TRAVERSE CITY — Data is the next essential utility, and building a fiber-to-the-premises network would be the same as what Traverse City Light & Power did a century ago, Fujitsu Network Communications Vertical Markets Director John Cafaro said.
The city-owned utility would be delivering a needed service to its constituents, Cafaro said. He was one of five with the company to present their findings that such a network and the high-speed internet services — among others — it would deliver has a good chance of financial success if built.
Anthony Bednarczyk, Fujitsu Network Communications practice leader, showed utility board members a most-likely scenario where the first phase — which would serve a portion of the city — is making money.
"We think it's a financially sound and operationally sustainable project and we're open to answer any of the questions you have," said Bednarczyk.
Board members had plenty. They peppered Cafaro, Bednarczyk and the other three with questions and eventually agreed to ask utility Executive Director Tim Arends to negotiate contracts with Fujitsu to build a fiber-optic network that would serve part of the city, and to operate and maintain it.
The board also set a public hearing on June 11 for the analysis the company provided. Board President John Taylor said that's the potential decision date for whether the utility will build on its existing fiber-optic network to bring more gigabit-speed internet to Traverse City — Arends said he will report in two weeks if he thinks a contract will be ready by then.
Board members pored over Fujitsu's report, especially Pat McGuire — he cast the lone "no" vote against starting contract negotiations. He and other board members asked several questions about other government-owned fiber-optic networks that struggled or failed.
Those have been the focus of project skeptics and opponents who point to spectacular failures of government-owned broadband networks built with taxpayer cash elsewhere as reason for TCL&P to be, at best, extremely cautious — or just say "no," as one public commenter who didn't identify herself said Tuesday.
Operations and maintenance are where many utility-owned fiber networks have run into trouble, said Michael Riley, Fujitsu network design and integration LOB director. The company would handle that, with TCL&P eventually doing a "managed takeover," he said. Utility employees would get the knowledge they need and the company could stay involved at smaller levels, or not at all, he said.
The utility has some advantages, including owning the poles it would need to string fiber-optic cable, Cafaro said. Access to those poles can cause hang-ups in building these networks, he said.
Light & Power also has experience in billing, Cafaro said. Other local governments that tried to tackle similar projects didn't have that know-how, he said.
Fujitsu also looked at whether the network could survive in its competitive environment, Cafaro said.
Charter Communications is one competitor, and company Government Affairs Director Marilyn Passmore told board members the service provider already has gigabit-speed internet in Traverse City and is planning to bring 10-gigabit service later.
Previous estimates put the cost of the first phase at around $4 million. Arends told board members the project would be financed through a loan from the utility's electric fund to its fiber-optic fund.
McGuire supported past moves to keep exploring the fiber network idea, but was "getting off the bus," he said. He wanted more details about financing the project, and doesn't want to build the first phase if the second won't be built also. Passing on the next phase could leave numerous ratepayers footing the cost but getting no benefit, he said.
Fujitsu pursuing a business plan it created is a conflict of interest, McGuire argued. Any failure would fall back on the utility, he said. Plus, utility board members themselves would be conflicted between doing what's best for electric ratepayers and doing what's best for the fiber-optic network.
McGuire took issue with giving so many responsibilities to a private company. He also disliked part of Fujitsu's report being withheld from the public, including the projected customer rates used in the financial feasibility scenarios, he said.
"We're supposed to be a public body, we're supposed to be transparent," he said. "We shouldn't be sitting here with redacted documents."
Arends said some of the redactions were of maps of the utility's power system, which can't be released by law. Others were covered under a nondisclosure agreement between TCL&P and Fujitsu for information considered proprietary, he added.
Public-private partnerships are increasingly the way local governments provide services, board member Amy Shamroe said. The concept may be relatively new to TCL&P but it's "not walking on the moon," she added.
Taylor said he saw the conflict between fiber and electric money as a dual fiduciary responsibility, and acknowledged it wouldn't be easy — but not impossible.
"I also think that in terms of a public-private partnership, what we haven't done is delegate our governance," he said.
Solar surge at TCL&P
Traverse City Light & Power board members gave utility Executive Director Tim Arends the go-ahead to work out a change to the utility's contract with Heritage Sustainable Energy. The company wants to expand its solar panel array on M-72 at Bugai Road to add another 2 megawatts worth of panels, documents show. Arends said he asked company CEO Marty Lagina for the best offer he could provide — $57 per megawatt-hour for five years, then a jump to $74.94 in 2025 and a 1.5 percent increase each year after until 2041.
Board member Pat McGuire cast the lone "no" vote and said he thought the project wasn't big enough to justify paying more than market rate for its power.
Board members unanimously approved committing to buy the output from a 7.6-megawatt portion of a larger solar array installation starting in 2022, documents show. That's at an even better price — $36.95 per megawatt-hour with a 2 percent increase each year. The power will help the city meet its goal of powering all municipal operations with renewable energy.
Arends said that represents an expansion of a larger downstate project, of which the utility will buy even more power.
The utility board also approved giving Gosling Czubak employees the go-ahead to find out more about a former coal ash dump the utility owns on Cedar Run Road between Barney and Harris roads. Company Senior Project Managers Klaus Heinert and Donald Conway said there's more to investigate to see if the land can serve as a site for a solar array.
Meeting documents show the utility paid $12,600 so far to Gosling Czubak for work involving the land. The additional work could cost another $19,800.