 Welcome to the Senate Finance Committee. This is September 1. And we are going to do today an update. This is CUD afternoon and we're going to allow you folks to tell us anything you think we should know we're really interested in progress in getting broadband out to schools. Schools and other folks. I think schools is probably the most urgent right now. So we're going to start we've got first on the agenda is Irv Tome from EC fiber. Welcome back Irv. Thank you. Good afternoon. For the record, my name is Irv Tome. I've been a Norwich resident since 1975. And I've represented Norwich on the governing board of EC fiber since it was first organized formally in 2008. I had the privilege to serve as chair from November or December of 2012 until this May when I decided not to seek reelection. I'm aware upon my successor who's with FX Flynn who's with us to immediately turned around and asked me to continue as quote government relations officer. You're not done with me yet. My colleagues from the other CDs thought it would be helpful to give you a quick overview, a reminder about CUDs now. Actually, a couple of members of this committee were serving on the committee four years ago, when the CUD statute was first passed, and we especially owe a debt of thanks to Senator McDonald, as well as to Senate government operations for helping make it happen. The CUD is on is basically very similar to other union districts in the state of Vermont. That means it has member communities, and it as a union district, it's it has itself the status of a virtual municipality. It's important ways in which a CUD differs from other types of union districts, one in that it does not have the power of eminent domain that was in the first draft and I said, I don't think we need that, and I don't think it's a good thing to have. More importantly, restrictions that had existed in state law from before CUDs were formed against using any local taxation to fund either capital construction or operations of a CUD under state law. The municipality can build and operate a telecommunication network for the use of its presidents and businesses and so on, but it can't finance them either with direct taxation or any recourse against the grand list. If the CUD operations fail, the, the investors only recourse is to the physical assets of the network. They do not have any claim against the grand lists of the member towns. That's an extremely important principle. And it. So how can we be financed? Well, we borrow against pledge of future revenues. And as EC fiber has shown, this is indeed quite workable. I will review briefly the benefits of a CUD, which mostly boiled down to economies of scale. It costs about the same per mile to string any kind of cable on utility poles. You have to string a new kind of cable. It doesn't matter whether you're stringing brand new copper to replace old worn out corroded copper, or if you're a stringing fiber optics. The cost per mile is about the same challenge is finding customer revenue that will defray that cost. It's a regional body by combining the customer base of many towns and the, the financing capability a CUD merges that into a single market unit, which can become economically viable. Now there are a donut hole issues. I didn't mention this in my written testimony and I'll try to digress very briefly. The commercial entities have typically competed aggressively for business in the core parts of the more populous towns, where they can make a profit, but where they can't make a profit. They aren't interested in going. They're down side to some kinds of programs that make it easier for them to make a profit in a donut hole donut type shape area around that central core. The CUD is going to average lower cost per mile in that ring around the central area with higher cost per mile way out in the most rural areas. Overall average of five to six customers per mile across the entire territory, we can make it work. And BC fiber, I think is shown that we do. The other thing about economy of scale is it also merges the efforts, the diverse backgrounds and skills of volunteers from many communities. And by enabling them to work together for this common goal, it achieves great leverage. A CUD typically contracts with some commercial entity or non commercial entity with some experienced party to do the detailed work of designing building and operating the network. BC fiber began construction early in 2011 with about $900,000 of high interest loans from a small number of interested people who wanted to fund a demonstration project to show that in broadband style rural towns, you could make it work. And the money that we started with was used to build a hub and a 25 mile loop of fiber optic cable. The residents of neighbors near that first loop said how about us. And that's only had a really bright idea. We started offering promissory notes in multiples of $2,500 15 year unsecured loans, and more and more people gradually decided that it was worth it to them to finance a demonstration in their neighborhoods. And over the next five or six years we raised a total of $6 million that way, but it wasn't quick, and it wasn't easy. And it also wasn't conducive to a well planned design of a network. Eventually, two things made a better way possible. One was the CUD statue, and the other was that we had achieved a sufficient customer base to be cash flow positive. And that can be done. But our first bond issue didn't happen until April of 2016, which was five years and one or two months after we had begun construction on a shoestring. And more than half of our first bond issue was used to refinance many of our high interest loans, the short term loans. Actually the first bond issue we've refinanced about those that had payments due in that year. The second bond issue in 2017 we've paid off the rest of our high interest debt. The daunting question for any CUD is how do you get over that initial home. And that's why last winter, I mean the winter of 2019, we strongly encourage the legislature to support House 513's provisions for the emergency broadband loan program through VEDA. And that makes it possible to get started, to come up to a small but sustainable lump beginning, and then go out as we did to the revenue bond market to finance a more stable long term financial situation. I would remind you that it took us a long time. I would also remind you that the statute as developed in 2019 calls for 10% match from other sources. There's a crash saying that communities should have skin in the game. Yes, they should. But there are parts of the state, or nobody has any skin to spare. You count volunteer labor. And that should not be undervalued. EC fiber gut work to where it is today, thanks to thousands of hours of volunteer hours. Our successor see our younger sibling CUDs as I like to think of them will put in thousands of volunteer hours as well. We have proposed appropriating $2 million, which can be used by CUDs to make that 10% match. And we strongly support that. That's not going to have any effect on EC fiber itself. But we have, we all see the urgency now the urgent need for broadband across all of Vermont, especially in rural areas, rural kids and rural towns cannot wait five or six years. To speed it up. That's why we're here to support that. You're going to hear much later from us about something else that can be done to help CUDs could be done if cares money is could be pride loose, but the principal message is, we need to get that $2 million appropriation so that CUDs can get their finances going. Thank you. Committee. Any questions for Mr. Tommy. Mr. Flynn I have you last on the agenda and I have her first. Is there anything it might work better if you were back to back is there anything you would like to add. Actually, we asked if we could do it that way. Okay. That's right. He's batting clean up. Okay, he's batting clean up. That's good. All right. So we'll go on to Jane Campbell, who is from LaMoyle Fibernet. For the record, I'm Jane Campbell. I'm the Morristown representative on the LaMoyle Fibernet CUD. We launched in mid July just a little over a month ago, and we started with the five towns of Cambridge, Hyde Park, Johnson, Morristown and Waterville, and we have since added Eden and Belvedere to that. Today, I'm testifying in support of the $2 million that Governor Scott proposed to support the CUDs. I'm going to share an image with you so that you can understand why the LaMoyle Fibernet came up. Can you see that screen. Very well. So if you look, this is an excerpt from the Public Service Department map of available 25 over three broadband speeds in our region, you can see that three towns there's no coverage at all. And in the other towns, about half of each town has some sort of geographic coverage and that's, that's again for the 25 over three speeds. So those towns that you've been reading about and hearing about where during the pandemic our school children had to find someone to drive them to the hotspot at the school so they could sit in the car and do their schoolwork for people who couldn't access telehealth services or people were trying to work at home and even those with broadband was finding out, you know, some of them teachers that it just wasn't. It wasn't adequate for what they were trying to do. I can share many personal anecdotes about unreliable speeds and buying extra equipment and calling our provider and calling them again and needing to move around the house while I'm on zoom calls to get more stable connection. And that's what happened when our daughter was trying to do school online what we had to do is turn off all devices in the house but one so that we could actually make things work and that is with we pay for 25 over three speeds. Wireless is not an option we used to have wireless and that's that's even worse even more unreliable. And that for some people they feel that wireless is a worthy investment of public dollars. The lamoille Fibernet CD really feels that it's sort of an outdated technology and that if we're installing wireless now we're going to soon need to switch it to fiber. Just because some of the sizes of the files and the data that's going back and forth. In the little over a month that we've been around. We started by securing a grant this is before any of the state funding came through we got a grant from the Green Mountain Fund for some of our startup costs. We've established our bylaws crafted financial policies and procedures job description. We're applying for insurance. Our technology committee has started researching and evaluating the technologies that deliver high speed broadband and also looking at what the pros and cons might be of how we can interconnect with other CDs. We've been participating in the regular meetings of the Vermont Association of CDs to keep up to speed. And we're also kind of pun intended on are there some efficiencies, you know that we can collaborate on things and work together and also there's tremendous knowledge sharing that's really helping get some of the nearest newer CDs up to speed. These are a great mix this kind of taps into what Earth was saying before it's all volunteers but we have people who have expertise in technology expertise and education financing fundraising marketing policy and administration. And I think that that that broad spectrum of expertise has really helped us do so much in such a short time. So for our next steps, we're going to be using a study that was commissioned by the Lamoille County Planning Commission to determine which areas we should first build out in is, as I was saying, it makes sense to build the higher density areas first to help subsidize the other areas and then we will be contracting with somebody to design the system, and then contracting with somebody to build the system so we're assuming this fall will be the poll data assessment either. We will do that individually individually or in collaboration with other CDs, then during the winter that'll be the design phase and in the spring we will start contracting for the build out. So we're assuming that this is going to happen pretty fast because as we all know this is this is an urgent need for this infrastructure, it really can't wait. The most difficult part of this plan is one piece that I didn't mention it will be ongoing fundraising to get that initial chunk of funding that was talking about. This is why this $2 million is just essential that's the key that can really unlock the door to the Vita funds, which can then help us get on the road to build in the rest of our network. I think that the $2 million and I'm speaking on behalf of the board here will really make a difference into how quickly we can begin to work in closing. I mean, I hope you're not just seeing one person you're seeing all the people in the towns that we represent who need this broadband. Our board really thinks it's been a wise move on the state's part to invest in the CDs the investment that's been made so far, and that this $2 million is the logical essential next step. I don't want to partner with internet service providers but it's, it's a different mission. It's our community. We know the neighbors in those far flung corners where the for profit providers aren't going to be able to reach and we have a mission to reach everybody and bring that high speed broadband to everybody so I think that's a key difference. So thanks for the opportunity today and I'm happy to take any questions. Madam chair. Yes, Senator McDonald. Forgive me for asking my traditional question, but for those folks that are listening in and trying to understand the challenges. When we talk about high speed internet, could we talk about the speeds, rather than suggesting that it's all the same. The last speaker was helpful enough to mention 25 three and the limitations thereof. And we're looking at the CUDs, I believe with an expectation of working symmetrical speeds that that that needs to be constantly spoken allowed to so the public those the difference and doesn't just use one term. Thank you. Okay, thank you. And I think, can