the work done, stating when and where the work is required. The person desiring the work may be required to pay the cost of labor, equipment rental, material and overhead charges required to do the work. -3- B. The customer shall at all times keep his wiring and appliances in such condition that they can be used without causing damage, delay, or cost to the City. C. The City shall use reasonable diligence in providing adequate electrical service to the customer. However, should the nature of the customer's equipment require protection, reversal of phase rotation, voltage control, unbalance, single phasing, safety, reliability or other requirements which exceed the levels provided by the City, it shall be the responsibility of the customer to provide such protection at his own expense. The City shall not be liable for damages caused to the customer's equipment when the customer's equipment requirements exceed those provided for by the City. The customer shall have the responsibility to provide suitable devices adequate to protect his three-phase motors and other equipment against reversal of phase rotation and single phasing. D. Customers shall not cause unusual fluctuations or disturbances in the City's electrical system. Customers may be required, at their own expense to install suitable apparatus which will reasonably limit such disturbances. Where the customer's use of electrical equipment results in an interference with the quality of the customer's own service or that of neighboring customers, or where the customer requires voltage control within unusually close limits, the Department may require to provide, at the customer's own expense, such special or additional equipment as is required. This may apply to cases of extreme unbalance of single and three-phase loads. E. The Department shall be notified in case of defective service by the customer, owner, or person in control of the premises. (Ord. 2341 § 1, 5/28/85) 13.10.060 Meters. A. When any customer desires to use electricity for purposes classified under different rates as established by Chapter 13.12 PAMC, separate meters must be installed to measure the current supplied at each rate, and the electricity passing through each meter must be charged for at the price specified in the rate schedule for such separate uses. ~t~ ~lL The Department will make periodic tests and inspections of meters and will make additional tests or inspections of meters at the request of any customer. No charge shall be made for any such additional test if there is a meter error of more than two percent. If the meter error is two percent or less, the fee for a meter test shall be charged to and collected from the customer. If any test shows a meter error of more than two percent, a pro rata adjustment shall be made in the customer's billing for a period of not more than ninety days prior to the date of the test; provided, that in no event shall any adjustment be made for any period prior to the date of any previous meter test. C. ~ The Department may install sealable locking devices on certain enclosures containing unmetered conductors, including but not limited to meter sockets, meter enclosures, current transformer enclosures, test switch enclosures, wire troughs, bus gutters, and terminal boxes. D. New or enlarged services to a duplex or a multiple dwelling building shall have common areas and common equipment supplied through a separate house meter. E. The customer shall not install or use equipment or devices to submeter electricity for the purpose of reselling or otherwise apportioning the costs of electric energy usage; except that C~:~ L~hZ the Department shall permit the apportionment of electricity for boat mooting establishments and recreational vehicle (RV) parks under the following circumstances: 1. Electrical service to boat mooring establishments ancl recreational vehicle parks may be master metered.,..,L~,'-"l Light The Department will not provide meters for individual spaces nor directly bill individual tenants at a boat moorage establishment or recreational vehicle park for which a master metering arrangement has been established. 2. Apportionment of electricity by customer-operator shall be considered a service provided by a boat mooring establishment or recreational vehicle park. The charge for such service shall be reasonable and nondiscriminatory and shall not exceed the operator's average cost per KWH as billed by the City plus the operator's reasonable cost of providing such service, and shall not exceed the proportion of the costs for which the boat moorage or recreational vehicle park tenant is responsible. F. Depending on the particular installation, Ci¥ Li~hZ the Department may provide a portion of the customer's service entrance equipment. The type of metering equipment (which may include meter, current transformer and enclosures, meter bases and junction boxes) shall be determined by Cit.r Li~h~ the Department. Meter sockets shall be placed only at those locations authorized by Cit,~ Ligh~ the Department and shall afford proper protection to meters. In order that the meter can be easily read, the center of the meter socket shall be located not less than five feet or more than seven feet above finish grade. If, as determined by,.,~[j'"'l Light the Department, the meter is inaccessible or improperly located for reading, the customer shall be required to relocate his service entrance to a suitable location or Cit:, Li~hZ the Department may install a remote metering device and all costs incurred shall be borne by the customer. G. Should the customer request additional metering equipment, C-/tT-Eight th._~e Department may install such equipment as agreed upon. The cost of such additional equipment, including necessary spares if any, shall be borne by the customer, including labor, equipment rental, material and overhead charges. The Cost of maintenance of such additional equipment shall be borne by the customer. The charge for maintenance of such equipment shall be sufficient to cover C-ity-L-ight th_.~e Department's costs as determined by the Public Works Director. Cit~ Light the Department may provide metering pulses from existing metering equipment at the customer's cost. (Ord. 2969, 10/17/97; Ord. 2369 §1, 1/3/86; Ord. 2341 §1, 5/28/85) 13.10.065 - Net Energy Metering A._~. In accordance with Chapter 80.60 RCW, it shall be the policy of the City to encourage private investment and renewable energy resources by offering to make net metering available and allowing net metering systems to be interconnected, provided that the requirements of Chapter 80.60 RCW and the Department's policies and procedures are met. B.~. Definitions. 1_,. "Customer-generator" means a user of a net metering system 2~ "Net metering"means measuring the difference between the electricity supplied by an electric utility and the electricity generated by a customer-generator that is fed back to the electric utility over the applicable billing period. 3~ "Net metering system" means a fuel cell or a facility for the production of electrical energy that: (a) uses as its fuel either solar, wind, or hydropower; (b) has a generating capacity of not more than 25 kilowatts; (c) is located on the customer-generator's premises; -5- (d) operates in parallel with the electric utility's transmission and distribution facilities; and (e) is intended primarily to offset part or all of the customer- generator's requirements for electricity. C.~. The Department's Electrical Engineering Manager is authorized to enter into Connection Agreements with customer-generators for the p.urpose of setting forth the specific duties, responsibilities~ terms, and conditions~ including the method of payment by the City for net energy. 13.10.070 - Department Employees and Agents. A. It shall be unlawful for any inspector, agent or employee of the City to ask, demand, receive or accept any personal compensation for any service rendered to a consumer of electric current or to any other persons or customers in connection with supplying, connecting or furnishing electric current by the City. B. No promises, agreements or representations of any employee or agent of the City with reference to the furnishing of services by the Department or its employees shall be binding on the City unless the same shall be in writing, signed by the Director. (Ord. 2341 §1, 5/28/85) 13.10.080 - Duti~:s and Liabilities. A. Nothing in this Chapter shall be construed as placing upon the City any responsibility for the condition, maintenance or safety of customers' electrical wiring or current consuming devices or other equipment; and the City shall not be responsible for any loss or damage resulting from defects, failures, malfunctions, or electrical faults in or originating in any electrical wiring, current consuming devices, or other equipment which they may own or operate, install or maintain. The City shall not be responsible for damage to persons or property arising from the use of the electric service on the premises of the customer. B. It is the responsibility of customers to protect themselves, life and property from the use, misuse, and/or availability of electrical current on their premises and from the consequences of the use, misuse and/or availability of electrical current on their premises. C. It is the responsibility of customers to provide, install, use, inspect, and maintain suitable protection and protective devices to protect themselves, life, and property from any defect, failure, malfunction and/or electrical fault in or originating in any electrical wiring, current consuming devices, or other equipment which they may own, operate, install, or maintain; and to protect themselves, life, and property from the consequences of any defect, failure, malfunction and/or electrical fault in or originating in any electrical wiring, current consuming devices, or other equipment which they may own, operate, install, or maintain. D. The City shall not be liable for any loss, injury, or damage resulting from the interruption, restoration, or reduction of electric service from any cause, including but not limited to failure of generation, transmission, substation, and distribution systems, inadequacy of energy supply, implementation of emergency plans, or temporary disconnections for repairs and maintenance or failure to pay for service rendered. (Ord. 2341 § 1, 5/28/85) 13.10.090 - Penalties. A. Any person, finn or corporation who shall fail to comply with any of the provisions of this Chapter shall be deemed guilty of a Class II misdemeanor. B. In addition to any other penalty for the violation of the provisions of this -6- Chapter, the electric service of any person determined to have violated the provisions of this Chapter may be discontinued and such violator shall be civilly and criminally liable for all damages and for all extra current used by reason of such violation. (Ord. 2341 §1, 5/28/85) Section 2 - Severabilit¥. If any provisions of this Ordinance or its application to any person or circumstances, is held invalid, the remainder of the Ordinance, or application of the provisions of the Ordinance to other persons or circumstances, is not affected. Section 3 - Effective Date. This Ordinance shall take effect five days after the date of publication. PASSED by the City Council of the City of Port Angeles at a regular meeting of said Council held on the __ day of ., 2001. MAYOR ATTEST: Becky J. Upton, City Clerk APPROVED AS TO FORM: Craig D. Knutson, City Attorney PUBLISHED: By Summary -7- WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 To: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager Mark Hughey, Commercial Energy Analyst SUBJECT: Conservation Plans and Publicity Summary: On April 17, 2001, the City Council authorized the Director of Public Works to implement a conservation program that qualifies for the Bonneville Power Administration (BPA) ! Conservation and Renewables Credit Discount (C&RD). Conservation has increased in importance due to a regional energy shortage and drought conditions that are anticipated to worsell. Recommendation: Recommend to the City Council that a budget adjustment is approved and the Director of Public Works and Utilities, or his designee, be authorized to enter into C~ty Authorized Contractor Agreements. Background/Analysis: Staffis developing programs that qualify for the BPA C&RD. As part of the program development effort, Staff has prepared a program plan, a City Authorized Contractor Agreement, an implementation and marketing plan, and program budget. A significant part of the program development effort includes preparation of customer, contractor and retailer brochures and information. Conservation Program Plan Summary Staff has developed five conservation programs that qualify for the BPA C&RD. Programs will be available to existing residential, general service, and primary customers. No programs have been developed for new construction due to low building activity. The programs have been designed to streamline customer participation and simplify program requirements where ~ossible. A summary of each conservation program is provided below. Programs Brief Description 1. Conservation Customer communications and advice on energy and water conservation. Awareness 2. Energy/Water Free energy/water saving devices and appliance rebates. City to purchase Conservation energy/water saving devices and participating retailers to stoqk qualifying appliances. 3. Compact Information and rebate coupons will be provided to customers to purchase Fluorescent Lamps qualifying lamps. A total of three offerings are anticipated. 4. Building Includes rebates for building improvements including heat pumps, Improvements windows, insulation, and lighting. Customers obtain bids from City Authorized Contractors on qualifying improvements. 5. City Facilities Reports on energy usage in City buildings, identifies and prioritizes conservation opportunities. May 7, 2001 Utility Advisory Committee Memo Page 2 City Authorized Contractor Agreement The Building Improvement conservation program requires the City to form a business relationship with independent contractors. Under the C&RD, the City is required to meet BPA program requirements and materials and installation specifications. Staffhas prepared a City Authorized Contractor Agreement that will be used to recruit independent contractors to participate in the program. The Agreement includes provisions to comply with BPA program requirements, procedures, and other standard terms and conditions. Staff anticipates working with energy service companies on projects involving large general service and primary customers and may submit proposals under the BPA Conservation Augmentation program. Staff requests the Utility Advisory Committee recommend City Council approval of the City Authorized Contractor Agreement. Staff proposes that the Director of Public Works and Utilities be authorized to enter into City Authorized Contractor Agreements. Staff also plans to recruit local retailers to stock appliances (water heaters, clothes washers, dishwashers, etc...) that qualify for appliance rebates under the Energy/Water conservation program. Rebates for qualifying appliances will not require the City to have a written agreement with retailers. Implementation and Marketing Plan An implementation and marketing plan has been prepared for the remainder of 2001 for each program activity. The implementation and marketing plan is subject to change based on customer participation in each program. Program development efforts are anticipated to be substantially complete by the end of May. Staff has requested BPA to review the program design during May and plans to begin to implement energy conservation programs in June of this year. BPA will grandfather the C&RD in the event any changes occur between now and October of this year. A summary of the implementation and marketing activities needed to carry out each program is included in Attachment 1. Budget Summary The City's C&RD is based on BPA power purchases at the rate of ½ mill per kWh which represents about $315,000 per year over the next five-year period. A smnmary of the anticipated program expenses for the remainder of this year is provided below. Due to the anticipated BPA wholesale power increase and water shortage, high customer participation in the conservation program is expected. A budget adjustment from the City's conservation fund will support the program pr/or to the C&RD that will be applied against the City's power purchases beginning October 2001. If customer and contractor participation exceeds expectations, Staff may return to the Utility Advisory Committee for their recommendation to advance the use of the C&RD that will be available over the next five years. Description of program expense 2001 Budget Rebates for energy conservation measures (heat pumps, insulation, etc...) $315,000 Low-income weatherization assistance through the Community Action Council $30,000 Energy/water saving devices (shower heads, faucet aerators, etc...) $10,000 Advertising (print, radio, television, etc...) $20,000 Small tools and equipment (ladders, tape measures, meters) $5,000 Total $380,000 Attachment 1 Implementation and Marketing Plan (subject to change) 1. Conservation Awareness Program 2001 Timeline Implementation?Marketing Activity 4 ~ 5 6 ? 8 9 10 11 12 Program development 3/ 3/ Community presentations 3/ School poster contest development 3/ School poster contest Energy Conservation Workshop Complementary advertisiug ~,/ ~/ ¥/ V' 2. Energy/Water Conservation Program 2001 Timeline Implementation/Marketing Activity 4 5 6 7 8 9 10 11 12 Program development 3/ No cost, iow cost brochure bill insert 3/ 3/ Purchase energy/water saving devices 3/ Free devices brochure bill insert 3/ Retailer recruitment 3/ Appliance rebate brochure bill insert Point-of-purchase promotional materials 3/ Complementary advertising 3/ V' 3/ 3/ 3/ 3. Compact Fluorescent Lamp Program 2001 Timeline Implementation/Marketing Activity 4 5 6 7 8 9 10 11 12 Program development 3/ Brochure/coupons bill insert 3/ Complementary advertising ¥/ ~/ 3/ 4. Building Improvements Program 2001 Timeline Implementation/Marketing Activity 4 5 6 7 8 9 10 11 12 Program development 3/ Contractor recruitment/training 3/ Brochure bill insert V Complementary advertising 3/ 3/ Energy audit program offering Supplemental program offerings 3/ 5. City Facilities Program 2001 Timeline Implementation Activity 4 5 6 7 8 9 10 11 12 Energy use benchmarking Quarterly energy use reporting Building/facility priorities 3/ 3/ Project identification/evaluation v Capital improvement planning N:~PWKS\LIGHTXCONS\conservation I .doc CITY AUTHORIZED CONTRA CTOR AGREEMENT THIS AGREEMENT, made this XX day of May, 2001, between the City of Port Angeles, Clallam County, Washington, hereinafter referred to as the "City", and ., Inc., Hereinafter referred to as "Contractor". WITNESSETH: 1 Scope of Work Contractor agrees to furnish all labor, materials, bonding, insurance, supervision and equipment required to install energy conservation measures available through the City of Port Angeles' Conservation program. It is understood that no verbal agreements between the Owner, Contractor, and the City will supersede this Agreement. 2 Term The term of this Agreement shall be for one year from the above date through December 31, 2002 and shall be automatically renewed annually unless either party gives ten (10) days written notice of intent to terminate. Either party may terminate this agreement without cause at any time upon ten (10) days written notice to the other party. 3 Procedure The City and Contractor share the responsibility to market the Conservation program. The City may market the Conservation program including City Authorized Contractors through utility billing inserts, radio and print advertising, television, and other appropriate media. In response to a request for a bid that is due to the City's marketing efforts, the Contractor shall promote the benefits of energy efficiency and participation in the City's Conservation program to the Owner. The Contractor may use its own client lists and sales leads to solicit participation in the Conservation program. The Contractor may market the Conservation program and their status as a City Authorized Contractor. All Contractor marketing and advertising that has any reference to the City's Conservation program or their status as a City Authorized Contractor shall be submitted to the Power Resources Manager for advance written approval. No work will be authorized without the Owner's completion of the City's Application and the Contractor's completion of the City's bid form. The Contractor and Owner share the responsibility to determine the building meets the City's eligibility criteria and indicate such on the City Bid form. The Contractor is responsible to identify and inform the City and owner of all required actions that do not qualify for payment under the Conservation program. The Contractor shall only propose materials and equipment that are pre-approved by the City. The Contractor's bid Page I shall be accurate within +5% of the actual materials requirements. The City does not approve the availability of energy conservation measures in the Contractor's Bid until City inspection acceptance. 4 Eli.qibilityCriteria In order to qualify for building insulation, replacement windows and heat pumps, a building must have electric heating equipment that meets one of the City's Eligibility Criteria defined in the City's application. Furthermore, Owners of buildings must be provided electric service by the City. In order to qualify for appliances, a building must have electric water heating equipment and be provided electric service by the City. In order to qualify for lighting measures, Owners of buildings must be provided electric service by the City. Additional minimum insulation requirements apply to heat pumps and replacement windows. 5 EnerqyConservation Measure Availability Buildings must meet the City's energy conservation measure availability defined in the City's Service Requirements. The Contractor agrees to restrict its weatherization materials, products, and installation methods to those currently approved by the City. 6 Commencement Once the City receives a signed Owner's Application and City bid form, the City will schedule a meeting with the Owner. The City reserves the right to reject any bid to perform work under this Agreement at the sole discretion of the City. Prior to the commencement of work, the Owner may request to cancel the City Participation Agreement. Such request to cancel shall be submitted to the City in writing. After the City gives notice to proceed to the Contractor, if the Owner or City cancels the work, the Owner is responsible to pay any cancellation costs to the Contractor identified in the bid. Contractor shall not commence work on an Owner's residence until an authorized City representative has released the Notice To Proceed based on the Owner's acceptance of the City's Application, Contractor's Bid and City Participation Agreement. All changes that result in an increase in the bid price or increased scope of work after Notice to Proceed must be approved in writing by the City and Owner. Reductions in the scope of work and cost may be made and the Statement may be revised upon City installation acceptance without requiring a revision to the City Agreement with the Owner. The City may issue no new work to the Contractor until all jobs which have been in progress for more than one hundred and twenty (120) days have passed all required inspections. The Contractor's failure to complete all work and obtain City inspection acceptance within one-hundred and twenty (120) days from the date of the City Notice to Proceed enables the City and/or Owner to cancel the Participation Agreement without incurring Contractor cancellation cost. The City Page 2 may cancel the Participation Agreement for just cause and shall not be responsible for any Owner or Contractor damages. 7 Warranty Contractor warrants that the work and materials furnished under this Agreement shall comply with accepted industry standards and the material and installation requirements established by the City. These requirements are included in this Agreement by reference. The City may revise its requirements at any time for a health and safety concern. All other City requirements may be revised semi- annually. If any defect in the Contractor's workmanship or materials is discovered within two (2) years after the completion of any work, the Contractor shall expeditiously remedy, repair, correct, replace or cause to be remedied, repaired, or replaced at the Contractor's expense such defect in materials or workmanship. Sealed insulated glass units and heat pumps shall be warranted against failure for at minimum period of five (5) years. The Contractor shall provide a written warranty for the sealed insulated glass units and heat pump to the Owner. The foregoing warranties shall survive any inspection the City may elect to make. 8 Acceptance and Payment Upon completion of the work, the Contractor will notify the City that the job is complete, and upon inspection approval by the City and acceptance by the Owner, Contractor may then, invoice the City and Owner for the amounts stated in the Notice to Proceed. The Contractor will be paid within thirty (30) days subsequent to City acceptance of the work and after an acceptable invoice has been received by the City. The Contractor shall promptly pay all subcontractors or materials providers employed by the Contractor in connection with installations undertaken for this Agreement. All material and workmanship shall be subject to inspection, examination and test by duly authorized agents of the City at any and all times during or after installation of materials. Such inspection will verify the building meets one of the Eligibility Criteria and the energy conservation measures are available and meet all City material and installation requirements. The City shall have the right to reject defective material and workmanship and/or require its correction without cost or expense to the City or the Owner. In the event the Contractor fails or refuses to correct any defect, as set forth herein, the City may, at its option, deduct an equitable amount from any payment owing or to be owed to the Contractor or take such other steps as it deems appropriate. The City reserves the right to levy inspection charges, in the amount of $30 per hour with a minimum one-hour charge, for reinspection due to work or materials failing previous inspection. Charges will be billed to the Contractor on a monthly basis. The City reserves the right to collect reinspection penalty charges, which Page 3 are outstanding and past due from subsequent Contractor payments for completed work. If the Contractor fails to pass all work on the third inspection, in consultation with the Owner, the City may correct the work and deduct the cost from the amount due the Contractor. The Contractor must resolve reasonable Owner written complaints within thirty (30) business days of receipt. 9 Indemnification/hold harmless The Contractor shall defend, indemnify and hold harmless the City, its officers, officials, employees, and volunteers harmless from any and all claims, injuries, damages, losses or suits, including attorney fees, arising or issuing out of or in connection with this Agreement, except as may be caused by the sole negligence or willful conduct on the part of the City. 10 Contractor License The Contractor shall procure and maintain for the duration of this agreement, a City business license, a State Contractor's License and performance bond. The Contractor shall provide copies of the above documents upon acceptance of this Agreement. 11 Certifications and Permits The Contractor shall give all required notices and comply with all applicable laws, ordinances, rules and regulations, certifications and shall procure and pay for all necessary municipal or other governmental permits, licenses and inspections. All Contractors shall request an in-progress inspection from the Power Resources Division for construction work that may become concealed (e.g., closed-blows and advanced air-sealing). Copies of all required permits and certification, including but not limited to a City building permit, City electrical permit, and insulation certification shall be attached to the invoice for each completed job. The Contractor may be required to request an inspection from the City's Building Official, Electrical Inspector, and Power Resources Division for all work performed under this Agreement. 12 Subcontractors Contractor shall not subcontract any of the work to be performed hereunder without advance written consent of the City. Contractor shall be fully responsible to the City and Owner for acts or omissions of any subcontractor performing any portion of the work under this Agreement, or any person directly or indirectly employed by them, and nothing contained herein shall create any contractual relationship between subcontractors and the City. Respecting any contract, the Contractor may subcontract or sublet only such part or parts of the work covered by said contract as the City may approve. Sub- contractors solely for the convenience or profit of the Contractor may not be approved if, as determined by the City, they would have an adverse effect upon the job. The City shall be the sole judge of such effect. The Contractor shall submit to the Power Resources Manager all requests to subcontract work, Page 4 including the name of the proposed Subcontractor, for review and approval in writing by the City. 13 Kickbacks Kickbacks, rebates, price reductions or inducements for participation or non-participation or other non-service benefits from the Contractor to an Owner is prohibited and may be subject to Federal Law. Bid rigging or bid collusion may be subject to triple damages under Federal Law. 14 Cleanup Contractor shall at all times keep Owner's premises and work areas free from accumulation of waste materials or rubbish, and prior to completion of work, remove any rubbish from the premises, such as but not limited to tools, scaffolding, equipment and materials. Upon completion of work, Contractors shall leave the premises in a condition satisfactory to the City and the Owner. In the event the Contractor fails, after reasonable notice to comply with any of the foregoing in a prompt and workmanlike manner, the City may, after such notice, perform the cleanup work and removal at the expense of the Contractor. 15 Independent Contractor Contractor is an Independent Contractor, this is not an Agreement of Partnership, Agency, or Employment of Contractor or any of the Contractor's employees by the City. It is understood and agreed that the equipment used and personnel employed by Contractor in performing this Agreement shall at all time be under the sole and exclusive control of the Contractor. The Contractor shall not create any obligation or assume any responsibility for the City nor attempt to bind the City in any way whatsoever; nor shall Contractor represent in any manner that he is an agent of the City or associated or affiliated with the City in any capacity other than as an Independent Contractor. 