HomeMy WebLinkAboutStaff Report 283-08CMR: 283:08 Page 1 of 3
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: UTILITIES
ATTENTION: FINANCE COMMITTEE
DATE: JUNE 17, 2008 CMR: 283:08
SUBJECT: RECOMMENDATION TO ADOPT A RESOLUTION AMENDING
UTILITY RATE SCHEDULES EDF-1 AND EDF-2 OF THE CITY
OF PALO ALTO RATES AND CHARGES PERTAINING TO
FIBER OPTIC RATES
RECOMMENDATION
Staff recommends that the Finance Committee recommend that the City Council adopt the
attached resolution to:
(a) Approve a 3.3 percent increase to commercial fiber optic rates EDF-1 and EDF-2, for
Fiscal Year (FY) 2008-09, effective July 1, 2008, which will increase annual revenues
by $48,500; and,
(b) Approve the changes to the Fiber Optic Rate Schedules (EDF-1 and EDF-2), as
attached.
BACKGROUND
The Utilities Department provides commercial dark fiber optic services within the boundaries of
Palo Alto. For customers having fiber optic leases beginning prior to September 18, 2006, rates
for service are published in Dark Fiber Licensing Services Rate Schedule EDF-1. Customer
expenses for engineering, construction and connection to the fiber optic backbone are charged
under Dark Fiber Licensing Services Rate Schedule EDF-2. The Council-approved Dark Fiber
Licensing Agreement (CMR 177:97) allows the commercial fiber optic fees charged under the
EDF-1 and EDF-2 rate schedules to be adjusted annually in accordance with the Consumer Price
Index (CPI), which is calculated by the United States Bureau of Labor Statistics.
CMR: 283:08 Page 2 of 3
DISCUSSION
For 2008, the CPI adjustment factor results in a 3.3 percent increase to the EDF-1 and EDF-2
rate schedules. Table 1 below outlines the adjustments proposed to the EDF-1 and EDF-2
Commercial Fiber Optic rates:
TABLE 1 – Proposed Rate Increases
Rate Description
Current
Rates
Proposed
Rates *
$
Difference
%
Difference
EDF-1 (Section C-1): Dark Fiber Backbone License Fees (fiber miles/month)
Fiber Price $281.00 $290.20 $9.20 3.3
Quantity discount 56.18 58.04 1.86 3.3
Buffer tube discount 56.18 58.04 1.86 3.3
Route length discount 73.04 75.45 2.41 3.3
Ring topology discount 22.45 23.20 0.75 3.3
Length of term discount 43.95 45.39 1.44 3.3
EDF-1 (Section C-2): Dark Fiber Lateral Connection Fees (ft/month)
Drop Cable Mgmt. Fees $0.01-$0.05 0.02-0.05 0.01-0.00** 3.3
Custom Cable Mgmt Fees 0.27 0.28 0.01 3.3
Fees for additional fiber 0.05 0.05 0.00 ** 3.3
EDF-2 (Section C-1): Advance Engineering Fees (AER)
Commercial/Industrial
AER min. fee $671 $693 $22
3.3
* Calculations have been rounded to the nearest cent.
** The proposed rate matches existing rates when rounded.
RESOURCE IMPACT
The additional Commercial Fiber Optic revenues resulting from the CPI increase to Dark Fiber
Licensing Services Rate Schedule EDF-1 are projected to be approximately $48,500 for FY
2008-09. As the Dark Fiber Licensing Services Rate Schedule EDF-2 applies to customer-driven
expansions and upgrades to the City’s Dark Fiber network, and the fee represents the minimum
fee, the increase in projected revenue due to this rate increase is negligible and impossible to
predict.
POLICY IMPLICATIONS
These recommendations do not represent a change in current City policies.
ENVIRONMENTAL REVIEW
The adoption of this resolution does not meet the California Environmental Quality Act’s
definition of a project, pursuant to California Public Resources Code Section 21065, therefore no
environmental assessment is required.
CMR: 283:08 Page 3 of 3
ATTACHMENTS
A: Resolution
B: Fiber Optic Rate Schedules EDF-1 and EDF-2
PREPARED BY: Eric Keniston, Utilities Rate Analyst
Ipek Connolly, Senior Resource Planner
REVIEWED BY: _________________________________
JANE O. RATCHYE
Assistant Director of Utilities, Resource Management
DEPARTMENT HEAD: _________________________________
VALERIE O. FONG
Director of Utilities
CITY MANAGER APPROVAL: _________________________________
STEVE EMSLIE/KELLY MORARIU
Deputy City Managers