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City of Prince George fibre

Network and Technology

Centre Business Case

City Council Presentation

Enzo D’Agostini, P. Eng.

Date: April 18, 2011

i CITYOF

PRINCE GEORGE

Stantec

Presentation Objectives

• Project Work Scope and Objectives – Phase I

• Business Case Development and Approach

• Summary of the Findings and Conclusions

• Summary of Risks and Recommendations

- ~ ~;.-;;;--------------------------------- ClfY OF Stantec PRINCE GEORGE

~Stantec

Project Work Discription

Project Objective:

Project was intended to surface a detailed business case for a municipally owned fibre

network and provide an opinion on the Technology centre component.

Project Scope:

• Review of existing fibre Network business plan (2008)

• Refinement and update of key assumptions used in existing fibre business plan

(Capital Estimates, Operating Costs and Revenues)

• Provide High level opinion on need for Technology Centre

• Development of a business case surfacing the most viable option (level of financial

detail to be similar to existing fibre network business plan).

• High level Implementation strategy


~Stantec

Summary of the Findings and Conclusions

Business Case – Financial model:

• A financial model was developed to provide a 10 year outlook on the potential cash flow

position for the City. The model was based on many assumptions and has an estimated

accuracy level of +/- 25%

• Key assumptions considered in the model include the following:

• Business demographics for the City of Prince George

• Network Expansion and build based on targeted areas for optimum

network coverage

• Timing and prioritization of the deployment and associated

expenditures to maximize customer penetration but also manage capital

outlay

• Customer circuit penetration projections


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Network Expansion and Build out:

• Downtown Core (Phase I)

ClfY OF PRINCE GEORGE

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• Carter Light Industrial (Phase II)

ClfY OF -----------------PRINCEGEORGE

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• Boundary Road Industrial (Phase III)

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Phase Ill



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Phase Ill

I


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Business Case – Financial

Model – 10 yr view:

• Cumulative Cash Flow

• Positive Net Income - Phase I and II

• Positive NET Cash Flow – Phase II

• Negative NET Cash Flow – Phase I

and Phase III

• Negative NET Cash Flow - TOTAL

Stantec MUNICIPAL FIBRE NETWORK & DATA CENTRE

INCOME AND CASH FLOW STATEM ENTS

Yea r 10

(Nom inal Dollars)

INCOM E STATEM ENT OPERATING REVENUES:

Dark f ib re renta 1

Custa mer d rop fees

Tot al revenues.

OPERATING EXPENSES:

Emergency maintenance standby fees

custo mer drop expense

Tot al ope rating e ,cpense

INTER-COMPANY (with City}:

Dark fibre rental to city Labor allocat ions f rom City

M ana,:eriaJ

Marketing Support Admin support Ne t\'t'o rl administrat ion

Mainte nance a 11d repairs Maintena nce su pplies

o ccupancy costs fi e m City

NETWORK USAGE FEE payabJe t o c~ 0 'ierhead a llocation from Cit y

Net in ter-<omp.a ny e,cp.ense

EBITDA

Amortizat ion

Interest on interim fi nancing de bt Interest en Ie ng te rm debt

NET rNCOM<IILOSSl

CASH FLOW STATEM ENT OPERATING ACTIVITIES :

Net income

Add : Amortization

cash ft o)fro m operations

INVESTING ACTIVITIES: capital expe ndrt:u r.es. • network e x.t ension

Capital expe nd'itur.es. · build ing connecttons ca pital expe nditu res.• capita l renewal

Cash tto)fro m investin~

RNANCING ACTMTIES: Custo mer financing (building connect ions) Interim fmancing debt issued (rep.a id )

Len g term finaocing iss ued

Lon g te rm financing ( repaid )

Cash ftottrom financinl:

Opening~h

Closinl!':C~h

NET CASH INFLOW/(OUTFLOW)