we work on the assumption that everyone supports the $2 million. Okay, I thought so. Because we don't appropriate it. But I'm sure you will get the word to appropriations and we will to and on broadband we are generally asked for recommendations so we'll make sure that the necessity of that money comes across. Okay. And man wearing next. Thank you so much for your face and voice to many most of us I think. Well, thank you. It's very nice to see you all again. And for the record, my name is Ian man wearing, and I am the chair of the Deerfield Valley Communication Union District. We're 15 towns and Wyndham and Bennington counties, one of nine CUDs. I wonder could you put up the map of the CUDs. I will. And you I think for the members of the committee as you look at that map you will see that most of you have constituents in these communication union. Just look and they can see how far we've gone from CB fiber. Deerfield Valley is the red district that on the southern border of Vermont. Okay. Oops, when you did that I lost my script. So faith maybe you could take it down. Sorry about that. Okay. A little bit. I'm some of this will be a little bit of a repetitive of what her was telling you because I didn't know her was going to come on and I know he knows a whole lot about how we began. We are mostly all new creatures. And in some ways we're, we're, we're walking on the same ground with the help of the folks from EC fiber. But we're having to do things in a much more competitive world, and with a lot more competition for the resources. Now, it's particularly the ones that that Jane was speaking about. So here goes a communication union districts were created by the legislature and the administration because the state of Vermont made a commitment to extend universal high speed access to the internet to every home and business in Vermont, focusing on the nearly 70,000 homes and businesses that are unserved or underserved. And this is for you standard center McDonald's standard for high speed is defined as a minimum of 100 megabits upload and 100 megabits download, which is accomplished by extending fiber to every home and business. Pardon. Did you made Senator McDonald's day. I did. I'm always happy to do that. This is a monumental task. It's as monumental as was building the highway system, or the electrification system, and it's just as likely to be economically rewarding to our state and its people. The electrification system is publicly financed in its entirety, both in its construction and its ongoing operations electrification is privately owned, but it's publicly regulated. In contrast, broadband is delivered through a competitive market system that is unregulated. The electrification system is driven by requirements for the highest possible return on financial investment. It is this feature of the market economy that has failed rural Vermonters and all Americans from participating in the 21st century economy, and indeed increasingly in everyday life of all of our citizens. There are nine CUDs, most of which have been formed this year, building on the accept of a success of the original CUD EC fiber. Thousands upon thousands of volunteer hours of our community members have gone into this endeavor that it was achieved in such a short time is testimony to the need. Job of the state now, along with other public and private financing systems is to do all in its power. To sustain and strengthen the work needed to accomplish this in the shortest time possible. While that will require substantial public resources in a time when demand for those dollars is far reaching. The good news is that the public dollars will go away. The CUDs have reached service that to a critical number of subscribers. At this point, CUDs, even though we are municipalities will continue to operate as though we are private sector providers by competing successfully in the market. Excuse me just a moment. I'm sorry about that. There is however, one ongoing need for further public investment in CUDs. And that is to find a way to subsidize rates for eligible subscribers. This is important for true universal service. But also because private providers do not have to carry subsidy costs in their profit and loss statements and subsidies should be available to cover customers of private providers as well. The public service department has estimated that the total cost of the infrastructure needed to connect all currently served or underserved will be nearly $300 million from all sources, including federal and state grants and loans. The $800,000 made available in H966 and the $2 million requested in the new budget will offer us a good start to do poll studies, work with utilities to do make ready for those polls to accept new fiber, do our engineering and design for the system with all its needed redundancies and undertake construction and marketing all leading to the day when we can light up the fiber to all our homes and businesses. Toward that end the primary purpose of the $2 million request for each CUD is to be able to provide the 10% match to unlock the $4 million Vita loans. I will also, as an aside, I do believe that the language of the bill doesn't give $4 million for each CUD. I believe there's a maxim that was created at a time when there was not the assumption that there will be as many CUDs. So the availability of money, how it's matched and a number of other things would be really good to revisit in the Vita construction of how they lend money. Access to the internet is no longer a luxury. It is a requirement for participating in today's economy. And so many of today's essential services from ordering groceries online to educating our children. Access to the internet is available to all who live in large communities, but denied to those of us who live in rural communities. And because Vermont is the second most rural state in the country, there is no public investment that will be more rewarding to Vermont's fiscal strength than is the public money that will bring all of its citizens into the 21st century economy. $2 million included in this budget targeted to CUDs. And that asks that you direct these funds and future funding and regulatory structures to assuring that CUDs become viable providers of broadband to meet the needs of all our citizens. And faith, if could you put up the second map and just this will this is a map that shows you the distribution of unserved addresses around the state. And then progress. Thanks. We are, we are very familiar with that map. Okay. All right. So you will see that this is where there is no service. We're the little amount of people down in the met on the southern border. Thank you so much. I really appreciate the opportunity. Thank you representative. Your, yes, and Senator Campion is with us. Yes, and he is my senator. Yes, he is aware of that. And we are aware of that. He has actually been very supportive making sure for the CUDs, especially down in your area where I was good work. Yes, has been Senator Ballant, who is actually not my senator, but because we also does good work. Wilmington in Wyndham County is actually in the Bennington Senate district. But as far as I was concerned, when I was in the legislature. So it's a good way to go. So the Deerfield CUD, Deerfield Valley. You are still in the formative like Lamoille. You guys have not strung any wire yet. You haven't done any engineering. You're still formative and figuring out your finances. Correct. Correct. Okay. Okay, that's, I would, there's so many of you. I think when we started this, there was easy fiber and central Vermont fiber that seemed to be close to running. But so we've got, we're just, I'm just trying to get a sense of who's out there and in what stage of development because we did get some federal money. And we did want to get it out and get people hooked up, but we also didn't want to do anything that would prevent you from making progress. That federal money, the COVID money is a conundrum to the CUDs. Despite its need, it is making inroads into our potential customer base. Right. And we were trying, trying to balance that with I don't think any of us want to say to the school children, sorry, you've got to go sit in a hot spot. We had a parking lot in January. Because, you know, we turned down money to somebody that wanted to get your broadband but we're hoping that it could go up as something like wireless that could also come down when you were able to provide much better service but that was the source of a lot of discussion. Right. And I'm sure we, in every case, did not get it right, but I just want you to know we, we did hear you. Right, we understand that. Next I've got Christine. My name is Christine Halquist for the record. And I've been working on getting broadband to roll Vermont since 2003. When I became the engineering and operations manager for Vermont Electric Co-op, we immediately GPSed our assets, we were the first utility in the country to do so, with the vision of eliminating paper maps for the utility vehicles. But in that process we learned just how weak our telecommunication system was. So we started the process of fiber swaps and IRUs and over the years we built hundreds of miles of fiber. But again, I've evaluated, you know, been evaluating this for a number of years and of course the numbers today are pretty much the same in terms of the challenge. I do have the honor today to tell you that I'm now a working for any K broadband and are able to, you know, continue to carry out that mission. And of course, as you know, who anybody who followed me when I run for governor, that was it. It continued to believe it's a top issue for economic development. And as a psychologist friends from Las Vegas told me, the greatest predictor of change is misery. And we're, we've got a lot of change going on that's for sure. And this is more critical now than ever. But I will say first, when we talk about wireless, you know, the goal of any K broadband, we represent 31 towns by the way of the Northeast King. So we are going to try to roll out as much wireless as possible to those locations as quickly as possible because as you described the issue for school children telemedicine teleeducation. That's an immediate issue that's been brought on by COVID. The problem of course as we roll out wireless is we eat into our own business case. And you know, if I were, if I were queen, and that was in control. I would do what happened in 1935 when, when FDR recognized that 56% of America didn't have electricity. We would have had, you know, regulated areas. So we could use some of the higher density areas to fund some of the lower density areas. And any K broadband actually serves some of the lowest density areas in the state with some of the poorest economy. But what I want to get into here is I really want to talk about the physics. You know, I love talking about physics, because, you know, sometimes physics and politics doesn't meet, but physics never changes. So let me talk about first of all, the advantages of fiber and I'm going to pull up a, I'm going to share my screen here and pull up a little graphic for you to look at as I talk. Bear with me. You were working on a wireless. And I heard that Northeast was doing wireless. Well, we're looking at immediate solutions for wireless that is not our long term goal, which is what I'm going to get into next of what our long term goal is. Wireless is clearly an interim and inadequate solution. But I'm going to, can you, can you allow my screen sharing, please. I've done that. Okay, it doesn't allow me to do that host disabled participant screen sharing. Okay. Well, I will talk to it hopefully I hopefully you got copies of my presentation because the graphics are in those. Can you send it to faith and she can put it up. Yeah, faith I did send you. And I did put it up. So if you want me to pull it up. Christine I'm happy to find the document for you. No, that's, I don't think that's necessary. If the part, if your panel has access to that document then I will just talk to it. Because I have some beautiful examples that I think will be very memorable. Look at LTE, LTE wireless is what we, you know, in many areas of Vermont when we have LTE on our phones when you see the little symbol go up on your phone this is LTE. That means you're on an LTE signal so I'm going to use LTE as the standard to talk about radio and limitations and wireless. If you look at a typical LTE tower. It has the capability of what's called 1.4 gigabytes per second or 1400 megabytes per second. If you look at today if you go to Netflix today and you read a movie, more than likely the new movies are going to be 4k HD video, which takes about 25 megabytes per second to stream that. So an average cell tower if you're dedicating it to these HD videos would take would allow about 56 videos. But a strand of fiber can carry 100 terabytes. A terabyte is 1000 gigabytes, which is 1000 megabytes. So a terabyte is essentially a million megabytes. One of those one strand of fiber can carry 100 terabytes of information. It's mind boggling when you think about the data capacity of fiber compared to wireless. So I talked about 56 users on a wireless cell tower today. One strand of fiber which is about the size of a human hair can actually carry 4 million users. That's the dramatic difference 56 versus 4 million. And you know we typically strand the utilities typically throw up 144 of these fibers. If you see a fiber strand that can carry, you know, reams and reams of data and it gets better every time. So that's what we talk about wireless. That's that's why we are the CUDs are so focused on getting fiber. I also want to talk about Starlink for a minute. Starlink are these satellites that SpaceX is putting up. And I've heard many Vermonters say to me, well, why do we why do we need fiber? We got all these satellites coming up. Let me tell you the difference between fiber and those satellites. So one of those satellites can carry 20 gigabits per second. Think about 20 gigabits per second versus one strand of fiber at 100 terabytes per second. So you're