PUD: NoaNet rates too low

Mid-year analysis suggests district losing money

EPHRATA — Three of the Grant County Public Utility District commissioners say the PUD urgently needs to begin charging meter rates to a Wenatchee-based telecommunications company called Northwest Open Access Network, or NoaNet, which has been using the district's fiber network to transport data.

Commissioners Bill Bjork, Randy Allred and Greg Hansen openly criticized the relationship the district has had with the company during Monday's regular meeting. They also addressed the need to stop revenue loss to the district that may be as high as hundreds of thousands of dollars per year.

NoaNet's low rates, relative to other internet service providers in the county, have led to complaints from local ISPs. Those complaints have drawn the attention of the commissioners.

"We got to get on top of this thing. We've been accused of loosing quite a number of dollars here," Commissioner Bill Bjork said. "If our ratepayers are telling us that, and our ISPs are telling us that, we should have listened a long time ago."

NoaNet is a nonprofit corporation that uses fiber optic cables from the Bonneville Power Administration to create a data network for utilities in the Northwest and serves as an on-ramp to the Internet for rural communities.

Bjork added that he is concerned that NoaNet is not being charged correctly by the PUD and that costs the district money. By not applying proper meter charges to NoaNet, Bjork believes that local ISPs are being put at a competitive disadvantage.

"They have been getting a lot of, how would you say it, unusual treatment for quite a number of years," Bjork said.

"I agree," Commissioner Randy Allred said.

The PUD staff has recently reviewed, discussed and determined that customers are being charged for products according to the district's rate schedule after confusion and questions arose regarding NoaNet.

"We may have some customers who are getting a good deal; we may have some customers who aren't getting a good deal," PUD Treasurer-Controller Nick Gerde told the board of commissioners during the meeting.

"There is not a subsidization. We have determined that we have the capabilities to provide a product to NoaNet and we sell it, at what we think is a fair price," Gerde said. "We're going to be going through, just like we do annually, we're going to be walking through an assessment of the products and services we sell. We are going to be doing some pricing evaluation on whether or not we're charging a competitive price."

Gerde said that he wasn't aware of any lost PUD revenue.

"To suggest that we missed an opportunity is not an accurate statement," Gerde said.

What Gerde suggested would be to move rate setting for telecommunications into the mainstream rate setting environment of the utility. By following that plan, the PUD staff would move telecommunication rate planning to the strategic planning and rate setting department, where rates are regularly set for electricity.

In doing so, the PUD would ensure that rates are based on competitive market analysis.

"The same basic disciplines that we use to establish electricity rates, is the same kind of discipline that we should apply to our telecom rates," Gerde said. "We have people who have the skills to do calculations and do studies and rates for electricity, I think they should apply their skills to the telecom area as well."

According to Gerde, the rates would be changed internally in the future, because they now have the capability to do that without the input of ISPs.

Both PUD Director of Telecommunications Larry Jones and Gerde will be attending a NoaNet board meeting in Seattle on Aug. 10.

The PUD does not have a seat as one of the nine NoaNet board member positions despite having one of the largest percentages of ownership in the company. Currently, the PUD has 15 percent ownership in the company, which is worth about $3 million.

Bjork said the outcome of the Aug. 10 meeting with NoaNet, and the company's efforts to reduce their future costs, improve the way they function and continue to be managed, will all be considered when the PUD discusses its future membership with the telecommunications company.