Chelan Public Utility District – Fiber-Optic Line Extension Policy

Chelan is in a rural region of Washington state and was a pioneer in rural fiber networks, investing high-speed connections for citizens and businesses long before private companies saw any reason to do so. They have adopted an interesting line-extension policy that may lower the cost of the network to the PUD and allow households to take greater responsibility for connecting.

Background
Chelan is unable to offer retail services directly to subscribers as Washington State law forces public utility districts to act solely as a wholesaler. Independent companies provide the services over the infrastructure owned and operated by the PUD. This arrangement limits revenues to the PUD, requiring subsidies from other funds like wholesale power sales. Chelan also uses wholesale power sales to subsidize other funds, including the water system.

A strong majority of citizens continues to support the existing network as well as its expansion, recognizing that without a publicly owned network, most would have access to worse networks or reliant on satellite and dial-up connections.

Connecting rural residents can be extremely expensive, which is ultimately why rural residents across the United States have fewer option and slower, less reliable connections that often cost more than in urban areas.

In short, the new policy is that the PUD will connect subscribers if the cost of doing so is less than $1500 (or average cost for a group of subscribers). If the cost exceeds $1500 per subscriber, the subscribers will have to pay the difference or make alternate arrangements to lower the cost. This alternate arrangement is where we think the rule is interesting. A homeowner, or group of homeowners that want to trench their own property and backfill can lower the costs, benefiting everyone.

Equity and Fairness
However, this is also a matter of equity. A number of communities have committed to charging all subscribers the same amount irregardless of cost to connect. This is a particularly key point in rural towns and surrounding farms. Without the farms, many of the towns would not exist so they find it appropriate for the lower-cost connections in higher-density towns to subsidize the higher-cost connections among the farms. But to the extent that farms, for instance, can lower the cost of connecting to the network, everyone benefits.

This is a discussion primarily of capital costs — the ongoing operating cost of operating the modern fiber-optic networks are much lower than previous networks. Very high capital costs to connect in rural areas are typically repaid over a period of many years, which results in higher costs due to interest that accumulates during that time. To the extent publicly owned networks can lower these costs, the more sustainable the network will be.

We find this an interesting example of one approach communities may choose rather than suggesting this is the preferred approach. We particularly like the opportunity for self-reliance among individual subscribers to take responsibility for connecting to the network, particularly when the alternative may simply be refusing the expand networks in rural areas due to the high costs that would accrue to the network.

The PUD will own the line extension facilities regardless of whether it builds them or the subscriber contributes to it and/or participates in the preparation. Additionally, the PUD must do all work in the Right-of-Way that is not on the property of a subscriber (a subscriber cannot trench across neighbor property, for instance).

TELECOMMUNICATIONS LINE EXTENSION POLICY

  1. LINE EXTENSION POLICY AND GENERAL PROVISIONS

    A Line Extension is defined as an increase in the size and/or length of the District’s existing Telecommunications Facilities required to serve a qualifying Third Party Service Provider within the District’s Telecommunications Service Area. Line Extensions are necessary to provide Telecommunications Service to new or existing homes, businesses and industries within the District’s established Service Area.

    All Line Extensions are subject to engineering and financial feasibility analysis by the District. The District will evaluate requests for Line Extensions consistent with business-like practices to provide efficient service to the Applicant in addition to future expansion options, ongoing maintenance and operations activities. The amount to be paid by an Applicant is subject to change as determined by the District’s financial requirements and approved revisions to this Line Extension Policy and the District’s Fees and Charges schedule. Upon completion of construction, the District will be sole owner of all Telecommunications Line Extension facilities. A new Line Extension may also require participation in annual permit fees as outlined in Section 11.

    Upon receiving an Application for a Line Extension, the District will make an Initial Cost Review. If the Initial Cost Review is less than $1,500, the District will proceed with Fiber Distribution subject to District scheduling and resource availability. If the Initial Cost Review is more than $1,500, the provisions of this Line Extension policy shall apply.

    A Line Extension shall generally commence at a node or a splice point on the District’s present Telecommunications Facilities. Extensions may also include improvements or relocation of existing facilities to meet an Applicant’s new telecommunications requirement or request. The District will perform a study to determine the required improvements necessary to meet the needs of new Line Extension. The Applicant shall pay all estimated costs associated with the construction of any new Telecommunication Facilities or modifications to existing Telecommunication Facilities in excess of a $1,500 for each verified Customer Service Request within the Line Extension.