you're looking at such a dramatic difference. Now, if you look at a fiber strand, one fiber strand can carry the equivalent of 5000 of 5000 of those Starlink satellites. Think about it 5000 satellites at a at a million dollars each. That would cost five billion dollars. That is the equivalent of one strand of fiber. And if you think about 144 strands, that's 720,000 of those Starlink Starlink satellites that that's the fiber that's running through Vermont. And basically, if you if you construct fiber, first of all, there's 720,000 satellites Starlink's only going to put up 12,000 for the entire planet. It's not going to be dedicated to Vermont. I'm thinking I'm getting your imagination to think about 720,000 of those satellites dedicated to Vermont and what the cost that would be. We could totally populate all of Vermont for less than one 1000 of that cost. So this is why you hear we as CUDs so excited and so focused on fiber. And when you hear people talk about these interim solutions. That's exactly what they are their interim solutions. When we talk about doing wireless, we're going to do wireless, but we don't want it to distract from our long term goal of getting fiber to every home and business in the state of Vermont. So that I just wanted to give you a little background on the physics. And I'll be glad to answer questions. Senator Pearson, you have a question. Well, just since you've illustrated it so nicely, could you help us understand coax as it fits into that whole scheme. Coax is still on the lower end. You know coax you are looking at maybe half a gigabyte. So, so again a strand of fiber has about 2000 times the capacity of coax. So coax itself, you know, you're maybe be able to get up to, you know, 500 megabits of transfer but you're nowhere, nowhere going to get fibers. And did. Madam chair, and did my head. I didn't say that basically when it comes to stringing coax or, or fiber, you're talking pretty much the same amount of money to to do either of those. Is that correct? That's correct. That was a good state under Brock had a question. As you look at what we are doing now, both as an emergency strategy as an interim strategy. And as we look at what our long term strategy is. How would you evaluate how well we're doing and how well the Department of Public Service is leading the charge here. And I tell you that I think you're doing the best you can with what you have, you know, and I let's put it this way. I don't envy the position that you are in, because you know you're having to make this is a serious crisis this COVID crisis, and trying to make decisions about where you're going to spend funds between, between life and death today, over a long period of growth for tomorrow. That's a tough decision. So I'm not going to sit and criticize at all. What's been happening. I think people are doing the absolute best job they can. And, and, and again, short, the real magic is creating regulated territories for the CUD. Short of that, what's in your power. Well, make sure any grants that come out of the state be directed through the CUDs, you know, strengthen those CUDs I've been telling legislation of the talk to me. When people, you know, I know you're getting lots of questions about broadband direct them those questions through your local CD, CD, you built what I think is an excellent model. And now what we need to do is strengthen that model strength that that model in two ways, make sure the funding goes through that, and expect those CUDs to provide those answers. I think you've, we've, you've created the expertise. You've essentially created what's like a subcommittee. And I don't believe you legislators should be really answering any of those questions that they had been directed to the CUD. Now I recognize that you know you serve your constituents. So what I'm saying is all in terms of purity, but, but that's really my answer to that question. Does that answer your question. Well, it doesn't, it doesn't, because one of the concerns is we have a variety of regulated providers, a variety of existing legacy providers. Much of what they do is outside of the purview of what we as a state can regulate, who are effectively in competition with the CUDs, at least in some parts of CUD territory. We've heard here today, the imperative of getting people online now rather than having them stand in line for two years or three years or whenever it is that a CUD is ready to serve them. How do you reconcile that with your recommendation to have everything go through the CUD when the CUD in some ways have a competitive interest in not allowing competitive providers provide service in some areas. I think, so NEC broadband, so let me just tell you first, I, I love the electric cooperative system, which is a volunteer board, and it's a not for profit system. And the reason I love that is because the goal, we all have to understand what our goal is. And our goal at the NEC broadband, although it does eat into our business case, our top goal is to get people served. And we will eat into our business case to get people served. So where, and I've been given the directors and the executive committee that, look, wherever there's existing infrastructure today, work with those partners and develop that. But we want to develop that as a partnership. So that's why I say I think you send the funds through the CUD but you have already set the expectation in terms of your emergency COVID funding that you want people served as quickly as possible and hold us to that. If you look at the strategy that you see right now, in terms of our emergency planning and the various streams of funds that we have, is there anything that you think we should change right now? The only thing is again is make sure you direct the funds through the CUD and set the expectations for the CD. Hold our feet to the fire. You put that just like you would hold the feet to the fire of anybody. Hold our feet for the fire demand we do. You know, I certainly, you know, I was the CEO of Vermont Electric Co-op. I should really understand what demands are and, you know, and the imperative of getting fired if you didn't meet those demands. Thank you. So, then you really hit on my next point and thank you for that which is around how do we utilize the CUDs. I'm going to also, you know, to follow up more in terms of what you're talking about, Senator Brock, is there's tremendous amounts of existing fiber in the state today. There's state-owned fiber, there's utility-owned fiber. And that, there's no, there's, it would be a car, I don't know, what do you call it, mortals, a mortal sin, to, for us to be overbuilding that. So, we're looking at developing, using indefeatable rights of use or RRUs to be able to use that fiber as an asset. The beauty of an IRU as a legal tool is that you can take a strand of 144 fiber and dedicate one bundle of 12 fiber to any of the CUDs and that it becomes an asset we can put on our books. So the most important thing we can do right now, and this is our focus, is to build our asset base. So we're going to be coming to the legislature in the next session to look to you to give us some, the legislative ability to use indefeatable rights of use. That's, and that's going to be the part, I, you know, I worked with, there's, there's a co-bank and cooperative finance corporation that finances municipals at, and co-ops at 2.5% interest right now. You know, so if we, if we can build up, but of course they're not going to give it 100%, they'll give us up to 75%. So if we could build an asset base, then we can leverage that asset base to get additional funding. And the last place I want to get that funding is from the taxpayer. You know, I want to get that funding through a good business planning, building up an asset base, and, and do the long term borrowing, because that's how our electric utilities were built. So that's essentially, let me make sure I got, oh, I want, I wouldn't want to leave this without, I want to make sure I box this up as a separate issue. One of the most important challenges that we face right now is in terms of pre-engineering is a really, we need a good polls and wire database. And I don't know what it's going to take. And we'll, and again, we'll investigate that for the next legislative session. But, but we really need to have a mandate as far as the base, that's, that becomes a public database. You know, I've heard some, I won't mention any names, but I've heard some of the, I don't know if you want to say too much, because you might figure out who it is. But, you know, there are some folks that say, well, this is critical infrastructure. No, it's not. The majority of our electric infrastructure in Vermont is, it's non-critical. Critical infrastructure is defined by the federal energy regulatory corporations, FERC. Yes, Svelko assets and some of the GMP substations are critical, but 95% of our infrastructure can be made public in this state. And there's no reason we can't do that. So, you know, I'll be, I'll be glad to be, you know, keep people honest on that one. It might be helpful. I did have a call last night from someone who represents one of the major utilities who apparently this topic has come up elsewhere, and want me to know that their polls were mapped and online. So, are you having, is it smaller utilities you're having trouble with? I mean, yeah, just, if you could let us know. Sure. Sure. Actually, I will speak to those utilities first. Okay, that would probably be very diplomatic. Yep. The answer is put, you know, let's all commit to getting this database online and keeping it updated and live, make the shape files available, just like we do through Vermont VCGI. Okay. And maybe we could find some COVID money for that since this is pointed out how critical it is. It is to know that. Okay, yeah, no, I think it would be definitely better to ask before we tell. That's right. I agree. Okay. All right. Sandra Brock. Just going back to that issue of what's public and what is it, and what's essential infrastructure and what is it, and what's part of the overall need for connectivity with fiber or otherwise. When we talk about electricity, we're talking about companies that are regulated utilities of which the state has some control. We're talking about polls over which we have some control, but a great deal of the fiber or other pieces of connectivity the wire is on is is owned by companies such as Comcast and others who are beyond largely beyond the state's control. And as we talk about the new neutral access, if you will, that would be the ideal that perhaps many of us would think about as we look back to the history of electricity is complicated by that. If we had I think many of us, the right to simply say that all of this stuff would be available to any provider who wanted to use it a provided there was room and be provided that the owner of it. Set a equitable rate rate and a profitable rate to charge others for using it that would be one thing. But do you envision any way that anything like that can be done that the state has any ability to mandate anything that would really extend broadband more equitably throughout the state and allow the various users to be able to use it. I would go out and say there's a I don't know what it's a majority of what percentage it is, but there's a large percentage of electric utility fiber out there. And in the emergency broadband action plan there was a reference there to, you know, making fiber available at $1 per strand mile. Today they're you know you're looking at $15 to $25 for strand mile, you're never going to be able to populate the Northeast Kingdom at $15 to $25 per strand mile. But let me tell you the argument why I would say it's in the best interest of all of us to allow some level of funding from the electric utilities to the telecom provider. One of the things it's my CFO you should tell me all the time is Christie you give me 2% low growth, and I don't have to come in for rate increases, because you're dealing with fixed assets. So if we have low growth, you can pay those assets. Today, we're seeing low growth decline. And there's a difference between good low growth and bad low growth. You know, inefficiency is bad. If you look, there's a direct correlation between economic growth and electric load. So just like the theory behind tax increment financing, you know, if you make the investment today with that telecom infrastructure to grow your rural economy. That will pay for itself in the future for the electric utilities in terms of low. So there's an argument to be made there for why we could do that with the, the fire, the state, and the, the electric utility fiber infrastructure. Now, what I just threw out was quite controversial so I'm certainly not expecting to take action on that right away but that's part of the topics that I think we should continue to talk about. I guess that, that's the, that's where I was going in terms of a question that if we wanted to do something like that. How would we go about doing that. Well, it's a little bit of that to happen. It's, it's, it's that I does that does need to happen. And, you know, and I, and I think the answer is you need someone and I'm certainly willing to, you know, do that is run those numbers and and show the long term positive impact of low growth versus, you know, some level of fiber subsidies, because it, the numbers, you know, ultimately, of course people can sludge numbers I understand that too, but ultimately, you know, if we were talking about numbers and talking about data. Then we're, then we move to step up a level higher in terms of our discussion. Do we say, for example, you know, in the, in, in the micro sense that if you have a road like right 207 between St. Albans town and swanton. There's cable up the road and you can access Comcast at any point. Do you also say to swanton electric and green mountain power that we want to put fiber on your line as well so that a people have a choice, and that it's available to any provider and that's what Comcast wants to deliver. Is that I would argue that that's there's a good argument for that. And ultimately, you know, let's go way far out. In terms of vision, if you truly believe we're going to get to an all electric infrastructure and electric vehicles, we're going to it's a necessity that we have interactive telecommunications with the load, and I'll give you one example. You know, you look at these Tesla electric tractor trailer rigs, they have a 500 kilowatt battery storage plan on it and they're going to want to charge them up in 10 minutes. 