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WEST VIRGINIA LEGISLATURE
2023 REGULAR SESSION
Introduced
House Bill 3541
By Delegates Rowe, Griffith, Pushkin, and Walker
[Introduced February 14, 2023; Referred to the Committee on Technology and Infrastructure]
A BILL to amend and reenact §24-2-1p of the Code of West Virginia, 1931, as amended, relating to removing surcharges from the Middle-Mile Fiber Broadband Infrastructure Expansion Program.
Be it enacted by the Legislature of West Virginia:
(a) Legislative findings. The Legislature finds:
(1) That access to broadband services is of critical importance to and a necessary prerequisite for enabling economic development in the state and for improving education, health care, public safety and government services, among other benefits to its citizens;
(2) That broadband expansion into unserved rural areas of the state continues to be an issue of importance to the Legislature, and progress is hindered by lack of full development of middle-mile broadband fiber infrastructure within the state;
(3) That the issues which have hindered the provision of broadband access to rural areas of the state especially disadvantage the elderly and low-income households;
(4) That it continues to be a primary goal of the Legislature to make every municipality, community, and rural area in this state accessible to Internet communications through the expansion, extension, and general availability of broadband services and technology;
(5) That regulated electric utilities have existing distribution infrastructure in place throughout the state, and that their existing and new infrastructure could be utilized in connection with construction of middle-mile broadband fiber assets;
(6) That it is in the public interest to expedite construction of middle-mile broadband fiber infrastructure to provide the necessary architecture to facilitate additional broadband Internet access to individuals and institutions in unserved areas of the state; and
(7) That it is appropriate to establish a program to allow electric utilities to construct middle-mile fiber broadband assets within the power supply zone utilizing existing and new electric utility distribution assets in a manner that addresses the needs of the public and is consistent with the operational concerns of the electric utilities that may participate in this program.
(b) Definitions. For purposes of this section:
"Commission" means the Public Service Commission of West Virginia.
"Council" means the Broadband Enhancement Council, as defined in §31G-1-1, et seq. of this code.
"Electric utility" means any electric utility operating within this state that is regulated by the commission: Provided, That an electric utility that has installed middle-mile fiber broadband infrastructure pursuant to this section shall not be considered a public utility engaged in the transmission of messages by telephone, telegraph or radio for purposes of §24-2-1(a) of this code.
"Program" means the Middle-mile fiber Broadband Expansion Program established pursuant to subsection (c) of this section.
"Project" means one or more middle-mile fiber infrastructure expansion projects, including any portion of such projects to be used for the electric utility’s communication needs, proposed by an electric utility and approved by the commission pursuant to subsection (e) of this section as part of the program.
"Served" means any area with broadband service as defined in §31G-1-2 of this code.
"Unserved" means any area without broadband service as defined in §31G-1-2 of this code.
(c) Establishment of program. Commencing July 1, 2020, the Middle-Mile Fiber Broadband Infrastructure Expansion Program is hereby authorized and established.
(d) Authorizing participation. An electric utility having distribution infrastructure in this state may participate in the program pursuant to the provisions of this section.
(e) Powers and duties of Public Service Commission to act on written plans and amendments to written plans. The commission shall have the following powers and duties in connection with the program:
(1) Review, approve, or reject each written plan submitted by an electric utility pursuant to subsection (f) of this section. A written plan shall be approved if the commission determines that the proposed plan is reasonable, prudent, useful, and is not contrary to the public interests, considering the interests of the potential broadband users. and the electric utility customers.
(2) Review, approve, or reject amendments to written plans submitted by an electric utility pursuant to subsection (f) of this section. Amendments to a written plan shall be approved if the commission determines that the proposed amendments to a written plan are reasonable, prudent, useful and not contrary to the public interest considering the interests of the potential broadband users. and the electric utility customers.
(3) Perform any other duties necessary to effectuate the provisions of this section.
