March 27, 2019 11:00:06 AM
Columbus Light and Water is still interested in selling phone and internet service to businesses in the city, but the future of that venture is uncertain as a bill to fund the initiative makes its way through the Legislature in Jackson.
A bill in the House Local and Private Committee would allow CLW to issue about $2.75 million in bonds to finance the expansion of the utility's already 20-mile network of fiber optic cable it now uses for internal communication. Bonds would be the best way to finance the expansion, said CLW General Manager Todd Gale.
However, Rep. Jeff Smith (R-Columbus), who introduced the bill in the Legislature and also is CLW's board attorney, said there is a possibility the bill won't make it out of committee, which it must do by 11:59 p.m. Thursday.
"Let me put it this way," Smith said. "It's very much alive in the House, but it's dead in the Senate."
In the House Local and Private Committee, the bill will probably pass, he said. However, he claims lobbyists are urging senators not to vote for it.
"I can only do so much on my end," Smith said. "And it's frustrating. But we haven't given up yet."
Sen. Chuck Younger (R-Lowndes County) said he is "all for" the bill, but has heard there is resistance from senators and lobbyists for big phone and internet companies like Comcast. Those lobbyists have not approached him, he said.
"I heard the other day that they were going to kill it," Younger said. "That doesn't make sense because we passed a bill to allow co-ops to do basically the same thing."
The co-op bill, which the Legislature approved in February, allows the state's electric cooperatives to provide broadband service to its customers. Until the new bill was passed, electric cooperatives were bound by a law passed in 1932 that prohibited them from providing anything but electricity to members. Now, the co-ops can provide broadband service but are not required to do so.
Unlike the co-ops, CLW -- as a municipal utility -- already had legal permission to sell internet service. However, both Smith and Gale said conflicting Attorney General's opinions made it unclear whether CLW could pursue a bond without legislative approval. To be on the safe side, Gale said bond attorneys advised the utility to seek legislation.
If the bill doesn't pass, Gale said CLW would look at finishing the infrastructure out-of-pocket -- something that could strain the utility that has operated at a deficit on the electric side each of the last three years.
Rep. Gary Chism (R-Lowndes County), who serves on the House Local and Private Committee, said there may still be hope for the CLW bill. House Speaker Phillip Gunn and Senate President and Lt. Governor Tate Reeves meet weekly to discuss bills coming up through committee, he said.
"The way those meetings go usually is indicated in how bills do in committee," he said. "So if the Senate doesn't like a bill, that affects how it's presented in the House."
Because the House is still moving forward with the bill, Chism said it's safe to assume there's still a chance for it in the Senate.
"We're coming down to the end of the session, so there doesn't need to be any more hiccups," he said. "But there doesn't seem to be any opposition. If the (House) chairman (Manly Barton, R-Jackson) understands it enough to bring it forward, it'll pass (in the House)."
Gary Jackson (R-French Camp), who chairs the Senate Local and Private Committee, did not respond to phone calls or text messages from The Dispatch by press time.
CLW has been considering expanding its services to include the sale of phone and broadband internet since last fall, as a way to generate revenue while mitigating the need for rate increases.
The service would first be offered to business clients only, with a possible expansion to residential customers later.
In September, CLW mailed surveys to roughly 2,500 businesses in the city limits, and the majority of respondents said they would be interested in purchasing those services from CLW.
"We found then that there was definitely interest," Gale said. "There were a lot of people saying they'd switch. And even now, I have people on the street asking when we're going to start selling that service."
The utility paid $28,000 to Tennessee-based Kersey Consulting Services, which has been working with power companies in Tennessee and Kentucky for nearly 10 years, to conduct a feasibility study.
If the bill passes and the bond is issued, CLW would need 600 broadband customers to break even, and it would take about three years for the initiative to turn a profit, Gale said. Payments on the bond would be deferred for up to three years.
CLW's board will meet Thursday, which is the deadline for the bill to come out of the legislative committees, to determine how to move forward. Gale said those discussions could include cost feasibility of self-funding the fiber expansion.
It would take roughly six months to install the additional fiber, he added, after which customers could be connected immediately.
"In order to keep our rates down, we have to stay competitive," Gale said. "There has already been interest and we already have the fiber for it. It makes sense to take an asset we've already paid for and make good use of it."
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