Commentary: Electric Co-Op are nonprofits who lack hedge-fund investors backing Internet Service Providers
by Gary Wood, the CEO of Central Virginia Electric Cooperative. Wood is not associated with Virginia Scope.
On January 26th, Richard Schollmann, a lobbyist for telecommunications companies partnered with cable companies and All Points Broadband, published a grossly misleading op-ed titled “Virginia’s new legislation to supercharge broadband availability.” Let me offer the truth about the legislative proposal. The legislation he cites does not address the speed of deployment, but instead is a clear money grab for corporate interests using the leverage of grant awards with a deadline to scare legislators into action. The proposed law will raise electric rates at a time where too many Virginians are already struggling to make ends meet.
Electric Cooperatives serve the most rural areas across Virginia, including many low-income families. Co-ops do everything possible to keep electricity affordable. Co-ops operate at cost and any leftover margins are given back to the ratepayers. Every dollar a cooperative spends comes from the homes of its members.
Mr. Schollmann and his partners are acting like reverse Robin Hoods – robbing the rural ratepayer to fatten the pockets of ISP hedge fund and stock investors. He implies it’s unfair for Wall Street ISPs to pay for the poles that they need replaced. Who does he think will be left with sky high electric bills resulting from his government mandated cost-shifting? Rural taxpayers who are cooperative members..
Here’s the thing. Electricity poles are just that – poles designed to deliver electricity. Those poles are clearly performing that duty reliably and safely. Reliability in Virginia’s electric cooperative service territory is among the best in the nation.
The problem lies when those poles are tasked to do something they were not designed for, like holding heavy cable and broadband attachments. There is longstanding precedent – endorsed by USTelecom, Mr. Schollman’s national trade association – that says pole upgrades and make ready work are the cost of doing business for the cable or ISP company.
When a private broadband company wants to place their equipment on a utility owned pole, the ratepayer will see no benefit – these attachments don’t make reliability better or rates lower. However, the broadband company will profit millions annually once the broadband is hooked up. Yet, somehow the broadband company believes the non-profit ratepayers should be the one to foot the bill for their profit making venture? That is remarkably unfair.
Let me be clear. Electric Cooperative territories are the areas with the fastest deployers of rural broadband in Virginia, and they are entirely footing the bill. The legislation being considered does not speed deployment, but instead seems to be a solution for a handful of companies that have mismanaged projects that are over budget and behind schedule now looking to electric ratepayers to bail them out.
A vote for this bill is a vote for higher electric rates for rural constituents.
A vote for SB713 says the government knows how to better spend money than families do.
A vote for SB713 is an unfunded mandate on rural ratepayers.
A vote for SB713 creates a windfall for for-profit broadband companies who would pay nothing for broadband construction work plus pocket the state grants they were already awarded specifically to cover these costs.
Broadband is important, but companies across the Commonwealth have found ways to deliver it affordably, without passing the costs along to electric ratepayers. If a company feels they can no longer deliver on the promises they made to Virginia to deliver broadband to rural communities, then they should turn in their contract so someone more capable can handle it.
I am CEO at Central Virginia Electric Cooperative and its wholly owned subsidiary Firefly Fiber Broadband. We have built over 5000 miles of fiber across multiple cooperative territories in five years without strong-arming co-op members for additional subsidies. And we are doing that with broadband rates among the lowest in the nation and industry leading ratios of homes and businesses signing up for service, plus being recognized for delivering best in class service. Our company and others have proven there is no need to squeeze cooperative members for more money.
Electric Cooperatives stand ready to aid in the expansion of broadband. But what we cannot do is force those costs on the back of electric ratepayers in the most rural parts of Virginia. Virginia is leading the nation in rural broadband deployment, and it is doing so without this corporate subsidy bill. Let’s not become the first in the nation to shift the costs from the broadband providers to rural electric ratepayers. We can do better and rural Virginians are counting on it.
Gary Wood is the CEO of Central Virginia Electric Cooperative.