500 kilowatts 10 minutes ends up to be three megawatts off a line. Well, our lines are only capable of three megawatts on average anyway, in terms of the feet. So you're not going to put a couple trucks on the lines because you'll collapse the grid. So you got to be able to talk with these things in terms of your generation, your load. So having you really, you know, a smart intelligent communication to all event devices is where I see the necessary answer to be if you're going to solve climate change, for example, you know that if you accept the fact that you want to solve climate change, well, that means we've got to move from where 80% of our energy source today is from from fossil fuel to 100% from electricity. And of course, that's going to take a lot of telecommunications infrastructure. Christine, I can see about three future meetings with you going through this but maybe you could send us some of the numbers that you know just some sample numbers. I think Senator Brock can probably do most of this in his head but some of us actually need to see paper and pencils to be able to see the progression of your theory so I think that would be very helpful as we go through this. I've got a lot farther to go than just getting the CUDs running. And I know that as we go. Okay, are you. Is that your testimony. That's my testimony. Thank you. Okay, thank you. Adam and I'm probably going to massacre your last name is it Lou J. Yes, thank you. It's Adam region. Director of the Addison County regional planning. We are getting some real feedback from you. Now we can't hear you at all. And I don't. So I don't have a mute symbol up. Now you're muted. And this says you're unmuted but we can't hear you. You want I can go on to the next witness you can work on this. And if all else fails you can call in. Just, I think email faith your number so she knows who to let in, and we'll go on to Chris Coda, and then we'll come back to you if we can figure out the technical difficulties okay where. Right here. Chris is up top. Okay. Right here. I'm Chris Coda vice chair of the Northwest Communication Union District. I have a prepared statement I'll be reading today because unfortunately the chair was supposed to present this and he had a last minute appointment that came up. So, okay, where are you to start with what what towns. We're, we're in Northwestern Vermont so I personally represent Fairfax we also have Georgia and Montgomery, Enosburg, and I can give you the full list of CUDs but I don't have. Okay, memorized. Okay. It's a pleasure to appear before you today and testify regarding the funding brand band expansion in Vermont through the Communication Union districts, the creation of our district was born out of the limitations of current providers and the great inequity of broadband access highlighted by COVID-19. We are an active and driven organization that currently supports nine municipalities looking to solve our broadband challenges. I will begin by describing the connectivity of our district to provide you a foundation by which you can understand the support the CUDs require to accomplish Vermont's long term connectivity goals. Currently 9.5% of our district is unserved by any reliable fixed line internet provider. In the current print pandemic, these residents were cut off from access to education work and telehealth opportunities, unless they leave their homes putting their health at risk. These residents were left vulnerable by the current broadband market in Vermont, because current providers have no incentive to connect them. 29% of our district does not have access to internet service that would be considered broadband by the FCC. This term is used to describe service of 25 megabits download and three megabits upload. In homes that meet the standard, residents find the service inadequate for remote work, education or telehealth, as this standard was defined using only a single device. A family working to trying to work, learn and connect with others at the same time, find themselves left behind by this dated standard. Much in the way we used to have to trade our phone calls for internet use with dial up, these families are forced to try and schedule their priorities at a time when everyone needs that connection equally. The 27% of our district does not have access to service greater than 100 megabits symmetrical internet. Our district's objective aligns with the statewide goal of achieving that standard of 100 megabits minimum for every resident in business. This achievable goal will provide significant economic benefits and create a generational impact for Vermoners. Through the challenges and looking at the projected broadband deployment costs of 29.92 million for our region, our CUD is beginning the process of planning and feasibility for a fiber to the premise network capable of universally reaching members of our district. Without increased financial support from this committee, we feel the goal of the 2024 for connectivity would be difficult to accomplish. Our CUD needs grant funding for feasibility and engineering work with the ultimate goal of working towards a sustainable business model that provides a vital utility to all. Our group of dedicated volunteers also needs funding for supports positions, such as a project manager, a technical director and a data analyst in order to accelerate our CUD to meet the increased needs of next generation internet service in our communities. By investing in our CUD, we'd be able to provide long lasting social and economic benefits to our district, which would make Vermont stronger for generations to come. Thank you for inviting the testimony of the Northwest Communication Union District. If there's any questions I can answer, I'd be happy to. How long have you, how old are you? How long have you been working at this? We're on week five. Ah, okay. The newbie. One of the freshest probably. Okay. Well, you've got some old timers here so one of the good things about being the newbie is you can learn from the old timers. Any questions for Chris? Okay, I'm not seeing any. I do see Adam is back visually and I said he is on the phone so Adam I'll go back to you. Can you hear me now? I can hear you perfectly. Okay, thank you. I apologize for the technological glitch. It has happened to all of us. Well, thank you for having me here this afternoon. I'm Adam Luigi. I'm director of the Addison County Regional Planning Commission. I am here to testify on behalf of the Addison County CUD. I'm here with the newly formed CUDs. We currently represent 12 towns in Addison County. I expect we will add more. We just started in July and we've put on a lot in a pretty quick timeframe. And I expect we'll get the whole county by the time we're done. We also like cats on this committee so don't worry about him. Yeah, well she likes people. Anyway, we've come a long way in a very short time. I wanted to support the $2 million of funding in the governor's budget to basically allow us to serve the underserved people within our region. I've been the regional planning director for 20 years or so. And the response that I got from the feasibility study that we were doing for broadband is probably bar none. The best response that I've had for any projects we've built, whether they're sidewalks or other pieces of infrastructure or or plans or things like that. I got a ton of feedback from people all around Addison County saying, I need this for my business. You know, I'm an architect in wall them and I can't can't commute to my office. I'm a hedge fund trader and cornwallet that does permit lots of my business in Bermuda and I can't do it right now. So just Middlebury College Porter Medical Center, you know their employees, just a lot, a lot of people stunned me how many home businesses there were in Addison County to tell you the truth. And how many that were there, despite the fact that they had really inadequate broadband. So, I believe, you know, to answer some of Senator Brock's questions, if this infrastructure will pay itself off, it will allow us to expand that and and allow our children to go to school and enable telemedicine is something that is that is very necessary in our rural areas. So, I think I'm going to, going to just stop there for right now you've heard a lot of other things from other people but the CUDs have come on fast. I'm really representing almost all of the state at this point I expect we will get to even more portions of the state and with funding we can reach underserved portions. Thank you. I also have next is Jeremy grip from Addison is Jeremy still with us. You see me. Yeah. I have a little presentation here, which will sound pretty basic to a lot of the folks here. I am impressed by the level of this discussion. More than I will have to tell you, but here's my presentation. My name is Jeremy grip. Thank you for hearing my testimony for almost a decade and a half. I have operated small with a wireless service provider in Addison County, rural Addison County. I started as a co-op with some VTA and Vita funding. More evidence should then be needed of the importance of initial public support for broadband efforts. I'm not here to promote wireless, however, on contrary, I'm here to share a few lessons I've learned in the process. The first is that the world of wireless is one of constant change and improvement, which is great. Except that it means the current technology will likely be obsolete in five years, five years, a good number for this I've learned. So that may be the most economical way to meet the bandwidth needs of most for monitors today, it will require frequent reinvestment as those bandwidth needs increase. In fact, the current federal standard of 25 five has already been made obsolete by the zoom demands necessitated by COVID-19, as we all know. The second lesson is that in all areas, there are locations that are almost impossible to get to with wireless. Getting to every last on-grid location means considerable additional expense over the long tail at the right side of the bell curve. Another lesson our experience has taught me is there's tremendous amount of self-promotion and promotion of vaporware, accompanied by false starts, bad choices, and rapid rate turns and reversals of technology choices and standards in the world of wireless. That makes it even more difficult for funders than it is for operators to make commitments. One has only to look at some of the providers who have absorbed significant federal and Vermont funds over the past two decades. There are some heroes and wireless, but there are others that range from incompetent to the criminal and a lot of money has gone down that drain. Fiber to the home, FTTH, is another animal entirely. Although the initial cost may be double that of stationary wireless, the investment is long-term, as you've heard in tremendously eloquent terms from this hall quest. In a 20 or possibly in the 50-year period, the operational cost is minimal and there should be no requirement for an upgrade, whereas wireless will require multiple rounds of reinvestment and the total cost will be vastly more. The problem has always been how to finance that long-term investment. The pioneering work of VC fiber has solved that problem with revenue bonding after initial funding support, almost all of which is repaid on the path to permanent cash flow or profitability. Additionally, I personally firmly believe in the ideal of citizen ownership of media. And it's place in a functioning democracy. All this is why I'm wholeheartedly supporting and doing what I can to see that ACCUD, our brand new Edison County Communications, succeeds. I hope the legislature shares that wish. The pioneering, the prior testimony, I have to say that I understand that you understand that there is a temporary need in regard to wireless is a temporary solution and that's absolutely appropriate. In fact, I am connecting new customers challenge students being subsidized by the local school district. I have physicians. I have cardiologists who needs to operate remotely in the era of COVID who is very challenged. It's a constant battle. I don't want to be this busy. I want to retire. Thanks. That's really open to questions. Any questions committee. I am not seeing any. So we're going to move on. I'm doing one last look to Jeremy Hansen. And I think you're in the senior class here, Jeremy. Oh, I guess so. So Jeremy Hansen, I live in Berlin, Vermont, and I am the chair of CV fiber. We were founded in 2018 town meeting day, we're made up of 20 towns in Washington, Lamoille and Orange counties. Just to give you a quick status update as to where we are through a broadband innovation grant. We finished our business planning and our feasibility study. It's been a long time. It's been the last couple months. That's done. So we're essentially at the beginning of the race waiting for the starting pistol and I'll get to get to what that looks like in a bit. We also have applied for some of the cares funding for a small fixed wireless build, which again is intended to be a stop gap to get service to some kids and folks working at home. We're looking at 244 possibly serving up to 244 locations and 50 priority locations with that fixed wireless build at a minimum of 25 three. The long term goal is to serve every resident every resident's business and civic institution with gigabit speed. It's 1000 1000 are there about fiber throughout the entire district. The reason that we're still kind of waiting at the starting line is we applied for matching funds for the Vita loan program from NBRC, and we did not get it. Similarly, the public service