Rural broadband raises questions

By CHIP ESTES,

The issue of broadband access is a concern throughout the United States and not just in Mississippi. Living in a rural area often means one rides a bus to school, has sewer from a septic tank, and drinking water from a personal or rural association well.

Even today, investor-owned electric utilities only extend new power lines a certain distance (600 feet for Entergy, while a cost-to-revenue ratio test is conducted by Mississippi Power) as required by the Mississippi Public Service Commission (MPSC) to determine if any supplemental payment is required from the ratepayer.

In a 2019 attempt to partially address rural broadband access, a bi-partisan effort was spearheaded by Speaker Phillip Gunn and MPSC Chairman Brandon Presley. The legislature then passed and the governor signed the Mississippi Broadband Enabling Act (HB366), which only authorizes electric cooperatives to provide for ownership and/or operations of broadband systems. Additionally, several ratepayer safeguards exist in the legislation, such as the mandate that “an electric cooperative shall not use its electric energy sales revenues to subsidize the provision of an affiliate or unaffiliated broadband operator of broadband services to the public,” and “Before broadband services may be offered under this act, an electric cooperative must, by resolution of the board of directors and spread upon its minutes, have an economic feasibility study conducted and adopt a plan that will provide service to its entire certificated area.” The decision to actually provide broadband services is then up to the board of directors of each electric cooperative to determine if it is in the best interest of their members.

Alternatively, since the MPSC has very little oversight over the Mississippi electric cooperatives but fully regulates the state’s investor-owned electric and natural gas utilities, the MPSC apparently initiated its own agenda regarding broadband in 2016. A March 30, 2017 letter from Entergy to C Spire states, “As we have discussed, at the request of the Mississippi Public Service Commission, Entergy Mississippi, began exploring in 2016 whether it could play a role in helping to expand rural broadband access within its service area while at the same time enhancing its provision of electric service to its customers.”

This Entergy/C Spire/MPSC project (five segments totaling approximately 300 miles) was recently lauded as being completed. It entailed a C Spire investment of $11 million and an Entergy MS expenditure of an estimated $19 million. Since none of the safeguards implemented in HB 366 were required, Entergy MS ratepayers are now responsible for paying for these expenses without a cost/benefit analysis or any documented guarantee of receiving any benefits.

Even more troublesome for the ratepayers of investor-owned electric and natural gas companies is a rule passed by the MPSC in December 2019 on a 2-1 vote (Sam Britton (R) voted “No”). This rule allows the companies that are MPSC jurisdictional to bill their customers for broadband and “grid enhancements” up to $35 million each per year over at least a five year period. Collectively, that is $875 million without any feasibility study mandate, as the MPSC rule states that “Because of the inherent, yet difficult to quantify benefits of such investments, no cost/benefit analysis shall be required.” 

The MPSC has implemented a rule that arguably exceeds its legislative authority, ignores the ratepayer protections included in HB 366, dismisses the work already undertaken as described in Gov. Bryant’s 2019 update to Mississippi’s State Broadband Plan, and possibly violates open meetings and ex parte legislation.

The MPSC rule is also prohibited by Section 66 of the Constitution of the State of Mississippi, which states:

“No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the Legislature, nor by any vote for a sectarian purpose or use.”

Hopefully, the two newly elected Republican commissioners at the MPSC will reopen the proceeding that created this rule in order to fully expose the risks and costs to utility-captive ratepayers. Otherwise, some of the poorest households in America will be stuck with paying for yet another boondoggle investor-owned utility scheme that this time was apparently hatched by and then later expanded and approved by their regulators.

Chip Estes has worked in energy for 38 years.

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