16 Assiclnment Contractor shall not assign or transfer any right, tithe or interest under the terms of this Agreement without the prior written approval of the City. 17 Survival The provision covering Warranty, Waiver of Liens and Indemnification shall survive termination, cancellation or expiration of this Agreement. 18 Violations If the City has reason to believe that the Contractor is in violation of this Agreement, the Power Resources Manager shall notify the Contractor in writing of the violation setting forth the nature of such violation. Within thirty (30) days of receipt of such notice, or such longer period specified by the Power Resources Manager, Contractor shall respond in writing that the violation has been cured or provide a cure plan that satisfies the Power Resources Manager or provide explanations in refutation or excuse with documentation to support the alleged violation did not occur. If the violation has not been cured within the time allowed, in the Deputy Director of Power Systems' reasonable judgment, the Contractor may be removed from the City Authorized Contractor list. Page 5 If the nature of the violation is such that it cannot be fully cured within thirty (30) days due to circumstances not under Contractor's control, the period of time in which Contractor must cure the violation may be temporarily extended by the Power Resources Manager in writing for such additional time reasonably necessary to complete the cure, provided that (i) Contractor shall have promptly commenced the cure, and (ii) Contractor is diligently pursuing its efforts to cure in the Power Resources Manager's reasonable judgment. If the violation has not been cured within the extended time allowed, in the Deputy Director of Power System's reasonable judgment, the Contractor may be removed from the City Authorized Contractor list. In the event a Contractor's name is removed from the City Authorized Contractor list, the Contractor may request to be reinstated on the list by curing violation(s) of this agreement or provide a cure plan that satisfies the Power Resources Manager. The Power Resources Manager may authorize a Contractor that has been voluntarily or involuntarily removed from the City Authorized Contractor list to complete work under the Conservation program. Such authorization would permit the Contractor to serve owners but not enjoy the benefits of being listed as a City Authorized Contractor. 19 Amendments When written changes to referenced documents are issued by an authorized City representative, they shall be incorporated in this Agreement. Other changes required by the City or Contractor may require amendment of this Agreement. 20 Asbestos Notice to Contractors Notice is hereby given that there is a strong possibility that buildings located within the City of Port Angeles may contain asbestos. Contractors are solely responsible to take proper precautions to protect their employees, the Owners and their tenants from the release of asbestos fibers into the environment. If any area of a structure has had any asbestos removed by other than an EPA-approved procedure documented in writing by an EPA-certified contractor, then the City shall be notified. Any structure that is known or suspected to have had asbestos removed shall be considered as contaminated until decontamination has been performed and certified and wdtten documentation accepted by the City. Decontamination and all other types of asbestos abatement are costs borne by the Owner. The Contractor is responsible to determine and document if the scope of work will affect or disturb asbestos on the City's bid form. Page 6 21 Insurance The Contractor shall procure and maintain for the duration of this Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Contractor, their agents, representatives, employees or subcontractors. The Contractors insurance shall be primary insurance as respect the City and the City shall be given thirty (30) days prior written notice of any cancellation, suspension or material change in coverage. Upon acceptance of this Agreement, the Contractor shall provide a Certificate of Insurance evidencing: A Automobile Liability insurance with limits no less than $1,000,000 combined single limit per accident for bodily injury and property damage; and B Commercial General Liability insurance written on an occurrence basis with limits no less than $1,000,000 combined single limit per occurrence and $2,000,000 aggregate for personal injury, bodily injury and property damage. Coverage shall include but not be limited to: blanket contractual; products/completed operations; broad form property damage; explosion, collapse and underground (XCU) if applicable; and employers liability. If any payment of deductible or self-insured retention shall be the sole responsibility of the Contractor. C The Contractors insurance shall contain a clause stating that coverage shall apply separately to each insured against whom claim is made or suit is brought, except with respects to the limits of the insurers liability. D Contractor and all subcontractors will provide the City with a performance bond covering all work performed under this Agreement, in an amount of not less than $10,000. The bond will be in a form acceptable to the City and will name the City as obligee and must be from a company registered to do business in the State of Washington. These certificates shall contain a provision that coverages afforded shall not be canceled or changed until at least thirty (30) days after prior written notice has been given to the City. The City shall have the right, at its sole discretion, to require additional Performance bonding at any time for any Contractor whose total City funding of jobs in progress would exceed $10,000. The City can then require additional bonding up to the total of jobs proposed to be authorized before these jobs are given a Notice To Proceed. The liability insurance policies required by this section shall be maintained by the Contractor throughout the term of the Agreement. Each such insurance policy shall contain the following endorsement: "It is hereby understood and agreed that this policy may not be canceled nor the intention not to renew be stated until ninety (90) days after receipt by the City, by registered mail, of a written notice addressed to the Power Resources Manager of such intent to cancel or not to renew." Within sixty (60) days after receipt by the City of said notice, and in no event later than thirty (30) days prior to said cancellation or intent not to renew, the Contractor Page 7 shall obtain and furnish to the City replacement insurance policies meeting the requirements of this section. The Contractor agrees that with respect to the above-required insurance, all insurance certificates will contain the following required previsions: a Name the City of Port Angeles and its officers, employees, board members, and elected representatives as additional insured parties as to all applicable coverage (except worker's compensation); b Provide for ninety (90) days notice to the City for cancellation, non-renewal, or material change; c Provide for notice to the Power Resources Manager, by certified mail at: City of Port Angeles P.O. Box 1150 Port Angeles, WA 98362-0217 The policy clause "other insurance" shall not apply to the City of Port Angeles. It is the intention that insurance policies protecting the Contractor and the City shall be primary coverage for all losses covered by the policies. Companies issuing the insurance policies shall have no recourse against the City of Port Angeles for payment of any premiums or assessments which all are set at the sole risk of the Contractor. Insurance policies obtained by the Contractor shall provide that the issuing company waives all right of recovery by way of subrogation against the City in connection with any damage covered by these policies. 22 .Notices All notices required to be given to the Contractor or City under this Agreement shall be in writing and shall be deemed served when delivered by hand or by regular mail during normal business hours. A Notices shall be given to the following: If to the City: Larry D. Dunbar Power Resources Manager, City of Port Angeles PO Box 1150 321 East 5th Avenue Port Angeles, WA 98362-0217 Page 8 B If to the Contractor: IN WITNESS WHEREOF, the Contractor has obtained all certificates, licenses, in compliance with this agreement, and the parties have entered into the City Authorized Contractor Agreement as of the day and year written below. CITY OF PORT ANGELES, CONTRACTOR WASHINGTON Contractor Name Glenn Cutler, Public Works and Utilities Authorized representative acceptance Director Date Date APPROVED AS TO FORM: Craig Knutson, City Attorney Page 9 WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 TO: UTILITY ADVISORY COMMITTEE FROM: Larry Dunbar, Power Resources Manager SUBJECT: Proposed Electric Franchise Ordinance ~ The franchise agreement with Clallam County Public Utility District No. 1 (District) for their electric facilities located within the City limits of Port Angeles has expired. A franchise ordinance has been prepared and presented to the District for their review and acceptance. Council approval of the proposed franchise ordinance is scheduled for May 22, 2001, and Staff anticipates the District will formally accept the franchise no later than June 22, 2001. Recommendation: Recommend City Council adopt an ordinance granting the Clallam County Public Utility District No. 1 a franchise to operate and maintain infrastructure for the sole purpose of transmission and distribution of electric energy. Background/Analysis: On November 24, 1948, the City granted the District a fifty (50) year right to construct, maintain and operate an electric transmission system within a specific geographical area of the City. On November 13, 2000, Staff informed the Utility Advisory Committee that the franchise agreement expired and about the need to renew thc franchise. On December 11, 2000, Staffpresented a summary of the proposed franchise ordinance to the Utility Advisory Committee. The Utility Advisory Committee supported Staffs recommendation to provide the proposed franchise ordinance to the District for their review and acceptance. On December 29, 2000, Staff shared a proposed franchise ordinance with the District. On January 17, 2001, Staff met with representatives of the District and received comments on several franchise provisions. On February 21, 2001, another meeting with the District was held and additional comments were received. On March 7, 2001, the District provided written comments. On April 17, 2001, the District provided a letter of intent to accept the franchise, subject to confirming the proposed insurance provision was acceptable with their insurance administrator. On April 20, 2001, the District proposed changes to the City's draft insurance requirements that are acceptable to the City Attorney. Staffhas carefully considered all of the District's comments and revised several provisions of the proposed franchise ordinance. 2431 East Highway 101 (360) 452-9771 Post Office [lox 1090 FAX 452-9338 Port Angeles, WA 98362 www. clal~ampud.net __ c/ct? (~ (~¢0¢0~,~ Commissioners William McCrode, District No. t Michael Mclnnes, General Manager April 17, 2001 Hugh Haffner, District No, 2 Ted Simpson, District No, 3 RECEIVED Public Works and Utilities Director City of Port Angeles CllY OF PORT ANGELES- P.O. Box 1150 PUBLIC WORKS Port Angeles, WA 98362-0217 RE: FRANCHISE ORDINANCE Dear Glenn, The latest draft of the proposed franchise ordinance has been received and reviewed. We appreciate the consideration given to the concerns we had with the earlier version. We are awaiting a resl3onse from our insurance administrator as to compliance with Section 11. Clallam PUD belongs to an insurance plan that includes numerous other PUDs, and the coverage may be a little differently framed than the typical coverage you would expect from a private company. It is my understanding that our insurance representative was trying to get clarification on a couple of questions from City staff. I am willing to recommend that the PUD accept the franchise, subject to resolution of the insurance section wording. I believe our actual coverage is more than sufficient to meet the City's concerns, and it will only be a matter of properiy wording the language to match what our plan can provide. This section might have been approached differently for another mnnicipality entity. I will also note that, since the City will be attaching its electrical system to PUD poles in some cases, we expect the City to also carry similar insurance to what you expect of the PUD. That reference was not included in the ordinance, but may not be necessary. Sincerely, %,/ Michael Mclnnes General Manager / ~- MM:lie ORDINANCE NO. AN ORDINANCE of the City of Port Angeles, Washington, granting the Public Utility District No. 1 of Clallam County, Washington, the non-exclusive right, privilege, authority, and franchise to own, operate and maintain facilities on any street in the City for the sole purpose of transmission and distribution of electric energy and repealing Ordinance No. 1200. THE CITY COUNCIL OF THE CITY OF PORT ANGELES DOES HEREBY ORDAIN as follows: Section 1 - Specific Grant. There is hereby granted, subject to the District's acceptance of the terms of this franchise as provided herein, for a term as described below, unless otherwise terminated as provided for herein, to the District, its successors and assigns, the non-exclusive right, privilege, and authority to own, operate and maintain an overhead or underground electric transmission and distribution system, along and across portions of the franchise area,. This franchise is conditioned upon the terms and conditions contained herein and the District's compliance with any federal or state regulatory agencies with jurisdiction over the District. By granting this franchise, the City is not assuming any risks or liabilities by way of Disla-ict activities therefrom, which shall be solely and separately borne by the District. The City is specifically granting the District authority to operate and maintain its existing facilities. No facilities within the City limits may be enlarged, improved, or expanded or retail customers served without obtaining the City's permission, which can not be unreasonably denied, pursuant to applicable ordinances, codes, resolutions, agreements, standards, and procedures that may require an amendment to this franchise. The District agrees to obtain all lawfully required City, state or federal permits, consents, or franchises or other required authorizations in the event the District seeks to provide or to allow others to use its electric transmission and distribution facilities for proposes not authorized by this grant. Section 2 - Definitions. Where used in this franchise (the "franchise") the following terms shall have the following meanings: "District" means the Public Utility District No. I of Clallam County, Washington, and its successors and assigns. "City" means the City of Port Angeles, Washington, and its successors and assigns. "City Manager" means the City Manager of Port Angeles or his/her designee. "Electric transmission and distribution services" includes and is limited to the transmission and distribution of electric power across the District's electric facilities and use of wireless communications facilities to be utilized solely by the District in the operation of its electrical system. The definition of electric transmission and distribution services, by way of example, does not include retail electric services, water or sewer services, placement of telecommunications infrastructure or use of District structures to locate communications facilities. "Fome majeure" shall mean delays due to acts of God, war, civil disturbances, fire, unavoidable casualty, construction delays due to weather, failure of supplier(s), labor dispute, or for other similar causes beyond the control of the District. -2- "Franchise area" means all of the roads, streets, avenues, alleys, highways, and public ways of the City as now, and as may hereafter be, laid out, platted, dedicated, or improved within the present limits of the City and as such limits may be hereafter extended. "Facilities" means substations, poles (with or without cross arms), electric transmission and distribution wires, lines, conduits, cables, braces, guys, anchors, vaults, meters, and all necessary or convenient facilities and appurtenances thereto, whether the same be located overhead or underground. "Ordinance" means this Ordinance No. Xxxx, which sets forth the terms and conditions of this franchise. Section 3 - Franchise Term. The term of this franchise shall commence on February 20, 2001 and shall extend for a period of five (5) years. The District may obtain up to five (5) automatic extensions of the term of this franchise for additional five (5) year periods, not to exceed a maximum term of twenty-five (25) years, if the District is in substantial compliance with the material terms and conditions of this franchise as affirmatively determined by the City Manager and evidenced in the City Manager's written report to the City Council. Section 4 - Right-of-Way Construction, Use, Maintenance and Operation. In furtherance of the public interest in safety, health and public welfare and to facilitate the safe management of public rights-of-way, the maintenance and operation of the District's electric transmission and distribution facilities and property shall be subject to all generally applicable City requirements and ordinances as now or hereafter amended. Nothing in this franchise shall be deemed to impose any duty or obligation upon the City to determine the adequacy or sufficiency of the District's plans and designs or to ascertain whether the District's -3- proposed or actual construction, testing, maintenance, repairs, replacement, or removal is in conformance with the plans and specifications reviewed by the City. The District shall be solely and completely responsible for workplace safety and safe working practices on its job sites within the franchise area, including safety of all pemons and property during the performance of any work therein. The District shall continuously be a member of the State of Washington "One Call" system, or approved equivalent, and shall comply with applicable notification and response requirements.. In consideration of existing agreements and the City allowing the District to use the franchise area for its utility poles, the City shall have the right to maintain existing facilities and attach new City facilities to the District's utility poles as herein described. The City may, at no charge, upon obtaining the District's permission, which cannot be unreasonably denied, attach to District owned utility poles City aerial facilities (not including telecommunications. The City reserves the right to lay and permit to be laid, sewer, gas, water, telecommunications, electric, and other pipe lines or cables and conduits, and do and permit to be done, any underground and overhead work, and any attachment, restructuring, or changes in aerial facilities that may be deemed necessary or proper by the City Manager in, across, along, over, or under any public street, alley, or fight-of-way occupied by the District, within the City limits. The City may apply for a pole contact agreement with the District for attachment of City telecommunications facilities on District utility poles. -4- The District may, at no charge, upon obtaining the City's permission, which cannot be unreasonably denied, attach to City owned utility poles and lay and permit to be laid, electric cables and conduits, and do and permit to be done, any underground and overhead work, and any attachment, restructuring, or changes in aerial facilities that may be deemed necessary or proper by the District in, across, along, over, or under any public street, alley, or right-of-way occupied by the City, within the City limits. The City and the District recognize that joint use of utility poles currently exists and that it is not the intent to require requesting permission of either party for those joint use areas. In the event that, during the term of this franchise, the City authorizes abutting landowners to occupy space under the surface of any public street, alley, or right-of-way, such grant to an abutting landowner shall be subject to the rights herein granted to the District. In the event that the City shall close or abandon any public street, alley, or right-of-way, which contains any portion of the District's electric transmission and distribution facilities, any conveyance of land contained in such closed or abandoned public street, alley, or right-of-way shall be subject to the rights herein granted. The City is required to grant an easement to the District prior to conveyance. During the term of this franchise, the District shall be liable for the acts or omissions of any entity used by the District (including an affiliate), when such entity is involved directly or indirectly in the operation and maintenance of the District's electric transmission and distribution facilities to the same extent as if the acts or omissions of such entity were the acts or omissions of the District. -5- Within ninety (90) days following written notice fi.om the City, or within a longer period if authorized by the City, the District shall, at its own expense, except where District has an underlying easement, temporarily or permanently remove, relocate, change, or alter the position of any of its electric transmission and distribution facilities or other of its facilities that are within the fi.anchise areas, whenever the City shall have determined that such removal, relocation, change, or alteration is reasonably necessary. In the event of removal of all or a portion of its facilities, the District shall restore the franchised property area as nearly as possible to the condition that existed prior to installation of the District's facilities. Such property restoration work shall be done at the District's sole cost and expense and to the City's satisfaction. If the District is required to remove facilities and to restore the premises and fails to do so, the City may, after reasonable notice to the District, remove the facilities, restore the premises, or take such other action as is reasonably necessmy at the District's expense and the City shall not be liable therefore. This remedy shall not be deemed to be exclusive and shall not prevent the City from seeking a.judicial order directing that the facilities be removed. Nothing in this fi-anchise shall authorize the District to attach any part of its electric transmission and distribution facilities to any City property or facilities or to use any City-owned conduits or facilities until the District has obtained all required agreements, permits, and licenses fi.om the City, for such fights of attachment or use. None of the rights granted herein shall restrict the City's ability or jurisdiction over its property, streets, or rights-of-way. Section 5 - Underground Installation of Distribution Facilities. -6- In connection with City improvement of the franchise area, the City may by written notice to the District, request District to underground its existing distribution facilities (of 15,000 volts or less) within the franchise area improved by the City. If the District elects to install new overhead distribution facilities (of 15,000 volts or less) within the franchise area or a new extension of existing overhead distribution facilities within the franchise area, the District shall apply for a City rightqof-way construction permit. The City may by written notice to the District request the District to install such facilities underground within the franchise area. Section 6 - Safety Requirements. The District, in accordance with applicable national, state and local safety requirements, shall at all times employ ordina~ care and shall install and maintain and use commonly accepted methods and devices for preventing failures mad accidents which are likely to cause damage, injury, or nuisance to the public. All structures and all lines, equipment and connections in, over, under and upon the streets, sidewalks, alleys, and public ways or places ora license, master permit, or lease area, wherever situated or located, shall at all times be kept and maintained in a safe, suitable condition, and in good order and repair. Ifa violation of the National Electrical Safety Code or other applicable regulation is found to exist, the City may, after discussion with the District, establish a reasonable time for the District to make necessary repairs. If the repairs are not made within the established time frame, the City may make the repairs itself or have them made and collect all reasonable costs thereof from the District. Section 7 - Annexation. -7- Annexation of unincorporated areas within the City's urban growth area, including City consideration of acquisition of District electric transmission and distribution facilities, shall comply with Chapter 35A. 14 RCW, Annexation by Code Cities, this franchise, and the Electrical Service Area Agreement between the City and the District, which by this reference incorporated as part of this franchise. Section 8 - Compensation to the City. To the extent consistent with federal and state law, the compensation set forth in this Section shall be limited to all special assessments and taxes of whatever nature, including, but not limited to, ad valorem taxes, utility taxes, street cut permits, and assessments for recovery of costs incurred by the City such as those directly related to preparing, receiving, and approving this franchise, reviewing and approving requests to assign or transfer this fi'anchise, construction permits, inspecting plans and construction, and environmental review documents pursuant to Chapter 43.21C RCW. District payment of compensation under this Section shall not in any way limit or impair any of the privileges or regulatory, annexation, condemnation, police powers, or taxing rights of the City, whether under this franchise or otherwise. City acceptance of any compensation shall not_be construed as an accord that the amount paid is the correct amount, nor shall such acceptance be construed as a release of any claim which the City may have for additional stuns payable under the provisions of this Section. RCW 35.21.860 currently prohibits a municipal franchise fee for permission to use the right of way from any person engaged in the" light and power business," as defined in RCW 82.16.010. The City reserves the right to amend this franchise to impose and receive a franchise -8- fee of a percentage, up to the maximum allowed by law, of the District's gross receipts from its business activities in the City, if the statutory prohibition is repealed or for other light and power activities not covered by the statutory prohibition. It is acknowledged that the District has paid an occupation license tax and will continue to do so as required. Section 9 - Accounts, Records and Reports. The City Manager or designee may, at any time, make written inquiries pertaining to the District's performance of the terms and conditions of this franchise. The District shall respond to such inquiries on a timely basis. Upon written request by the City Manager, as soon as reasonably available but no later than thirty (30) days from such request, the District shall provide, at City expense and as allowed by law, the City access or copies of customer addresses within the franchise area and records as to all matters in connection with or affecting the expansion, reconstruction, removal, maintenance, operation, and repair of the District's electric transmission and distribution facilities in the franchise area. The City shall extend the time for provision of such information upon a reasonable showing by the District that such extension is justified. The District shall keep complete and accurate books of accounts and records of its business and operations pursuant to this franchise in accordance with generally accepted accounting principles. Upon the City Manager's thirty (30) day written request, the District shall make available to the City, at City expense and to the extent allowed by law, its books and records to examine, audit, review, and/or obtain copies of the papers, books, accounts, documents, maps, plans, and other records of the District pertaining to all revenue derived by the District from the operation -9- of the electric transmission and distribution facilities to provide electric transmission services in order to verify the accuracy of payments. The District shall fully cooperate in making available its records and otherwise assisting in these activities. The City shall extend the time for the provision of such information upon a reasonable showing by the District that such extension is justified. The City will maintain confidentiality of information provided by the District to the extent permitted by law when the District has notified the City of the confidential nature of the information. Section 10 - Sanctions. If the City has reason to believe that the District is in violation of this franchise, after informal and cooperative efforts have failed, the City Manager shall notify the District in writing of the violation, setting forth the nature of such violation. Within thirty (30) days of receipt of such notice, or such longer period specified by the City Manager, the District shall respond in writing that the violation has been cured, provide a cure plan or schedule that satisfies the City Manager, or provide an explanation in refutation or excuse with documentation to support that an alleged violation did not occur or should be excused. The District shall be allowed thirty (30) days to cure violations after written notice is received from the City, by taking appropriate steps to comply with the terms of this franchise ordinance and any lawful regulations. If the nature of the violation is such that it cannot be fully cured within 30 days due to circumstances not under the District's control, the period of time in which the District must cure the violation shall be extended by the City Manager in writing for such additional time reasonably necessary to complete the cure, provided that (i) the District -10- shall have promptly commenced to cure and (ii) the District is diligently pursuing its efforts to cure in the City Manager's reasonable judgment. If the violation has not been cured within the time allowed above, the District shall be liable for liquidated damages for the following violations and in the following amounts: a) Failure to promptly provide data, documents, reports,, insurance, or information to the City, in accordance with this franchise: two hundred ($200) dollars per day for each day such failure continues; b) Failure