Cleveland Utilities Receives Green Light to Provide Broadband Services in Conjunction with Transitioning to an Energy Authority
On April 10, 2023, the Cleveland City Council passed two resolutions authorizing Cleveland Utilities to provide broadband services and form an Energy Authority. This is the final hurdle in the regulatory approval process for CU to move forward with its Broadband Project. The road to get to this point has been a long one for the utility going back to 2001 when the first study of exploring broadband opportunities for the Cleveland community was conducted per CU President/CEO Tim Henderson. He said, “this consideration has not been taken lightly and consisted of an immeasurable amount of work.”
Cleveland Utilities has been working through the approval process to be able to provide broadband services on this particular study for several years. One of the steps in the approval process was for CU to hold a Broadband Public Hearing to allow the public an opportunity to provide comments/feedback to CU’s board and staff in relation to its Business Plan. This public forum meeting was conducted on Wednesday, March 8. Staff advised the majority of local comments were supportive of CU entering the broadband business. The utility has a review of the Public Hearing published to its website www.clevelandutilities.com. Earlier steps in the approval process consisted of a review of CU’s Business Plan by the Tennessee Valley Authority and the State of Tennessee Comptroller’s office. The reviews by both entities deemed the plan to be viable, giving CU the okay to proceed with the approval process.
CU has been installing fiber on its electric system in preparation for the utility’s Distribution Automation (DA) Project and future meter connectivity. DA will allow CU to create a “self-healing” system where power outages are isolated to smaller sections through automated reclosers and switches. This same fiber will be utilized by the utility to provide broadband services and create a fourth division, a Broadband Division, of Cleveland Utilities. The services offered would consist of symmetrical high-speed internet and Voice-over-IP telephone services. Although the utility is not proposing to offer television services, assistance with video streaming platforms will be provided to customers.
The total project cost is $72 million, with the plan conservatively based on a 30 percent take rate. Additionally, 12 new employees would be added to CU’s workforce.
The utility’s plan to enter the broadband business was also done in conjunction with it transitioning to an Energy Authority. CU currently operates as a municipal utility. The authority model will provide an optimal business structure for broadband and CU’s existing electric, water, and wastewater services per the utility’s management who believe the formation of an authority is a positive move for CU and the city. Under the authority model, CU will have the flexibility to establish public-private partnerships and the ability to meet the emerging utility industry needs of the community.
Henderson emphasized there will not be a name change; the organization will always be known as Cleveland Utilities. The main points of difference in transitioning to an authority is CU’s debt and budgetary approval will be moved from the city council to the authority. However, the city council will still provide feedback and comment to CU’s budget through city council representation. The city council will appoint all CU board members as they do now.
One notable change is an adjustment to the makeup of CU’s current Utility Board. During the action taken by the City Council in authorizing the formation of the Energy Authority, they also voted to add two additional seats to its current 5-member board. Therefore, CU will be moving to a 7-member board with the two extra seats coming from a member of the City Council or the City Mayor.
Now that the approval process is complete, Henderson said the utility will shift focus to the design phase where buildout of the infrastructure will be determined. The engineering design of the system is estimated to take approximately two to three months. Then, bids would be requested for materials and construction to build the fiber system. This is expected to take one to two months. The start of construction is anticipated to begin around March of 2024, with the complete build-out taking roughly two to three years. Network testing would occur during the buildout. There’s much work to be done to lay the groundwork for this substantial project.
In closing, Henderson said, “I want to thank our board, the City Council, CU staff and employees, city staff, along with the entire community for their support. The actions taken will be a great step for Cleveland moving forward. This is an exciting time and clearly a milestone in the history of Cleveland Utilities.” The utility will publish updates through social media and to its website as they become available.