TOTAL

!i.600,000

$442,800

$1 042,800

$ 32,000

$ 38>,16 6

!i-417 ,166

so

$117 ,000

$40,000

so $72,0 00

$ 50,000

$10,000

so $ 10,428

$ 39,060

$338 ,488

$101 ,16 1

so $140,500

$45 485

$45,485

$101 ,161

$146,646

so ($113,950)

($49,961)

1$163 911)

$113,9 50

so so

($234,04'1)

($120,098 )

($627,597 )

1$764 959)

($137,3631

~

DOW NTOWN

OOR.E

$2.94,000

$19 1,880

$485 880

$32,000

$ 166, 90 >

$ 198, 90>

$0

!:, 57, 330

$19,600

$0

$35,2 8 0

$24,500

$4,900

$0

$4,859

$19,1.39

$165,608

$40,149

$0

$57,500

$23 71.8

$2 3,718

$40, 149

$63,8 67

$0

($33,028) (S19,B68J

1$52,896)

$33,02.8

$0

$0

($95,785)

($62,757)

($140,548)

($192 ,3'4)

($51,786)

£llAll.l,

CARTER LIGHT

l.N DUSTRI.AL

$19 2,000

$157,440

$ 349,440

so $136,94 8

$136,94 8

so

$ 3 7,440

$12,800

so $2 3,040

$16,000

$3,.200

so $3,494

$12,499

$108,474

$29 ,3 67

so $22 ,500

$52152

$52.,152

$2.9 ,3-67

$81,519

so (SS7,126I ($14,4771

IS71 6031

$57,12.6

so so

($37,4811

$1.9 ,645

$44,229

$73,789

$29,561


~

BOUNDARY ROAD

5114,000

$93,480

5207,480

,o $81,}13

$81 , 313

so

$2.2,2 30

$7,600

so $13,6 80

$9,500

$1,900

,o $2,075

$7,42 1

$ 64,406

$ 31,6 45

so $ 60,500

1$30 384)

($30,384)

$31,6 45

Sl ,261

so (S23,796)

(S15,616J

(S39 412)

$2.3,796 ,o ,o

($100,7821

($76,986)

($531,2771

1$646 4141

[$115,1371

~Stantec


Business Case – Financial Model beyond 10 yrs:

• Beyond 10 yrs

• Positive Net Income - Phase I and II

• Positive NET Cash Flow – Phase II

• Negative NET Cash Flow – Phase I and Phase III

• Negative NET Cash Flow - TOTAL

Stantec

$3,.00 0,.0 00 ,---------------.===================-----

CUMULATIVE CASH FLOW {CONSOLIDAliED)

$2,000,.0 00 +---------~ -----------------~------

Short lierm

1 2 3 4 YEARS

Lo11g lierm Financing

38 yrs

-$3,000,.000 +--------------------------------

-$4,000,.0 00 ~-------------------------------

- Capital Inv est ment Requ ir ed


- Cumu la,t iv e Cash Flow (BASE CASE)

- c umu lat iv e Cash Flow (Rev enue @-10'%)

- Cumu lat iv e Cash Flow (Rev enue @ -20'%)

~Stantec

Summary of Key Project Risks

• Financial (viability)

• Revenue Assumptions ( Customer connections, take rate, network capture, service offering,

pricing, installation costs )

• Operational Assumptions ( Manpower to operate, network administration, debt financing, service

levels, Inflationary impacts )

• Business Demographics ( number of large businesses, propensity to buy )

• Construction Costs ( Labour costs, boring/drilling vs trenching/plowing, restoration)

• Political (backlash)

• Competitive landscape impact (Telus, Shaw, other providers )

• Access to network ( those not captured by the network)

• Long term payback using public funds ( should public funds be used for this type of opportunity)

• Need for an appropriate governance model and stakeholder communication plan


~Stantec

Summary of Recommendations

Technology Centre

• Not justifiable on the basis of a fibre termination and customer co-location alone.

