Michigan City Utility borrows $18 million for fiber optic network

(TNS) – Borrowing up to $18.2 million will give Traverse City Light and Power what it needs to expand its fiber optic network across city limits.

City commissioners unanimously agreed to authorize borrowing up to that amount at their Monday meeting, the latest step toward completing a project the city utility has been considering for several years and completed in part of town. Karla Myers-Beman, the utility’s comptroller, said the utility will pay it all back and most of it is actually a $14,699,000 loan from the US Department of Agriculture.

This will not only build Smart Grid technology infrastructure to the electric utility’s footprint, but allow TCL&P to provide what it considers an essential service: high-speed internet access, according to documents.

City manager Marty Colburn told commissioners about the need for better upload and download speeds when the utility started discussing the idea. He recalled stories of companies physically moving stored digital data from one building to another because their connection speed was so slow.

“One of the things that we’re also noticing with COVID is that we’re seeing there seems to be even more interest and there’s certainly a discussion nationwide in terms of availability and basically how you’re building a world-class city,” he said. “It’s the ability to circulate information.”

Smart grid apps could, for example, better track usage and outages, and participating users could agree to let the utility company limit their air conditioning on hot days in exchange for better rates, as noted earlier.

While the USDA approved the nearly $14.7 million loan to build the fiber optic network, that money would not cover the cost of connecting homes to the network, Colburn said. So there’s an additional $3,501,000 to cover those costs, according to the documents.

Myers-Beman said the utility has a turnout of about 20% so far for the first phase of its network, which includes most downtown and surrounding neighborhoods. This is less than the 40% that the operator Fujitsu Network Communications included in its cost-benefit analysis as the break-even point.

Additionally, new registrations have slowed among the roughly 3,200 homes and businesses that have gone through the network so far, documents show.

Critics of the idea include Gerald DeGrazia, a telecommunications industry veteran who has frequently criticized Fujitsu Network Communications’ cost-benefit analysis as flawed and overly optimistic. He told city commissioners in a letter that the USDA loan amounted to a “bailout” of a first phase that failed to attract enough customers.

Barb Willing also criticized the commissioners for agreeing to borrow money and put the utility in debt. She pointed to other municipal utilities that have tried unsuccessfully to get into the broadband business and noted that this is another company, not the utility, that runs a network with a abundant local competition.

Pro Tem Mayor Amy Shamroe, a long-time project advocate and TCL&P board member, said the utility had its own chief information officer and Fujitsu Network Communications was a contractor who essentially worked for him. .

Mayor Richard Lewis agreed, adding that it was the same arrangement with Jacobs, for which the city, at the same meeting, renewed its operating agreement for the Traverse Regional Wastewater Treatment Plant. City for a further 10 years.

“They all work for us and there are checks and balances,” he said.

Next, the TCL&P board must pass another motion clarifying its initial approval to clarify what the USDA funding pays for and indicate the utility’s intention to seek additional funding to cover a $25 cost increase. % compared to previous estimates. This increase is included in the figure of $14,699,000.

City voters have 45 days from the resolution’s publication in Record-Eagle’s legal notices section to collect enough signatures to put the loan to a referendum, documents say – the petitioners would need the signatures of at least 10% of the city’s registered voters, according to state law.

© 2022 The Record-Eagle (Traverse City, Michigan). Distributed by Tribune Content Agency, LLC.

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