to comply with lawful City requirements, including but not limited to: Revenue and Finance, T/tie 3 PAMC; Business Licensing and Regulation, Title 5 PAMC; Streets and Sidewalks, Title 11 PA/ViC; and Public Utilities, Title 13 PAMC, as now or hereafter amended, in accordance with this franchise: two hundred ($200) dollars per day for each day such failure continues. c) Failure to comply with lawful City requirements conceming payment of compensation in accordance with this franchise: two hundred ($200) dollars per day for each day such failure continues. d) Failure to comply with agreements referenced and incorporated into this franchise: two hundred ($200) dollars per day for each day such failure continues. e) Failure to comply with all other lawful City requirements incorporated into this franchise: two hundred ($200) dollars per day for each day such failure continues. The Disffict agrees that each of the foregoing failures shall result in injuries to the City and its citizens, the compensation for which would be difficult to ascertain and to prove. Accordingly, the District agrees that the foregoing amounts are liquidated damages, not a penalty -11- or forfeiture. Notwithstanding any other provision of this franchise, upon the Dislrict's request, the District shall be afforded an opportunity to show that a violation has not occurred, and the City Manager may not act until the administrative heating, as provided for herein, is concluded and a determination has been made on whether a violation has occurred. This opportunity shall consist of an administrative hearing upon thirty (30) days' notice before an impartial hearing examiner jointly designated by the City and the District within thirty (30) days of the District's request. If, as a result of the administrative heating, the heating examiner determines that a violation has not occurred, the City shall pay all of the expenses related to the administrative hearing. Ifa violation has occurred, the District shall pay the expenses. After the conclusion of the administrative heating, either party may seek any remedies which it may have at law. Upon evidence being received by the City that violations of this franchise or any ordinances lawfully regulating the District in the operation and maintenance of its electric transmission and distribution system have occurred, or continue to occur after the thirty (30) day period and any additional time necessary to cure, the City may cause an investigation to be made. If the City finds that such a violation continues to exist or has occurred, then the City may take any action authorized by law, including forfeiture of this franchise and a suit in court to compel compliance. In any such proceeding, the non-prevailing party shall be required to pay the prevailing party's damages and costs (including attorney fees). The District may be allowed, either by the court in the judgment of forfeiture or by order of the City Council, a reasonable time thereafter, as fixed by such judgment or order, to correct the default and pay such expenses, -12- damages, and costs as it may be adjudged to pay, and if the District does so correct and so pay within such time, forfeiture shall not become effective nor be enforced. Failure by the City or the District to enforce any fights under this franchise does not constitute a waiver of such rights. Section 11 - Insurance. The District shall obtain and maintain in full force and effect throughout the term of this franchise insurance with an insurance company licensed to do business in the State of Washington and acceptable to the City Manager. All companies will be required to be rated A- VII or better by A.M. Best or A or better by Standard and Poors or as approved by the City Manager. The District shall provide the City with certificates of the insurance required herein at the time of filing the acceptance of franchise. The City reserves the right to review these insurance requirements during the effective period of the franchise and to reasonably adjust insurance coverage and limits when deemed necessary and prudent by the City Manager based upon the recommendation of the Washington Cities Insurance Authority or changes in statutes, court decisions, or the claims history of the industry or the District. Subject to the District's right to maintain reasonable deductibles in such amounts as are approved by the City Manager, the Disthct shall obtain and maintain in full force and effect for the duration of this franchise, at the District's sole expense, insurance coverage in the following type and minimum amounts: a) Comprehensive general liability insurance with limits not less than: 1. One million dollars ($1,000,000.00) for bodily injury or death to each person; -13- 2. One million dollars ($1,000,000.00) for property damage resulting fi-om any one (1) accident; 3. One million dollars ($1,000,000.00) for all other types of liability; b) Automobile liability for owned, non-owned, and hired vehicles with a limit of one million dollars ($I,000,000.00) for each person and one million dollars ($1,000,000.00) for each accident; The liability insurance policies required by this section shall be maintained by the District throughout the term of the franchise and such other period of time during which the District is operating without a franchise hereunder or is engaged in the removal of its facilities~ Each such insurance policy shall contain the following endorsement: "It is hereby understood and agreed that this policy may not be canceled nor the intention not to renew be stated until ninety (90) days after receipt by the City, by registered mail, of a written notice addressed to the City Manager of such intent to cancel or not to renew." Within sixty (60) days after receipt by the City of said notice, and in no event later than thirty (30) days prior to said cancellation or intent not to renew, the District shall obtain and furnish to the City replacement insurance policies meeting the requirements of this section. The District agrees that with respect to the above-required insurance, all insurance certificates will contain the following required provisions: a) Name the City of Port Angeles and its officers, employees, board members, and elected representatives as additional insured parties as to all applicable coverage (except worker's compensation); - 14- b) Provide for ninety (90) days notice to the City for cancellation, non-renewal, or material change; c) Provide for notice to the City Manager, by certified mail at: City of Port Angeles P.O. Box 1150 Port Angeles, WA 98362-0217 The policy clause "other insurance" shall not apply to the City of Port Angeles. It is the intention that insurance policies protecting the District and the City shall be primary coverage for all losses covered by the policies. Companies issuing the insurance policies shall have no recourse against the City of Port Angeles for payment of any premiums or assessments which all are set at the sole risk of the District. Insurance policies obtained by the District shall provide that the issuing company waives all right of recovery by way of subrogation against the City in connection with any damage covered by these policies. Section 12 - Indemnity. The District shall defend, indemnify, and hold the City harmless from and against all damages, costs, losses, or expenses for the repair, replacement, or restoration of the City's property, equipment, materials, structures, and facilities, which are damaged, destroyed, or found to be defective as a sole result of the District's negligence, willful misconduct, or strict liability. The District, for itself and its agents, employees, subcontractors, and the agents and employees of said subcontractors, shall defend, indemnify, and hold the City, its successors, assigns, officers, employees and elected officials harmless from and against any and all claims, demands, suits, causes of action, and judgments for: (i) damage to or loss of the property of any -15- person (including, but not limited to the District, its agents, officers, employees and subcontractors and the City, its agents, officers and employees, and third parties); and/or (ii) death, bodily injury, illness, disease, worker's compensation, loss of services, or loss of income or wages to any person (including but not limited to the agents, officers and employees of the District, the District's subcontractors, the City, and third parties), arising out of, incident to, concerning, or resulting solely from the negligence, willful misconduct or strict liability of the District, its agents, employees, and/or subcontractors, in the performance of all activities and servicos pursuant to this franchise, no matter how, or to whom, such loss may occur. The City shall defend, indemnify, and hold the District harmless from and against all damages, costs, losses, or expenses for the repair, replacement, or restoration of the District's property, equipment, materials, structures, and facilities, which are damaged, destroyed, or found to be defective as a sole result of the City's negligence, willful misconduct, or strict liability. The City, for itself and its agents, employees, subcontractors, and the agents and employees of said subcontractors, shall defend, indemnify, and hold the District, its successors, assigns, officers, employees and elected officials harmless from and against any and all claims, demands, suits, causes of action, and judgments for: (i) damage to or loss of the property of any person (including, but not limited to the City, its agents, officers, employees and subcontractors and the District, its agents, officers and employees, and third parties); and/or (ii) death, bodily injury, illness, disease, worker's compensation, loss of services, or loss of income or wages to any person (including but not limited to the agents, officers and employees of the City, the City's subcontractors, the District, and third parties), arising out of, incident to, concerning, or resulting solely from the negligence, willful misconduct or strict liability of the City, its agents, - 16- employees, and/or subcontractors, in the performance of all activities and services pursuant to this franchise, no matter how, or to whom, such loss may occur. In the event that any such damage, claim or loss is found by a court of competent jurisdiction to be caused by the concurrent fault of both the District and the City, then each party shall indemnify the other to the full proportionate extent that each party is determined to be at fault. It is the intention of the parties, and they expressly agrees, that the provisions of this section shall not exclude claims, damages, and losses caused in part, but not wholly, by the negligence ora party, even if said party is more negligent than the other. Should a court of competent jurisdiction determine that this franchise is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the District and the City, its officers, officials, employees, and volunteers, the parties' liability hereunder shall only be to the extent of each party's negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the parties' waiver of immunity under Title 51 RCW, Industrial Insurance, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the part/es. The provisions of this waiver shall survive the expiration of this franchise. The parties shall give each other prompt written notice of any claims or suits. Each party shall have the right to investigate, defend, and compromise such claims or suits to the extent of its own interests. The City shall give the District complete and total access to any and all records pertaining to said claim or suit. Section 13 - Notices. -17- All notices from the District to the City pursuant to this franchise shall be directed to the City Manager at P.O. Box 1150, Port Angeles, Washington 98362-0217 or to such person as designated by the City Manager. All notices from the City to the District pursuant to this franchise shall be directed to the General Manager at P.O. Box 1090, Port Angeles, Washington 98362, or to such person as designated by the General Manager. The District shall maintain within the Clallarn County area throughout the term of this franchise an address for service of notices by mail. The District shall also maintain within the Clallam County area a local telephone number operational during normal business hours for the conduct of matters related to this franchise. Any change in address or telephone number shall be furnished to the City ten (10) days prior to the change. Any change to City ordinances that effect the District's compliance with this franchise shall be furnished to the District upon request. Section 14- Forfeiture and Termination. In addition to all other fights and powers retained by the City under this franchise or otherwise, the City reserves the right to forfeit and terminate this franchise and all rights and privileges of the District hereunder in the event of a material breach of its terms and conditions, subject to reasonable notice and opportunity to cure. A material breach shall not be deemed to have occurred if the violation occurs without the fault of the District or occurs as a result of circumstances beyond its control; provided however, that the District shall not be excused from performance of any of its obligations under this franchise by economic hardship or misfeasance or malfeasance of its directors, officers, employees, subcontractors, or agents. A termination shall be declared only by a written decision of the City Council, by ordinance, resolution or motion, after an appropriate public proceeding which shall accord the District due process and full opportunity to be heard and to respond to any notice of grounds to terminate. The City shall provide the District at least fifteen (15) days prior written notice of any public proceeding concerning the proposed termination of this franchise. Such notice shall state the grounds for termination alleged by City. The City Council, after the public proceeding, and upon finding the existence of grounds to terminate, may either declare this franchise terminated or excuse such grounds upon a showing by the District of mitigating circumstances or good cause for the existence of such grounds. Neither the District's acceptance of this franchise, the District's appearance before the City Council at any public proceeding concerning the proposed termination of this franchise, nor any action taken by the City Council as a result of any such public proceeding, including a declaration of termination or a finding of grounds to terminate, shall be construed to waive or otherwise affect the District's right to seek dispute resolution of the rights and responsibilities of the parties under this franchise. Section 15 - Governing Law. This franchise is subject to the provisions of the Constitutions and laws of the United States of America and the State of Washington and the municipal code and ordinances of the City of Port Angeles. Section 16 - Force Majeure. The time within which the District shall be required to perform any act under the franchise shall be extended by a period of time equal to the number of days performance is delayed due to a -19- force majeure. The District shall not be subject to any penalty hereunder because of acts or failure to act due to force majeure. Section 17 - Severability. Except as provided below, if any section, subsection, sentence, clause, phrase, term, provision, condition, covenant or portion of this franchise is for any reason held invalid or unenforceable by any court of competent jurisdiction, or superseded by state or federal legislation, rules, regulations or decision, the remainder of this franchise shall not be affected thereby but shall be deemed as a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions hereof, and each remaining section, subsection sentence, clause, phrase, provision, condition, covenant and portion of this franchise shall be valid and enfomeable to the fullest extent permitted by law. If any material provision of this franchise is for any reason held invalid or unenforceable by any court of competent jurisdiction, or superseded by state or federal law, rules, regulations or decision so that the intent of these provisions is frustrated, the parties agree to immediately negotiate a replacement provision to fulfill the purpose and intent of the superseded provisions consistent with applicable law. Section 18 - Acceptance of Franchise. The District shall, on or before May 17th, 2001, file in the office of the City Clerk a written instrument accepting this franchise and all terms and conditions thereof, signed and acknowledged by its proper officers in a form acceptable to the City, certificates of insurance, and a complete set of current drawings or in a computer readable electronic format if available, of the District's facilities within the City, including identification of transmission and - 20 - distribution facilities within the City. All of said documents shall be in compliance with the requirements of this franchise ordinance. Section 19 - General Provisions. The 6/5/2000 Maintenance And Operating Agreement For Electric Transmission Lines 1 & 2 agreement in effect prior to acceptance of this franchise is attached hereto and is hereby incorporated into this franchise. Termination of any agreements incorporated into this franchise by said reference may require an amendment to this franchise, as determined by the City in its sole discretion. The City and the District agree to negotiate in good faith any additional agreements that may reasonably be required to implement the terms and conditions of this Agreement. Each party shall use reasonable best efforts to take all actions necessary or appropriate to enable it to carry out/ts obligations under this franchise. If any suit or other action is instituted in connection with any controversy arising under this franchise, the prevailing party shall be entitled to recover all of its costs and expenses including such sum as the court may judge reasonable for attorney's fees, including fees upon appeal of any judgment or ruling. Any remedies provided for under the terms of this franchise are not intended to be exclusive but shall be cumulative with all other remedies available to the City at law, in equity, or by statute. Section 20 - Assignment of Franchise. Neither this franchise, nor a substantial portion of the electric transmission and distribution facilities held by the District for use under this franchise which are in the franchise -21 - area, nor any rights or privileges of the District under this franchise, either separately or collectively, shall be sold, resold, assigned, transferred or conveyed by the District to any other person, firm, affiliate or entity, without the prior written consent of the City. Such approval shall not be unreasonably withheld. Should the District sell, assign, transfer, convey, or otherwise dispose of any of its fights or interests under this franchise, including the District's electric transmission and distribution facilities or capacity on its electric transmission and distribution facilities, or attempt to do so, without the City's prior consent, the City may revoke this franchise for default, in which event all rights and interest of the District shall cease. Any transfer in violation of this section shall be null and void and unenforceable. The District agrees to promptly pay to the City a sum of money sufficient to reimburse it for all reasonable expenses incurred by the City in review of such an assignment or transfer as provided for in this section, unless said assignment or transfer is to the City. Section 21 - Repealer. The electric transmission franchise Ordinance No. 1200, approved by City Council on 11/28/1948, which expired on 11/28/1998, is hereby formally repealed. Section 22 - Effective Date. This franchise shall take effect five days after publication, subject to acceptance by the District in accordance with the provisions of this franchise. PASSED by the City Council of the City of Port Angeles at a regular meeting of said Council held on the 17th day of April, 2001. MAYOR ATTEST: - 22 - Becky J. Upton, City Clerk APPROVED AS TO FORM: Craig D. Knutson, City Attorney PUBLISHED: By Summary C :~Larry~PUDFRAN7.DOC. - 23 - WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 To: UTILITY ADVISORY COMMITTEE AND P.A. WORKS COMMITTEE FROM: Larry Dunbar, Power Resources Manager SUBJECT: Fiber Optic Backbone Business Plan Authorization to Proceed ummary: On April 30, 2001, Mr. Richard Li and Dr. Paul Carlson of Metropolitan Communications Consultants (MCC) presented the draft business plan at a special meeting of the Utility Advisory Committee and P.A. Works! Committee with no action requested. Consultin, g services proposals have been received for implementation of the business plan s ~commendations. ',ecommendation: Recommend to City Council that the business plan be approved, the iber optic backbone design engineering services agreement with MCC be rescinded, and the Mayor be authorized to accept the consulting services proposals with Metropolitan Communications Consultants and Dow, Cogburn and Friedman. Background/Analysis: On October 17, 2000, the City Council approved a professional services agreement with MCC including legal services from the firm of Dow, Cogbum and Friedman (DCF) to implement the Community Telecommunications Action Plan. On February 6, 2001, Council approved an agreement in the amount of $166,882 with MCC for fiber optic backbone design engineering services and withheld notice to proceed until business planning verified overall feasibility. Based on the business plan's recommendations and strategic direction, Staffrecommends the fiber optic backbone design engineering agreement be cancelled. On April 30, 2001, the business plan was presented at a special meeting of the Utility Advisory Committee and P.A. Works! Committee with no action requested. A total of four infrastructure development alternatives were presented including: City developed and owned, City/Cable provider partnership, City/Telephone provider partnership, and City/Cable/Telephone consortium. The business plan confirmed the overall feasibility of each alternative described above and recommended a strategic direction for the City to follow as it pursues development of a broadband telecommunications infrastructure. The business plan recommends the City's role should be an infrastructure enabler versus a telecommunications services provider. A copy of the final business plan is attached. In order to proceed with implementation of the business plan, consulting services proposals were obtained to assist the City on a Pilot Project, negotiation of a City/Cable provider partnership, and development of a City/Cable/Telephone consortium. The City Attorney has not reviewed the consultants' proposals. A copy of the consulting services proposals is attached. May 7, 2001 Utility Advisory Committee and P.A. Works Committee Memo Page 2 The business plan's recommendations and strategic direction support the proposed mission "To ensure delivery of broadband telecommunications products and services to Port Angeles by 2002, by enabling the development of necessary telecommunications infrastructure." Although the business plan confirmed the overall feasibility ora City owned and operated fiber optic backbone, it should only be pursued if furore infrastructure development partnership efforts are unsuccessful. A summary of the business plan's infrastructure development recommendations and strategic direct/on is provided below. Business Plan Infrastructure Development Scenario' Strategic Direction 1. City Development Delayuntil outcome of Scenarios 2-4 2. City/Cable provider partnership Proceed with negotiations 3. City/Telephone Partnership Proceed with consortium planning 4. City/Cable/Telephone consortium Below is a summary of the consulting services scope of work required to proceed with implementation of the business plan's strategic direction. Strategic Direction Scope of work summary City Pilot Project Project definition and design consulting services for a fiber optic infrastructure pilot project. During the project definition stage, goals, and participating customers and service providers would be determined. The cost of the proposed scope of work is $35,000 (lump sum) and the construction and equipment costs are estimated at $350,000. If the project definition and design consulting services are approved, Staff would return to the Utility Advisory Committee requesting their recommendation for bid award of the pilot project. City/Cable provider Proceed with technical and legal consulting services to negotiate an partnership upgrade to the Cable Operator's infrastructure as part of the franchise renewal. Prior to negotiations, MCC would prepare the infrastructure partnership, network, cost, and schedule requirements. Outside legal services proposed would be provided to assist the City Attorney with franchise renewal issues as they may ar/se under Federal Law. The proposed technical and legal consulting services total $25,000 and $10,000 respectively (time and expense). The cost of consulting services will depend on how well negotiations proceed. City/Telephone Proceed with technical services in support of consortium partner Partnership, and development. The proposed technical consulting services total $20,000 City/Cable/Telephone (time and expense). Additional technical and legal services may be consortium necessary for planning, solicitation, and consortium building. METROPOLITAN COMMUNICATIONS _ CONSULTANTS Seattle: 5847 McKinley PI. N,, Seattle, Washington 98103 Tel: 206.522.6778 Fax: 206.522.6777 Tacoma: 1201 PaciflcAvenue,$uite170Z, Tacoma, Washington 98402 Tel: 253.272.1636 Fax: 253.272.1482 ww~v.mcco.com May 3, 2001 Mr. Larry Dunbar Power Resources Manager The City of Port Angeles 321 East Fifth Street Port Angeles, WA 98362-0217 Re: Broadband Infrastructure Development Dear Larry: In response to your request, we are submitting our proposal detailed in Exhibit A, covering consulting services for development of broadband infrastructure based on the findings and recommendations of the Business Analyses. The proposal may be authorized in part or in whole, with the appropriate signature below, or by other City procedure as required. Thank you for your consideration, we look forward to being of service. Very truly yours, METROPOLITAN COMMUNICATIONS CONSULTANTS, LLC Richard C. T. Li, P.E. President Acknowledge and Accepted by the City of Port Angeles by_ date EXHIBIT A - SCOPE OF WORK page 2 RECOMMENDED STRATEGIC DIRECTION AND WORK SEQUENCE MCC recommends the strategic direction and sequence of work outlined in the schematic below. The green shaded tasks are covered by the City's existing authorization, issued October 17, 2001. The pink shaded tasks are the items covered by the current request for authorization. Bucommeaded Strategic DlfecUoa CATV Francklse CATV Franchise Reaewll Sceaado Z Neget{atlons Public Proceeding Future Needs & Cable Operator Interests Report Proposal Oty in~orma~Formal Negotiations Dr~ Negotiations Needs & Inte~sts Request for Broadband Capability Adoption of Proposal Reasonabl, No Stop Ot~er Negotiitloas Other Scemario (3 ami 4) Negotiatioms Pilot Definition Development Solicitation Building Design Specs Consortium Consor:ium CoBsoltilm Proposals Agreements Pilot Design Design Revi~ Planid#g Structure and Evaluate Responses Negotiations Build Pilot Organization Test Pilot Determine Strategic Execute ,~rcemeets Policy and Relationships Integrate Pilot Planning Begin Consortium Into Network Functional Operations Recommend Partners Operations City Developaent (Scenario 1) Port Angeles Telecommuaicatioas Network Implementatioa Metropolitan Communications Consultants Confidential and Proprietary Exhibit A- Scope of Work page PRIOR AUTHORIZATION (10/17/00) Task I - Cable Franchise Renewal Proceedings A. Public Proceedings B. Ascertainment Report and Draft Ordinance CURRENT AUTHORIZATION REQUEST Task II - Scenario 2 Negotiations A. Franchise Ordinance Negotiations 1. Partnership Requirements 2. Network Requirements 3. Cost Requirements 4. Schedule Requirements 5. Prepare Final Ordinance B. Franchise Ordinance Adoption I. Assistance during Franchise Ordinance Adoption Process Task III - Other Scenario Negotiations A. Continuing development work with service providers and other applicable parties through Task II B. Task IV - Pilot Project A. Pilot Project Definition and Design. 