    Where the city, county or state requires improvements within the right-of-way as a result of a proposed development and said right-of-way improvements require relocation of the District’s Telecommunication Facilities, the Applicant shall pay the estimated cost of relocating or converting these facilities. The District shall estimate the costs of the modifications as part of the estimated costs for the Line Extension.

    All provisions of this Line Extension policy apply to all requests of Telecommunication Line Extensions. This policy does not limit or apply to District’s decisions to extend or modify its own Telecommunication Facilities.

  2. We have omitted the lengthy definitions section — see the full document for them.

  3. APPLICATION

    1. ApplicationEach Application shall be submitted to the District for approval with the payment for the Engineering Fee. The Application must be completed to the District’s satisfaction prior to review or other action by the District. Upon approval, the Applicant may proceed with the Line Extension construction in accordance with the District’s requirements.
    2. Site Plan for Application At the District’s discretion the Applicant may be required to provide a site plan illustrating the properties to be served and the approximate location of the proposed Work. The District will review the proposal and the layout of the location of all Telecommunication Facilities needed to serve the area. The District will provide guidance which shall be used during preparation of Contract Plans and Specifications for the Line Extension. A site plan deemed incomplete by the District will not be accepted.
    3. Ownership of Land Applicant may be required, at the District’s discretion, to provide satisfactory proof of ownership or right to use land impacted by any Telecommunication Facilities required for the requested Line Extension.

  4. ENGINEERING FEES

    1. Applicants requesting a Line Extension will be required to pay in advance a non-refundable Engineering Fee upon submittal of the Application if the Initial Cost Review exceeds $1,500. This Engineering Fee is specified in the District’s Fees and Charges schedule.
    2. The Applicant’s Engineering Fee will be applied to the overall cost of the job.
    3. Applicants who seek a material change in the design after the initial engineering Estimate and design is complete will be required to pay an additional Engineering Fee.
    4. The Applicants will be required to retain and pay for professional services where the project design requires additional or specialized services including, but not limited to, advanced civil engineering, surveying, geotechnical, environmental or other professional services.

  5. LINE EXTENSION CONSTRUCTION OPTIONS

    The following options and conditions apply to the construction of the following types of Line Extensions:

    1. Single lot Line Extension and Short plats (4 lots or less)For each Customer Service Request the following requirements apply:
      1. Except as provided herein, the Applicant has the option to provide the trench, install warning tape, conduit, vaults, bases, handholes, and backfilling of trench on their own property. All Work must comply with District Construction and Design Standards. A licensed electrical contractor must install the grounding (if required) for the Nodes. If an Applicant chooses to perform the above Work, they must do all the Work as outlined above. All Work must be inspected by a District inspector prior to backfilling the trench.
      2. The Applicant may request the District do all the Work outlined in (A.1) above. After receipt of the full payment of the Estimate, the District will schedule the Work to be performed by the District based on availability of construction resources and the priorities of the District.
      3. All Work on public right-of-way or Work to be completed which is not on the End-User’s property must be completed by the District. All costs of such Work must be paid for by the Applicant as part of the Line Extension. All permitting and easements must be secured prior to the start of construction.
      4. Vaults, bases and handholes shall be purchased from the District and paid for prior to receipt and shall be installed per District Design Standards to ensure compatibility and uniformity with the District’s Telecommunication system.
      5. The District will provide and install all nodes, splice cases, distribution towers, fiber optic cable, connectors, splices, cabinets and other telecommunications apparatus as needed. These items will be included in the Estimate to be paid by the Applicant.
      6. The Applicant will pay for all estimated Line Extension costs in excess of $1,500 per verified Customer Service Request within the Line Extension pursuant to Section 6 prior to the scheduling of District construction crews.
    2. Developments, Commercial or Industrial Line ExtensionsApplicants requesting Line Extensions for residential developments with 5 or more lots, commercial or industrial properties must construct Line Extensions in accordance with the following:
      1. The Applicant will provide the trench, conduit, install the warning tape, vaults, bases, handholes and backfill. A licensed electrical contractor must install the grounding (if required). All Work must comply with District Construction and Design Standards. The Applicant shall do all Work or hire a qualified contractor to perform Work within the Applicant’s property. All Work must be inspected by a District on-site inspector prior to backfilling.
      2. Vaults, bases and handholes shall be purchased from the District and paid for prior to receipt. Fiber conduit will be made available to Applicant at no additional cost. All must be installed per District Construction and Design Standards to ensure compatibility and uniformity with the District’s Telecommunication system.
      3. All Work performed on public right-of-way or private easements will be completed by the District, unless the Applicant or developer has the specific permitting and authority to perform Work within the right or way or private property. Applicant must provide proof of appropriate rights or permits satisfactory to the District before commencing any Work.
      4. The District will install all nodes, distribution towers, connectors, splices, fiber optic cable and other Telecommunication apparatus as needed. These items will be included in the Estimate to be paid by the Applicant.
      5. The Applicant will pay for all estimated Line Extension costs in excess of $1,500 per verified Customer Service Request within the Line Extension pursuant to Section 6 prior to the scheduling of District construction crews.