department applied for some funding through that also to support CUDs and they also did not. They also did not win their grant proposal. However, we did recently receive $100,000 from the PST through the grant program that the legislature recently authorized for CUD startup funds through the end of the year. We also applied for some of that for the wireless build and we've also used some of it where we had earmarked for a project manager that we just began our contract with yesterday actually his contract starts today and I expected he's watching item. We're hoping so again we're expressing support for the $2 million that the governor put in the proposed budget and hoping for that as the match for the Vita funding is that like the moment that that hits our bank account, we will be applying we'll be submitting the Vita loan and we will start we'll go be going a bit farther with our pre engineering and engineering and we'll be we'll be ready to go. We're kind of itching ready to go we have kind of the pilot sites I think basically chosen and while it's not concretely engineered we basically know where we're going to be going. And again that's to build gigabit fiber over about 150 miles of our district. So one of the things that's been talked about is the, the wisdom of this emergency funding versus the longer term funding and this is something that we've talked to a lot of people who are excited about line extensions or who are excited about some of the wireless deployments. And so, notwithstanding a lot of that excitement you know we have to be in that kind of pragmatic middle, and we've been at our last meeting we spent a bit of time philosophizing about whether it's more valuable for us to get those people served more quickly. With, compared to what we will get to them with inferior service and get it get them that service now versus better service later, more cheaply, because you know please be aware and I don't know if anybody has said this in this in this particular way but you know when we are when you know these this care cares funding subsidies go out to places that we will eventually go to serve later. It's going to be more expensive for us to get there, because there will be fewer people the take rate will be lower and therefore our costs as we sort of distributed of the various subscribers will necessarily be higher. So more people sign up the better, but when we. So it's kind of a I mean it's a really it's a terrible situation to be in right is we want to get people serve now but getting those people serve now makes it more expensive later. So, we, if we are going to be something like the carrier of last resort, we will, we may need additional supporter subsidies for those areas that are covered by those short term extensions. There are people who are who are going to be left out of those line extension requests who are not accessible unless we over build in some of those areas or unless we go through places that are otherwise served. And those people who are you know who were not part of the cherry picking of some of the incumbent providers. They, because we still intend to eventually reach everyone, it makes it much more makes it makes it much more expensive for us to do so when we have to compete there. And I want to I want to reiterate something that was said before I think I think it was and man wearing this says that said this, that it looks like there's an $8 million pool of funds available from Vita, which any particular application can't be more than $4 million of that and should all go well we're going to be applying for $4 million of that within. I'm hoping within a month within two months, certainly by the end of the year. And, you know, I'm looking at the plans for the other CUDs and the other CUDs have the same idea. And if they want to build a project of roughly the same size as ours. There's not going to be enough left of them, not not going to be enough left of that pool for them to go and do those projects, because some of that Vita money has already been distributed that loan is those loans have already been distributed. So we will probably need a bigger Vita pool some authorization to expand that to make sure that all of the CUDs can participate in this up until the point where we can go and then get revenue bonds of our own, which for us is going to be about three years out, you know, if we're able to get some revenue from our fixed wireless project that gets us in line a bit quicker. So we would be able to pay back those Vita loans quicker. However, again it's you know kind of first, you know first pig to the trough and it's looking like we're going to be muscling in on that and that's going to put the rest of our comrades here in in a tougher in a tougher position. So the idea that was pitched earlier about having CUD feedback. I think Christine that was yours, having CUD feedback or maybe not control but some significant deference to CUDs and the strategic planning that we're going through right now. And the idea of subsidizing rates for you know folks getting snap benefits or that sort of thing. I think that's that's valuable I mean that's something that we expect that we will be able to do on our own in the future. We have to have stable financials underneath us for a couple years before we even consider kind of juggling around the rate structure to handle that I mean that's something that I imagine EC fiber could start thinking about but even so I know as they're still building more, more network, it's still maybe not not the best idea, just now. And that's, and that's all I have thank you. Any questions, Senator Pearson. Thank you, Jeremy and maybe this is a question for you and Christine, if she's still listening. I'm intrigued by your comment about sort of the quandary of helping people immediately, but doing a little bit of damage to your own plans and that challenge and it's one that this committee has wrestled with ourselves over and over and over and it's Sophie's choice. I wonder, though, if there is any opportunity or if you've considered getting people wireless fixed wireless today, and then sort of, then you've got them as a customer just swapping them out so that so that, you know, their experience is only going to get better, but, but then you maybe as a strategy don't have to go, you know, only hitting one of every five houses instead of one of every three or something like that. Maybe I'm completely over simplifying this but it does strike me that, and obviously that's more costly than just building once, but I'm just if you could comment on that is there any wisdom is that already part of your thinking and Christine you mentioned short term conflict wireless so maybe the same question could go to you as well. So our wireless proposal. Thank you, Senator Pearson that is a terrific question and right in line with our thinking so for the for that project that we are that we have proposed that we are hoping to get funding for that is exactly what we're talking about and we're even thinking about keeping the pricing exactly the same, so that when we finally go past those folks and we pull you know if we pull down the radios that we can keep. Let's keep them at the same price and we just jack up their speed by 100 times 50 times something like that. So yeah that's part of the idea. The subsidies that I'm talking about some of the additional subsidies is that we're not getting all of those fixed wireless subsidies, or the what line extension subsidies that those that were really more concerned about that are going to change our take rate so I have to go back into our you know our big spreadsheet and we look at the take rate and if we look at those places. The number of houses now served changes everything and the amount of time it takes for us to get to cash flow positive or the equivalent there of. It goes up, and it's not it's probably not that we at least with the current model that we have. It's not that we may be able maybe can't absorb that eventually, but it slows it slows absolutely everything down because as we're able to get to those revenue bonds were again looking to our neighbors to the south EC fiber, as they were able to get a stable population of subscribers they were able to expand their network, more subscribers expand their network more subscribers continuing that cycle of going after those revenue bonds because they had more revenue. But that said, you know, you still have to have people take the service at five or six people per mile for it to work in anybody spreadsheet. Yeah, I'll add I'll add that that is our strategy and that really gets back to the question of what when we say why, why is it so important for the money to be coming through the CUDs, because the new force I've been already negotiating with partners to put out fixed wireless solutions, and the beauty about those fixed wire solutions you could pick them up and move them once they're served and then serve other areas. However, we want to own those assets again, because that helps us build up our financial assets. So that tie I hope that ties it all together for those those answers that Jeremy and I provided. Questions. Any more questions. Okay. Thank you. Yes, Senator McDonald. Are we through everybody or we have a couple we have we have the the Mr Flynn is going to wrap it up for us. Like, maybe I had a couple questions and I don't know if I should do them now or after Mr Flynn wraps it up. That is up to you if they if it if it's just a general question maybe you could wait. Okay, I'll wait. Okay. All right, Mr Flynn you're you asked to be the the last batter it's all yours. Thank you, thank you very much. Senator and I really want to just begin by saying my initials are for Francis Xavier. And I think that I also want to thank each of you individually for your support. For the support of the emergency broadband bill and the expansion of the connectivity initiative because easy fibers, putting a million dollars of that to use, putting in conduit for our at 13 trailer parks in our district and 200 homes, a couple hundred mobile homes out there individually around our district. We had found that so many people in those households had not been able to become customers after having subscribed, because the quote for doing the underground work was too high or was blocked by the fact that the trailer park owner would have to give their permission. So there are two crews out there, installing conduit as we speak. We've already done two trailer parks, and it's, it's very exciting. And so, thank you very much. It's, I really appreciate it. I mean, I want to share a quick little presentation here. We're talking about solving the rural broadband crisis and the states made the decision that easy fibers the model. And so we're going to stand up cuts and we always have to keep in mind that every dollar can be repaid by cut revenue over the long haul. And obviously the pandemic has changed the, not the strategy, but the tactics we need to employ we need to mobilize more money faster if we're going to get this done by 2024. That's the, that is the big picture goal. So we at easy fiber and and me personally and all of us who are working on this we strongly support this $2 million appropriation. Because that can be used to unlock those Vita funds and, and it can be used and that can be used in ways that cares money can. So, just to put some dimensions on how we're going to win this war how are we going to get to those 70,000 premises that that lack broadband. Well, 10% of those are going to be taken care of by easy fiber. And, and if everything goes right, will have been finished with our build out next year, a stretch, but possible. There are 39,000 of those addresses are on 5700 road miles in towns that have become members of CUDs 21,000 more are in towns that have been identified as study areas or expansion areas. And so, if we have seven CUDs building 350 miles a year for the next four years that's pretty much going to do the job, but easy fiber has had trouble building 300 miles a year so it's a stretch it's a really big challenge. And I also want to point out, as Irv did that it took us three years from our founding in 2008 to start building then it took five years of building and having customers to get to being able to get bonds. And now it's going to have take six years from that point to finish building our original 23 towns, and we've added seven more. So, essentially what we need the state to be paying attention to is that the new CUDs in this year and next year have to make the same journey that easy has been made from 2008 to 2015. And that that that's going to require a lot of support and, frankly, creativity out of the state. I have a chart in here you could you can look at that that shows how this would work out. By the time easy fibers finished, that's 70,000 will have been reduced to about 63,000. And then, starting from there, the current member towns of the CUDs, by the time they build out, you'll have reduced the number of unserved premises to 8%, which is great. If you get the study area in, and, and they do the job now you're down to 1%. So that would be your that would be your 2024 goal and I want to say, these non CUD towns, they're all on the fringes of the very well served Chittenden County like in Bolton. And I'm quite confident that that the border areas of those towns will be picked up by the CUDs in the same way that EC5 or picks up some folks on the border of Bridgewater through Woodstock, where VTEL doesn't doesn't come in. So, the 2 million for the Vita matching is only a start. We built cost effectively at 30,000 a mile and I broke that out for you. The, the $10 million that would we know is on the table would be good for 333 miles that's only 6% of all the road miles and in member towns. We need to get the CUDs to the municipal bond market quickly, and customer revenues are the key. So we need for the legislature and the executive to find ways to say yes to the CUDs that that's that that's really my message. Now, I have a very specific idea for how we can spend some cares act money, but