• Should be multiple co-location and fibre termination sites to reduce fibre counts in the backbone and

also maintain a high reliability network.

• Considering the size of the Prince George market, the need for future expansion of the existing City IT

infrastructure, the requirement for multiple fibre termination points in order to properly support the

Municipal fibre network as well as future opportunities and possibilities to improve City operations

• Opportunities - Co-location space for the fibre network customers,

- Backbone redundancy for the fibre network

- City IT department , current and future expansion

- Local business continuity coverage,

- Winter games data (digital Audio and Video) support

- Longer term City Operations improvements.

- Third party gateway or business critical data back-up facilities.


~Stantec

Summary of Recommendations

Fibre Network • Network Topology - Star configured network architecture is recommended, with longer term redundancy

in the backbone

• Network Ownership and Operation - “City Owns and Operates”

• Services to be Offered - “ Dark Fibre”

• Construction Strategy - Spread capital cost of construction across 6 years.

- Prioritize construction by Phases. Phase I carrying the highest priority, phase II

and a portion of Phase III to be a secondary priority and remaining sections of

Phase III to carry third priority.

• City should adopt the risk mitigation strategies identified in the report in section 9

• Resellers and key customers should be part of strategic decision making for scaling out the network.

• Effective communication plan required to educate and raise awareness for all stakeholders

• Refinement of business model recommended before final “go-no-go” decision is made


~Stantec

City of Prince George fibre

Network and Technology

Centre Business Case

APPENDICES

i CITYOF

PRINCE GEORGE

Stantec

PHASE I - Project Roadmap

GATE 1 GATE 2

Scoping study

Prelim Business

Case

Prelim Execution/

Business Plan

Prelim Work

Breakdown

(WBS)

Prelim

Design/Eng

Specifications

Updated

Business Case

Updated

Execution/

Business Plan

Prelim WBS

Class V+50% to -30%

Class IV+35% to -20%

Final Design/

Specifications

Final Business

Case

Final

Execution/

Business Plan

Final WBS

Class III+20% to -15%

Procurement

C&SU

Plan

Red line

drawings

Monitoring and

Control

Class II+10% to -7%

Performance

evaluation

Idea Generation

GATE 3 GATE 4 GATE 5 GATE 6

Lessons learned

Close-out

report

Financial

Close-out

Planning / Design Implementation Evaluation

Increasing Scope Definition

Idea

validation

Preliminary

Design/

Engineering

Final

Design/

Engineering

Project

Implementation

Commission

and

Start-up

Project

Evaluation and

Close-out

“Conceptual” “Pre-Feasibility” “Feasibility” “Control Target”

“Final

Go/No Go”

CURRENT

STATUS

END

PHASE

1

END

PHASE

2

~------------, r----------- r-----------1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I -------------~ -----------~ -----------~

-----------~ -----------~ I I I I I I I I I I I I I I I I I I I I I I I I I I I I : I : I ~----------~ ~----------~

i

--------------.. I I I I

I I I I I

I : L.------------..

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Capital Cost Accuracy & Decision Making

Order ofMagnitude Estimate

CLASS VCLASS BCONCEPTUAL

PreliminaryEstimate

CLASS IVCLASS CFACTOREDPRE-FEASIBILITY

BudgetEstimate

CLASS IIICLASS B (QUALIFIED)A,F,E, CONTROLFEASIBILITY

DefinitiveEstimate

Note:This diagram shall not be used to define the order accuracy of an estimate

CLASS IICLASS BCONTROLTARGET COST

ALTERNATETITLES

Maximum Probable Cost

Most Probable Cost

Basis of Estimate

Preliminary Project Scope DefinitionOutline of Process DesignPreliminary SchedulePreliminary Site Data

Basis of Estimate

More defined Project Scope DefinitionSite SelectedOutput SpecifiedType of Structures Defined

Basis of Estimate

Defined Project ScopeApproved Process Flow DiagramsList of EquipmentPreliminary Plot & Site PlansProposed Project SchedulePreliminary Logistics Plan