  6. PAYMENT FOR LINE EXTENSION

    The Applicant will be provided an Estimate by the District. This Estimate will be based on the Line Extension Construction Options listed in Section 5. The Estimate will include all usual charges associated with a Line Extension Estimate. This Estimate will also include estimated costs for a District inspector should the Applicant desire or be required to install their own trenching, vaults and conduit.

    All Line Extension costs and engineering fees must be paid by the Applicant prior to the District scheduling construction crews and proceeding with any Work. Estimates provided to the Applicant are void after 60 days from the date of issue if full payment has not been received.

    If Work is not completed within 180 days of the issue of the Estimate to the Applicant, the District will issue a revised Estimate. The Applicant will pay the difference between the original Estimate and the revised Estimate. If this amount is not paid, the District may consider the Line Extension to be abandoned and may refund the original payment less any engineering fees, Materials used and any costs incurred by the District.

    The Applicant will be required to make payment arrangements for any ongoing permit fees or reoccurring fees prior to construction by the District.

  7. TYPE OF CONSTRUCTION

    Overhead or underground construction will be installed as determined appropriate by the District. The District shall determine the most suitable type of construction in its sole discretion. Generally, all Line Extensions in subdivisions or platted areas shall be underground as may be required by city and county ordinances.

    The construction phase of a Line Extension may include, but is not necessarily limited to, the following items:

    1. Preconstruction conference
    2. Construction of the Line Extension
    3. Inspection
    4. Final Acceptance and testing
    5. One Year Warranty for Telecommunication Facilities installed by someone other than the District.

  8. CONSTRUCTION REQUIREMENTS

    1. Prior to the commencement of any Work or construction, all easements and/or permits for the Telecommunication Facilities must be executed and on file with the District. The easements and/or permits must be complete and satisfactory as determined by the District.
    2. As the District will be the sole owner of all Line Extension facilities and desires to provide for the future reliability, operation and maintenance of said facilities, the following conditions will apply should the Applicant desire to install the underground conduit for the Line Extension.
      1. The construction will be completely on private property or on an established right-of-way with the permanent right to locate and maintain the facilities. The District will not accept any Line Extension located on government agency lands with revocable permits.
      2. Where the city, county or state requires improvements within the right-of-way as a result of a proposed development and said right-of-way improvements require relocation of the District’s Telecommunication Facilities, the Applicant shall pay the estimated cost of relocating or converting these facilities. The District shall estimate the costs as part of the Line Extension.
      3. All conduits, sweeps, and the installation thereof must meet District Specifications as outlined in the District’s Construction and Design Standards and must follow the design prepared by the District’s Customer Service Staff if approved by the District. The design review by the District shall not constitute assurance that the District will accept the Line Extension or Work. Any costs to repair or modify the Telecommunication Facilities will be the responsibility of the Applicant.
      4. The District will provide an on-site inspector at times during construction and before the trench is backfilled to determine if the conduits, sweeps, vaults and bases are installed according to the District’s Specifications. The Applicant must provide advance notice to the District prior to when an inspector will be required. The District will schedule an inspector as District resources become available.
      5. The presence of the on-site inspector or other District representative does not constitute assurance that the District will accept the Line Extension or the Work as satisfactory. Any costs for repair or modification of the conduit installed by the Applicant will be borne by the Applicant or Applicant’s authorized agent.
      6. All other matters connected with providing Telecommunication Facilities shall be in compliance with the District’s Utility Service Regulations, District Design and Construction Standards.
      7. The Applicant or contractor shall notify the District in advance to request an inspection for Final Acceptance. The District will schedule an inspector as District resources become available.
      8. If the Line Extension has been installed according to the approved Plans and Specifications, inspected, backfilled, compacted, and after all of the Telecommunication Line Extension Policy conditions are fully satisfied, the District will install the remaining Equipment such as fiber optic cables, nodes, distribution towers, terminations, splices and transformers and other Equipment required to provide Telecommunication Services. District crews will light the Line Extension only after all Estimates and Fees and Charges have been paid and a Line Extension Checklist has been completed to the District’s satisfaction.
      9. A one-year Warranty Period will begin after the Line Extension has been accepted by District crews. The Final Acceptance of the Work shall not prevent the District from making claim against the Applicant for any defective Work if same is discovered within the Warranty Period.

