EPB telecom cuts power costs

Fiber payoffEPB's nearly $300 million investment in stringing fiber optic lines and installing smart grid equipment should:• Generate nearly $20 million in lease payments from Internet and video users of the power system's fiber optic lines. That money flows into the electric system• Save $3 million a year by replacing electric meter reading staff with automated smart meters• Save on staff overtime and speed power repairs after storms. EPB estimates it saved $1.5 million in the July 5 storm• Reduce electricity theft, estimated to be as high as 1 or 1.5 percent at some utilities, by installing smarter meters• Generate extra local property taxes on investments, estimated at more than $4 million this year.Source: EPB

EPB's high-fiber diet is not only shedding time off of telecom connections, it is also helping cut the cost of power.

EPB President Harold DePriest said Friday that Chattanooga electricity rates are 5 percent below what they otherwise would be if EPB had not wired its network with fiber optic lines to offer video, high-speed Internet and smart grid electric services.

"The savings from the smart grid and the payments from the telecom division to our electric system are exceeding our costs and that is helping save money for every customer of EPB, whether you are signed up for any of our telecom services or not," DePriest told EPB directors Friday. "If we hadn't made this investment, your electric bills would be higher."

EPB invested $169 million of borrowed money in its smart grid and about $50 million more on telecom services to build a fiber optic network capable of high-speed Internet, video, phone and smart electric meters.

That investment was bolstered three years ago by more than $111 million awarded to EPB from the U.S. Department of Energy through the federal stimulus program. But EPB officials insist the investment would still be worthwhile even without the generosity of Uncle Sam.

Profits in 3 years

The video and Internet division launched by EPB three years ago was profitable by April of this year and payments from the telecom division helped offset what would have otherwise been a loss for EPB's electric system last year. Already, the telecom business has attracted more than 40,000 video, phone or Internet users to EPB and the telecom division was more profitable last year than EPB's 73-year-old electricity business.

EPB is paying about $16 million a year in debt service on fiber optic investment. But DePriest estimates the utility is getting more than $25 million in benefits from extra revenues, cost savings and improved reliability.

The upgrade means EPB can more quickly isolate and repair outages, and use smart meters for better load control and remote billing without use of manual meter readers.

EPB Chairman Joe Ferguson said the stimulus funds helped speed the installation of the smart grid network from the original plan of 10 years down to less than two years.

"We're exceeding the goals we set in our business plan," Ferguson said. "We've stayed ahead of schedule; we've stayed on budget, and the number of customers who have signed up is better than we expected. The acceptance has been huge and that's where the revenue comes from that we can plow back into our business and help keep our electric rates down."

EPB tax payments up

With its extra $200 million-plus investment in its fiber optic network, EPB also is paying more than $4 million extra a year in local taxes and is attracting utility visitors from around the globe interested in seeing how the smart grid is working here.

The biggest advantage, DePriest said, is the potential to recruit businesses eager for the first citywide gigabit-per-second Internet service or the improved power reliability of the smart grid.

"This is going to end up being another competitive advantage for our city either as new plants are looking at Chattanooga or existing plants make their case for investment here rather than at other company locations," DePriest said.

Competitive landscape

EPB's venture into video, Internet and phone service is competitive with Comcast, AT&T and others, however.

Jim Wiegard, general manager for Comcast in Chattanooga, said Comcast still has the most local cable TV customers and Comcast still offers numerous programming and mobile options EPB does not.

"We still believe we provide better value with more attractive pricing for the most common options," Wiegard said. "We also provide the services that others don't, like HBO or Cinemax on the go or live streaming TV to your mobile app."

For all the talk about EPB's gigabit Internet speed, Wiegard said most Internet users are adequately supplied with Comcast's high-speed Internet - and at less cost.

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