it's something that we're going to have to move quickly on. And I'm calling this the Vermont poll harvest, and why we need $1.4 to $3 million of cares act money to collect poll data this autumn. Whoops. Basically the issue that we face is, whoops, is that I'm pulling up the wrong file. Okay, hang on folks sorry about that moment here. Okay, so there are certain assumptions that that that I'm making and I, and I believe are to be the case. The point is that the new CUDs could build up to 25% of their networks during the 2021 construction season. Second, that none of the existing poll data that we have. That would mean poll data that the utilities have is adequate for the design of fiber to the home networks. It's not sufficiently precise there's not sufficient detail about what's on the polls, etc. You can't do any construction, you can't buy any materials, you can't do design without adequate poll data. Poll data collection is a legitimate use of cares money. We already have made small grants in those $100,000 grants to the CUDs, they've specified that some of that would be for poll data collection. Madam Chair may just interrupt for a moment. Yes, I can't see you. Mr. is it possible do we already have this data, or is this data that we really we don't have for some reason I recall and I probably miss recalling the commissioner sharing some poll data with us but it could be also that it's just outdated. We have the poll data that we have from Green Mountain Power, for example. Are there are the position of their polls on actually you're absolutely right now I'm recalling. I remember reaching out to Robert Dostos and they did not have this data. That's right. Thank you. Sorry. That's fine. That's fine. We know where the polls are but not necessarily what's on them. That's right. Thank you. And it's also true that we don't necessarily know where the polls are within a meter of their actual position. And that becomes critical for design. Okay. Now, big assumption that this cares money can be put to work by the middle of September. The decision can be made this week and next week to move ahead with this project. And that's that becomes critical as all as I'll explain. So the poll data collection for all the CUD areas to be designed during the winter of 2021 can be collected in eight weeks. Being by poll data collection. In other words, what data are you looking for vis a vis the polls. We're looking for their position within a meter we're looking for what's on the poll we're looking for how tall the poll is we're looking for the birthmark that is on the poll the numbers that are on the poll. All of the elements that we need to collect in order to provide applications for poll licenses, all the data that we need for the designers, so that they can accurately and correctly design the network. Well, as I understand, there are some providers, such as some of our internet providers that the state doesn't regulate who have devices on the polls and who claim that that information as well as the wires associated with them is proprietary information. That's correct. That's why we have to go again. That's why we have to go out and get it. Well, the question is, if it's proprietary, do you have the ability to go out and get it legally. Oh, yeah, right here in plain sight. Yeah, I may be in plain sight. It may or may not be in plain sight in terms of the details of what the precise device there is on the poll which is what I understand that some folks are saying is proprietary. Well, you can tell if there's a transformer if there's some specialized gadget you can say there's some specialized gadget that that the cable company is using because it's attached to the cable wires, or there's a specialized gadget that the power is attached to the to their data line in the electric space. So you might not have to identify exactly what was in that box. You would simply know that the box was there. What you need to know is how many poles or how many lines are up there. If you're going, you know how many lines you're going to need to pay to have moved. How many if you're going to need to put in or have put in a taller pole. Is that the information you need not whether or not it's a 5G 3G or 10G device that stuck up there. That's correct. We need to know what we need to know all that and more. Okay, and that's in order. So you configure your cost to string the lines out. And what and where the lines, you know, need to go because, you know, frankly, when you sit down to design the network you may find that you only need to build up to this pole and then you have a then there's an area where, you know, there isn't any, there aren't any premises to serve. And then on the far side of town, you can actually come down from another place. So at the end of the day, it's not necessarily true that you need to put fiber optic on every single cable on every single road. And you're doing in terms of inventory. Are you inventorying, for example, fiber that may be connecting one pole to the next to the extent of determining who owns it. Is that part of your concept. Well, the, when the pole data is being collected, the make ready application that would go to the pole owning utility would say that in the, in the data space where the phone wires go. We observe that there are that there are attachments at this height, this height in this height, and the pole owning utility would know who those attaching entities were. We wouldn't need to be determining that while we were collecting that information. I think our would like to inject something. I'm watching her if he's one of the few people I can actually see right now. I just wanted to point out to Senator Brock that even if those attached entities on the pole claim that their detailed information proprietary. They are more than willing to take our money to move their cables around in the make ready process. So they talk out of both sides of their mouth to be blunt. Yeah, what I'm really trying to just ascertain is, is there a risk of litigation slowing all of this down. Oh, no, because we already easy fiber has already done this for all of its towns we have already gone out. Excuse me, excuse me exclusive or of our new towns, but we've already, we've already done this and this is a very. This is actually a fairly common task anybody who is if you're, if you're building a coax base cable or fiber optic or, you know, anything else, and you are not the poll owning utility, you need to do poll surveys in order to file make ready applications and in order to give your engineers, the, your design engineers the data they need to design your network so this is there's nothing about this that's any kind of a legal risk. No. Okay. All right. So, basically, as temperatures fall below freezing, the ability to collect massive amounts of poll data quickly can continue because the technology has limits. Okay, so it's harvest time, and we are staring down a harvest crisis because if we don't conduct a harvest this fall, then we're going to miss the next construction season because if it's incomplete, then some areas will have no chance of seeing progress next construction season. And the poll harvest season basically ends in mid November so the modern way of doing a poll harvest is to use very highly use a highly sophisticated very expensive mobile data collection unit that collects polls as you drive along the road and it's pretty astonishing technology. And the mobile units that do this cost about a million dollars piece. So there's a hefty rental fee to put them to use. Now there are also lots of polls that go through the woods or so called easement polls. And we have access to a company that can deploy five highly trained collectors with state of the art equipment. Who can go out and do this. Now, in order to harvest the poll data, we're going to have to rapidly mobilize at least a million dollars. And the reason is it's not economical to deploy that mobile data collection equipment on short notice with a short window of good weather, unless they're going to be able to bill us for 50,000 polls at $21 a poll. So that's your, that's your $1.05 million. And in terms of the easement poll data which also has to be collected. We have to mobilize at least at least 315,000, because again, the cost to get these guys run run up and set up with and set up with the collection equipment on relatively short notice with the short weather. We have to be able to collect at least 15,000 polls at $21 a poll. So that's where the 1.4 million comes from. Now, everybody's been saying it today, all this money can get repaid so the risk to the state, I think is essentially zero. It's a cost that in normal circumstances, we would borrow in a revenue bond on the municipal bond market. And if there's, and if we use CARES money for this and clawback happens down the line, all the cuts should be up and running and be able to just stick that into the next municipal bond issuance they have. So I really think that that we can do this and we can sleep comfortably at night and not be nervous about it. How would we implement this since we know each town based on the information that we have available. We can, we either know or we can make a good guess how many polls can be collected mobile and how many can be would need to be collected manually. So if we get the go ahead on this than the each of the individual CDs will identify for us where they're where they want to be able to do design work this winter, and we will focus on those polls. And once we have identified 50,000 polls to collect mobily, then we'll kick off this project and we'll run it all through EC fiber, which should vastly simplify on doing the appropriation. So, um, at $21 Paul go through EC fiber. So here's a here's an example of a scenario where we've got six of the CDs in on it. And 1,000 mobile polls and 29,000 manual polls at $21 all would be 1.697 million. So that's an example of how this could happen, which is why the ask is that the state approves an appropriation or grant or a loan, presumably of cares money of up to 3 million for the collection of poll data collection. And we could allow for 142,000 polls, since there are approximately 205 polls in the CUD towns and the study area towns. It's, it's, it could happen we could do it all. But given the time constraints, it's likely that the maximum number of polls we could collect this autumn would be around 120,000 which would be 2.5 million. So, there's a lot of factors that are in the air that need to be balanced. But, but that's where we're at. And that is the proposal to help us move along laying the infrastructure for a world that's coming faster than we expected. Thank you very much. Okay. Thank you so much, I'm sorry, I'm sorry, I'm sorry. I was just wondering if you had some sort of review. You got something short. I've got a couple short. I just wanted to add what FX didn't say explicitly. EC fiber has added eight new member towns, seven of them to our north and one to our south. So we do not in those eight towns alone have anywhere near 50,000. That's why we're talking about trying to have a proposal that would embrace poll collection for many additional CUDs and get a lot of CUDs to the point where they're ready to design this during the winter. Okay. So we need to have the poll data so you can design so you can start stringing next season. Exactly. So my first question is a we don't this committee doesn't appropriate anything. So who else have you talked to? Well, we're going to be bringing this to the House Energy and Technology Committee on Thursday. And I've shared this with Ted Brady and the folks at DPS and with the joint. Well, with Senate appropriations anyway. I've sent it to my my Senators Dick McCormick and Allison. Okay, I'm there's if this is emergency funding that needs to go out there is still some money available. I don't think it's going to be. In the CARES funds that the joint fiscal committee can disperse. But that would take a request from the administration. We did 13. We had 16, there's probably three million left in there. Now they tell us there's FEMA money going to come back in there, but we might have just three million. And so the administration would request that. The rest of the money is going through the regular appropriations process, which means it will be the end of September. Provided everything goes smoothly and there's no veto, but by October 1st, we have to have a budget or everything shuts down. So it, it'll be a couple more weeks. You can do either. You need the budget is being done right now in the house. And if you can get it included there, it's got a really, you know, a much better shot than. Trying to add it in the Senate, which means we have to take out something that the house has put in. So we can do what we can to give you support. But I would try and get in, in front of. And I would book it now and assume that house energy and technology is going to support you. Because I don't know why they wouldn't. And, but get yourself in before that appropriations committee. And then when it comes here, we can. And I think. Yeah, if we want to get broadband out in an emergency service. The administration has White House, they have some organization they've contracted with, which is supposed to vet proposals to make sure that they are. Clawback immune or as clawback immune as possible. So I would encourage you to. Call your representatives on the house. Appropes and see if you can. Talk to the chair at least of energy and technology and, you know, let him know what you're thinking. So he can be prepared to. Move things swiftly and perhaps. Get it before prop's over there. I think it might be possible to get. To get some out of the emergency and. And maybe tag the rest into the bill. I don't know. That was my question too. Yeah, I mean, the, the governor, the administration came to joint fiscal with $47 million worth of requests. They were telling us, well, they've got that much money because FEMA is going to reimburse us for things that we did, but to date. We didn't have any documentation and our numbers said we had. 