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Farmington, N.M., Utility Considers Offering Internet Service

Farmington Electric Utility System is exploring the feasibility of offering high-speed Internet service to city residents. Officials say the service would benefit customers while providing a new revenue stream.

by Hannah Grover, The Daily Times / September 14, 2020
Shutterstock/asharkyu

(TNS) — Farmington Electric Utility System is exploring the possibility of adding high-speed internet to its offerings, which could help bridge the digital divide within the utility’s service area while also providing a new source of revenue.

A feasibility study is underway looking at that possibility. The city has contracted with Finley Engineering for the engineering portion of the feasibility study and has contracted with CCG Consulting to perform the financial and survey aspects. Those two firms previously teamed up for a similar study in Cortez, Colorado.

The Public Utility Commission learned about this proposal during its Sept. 9 meeting. A recording of that meeting is available at fmtn.org/AgendaCenter.

FEUS Administrative Services Financial Analyst Olena Erickson said FEUS may be able to provide higher speeds at rates comparable to what San Juan County residents currently pay.

The pricing model presented to the PUC ranged from $60 for 100 megabytes per second to $80 for one gigabyte per second for residential. On the commercial side, prices ranged from $75 for 100 megabytes per second to $95 for one gigabyte per second.

This concept is not new and nothing in state statute prevents a city-owned utility from offering broadband Internet to customers.

There are success stories across the country, the most famous being Chattanooga, Tennessee. But Erickson warned there are also cities that tried offering broadband and failed.

The price tag to offer the service is large — $156.7 million in bonds.

"FEUS is debt-free today. We have paid cash for all of our assets and we're very conservative and that's why we have the lowest rates in the region," said FEUS Director Hank Adair. "So this will be a change in approach for us."

Farmington may be able to receive about $9.5 million in grant funding by participating in an auction where various entities bid for money to install and offer broadband in rural areas. This could cover parts of FEUS’ service area, such as Navajo Dam.

If FEUS chose to pursue offering broadband, it would not help bridge gaps in the Navajo Nation because very little of the tribal lands are served by FEUS.

The consultants have recommended if FEUS chooses to pursue broadband it should enter the auction this October and should provide internet service for the entire service area, not just rural parts.

But some commissioners expressed concerns about the long-term debt and possible technology changes. Adair said more information will be provided in the future as the feasibility study is completed.

While they had concerns, the commissioners overall supported pursuing the idea.

©2020 The Daily Times, Distributed by Tribune Content Agency, LLC.

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