(f) Written plan. Following the council’s determination that construction, installation, operation, and repair of a middle-mile broadband infrastructure expansion project by an electric utility is feasible pursuant to §31G-4-5 of this code, the electric utility shall file a written plan and application seeking the commission’s approval of the project and its associated cost recovery. The written plan and application is in lieu of a proceeding pursuant to §24-2-11 of this code and shall contain the following:
(1) The route of the middle-mile fiber infrastructure proposed for the project, the number of fiber strands that would be utilized in connection with the proposed project and dedicated to serve as the middle-mile, the location of the electric utility’s distribution infrastructure that will be utilized in connection with the proposed project, the capacity or number of fiber strands of the middle-mile that will be available to lease to non-governmental last-mile broadband Internet providers and other third parties upon completion of the proposed project, and the commitment of at least one non-governmental last-mile broadband Internet provider that will lease access to the middle-mile fiber assets constructed as part of the proposed project, and an estimate of potential broadband customers, determined in consultation with the council, that would be served by the middle-mile infrastructure;
(2) The estimated cost of the proposed project, including, but not limited to, engineering costs, construction costs, permitting costs, right of way costs and a reasonable allowance for funds used during construction;
(3) Proposed schedule of construction of the proposed project;
(4) Method of attachment and connection of the middle-mile broadband fiber assets to the electric utility’s distribution infrastructure;
(5) Testimony, exhibits or other evidence that demonstrates the project is reasonable, prudent, useful and not contrary to the public interest;
(6) A cost recovery mechanism that allocates all net costs to be recovered under this section from the users of the broadband facilities; on a distribution-level basis and
(7) Other information the applicant considers relevant or the commission requires.
(g) The electric utility shall publish, in the form the commission directs, which form shall include, but not be limited to, the anticipated monthly and yearly cost to broadband users, electric rate increase, if any, and actual rates under the proposal, by average percentage and dollar amount for customers within a class of service as a Class I legal advertisement in compliance with the provisions of §59-3-1 et seq. of this code, the publication area to be each county in which service is provided by the electric utility, a notice of the filing of the application and that the commission shall hold a hearing on the application within 90 days of the notice; unless no opposition to the plan or the rate change is received by the commission within the time limits established by the commission, in which case the hearing can be waived, and the commission shall issue a final order within 150 days of the application filing date: Provided, That upon the request of any interested person or entity, the commission shall allow for the submission of comments on the feasibility of the plan.
(h) Upon notice and hearing, if required by the commission, the commission shall approve the plan and allow expedited recovery of costs related to the expenditures as provided in subsection (f) of this section if the commission finds that the expenditures and the associated broadband rate requirements are just, reasonable, not contrary to the public interest, and will allow for the provision and maintenance of adequate, efficient, safe, reliable and reasonably priced middle-mile fiber broadband service.
(i) The council or the commission may not act to limit the number of last-mile broadband Internet providers eligible to be contracted to utilize the middle-mile fiber infrastructure constructed as part of a project proposed pursuant to this section. No board, commission, agency, or other governmental body may regulate the costs extended to a broadband customer from any last-mile broadband Internet service provider. Nothing in this subsection shall prevent the commission from reviewing, modifying, and approving or denying the cost or means of providing a middle-mile fiber proposed project pursuant to this section.
(j) Upon commission approval, an electric utility will be authorized to implement the plan and to recover related project costs from users of the broadband facilities: net of any middle-mile broadband revenues or contributions in aid of construction, as provided in the following
(1) An allowance for return shall be calculated by applying a rate of return to the planned net incremental increase to rate base attributable to the project for the coming year, considering the projected amount and timing of expenditures under the project, plus any expenditures in previous years of the project. The rate of return shall be determined by utilizing the rate of return on equity authorized by the commission in the electric utility’s most recent broadband rate case proceeding or in the case of a settled broadband rate case, a rate of return on equity as determined by the commission, and the projected cost of the electric utility’s debt during the period of the project to determine the weighted cost of capital based upon the electric utility’s capital structure.
