Knoxville City Council approves KUB broadband proposal, and electric grid upgrades that come along with it

SACE supports expanding access to broadband for Knoxville citizens in a smart and fair manner. By doing so, KUB can improve the electric grid, address the "Digital Divide," and prioritize equity.

Brady Watson | July 20, 2021 | Energy Justice, Energy Policy, Tennessee, Utilities

The Southern Alliance for Clean Energy (SACE) has engaged with the Knoxville Utilities Board (KUB) for many years over its policies related to energy and equity. KUB’s latest venture, municipal broadband, and the fiber infrastructure that goes along with it, offers the potential for numerous environmental and societal benefits to our community.

At the Knoxville City Council meeting on Tuesday, June 29, 15 speakers from the public addressed Councilmembers regarding the KUB’s broadband proposal, with 13 in favor and two against. (The two in opposition were a telecommunications lobbyist who flew in from D.C., and a local Comcast executive.) Most of the speakers in support of broadband touched on the need for reliable, high speed internet, as well as their struggles with private sector providers like Comcast. Councilmember Roberto again expressed his desire to delay the vote and hold a workshop but the City Council instead opted to vote. The resolution establishing KUB’s fiber division and accepting their broadband plan passed 8-0 with Roberto abstaining. 

SACE supports expanding access to broadband for Knoxville citizens in a smart and fair manner. By doing so, KUB can improve the electric grid, address the “Digital Divide,” and prioritize equity to ensure it benefits the Knoxvillians who need it most.

Broadband Fiber Infrastructure Improves the Electric Grid

The build-out of fiber infrastructure to allow KUB to offer broadband services will greatly improve the reliability of the electric grid. One need look no further than Chattanooga at the Electric Power Board, which has seen around a 50% reduction in power outages as a result of their investments in fiber, in addition to excellent broadband service. In fact, in Chattanooga the municipal broadband makes up 70% market share of broadband in their service territory. 

Fiber infrastructure will improve the electric grid by allowing for more realtime relaying of information, better connectivity, and fewer power outages – which means lower carbon emissions as a result of fewer deployments of KUB maintenance vehicles to respond to those outages. It also provides the opportunity to integrate smart grid technologies such as programmable thermostats and smart water heaters that consume less energy. 

Social Benefits of Municipal Broadband – Addressing the “Digital Divide”

As the COVID-19 pandemic has shown in stark contrast, we as a society have become increasingly dependent on reliable, high speed internet access, and many in the Knoxville community, especially low-income folks and communities of color, lack access to reliable high speed internet. In fact, according to a recently published economic impact study from the University of Tennessee, more than 30,000 households in Knox county do not have an internet connection. This leads to a “digital divide” that makes existing disparities even more pronounced. Students need reliable internet access to complete assignments – and those who lack this necessity fall behind their peers with more consistent access. Without reliable internet access, many adults also find themselves struggling to work from home, pay bills, and access information. By offering reliable, high speed internet access, we believe KUB can begin to close that digital divide and help decrease some of the disparities that exist. 

Municipal broadband also offers real economic benefits: KUB’s proposal would add around 200 local jobs, with fiber installers earning a base rate of $55,000. These jobs will benefit the local economy and provide an opportunity for well-paying employment that does not require a college degree. 

Prioritizing Equity

Of course, the rollout of this program must be equitable to ensure access to households that need it most. KUB has taken initial steps to ensure this by offering a low-income internet program. At the June 29 meeting, Councilmembers Seema Singh and Amelia Parker both raised concerns about equitable rollout of broadband to Knoxville residents who actually need it the most, not just areas that already have reliable access. KUB President Gabe Bolas assured Councilmembers that they would prioritize areas with poor connectivity, and with frequent power outages because the fiber infrastructure would help with both issues. Additionally, KUB indicated that the broadband internet service would be on a separate bill so that customers who are behind on broadband payments and at risk for service interruption would not also be at risk of having their electricity or water shut off

Impacts on Rates & Fixed Fees

There was also much talk at the June 29 meeting about the electric rate increase to pay for the fiber. Councilmember Parker asked if the rate increase could exclude low-income residents, but Mark Walker, KUB Finance Director, said they were not allowed to do that based on contractual obligations that all customers be charged a uniform rate. Councilmember Lauren Rider voiced concerns from some constituents who felt they would have to pay more for their electricity to pay for a service they are not yet getting. KUB officials said that 6% of the planned rate increases were planned prior to the broadband rollout and would happen regardless, and that the fiber infrastructure the rate increases are meant to pay for would benefit all KUB customers, not just those who subscribe to the broadband service. 

The only increase that is directly tied to the broadband program is the final 3% increase. Councilmember Tommy Smith asked how much of the average monthly increase in electric bills could be attributed specifically to the increase needed to establish the broadband division, and KUB indicated $3.60. Councilwoman Janet Testerman asked about the total cost of the fiber infrastructure, which KUB estimates to be $450-500 million, and how much Comcast was willing to contribute. The Comcast representative said the company planned to invest around $20 million to expand services and could complete the expansion in 24 months. 

According to KUB, the average customer will see a $10.80 increase in their monthly electric bill after all three electric rate increases take effect over the three year period, but subsequent increases would not be expected for at least another seven years. It is important to note that the rate increases being proposed to help pay for the fiber infrastructure are also based on usage, and not fixed fees. This is a more equitable solution, as fixed fees are felt most by low-income families who can be charged up to $85 if they receive all four KUB services, even before they turn on a light or use a drop of water. Rate increases on usage fees can actually help conserve energy by sending the correct market signals and encouraging high energy users to consume less as their bills go up. As far as the price of service, KUB president Bolas said customers could expect to save $11-46 per month on KUB’s service compared to current market prices. 

KUB’s broadband business plan is built on an assumption that 35% of the roughly 500,000 Knox County residents who could be served by KUB broadband elect to subscribe to the service.

Low-Income Internet Program Also Passes

At the same meeting, KUB also brought forth a resolution to offer a low-income internet program for households that might not otherwise be able to subscribe to the service. Councilwoman Parker raised questions about the lack of a dollar figure to pay for that program and suggested that there were perhaps as many as 50,000 households in Knoxville that could qualify as low-income. She asked what KUB was doing with the roughly $10 million per year credit they receive from TVA as part of the long-term contract they signed. President Bolas said KUB had dedicated $20 million from that pot over the next 10 years to low-income weatherization, and $3.3 million this year for that purpose. 

Resident Kent Minault voiced his support for the low-income internet program but also raised concerns about KUB’s fixed fees which disproportionately impact people of color. He suggested lowering or eliminating those fixed fees for low-income customers on KUB’s energy efficiency upgrade waitlist, and for more funding to be allocated for that program. At the current rate, KUB is only able to weatherize about 200 homes, but there are more than 3,000 on the waiting list. 

The low-income internet program passed 7-0 with Councilmembers Testerman and Fugate abstaining, citing concerns about fairness to private entities. Stay tuned as we track the rollout of KUB’s fiber network.

Brady Watson
Kansas native Brady Watson attended Kansas State University where he received a bachelor’s degree in History, and then a master’s degree in Documentary Film and History from Syracuse University.  After…
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