1. Demonstration Goals 2. Users, Providers and Services 3. Fiber Design & Bid Documents 4. Equipment Design & Purchase Documents 5. Pre-Bid Cost Estimate 6. City Financing Advisory Sen, ices FUTURE WORK (NOT IN THIS AUTHORIZATION) Task IV - Pilot Project (estimated Total Project Cost $350,000) B. Pilot Project Bid Solicitation and Awards C. Fiber Construction and Equipment Installation. Task V - Consortium Planning Task VI - Consortium Partner Solicitation Task VII - Consortium Building Task VIII - Network Implementation RUDG[I E~'IMATES The work covered by this proposal is estimated to require the time and expense budgets shown below. Item Description Fee Basis Proposed Budget Task II Scenario 2 Negotiations Time and Expense $25,000 Task III Other Scenario Negotiations Time and Expense $20,000 Task WA Pilot Project Definition and Design Lump Sum $35,000 Total, Estimated Budget Required, all tasks $80,000 Metropolitan Communications Consultants Confidential and Proprietary Exhibit A- Scope of Work page 4 ADDITIONAL WORK, STANDARD HOURLY RATES AND EXPENSES Additional work requested, outside the scope of work of this proposal, may be done on a negotiated lump sum basis or at the standard rates listed below. Description Technician Engineer/Analyst Principal Labor charge/hour $40 to $70 $80 to $170 $195 Direct project expenses reimbursed at actual cost plus 10% based on receipts presented WORK SCHEDULE The schedule is shown on the following Gantt charts. Metropolitan Communications Consultants Confidential and Proprietar~ DOW, COGBURN & FRIEDMAN, P.C. Attorneys at Law Arboretum Great Hills Center 9600 Great Hills Trail, Suite 150W Austin, Texas 78759 Direct Dial:(512) 637-1360 Fax:(512) 637-1361 www. dcf. com Clarence A. West, Shareholder Email: cawest~.dcf, com May 3, 2001 Mr. Larry Dunbar Power Resources Manager City of Port Angeles 321 East 5th Avenue Port Angeles, Washington 98362 RE: Engagement Letter between City of Port Angeles, Washington, and Clarence A. West of Dow, Cogburn & Friedman, P.C., concerning cable renewal with Port Angeles, Washington and related issues Dear Mr. Dunbar: This letter sets forth the agreement between the City of Port Angeles, Washington ("the City") and Clarence A. West, Dow, Cogbum & Friedman, P.C. ("Attorney"), in his representation with respect to briefing of city officials on the above referenced matters. Our agreement is as follows: The professional services to be performed by the Attorney consist of the following: 1. Cable Television Franchise Renewal Issues. Upon request of the City Attorney, Attorney will review and assist on cable franchise renewal issues as they may arise under Federal Law. -1- 2. As compensation for the services to be provided by the Attorney under this agreement, the Client will pay the Attorney the following: (1) Client agrees they will compensate Attorney and Attorney's firm at the maximum hourly rate of $260/hour (discounted from the standard hourly rate of $310), based upon detailed monthly billings showing hours and services provided. (2) Client further agrees that it will reimburse reasonable out-of- pocket expenses incurred by Attorney, including, but not limited to copies, long distance telephone charges, travel cost, including airfare, lodging and meals, and other related expenses. (3) The fees shall not exceed the sum of $10,000.00, without express written authorization from the City. If the foregoing accurately sets forth our agreement, please sign this letter in the space below and return a signed copy of this letter to me, and retain the other copy. I look forward to a productive engagement with the City. Sincerely, DOW, COGBURN & FRIEDMAN, P.C. Clarence A. West cCC ACCEPTED AND AGREED TO: CITY OF PORT ANGELES, WASHINGTON By: Name: Title: Date: 111360\0002\LTRDUN01 .wpd -2- Recent Papers~ Publications and Presentations · "Pending H.B. 1777 Right-of-Way and Compensation Implementation Issues before the Texas Public Utility Commission" - Presentation to the National Association of Telecommunications Officers and Administrators Regional Conference (NATOA), May 9, 2001 in San Antonio, Texas. · "Pdnce George's County Franchise Fee Case Vacated and Remanded by the Fourth Circuit on State Law Issues" - Presentation to the International Municipal Lawyers Association, May 19, 2000 at Washington, D.C. · "Municipal Authority to Manage the Public Rights-of-Way and House Bill 1777" - Presentation to North Texas City Managers Association, March 31, 2000 at the Sherrill Park Country Club, Richardson, Texas. · State Court Limits City's Franchise Fees to Costs of Maintaining Rights-of-Way, "Chattanooga Franchise Fee Case - It's A Local Train," Article in The Official Newsletter of the Municipal Contracts, Franchises and Technology Section, (Vol. 4, No. 1, Feb., 2000) for the International Municipal Lawyers Association. · "South Carolina Supreme Court Upholds Percentage Franchise Fee," Article in The Official Newsletter of the Municipal Contracts, Franchises and Technology Section, (Vol. 3, No. 5, Dec. 1999) for the International Municipal Lawyers Association. · "Telecommunication Franchising and House Bill 1777 Workshop," October 11, 1999, Workshop by Texas Municipal League, presentation on Special Issues to Cities, Dallas, Texas. · Local Telecommunications Infrastructure Options, Law Seminar International. Co-Chair and Presentation "Local Franchise Issues: Effective Negotiating Techniques: Municipal Perspective," Dallas, Texas, June 11, 1999. · "Federal District Court Holds That Franchise Fees Must be Based Upon Cost," Article on Pdnce George's County case for the Contracts, Franchises and Technology Section of the IMLA Newsletter (Vol. 3, No. 3, June, 1999). · Recent Telecommunications Case Law and Pending Cases, 1998 Telecom Litigation in Texas and Selected Cases Outside the State, presentation to the Texas Coalition of Cities on Franchised Utilities Issues ("TCCFUI") Conference in January, 1999, in Austin, Texas. · "Fair and Reasonable Compensation... For Use of the Public Rights-of-Way" - What Does it Mean? presentation to the National Association of Telecommunication Officers and Advisors (NATOA), Annual Conference, San Diego, California (September 11, 1998). · "'Resellers' and 'Rebundlers' of Telecommunications Services in Texas do not Need City Consent," Vol. 3, July 1998, Contracts, Franchises and Technology Newsletter (IMLA Section Newsletter). · "A Discussion of Franchising, Franchise Fees and Telecommunications Service Providers in Texas," presented to the Legislative Committee on Municipal Franchise Agreements for Telecommunications Utilities on behalf of the Texas Coalition of Cities on Franchised Utilities Issues (TCCFUI), Houston, Texas (March 19, 1998). · "Preserving Your Rights-of-Way and S.B. 1937" - Presentation at 1997 Texas Municipal League Conference, Fort Worth, Texas (October 31, 1997). · "Municipal Telecommunications Issues" - Presentation before Texas City Attorney Association Section Meeting at 1997 Texas Municipal League, Fort Worth, Texas (October 30, 1997). · "Current Municipal Telecommunications Issues" Presentation at 1997 Texas Association of Telecommunications Officers and Advisors Conference, San Antonio (August 11, 1997). · "Local Government Impact of Recent Federal and State Telecommunications Laws" Presentation to Government Lawyer Section of State Bar (June 27, 1997). · "The SPCOA's Are Coming - The SPCOA's Are Coming and Are They Trying to Devaluate Your Right-of-Way by 21.6%? (Don't Believe All Those Rumors About FCC/State Pre-Emption)," article in the Texas City Attorney's Association Newsletter (Spring 1997). · "The Houston Lawyer", Vol. 34, No. 2, Sept./Oct. 1996, Book Review on Federal Broadband Law and The Telecommunications Act of 1996: Special Report (Huber, Kellogg and Thorne). · "Knock, Knock, Let Me In -- An Overview of the Legal Issues Surrounding Building Access for Telecommunication Service Providers", presentation to law firm of Dow, Cogburn & Friedman (1996). · "Assessing the Impact on Local Governments of the Telecommunications Act of 1996", Panel Moderator, 1996 International Municipal Lawyers Association, Little Rock, Arkansas. · Presentation on "Wireless Communications and its Impact on Local Governments" presented at the 1996 Wireless Communications Technology Conference sponsored by the Washington Council of Governments, Washington, D.C., 1996. · Presentation on "Cable and (TELCOM) Franchising After the Federal Telecommunications Act of 1996 and the Amended Texas Public Utility Regulatory Act of 1995" at the 1996 Texas Association of Telecommunications Officers and Advisors Conference (TATOA); 1996, Austin, Texas. · "The Information Highway Must Pay Its Way Through Cities: A Discussion of the Authority of State and Local Governments to be Compensated for the Use of Public Rights-of-Ways", 95 Michigan Telecommunications and Technology Law Review 2 (1995) (on the internet at http://www.umich.edul~mttlNolOne/westJwest.html). · "Franchising and Contracting Issues for Local Governments," Panel Moderator, 1995 Annual Conference National Institute of Municipal Law Officers ("NIMLO"), Chicago, Illinois. · "Primer on Emerging Telecommunication Service and Issues", presentation to Telecommunication and Information Task Force of Public Technology, Inc. ("PTI"), Houston, Texas (1995). · "Telecommunication Legislation and Federal Regulation Update", presented to Public Technology, Inc. ("PTI") Annual Conference, San Diego, California (1995). · "State and Federal Telecommunication Legislation and Federal Regulation Update", presented to the Texas State Municipal League Institute, Dallas Texas (1995). · "The National Information Super Highway Must Pay Its Way Through Cities", in NATOA News Quarterly (Summer 1994, Vol. 2, No. 4). · "Uncompensated Appropriation of State and Local Rights-of-Way for Telecommunication Service Providers," 35 Municipal Attorney 100 (1994). · "Telecommunications and the Law," published in "Local Government Roles and the Choices on the Information Superhighway-Tenants or Architects of the Telecommunications Future?" published by PTI, 1994. · "Local Franchising Requirements (and Obligations) in Providing 'Video Dialtone' Service", 35 Municipal Attomey 158 (1994). · "Local Regulatory Role of Cities Over 'Nontraditional' Cable Television Systems (or What You Can Do With Those Other Guys -- HSD, DBS, SMA-IV, MDS and Telephone and Cable Television and other Telecommunication Service Providers)", presentation to 1994 NATOA Annual Conference, Reno, Nevada. · "The Cable and Telecommunication Revolution", Panel Moderator, 1994 Mid-Year Seminar of the National Institute of Municipal Law Officers (NIMLO), Washington, D.C. · "Practical Aspects in the Pursuit of Franchise Fee Claims - Vigilance has its Rewards," presentation to the 1992 Annual Conference of the National Institute of Municipal Law Officers (NIMLO, now IMLA), Edmonton, Alberta, Canada. C:\Documents and Settings~caw. DCF-WKS0209,4y Documents\CWpapers2.wpd~DATE \@ RESUME OF CLARENCE A. WEST Areas of Practice Mr. West has had a primary focus on telecommunication and cable television law for over a decade. Representation has included municipal franchising authorities and private commercial (office and multi-family) property owners on the use of public and private property for telecommunication and cable television purposes and on matters including franchise fee compliance issues, negotiations of cable television, telecommunications and right-of-way use agreements pursuant to state and federal law. Representative Experience and Clients 1992 - Present: Law firm of Dow, Cogburn & Friedman, Of Counsel 1988 - 1991: City Attorney, City of Houston Mr. West represents municipal franchising authorities throughout the nation on telecommunication issues. Since 1992, he has represented cities on right-of-way franchise issues. Representative city clients include: Addison, Arlington, Austin, Baytown, Bedford, Carrollton, Cedar Park, Dallas, Farmers Branch, Fort Worth, Grapevine, League City, Palestine, Pasadena, Richardson, Texas City, Tyler, Westlake, West University Place and Wharton, Texas; Auburn, New York; Memphis, Tennessee; Mercer Island, Richland, Ellensburg and Walla Walla Washington; Takoma Park, Maryland and Prince George's County, Maryland. Professional Membership and Associations American Bar Association, Section on Public Law; International Municipal Lawyers Association, Immediate Past Section Chair on Municipal Contracts, Franchises and Utilities (1993 to 1997); Houston Bar Association; Texas City Attorneys' Association. R:'~CAW0 I~R ES UME~$ HOR T.CAV¢~0503011356 The Port Angeles Telecommunications Network Business Planning Analyses May 1, 2001 Prepared for City of Port ^ngeles P.O. Box 1150 321 East Fifth Street Port Angeles, WA 98362-0217 METROPOLITAN COMMUNICATIONS CONSULTANTS Seatlle: 5847 McKirfley PI N., Seatile, Washington 98103 Tel: 2065226778 Fax: 206522.6777 Tacoma: 1201 Pacific Avenue, Suite 1702, Tacoma, Washington 9[~402 Tel: 253.272.1636 Fax: 253.2721482 www.mcco.com THE CITY OF PORT ANGELES 321 East Fifth Street, Port Angeles, WA 98362-0217 CITY COUNCIL Larry Doyle, Mayor Cathleen McKeown, Deputy Mayor Orville Campbell Lauren Erickson Jim Hulett Glenn Wiggins Larry Williams Michael Quinn, City Manager PROJECT TEAM Glen Cutler, Director, Public Works and Utilities Scott McLain, Deputy Director of Power Systems Timothy Smith, Economic Development Director Tanya O'Neill, Information Technology Manager Project Manager Larry Dunbar, Power Resources Manager Project Consultant Metropolitan Communications Consultants, LLC Seattle and Tacoma, Wash]ngton PA TELECOM THE PORT ANGELES TELECOMMUNICATIONS NETWORK BUSINESS PLANNING ANALYSES May 1, 2001 Table of Contents Executive Summary ................................................................................................................... s-1 A. Introduction Background ........................................................................................................................... 1 Authorization ........................................................................................................................ Related Activity .................................................................................................................... 2 Mission and Goals ................................................................................................................ 4 Competitive Environment ................................................................................................. 4 B. Project Definition Telecommunications Products and Services Value Chain .............................................. 6 Surveys and Interviews ....................................................................................................... 8 Infrastructure Development Alternatives ..................................................................... 10 Business Proposition .......................................................................................................... 12 Value Proposition ............................................................................................................... 12 C. Project Analyses Criteria and Assumptions ................................................................................................. 13 Projects Analyzed ............................................................................................................... 13 Infrastructure General Plan ............................................................................................... 13 Users and Growth ............................................................................................................... 14 Project Cost Estimates ........................................................................................................ 21 Revenue Estimates ............................................................................................................ 22 Feasibility Analyses ............................................................................................................ 24 D. Findings and Discussion Analysis Findings ............................................................................................................... 26 Discussion ............................................................................................................................ 27 E. Recommendations Recommendations .............................................................................................................. 31 METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 List of Tables and Figures Tables 1. Service Providers and Users Contacted ..................................................................... 9 2. Basis of User Projections ............................................................................................. 14 3. City Network Projected User Growth ...................................................................... 17 4. City/Cable Network, Projected User Growth ......................................................... 18 5. City/Telco Network, Projected User Growth ......................................................... 19 6. City/Cable/Telephone Network, Projected UserGrowth .................................... 20 7. Summary of Annual Costs for Alternative Project Scenarios ............................... 21 8. Summary of Annual Revenues for Alternative Project Scenarios ........................ 22 9. Summary of Project Feasibility .................................................................................. 25 10. PA Telecom Consortium Operations Framework .................................................. 29 Figures 1. Telecommunications Value Chain ............................................................................ 7 2. Backbone Concept Plan .............................................................................................. 15 3. Ring, Distribution and Fiber Connection Schematic .............................................. 16 4. Recommended Strategic Direction ............................................................................ 28 METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 Executive Summary page s-1 SUMMARY OF FINDINGS City Mission, Goals and Commitment to Enable Broadband Telecommunications · Facing a decline in core natural resource industries such as fishing and logging, the City of Port Angeles has recognized that broadband telecommunications can play a ro!e in stimulating and sustaining community and economic development. · The City of Port Angeles has established an economic development goal that includes evaluation of the cost, benefits, and feasibility of enabling broadband telecommunications in the city. · The City of Port Angeles has therefore undertaken a vigorous telecommunications initiative, the proposed mission of which is: To ensure delivery of broadband telecommunications products and services to Port Angeles in 2002, by enabling the development of the necessary telecommunications infrastructure. · The City's commitment to enable broadband telecommunications is tied to a Community Telecommunications Action Plan and schedule approved by Council on October 17, 2000. Existing Hindrances to Broadband Telecommunications in Port Angeles · The cal~ital expenditures necessary to develop telecommunications infrastructure are the greatest limiting factor hindering providers from deploying broadband telecommunications in Port Angeles. · The cost of last-mile connections to each individual home and business is the largest expense in the deployment of broadband telecommunications infrastructure. Development Options for Enabling Broadband Telecommunications · Four infrastructure development scenarios, the original Power Engineers City Backbone project and three additional consortium scenarios, have been investigated for consideration by the City: Original City Backbone Project Scenario 1: City developed and owned project Additional Consortium Projects Scenario 2: City/Cable provider partnership - Scenario 3: City/Telephone provider partnership Scenario 4: City/Cable/Telephone consortium · Since the primary measure of economic development success is the number of ultimate end-users that can be most quickly benefited, partnering with owners of existing infrastructure to reach the greatest number of Port Angeles residents and businesses is the best means of achieving economic development success. Financial Analyses and Findings · The financial analyses of the options show that all four scenarios are feasible. · All three consortium projects (Scenarios 2-4) however, are superior to the original City stand-alone project (Scenario 1) in meeting the City's economic development goals, as well as providing cost savings, greater returns and mitigation of risk. Conclusions The findings indicate that any of the consortium projects will meet the City's goals, be superior and easier to implement than a standalone City developed and owned infrastructure project. The findings also indicate the City has a good existing opportunity to develop broadband infrastructure through the current cable franchising renewal. At the minimum, the opportunity can yield a limited non- commercial institutional network. A City developed network, although feasible, is therefore the last choice that the City should consider. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 Executive Summary page s-2 SUMMARY OF RECOMMENDATIONS Policy and Strategic Direction · The City should proceed with a telecommunications network consortium project. · The City of Port Angeles should take a strong, pro-active leadership role in developing and managing the consortium. · The infrastructure project should plan to connect the majority of end users through private partner last-mile infrastructure but concurrently offer the option of direct fiber drops to larger customers needing more bandwidth and willing to pay for the required fiber drop. · The City should stimulate the demand for direct fiber drops by providing incentives such as a low cost financing program to cover the incremental difference between the copper and fiber drops. This should rapidly increase the number of high bandwidth end-users. · The City should focus on attracting Qwest, Olypen, other owners of infrastructure, and telecommunication service providers to a City led infrastructure development consortium. · In dealing with prospective partners, the City should provide incentives and determine how it might build their markets to make their participation in a consortium more attractive and justifiable. · The City should undertake development of a project on its own project only as a last choice, in the event no others will step forward or join it in the project development. · At a minimum, should difficulties arise with development of the broadband infrastructure, the City should strive to obtain an institutional network for non-commercial public use. Broadband Infrastructure through Cable Television Franchise Renewal · The City should capitalize on the opportunity provided by the current cable franchise renewal proceedings and aggressively negotiate with Northland Cable to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Consortium Implementation · The City should keep developing all available options by concurrently proceeding with work on Scenarios 3 and 4. · The concurrent negotiations will maintain a competitive atmosphere that will be an incentive to Northland as well as other prospective partners. · The City should formalize the process of building the consortium to maintain implementation time frame goals. · The City should prepare and distribute a Request for Consortium Partner Proposals to private telecommunications companies. The solicitation process should run in parallel and in close coordination with the Cable Franchise renewal process currently underway. · The City should delay the engineering design phase of the City Backbone project awarded to MCC until the consortium is finalized. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 A. Introduction page 1 BACKGROUND Shifts in the U.S. and global economies have historically changed areas of the country that receive the benefits of economic growth. Municipalities need to respond to these shifts to remain competitive in the pursuit of economic health and development. As shown in areas that have been left behind, inaction can be a harmful response when faced with changing economic conditions. The latest economic shift has revolved extensively around technological advancements in computing and telecommunications. The convergence of these industries has led to the rise of the Internet and changed the way we live and work. It is a feature of these technologies that people and businesses can now more effectively communicate over longer physical distances. This levels the playing field and creates a solid opportunity for smaller municipalities to compete for economic development opportunities previously beyond their reach. A good example is the trend of larger firms to locate call centers and hundreds of jobs in rural communities with desirable quality of life advantages. Attractive smaller cities such as Port Angeles now can compete but must prepare if they wish to benefit from this new opportunity. Enabling broadband telecommunications in the community is a crucial preparatory step. Conversely, there is a barrier to this opportunity becoming a reality. Infrastructure required for broadband telecommunications is capital intensive, and smaller markets do not provide the return on investment required by private companies. Municipal governments, however, can play a unique role in enabling the market by providing leadership, regulatory oversight and capital for telecommunications infrastructure development. By taking a pro-active leadership position, municipal governments can overcome the limiting factor of infrastructure, and greatly accelerate the development of broadband telecommunications in their communities. AUTHORIZATION The City of Port Angeles recognizes the telecommunications opportunity and the role it can play in sustaining community and economic development. Facing a decline in core natural resource industries such as fishing and logging, the City of Port Angeles has set goals and objectives~ and undertaken a vigorous telecommunications initiative. The various components of this initiative include City sponsored technical studies2, community-wide education and discussions~, and participation in service provider programs4s to develop a vision for integrating the community through technology. Summary findings from these programs are given in the section entitled "Related Activity" on the next page, and findings have been incorporated into this report where applicable. On August 10, 2000 the City engaged Metropolitan Communications Consultants (MCC) of Tacoma and Seattle, Washington to prepare a plan of action6 to guide the City in its telecommunications planning and development efforts. The report summarized the City's work to date, identified additional planning ~City Council Goals and Objectives 2001 Community Development Objectives: "Review and evaluate the feasibility and cost/benefits of fiber optic expansion, or other technological source, to provide broadband services, other advanced technology services, and advanced communication and information services to the community." Economic DeveIopment Objectives: "Explore opportunities to support and promote the economic diversification of the community, especially in areas of advanced technology, marine industrial, telecommunications, and other potential businesses that can expand our local economy." '-Power Engineers, Inc., "Communications Systems Evaluation for Public Utility District No. 1 of ClaIlam County and the City of Port Angeles", February 10 2000. ~DenRee Productions, "E-nable Visions Tour", February 2000. 4Fairpoint Communications, "BridgeWorks'"~ Program", in process 5Unisys Corp., "E-@action Community Helper Solution", Community Portal S~dy, November 2000. ~Metropolitan Communications Consultants, "Community Telecommunications Action Plan", September 29 2000. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 A. Introduction page needs and telecommunications opportunities and recommended specific action for the City to take over the next three-year period. On October 17, 2000, the City authorized MCC to implement the recommendations of the September 2000 Action Plan. The authorization covers three tasks, the third of which is this report, as described below: · Telecommunications Ordinance. Assist the City in finalizing its draft telecommunications ordinance and modification of related ordinances for consistency. This task brings the City into compliance with the 1996 Telecommunications Act, provides for management of public rights-of-way and levels the playing field for prospective service providers. The final draft was delivered on March 27, and adoption is anticipated in May 2001. · Community Telecommunications Needs and Interests. This task is to assist the City in its formal proceedings for renewal of the current cable television franchise held by Northland Cable. A procedural requirement of the renewal is an ascertainment of cable related community needs and interests. Making best use of the opportunity, the City has expanded this task to include community telecommunications needs and interests. The work is currently in the public proceedings and data gathering stage and the needs and interest assessment is scheduled for completion in May. > PA Telecom Network Business Planning Analyses (authorization for this report). This report was authorized to analyze the infrastructure development options available to the City, and to make recommendations on the best course of action. Because of the commitment to its telecommunications goals and the current industry shortage of optical fiber7, the City implemented a fast track schedule for proceeding with the backbone infrastructure proposed in the Power Engineering~ report. A design contract was awarded to MCC on February 13, 2001, conditioned however, on notice to proceed being withheld until verification of overall feasibility by the business planning analyses. Action on this item is discussed in the recommendations of this report. RELATED ACTIVITY The recognition of the importance of broadband telecommunications has led to various efforts and studies of the current telecommunications environment in Port Angeles. The following activities have been reviewed and their findings are summarized below: Power Engineers, Inc9 On March 22, 2000 the City of Port Angeles and Clallam County Public Utility District No. 1 received an engineering report from Power Engineers, Inc. for a fiber optic backbone communications system in Clallam County. Local businesses were surveyed with 56% stating they would definitely use the proposed system and an additional 20% stating they would possibly use the proposed system. This more detailed business planning study carries_ f?rward one of the recommendations of the Power study. E-nable Visions Tour'° In February 2001 the results of a survey entitled 'E-nable Visions Tour" sponsored by the City and conducted by a local Port Angeles consultant were released. In contrast with the Unisys study described later, survey methods, data, and finding were released in the E-nable report. The survey contacted 2,600 area residents and queried them on subjects such as computer ownership, Internet usage, and interest in telecommunications services. 7http: / / ww w.zdnet.corn/intweek/stories/news/0,4164,2646159,00.html 8See footnote 2 qbid ~See footnote 3. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 A. Introduction page 3 The study found high levels of Internet usage across demographic groups in the community. In addition, 77% of the survey respondents indicated interest in improved bandwidth and advanced telecommunications services. These findings led to the first recommendation of the E-nable report: "The City of Port Angeles should promote and pursue the immediate and rapid deployment of widespread, affordable, and proven broadband tech~zology such as DSL or cable moderns in order to promote economic growth..." FairPoint Communications BridgeWorks.- Program,, In July 2000, FairPoint Communications, a competitive local exchange carrier (CLEC), gave a presentation of their BridgeWorks,m program to a group of interested parties, including members of PA WORKS! The program's goal is to assist communities in using advanced telecommunications services to stimulate economic growth. The program has four phases, starting with a needs assessment and proceeding through collaboration, implementation to the final stage of economic acceleration. Fairpoint with the support of PA WORKS! has been continuing this program with periodic workshops for key community, business and governmental leaders. Unisys Corporatiow~ In May 2000, the Unisys Corporation announced that it had selected Port Angeles as the site for a feasibility study for a community portal to access the Internet. The project however, was dropped in November after Unisys announced the decision related to their study. The company cited a dispersed population base, lack of irffrastructure, and low levels of Internet use as the obstacles to the project. It is important to note, however, that details on the study methods, data, and findings have not been released. Sappho Gap ProjecV3 The Cities of Port Angeles and Forks have worked together since April of 2000 attempting to create a fiber loop through all of Clallam County. The Sappho Gap is the name assigned to a missing section of infrastructure which would connect existing systems being installed by CenturyTel on the west side of the Olympic Peninsula, with the Qwest infrastructure on the east side. The project entails linking the CenturyTel and Qwest systems at a meet point between Joyce and Sappho. In September 2000, the Clallam County Economic Development Council submitted an application to the Washington State Community Economic Revitalization Board (CERB) for Qwest Settlement Telecommunications Project Assistance grant funds for the Sappho Gap project. On April 19, 2001, the CERB Board awarded grants to 5 projects, among which the top award of $1.7 million was made to the Sappho Gap Project. Wireless Communication Planning in Clallam County~4 In April 2001, the Clallam County Economic Development Council and Clallam County PUD No. 1, authorized a study entitled "Wireless Communication Planning in Clallam County", a project to evaluate and design an optimum wireless voice and high-speed data communications infrastructure plan for Clallam County. The study entails identification of existing service and of technology limits for various wireless providers and design of a plan for an "open access" platform for wireless communications facilities. ~Clallam County Economic Development Council and Clallam County PUD No. 1. "Wireless Cormmunication Planning in Clallam County", study in progress by Hatfield and Dawson, April 12, 2001. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 A. Introduction page 4 NoaNet~ The Northwest Open Access Network (NoaNet) is a nonprofit corporation that has licensed fiber optic cables from the Bonneville Power Administration to build and operate a broadband network that serves public power electric utilities and their customers in the state of Washington and parts of Oregon. NoaNet is envisioned to be a broadband communications backbone between public utility districts (PUD's) and other entities, allowing access to network services by the PUD's and their customers as well as establishing a common broadband link to the Internet for use within their respective Districts. NoaNet's initial Washington network was put into operation in January 2001. Service providers are now being solicited. BPA began installing approximately 107 miles of fiber optic cable between its Olympia substation and its Port Angeles substation in March 2001 and is expected to complete most of its work by July 2001. NoaNet has indicated that its schedule follows closely thereafter, probably in the 2nd or 3rd quarter of 2001. NoaNet's Port Angeles area member is the Clallam County PUD No. 1. NoaNet represents an alternate way (to Qwest) off the peninsula for any Port Angeles telecommunications infrastructure. A map of the NoaNet Olympia to Port Angeles network route map is shown in Appendix 15. MISSION AND GOALS Based on the foregoing economic development background, the proposed mission of the City of Port Angeles Telecommunications Initiative is: To ensure delivery o/broadband telecommunications products and seroices to Port Angeles in 2002, by enabling the development of the necessary telecommunications infrastructure. Broadband telecommunications services consist of the following: · High-speed transmission of data, voice, and video traffic, including broadband Internet access via DSL modems, cable modems, direct fiber connections, or wireless technologies. · Local area networking (LAN), and wide area networking (WAN) · Digital cable television City Goals The goals of the initiative are in support of the above mission statement. These goals include: · Plan, develop and enable an economically feasible infrastructure project. · Enable the largest number of homes and businesses to obtain broadband telecommunications in as rapid a time flame as feasible. · Foster competition in the delivery of products and services. · Prevent the development of excessive redundant infrastructure. COMPETITIVE ENVIRONMENT Any project that changes the telecommunications landscape will have impacts on the competitive dynamics of the industry. As a result, it is crucial to understand the current competitive situation of telecommunications infrastructure in the area prior to undertaking a project. In this way, the City of Port Angeles can better understand potential partners and competitors to any network developed. Off the Peninsula Any telecommunications network within Port Angeles and the surrounding area must connect to a line traveling off the Olympic Peninsula that connects on the other end to the major nationwide trunk lines crossing the country. At the current time, the only provider with a high capacity fiber optic line off the peninsula is Qwest, with a line that connects to a trunk line in Seattle. Access to this line can be provided from Qwest's central office in downtown Port Angeles. A competitive line is currently under ~Shttp://w ww.lloanet net/about.htrnl. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 A. Introduction page 5 construction by BPA/Northwest Open Access Network (NoaNet) of which the Clallam County PUD is a member. BPA reports this line will be completed in late summer 2001 with a Point of Presence at the Port Angeles BPA substation. A third project is the previously described Sappho Gap project that provides the currently missing link to connect Port Angeles to Forks and on to major trunk lines near Olympia. All traffic carried by any future Port Angeles backbone will have to utilize one of these methods to carry traffic to and from the community. In addition, users requiring high levels of uninterrupted service may require redundancy beyond the existing Qwest trunk prior to locating their businesses in the area. Port Angeles Backbone A backbone aggregates, carries, and distributes traffic coming into and leaving the city. The backbone connects to the trunk line off the peninsula and contains last-mile distribution cross connections. At the present time an integrated, open-access fiber optic backbone does not exist in Port Angeles. The current infrastructure is a patchwork of copper, coaxial cable, fiber-optic and wireless connections built by separate users in an attempt to provide bandwidth for their needs. The most substantial backbone section is a high capacity fiber optic ring between the Qwest central office and their largest customer, Olympic Medical Center. Northland Cable has a smaller amount of backbone fiber to carry their cable television traffic. It would be advantageous to design an integrated, open-access backbone that builds upon and connects to current available infrastructure, but execution would depend on partnerships between the builder and current owners of private infrastructure. Last Mile Beyond the new backbone, the last mile connection to the end-user presents the greatest challenge of all the segments of any new telecommunications infrastructure. Costly connections must be provided, one by one, to each home or business. The cost and the delayed time frames associated with providing fiber drops directly to the end-user has become the limiting factor in attempts elsewhere to provide community-wide fiber connections. As a result, the vast majority of other network projects have utilized DSL and cable modem technology to provide broadband data communications. These technologies utilize copper and coaxial connections already connected into the majority of homes and businesses. In Port Angeles, Qwest is the primary owner of the copper connections to the end-user that have traditionally carried only voice traffic. Northland Cable has coaxial connections providing cable television to approximately 60% of the homes in the City. Connecting a new fiber backbone to either of these last-mile infrastructure layouts will dramatically accelerate the adoption of broadband telecommunications to the community. Fiber optic connections can still be made available to users willing to pay a higher price for the increased bandwidth the fiber connection will allow. Olypen, a local lnternet Service Provider, is currently providing wireless last mile connectivity to homes and businesses on a limited basis. The company has installed various antennas at key high points in the community. Olypen then provides a wireless data connection at broadband speeds up to 1 Mbps. A significant limitation of this service is the requirement for uninterrupted line-of-sight between the ante~na and the home or business. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/'1/2OO7 B. Project Definition page 6 TELECOMMUNICATIONS PRODUCTS AND SERVICES VALUE CHAIN A representation of the telecommunications products and services value chain is presented in Figure 1. This figure provides an overview of the flow of products and services to the end-user and shows representative companies operating in each segment of the chain. An important aspect of the value chain is the distinction between providers of infrastructure, labeled in green, and the providers of products and services, shown in blue. Many private companies operate in only one distinct area of the chain. Others, such as Qwest operate across multiple areas. Products and Services Telecommunications products and services include software, content, and the ability to connect to the Internet using an Intemet Service Provider (ISP). Specialized marketing and technology expertise is required to successfully compete in these marketplaces. Numerous private companies provide these products and services over installed telecommunications infrastructure. Infrastructure To reach the end-user, companies offering telecommunications products and services rely on owners of infrastructure to provide a pathway to the customer. These infrastructure companies can be split into two sub-groups: · Infrastructure product companies that manufacture and provide fiber, copper and network equipment. · Organizations that ultimately provide and "light up" the copper or fiber wires that connect homes and businesses. These pathway providers operate in three segments: Trunk carriers that carry telecommunications traffic between communities, regions, and nations; - Backbone carriers that carry traffic aggregated on a community or metropolitan level, and "Last mile" providers that carry traffic in and out of individual homes and businesses. Municipal governments such as the City of Port Angeles have core competencies in enabling or providing infrastructure to the community, and have the ability to operate in the select regions of the value chain that exist within their jurisdiction. This opportunity includes the backbone and last mile infrastructure connections to the community. Role of the City The City should be open to any course of action that can meet the above mission and goals. As such it can play any role that will accomplish its goal, from being just a regulator and facilitator to infrastructure developer and builder. There are compelling reasons however, for the City to take an authoritative leadership role. As previously mentioned, the limiting factor in deploying broadband telecommunications is the capital expenditure necessary to build the infrastructure required as a first step. Due to the smaller market size of the Port Angeles area, private companies have been unwilling to spend the capital. On the other hand, private companies are also wary of municipalities building networks for fear of perceived "unfair" competition. The resulting situation is a stalemate with demand unsatisfied and "new age" economic development stalled. The City for the following reasons however, can effectively address both difficulties: · The backbone infrastructure falls within the city limits and the City has the authority to build it. · The City should be willing to bring capital, rights-of-way, poles and other assets to any development proposal. · The City has experience in providing infrastructure to the community and will do so if necessary. · The City however, should be committed to be an infrastructure enabler, not necessarily a builder, and not a service provider competitor. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 B. Project Definition page 7 Content Application Providers (e.g. Starwave, ESPN, Disney) Application Service Providers (e.g. Napster, Yahoo, MSN) Internet Service Providers (e.g. (~est, Olypen, TenForward, Olympus.net) Voice Data Video Software Operating Systems Providers (e.g. Hewlett Packard) Telecommunications Network Equipment (e. g. Cisco, Nortel, Marconi, Alcatel) Transmission Hedia, Fiber/Copper Providers (e. g. Corning, Lucent, Fujikura) I Trunk Carrier Backbone Provider "Last mile" Provider End User (e.g. AT&T, Sprint) · (Partial/Limited only) (e.g. qwest, Northland) Figure 1: Telecommunications Value Chain METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 B. Project Definition page 8 The City should not provide telecom products and service. · The City should support, however, competition in the market and should be willing to be the service provider of last resort in the event competition does not evolve. · The City is in the planning stage and has not made any decisions but should be committed to enabling broadband telecommunications in Port Angeles in 2002. · The City should be open to any and all possible solutions for solving the limiting factor of broadband · Concurrent Cable Franchise Renewal and Institutional Network negotiations provide the City with excellent opportunities to form partnerships with private telecommunications providers to begin working toward a solution. Once the capital-intensive backbone infrastructure is in place, telecommunications service providers are typically eager to deliver their products and services over the network. Instead of having to make large capital investments, service providers can instead pay the infrastructure providers as they receive revenues from their customers (the end-users). Thus the limiting factor of the value chain can be overcome. In this typical scenario, the end-user becomes a customer of the product and service provider, and the product and service provider becomes the customer of the infrastructure provider. SURVEYS AND INTERVIEWS As part of the business planning process, the City of Port Angeles and MCC collaborated on a web-based survey, conducted interviews with select organizations within the community and on March 30, 2001 held a Telecommunications Needs and Solutions Workshop. Organizations were segmented into three groups: · End-users of products and services · Providers of products and services · Providers of infrastructure The results of the surveys and interviews were utilized in the analysis of the competitive dynamics of the telecommunications market in Port Angeles, and helped form the basis for assumptions in the business analysis of options available to the City. A copy of the Workshop report is given in Appendix 16. A list of the service providers and major users contacted as part of this analysis is given in Table 1. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 B. Project Definition page 9 Company Name Title Telephone e-mail Se.ice Providers Northland Cable Television Pete Gdgodeff Manager 360-452~8466 p~te@)northlandW.com Northland Communications Corp, Michael W, goberge Western DMsion Ops Mgr 206-621-1351 mroberge~orthlandco.com Richard J. (Jack) Dyste VP Technical Services 206-621-1351 jack@northlandco.com I~/we st Communications Jane Nishita Regional Manager Z06-345-2316 jnishi~q't~est.corn Fairpoint Communications Daniel P, Fine Regional VP of Sales 704-414-2527 dRneCG~airpoint,com Ly~n Scherencel 3G0-417-9757 Iscberencel~airpoint,corn John Utley jutle~irpoint,¢om CenturyTel Tim Gdgor Wa. General Manager 253-851-1345 Jill Comsa Account Manager jiJI.comsa@centurytel.com Ross Shenner Area Manager Tony Nicholson Area Manager t ony.nic holso v~centuryt el.co m Arista Communications Greg Greene President 509-444-4900 Karen Moses General Manager, Yakima 509-853-4010 kmo~avistacornmet New Edge Networks Sa[ Cinquegrani Exec. Dir. Community Relations 360-693-9009 Nu Wave Communications Heidi Dunfleid SVP, Business Development 541-386-5000 Ten Forward Communications Sheldon Roehler O~ner 360-4S7-9023 sheldofl@teflfor~ard.com Darren Atkins Manager 360-457-9023 Olypen Mike Breen Owner B00-962-8714 billing@olypen.com Jared Emory Broadband Design Engineer 800-96B-8714 Terry Kennedy ROO-gBz-8714 ter~olypen.com Olympus net Ned Shenann ned@olympus.net Dave Meyer davemeyer@olympus,net Angeles Communications, Inc Bob Jensen 360-457-4375 Excel UtiLity Construction Bill Roberds 360-452-1110 billwash~olypen.cora Clallam Co PUD No. 1 Fred Mitchell A~sistant General Manager 360-452-9771 x235 fredm@dallampud.net Northwest Open Access Network Dave Spencer Chlef Operating Officer 208-343-6477 dspencer~Jnoanet.net PA Prospective Large Users Clallam County Daniel Gouin Central Services Department 360-417-2000 x2406 dgouin@co.dallam.wa.us Port of Port Angeles David H Hagmwara Deputy ExecuPve Director 360-417-3422 daveh@portofpa.com Bill James bjames~poto[pa.com Port Angeles School District 121 Steve Baxter Supervisor of IS & Technology 360-457-8575 x33 steve_baxter@pasd.wednet.edu Peninsula College Ken Jacobson Director of IS 360 452-9277 kjacobso@ctc.edu Emma Janssen emmaj@pcadmin.ctc,edu Olympic Medical Center Evan Boyd St, Network Administrator 360-417-7192 eboyd@olym picm ed{cai,or g Craig Haught Eric Jacobson Gary Smith grsmith@oJympicmedical.org Virginia Mason Port Angeles Ida Brooks 360-457-Z 156 First Federal Savings & Loan Paula Johnson 360-457-0461 paula~i~fpa corn Daishowa America Kathy Prince IS Supe~isor 360-457-4474 kathy.princec~daisho~aamePca.com Jason Mangano jason,mangano@daishowaamefica.com Table 1: Service Providers and Users Contacted METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 B. Project Definition page 10 INFRASTRUCTURE DEVELOPMENT ALTERNATIVES General The Power Engineers study presented a preliminary engineering evaluation of a City developed and City owned backbone project. The scope of work did not include a thorough consideration of other ownership or governance alternatives or financial feasibility analyses. The reporV* did conclude that the City should implement only a transport network and that the City should: ~.. contract with one or more service providers, sud~ as Olypen or Century Telephone, to provide In considering the relative merits of any alternative the primary criteria is economic development potential. The major index of economic development potential is the number of ultimate end-users that can be immediately benefited. Other related criteria are network geographic coverage and capability. In summary, the best alternative is the network that will serve the most users, have the widest coverage, and offer the quickest and most capable service. In addition to the alternatives that will be discussed, the City is involved in three ongoing telecommunications initiatives. These are: · Cable Franchise renewal proceedings requested by Northland Cable. · Deployment of DSL service by Qwest and resellers. · The Sappho Gap project The City's involvement in these initiatives should continue actively and aggressively, concurrent with evaluation of the broadband network alternatives in this analysis. All avenues should be explored to develop the most favorable business proposition for the City to implement. Status Quo, Private Network Alternative Under this alternative, the City would not initiate any development, and provision of broadband telecommunications would be left to private companies to develop in accordance with their individual market strategies. Private companies, however, consider Port Angeles a smaller market that does not justify the capital expenditures necessary. This has been Qwest's position until February 19, 2001 when Qwest in an unexpected turn-around indicated to the City that it would furnish DSL service in Port Angeles, a move that may in part have been prompted by the City's active consideration of other alternatives to jointly provide broadband services. We view this to be a positive development. Under this alternative the City's activities would be limited to: · City accepts status quo, remains a customer of incumbent providers and is dependent on their plans. · City updating of its policies and regulations to comply with the 1996 Telecommunications Act, to level the playing field, and to ensure a competitive market in the area under its jurisdiction. This work has already been implemented17 by the City and is scheduled for completion in May 2001. · City makes available and manages its rights-of-way and telecommunications assets to providers on a non-discriminatory basis. In doing so, the City must be prepared for separate and duplicate systems, heavy use, damage, and repeated repair of its streets, poles and other assets. Under this alternative, the City has no leverage to determine the extent or timing of broadband telecommunications and significant, competitive services could be delayed for many years. This alternative will not meet the City's economic development goals and is a default approach, one already considered in related studies and found to be unacceptable. City Network Alternative A second alternative is City development of a broadband transport network. By developing such a network and making it available to all qualified service providers, the City integrates provider needs, METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 B. Project Definition page 11 eliminates duplicate networks and optimizes management of its limited rights-of-way and other telecommunications assets. This alternative also provides maximum protection for the public interest in contrast to a privately developed network where the owners would be inclined to "cherry pick" the most profitable customers and not provides citywide service. On the other hand, this alternative carries great risk, related to competition, competencies, and financing. If the network is to be wholly owned by the City, the City will also have to construct the distribution and last mile system to reach the ultimate end-users. Also, even though the City may only intend to provide the transport pathway, the project may be perceived as inappropriate use of public monies in competition for the customers of the incumbent private companies. If the City can assure the private providers that they, not their end-users, are the City's target customers, competencies and system standards then become an issue. Required system redundancy, dependability, network management, operation and maintenance will be at levels far beyond existing in-house City competencies. These challenges are not technically insurmountable but may well be financially unachievable. Public/Private Network Alternative The most attractive alternative available to the City of Port Angeles is for the City to take a leadership role in a public/private consortium network alternative. Ideally this consortium would have as members, one or both of the incumbent providers of existing last-mile infrastructure. By developing a backbone that connects to the last-mile infrastructure of these incumbent partners, the number of ultimate end-users immediately benefited increases dramatically beyond that in other alternatives. There are other advantages for considering such an alternative: · Close coupling of public/private partners allows the best matching of needed competencies with the proper resources and market focus. · The public interest is protected while risk is spread among a larger group of participants. · Financing risk can be balanced using both public and private, available financing opportunities. · Making use of partners' last mile infrastructure through DSL and/or cable modems is a less capital- intensive first step that allows network costs to be managed incrementally and to grow with demand. · Using a private partner's existing last mile infrastructure immediately enables widespread broadband service which may be adequate to meet demand, particularly among residential users for a long time. · At the same time, fiber drops can be offered concurrently to users needing higher bandwidths and willing to pay the cost of early deployment of new fiber optic last mile infrastructure. · Quick deployment of widespread broadband service will also enable the City to implement broadband utility applications much sooner, an imperative in the current electric utility market. Cable Television Infrastructure Upgrading The City of Port Angeles is currently in the formal franchise renewal process with Northland Cable for the Cable Television Franchise in Port Angeles. These negotiations provide the City with the opportunity to work together with Northland to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Institutional Network At a minimum, should the City not proceed with a City owned network or if no partnerships can be achieved, the City still has the opportunity to obtain a governmental and educational institutional network through the cable franchise renewal. An institutional network will limit broadband service to non-commercial public, educational and governmental users but will allow dramatic cost-savings and efficiencies in their operation. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 B. Project Definition page 12 BUSINESS PROPOSITION Port Angeles Telecom The business proposition is the creation of a new business to provide broadband telecommunications products and services in the city of Port Angeles. The new business, for convenience hereafter referred to as Port Angeles Telecom (PA Telecom), would be developed, owned, and operated either by the City or a City led consortium as previously described. Physical Infrastructure The physical infrastructure itself will be a high speed, high capacity, citywide network, serving the proprietary communications needs of the City of Port Angeles and institutional, commercial and residential customers in the City. The initial phase of the irLfi'astructure would consist of a fiber optic backbone and a hybrid fiber/copper distribution system. Later phases of the in_fi"astructure development could bring upgrades of the distribution system to the ultimate state of an all-fiber network with fiber to the user. VALUE PROPOSITION The City's Competitive Advantages With the business proposition it is crucial for the City to clearly understand the value proposition it brings to any negotiation or business arrangement to enable broadband telecommunications. The City has a strong value proposition based upon the following competitive advantages: · The City's willingness to bring substantive capital to any project deemed feasible by business analyses. This is a crucial item that private companies have identified as the limiting factor to accelerated private build out of infrastructure. · Access to long term municipal financing, which is more favorable than private commercial financing. · Control of public rights of way, poles, and other telecommunications assets. · Experienced project management and prior experience in providing and managing utility infrastructure in Port Angeles. · Valuable competitive advantage in the City's solid customer relationships. · The ability to facilitate the navigation of governmental and regulatory issues relating to a project. · Skilled management and leadership ability in consortium building and partnerships. · Willingness to sell its share of any developed network once the project is complete and operations are stable. This is consistent with the City goal of enabling broadband telecommunications in Port Angeles and not becoming a competitor with private industry. Its strong value proposition should make the City an attractive partner in the eyes of private companies in an infrastructure development consortium. The City's Crucial Leadership Role The above advantages give the City a strong position to negotiate and to take the leadership role in any project for development of telecommunication infrastructure. It is crucial that the City take the lead if it is to achieve its goals, as private companies have understandably different goals based on profitability, not necessarily consistent with the City's economic development and public service goals. The City can further enhance its advantages by leveling the playing field to attract competition, by creating a favorable telecommunications environment, by preparing itself, and by developing community readiness. The City leadership is essential for these inter-related telecommunications and economic development activities to be successfully accomplished. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses CRITERIA AND ASSUMPTIONS The criteria and assumptions used in the project analyses are listed below. The criteria are based on project materials gathered, design and cost data from MCC records and current industry and vendor sources. Conservative planning assumptions have been used, and where appropriate remain consistent across all analyses. The primary criteria and assumptions, based on a ten-year analysis period, are shown below: PROJECTS ANALYZED Project analyses were performed on four potential PA Telecom network projects. The first is an analysis of a City developed project, the other three are City led consortium projects. The four projects are: City Developed · Scenario 1, City Developed and Owned PA Telecom Network (also called City Backbone Project). This is a feasibility analysis of the Power Engineers proposal. The infrastructure layout is modified &om the Power preliminary design to reflect changes based on a field inspection of the route and an immediate build-out of the backbone rather than a 4 phase build-out as proposed. City led Consortium Developed · Scenario 2, Partnership with a Cable Provider, desirably Northland Cable, the incumbent cable TV provider and owner of coaxial last-mile infrastructure. · Scenario 3, Partnership with a Telco Provider, desirably Qwest, the incumbent local exchange carrier and owner of copper last-mile infrastructure. Century Telephone is another potential partner, having extensive operations on the Olympic Peninsula and infrastructure near but not in Port Angeles. · Scenario 4, Partnership with both a Cable and Telephony Provider. INFRASTRUCTURE GENERAL PLAN The physical infrastructure itself will be a high speed, high capacity, citywide network, serving the proprietary communications needs of the City and institutional, commercial and residential customers throughout the city. The infrastructure will have a ring topology and will consist of a fiber backbone and hybrid fiber/copper distribution system spreading out to reach all potential users. Backbone Layout · At this point, without specific information regarding the existing last mile infrastructures of the incumbent providers, a backbone layout based on the Power Engineers preliminary design, modified per a field survey by MCC/LMSI, has been prepared and is shown in Figure 2. · The backbone consists of 17 miles of 96-strand fiber in a figure-eight ring configuration, with associated voice, data, and video, transport and customer interface equipment, located in 10 network nodes. · All network nodes are assumed to be located in existing City owned buildings or other properties. · A partnership with the cable and/or telephone provider will determine the customized layout to best incorporate the specific provider's last mile distribution infrastructure. It is expected that such a custom layout should result in a less extensive backbone. · To be conservative and for purposes of analysis, the more extensive backbone in Figure 2 has been assumed to be applicable for all scenarios. · A schematic of the backbone between 2 nodes is shown in Figure 3. Distribution Cabling · A city owneci distribution system would ultimately consist of approximately 50 miles of last mile fiber and copper cabling reaching an estimated 3,535 customers in the 10-year analysis period. The analyses assume that approximately 242 will be direct fiber and the balance copper connections. METROPOI [TAN COMMUNICATIONS CONSULTANTS .