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Section III Proposed Services and Operations A. Electricity LID will provide all of the services of a distribution utility. Some of these services include customer services and procuring electricity at wholesale for sale to the utility's retail customers. Customer services include meter reading, billing, call center response, and administering public purpose programs. LID will provide the electric commodity to its retail customers by procuring power in wholesale markets and transporting it over the transmission grid to the LID distribution system. Some or all services will be provided through contracts. For instance, coordination with the transmission system will be done through a contract with a scheduling coordinator. Power procurement will involve contracts with power merchants and/or power generators. Other services will be either contracted or provided by LID employees, depending on the most economic means for providing those services, as determined from time to time. Initially, LID expects to rely heavily on established contract providers who have the resources to provide necessary services from the inception of service. An economic analysis has been provided by Advanced Energy Strategies, Inc. indicating the feasibility of LID providing electrical services in Exhibit"C". Simply stated,this report provides an analysis of expected costs and revenues associated with the proposed electrical service and LID will be able to successfully finance necessary capital costs and offer competitive rates in covering its operating costs. The primary indicators of this economic viability are the positive net present value(NPV) that results after year 10 of operation and the high debt coverage ratios that occur after revenue bond financing. The positive NPV demonstrates that LID will have more value for its customer-owners over the period included in the analysis than they would experience with service from PG&E. That value will translate into lower rates and additional services. The high debt coverage ratios will likely make LID bonds attractive investments. B. Telecommunication Service LID will design and construct telecommunication services for the River Islands area. The telecommunications services system will be designed to meet commercial telephone, data and video needs, and residential telephone, video entertainment and data needs. As mentioned above,the system will be comprised of four separate networks: (1) a telephone network; (2)a cable TV network; (3) a wireless network; and (4) a trunked radio network. Should LID not operate its own intemet service, independent intemet providers may establish a Point of Presence(POP) through LID's backbone infrastructure. LID would connect its system to one of several high-level networks (Network Access Points or NAPS). Telephone service is currently provided by SBC on the Stewart Tract. LID may choose 12