Dominion Energy Virginia: A middle mile provider awaits regulatory OKs on proposed pilots

A recent filing at the Virginia State Corporation Commission (SCC) marks the first time an investor-owned utility (IOU) has joined with electric cooperatives to expand broadband access into rural communities in the Commonwealth, resulting in new considerations for everyone involved.

Dominion Energy Virginia on Oct. 1 filed a petition with the SCC for approval of its Rural Broadband Pilot Projects to extend broadband capacity to unserved areas in Surry County, Botetourt County, and the Northern Neck region of Virginia.

The IOU has signed agreements with electric coops in the state to make the projects a reality, explained Dominion Virginia Energy President Ed Baine during a Nov. 11 session held at the virtual National Association of Regulatory Utility Commissioners’ (NARUC) Annual Meeting and Education Conference: Bridging the Divide. The nonprofit NARUC represents the state public service commissioners who regulate the American utilities that provide energy, telecommunications, power, water, and transportation services.

To his knowledge, this is the first time an IOU in Virginia or within the United States has worked directly with electric coops to bring broadband to unserved rural areas, said Brian O’Hara, senior director of regulatory issues for telecom and broadband at the National Rural Electric Cooperative Association, during the NARUC session entitled Electric Utilities Role in Rural Broadband.

“Electric co-ops have had an increasing role in addressing the digital divide in unserved and under-served communities,” O’Hara said, noting there are roughly 844 distribution coops in 48 states, serving about 42 million people in about 56 percent of the country’s land mass. Of those, there are now more than 150 co-ops across 37 states that are deploying or offering broadband, he added.

“We’re just grateful to have the opportunity to help solve this issue,” Baine said. “We need to make sure we’re doing everything we can to help level the playing field — from an education perspective, an economic perspective, and from an equity perspective, as well.”

Amid today’s pandemic, access to reliable, high-speed internet has become more critical for education, healthcare and economic stability, according to the company’s SCC filing, in which Baine said that Dominion Energy Virginia acknowledges the disparity within the Commonwealth regarding access to broadband internet, particularly in rural communities.

“There are still over a half a million Virginians who don’t have easy access to high-speed internet, which wouldn’t be acceptable at any time, but especially now in this COVID-19 environment,” said Baine. “Virginians deserve better, and we want to help be a part of the solution.”

Dominion Energy Virginia seeks approval from the SCC for three pilot projects introduced as a result of the Grid Transformation and Security Act of 2018, comprehensive state legislation passed around strengthening and modernizing the distribution grid that also established a middle mile rural broadband pilot for IOUs.

“Our legislators recognized the need to bridge the digital divide and have a framework to enable electric utilities to be part of the solution,” Baine said. “And we thought it would be best, from a utility perspective, to serve as that middle mile provider.”

As the middle mile provider, Dominion Energy Virginia won’t directly connect customers to the internet. That job in each of the company’s proposed pilots would fall to an internet service provider (ISP) that would lease Dominion’s infrastructure to provide broadband to businesses and homes. The electric co-ops are working with or creating their own ISPs as part of the pilots to provide that last-mile access.

Dominion Energy Virginia seeks SCC approval to partner on:

– The Northern Neck Pilot with All Points Broadband, Northern Neck Electric Cooperative, and several jurisdictions to bring internet services to four area counties by installing about 217 miles of middle mile fiber at an estimated cost of $21 million;

– The Surry Pilot with Prince George Electric Cooperative’s (PGEC) RURALBAND to install a 43-mile middle mile fiber route estimated at $3.6 million; and

– The Botetourt Pilot with BARC Electric Cooperative’s BARC Connects to install a 34-mile middle mile fiber route costing about $3.5 million.

“We believe the Pilot Projects support both grid transformation and telecommunication initiatives at the federal, state and local levels,” according to Dominion Energy’s filing. “The company proposes that the Pilot Projects be extended for three (3) years beyond the three (3) year minimum provided in the Broadband Statute, for a total of six (6) years.

“Additionally, we seek approval to recover the incremental costs of the Surry Pilot and the Botetourt Pilot through a rate adjustment clause. The company does not seek recovery of the incremental costs associated with the Northern Neck Pilot at this time and is only seeking a prudency determination for that project,” the filing says.

Casey Logan, president and chief executive officer at PGEC, called the Surry Pilot a unique partnership with an IOU that could help the coop find a path forward in a legislative situation that he said can be cumbersome.

“Through this pilot project, we were able to obtain some private grants from local counties to help expedite the broadband deployment and today we’ve already made it available to 5,500 homes in our community,” Logan said during the NARUC panel. “We see high-speed internet access being critical for rural areas,” where customers need it for telemedicine, telecommuting, education, and to grow and compete alongside already-connected suburban and urban areas.

PGEC, added Logan, has gone from having a member focus to having a community focus because the coop realized it could not serve all customers by itself. So as new electric grid modifications also take place, PGEC is leveraging some of Dominion Energy’s infrastructure, “so we can reduce our costs to serve and deploy broadband at a much faster pace,” he said. “We’re not having to go and reinvent the wheel all over again.”

Baine noted there were several key considerations Dominion Energy had to think about regarding the utility’s role and from a commission’s perspective in deploying broadband. One, for example, is that you need to look at the federal and state grant processes, which depending on varying timelines can make it easier or harder to get such projects done, said Baine. “Additionally, the more that we can do as a middle mile provider allows… [companies like PGEC] to serve more customers with those grant dollars.”

Cost allocation is another consideration. “If you have a structure like we do where you’re installing the infrastructure as part of our grid transformation plan, you have to think about cost allocation between what supports utility operations versus broadband,” Baine said.

In a related question, session attendees asked Baine if building broadband infrastructure and providing wholesale middle mile access is cost effective for electric ratepayers.

“Once you go to string fiber for telecommunications, increasing the amount of fiber strands within that run is a very modest cost increase for that additional functionality. So yes — is there an impact to our electric customers? There is,” Baine said. “Are some of those same electric customers getting the benefit from broadband access? They are. And I would bet you, especially now, that the majority of our customers would say ‘yes, it’s important for all citizens within the Commonwealth to have access to high-speed internet.’”

The other key considerations, according to Baine, are to get supplementary communication easements as you attach along your right-of-ways, and as the middle mile provider, in order to be able to serve in these underserved communities, you need to have an ISP partner.

When asked about the Virginia regulatory approvals sought by Dominion Energy Virginia, Baine said the 2018 law allows the company to be a middle mile provider, but it must seek approval for its projects from the SCC. “The October 1st filing is the first filing, so we’re hopeful for approval, as well as guidance on any modifications we might have to make for future projects,” he said.

Session facilitator Jeremy Oden, a commissioner with the Alabama Public Service Commission, said that’s not the same process in all states.

“In a lot of states, it won’t be up to the commission, it will be up to your legislators to establish that original law,” Oden said. “On the funding aspect, too, our state has put in grants that will be available. So most of that will go through the legislative workings and then come back to the commission. Many commissions, but not in Alabama, still have right-of-way dictation. It really will be based on what your legislators have built into their laws.”

At the state level, Oden said this is a topic regulators will be addressing “most definitely in the next couple of years.”

“I’m hoping it’s not a partisan issue,” said Oden. “We must face it as we did electrification in the early 1900s. Rural internet and internet altogether needs to be a necessity now and not a luxury.”