Basis of Estimate

Defined Project ScopeApproved Piping & Instrument Diagrams Plot & Site PlansApproved Engineering SpecificationsEquipment Purchased or QuotedApproved Master Project ScheduleSite & Labour Survey CompleteBulk Take-offs CompleteLogistics Plan Approved

% O

ve

rru

n

+10

-40

+20

-30

+30

-20

+40

-10

+50

0

% U

nd

err

un

50

35

20

20

35

10

715

Minimum Probable Cost

MechanicalCompletion

FinancialCompletion

Project Completion

CLIENT

Client/Project

Figure No.

Title

PROJECT LINE 1PROJECT LINE 2

Classes of Estimate Diagram

1.0

i -- S1tarrtE~-----------------------------------------~ ClfY OF Stantec PRINCE GEORGE

........ ........ .... _ ----

---------------

__ [ -------------r ---- -----------------------

--~------------- -----------------------

D t 2001 11 11 10 00

~ Stantec


Option Evaluation Matrix:

• An option matrix was developed to surface the most viable option

• City objectives formed the key evaluation criteria

• The Key criteria which reflect pertinent and relevant rewards or risks to the

City were added to form five key criteria components, these included:

• Economic

• Environmental

• Social

• Operational

• Legal, Political and Regulatory


~Stantec



• The consolidated results for the fibre Network component – Ownership/Operations

Options considering all the criteria:

ClfY OF --------------------------------------------- PRINCE GEORGE

Stantec

120.0%

100.0% VI

al ::, QJ

...J

~ 80.0%

Cl a:

~ 60.0% LIJ a: "C C 40.0% Ill ~ <l'I

ci:: 20.0%

0.0%

FIBER NETWORK-OWNERSHIP/OPERATOR OPTIONS

(ALL CRITERIA)

Status Quo City Owns &

Operates

City Owns & Othe rs Own & Othe rs Own &

Othe rs Operat e City Ope rat es Operat e

MAX Li ne

• REWARD

• RI SK

MIN Li ne

~Stantec



• The consolidated results for the fibre Network component – Services Model Options

considering all the criteria:


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100.0%

90.0%

"' "ijj 80.0%

:> QJ 70.0% ...J

~ C 60.0% a::

~ 50.0% uJ a:: 40.0% "C C cu 30.0% ~ <l'I

12 20.0%

10.0%

0.0%

FIBER NETWORK -SERVICES MODEL OPTIONS

(ALL CRITERIA)

DARK FIBRE MANAGED SERVICES

MAX Li ne

• REWARDS

• RISK

M IN Li ne

~Stantec



• The consolidated results for the Technology Centre component – Ownership/Operations

Options considering all the criteria:


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120.0%

100.0% "' ai :> Q)

-' 80.0% ~ C a:: ~ 60.0% LU a:: "C C: 40.0% n, ~ VI

ii:: 20.0%

0.0%

TECHNOLOGY CENTRE - OWNERSHIP/OPERATOR OPTIONS {ALL CRITERIA}

City Owns & Operates City Owns & Oth e rs Op e rate Oth e rs Own & Ope rate

MAX Li ne

• REWARDS

• RISK

M IN Li ne

~Stantec


Business Demographics:

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90.0%

80.0%

70.0%

-; ... ~

60.0%

~ 50.0%

~ iii

40.0% "' "' ., C

·.;; 30.0% :, ca

20.0%

10.0%

0.0%

City of Prince George - Business Demographics

Business Size Demographic 8 4.1%

• Business Size

3.1% 0.8%

1-19 Em ployees 20-49 Employees 50-199 Employees >200 Employees

Data Sou rce: Busin ess Registe r, St atictics Canada. In some areas, boundarychanges/ geocod ingchanges may cause large changes

PrlMit Geo CA 1 to 19 20 lo A9 SO. 199


~Stantec


Timing and Prioritization of the Deployment and associated

Expenditures :

