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PUD commissioners consider broadband community benefit rates

by Kimberlee Craig | Dec 20, 2016

Chelan County PUD commissioners Monday continued review of a proposal for wholesale broadband rates that could offer greater community benefit by encouraging retail service providers to offer low-cost internet access for their customers using less bandwidth and for those who cannot afford standard packages.

The approach also would simplify rates and better match costs with the network use that drives them, said Mike Coleman, Fiber and Telecom managing director. “It also would provide an incentive to service providers to reach more homes and businesses than they do today,” Coleman said.

The new rates are designed to keep current PUD revenues level and then be able to grow as future bandwidth use requires more investments in the network, he said. Increases in the total amount of revenue collected would require returning to PUD commissioners for approval.

Doug Dawson, a telecom expert who advises Chelan PUD, said the proposed move to “loop rates” recognizes changes in the way technology is being used, including the demand for video capability, which requires ever-increasing amounts of bandwidth.

“Annual global internet traffic surpassed the zettabyte threshold in 2016,” Dawson said. A zettabyte (ZB) is 1 byte (a measure of capacity) followed by 21 zeros. Dawson cited Cisco’s forecast that video will be 82 percent of home internet traffic by 2020.

“It took 26 years for internet traffic to reach a zettabyte and the prediction is it will only take three more years to hit 2 zettabytes,” he said. 

Moving to loop rates is the final action item from Fiber’s 2012 strategic plan and is better aligned with the District’s wholesale model, Dawson added.

The proposed loop rate would bring revenue to the District in two ways with:

  • A fixed loop rate, and
  • Measured bandwidth use rate

Current rates take a service-based approach, recovering a flat rate for each service to bring in revenue to operate the network. The proposed approach would give service providers more flexibility to tailor packages for customers using less bandwidth, Dawson said.

The proposed rates take into account a wide range of possible growth, or decline, in aggregated bandwidth use, said Coleman. The PUD expects average annual bandwidth use on its network to grow by 36 percent next year. Coleman said he would return for additional commission rate review if aggregated bandwidth use was to exceed the range.

Commissioner Garry Arseneault said he was pleased with the proposed approach. “It just makes sense and is good business.”

Commissioners will receive the loop rates resolution for review on Jan. 3 and be asked for action on the loop rate proposal on Jan. 16. If approved, the new rate would go into effect on March 1, 2017.

In other business Monday, commissioners: 

  • Directed staff to close out the unassigned portion of the initial round of Public Power Benefit funding. Commissioners allocated $8 million in the initial round. Actual costs and funding assigned is $5.2 million to complete the projects selected in the first round of the program. The remainder won’t be spent. New project spending may be part of annual decision-making for the 2017 funding cycle. Commissioners also directed staff to bring them options to discuss for establishing internal reserves, as a normal course of business, for projects such as facility improvements.
  • Congratulated Willard Fields, senior energy planning analyst, on reaching 40 years with Chelan PUD. Fields, an electrical engineer with a joint major in computer science, started Nov. 21, 1976, as a temporary employee tasked with programming Rock Island Dam’s first computer. He also maintains an extensive history of the PUD that is an essential resource for employees and the community.   “He is the keeper of all things important” to the PUD, said Janet Jaspers, Energy Planning and Trading manager. “He understands operations and marketing and how they fit together. He is a great asset to the PUD and we thank you for your service.”
  • Heard from Mario Cantu, education and community engagement coordinator, that more than 250 people attended Fiesta Decembrina in the PUD’s Wenatchee Auditorium on Sunday, Dec. 18. Among the responses to the District’s customer satisfaction survey were comments from Latino and Hispanic customers seeking more information about PUD services. The fiesta was part of the PUD’s overall effort to keep all customer-owners informed and to hear from customers what they think about ways to add value to PUD services, Cantu said. Chelan PUD and La Nueva Radio hosted the event.
  • Received an update on annual Customer Service staff training set for Jan. 16. The Chelan and Leavenworth offices will be closed. The Wenatchee office will be open for all other services - except for taking payments and answering billing and utility service questions at the front counter in the lobby. Bill payment by phone or online will be available as normal. It will be business as usual for all other PUD operations. That also is a commission meeting day. This is the fourth year the customer service training has been held on the Martin Luther King holiday, when visits to the front counters at PUD offices are low, said Kerri Wendell, Customer Accounting manager. About 30 PUD employees will take part in the training.
  • Heard an update on reviewing proposals received Dec. 2 for replacing the aging Customer Information System. The eventual system chosen will handle the essential tasks of managing utility customer information and billing. The first phase of review will lead to selection of a short-list of proposals for further consideration starting next month. Onsite demonstrations and evaluation will continue through next spring, followed by negotiations and a final agreement on a contract. Installing the new system is scheduled to start next summer and take about two years.

Upcoming events:

  • Dec. 26 – Christmas Day holiday observed, PUD offices closed
  • Jan. 2 – New Year’s Day holiday observed, PUD offices closed
  • Jan. 3 – Board meeting, 10 a.m. (Tuesday)
  • Jan. 16 – Board meeting, 10 a.m.
  • Jan. 20 – PUD Night at the Wenatchee Wild

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The next regular Chelan PUD commission meeting starts at 10 a.m. on Tuesday, Jan. 3, 2017, in the boardroom at 327 N. Wenatchee Ave.  

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Visit our Safety and Outage Center for information, or to report an outage, 24 hours a day, 7 days a week, call 1-877-PUD-8123.

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