16 million left. And the administration. Had, I don't know, one or two million that they can disperse. In an emergency situation. We're not going to be able to do that without our approval. The bulk of the money is going through the regular budgetary process. And so there's more money there. But I'm assuming. Given the vagaries of our weather. That to get you out there sooner rather than later. Would be ideal. But Ted Brady is going to have to. I don't know if he's going to be able to do that. I don't know if he's going to be able to do that. I don't know if he's going to be able to do that. I don't know if he's going to be able to do that with that one. That's going to have to come through the administration. So he would, he would be the right person to. Be in touch with on this. Yeah. Ask him if that's a possibility and tell them, you know, we're going to try and get. See if we can get you an emergency, you know, an appropriation. Appropriations is just going to take a couple more weeks to get approved. You know, you know, you know, you know, the sooner you get out, the more polls you can. You can get done. And then you can. Spend the winter. Doing your engineering and planning and. Hopefully you see fiber and maybe CV fiber. Can start string. And I don't know if anybody else is ready to do that. But. Yeah. That would be the next challenge. Yeah, I mean, I'm not sure if I'm getting more calls on lack of broadband or lack of childcare, but they've replaced inability to get unemployment benefits and where I'm spending my time. So there's a real need out there. And. I haven't got hugely rural County to deal with. Senator McDonald. Just a matter of chair. I just, this meeting this afternoon to kind of view as a watershed moment. We have. And I, it has made me realize that the committee that was put together that were that centers, Westman and. And. Campion worked on to. To look ahead on the things that would be needed during this time have come to bear. This is the first time I've heard people from all over the state. Who. Understand that funding the cherry picking for profits is a road to disaster. And that. The goal is fiber. And that different. When. When Christina said that we. We should let the individual CUD funds through them. They're the ones that know where. The temporary wireless might be effective. Because the topography of each CUD is. They're all unique. And one size isn't going to solve it. We've spent a long time in several years having discussions to try to bring this sort of unity together. The one thing that I found scary. Was that it's sort of like the San Francisco. Gold rush that. Once this, this has become realized as being the way to go with CUDs. We've got twice as many as we expected. But I don't. Someone is going to have to tell us whether they, the trucks and workers. Who string whatever. Fiber or whatever gets put up. Do we have enough of those. After the harvest survey. Do we have enough of those? Or do we have to start thinking about. We've got a lot of CUDs ready to go. We've got a lot of CUDs ready to go. We've got a lot of CUDs ready to go. So we've got the intelligence from the polls and what needs to be done. Are there the people who will be ready next year to do it? Or will be, we'd be saying sitting there with. Sitting there with no one to actually perform. The work. But I. I didn't expect. To hear what I heard today and the unanimity with which. The various entities have. Not been. The coalesce around and it's been a long time coming, but chair. So thank you. And this has been. I will share that the first time. That I feel I have something I can hang my hat on. This is very technical. And not my field of expertise. So right now we know what you need. where it'll get the big bang and three or $4 million is not a whole lot as requests have been coming in. But the money is depleting. I think we all remain hopeful that more will come, but right now we only have what we have. So this may be a very good investment. And Christine, I see you're well-trained. Christine, you've got your little blue hand up. Yeah, I wanted to follow up on what Senator McDonnell was talking about because this is really, I wouldn't necessarily be concerned about that because what you've created, this is really the opportunity for Vermont moving forward. And so I think the next step is, and our COD should be doing this as well. We're all fresh and new, but I see this in our vision working with the local schools to get the training in the schools so we can produce the workers long-term. This is the future. And I will pick another plug too. You look at, I've said this when I was in the electrical world, you've got an average field line work for electric utility starts at 79,000. It makes a lot of money with overtime, yet we don't have one single female line worker in the state of Vermont. So I would certainly look at this field, try to encourage more women into this field as well. So this is definitely a great opportunity moving forward. It was training women to work in male fields. We need to talk to them. Okay, Irv, I'll just start wrapping this up because our next witness is- EC Fiber's outside crew chief is a woman. We took her out of the field. Use this table, Scott's a woman running that thing too. Okay, updated David. Okay. Madam Chair. Yes. As we go after money, it is more and more apparent to more and more Vermonters and people who are in the business world that I took quote and man wearing that proper broadband is no longer a luxury, but a necessity for this state's fiscal future. So when we're dealing with competing interests, this is the one that is gonna take us to where we need to go as a state for our fiscal future and should be embraced by all, particularly since there's a consensus amongst all parts of the state as the direction to take and where to start, whether it's starting with harvesting and then letting districts make their own plans according to their topography. But losing a construction season when there seems to be consensus would be just a terrible waste. So thank you. Okay, so we will do what we can see if you can get into the house really fast and get into the budget there. And then we'll see. And the next thing we need to think about is if CV fiber is gonna go request a good portion of what of the funds that Vita has, at some point we're gonna have to start thinking about replenishing those funds. So... Let me just take a question of hand to the group. Who would oppose doing what you'd like to do and why? Who's gonna propose, Randy, a question is who is going to be the spokesperson? No, my question was, who would oppose be against doing what's being... You mean what other interests would oppose? Correct, and why? Oh, cable companies. Okay, that's the other guy's answer. Would anybody really wanna fight you on this one? Who's gonna testify against it, for example, in the house? Comcast, CCI. And what would the basis for their opposition be? Frankly, very frankly, they won't put it this way, but CCI is fighting a rearguard action. They're trying to get the maximum possible return out of obsolete infrastructure that they do not want to invest in upgrading. And what would they say publicly? I'm not sure. Okay. Okay. This is 25-3. I saw Jeremy, and I've seen Jane, and then I see Mr. Flynn. Okay, Jeremy, have you got anything to... No, I mean, I guess I would just echo what Irv said. I mean, I think it's gonna be, you know, Comcast and CCI and Consolidated is, you know, looking at, you know, can they convert their business over to fiber? And I'm not sure that they're gonna be able to do that without, you know, without public funding. So, but they, what they may argue in public is that they may say that they can do it more cheaply. And I'm not sure that that's actually the case. Jane, did you have something? It was, I'm gonna say pretty much the same thing. It's a different mission, the for-profits and the CUDs. And Mr. Flynn. I think that, you know, there are people out here who still think this could be done wirelessly or that we shouldn't bother because of what's going on with satellite internet. And I just have one word for them, topography. Mountain State. Okay, Senator Sorokin, you have a yellow hand. Where did you come up with that? I have no idea. It's all in yellow. I got that one too. I would add better. Okay, what's your question? It's a comment and question. I'm no expert in this area for sure. But is the proposal that we're talking about is to do some preliminary workup on locations of poles, et cetera? Yeah. Yes. Yeah, I think it's not just location. It's what's on the poles that have to be moved or, you know, have to do a replacement pole, that kind of stuff. I don't speak up very often on this topic, but I do remember talking and raising some suggestion like this a month ago to Commissioner Tierney when she was giving us her plan or remember when she had a plan for $200 million. Oh, yeah, that's her auction. Yeah. And the answer that came back pretty clearly, unless you can deliver service to a home by the 30th, it's not gonna be covered by CARES Funding. If we're completed. Well, that it will have to be vetted. I think what they're saying is no, we can't just commit to running cable next year. I don't know if this is preliminary, maybe out of something not CARES Fund or maybe it's some other pot of money we need. I mean, it's worth asking. For sure. Yeah. And we may have dedicated money that's not gonna be used. We've got a second round going out, but we can check and see what's left in the $30 million pot we put out. We may have some extra money in there, but everybody needs to start talking to everybody pretty fast. Okay, Mr. Finn in that plan, and then I'm gonna have to wrap this up because commissioner Hechek is here with us and this is one area he doesn't have to worry about. Yeah, I just wanna say about using CARES Money for the Pull Harvest that under the resiliency and speeding up deployment, DPS is saying yes to line items in the $100,000 grant to be applied to Pull Data Collection. And we've gotten to go ahead on that so long as we can make that connectivity. And the assumption is that that connectivity would be made for this broader project. Thank you. But we need to get all of that verified in writing because if we can use CARES Money, it'll be a lot easier than, we do still have $180 million deficit. So... We've heard. Yeah, there's no state money. Thank you very much. Thank you. Thank you. You all have been out in the field and really, this is probably the most constructive, I think meeting that I can remember in a long time. So thank you for all your good work and keep us posted. You can email anything to Faith and she'll get it out to all of us. Let us know how you're doing. If you run into any snags and we'll see if we can smooth out the trouble waters or maybe find a way around the rapids, but see what we can do. Okay? Thank you. Thank you, everybody. Okay. Bye-bye. We are here. And committee, I actually thought we were gonna finish early at the rate we were going through the witnesses there, but it was good afternoon. I have to click off at four, but I'll click back on if you go later. I have a feeling we're not unless this gets more controversial. Now, mostly I thought I'd give the commissioner a chance to get away from COVID predictions. Oh, I appreciate that. Yeah. You knew you were gonna do that when you signed up for the job, right? Yeah, it was part of the owner's manual to the DFR commissioner role. Right. How to crunch pandemic numbers. But it came up in one of the caucuses of a whole or maybe it was the chairs meeting. There was one insurance company that has announced that it lost money in its retirement fund. And, but that brought up the question of insurance companies invest their money. What happens if those investments go south? Who, if they don't make good investments, I mean, at what point, I guess are the ratepayers on the hook for this? Yeah. Yeah, great. So I'm happy to, Chair Cummings, I'm happy to take it from there if you'd like. And I did provide a PowerPoint that I thought would be a helpful illustration, both for that general question. And then also to ask the specific question as to the loss that occurred with Blue Cross Blue Shield and its pension plan. Cause I think that'll be helpful to talk about and walk through. So Faith, I don't know if you could put the slides up or if folks have those and I can just walk through them. We have them. Or you can do it yourself. What do you prefer? If you could do it, Faith, that might be great only because I'm on my iPad. I'll get them right up. That'd be great. We do have them on our documents list. So generally, if you think of, how does any insurance company make money? There are really two ways that it gets revenue. It's either through the underwriting process, which I'll just touch on briefly in a minute, or it's through their investments. And if you are an insurance company providing insurance that's gonna last for a year or less, then your underwriting is really critical to you. Both is critical, but the underwriting is critical because you don't necessarily have these long-term obligations every year. You can rewrite your insurance policy for the risk as it presents itself. But if you are a long-term care insurance company, if you're a life insurance company and a company that sells annuities, then those long-term strategies are gonna be really important for you. And much of the proceeds that you're gonna end up paying out will be earned through investment returns, unlike a PNC company, a property and casualty company, or even a life insurer like Blue Cross Blue Shield, where those investments are important, but really you wanna get the underwriting correct. And the underwriting is basically the difference of how much premium you take in, how many claims you have to pay out, and did you have enough leftover to cover your administrative overhead? And you wanna get that ratio right and make sure that you don't have a deficit or a loss, particularly year after year. But Faith, we could go to the next slide. I'll