~/1/2001 D. Project Analyses page 14 · A single partner distribution system would consist of the last mile partner infrastructure integrated into the backbone through approximately 20 miles of distribution fiber connections and direct fiber drops. For analysis purposes, a single over-designed distribution system has been assumed without regard to type of potential partner. · A multiple partner distribution system would consist of all last mile partner infrastructures integrated into the backbone through approximately 36 miles of fiber connections and direct fiber drops. USERS AND GROWTH Basis of User Projections · User growth projections over the 10-year analysis period were estimated for both a City developed network (Scenario 1) and a Consortium developed network (Scenarios 2-4). · For either City or Consortium development, user projections were made for home and business users by the categories of voice, data or cable television customers. · The projections incorporate the findings of the Enable Visions Tour community survey and reports, dated February 2001, but are deliberately set low to achieve conservative analyses. · In the Port Angeles exchange, Qwest's last mile telephone infrastructure and DMS100 switch~ in its Laurel Street Central Office, currently serve 15,463 residential and 6,454 business access lines. · Since the Port Angeles exchange extends beyond the city and since exact data from Qwest is proprietary and unavailable, the project market in the city for local telephone service has been conservatively estimated at only 60% of the total access lines served by Qwest's Laurel Street Switch. · At 60%, the 2001 available market for voice and data services is 9,278 residential lines (7,732 residences) and 3,873 business lines (1,107 business establishments). The difference between access lines and establishments is noted because construction costs are based on cabling drops (1 per establishment) whereas revenues are based on access lines. · The cable television market currently served by Northland Cable's~9 last mile infrastructure is 10,653 homes passed. Since the 10,653 homes passed include areas outside the city, the telephone data have been extrapolated to get homes passed in the city. The cable television market in the city is therefore made up of 7,732 homes and 1,107 businesses, a total of 8,839 available connections. · Direct fiber customers are assumed to be equal across all scenarios, approximately 4% of the home/SOHO (small office, home office) connections and 30% of business connections. Table 2 summarizes the market opportunities and basis of user projections for each scenario. Development I Home Users I Dusiness Users I Total Users Descriptions I lines I conne , I conne lI co.ne I conned, I "ne, I con"e ' I co" ed' 2001 Market 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Market penetration at yr 11, in % of yr ZOO1 market 1. City Project 17.0% 40,7% n/a 9.9% 34.8% n/a 14.9% 40.0% n/a 2. City/Cable 17,0% 43.4% 71.1% 9.9% 43.4% 54.7% 14.9% 43.4% 69.0% 3. Cityffelco t00.0% 86.9% n/a 100,0% 86.9% n/a 100.0% 86.9% n/a 4. City/Both 100.0% 86.9% 71.1% 100.0% 86.9% 54,7% 100.0% 86.9% 69.0% Table 2: Basis of User Projections t~Qwest Communications interconnection Database, see Appendix 15. l~Data furnished by Mr. Pete Grigorieff, Manager, Northland Cable, 2/8/01. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 16 Backbone Node A Fire Station Bacldx~e Device NoaNet or Other ~User Site .:~, g X ~. I Remote r ~ Neighborhood D~st Fibers. typ. Service Provider B Typmal Device . m , o ----- User Drop Fibers, typ. Back~one Node B Backbone Node B Coverage Area Figure 3: Ring, Distribution and Fiber Connection Schematic METROPOLITAN COMMUN]CATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 17 Scenario 1 City Network (City Backbone Project), User Projections · The estimated user g~owth based on a Scenario 1 City developed network is shown in Table 3 and its accompanying chart. · The pink columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. Scenario 1 Home Users Business Users Total Users City Voice Data Catv VoiceData Catv Voice Data Catv Infrastructure lines connects connects lines connects connects lines connects connects 2001 [,4arket 9,278 7,732 7,732 3,873 1,t07 1,107 13351 8,839 8,839 Year 1 Year 2 150 300 0 100 lO0 0 ZSO 400 0 Year 3 400 800 0 150 150 0 550 950 0 Year4 650 1,300 0 195 195 0 845 1,495 0 Year 5 850 1,700 0 235 235 0 1,085 1,935 0 Year 6 1,050 2,1 O0 0 270 270 0 1,320 2,370 0 Year 7 1200 2,400 0 300 300 0 1,500 2,700 0 Year 8 1,350 2,700 0 325 325 0 1,675 3,025 0 Year 9 1,450 2,900 0 345 345 0 1,795 3,245 0 Year 10 1,525 3,050 0 365 365 0 1,890 3,415 0 Year 11 1,575 3,150 0 385 385 0 1,960 3,535 0 ~ 6~000 // 8,839 t 2~000 8,839 8,000 "% ~l 0 123456 Projed Year 7891011 Table 3: City Network, Projected User Growth · Although the backbone can be built quickly, the 10 year build out of a City distribution infrastructure to reach all end-users limits the rate of user growth. This is a hindrance for providers, such as cable television companies, who want to immediately furnish citywide service. · In the City alternative, it has been assumed that cable television will be furnished by the incumbent provider using its own separate network and that the City network will not have any cable television users. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 18 · It is possible that another cable television company may be attracted to use the City network and be willing to invest in the required distribution and last mile system. This possibility however, is covered by and is a variation of Scenario 2, the City/Cable Partner consortium scenario. · The network's voice customers will be competitive local exchange carriers (CLEC) to whom citywide coverage by infrastructure will not necessarily be a critical factor. This is because CLEC's primarily target businesses, wiffch will be reached in the early build-out stages of the distribution system. · Qwest has a competitive advantage as the incumbent and it has been assumed that a CLEC using the City network to compete against Qwest will gain only 15% of the total voice market and 40% of the total data market by year 11. The voice market assumptions are deliberately conservative in view of the fact that tiffs scenario has the highest risk for the City, as described on page 11. Scenario 2 City/Cable Consortium Network, Projected User Growth · The estimated user growth based on a Scenario 2 City/Cable developed network is shown in Table 4 and its accompanying chart. · The pink columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. Scenario 2 Home Users Business Users Total Users Consortium Voice Data Cat~ Voice Data Catv Voice Data Catv City/Cable lines connects connects lines connects connects lines connects connects 2001 Market 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Year 1 Year2 150 2,165 5,026 100 310 554 250 2,475 5,579 Year 3 400 2,273 5,076 150 325 559 550 2,599 5,635 Year4 650 2,387 5,127 195 342 565 845 2,729 5,691 Year 5 850 2,506 5,178 235 359 570 1,085 2,865 5,748 Year 6 1,050 2,632 5,230 270 377 576 1,320 3,008 5,806 Year 7 1,200 2,763 5,282 300 396 582 1,500 3,159 5,864 Year8 1,350 2,901 5,335 325 415 588 1,675 3,317 5,923 Year 9 1,450 3,046 5,388 345 436 593 1,795 3,482 5,982 Year 10 1,525 3,199 5,442 365 458 599 1,890 3,657 6,042 Year 11 1,575 3,359 5,497 385 481 605 1,960 3,839 6,102 16,000 8,839 12,000 8,839 8,000 Voice Lines 1,960 4,000 0 Data Users 3,839 I 2 3 4 5 6 CA1YUsers6,10;' Project Year 7 8 9 10 11 Table 4: City/Cable Network, Projected User Growth METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 19 · For Scenario 2, the incumbent's 5,579 cable television customers will be brought on board immediately. · Using only a 1% annual increase, the cable television customers will grow to 6,102 users by year 11, a 69% penetration of the 2001 available market of 8,839 homes and businesses passed in the city. · Qwest will still be the incumbent competitor for voice and data services. The market penetration for voice has therefore been assumed to be the same as for Scenario 1, approximately 15%. · Because the network will have access to all the cable television customers, and because of the immediate availability of cable modem service, it has been assumed that the data market opportunity would be open to the most aggressive competitor. It has been conservatively assumed however, that the Scenario 2 network will get a little under half, or approximately 44% of the available customers. Scenario 3 City/Cable Consortium Network, Projected User Growth · The estimated user growth based on a Scenario 3 City/Telco developed network is shown in Table 5 and its accompanying chart. · The pink columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. Scenario 3 Home Users Business Users Total Users Consoctiurn Voice Data Catv Voice Data Catv Voice Data Catv City/Telco lines connects connects lines connects connects lines connects connects 2001 i~arket 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Year 1 Year2 9,278 4,330 0 3,873 620 0 13351 4,950 0 Year3 9,324 4,546 0 3,892 651 0 13,217 5,197 0 Year4 9,418 4,774 0 3,931 683 0 13,349 5,457 0 Year5 9,51;' 5,012 0 3,971 718 0 13,482 5,730 0 Year 6 9,607 5,263 0 4,010 754 0 13,617 6,017 0 Year7 9,703 5,526 0 4,050 791 0 13,753 6,317 0 Year8 9,800 5,803 0 4,091 831 0 13,891 6,633 0 Year 9 9,898 6,093 0 4,132 872 0 14,030 6,965 0 Year 10 9,997 6,397 0 4373 916 0 14,170 7,313 0 Year 11 10,097 6,717 0 4,215 962 0 14,312 7,679 0 16,000 i 8,839 l 17,000 i 8,839 8~000 tJ Voice Lines 14,312 4,000 0 Data Users 7,67g CATV Users 0 1234567 Project Year 8 9 10 11 Table 5: City/Telco Network, Projected User Growth METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 20 · In Scenario 3, it has been assumed as in Scenario 1 that cable television will be furnished by the incumbent provider using its own separate network and that the network will not have any cable television users. Scenario 4 City/Cable/Telco Consortium Network, Projected User Growth · The estimated user growth based on a Scenario 4 City/Cable/Telco developed network is shown in Table 6 and its accompanying chart. · The pink columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. Scenario 4 Home Users Business Users Total Users Consortium Voice Data Catv Voice Data Catv Voice Data Catv City/Both lines connects connects lines connects connects lines connects connects 2001 r,4arket 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Year 1 Year2 9,278 4,330 5,026 3,873 620 554 13,151 4,950 5,579 Year3 9,324 4,546 5,076 3,892 651 559 13,217 5,197 5,635 Year4 9,418 4,774 5,127 3,931 683 565 t3,349 5,457 5,691 Year5 9,512 5,012 5,178 3,971 718 570 13,482 5,730 5,748 Year6 9,607 5,263 5,230 4,010 754 576 13,617 6,017 5,806 Year7 9,703 5,526 5,282 4,050 791 582 13,753 6,317 5,864 Year8 9,800 5,803 5,335 4,091 831 588 13,89t 6,633 5,923 Year9 9,898 6,093 5,388 4,132 872 593 i4,030 6,965 5,982 Year 10 9,997 6,397 5,442 4,173 916 599 14,t70 7,313 6,042 Year 11 10,097 6,717 5,497 4,215 962 605 14,312 7,679 6,102 1G~O00 ~ 8,839 1~000 8~839 8~000 ~ Voice Lines 14,312 o' 4~000 0 /./ Data Users 7~679 CATV Users 6~10Z 12 34 S6 Project Year 7 8 9 t011 Table 6: City/Cable/Telephone Network, Projected User Growth · In this scenario, the network serves both incumbents and their existing customers and the current market penetrations for all product categories have therefore been assumed. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 21 PROJECT COST ESTIMATES Summary of Cost Estimates A summary of the annual costs for each of the four scenarios is presented below in Table 7 and its accompanying chart. Detailed cost estimates for each Scenario are given in Appendices 2-5. Alternative Annual Cost~ $milllon Total Project Scenario Yr I Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr $ Yr 9 Yr 10 Yr 11 Sm '1. city prej~t ].63 1.42 1.38 0,91 0.85 0.70 0.63 0.48 0.36 0.26 0.06 10,70 Z. City/cable partner 4.98 0.21 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.00 5.32 :3. Cityltalco partner 4.84 0.25 0.08 0.08 0,08 0,09 0.09 0.10 0.10 0.11 0.01 5.83 4. City/both partners 5.62 0.31 0.09 0.10 0.10 0.11 0.11 0,18 0.13 0.13 0.01 6.84 ~,b 4. City/both partners :~ t 3. City/telco partner 4: 0 2~ City/robie p~ner 1 4 S 6 t. Cityproje~ 7 --- "ProjedIear ~ , 10 11 Table 7: Summary of Annual Costs for Alternative Project Scenarios Project Capital Costs · Total project construction costs (TPCC) are broken down into backbone infrastructure, distribution system costs. And indirect costs. · Backbone Infrastructure is further categorized into backbone fiber and backbone electronics. It has been assumed that the entire fiber backbone including all 10 nodes will be constructed in year 1, and that node electronics will be staged to match customer demand and requests for service. · Backbone costs differ between the scenarios, the most expensive being Scenario 1, because of the greater quantity of node electronics needed to interface with end users than in the other scenarios. · The Scenario 1 distribution system will be staged to meet demand over the 10 year analysis period and will consist of direct tiber drops to approximately 250 business and SOHO users, the balance of the distribution system will be copper. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 22 · Again, the Scenario 1 distribution system cost is the highest reflecting the construction of a new distribution system versus the integration of one or more existing distribution systems. · Indirect costs are assumed to be 25% of total project costs and cover legal and adn~nisti'ative, engineering, fieldwork, and financing costs. Annual Operation and Maintenance Expenses · Armual operation and maintenance expenses have been grouped into the following categories: - General operating expenses covering staff salaries, office space, equipment, etc., estimated at 12% of gross revenues. - System upgrades/replacements at 5 % of cumulative backbone costs beginning in year 4, at which point all of the original warranties for equipment are assumed to have expired. - Network management at 10% of gross revenues. - Network maintenance at 3% of cumulative capital costs. REVENUE ESTIMATES Summary of Revenue Estimates A summary of the revenue estimates for each of the four scenarios is presented below in Table 8 and its accompanying chart. Detailed revenue estimates for each scenario are given in Appendices 6-9. AItarnative Annu&l Revenue, Smillion Total Project Scenario Yr I Yr Z Yr 3 Yr 4 Yr S YT $ Yr 7 Yr 8 Yr ~ Yr 10 Yr 11 Sm t. Ci~ project 0.4; 0.65 0.84 0.96 1.11 1.19 1,31 1.35 h40 1.43 I0.65 Z. Cit,/cable panner 1.08 0.95 1.07 1.17 1.26 1.34 1.42 1.49 1.55 1.61 12.94 3. Ci~/telco panner 4.07 3.64 3.70 3.76 3.83 3.90 3.97 4.05 4.13 4.21 39.26 4. City/both panners 4.84 4.41 448 4.55 4.6] 4.71 4,78 4.87 4.95 5.04 4726 '~ ~ 2 4, City/both pirU~ers ::1 ~ I 3. £ity/taico ~n~r 0 2, City/cable ~rt~r 1 3 ProjedYear 7 8 , 101~ Table 8: Summary of Annual Revenues for Alternative Proiect Scenarios METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1/2001 C. Project Analyses page 23 Basis for Revenue Estimates · A fundamental basis is that PA Telecom, regardless of scenario, will be a transport network, whose customers will not be individual end users in the city, but rather the service providers such as telephone or cable television compardes serving the ultimate end users. · All four scenarios represent a basic initial network consisting of a core fiber backbone and a first stage, upgradeable distribution system. · The first stage distribution system will support digital service line (DSL) transport over copper at up to 12 megabits per second (mbps) and cable modem transport over coaxial cable at up to 30 mbps. · Such transport capabilities over the copper and/or coaxial cable distribution system sections may prove to be adequate for residences and even smaller businesses for many years and are an economical step to begin broadband connectivity in the community. · The direct fiber connections (4% of residential and 30% of business) are an example of what an ultimate all-fiber network would be like. Transport capacities are no longer limited by transmission media but by the capability of system electronics, currently capable of multiple gigabit per second (1000 mbps) transport. · Revenue estimates for direct fiber connections are based on individual and multiple T-1 (1.5 mbps) transport. This is deliberately conservative as large direct fiber users will be paying for T-3 (45 mbps), OC-3 (155 mbps) and even faster transport, the revenue for which is not included in the analyses. Revenue Sources · PA Telecom will offer service providers access to end users via the network, and charge the providers a "transport fee" based on gross revenue generated. · Reports filed by service providers at the WUTC, indicate their costs to provide service fall into the following three general categories: - Network operations (customer service, billing, engineering, equipment, etc.) - Content or programming, and The transport system (the network) · The records show that the last category, transport costs, range from 38¢ to 45¢ per revenue dollar. PA Telecom's transport fee to providers has been set at 30% of the provider's retail charge to the end-user. Using cable television as an example, the cable company will charge the individual home user $39 per month (Ultra Basic Package 5) and PA Telecom's revenue would in turn, be $11.70 per month. · Where a partner's last mile infrastructure is used (Scenarios 2-4) PA Telecom's transport revenue is shared equally with the partner. In the cable television example, PA Telecom and the cable partner each receives $7.50, half of the transport fee collected. · Service providers will be asked to pay a one-time connection charge for all new drops, whether fiber or copper, constructed by PA Telecom. It is assumed the providers will pass this charge on to their end user customers affected. · The one time connection charge will cover the cost of the drop and is: $1,450 per direct fiber drop $322 per copper drop · The City should stimulate the demand for direct fiber drops by providing incentives such as a low cost financing program to cover the incremental difference between the copper and fiber drops. This will rapidly increase the number of high bandwidth end-users. · Unit prices used for revenue calculations are based on available records of tariffs and provider charges for delivering voice, data, cable television services and expectations of future market prices. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 24 FEASIBILITY ANALYSES Financing Options For feasibility analysis purposes, and consistent with City participation in the project scenarios, the yardstick of municipal financing, that is, the ability to meet bond issuance requirements, has been used to measure feasibility. Financing options available depend on the alternative chosen for development of the proposed project. Besides participant cash contributions, various means of public and/or private financing are available. The analyses assume the latter option, that the project will be 100% financed. · A City sponsored project would have recourse to public funding sources such as municipal bond issues, supported by revenue (revenue bonds) or taxes (general obligation bonds). Revenue bonds would be the preferred financing method for a City sponsored project. · A City/private partnership alternative can combine features of both public and private financing sources. Care must be observed regarding lending of credit by the City and other legal constraints, but at this time preliminary investigations~ indicate funding can be arranged. The City's participation in any of the PA Telecom development scenarios wilI be tttrough its Public Works and Utilities Department. For simplicity, the analyses herein assume the issuance of electric utility revenue bonds, even though the eventual financing may take another form% especially in Scenarios 2-4, where private partners are involved. Basis of Feasibility Analyses The feasibility analysis of the PA Telecom project is based on the following items: · Electric utility revenue bonds backed by strong financial commitments could reasonably be expected to receive an investment grade rating and an average interest rate for these bonds would be in the range of 8.0% to 10% depending on the strength of the contracts with key customers. · An 8% rate is used for Scenario 1 and 10% for Scenarios 2-4. · The State of Washington recognizes a 7-year life cycle for equipment, a much shorter period than the life cycle of optical fiber. The equipment life cycle is shorter, not because of physical deterioration but because of obsolescence and improved new technology. The term of the financing therefore has been set at 10 years, a reasonable overall assumption. · City electric utility revenue bonds will require coverage of net user revenue to annual debt requirements of at least 1.3 times the debt service requirements. · Revenue bonds will require a debt service reserve fund (DSRF). The required amount in the DSRF is generally the lesser of: - I 0% of the par amount of the bonds 100% of maximum annual debt service, or - 125% of average annual debt service. · The DSRF is used to pay for debt service in the event that net revenues in any one year are insufficient to pay debt service. · The par value of the revenue bonds required, calculated in the feasibility analyses for each scenario (Appendices 10-13), are: Scenario 1 City project, $10.26m - Scenario 2 City/cable partner project, $5.0m Scenario 3 City/telco partner pro~ect, $4.9m - Scenario 4 City/cable/telco partners project, $5.7m :°MCC private communication with City F~nanc~al Consultant, Steve Ga}dos, Gaidos Consult/nm, 4/3/01 METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 C. Project Analyses page 25 Project Feasibility Project Feasibility, expressed as debt coverage (net revenue/annual debt service) and annual cash balances, is summarized in Table 9, shown with its accompanying charts on the next page. Detailed feasibility calculations for each scenario are given in Appendices 10-13. Alternative Financing Yr 1 Yr Z Yr 3 Yr 4 Yr g Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Project Scenario Sm Int % Yrs Debt Coverage I, City 10.26 8.0% 10 n/a 3,61 2.91 2.49 2.02 1,71 1.45 1.33 1.30 1.34 1.84 2. City/Cable 5.00 10.0% 10 n/a 132 1.42 2.01 2.52 3.11 3.77 4.51 5.30 6.14 7.05 3. Cityf[elco 4.90 10.0% 10 n/a 3.75 6.56 8.91 10.85 1Z.61 14.22 15,69 17.05 18.30 19.60 4. City/Both 5.70 10.0% l0 n/a 3.83 6.78 9.26 11.32 13.18 14.87 16.42 17,83 19.13 20.47 Ending Cash Balance, Sm 1. City 10.26 8.0% 10 6.63 4,00 2.93 2.28 1.56 1.08 0.69 0.51 0.46 0.53 0.82 2. City/Cable 5.00 10.0% 10 0.02 0.16 0.36 0.87 1.32 1.83 2.41 3.04 3.73 4.46 5.26 3. Cityftelco 4.90 10.0% 10 0.06 2.19 4.44 6.31 7.86 9.26 10.54 11.72 12.80 13.80 14.83 4. City/Both 5.70 10.0% 10 0.08 2.62 5,36 7.66 9,57 11.30 12.87 14.30 15.61 16.82 18.06 Z5 3.; 3.75 ~-; 10 4. City/Botl' ($5.7m 10% lOyr) ~ 5 3. City/Telco ($4.9m 10% 10 yr) Z. City/CaMe (SS.Om 10% 10 yr) I Z 3 4 5 6 7 1.Clty($10.3m 8% lOyr) 8 - ' -I'roJectlrear 9 t0 11 ZO 'i -- := I 3.City/Telco($4.gm 10% lOyr) ua 0 Z. City/Cable (SS.Om 10% 10 yr) t Z $ 4 5 6 7 --~ 1.City (S10.3m 8% lOyr) Project Year 8 9 1011 lable 9: Summary of Proiect Feasibility METRO?OLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 D. Findings and Discussion page 26 ANALYSIS FINDINGS Existing Hindrances to Broadband Telecommunications in Port Angeles · The capital expenditures necessary to develop telecommunications infrastructure are the largest limiting factor hindering broadband telecommunications in Port Angeles. · Private providers of telecommunications infrastructure are currently unwilling to make the capital expenditures necessary to provide broadband telecommunications infrastructure to the whole city. · The cost of last-mile connections to each individual home and business is the largest expense in the deployment of broadband telecommunications infrastructure. City Commitment and Opportunities to Enable Broadband Telecommunications · The City of Port Angeles has established an economic development goal that includes evaluation of the feasibility and cost/benefits of enabling broadband telecommunications in the city. · The City's commitment to enable broadband telecommunications is tied to a Community Telecommunications Action Plan and schedule approved by Council on October 17, 2000. · The primary measure of economic development success is the number of ultimate end-users that can be immediately benefited. · Economic development success is the most compelling reason to partner with owners of existing infrastructure to reach the greatest number of Port Angeles residents and businesses. · Concurrent cable franchise renewal and institutional network negotiations provide the City with an excellent immediate opportunity to develop broadband infrastructure through upgrading of the existing cable television infrastructure. · Infrastructure development opporttmities, however, are not limited to the immediate opportunity, and four project scenarios, the original Power Engineers City Backbone project and three additional consortium scenarios, have been investigated for consideration by the City: Original City Backbone Project Scenario 1: City developed and owned project Additional Consortium Projects - Scenario 2: City/Cable provider partnership (immediate) - Scenario 3: City/Telephone provider partnership - Scenario 4: City/Cable/Telephone consortium · All four scenarios are based on construction of a new fiber optic backbone ring. Scenario 1 includes a new fiber/copper distribution system. In Scenarios 2-4, the fiber backbone is connected to existing distribution networks of last-mile infrastructure to reach the homes and businesses in Port Angeles. Financial Analyses and Findings · The financial analyses of the options show that all four scenarios are feasible. · All three consortium projects (Scenarios 2-4) however, are superior to the original City stand-alone project (Scenario 1) in meeting the City's economic development goals, as well as providing cost savings, greater returns and mitigation of risk. · Over the analysis period of 10 years, the total capital cost of the City project (Scenario 1) is the highest at $10.70 million. · For the consortium projects, total capital costs range from a low of $5.32m for Scenario 2, $5.83m for Scenario 3 to a high of $6.84m for Scenario 4. These costs are detailed in Table 7. · All four scenarios would require financing to bridge an initial shortfall in available funds during project construction. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 D. Findings and Discussion page 27 · The financing required, based on a 10 year repayment period and interest as shown is: Scenario 1: City developed and owned project $10.26 million (8% interest) - Scenario 2: City/Cable provider partnership $5.0 million (10%) - Scenario 3: City/Telephone provider partnership $4.9 million (10%) Scenario 4: City/Cable/Telephone consortium $5.7 million (10%) · Revenues from the project consist of one-time connection charges, and a transport charge calculated as a percentage of provider product and service revenues. · Over the analysis period of 10 years, the total revenues of the City project (Scenario 1) are the lowest at $10.65 million. · For the consortium projects, total revenues range from a low of $12.94m for Scenario 2, $39.26m for Scenario 3 to a high of $47.26m for Scenario 4. These revenues are detailed in Table 8. · Feasibility for the projects is measured by the requirements for municipal revenue bond financing, that is by debt coverage and annual ending cash balances. · Debt coverage for the City project (Scenario 1) is the weakest, not exceeding 1.3 until year 9. Debt coverage in the initial 8 years is artificially maintained above 1.3 by the large front end financing required in year 1 to supplement the inadequate revenues. · Debt coverages for the consortium projects are very strong, ranging from 1.32 to 7.05 for Scenario 2, from 3.75 to 19.6 for Scenario 3 and from 3.83 to 20.47 for Scenario 4. These figures are detailed in Table 9. · Ending balances for the City project (Scenario 1) are the weakest, not showing profitability until year 9. Positive ending balances in the initial 8 years are artificially maintained by the large front end financing required in year 1 to supplement the inadequate revenues. · Ending balances for the consortium projects are very strong, showing profitability immediately and increasing annually to $5.26m for Scenario 2, to $14.83m for Scenario 3 and $18.06m for Scenario 4 in year 10. Conclusions The findings above indicate that any of the consortium projects will meet the City's goals, be superior and easier to implement than a standalone City developed and owned infrastructure project. The findings also indicate the City has a good existing opportunity to develop broadband infrastructure through the current cable franchising renewal. At the minimum, the opportunity can yield a limited non- commercial institutional network. A City developed network, although feasible, is therefore the last choice that the City should consider. DISCUSSION Strategic Direction Based on the findings of this report, a strategic direction is recommended, and is shown graphically in Figure 4. The chart indicates that the City should proceed with Scenario 2 (City/Cable partner) and aggressively negotiate with Northland Cable to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Concurrently, the City should also proceed with work on Scenarios 3 and 4 for the following reasons: · The City should keep developing ail available options. The concurrent negotiations will also maintain a competitive atmosphere that will be an incentive to Northland as well as other prospective partners. · Although the parties are currently very cooperative, there is no guarantee that the Scenario 2 negotiations with Northland will achieve the schedule or all the results desired by the City. Proceeding concurrently with other consortium negotiations will provide the City with ready alternate options and protect the critical schedule. METROPOLITAN COMMUNiCAT]ONS CONSULTANTS 5/1/2001 D. Findings and Discussion page 28 · One example of the need to keep developing all the City's options is the City's ongoing discussions with CenturyTel, a stakeholder in the Sappho Gap project, previously described on page 3 of ti'ds report. The project received state grant funding on April 19 2001, as a result of which, CenturyTel has become an even more significant potential partner for the City. The opportunity to develop the City's relationship with CenturyTel should be grasped now and should not be delayed. · Lining up a potential CLEC partner such as CenturyTel is consistent with the "quick strike" strategy embedded in all scenarios. The strategy is to build high bandwidth fiber drops to City, educational and other public institutional users as well as major commercial users in the first years of any scenario. This enhances the ability for a CLEC such as CenturyTel to offer competitive services early on to public and business users, their targeted market. Should the [ Rec°mmended Strategic Direction i Northland negotiations with under Scenario 2 be t o.1'~ Fr~l~ r~l~ F~a~se successful, the Int~ ~ er0~l terminated, although as a practical matter, ~e~c~a~e~50ta~ Ne~o~$ they will probably R~qu~ ~ ~roaaer~ Ca~/ y ~i~ I[ transitioning Proposal Reasoflal~ ~t? - ~ mn~e · Scenario 2 into I : I ' Ordinance I Scenario 4. If none of , the partner or Other Srenario 13 and 4) #egotiatiens still has the opt/on of proceeding by itself V under Scenario 1. {;it,/Developer (S~e~a6o 1) Port Angeles Telecommunications Nehvod4 Implementation Figure 4: Recommended Strategic Direction METROPOLITAN COMM, UN[CAnONS CONSULTANTS ~/1/2OO1 D. Findings and Discussion page 29 Work and Operations Planning Framework The framework for a work plan for negotiation of the cable television franchise and development of a consortium project, covering four major task areas, arranged by type of work and anticipated timing is given in Table 10. 