An Appalachian Power representative reported that the company hopes to have infrastructure in place by February that will allow an Internet service provider to connect to its "middle-mile" broadband fiber and provide "last-mile" service to benefit about 15,000 potential unserved customers in Logan and Mingo counties.
Appalachian Power External Affairs Manager Jon Webster's update at last month's joint meeting of state legislative interim session committees on infrastructure and technology followed the West Virginia Public Service Commission's order in June approving the $61.3 million project.
Middle-mile infrastructure links main data routes to the last-mile networks of local providers of broadband service to end users.
The last-mile provider that Appalachian Power has entered into a lease with, GigaBeam Networks LLC, will be free to start fiber installation after the infrastructure is in place, Webster told lawmakers at the Nov. 16 meeting.
Webster said an American Electric Power construction management team is working with an Appalachian Power distribution team reviewing routes in Logan and Mingo counties and making a priority list for fiber routes.
GigaBeam has estimated that 60% of unserved residents and 90% of unserved businesses in Logan and Mingo counties will sign up for service. Appalachian Power has estimated that there are roughly 15,200 potential unserved customers in those counties.
"[W]e hope to have all this work done in about a two-year time frame," Webster said.
He indicated that AEP is evaluating the feasibility of similar broadband expansion in Mercer, McDowell, Wyoming, Summers and Monroe counties.
"We're looking to see if this project makes sense," Webster said. "We're in the survey stage."
He said his company is working with a third-party contractor to identify unserved customers in those five counties and will go before the Broadband Council regarding a project in the counties next year, if one is deemed feasible.
Webster said Appalachian Power serves 23 counties in West Virginia.
"As we look at our service territory, there's potential to go west. You could go north in our service territory," Webster said, "but it's the idea [that] it has to make sense with the unserved customers."
The Public Service Commission approved Appalachian Power's proposal to invest $61.3 million for construction and installation of 361 miles of 96-strand fiber and an additional 48 strands to 69 miles of its transmission in Logan and Mingo counties.
The estimated annual operational and maintenance costs are $1.74 million, with a first-year revenue requirement of $1.2 million.
The PSC approved a broadband surcharge of 0.015 cents per kilowatt-hour for residential service.
Appalachian Power chose Logan and Mingo counties for the project in response to a Federal Communications Commission finding that broadband coverage in those counties is low, compared to similar counties in West Virginia.
GigaBeam provides Internet connectivity to eight counties in Southwest Virginia, Southern West Virginia and Eastern Kentucky, according to PSC filings.
Michael Clemons, president and CEO of GigaBeam, testified at the evidentiary hearing on the project proposal in April that pricing for his company's service will range from $45 to $100 for residential service and $65 to $100 per month for commercial service.
The Consumer Advocate Division, an independent arm of the PSC that represents the interests of utility customers, contended that the commission should reject the proposed project, require Appalachian Power to rebid the project and require that any middle-mile facilities could be used to provide Internet service to any customers in Logan and Mingo counties.
The commission rejected that argument, citing the Legislature's emphasis on broadband expansion into "unserved rural areas" in the text codifying the program for extending middle-mile fiber broadband infrastructure it established last year.
The commission also rejected the arguments of the agency's staff, the Consumer Advocate Division and the West Virginia Energy Users Group that the commission hold off on approving the broadband surcharge until the middle-mile infrastructure is constructed and in service.
The panel said the case involved "very unique and special circumstances" that merited ignoring the general rate-making principle that a utility plant should be in service and "used and useful" before cost recovery is permitted.
"Enforcing the used and useful ratemaking principle in this case causes a regulatory lag in cost recovery that may discourage electric utilities from participating in the [Middle-Mile Fiber Broadband Infrastructure Expansion] Program," the commission said in its June 16 order.
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