Your PUD News Release
Commissioners agree PUD should withdraw from fiber grant
Chelan County PUD
News Release
4/11/2011
To keep from facing higher costs and an unrealistic construction schedule, Chelan County PUD commissioners Monday stood by the District’s Strategic Plan and decided to withdraw from participating in a federal grant project that was designed to extend the PUD’s fiber optic network to more rural areas.
After careful analysis of costs and construction deadlines that were impossible to meet, General Manager John Janney recommended that the PUD withdraw because PUD expenses could have risen as much as $34 million over initial projections made last year. Commissioners unanimously agreed with his recommendation.
Janney reminded them that the PUD is developing a new long-term strategic plan for fiber and there may be new options for providing broadband services that have not yet been fully explored. He called the fiber-optic service, which has already brought access to high-speed broadband to about 70 percent of the county, a significant accomplishment, likely better than any other rural county.
Commissioners Monday also voted to reduce PUD electric bills by 2 percent, effective in about a week, since a rate increase approved last November will no longer be needed to cover the PUD’s share of matching dollars for the grant. Money received since December will be used to cover PUD costs that have gone toward bidding contracts and materials, design and other work on the project to this point.
The original grant would have provided the PUD $25 million to extend fiber over the next three years to areas of Chelan County not yet served by any high-speed broadband. The PUD first thought its share of the costs might be about $8 million.
Staff told commissioners Monday that a large part of the higher expense would be for transmission poles that would need to be replaced in order to carry the new fiber-optic lines. That work also would have taken an estimated three years beyond the time limit for completing the RUS project. The costs of building in difficult terrain and in winter conditions to try to meet the tight schedule also raised the estimated price tag for the build-out. Many of the lines serving rural areas would need to be underground in uncertain terrain to match existing electrical service.
Commissioners said it was a disappointment not to be able to proceed with extending service the way the grant intended, but they all agreed the revised budget and schedule made the decision clear.
"I'm a complete, absolute supporter of fiber and what it means to Chelan County," said Commission President Randy Smith. "We need to get through this day so we can go to tomorrow and focus on what can we do (to make service available)."
"I absolutely support the staff recommendation," added Commissioner Ann Congdon. "We have no choice."
The PUD does not expect to face any penalties by withdrawing at this early stage from the Rural Utilities Service (RUS) grant program, said PUD attorney Erik Wahlquist. No money has yet been received from RUS.
Commissioners had voted to accept the federal grant last September after about two-thirds of customers said in a survey that they were in favor of taking the grant if a needed rate increase was no more than 3 percent (about $1.50 per month on the average PUD bill). But a majority of those surveyed favored rejecting the grant if the rate increase had to be higher. That matched sentiment in another survey a year before that.
Chelan PUD did discuss with RUS officials the possibility of reducing the geographical scope of the project to help trim costs, but RUS officials told the PUD such changes in scope would not be approved. PUD management concluded that the original scope, schedule and budget could not be met under terms of the agreement and therefore recommended that the PUD withdraw now before any money has been received.
The PUD has recently added a Line Extension Policy for the roughly 70 percent of county residents with access to the PUD’s existing fiber network which makes it possible for interested customers to receive fiber service if they are willing to pay costs above an initial PUD investment of $1,500.
In additional action:
- Commissioners declared a special meeting for 10 a.m., April 20, for a tour of the Alcoa Wenatchee Works to see the new third pot line. Anyone from the public must notify the PUD by April 15 if they wish to attend because of Alcoa’s requirements for visitor notification.
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The next regular commission meeting is at 1 p.m. on Monday, April 18, in the PUD boardroom at 327 N. Wenatchee Ave.
Most PUD commission meetings are recorded, and a link to the audio is available on the PUD’s home page at www.chelanpud.org.
Steve Lachowicz
Communications director
509-661-4639, direct line
509-679-0148, cell
steve.lachowicz@chelanpud.org