Johnny Kampis: Alabama’s rural broadband bill could lead to higher power rates
From Tuscaloosa News:
Travis Kavulla, director of energy policy for Washington, D.C.-based R Street Institute and former Montana public utility commissioner, notes the bill allows utilities to set their own broadband subscriber rates. That’s normally a positive in the free market, but he finds that aspect of the Alabama legislation combined with the ability for cross-subsidization “deeply problematic.”
“What will the co-op likely do? It will under-price its broadband offering in order to capture market share, and will attempt to allocate more costs to its line of business that is a monopoly, from which customers must take electricity service,” Kavulla told the Taxpayers Protection Alliance Foundation. “Whatever else it may do, this bill should create accounting protections for electricity customers. It says nothing about this potential cross-subsidy; indeed, such a cross-subsidy would be completely permissible under the bill’s language.”
Indeed, Kavulla points out that HB 400 allows electric utilities to monopolize broadband service by selecting itself or an affiliate as a provider while blocking others by preventing easement access.
“It’s a bold use of government on behalf of private corporations, albeit dressed up with happy talk about broadband expansion to the public,” Kavulla said.
Another troubling aspect of HB 400 gives utilities the right to reconfigure existing contracts for easements with landowners without additional consideration. Kavulla notes that it’s rare for a state to interfere with existing easement contracts by adding new language not previously agreed upon when the contracts were formed.
“Additionally, if those broadband installations somehow damage the landowner, the obligation is on the landowner to litigate the matter — this is a reversal in the burden of proof required in an eminent domain proceeding,” he said.