(2) Income taxes applicable to the return allowed on the project shall be calculated for inclusion in rates at the federal and state statutory rates.
(3) Depreciation and property tax expenses directly attributable to the project shall be estimated for the upcoming year.
(4) Operation and maintenance expense specifically and directly related to operation and maintenance of the middle-mile fiber broadband facilities.
(5) Following commission approval of the broadband project and related cost recovery mechanism, an electric utility shall place into effect a commission approved reconcilable rate surcharge that recovers the revenue requirement of the allowance for return, related income taxes, operation and maintenance expenses, withdrawing legal fees and expert witness fees or other costs in the rate proceeding, depreciation, property tax expenses associated with the electric utility’s estimated project investments for the upcoming year, net of middle-mile revenue or contributions in aid of construction recovery of those costs provided by last mile broadband Internet providers upon completion of the project, if any ("middle-mile cost recovery rates"). In each year subsequent to the order approving the project and middle-mile cost recovery rates, the electric utility shall file a petition with the commission setting forth new proposed middle-mile cost recovery rates that recover the revenue requirement of the project investments previously installed and projected costs of the project based on investments to be made in the subsequent year, plus any under-recovery or minus any over-recovery of actual costs attributable to the project, for the preceding year. This approved reconcilable rate will be recovered from users of the broadband facilities.
(k) The electric utility may make any accounting accruals necessary to establish a regulatory asset or liability through which actual costs incurred and costs recovered through the rate mechanism are tracked.
(l) Construction, installation, operation, maintenance, and repair of middle-mile fiber expansion projects. Subject to continuing authority of the commission to determine the reasonableness of acts and practices, for all projects contained in a written plan approved by the commission pursuant to subsection (e) of this section, and constructed, installed, operated, maintained, and repaired by an electric utility pursuant to this section, the electric utility shall have control of the scope, scheduling and execution of the project to construct, install, operate, maintain and repair middle-mile fiber assets, including fiber build route selection and build and splice schedules. The electric utility shall be entitled to reestablish electric service and assure safety of its workers prior to restoration of middle-mile fiber broadband service in order to ensure operational safety matters of the shared infrastructure. Additionally, the electric utility shall be entitled to use contractors chosen and approved by the electric utility to construct, install, operate, maintain, and repair middle-mile fiber assets pursuant to this section because of its or electric utility’s knowledge of hazards in the power supply zone and the associated controls to reduce the risks involved. Nothing in this section confers any rights to work in the power supply space except by the electric utility and its designated contractors.
(m) Attachment and connection of middle-mile fiber assets. An electric utility participating in the program shall have sole control of the location and method of attachment and connection of middle-mile fiber assets to the electric utility’s distribution infrastructure, unless otherwise ordered by the commission.
(n) Management of fiber projects. In order to manage operations, an electric utility participating in the program shall manage and document the entities that lease middle-mile fiber assets for last-mile operations, including, but not limited to, outage notification and management.
(o) Notwithstanding anything in this code or in the articles of incorporation of an electric utility to the contrary, an electric utility may, either directly or indirectly or through an affiliate or subsidiary, pursuant to a written plan approved by the commission:
(1) Own, manage or control any broadband capacity, number of fiber strands, equipment and electronics, including any plant, works, system, lines, facilities or properties, or any part or parts thereof, together with all appurtenances thereto, used or useful in connection with the provisions and extension of such broadband services;
(2) Lease such broadband capacity, number of fiber strands, equipment, or electronics to non-governmental Internet service providers and other third parties, on a nonexclusive basis; and
(3) Provide access points that are outside the electric utility’s power supply zone to allow connection between the electric utility’s broadband capacity system or fiber strands, and any non-governmental Internet service provider’s or other third party’s system.
NOTE: The purpose of this bill is to move the recovery of certain expenses from the reconcilable rate to be charged to the users of the broadband facilities.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
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