1~mess Plan Analyses [X I I Cound~ UAC, Ob' Council g. Consortium Planning ! j 1. Structure and Organization X City staff outsource as req'd · . i City staff outsource as req'd b. Rnancial and Accounting j Il J City staff outsource as req'd c Legal and Regulatory I B City staff outsource as req'd d~rechnicaJ Rerwces J X I J City staff outsource as req'd f~roduct Development J X City staff outsaurce as req'd ~ Narkebng I X City staff outsource as req'd A~ Solicit~tio. '~ l~)repare Conso~um RFP X i PW&U outsource as req'd 2. issue Consonrurn RFP J X L ~ ~&U outsource as req'd 3 Evaluate RFP Responses X ~ I I J 3. Eva uate RFP Responses I X ' j ! City staff outsource as req'd 4, Determine Strategic Relationships I B j J] i City staff outsource as req'd 5. Select Partners for Consortium Negotiations I] X iJ l ii ~ City staff outsource as req'd g. Consortium Building '~l J J ir 1. Develop Consodium Agreements I X J j City staff outsource as req'd a. Define Member RolesI XJ J City staff outsource as req'd b Specify Product/Sep~ices Areas X I[ City staff outsource a5 req'd c Set Pricing Schedules X~ City staff outsource as req'd d Financing Commitments J X j City staff outsource as req'd e Timeline Agreements X I City staff outsource as req'd 2 Negotiate Agreements X j City staff outsource as req'd 3 Conclude Agreements ]J I City staff outsource as req'd 4. Eslablish Consortium X City staff outsource as req'd Notes: CHgr Consodium Manager (City of Port ArJgeles) PW&U- Pu blic Works arid Utilities CH---- Consortium Member UAC- UtilityAdvisoryCommittee Table 10: PA Telecom Consortium Operations Framework METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 D. Findings and Discussion page 30 A. Consor~ium Operations 1. Operations Setup CMgr outsource as req'd 2. Network Pfanning CHgr CM or outsource a. System Standards and Specs CHgr CN or outsource b. Comprehens~,e Plan CHgr CM or outsource c. Prepare Cap,al Construction Program CMgr CM or outsource d. Prepare Operating Budget CHgr CH or outsource 3. Project Design CHgr CH or outsource a. Transmission Infrastructure CHgr CH or outsource b. Network Equipment CHgr CM or outsource 4 ProJect Financing CHgr CH or outsource a Review for Financing Constraints CHgr CH or outsource b. Opinion on Proposed Finandn9 CHgr CH or outsource c. Complete Project Financing CMgr CH or outsource d. Sources & Amounts of Owner Capital CHgr CM or outsource 5. Customer Development CHgr C~4 or outsource a. Solicit Prospective Customers CMgr CM or outsource b. Sign-up Key Customers CMgr c. Execute Service Contracts CHgr 6 Project Construct$on CMgr a, Solicit Bids CHgr outsource as req'd b Construction Contract Awards CHgr outsource as req'd c Construct Backbone Facilities CHgr Contractor, CH d. Construct Network Operating Center CHgr Contractor, CH e. Construct Backbone Nodes CHgr Contractor, CM f. Construct Distribution Facilgies CHgr Contractor, CH g. Procure and InstaLl Equipment CHgr Contractor, CH h End to End System Tests CHgr Contractor, CH I Operator Training CMgr Contractor, CH j Project Acceptance CHgr ~ 7 Begin Network Operations > '~, CHgr Notes: CHgr Consortium Hanager (City of Port Angeles) PW&U -- Public Works and Utit~ties CH ---- Consodium Member UAC-- Utility Advisory Committee Table 10: PA Telecom Consortium Operations Framework (continued) Ongoing City Telecommunications Initiatives Beyond initial development of the project and on an ongoing basis, the City can make Port Angeles attractive to both telecommunications users and providers. This should be done regardless of what decisions the City might make regarding infrastructure development. City action, such as leveling the playing field to attract competition, creating a favorable telecommunications environment and developing community readiness will enable the City and the Port Angeles community to take full advantage of whatever infrastructure is eventually realized. The City has already taken action on several of these items and may consider collaborating with interested community and economic development organizations and groups to pool resources and efforts in pursuing these objectives. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2001 E. Recommendations page 3~ RECOMMENDATIONS The following recommendations are made for consideration and action by the City of Port Angeles: Administrative and Procedural · The City should review this report and analyses and satisfy itself that it concurs with the findings and recommendations proposed. · The City should invite selected community representatives to assist it in reviewing the report. · The City should request the City Utility Advisory Committee to review and recommend City Council acceptance of this study. · The City should assign responsibility for implementing individual work plan tasks to qualified and appropriate parties. Preliminary assignment suggestions are shown in Table 10. Policy and Strategic Direction · Proceed with a telecommunications network consortium project. · The City of Port Angeles should take a strong, pro-active leadership role in developing and managing the consortium. · The infrastructure project should plan to connect the majority of end users through private partner last-mile infrastructure but concurrently offer the option of direct fiber drops to larger customers needing more bandwidth and willing to pay for the required fiber drop. · The City should stimulate the demand for direct fiber drops by providing incentives such as a low cost financing program to cover the incremental difference between the copper and fiber drops. This should rapidly increase the number of high bandwidth end-users. · The City should focus on attracting Qwest, Olypen, other owners of infrastructure, and telecommunication service providers to a City led infrastructure development consortium. · In dealing with prospective partners, the City should provide incentives and determine how it might build their markets to make their participation in a consortium more attractive and justifiable. · The City should undertake development of a project on its own project only as a last choice, in the event no others will step forward or join it in the project development. · At a minimum, should unforeseen difficulties arise with development of the broadband infrastructure, the City should strive to obtain an institutional network for non-commercial public use. Broadband Infrastructure through Cable Television Franchise Renewal · The City should use the opportunity provided by the current cable franctrise renewal proceedings and aggressively negotiate with Northland Cable to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Consortium Implementation · The City should keep developing all available options by concurrently proceeding with work on Scenarios 3 and 4. · The concurrent negotiations will maintain a competitive atmosphere that will be an incentive to Northland as well as other prospective partners. · The City should formalize the consortium building process to implement time frame goals. · Prepare and distribute a Request for Partners (RFP) document to private telecommunications companies. A sample table of contents for an RFP is given in Appendix 15. · The RFP process should run in parallel and in close coordination with the Cable Franchise renewal process currently underway. · Delay the engineering design phase of the project, awarded to MCC, until the consortium is finalized. · Begin planning for the capital budgeting process. METROPOLITAN COMMUNICATIONS CONSULTANTS 5/1/2OO1 The Port Angeles Telecommunications Network Business Planning Analyses Appendices May 1, 2001 This document contains proprietary materials furnished by MCC to the City for internal use and is not intended for distribution Prepared for City of Port Angeles P.O. Box 1150 321 East Fifth Street Port Angeles, WA 98362-0217 METROPOLITAN COMMUNICATIONS _ CONSULTANTS Seattle: 5847 McKinley P~ N., Seattle, Washington 98103 Tel: 206 522.6778 Fax: 208.522,6777 Tacoma: ] 201 Pacific Avenue, Suite 1702, Tacoma, Washington 98402 Te]: 253 272.1636 Fax: 253.272.1482 www.mcco.com Appendices page 34 PA TELECOM THE PORT ANGELES TELECOMMUNICATIONS NETWORK BUSINESS PLANNING ANALYSES APPENDICES May 1, 2001 Appendices 1. Project Feasibility Summary ............................................................................... 35 2. Proiect Capital Costs - Scenario 1 City Proiect.....: ............................................. 36 3. Project Capital Costs - Scenario 2 City/Cable Partner ................................... 37 4. Project Capital Costs - Scenario 3 City/Telco Partner ...................................... 38 5. Project Capital Costs - Scenario 4 City/Cable/Telco Partners ...................... 39 6. Annual Revenues - City Project ......................................................................... 40 7. Annual Revenues - City/Cable Partner ...........................................................41 8. Annual Revenues- City/Telco Partner ............................................................42 9. Annual Revenues - City/Cable/Telco Partners .............................................. 43 10. Project Feasibility - City Project ......................................................................... 44 11. Project Feasibility - City/Cable Partner ............................................................ 45 12. Project Feasibility - City/Telco Partner ............................................................ 46 13. Project Feasibility- City/Cable/Telco Partners .............................................. 47 14. Qwest Port Angeles Laurel Street Central Office Switch Data ...................... 48 15. NoaNet Route Map ................................................................................................ 49 16. Sample Outline Request for Consortium Partner Proposals ............................ 50 17. Telecommunications Needs and Solutions Workshop ..................................... 51 METR©POL]TAN COMMUNICATIONS CONSULTANTS Proprietary and Confidential 5/1/2001 Appendices page 35 Appendix 1: Project Feasibility Summary METR©~OL[TAN COMMUN]CATIONS CONSULTANTS Proprietary and Confidential 5/1/2001 Appendices Fage 4~ Switch Code PTANWA01 DSO Central Office Name Port Angeles Address 406 S Laurel St (CO) City Port Angeles State WA Equal Access Date 12/I 7/88 Host Switch Tandem Switch S1~LWAO6C9T Vertical Coordinates 6236; Horizontal Coordinates 9065 LATA 674 Existing Switch Type DMS1 O0 Replacement Switch Type :: Replacement Switch Date Existing Switch Sol, rare [EcoIo Replacement Switch Software LECO13 Software Replacement Date 06106101 Business NALs 6454 Residential NALs 15463 ISDN Date 04/24/95 Oass Date 06/15/95 557 Date 06/25/94 % Digital Loop Carder 16% Total Usage 38471669 Area Code(s) 360 Data Residential Business Network Access Lines (NALs) 15,463 6,454 ~area within PA/xcha~lge Assumed 60% Assumed 60% Lines within City 9,278 3,873 Lines/unit 1.2 3.5 Total units within City 7,732 1,107 Appendix 14: Qwest Port Angeles Laurel Street Central Office Switch Data= 2: http:/ /www uswest¢om/cgi-bin/iconn/iconn..central.pl MEIROPC)L]¥AN COMMUNtCATI©NS CONSULTANTS Proprietary and Confidential 5/1/2001 Appendices page 49 Appendix 15: NoaNet Route Map METROPOLITAN COMMUNICATIONS CONSULTANTS Proprietary and Confidential 5/1/2OO1 Appendices page 50 Appendix 16: Port Angeles Telecommunications Network Sample Outline Request For Consortium Partner Proposals Introduction Purpose of the Request Background Scope of Project Goals Procedure for Responses Inquiries Submission of Responses Response Process Timeline Confidentiality of Responses Business Proposition Description of the Business Business Summary Products and Services Costs and Revenues Projected Returns Network Description General Description Design Criteria Network Management Implementation Scheduling Partnership Partnership Description Organization Partnership Management Partnership Policies and Activities Data Requested from Respondents Intentions and Capabilities Role Desired Desired Market Segments Competencies, Capabilities and Strengths Ability to Meet Partnership Requirements Respondent's Data Appendices Map of Proposed Network METROPOLITAN COMMUNICATIONS CONSULTANTS Proprietary and Confidential 5/1/2001 Friday, March 30, 2001 Telecommunications Needs and Solutions Workshop U IO:OOAM ~ NEEDS AND N SOLUTIONS S WORKSHOP Appendix 17: Telecommunications Needs and Solutions Workshop page 5g ~)en-~ee P~oduction$ 670 Lotzgesell I~oad Sequim, WA 98382 Ph: (360)- 683-2677 TELECOMMUNICATIONS NEEDS AND SOLUTIONS WORKSHOP, 3/30/01 WORKSHOP FORMA T/PURPOSE: In an effort to analyze the community and customer support for the establishment of a community fiber optic, or telecommunications backbone, the City of Port Angeles contracted with Den-Ree Productions of Sequim, Washington to organize a process to conduct group interviews, or focus groups to obtain input. Through working with the City of Port Angeles and Metropolitan Communications Consultants, Den-Ree Productions finalized a list of 10 specific questions, focusing on different aspects of the telecommunications backbone plan. These ranged from how such a network could be employed in the community, to the respective advantages and disadvantages of such a network (see detail in summary report for a listing of all questions). Den-Ree Productions met with two focus groups and led them through a discussion on several topics, starting with broad questions, gradually moving the group to more focused discussions. The workshop was held in Port Angeles on Friday, March 30% 2001. The discussion was broken into 2 different workgroups in order to improve the responsiveness in each session and the deployment of the discussion topics. Each of these sessions lasted approximately 2 hours using the following agenda: 1). Introduction of participants 2). Brief explanation of the city's planning effort 3). Interactive discussion and evaluation of key questions In order to preserve objectivity, participants were only allowed to attend one of the two workshops, thereby entering the process from a fresh perspective. During the workshops, participants were presented each question and then asked to write their responses on cards that were then collected and shared with the group. The discussion allowed the panel to help the facilitator group the responses using a process known as 'storyboarding', posting the response cards under general headings. Once a series of questions were completed in this manner, participants were then asked to come forward and analyze all of the responses on the storyboard. Using stickers and a point value system, participants were able to make one final, "close-up" review of the cards for each question and assign top priority to the responses they felt to be most critical to each question. This not improved the dynamics of the discussion, but allowed for a "second look" by viewing all of the responses collectively as they were prioritized. D£N-R£E PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 53 The cards were then collected off the board and point values calculated (see summary report). ]n addition, notes and audio recordings of the workshops were collected to provide an additional, detailed record of the process. WORKSHOP PARTICIPANTS: In selecting the workshop participants, the City of Port Angeles and Den-Ree Productions endeavored to include a broad range of both potential customers of the telecommunications backbone, but also those who represented specific segments of the population such as local government, health care, small business and the public-at-large. Workshop "A" 10am to 12noon Bob Jensen- Angeles Communications Bill Robards- Excel Utilities Construction Alan Bentley- Port Angeles Business Association Dan Gouin- Clallam County Central Services Bill James- Port of Port Angeles Dave Meyer- Clallam County Central Services Steve Baxter- Port Angeles School District Evan Boyd- Olympic Medical Center Workshop "B" 1pm to 3pm Jerry Nichols- Port Angeles Chamber of Commerce Sandi Jerome- Science, Technology, Manufacturing Association Greg Scherer- Pacific Rim Hobbies (small business) Emma Janssen- Peninsula College Gar), Smith- Olympic Medical Center Katy Stansifer- Clallam County Economic Development Council Eileen Knight- Port Angeles Downtown Association (business) Joan Sargent- former Port Angeles Mayor (citizen-at-large) Paula Johnson- First Federal Savings and Loan Dan Englebertson- Clallam County/Pencom Kathy Prince- Daishowa America By incorporating a broad range of workshop participants, the process was able to include input covering not only the operation of the telecommunications backbone, but general opinions about the projects' viability and expense from leading community members representing a variety of viewpoints. In addition to the workshop participants, the event also included an hour-long panel discussion with local telecommunications service providers representing telephone and data carriers, cable television and local Internet service providers. They included: Pete Grigorieff Northland Communications John Ut]ey Fairpoint Communications Fred Mitchell Clallam County Public Utility District Ned Schumann Olympus Net Terry Kennedy Olypen Tony Nicholson Century Tel Sheldon Koehler Tenforward DEN-REE P~OiJ ~CT~N g 5/I/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page Den-I~ee Productions 670 Lotzgesell Road Sequim, WA 98382 Ph: (360)- 683-2677 TELECOMMUNICATIONS NEEDS AND SOLUTIONS WORKSHOP- EXECUTIVE SUMMARY Overall, 19 participants took part in the Telecommunications Workshop on March 30, 2001, generating between 250 and 300 response cards on 10 key questions that were developed for the focus group component of the business plan. (These are detailed in the Detailed Report). The primary findings are as follows: 1. What telecommunications services needs does your organization have in PA today? Are there any un-served broadband needs? Are your needs changing? If so, how? Participants first considered their present, unserved telecommunications needs with the demand for high-speed connectivity clearly ranking as the most important demand that's not being met with the present infrastructure. Participants were then asked to list the areas where they had specific telecommunica~ons needs in their organizations today, or in the community as whole. As with many of the questions throughout the workshop, the panel clearly said they not only want "fast" telecommunications services, but also want them at "affordable" prices. Finally, the groups were asked how their telecommunication needs could change in the future. The prospect for the convergence of combined telecommunications services (TV, phone, Internet) emerged on top. Business people who participated further expected the need to compete, or offer new services via the Internet. 2. How would your organization use a broadband wide area network if it were available and affordable? Workshop participants were asked to consider how they might use the telecommunications backbone if it were available now, at an affordable price. The morning panel's involvement in local government clearly showed with the top selection favoring remote connectivity and service to offices and departments scattered at various locations around the community. Other top responses included the prospect for video conferencing and remote training and education for people who cannot t-ravel to attend school. 3. Is development of a broadband network throughout PA important? Should investment be limited to those areas that make economic sense or should the City pursue citywide development? How could an investment in a citywide project be justified? Participants in the morning workshop clearly believed that the network should be developed beyond a "limited model", in order to include more population in potential services and improve economic impacts throughout the community, although cost was mentioned as a factor. The afternoon work group suggested a "limited" deployment might be a possible path for initial network development, using partners for expansion. At the same time, the participants felt a large deployment is necessary if the network is going DEN-REE PRODUCTIONS 5/112001 Appendix 17: Telecommunications Needs and Solutions Workshop page 55 to have the greatest benefit, in the shortest period of time. In fact, they saw partnerships as key to overcoming service limits. Participants felt economic development and education opportunities were a primary means of justifying the network in a community network. 4. What are the advantages/disadvantages of a City partnership in a broadband telecommunications backbone to enable broadband services for business? Not surprisingly, the issue of "cost" topped the list of "advantages". When it came to disadvantages, the functions and use of a joint network, such as security of documents and information management were mentioned. The afternoon group saw specific advantages to such a partnership, not the least of which was the rate of broadband deployment, and the use of existing technology, although the panel expressed concerns about working out the details of such a partnership. 5. Is "open access" and competition important for the advancement of broadband telecommunications services? The morning group simply said "yes", open access was important. The afternoon group felt open access could benefit the consumer, with more options, better service and lower prices. 6. What criteria should the City use to evaluate proposals to develop a broadband telecommunications infrastructure? Quality of Service, cost and Return on Investment emerged as the top considerations, with other suggestions such as "access to many or all", and consideration of existing resources and how to integrate those into the network. Other factors included reliability, technology and experience (of potential partners). 7. What needs do public, educational and governmental organizations have that may go un-served if a broadband infrastructure is not developed? The morning group clearly showed a determination that the network should be constructed, again with the cost of development a theme in their responses. The afternoon panel, with a greater number of business representatives, expressed concerns that the lack of a network would slow economic growth and hart the community's ability to compete in attracting new business. 8. What obstacles would need to be overcome with "last mile" infrastructure? In this question, participants were allowed to fi'eely touch on a variety of challenges that must be bridged with the "last mi]e" deployment of a community network. The cost of that development was the primary concern, but others worried about the time for construction, administration, how to avoid construction disruptions to the community and convince people of the importance of building the network. 9. What types of business/industry could we attract to PA if broadband services were available? These responses touched on a variety of business sectors that need broadband in order to compete in today's markets including call centers, engineering/architectural firms, high-tech research and development and any "businesses that use Internet distributed & developed products & services." Some suggested the network could attract "any business who brings employees who have high expectations in the area of high speed connection & services". 10. Should the City be involved in providing telecommunications services, or only be the service provider of last resort? The groups were asked to separate their answers into subheadings of "advantages" and "disadvantages" of the City of Port Angeles actually providing the telecommunications service. Generally, most in the morning workshop saw the disadvantages of this scenario, saying, "government should not be competing as a private enterprise". But the afternoon panel felt that the city could/should actually take steps to insure the availability of service if necessary, although they expressed concerns about the city's expertise and expense of such a deployment. DtN-R~E PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page TELECOMMUNICATION SERVICE PROVIDERS PANEL DISCUSSION During the period of time between workshop sessions, participants also had an opportunity to hear a one hour panel discussion involving telecommunication service providers representing telephone and data services, cable television and local Internet service providers (see background report for a complete listing). The various representatives related steps their firms were taking to improve, or expand their services in the future. All related an interest in expanding service offerings, although they said that costs of service must be taken into account. Some did express an interest in partnering with the city and showed support for "open access" to a local telecommunications network. ben-Ree Productions 670 Lotzgesell Road Sequim, WA 98382 Ph: (360)- 683-2677 TELECOMMUNICATIONS NEEDS AND SOLUTIONS WORKSHOP- DETAILED REPORT POINT SYSTEM: During the workshop, participants were asked to rank the individual response cards to each of the questions, using stars with the following point system, with the most points awarded to the responses they felt best reflected their primary feelings or opinions under each question. Each participant was allowed to have a gold, silver and blue/red vote for each question heading (or sub-heading). Gold = 5 points Silver = 3 points Blue/Red = 1 point AM Workshop (See listing of participants in previous section) Question #1 1). What telecommunications services needs does your organization have in PA today? Are there any un-served broadband needs? Are your needs changing? If so, how? Because of the complexity of this question, the group was asked to break their responses into subsections. DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 57 Unserved Needs: Participants first grouped their present, unserved telecommunications needs with the demand for high-speed connectivity clearing ranking as the most important demand that's not being met with the present infrastructure. -High speed connectivity to remote locations, i.e. - fiber, T1, etc. *26 points* Other responses included not only the demand for broadband service, but also the desire to use such bandwidth to implement additional services, such as video/voice/data throughout the community. - "DSL or equivalent services" '18 points* -"Looking to enhance video to the citizens (streaming video to citizens)" '16 points* -"Fiber to remote locations" *6 points* -"Connection to roads and fairground" *4 points* -"Voice and video services across IP network internal or external" *1 point* Other ideas mentioned in ti'tis subsection included: -"Broadband to all schools- voice, data, and video" -" Fiber/broadband connectivity all sites, 4 sites unserved" Needs Today: Participants were then asked to list the areas where they had specific telecommunications needs in their organizations today, or in the community as whole. As with many of the questions throughout the workshop, the morning panel clearly said they not only want "fast" telecommunications services, but want them at "affordable" prices: -"Affordable high speed service" *24 points* -"Organization becoming more dependent on remote locations via WAN connections" '10 points* -"56K > $50 month" *9 points* Others related that present changes in their organizations were impacting their demand for affordable, high capacity bandwidth: -"Changing slowly, need lower cost, more capacity" *6 points* -"Change is a constant thing. There is always a demand for bandwidth" *5 points* -"Always changing, more need for high speed Internet, SAN, video" *3 points* Other responses in this subsection included: DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 58 -"Wireless DSL > $50" -"Yes: A. Work reaches us via lnternet B. Billing is via Internet" -"POTS" -"Reasonably priced, T-1 speed data communications connections - for remote, small # users, locations" -"T-1 connectivity available but at cost-prohibitive rates for small # of users" Change: Finally, the group was asked how their telecommunication needs were changing in the future. The prospect for the convergence of combined telecommunications services clearly emerged on top: -"People want combined services: T.V., Phone, Internet, etc." *28 points* -"Needs changing - will require faster service in order to compete on Internet" '13 points* -"Connection courthouse to Juvenile, D&F, Roads yard, fairground" *4 points* Other responses to this sub-heading for question one focused on specific connections to government locations in the community, especially from Clallam County's standpoint, with the desire for video conferencing capabilities to various locations, such as the Clallam County Juvenile Detention Center, Forks, Sequim, the Clallam Bay Prison, remote office locations like the Clallam County Drug Task Force and other facilities off the Olympic Peninsula~ Question #2 2. How would your organization use a broadband wide area network if it were available and affordable? With the next question, workshop participants were asked to consider how they might use the telecommunications backbone if it were available now, at an affordable price. The morning panel's involvement in local government clearly showed