HomeMy WebLinkAboutStaff Report 206-09TO:
ATTENTION:
FROM:
DATE:
SUBJECT:
BUDGET
FY 2010 -FY 2011
HONORABLE CITY COUNCIL
FINANCE COMMITTEE
CITY MANAGER
APRIL 21, 2009
DEPARTMENT: UTILITIES
CMR: 206:09
Recommendation that Finance Committee Recommend Council
Adoption of a Resolution Adopting a Fiber Optic Rate Increase and
Amending Utilities Rate Schedules EDF-1 and EDF-2
RECOMMENDATION
Staff recommends that the Finance Committee recommend that the City Council adopt the
attached resolution to:
(a) Approve a 3.1 percent increase to commercial fiber optic rates EDF-1 and EDF-2, for
Fiscal Year (FY) 2010, effective July 1, 2009, which will increase annual revenues by
$48,000; and,
(b) Approve 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 licenses 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 annual
Consumer Price Index (CPI), which is published by the United States Bureau of Labor
Statistics.'
DISCUSSION
Based on the rate of change in annual CPI for 2008 over 2007, the CPI adjustment factor results
in a 3.1 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:
1 http://data.bls.gov/cgi-bin/dsry
CMR: 206:09 Page 1 of 2
TABLE 1- Proposed Fiber Rate Increases
Rate Description
Current
Rates
Proposed
Rates *
$
Difference
04
Difference
EDF-1 (Section C-1): Dark Fiber Backbone License Fees (fiber miles/month)
Fiber Price
$290.20
$299.22
$9.02
3.1
Quantity discount
58.04
59.84
1.80
3.1
Buffer tube discount
58.04
59.84
1.80
3.1
Route length discount
75.45
77.80
2.35
3.1
Ring topology discount
23.20
23.94
0.74
3.1
Length of term discount
45.39
46.80
1.41
3.1
EDF-1 (Section C-2): Dark Fiber Lateral Connection Fees (ft/month)
Drop Cable Mgmt. Fees
$0.02-0.05
0.02-0.06
0.00-0.01
3.1
Custom Cable Mgmt Fees
0.28
0.29
0.01
3.1
Fees for additional fiber
0.05
0.06
0.01
3.1
EDF-2 (Section C-1): Advance Engineering Fees (AER)
Commercial/Industrial AER min. fee
$693
$715
$22
3.1
* Calculations have been rounded to the nearest cent.
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 $48,000 for FY
2010. 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
An increase in fiber optic rates is statutorily exempt from the California Environmental Quality
Act (CEQA), pursuant to California Public Resources Code Section 21080(b)(8) and Title 14 of
the California Code of Regulations Section 15273(a)(1) and (3), (modification or approval of
rates and charges).
ATTACHMENTS
A: Resolution
B: Fiber Optic Rate Schedules EDF-1 and EDF-2
PREPARED BY: IPEK CONNOLLY, Utilities, Sr. Resource Planner coc
JANE O. RATCHYE, Utilities Asst Director, Resource Management
DEPARTMENT APPROVAL:
VALE
CITY MANAGER APPROVAL:
JA 1 1F KEENE, C j Manager
NG, Director of Utilities
CMR: 206:09
Page 2 of 2
ATTACHMENT A
NOT YET APPROVED
Resolution No.
Resolution of the Council of the City of Palo Alto Amending
Utility Rate Schedules EDF-1 and EDF-2 of the City of Palo
Alto Utilities Rates and Charges Pertaining to Fiber Optic
Rates
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utility Rate Schedule EDF-1 (Dark Fiber Licensing Services) is hereby amended to read in
accordance with sheets EDF-1-1 and EDF-1-2, attached hereto and incorporate herein. The
foregoing Utility Rate Schedule, as amended, shall become effective July 1, 2009.
SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utility Rate Schedule EDF-2 (Dark Fiber Connection Fees) is hereby amended to read in
accordance with sheet EDF-2-1, attached hereto and incorporate herein. The foregoing Utility
Rate Schedule, as amended, shall become effective July 1, 2009.
SECTION 3. The Council finds that the revenue derived from the authorized
adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2,
of the Charter of the City of Palo Alto.
1/
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/1
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1
090408 syn 6050726
NOT YET APPROVED
SECTION 4. The Council finds that the adoption of this resolution does not
constitute a project under the California Environmental Quality Act, California Public Resources
Code section 21080, subdivision (b)(8).
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Deputy City Attorney City Manager
Director of Utilities
Director of Administrative
Services
2
090408 syn 6050726
ATTACHMENT B
DARK FIBER LICENSING SERVICES
UTILITY RATE SCHEDULE EDF-1
A. APPLICABILITY:
This rate schedule applies to customer accounts established prior to September 18, 2006, unless the customer elects
to apply the EDF-3 rate to the entire customer account. This rate applies to Fiber Optic services from the City of
Palo Alto Utilities (CPAU) pertaining to the City's network (Backbone and associated connections).
B. TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
C. FEES:
1. DARK FIBER BACKBONE LICENSE FEES:
The values or ranges for each of these price components are shown below:
(1) Fiber Price $29-0,214$299.22/FM/month
(2) Quantity discount $0 to
$58.0459.84/FM/month
(3) Buffer tube discount $0 to
$58.0159.84/FM/month
(4) Route length discount $0 to
$ 75.4577.80/FM/month
(5) Ring topology discount $0 to $23.2094/FM/month
(6) Length of term discount $0 to
$15.3916.80/FM/month
(7) Per Project Minimum Annual Backbone License Fee $425/month
Project Minimum Backbone Fees apply to any project proposal signed after September 18, 2006 in which
the project connects with the Backbone.
Description for Discounts:
Quantity discount: based on an array of discounts for quantities of fiber licensed on a specific path.
Buffer tube discount: discount for numbers of full buffer tubes licensed on a specific path.
Route length discount: based on the route length licensed on a specific project.
Ring topology discount: The ring topology discount for customers contracting for complete rings.
Term discount: based on an array of discounts for contracts greater than one and less than ten years.
2. DARK FIBER LATERAL CONNECTION FEES:
Customer responsibilities and fees for drop and custom cable construction are described in the CPAU Rules
and Regulations, Rate Schedule EDF-2, project proposals and other associated documents. In all cases, the
Licensee shall pay an annual Drop/Custom Cable Management Fee based on the follow per foot fees:
(1) Drop Cable Management Fees (for the first 12 -Fibers) $0.02-
$0.0306/ft/month
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 07-01 20082009
Sheet No._EDF-1-1
CITY OF PALO ALTO
Supersedes Sheet No.EDF-1-1 dated 7-01 2007200E
UTILITIES
DARK FIBER LICENSING SERVICES
UTILITY RATE SCHEDULE EDF-1
(2) Custom Cable Management Fees (for the first 12 -Fibers) $0.2829/ft/month
(3) Fees for additional Drop or Custom Cable fibers (each additional set of 12 -Fibers) $0.0306/ft/month
(4) Per Project Minimum Drop or Custom Cable Management Fees $210/month
Project Minimum Drop Cable Management Fees apply to any project proposal signed after September 18,
2006.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 07-01 20052009
Sheet No. EDF-1-2
Supersedes Sheet No. EDF-1-2 dated 7-01 2007200E
CITY OF PALO ALTO
UTILITIES
DARK FIBER LICENSING SERVICES
UTILITY RATE SCHEDULE EDF-1
3. EARLY TERMINATION FEES:
If the Licensee chooses to terminate for convenience the License Agreement or the term of any project
under the License Agreement, then the Licensee shall pay the applicable termination payment as specified
in this schedule or in the License Agreement, as provided below.
Unless otherwise provided in the License Agreement, the Licensee shall pay a termination fee in one of the
following amounts, whichever is less:
• Annual fee of the contract year that the Licensee chooses to terminates in full without term
discounts, or
• Remaining fees of the project term as indicated in the License Agreement.
D. SPECIAL NOTES:
1. All fees must be paid to the City according to the specifics in the Dark Fiber License Agreement, the
customer's project proposals and all the applicable Utilities Rates, Rules, and Regulations.
2. All fees are subject to consumer price index (CPI) adjustments, to be applied at the City's discretion but not
more frequently than an annual basis.
[End]
CITY OF PALO ALTO UTILITIES
Issued by the City Council
EV
Effective 07-01 20082009
Sheet No._EDF-1-3
Supersedes Sheet No.EDF-1-3 dated 9 18 20067-01
CITY OF PALO ALTO
UTILITIES
DARK FIBER SERVICE CONNECTION FEES
UTILITY RATE SCHEDULE EDF-2
A. APPLICABILITY:
This schedule applies to all connections, expansions, and upgrades to the City's Dark Fiber network (Backbone).
B. TERRITORY:
All territory within the incorporated limits of the City and land owned or leased by the City.
C. FEES:
1. ADVANCE ENGINEERING FEES:
Advance engineering (AER) fees must be paid to start the engineering process and are non-refundable. The
fees will be credited against the estimated project cost prior to the collection of the project construction
fees.
(1) Commercial/Industrial AER minimum fee $693715.00
(2) Special conditions (requiring expert assessment) By Estimate
2. ESTIMATED SERVICE CONNECTION AND RECONFIGURATION FEES
All estimated service connection and reconfiguration fees must be paid prior to the scheduling of any
construction or reconnections to the City's Dark Fiber network.
(1) Service connection (Interconnection) fee
(2) Reconfiguration Fees
Labor rates are subject to change as stated in the Utility Rate Schedule C-1.
D. NOTES:
By Estimate
By Estimate
1. The Customer is responsible for the installation and maintenance of all ducts and pathways from the facility to
the property line in compliance with City of Palo Alto Utilities Rules and Regulations and contract agreements.
2. The City shall not be held liable for delays or interruptions in service, but will make reasonable efforts to
provide timely continuous service.
3. All fees are subject to consumer price index (CPI) adjustments, to be applied at the City's discretion, but not
more frequently than an annual basis.
[End)
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-01 20082009
Sheet No._EDF-2-1
Supersedes sheet No. EDF-2-1 dated 7-01 20072001
CITY OF PALO ALTO
UTILITIES