Stantec

C Al FUNDING ESTIMATE · City of PG Fibre Network YEAR YEAR YEM '\R

PHASE I - Downtown Core Network Extension, $583,159 $583,159 so so

Existing City Duct S12,905 so so so Customer Building Connections S55,046 $88,074 S77,065 sn,02s

PHASE 11 - carter Ueht lndustri I

Network Extensions so S142,816 S190,421 S190,421

Existing City Duct so $13,773 so so Custome.r Building Connections $57,126 $95,210 $95,210 S57,126

PHASE Ill • Boundary Road Industrial CitYWid Tra port

Network Extensions S37,598 S287,217 S376,095 S327,194

Existing City Duct so $44,500 $44,500 $44,500 Customer Building Connections so S23,796 $47,592 S23,796

ANNUAL NEW CAPITAL REQUIRED:

CUMUIATM CAPITAL REQUIRED: 45 8 24 i80 $2 855 531

YEA 5 YEAk

so so so so so so

sn.02s $33,028 S33,028

S38,560 so so so so so

S57,126 $57,126 S57,126

S232.011 S15,348 so S31,818 so so S23,796 S23,796 S23,796

947, 76964 $4 190,

YEA

so so

$33,028

so so

S57,126

so so

S23,796

04


9 YEAR

so so so so

S33,028 $33,028

so so so so

S57,126 S57,U6

so so so so

S23,796 S23,796

18 5H 764

~Stantec


Customer Circuit Penetration projections :

•Phase I

Stantec

Customer Connect ion Assumptions: I 1 "Pri mary" customer con nections are based on direct subscri be rship to the network 2 · secondary" customer co nnections a.re based on co nnections through a Rese ll er 3 A "Secondary Subscri ber" co nnection Rati o of 1:10 will be used to estab lis h add itional dark fi bre requirem ents for th e rese ll ers . 4 Th e database for "P rim ary" custom er co nnecti ons will be derived from all businesses who have > 50 em ployees . 5 Th e database for · secondary" customers will be derived fro m all businesses who have < 50 em ployees . 6 "Primary" and · secondary" custom er co nnecti on penetrati on rates and number of business quantiti es for each area are included be low. 7 Th e three target areas of th e Downtown Core, Ca rter Light Industri al and Boundary Road Industrial m ake up approximately 60% of total businesses in Prince George

DOWNTOWN CORE (PHASE I) - CUSTOMER Assumption W ork Sheet

Total Business Custom er Base : 3,297 60% ofTotal Base : 1,979

% with >50 Em ployess : 4 .1 % % with <50 Em ployees : 95.9%

DOWNTOWN CORE (PHASE 1) - (Po rti on of 50%): 50.0% "PRIMARY Custom er" PENETRATI ON Rate (30% after 3 yrs): 10.0%

"SECONDARY Custom er" PENETRATI ON Rate (9% after 3 yrs): 3.0% "PRIMARY Custom er" PENETRATI ON Rate (5%/YR beyond 3 yrs): 5.0%

"SECONDARY Custom er" PENETRATION Rate (1 %/YR beyond 3 yrs): 1.0% SECONDARY Rese ller to Custom er Connecti on Rati o: 10.0%

Customer Projections YR1 YR2 YR3 YR4

Annual Business Growth Rate: 1.0% 1.0% 1.0% 1.0% 1 0% 1.0% 1.0%

Total Potential Downtown Core (Phase I) Customer Base : 999 986 96 1 937 93 4 932 929