with the top selection favoring remote connectivity and service: -"Link voice, data, video to all internal locations & expand to remote citizens for better service (county services & offices)" '21 points* -"To link remote locations to main network, voice/video/data" '10 points* -"Video delivery SAN's (storage area networks) - voice over IP distance learning (bandwidth capacity)" *9 points* Others suggested the network could be beneficial to local business in reaching customers, providing improved video conferencing or linking existing customer locations: -" Business could use broadband - area network to offer goods and services to all in area" *6 points* -"Video conf. (more efficient - replace dial-up)" *4 points* D£N-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 59 -"Link existing customer sites... (Transfer data business)" *3 points* Other ideas including use of the network for better connections to the Internet, moving data among multiple locations at a better price, or performing services such as invoicing, permitting, bidding and other work throughout the community. Question #3 3. Is development of a broadband network throughout PA important? Should investment be limited to those areas that make economic sense or should the City pursue citywicle development? How could an investment in a citywide project be justified? As with Question #1, this issue was broken down into subheadings to facilitate discussion of the importance of the community developing the network. Limited Investment: First, participants were asked to consider whether there should be a limited development of the backbone, i.e. just to those customers or areas of the city that made strict economic sense. Only one suggestion was made that this be done throughout a partnership with primary users and organizations. -" Citywide develop partnerships with primary/large users/org," *3 points* Citywide: Participants in the morning workshop clearly believed that the network should be developed beyond a "limited model", in order to include more population in potential services and improve economic impacts, although cost was mentioned as a factor: -"It is important, but as county government we can't stop at the city limits" *28 points* -"Broadband services are important to all, county-wide development shall be considered" '11 points* -"Yes, extremely - Citywide development may spread up-front costs over more users, thereby lowering costs" *9 points* -"Hard to say? The locations within the city have the capacity but cost is prohibitive. Citywide and beyond" *7 points* -"Yes, cJtyw]de development, investment necessary economic development" *5 points* Justified: Finally for Question #3, the panel was asked to consider factors that could justify the development of the citywide network. Most clearly agreed with the statement that the network would be an incentive to economic growth and educational opportunities, lowering long range costs by shared use of the network: DEN-REE PRODUCTtONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop ?age -"Econon~c growth incentive better more education. Opportunities long range cost savings - sharing" *23 points* -"Partnerst6p" *9 points* Others said it might be difficult to justify spending the dollars necessary to build the network, but felt a public vote might be helpful in building support for the project: -"Public support (vote?)" *9 points* -"Have the public vote on it, perception is everything" *8 points* -"Increased productivity "or" enhanced efficiencies, $'s are hard to quantify" *4 points* Others suggested that the network could be justified through economic development, and that the proiect "probably can't be justified solely on financial basis, however, government agencies have obligations to provide some services, which are needed but can't be totally justified". Question #4: 4. What are the advantages/disadvantages of a City partnership in a broadband telecommunications backbone to enable broadband services for business? For this question, participants were asked to break their responses into "advantages" or "disadvantages". Advantages: Not surprisingly, the issue of "cost" topped the list of advantages (and was a factor with every response kom the g~oup under this subheading): -" Lower cost" *25 points* -"Expanded opportunities, lower cost (deliver goods)" *8 points* -" Lower investment to City, benefit partners" *7 points* -"Building public support, spread cost" *6 points* -" Better access/availability to information and services" *3 points* Others felt that it would be an advantage to spread the cost of the network between public and private enterprises, and to give business faster connections to serve their customers and clients. Disadvantages: When it came to disadvantages, the functions and use of a joint network, such as security of documents and in/ormation management were mentioned: -"Coordination, prioritization" DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 61 '18 points* -"Mandated security requirements, quality of service, reliability, limited area and scope (court documents, law & justice, financial, individual)" '17 points* -"The functions could be limited by the needs of the city *vs.* the needs of the partner (availability)" *8 points* -"How to service those outside city limits" *3 points* -"Billing/ ownersb2p" *1 point* Others saw issues with the related costs, meeting the demands for service, and a feeling that the general population would not appreciate the cost of the service to business. Question #5 5. Is "open access" and competition important for the advancement of broadband telecommunications services? This was a more general question, with the simple answer of "yes" being the top response. -"Yes" *23 points* -"Yes, competition and alternatives are important" *10 points* -"Yes] Should be available to all or most, Competitive prices down" *5 points* -"Competition will always promote better function at a lower cost" *5 points* -"Yes, levels playing field" *1 point* Others said that the competition stemming from "open access" could help to keep costs down, giving everyone access to the service. Only one respondent answered this question in the negative, saying service providers "will probably need some assurance of cost recovery". Question #6 6. What criteria should the City use to evaluate proposals to develop a broadband telecommunications infrastructure? These responses touched on a variety of suggestions, most related to quality and cost of service: -"QOS & ROI" '13 points* -"Cost, Access to many or all, Quality" '13 points* -"Look at existing resources and their integration" *8 points* -"Level of function serving the greatest # of citizens" *8 points* DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 62 -"Cost, Quality of service" *1 point* -"Needs of the community" *9 points* One panelist wondered how long it would take for the network project to "break even". Question #7 7. 1Arhat needs do public, educationaI and governmental organizations have that may go un-served if a broadband infrastructure is not developed? With this question, workshop participants were encouraged to look into the future and visualize what needs might be unserved if the network is not developed. The morning group clearly showed a determination that the network should be constructed, again with the cost of development a theme in their responses: -"None - Cost is the issue (AvailabIe facilities vs. cost - problem now!)" *23 points* -"They will remain at the current technology for sometime" *8 points* -"Economic development absolutely requires broadband access as a minimum requirement" *8 points* -"inability to have top-notch communications (local)" *1 point* Question #8. 8. What obstacles would need to be overcome with "last mile" infrastructure? In this question, participants were allowed to freely touch on a variety of challenges that must be bridged with the "last mile" deployment of a community network. The cost of that development was the primary, concern: -"Cost & how to allocate cost over business or residential users" '16 points* -"Cost & Time" '14 points* -"Cost, Administration, Remote locations?, Whole county" *11 points* -"Cost, How to implement will little to no disruption to community" *10 points* -"ESA/Permits cost, room on ROW" *5 points* Another panelist expressed concern about the cost of equipment (cable plano and service for servicing the "last mile" Question #9 9. What types of business/industry could we attract to PA if broadband services were available? The panel was asked to group their responses under two headings for this question (" business" and "industry"), although participants placed all their responses under the "business" heading. DEN-REE ~ORODUCYIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 63 Business: These responses touched on a variety of business sectors that need broadband in order to compete in today's markets: -"Call Centers, All Internet dependent bus., Engineering/Architectural, Government" '15 points* -"High tech research and development, Software development" '13 points* -"Information services, Aerospace, Server farms" '10 points* -"Small e-businesses software etc. We already have off Pen. Broadband, Again $$$' *6 points* Industry: The morning group had no specific responses under the "industry" heading. Question #10 10. Should the City be involved in providing telecommunications services, or only be the service provider of last resort? This question generated a number of responses, as well as verbal discussion as the cards were collected. The group was asked to separate their answers into subheadings of "advantages" and "disadvantages" of the City of Port Angeles actually providing the telecommunications service. Generally, most saw the disadvantages of this scenario. Advantages: When considering possible advantages, most of the panelists felt the city should only provide specific telecommunications services if it were a "last resort" situation, although some felt the city could help facilitate the implementation of service, or use of existing infrastructure. -" Last resort" *10 points* -"Only if service were lower cost" *5 points* -"No, possibly in over it's head, May not be cost effective, Control and administration requirements, We would like dark fiber, Not involved (but should facilitate)" *3 points* Other responses that were included but didn't receive any votes, and actually followed more of the "disadvantage" theme: -"Ability to provide service which may not be totally financially feasible" -"May drive costs down and/or increase availability of services" -" No, shouldn't step in (shouldn't be last resort)" -"Partner for competition - best, Last resort - No" Disadvantages: DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page With this subheading, the participants were actually challenged to look at the same question from a different angle. Although the second response was more truly a "disadvantage" consideration, the top choice once more sent a clear message of concern about having the city be that "provider of last resort": -"Government should not be competing with private enterprise" *25 points* -"Telco may not be as responsive in bringing new or better services if revenue is lost" '15 points* PM Workshop The afternoon group (see list in section 1) represented a somewhat different panel, although it was not specifically organized that way. Because of the participant's individual schedules, it developed that the afternoon workshop had a higher proportion of those representing business than the morning group (which had a few more representing local government). The scheduling factor also resulted in a scenario where there was more of a demographic "m/x" in the afternoon group, with the participation of several women (whereas there had been no women on the morning panel). These differences contributed to not only different viewpoints, but also more spirited verbal discussion as the questions were reviewed. Question #1 1). What telecommunications services needs does your organization have in PA today? Are there any un-served broadband needs? Are your needs changing? If so, how? As with the morning session, the group was asked to break this question down into key subheadings. Unserved: Whereas the morning panel had touched on larger, overall network concerns, the small business pari/cipants in the afternoon group hit on more specific problems, especially as it related to POTS (plain old telephone service) and existing voice networks, be they wired or wireless. But like their colleagues in the morning, the afternoon group listed affordable telecom, and especially broadband service as a top priority: -"Broadband options, low cost broadband" *28 points* -"Adequate phone lines (# of lines)" *25 points -"Business focus ISP (no emai! blocking)" '14 points* -"More options for phone services" *11 points* -"lntemet businesses, Home user & home business, faster connectivity" *3 points* -"Reliability of DCS & phones and cell, Cost is high" *5 points* DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 65 One other participant said they would like to be able to watch their local news, and other streaming video over better [nternet connections. NeedsToday: As with the morning group, the afternoon participants made it clear that "more bandwidth at lower cost" is their highest priority. (It should be noted here that the point totals for these and some of the following questions might be somewhat higher than the maximum number of potential points expected for each question. This may have stemmed from some confusion on the part of the participants, as they were "voting", or their enthusiasm for some of the response cards. In any event, since the process was only interested in finding the "top" responses to each question, the slight variances in point totals do not affect the overall findings and conclusions). -"More bandwidth, Low cost broadband" *47 points* -"Last mile broadband" '13 points* -"Video conferencing & streaming video" *10 points* -"Telephone overseas" *6 points* -"Affordable DSL or cable modems" *5 points* -"Broadband Internet access" *5 points* -"Visibility, expanded, markets, cost effectiveness" *4 points* -"Cell phone reception" *4 points* -"Voice data video" *4 points* -"More broadband; >T-l, better connectivity between disparate systems" *3 points* -"DSL better rates" *3 points* -"To establish a web page, lnternet & economical access" *3 points* -"ISDN POP (in PA)" '1 point* Others said "unserved needs" today included: -"Clean, clear pots for data lines (low speed band)" -"Fast, reliable, economical voice- data" -"Interactive communications between citizens and county" Change: The afternoon group's focus on business was reflected in their responses under the third heading for Question #1, i.e. how their telecommunications needs are changing, with the growing demand presented by the Internet and the ability to deliver new services at the forefront. Others DEN-REE PRODUCIlONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 66 (representing the college and the public pointed to the need for on-line education and access to services: -"Increased Internet competition (more competition to local business)" '19 points* -"Deliver more services via Internet (Banking)" '18 points* -"Video conferencing w/the home user- cheap" '14 points* -'Internet via TV" *6 points* -"To utilize Internet retail sales more effectively" *6 points* -"Affordable teleconferencing" *5 points* -"More sites (Internet) require video download" *4 points* -"Customers accessing data remotely, Video conferencing, Video t~aining/Education, Telecommute' *4 points* -"More online instruction" *3 points* -"Access to gov't, info & services, more efficiently" *2 points* Other responses mentioned the need to have more broadband to handle more complex streams information, such as data and pictures, interactive training and conferencing from a central location, sharing of network resources between education and government and private, as we as public video conferencing. Question #2 2. How would your organization use a broadband wide area network if it was available and affordable? Like their counterparts in the morffmg, the participants in the afternoon work session saw a need to extend services between remote locations and their people they serve: -"Video conferencing remote training" *34 points* -"Bring education to homes or businesses (requires Bandwidth) expand to remote areas or for people that cannot spend time to attend school away" *20 points* -"Expectations of 24/7/365 (reliability)" '13 points* -"Market to companies outside area as a benefit" '11 points* -"Extended OMC's connectivity to Docs & other healthcare providers" *8 points* -"We already use DSL- Homes For Sale, Display our product, Relay MIS info, Training" *5 points* Other comments: DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 67 -"Move our product form client/server onsite to ASP (Internet-use firms update once)" -"Video-training/education, Video-Conference, Remote access-data, contractors, employers" Question #3 3. Is development of a broadband network throughout PA important? Should investment be limited to those areas that make economic sense or should the City pursue citywide development? How could an investment in a citywide project be justified? The afternoon group was also asked to break their responses to Question #3 into three different subheadings. Limited Investment: In this area, the participants had more suggestions than the morning group, touching on the concept of using a limited network deployment, with partnerships to help with expansion of the backbone: -"Limited at first, then partner for expansion" *28 points* -"Economic sense (otherwise we'll never get anything) -Important to get something for EDC" *26 points* -"Start with limited for economic development" '14 points* Citywide: At the same time, the participants felt a large deployment was necessary if the network were going to have the greatest benefit, in the shortest period of time. In fact, they saw those partnerships as key to overcoming service limits: -"Yes, it is important, the largest area of development should be pursued. When you limit the area, it increases the digital divide to those outside the area. Citywide at a minimum." *25 points* -"Should quickly develop those services that make economic sense. The rate of change is too great for this to be a five year project. Similar to how roads are developed." 'I9 points* -"If there are no partnerships for investment, there will be limits of service" '15 points* -"Yes, More than citywide, W/o some idea of the cost - can justify" *5 points* Justified: The afternoon group clearly felt that economic development was a primary means of justifying the investment in a community network. Unlike the morning workshop, no one mentioned the idea of putting the question to a vote: -"Attract business who need this service level" *27 points* -"To attract firms to locate (in the served area) & increase jobs & sales of products for health & stability of our area" '15 points* DEN-REE PRC)OU/JIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 68 -"Economic development attract hi tech co. better gov't serv. opportunities for sm. Business for outreach" *10 points* -"Equal ground with metropolitan area" *9 points* -"Economic der attract high tech companies" *5 points* -"Increased competition (i.e. lower cosl ~ of services provided over wire. More providers (TV, phone, Internet)" *5 points* -"Improve health of "individuals" by giving HC providers better information- faster" *4 points* -"Delivery of social services to outlying populations" *3 points* -"Better services attract seniors for retirement" *3 points* Other responses included: -"Provide better services (by our gov't)' -"Provide better services to PA citizens at lower costs" -"Attracts new business - high tech -multinational" -"Provide oppor, for network sharing: schools, healthcare, gov't" -"Number of business and individuals that are connected is increasing" Question #4 4. What are the advantages/disadvantages of a City partnership in a broadband telecommunications backbone to enable broadband services for business? Advantages: The afternoon group saw specific advantages to such a partnership, not the least of which was the speed of broadband deployment, and the use of existing technology: -'Would make services available now!" *32 points* -"Can use their technology ~ save cost, Do not reinvent wheel" *22 points* -"More advantages than disadvantages, provided gov't doesn't slow down development" '13 points* -"Shared costs" *7 points* -"Faster completion of the project" *5 points* -"Lower maintenance costs - Telecom provides" *4 points* Other comments included having a "method for Internet access", "non-stagnation" and pushing the "development to meet local business needs rather than a private ISP needs." Disadvantages: DEN-REE DRODUCTION S 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 69 Concerns centered over the potential problems in trying to work out the details of such a partnership: -"Another entity to negotiate with" *30 points* -"Changing leadership (either side of partnership)" '15 points* -"Partnerships require lawyers which can slow down process" *10 points* -"Excludes other competition?" *6 points* -"Company could default, go under, etc." *1 point* One of the more colorful response cards in the entire workshop process came to this question: -"Getting in bed with devil? Could be" Question #5 5. Is "open access" and competition important for the advancement of broadband telecommunications services? This group showed support for the concept of "open access", especially for consumer benefit, but with conditions that take into account the private sector: -"Yes - But: Business & gov't using pipe should divide cost of maintenance" *20 points* -"The consumer benefits ultimately w/more options, better service, lower prices" '16 points* -"Open access encourages "buy in" to the project" '15 points* -"Competition promotes growth & reduced cost. Open access provides the greatest opportunity *3.0 points* -"Increased choices "Freedom"" *7 points* -"Yes, lower prices, Less restrictions for private" '6 points* -" No-we need limited access to qualified provider - but enough of them to compete" *5 points* -" Lower costs?" *4 points* The group also said that open access is "good, provided, each user pays for their share", that it "should lower the cost for everybody" by promohng "competition which drives the price down for users". Questions #6 6. What criteria should the City use to evaluate proposals to develop a broadband telecommunications infrastructure? DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 70 The afternoon workshop generated a wide range of responses, but the primary points like reliability and experience (of the partner) received the highest ma2~ks. -"Reliability, Technology, Experience" *32 points* -"Cost- how much- Who's paying use of existing facilities? & infrastructure" '13 points* -"Consider what infrastructure already exists & how to access" *11 points* -"Whatever's best for the area. To promote growth & development = Quality of life!! for all residents" *6 points* -"Cost effective, cost of user fees" *6 points* -" % of cost paid by partner" *5 points* -"The problem will be to trade off, good vs. cheap vs. fast, You will only get to pick 2" *5 points* -"Potential for expansion" *4 points* -"Technical ability - prior projects" *3 points* -"Partners willing to advance open to listen to smaller groups as well as large entities" *2 points* -"Cost timeline reputation" *1 point* Others suggested the costs to the consumer, as well as the amount of control, technology and infrastructure. Question #7 7. What needs do public, educational and governmental organizations have that may go un-served if a broadband infrastructure is not developed? Most of the concern here centered over the so-called "digital divide", or access issue, as well as impacts on impact growth and seeing the area slip behind in business competition: -"Slow economic growth" *27 points* ~"Digital divide- those without will be farther divided from those who have access" *25 points* -"Our community & area become non-competitive vs. other communities" '11 points* -"Slow development of duplicate services. Harder to attract new businesses. Existing businesses less competitive" *5 points* -"Lost in the *4 points* -"Addresses business? We'll lose our kids, business to metro area" *3 points* ~" Continued development of duplicate services & facilities" *1 point* DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: T~lecommunicalions Needs and Solutions Workshop ~ge 7~ -"Businesses could loose opportunities on Internet' *1 point* Question #8 8. What obstacles would need to be overcome with "last mile" infrastructure? As with the morrfmg group, "cost" was the primary concern with the responses to this question: -"Cost - convincing people of importance" '21 points* -"Consumer desire" '13 points* -"Justification of costs" *11 points* -"Partnerships that can feasibly complete this. Limited options. Cost" *9 points* -"Who is doing it? Squabbling" *9 points* -"Force USWest to reduce installation cost of ISDN (excellent last mile solution), Add ISDN POP" *6 points* -"Another wire to your house? Another ditch through your yard? OR can we use what's there?" *5 points* One participant suggested that the cost question might be best addressed by developing the "last mile" infrastructure through partnering. Question #9 9. What types of business/industry could we attract to PA if broadband services were available? Perhaps because of their business outlook, the afternoon group had a much broader ranger of suggestions for both subheadings to this question. Business: -"Businesses that use "Internet" distributed & developed products & services" *26 points* -"Any business who brings employees who have high expectations in the area of high speed connection & services" '13 points* -" Large business, Call centers, Remote Transcriptions, ASP, Application service providers" *6 points* -"Consulting services, Engineering services, Programmers" *3 points* Other ideas included software developers, media/technology firms, advertising and graphic arts. industry: Unlike the morning group, the afternoon panel had a number of suggestions on industries that might be attracted to relocate to Port Angeles if broadband were available: DEN-REE PRODUCTIONS 5/1/2001 Appendix 17: Telecommunications Needs and SoLutions Workshop page 72 -"Research & development teams, Software developers, Technical manufacturers" '19 points* -"Any knowledge transfer industry" '12 points* -"You will not likely attract "heavy" industry due to our infrastructuring. (No railroad, poor Hwy lin)' *11 points* -"Extreme sport manufacturing design, customer support centers" *3 points* Question #10 10. Should the City be involved in providing telecommunications services, or only be the service provider of last resort? This panel provided a sharp look at both the "advantages" and "disadvantages" of the city being a service provider, saying the city could/should actually take steps to insure the availability of service if necessary: Advantages: -"Guarantee the service would be available" '41 points* -"Better to use the expertise of providers" *30 points* -"Yes resources, yes aval., yes technology avaL This is the reason why we have a "city" *23 points* -"Any/alE of the above (in the question) as needed to fulfill the need" '14 points* Other Ideas: Disadvantages: -"Unknown territory" '16 points* -"Stifles competition, probably more expensive (few businesses are like the gov't)' '13 points* -" Interfere with private & smaller services" '11 points* -"Taxpayer's end vs. subsiding private businesses" *4 points* Some expressed concerns about the existence of another "government regulated entity", and whether the city would be capable of providing technical support. DEN-RtE PRODUCTIONS S/1/2001 WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 To: UTILITY ADVISORY COMMITTEE FROM: Jeff Young, Treatment Plant Superintendent Attached is the Rayonier leachate quarterly report. p~.z~.!FN3 SUOll~ WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 TO: UTILITY ADVISORY COMMITTEE FROM: Doyle McGinley, Water/Wastewater Collections Superintendent RE: Leak Detection 2001 Results The City of Port Angeles Water Division has contracted with Utility Services Associates for the past eleven years. They have detected many leaks over the years resulting in recovery of water revenue and water conservation. Leak Detection was performed from April 9th through April 13th. Utility Services Associates surveyed the areas on our schedule. The first area surveyed was between Lincoln Street and Race Street, from Water Street to 8th Street. The second area surveyed was between Lincoln Street and Cherry Street, 2nd Street to 8' Street. There were also several specific locations within the City that we had surveyed. Seven leaks were detected and reported. These were generally small in nature, less than 10 gallons per minute but substantial in cumulative effect over a 24-hour time period. In the areas surveyed we found no evidence of large main line fractures, suspected as a result of the recent earthquake. Estimated combined water loss was 41,040 gallons per day. All of the leaks that were detected have been repaired. Attach: Chart N:~PWKS\WATER\Iekdet01 .wpd pORTANGELES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: May 7, 2001 TO: UTILITY ADVISORY COMMITTEE FROM: Glenn A. Cutler, Director of Public Works and Utilities RE: CODIFICATION OF THE WATER SHORTAGE RESPONSE PLAN Summary: Rainfall and the snow pack in the Pacific Northwest has been below normal for the past number of months. It is anticipated that low water flows will be experienced in the Elwha River during the summer months. It will be necessary to implement conservation measures. Staff has developed a Water Shortage Response Plan. Recommendation: UAC recommend to City Council to adopt the Water Shortage Response Plan. Background / Analysis: The Pacific Northwest has experienced abnormal low rainfall for the past number of months. The snow pack is approximately 30 percent of normal, in the Olympic Mountain range that feeds the Elwha River, for this time of year. This situation will most likely result in lower water flows in the Elwha River during the summer months. Low water flows in the Elwha River have a potential to adversely impact the fish habitat. The Governor has declared a water emergency for the State due to the low rainfall and snow pack. In view of these facts it is recommended that the City codify its water shortage plan and develop an enforcement plan. On March 5, 2001 Doyle McGinely, Water/Waste Water Superintendent, outlined the water shortage plan. The plan has five stages: Stage I, Internal Preparations Stage II, Voluntary Conservation Stage lII, Outdoor Restrictions Stage IV, Mandatory Outdoor Restrictions and Indoor Conservation Stage V, Water Rationing. The Public Works and Utilities Department is proposed to be the lead agency for enforcement/warnings/flow restrictions/disconnects.