  9. APPLICANT RESPONSIBILITIES

    1. All Fees and the Estimate will be paid as outlined in Section 6.
    2. Work completed by the Applicant and not inspected by the District is subject to being exposed and repaired, if necessary, to meet District Design and Construction Standards at the Applicant’s expense.
    3. The Applicant shall pay all ongoing permit or easement fees. The payment of ongoing permit fees may require a recorded agreement, such as a participation contract, affecting all properties connected to the extension as set forth in Section 10.
    4. The Applicant will be responsible for all costs incurred to obtain easements or permits satisfactory to the District.
    5. The Applicant shall grant and execute all necessary easements across land owned by the Applicant at no cost to the District.
    6. The Applicant shall supply to the District all pertinent ownership, utility dedication and signing party information relevant to the necessary easements and permits to the District as deemed satisfactory by the District in its sole discretion.
    7. If the Applicant provides the trenching, vault installation and backfilling, the Applicant will be responsible for maintenance and repair of the trench and vault settling for one (1) year after completion of the project.

  10. DISTRICT RESPONSIBILITIES

    Any Work or provision of Telecommunication Facilities for the Line Extension by the District shall be subject to the District’s schedule and resources. No warranties or guarantees are made or will be binding if made orally by a District employee as to the timing for the District’s completion of its Work.

  11. EASEMENTS AND PERMITS

    When an extension of the District’s Telecommunication Facilities is to be installed on state, county or city right-of-way, federal Lands or by permits from a governmental agency, the District shall physically construct such facilities.

    The District will attempt to secure the appropriate easements and/or permits from governmental entities. When an extension of District Telecommunication Facilities is to be constructed on property or right-of-way not under the jurisdiction of a governmental agency with which the District has an existing franchise or permit, the District will attempt to secure necessary easements and will initially process the easements. The Applicant shall be responsible to pay all costs to obtain right-of-way easements prior to construction. All easements and permits shall name the District as grantee or permittee and shall include all Telecommunication Facilities. In the event the District personnel are unable to secure right-of-way easements and/or permits, the Applicant may assist with negotiating said easements or permits. All non-standard or non-typical costs (as determined by the District) associated with the District’s obtaining easements or permits in excess of these included in the Estimate will be paid by the Applicant.

    The District is under no obligation to commence any legal action to secure easements or rights-of-way. Any and all costs associated with obtaining easements and/or permits or ongoing permit fees will be paid by the Applicant. The payment of ongoing easement or permit fees may require a recorded agreement, such as a participation contract, on all properties connected to the Line Extension. As an example, if a Line Extension crosses Forest Service land, Department of Natural Resources land or railroad property, all properties connected to the Line Extension will share in the annual cost of the easement or permit.

  12. DISTRICT OWNERSHIP

    The District will be the sole owner of all the Telecommunication Facilities upon completion and Final Acceptance by the District.

  13. REVISION

    This policy cancels and supersedes any previous policy related to Line Extensions. This policy may be revised, supplemented or otherwise modified by action of the District’s Board of Commissioners.

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