Total Potent ial PRIMARY Customer Base : 41 41 40 39 38 38 38

Total Potent ial SECONDARY Customer Base : 959 947 923 899 897 894 892

" PRIMARY "Customer PEIJETRATlotJ Rate: 10.0% 100% 100% 5.0% 50% 5.0% 5.0%

" SECONDARY" Customer PE tJETRATION Rate: 30% 30% 3.0% 1.0% 1 0% 1.0% 1.0%

Primary Customer Connections(Derate by 50% in YR1 ): 3 5 4 2 2 2 2

Secondary Customer Connections (Derate by 50% in Yr1 ): 2 3 3 1 1 1 1

Total Customer Connections: 5 8 7 3 3 3 3

CUMULATIVE Customer Connections: 5 13 20 23 26 29 32

PENETRATION RATE of Total Business Base: 2.31/. 3.51/. 3.51/. 1.31/. 1.31/. 1.31/. 1.3½

2.3X 5 .9 X 9 .6X 11.lx 12.4X 13.7X 15.lX

3, 297 1


Total Bu sinesses in PG Market (100%)

999

Captu red by Network in Pha.se

959 96% (of 60%) <50 Emp loyees

4 1

4% (of 60%) >50 Employees

YRS YR9 YR10

1 0% 1.0% 1.0%

926 923 921

38 38 38

889 886 884

50% 5.0% 50%

1 0% 1.0% 1 0%

2 2 2

1 1 1

3 3 3

35 38 41

1.31/. 1.31/. 1.31/.

16.4X 17.8X 19.1%

~Stantec



•Phase II

Stantec

Customer Connection Assumptions: I 1 "Prim ary" customer co nnections are based on direct subscri be rship to th e network 2 · secondary" customer co nnections are based on co nnections through a Res ell er 3 A · secondary Subscri be r" co nnection Ratio of 1:10 will be used to establi sh add iti onal dark fibre requirements for the rese ll ers. 4 The database for "Primary" customer connecti ons will be derived from all businesses who have > 50 empl oyees. 5 The database for · secondary" customers will be derived from all businesses who have < 50 employees. 6 "Prim ary" and · secondary" customer co nnection penetrati on rates and number of business quantities for each area are included below. 7 The three target areas of th e Downtown Core, Carter Light Industri al and Boundary Road Industrial make up approximately 60% of total businesses in Prin ce George

CARTER LIGHT INDUSTRIAL (PHASE II) - CUSTOMER Assumption W ork Sheet

Total Business Customer Base: 3,297 60% ofTotal Base: 1,979

% with >50 Employess: 4.1% % with <50 Employee s: 95.9%

DOWNTOWN CORE (PHASE 1) - [Porti on of 50%): 30.0% "PRIMARY Customer" PENETRATI ON Rate [30% after 3 yrs): 10.0%

"SECONDARY Customer" PENETRATION Rate [9% after 3 yrs): 3.0% "PRIMARY Customer" PENETRATION Rate (5%/YR beyond 3 yrs): 5.0%

"SECONDARY Customer" PENETRATION Rate (1 %/YR beyond 3 yrs): 1.0% SECONDARY Resell er to Customer Connection Rati o: 10.0%


Annual Business Grow th Rate: 1.0% 1 0% 1.0% 1 0% 1.0% 1.0% 1.0% Total Potential Coll ege Dist rict (Phase II ) Customer Base : 600 594 577 559 553 546 540

Total Potent ial PRIMARY Customer Base : 25 25 24 23 23 23 22

Total Potential SECONDARY Customer Base: 576 570 554 537 53 1 525 518

"PRIMARY "Customer PEtiETRATION Rate: 10.0% 10.0% 10.0% 5.0% 5.0% 5.0% 5.0% "SECONDARY" Customer PE tffTRATION Rate: 3.0% 30% 3.0% 1 0% 1.0% 1.0% 1.0%

Primary Customer Connections(Derate by 50% in YR1 ): 2 3 3 2 2 2 2 Secondary Customer Connections (Derate by 50% in Yr1 ): 1 2 2 1 1 1 1



PENETRATION RATE of Total Business Base: 2.0½ 3.SX 4.0X 2.11/. 2.2½ 2.21/. 2.21/.

2.0X 5 .9X 10.1X 12.5X 14.8X 17.2X 19.SX

3,297 1


Tot al Bu,inesse, in PG M ar ket (100%)

600 Captured by Network in Phase

575 96% (of 60%) <50 Emp loyee,

24 4% (of 60%) >50 Emp loyee,

YR8 YR9 YR10

1.0% 1 0% 1 0%

533 527 520

22 22 22

512 506 499

5.0% 5.0% 5.0%

1.0% 1 0% 1 0%

2 2 2

1 1 1

3 3 3

28 31 34

2.3:X 2.31/. 2.31/.

22.1X 24.7X 27 .3%

~Stantec



•Phase III

Stantec

Customer Connection Assumpt ions: I 1 "Primary" customer co nnections are based on direct subscri bership to the network 2 · secondary" customer co nnections are based on connecti ons through a Resell er 3 A · secondary Subscri ber" connection Ratio of 1:10 will be used to estab lish additional dark fi bre requirements for th e resell ers. 4 The database for "Prim ary" customer co nnections will be derived from all businesses who have > 50 employees . 5 Th e database for · secondary" customers wi ll be de rived fro m all businesses who have < 50 employees. 6 "Primary" and · secondary" customer connection penetration rates and number of business quantities for each area are included below. 7 The three target areas of th e Downtown Core , Carter light Industri al and Boundary Road Industri al make up approxim ately 60% of total businesses in Prin ce George

BOUNDARY ROAD INDUSTRIAL (PHASE Ill) - CUSTOMER Assumption W ork Sheet

Total Business Customer Base : 3,297 60% ofTotal Base: 1,979

% with >50 Employess: 4.1% % with <50 Employees : 95.9%

BOUNDARY ROAD INDUSTRIAL (PHASE Ill ) - (Po rti on of 70%): 20.0% "PRIMARY Customer" PENETRATION Rate (30% after 3 yrs): 10.0%

"SECONDARY Customer" PENETRATION Rate (9% after 3 yrs): 3.0% "PRIMARY Customer" PENETRATION Rate (5%NR beyond 3 yrs): 5.0%

"SECONDARY Customer" PENETRATION Rate (1%NR beyond 3 yrs): 1.0% SECONDARY Resell er to Customer Connection Ratio: 10.0%


Annual Business Growth Rate: 1.0% 1 0% 1 0% 1 0% 1 0% 1.0% 1.0%

Total Potential Bounda~ Rd Industri al (Phase Ill ) Customer Base: 400 404 397 379 372 364 357

Total Potential PRIMARY Customer Base : 17 17 17 16 16 15 15

Total Potential SECotJDARY Customer Base: 384 388 381 364 357 350 343

" PRIMARY "Customer PEIJ ETRATlotl Rate: 10.0% 100% 10.0% 50% 50% 50% 5.0%

" SECONDARY" Customer PENETRATION Rate: 30% 3.0% 30% 1.0% 1.0% 1.0% 10%

Pri ma~ Customer Connections(Dera te by 50% in YR2,100% in YR1): 0 1 2 1 1 1 1

Seconda~ Customer Connections (Derate by 50% in Yr2.,100% in YR1): 0 1 2 1 1 1 1



PENETRATION RATE of Total Business Base: 0.01/. 2.71/. 5.51/. 2.91/. 3.01/. 3.01/. 3.11/.

o_ox 2 .7¾ 8.3¾ 11.6¾ 14.8¾ 18.1¾ 21.6¾

3,297 1


Total Businesses in PG M arket (100%)

400

Captured by Network in Phase

384

96%(of 60%) <50 Emp loyees

16

4% (of 60%) >50 Emp loyees

YRS YR9 YR1 0

1.0% 1 0% 1 0%

349 342 334

15 14 14

336 329 321

5 0% 50% 50%

1 0% 1.0% 1.0%

1 1 1

1 1 1

2 2 2

16 18 20

3.11/. 3.21/. 3.31/.

25.2¾ 28.9¾ 32.9%

~Stantec

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