show you basically just, again, the overview of this. You have the consumer over there represented by the individuals. You have a couple of different insurance companies here as an example. We have a reinsurance company that we're showing, and then we have this sort of retrocedent, which is like a reinsurance company on a reinsurance company, and these things called catastrophe bonds. So basically, if you think of this process, every one of these people or entities is taking on some portion of the risk. Usually we have a deductible of some kind, whether on health insurance or whether on a property and casualty, like an automobile insurance, you're taking on that first $500 or $1,000 of risk. The insurance company is taking on what is most likely gonna be the amount that a significant claim will land in, let's call it $500 to a million dollars. But there could always be a really significant loss, and the insurance company wants to protect itself as well. So it goes out to the reinsurers, that really take the risk on from a whole bunch of different insurance companies diversifying the risk even greater. And they might take on the risk that's between a million and 10 million, for example, and then they will even go out even further and offshore some of their risk to a retrocedent, basically another reinsurer, or they might issue these catastrophe bonds where if XYZ happens, then the reinsurer gets to maintain the amount of the bonds that it issued. So basically it issues a million dollars in bonds and says we'll pay you 2% except if there's a category five hurricane that strikes the United States and we experience X amount in damage, we get to keep all the proceeds from the bond issuance. So that's just to show you all the different ways that insurance companies spread the risk out across the system so that any particular hit for any one of those consumers or any one of those insurance companies will hopefully only have a minimal impact and not a systemic impact. If we could go down to the next slide, this is really just bringing home the point about underwriting, which we talked about just a minute ago. So if you just take one of these examples, your insurance company A, you wanna price all of that risk for all those individuals and try to determine what amount of premiums need to come into the insurance company so you can pay out your claims for that given year. But for whatever the difference is that you can pay your administrative expenses and whatever is left over will go into your surplus. So you'll see here in this example, the company is having an underwriting gain, they collected $1,000 in premiums, they paid out $900 in claims. The $100 is what they've retained, $90 of which went to pay for salaries, benefits and the like. And the $10 went into its surplus for reserves and its investments. So those reserves and investments are there in the event. They don't make a gain in a given year, but they have a loss or even a significant loss. So I highlighted pensions and we'll get to this in a minute, but you can see that the pensions are really under that administrative expense. That would be an expense that an insurance company decided to make for on behalf of its employees in the same way that it might decide to provide certain benefits to its employees, healthcare, life insurance and the like. Some insurance companies have decided to provide a pension to their employees and they need to cover the cost of that benefit just like any other benefit or salary under their administrative expenses. So that's just something to highlight. Faith, if we go down the next slide, again, just a pretty straightforward example, but here's a situation where in a given year, an insurance company collects $1,000, but it has to pay out $1,100. So it had an underwriting loss of $100. You still need to pay the $90 for salaries, benefits, pensions and the like. So that difference really comes from your reserves. That's really the thing that helps you absorb any of those losses that you might see year to year. And you're able to pay out of that, pay your claims and pay your administrative expenses. If we go down one more, Faith, I think we can help illustrate this again. That surplus, those reserves, those investments, that's really the heart of what we do at the department. State insurance laws govern how much reserves a company needs to have so that a significant loss will not cause them to go insolvent. State insurance laws also dictate what type of investments you can make. They need to be more conservative investments than certainly maybe even an individual might make. They need to be heavily weighted toward bonds and cash or cash equivalents with some exposure to equities, but there's a very strict protocol on what type of investments you can make. We as a DFR as the state insurance regulator, we're tasked with making sure those investments are sound, that they comply with the company's investment guidelines, they comply with our statutory guidelines as well. And those investments and reserves, those are there for the benefit of the policyholders. That is there to make sure that their claims are paid in a given year. So that's in contrast to these pensions that I highlighted under the administrative expenses. So unlike state insurance laws, if you have a private pension, that's going to be governed by ERISA and that is going to be regulated by the federal department of labor. They're the federal regulator and that federal regime dictates what kind of contributions you need to make, how much funding your plan needs to have if you're underfunded or overfunded. And again, that money that's put aside is for the benefit of those that are receiving or will receive a pension in the future that's separate from any policyholders or anything of that of the like. So when an insurance company maintains a significant loss in its investments under the surplus, that would be really critical for us because in all honesty, that should not happen under even abnormal market conditions because of how they need to invest their dollars in a diversified way and in a conservative way. So if their policyholder investments or policyholder reserves experience the significant loss, that would mean something really dramatic and systemic happen to the financial markets or they did something that was not in compliance with their own investment policies or our statutory policies. So that's something that we look at on a quarterly, yearly basis and then also in person do a much more fulsome examination every five years. But we have a thumb on that pretty regularly through common interactions with any insurance company but at least quarterly and then annually and then in more in depth every five years. The pensions on the other hand, those are again, those are investment decisions that are governed by ERISA. You can't make decisions that are in violation of ERISA and you also obviously have to make the investments in accordance with your policies that you set up internally as a company. Usually you have a pension committee that will make those decisions that are separate from the, separate from a normal board on the, or subcommittee of the board. So if you have again, if you have significant losses in your surplus and your investments, at some point if they get severe enough, you might not have enough capital left that you can continue to operate as a company that department might put restrictions on your licenses. We might have to put you into receivership we might have to take over your company. If you have significant losses in your pension, not that that's not an impact but it's a different kind of impact. If you have a pension and you experience a significant loss and you go below 80% funded. So what you anticipate to pay out your pension now and in the future is below 80%. Then you do have to make a cash contribution to get back up to 80% for example. And then obviously you have to have a plan to work back toward getting a fully funded pension as well. If we go to the next slide, Faith, I'll again just drill down on the specifics of what happened here with Blue Cross and again, just talking about it in general terms. But so if you have a significant loss that results in a significant underfunding and when I say significant underfunding I'm really talking about, are you below that ERISA threshold of 80% and if you do have that then you're gonna have to have an immediate contribution of cash into your pension fund to get you back up to that sort of level and then you're gonna have to make a payment or payments over time per ERISA to get back up to sufficiently funded. If you have a significant loss and it results in just sort of normal underfunding you're under by 90%, 85% then obviously you have to make sure you have enough on hand to pay individuals over time but that's not a immediate issue. You can work on that again over the years and even over the decades. Again, if you have a significant investment loss like what happened in, for example, Blue Cross Blue Shield you wanna see how your other investments play out throughout the given year. In Blue Cross's example, they liquidated from the position that they held and they did reinvest that cash back into the market when the market was low back in the end of March, early April and the market has come back up considerably since then. So that's something to keep in mind also. And then last, this is a general statement but it applies in the situation for Blue Cross Blue Shield. Is there any legal action resulting in recoveries from the pension loss that you experienced? And I will say that from what's available publicly the Arkansas Teachers Retirement Association was invested in the same product that Blue Cross Blue Shield National and Blue Cross Blue Shield of Vermont was invested in and last month they filed an action against the company that created the investment. So there are, I think legitimate legal avenues to pursue for those that were impacted by this specific example but you really want to, I guess my point here is you really want to understand that a significant loss in your pension might not necessarily result in an immediate financial impact. It's something that you have to certainly address. You have more time to address it in many circumstances and there's other factors that could come and help relieve some of that loss including how the other investments in your portfolio perform. And then if there is something that was either some sort of misfeasance or something that was wrong about how the investment was made on behalf of people making the investment for you whether there's any legal action and recoveries that can come in and make your pension plan whole. So in this case, just to put a finer point on it Blue Cross Blue Shield fortunately had wasn't a situation where they were overfunded in their pension, they had a very they were in a very good spot when it came to their pension prior to this loss that they experienced. The loss was certainly something that happened during very volatile period in the stock market. Losses, I think there was a record three or four days within a couple of weeks where the stock market had gone up more than it ever had at least the Dow Jones and the history of the Dow Jones industrial that also had gone down more than it had ever had in its history as well. So very volatile period in that February, March period leading up to the pandemic really hitting the United States hard. So some very unusual events happening that impacted the financial markets during that period of time. So Chair Cummings, that's really the overview of the broad points and some specific points as it relates to Blue Cross but I'm happy to answer any questions that folks might have. Answer, I'm listening to this and saying, oh yeah, the state of Vermont has learned a lot about pensions. I think we're in that pay it back to 80% plus all kinds of interest in penalties. So the same thing would basically happen to an insurance company or any private company they would be required to put money in. I guess the question and they could get that money from their other investments but eventually what could it come from rates if all else fails? Yeah, so if you think of, if you remember that one slide where it showed the $100 surplus and then some of it went to administrative costs, some of it went to the actual surplus. So if you think of that $90, I mean, over time that has been going to pay salaries and benefits and the pension. So the pension did come from rates over time and from an ongoing standpoint, the ongoing contributions that Blue Cross needs to make will be coming from those administrative costs. Just like how they pay their salaries or healthcare or any other benefits that they get. So there is a direct connection between the premiums, the revenues that they're collecting and those administrative expenses. I will point out though that Blue Cross, Vermont does have very low administrative expenses compared to the percentage of premiums that they bring in. So I think they trend somewhere between 6% and 7% of all the premiums that they bring in go toward administrative costs. And if you remember under the ACA you can't have more than 20% of your premiums go to administrative costs. So that's kind of the outside line there and they're sort of safely within it. And they usually are better than any of the other Blue's plans in the country on a proportional basis. So their administrative expenses, they have kept those low historically and done a good job on that. So could those administrative expenses increase because they need to provide funding to the pension? That's certainly a possibility, but I think they need to see how their other investments are gonna do this year. They need to see if they're successful in any legal recourse that they might pursue. Those are two really big questions, I think. And even if neither of those pan out if their investments didn't perform that well if they don't get any recovery then they were in a good spot being overfunded on their pension that they can likely repay and get back to a position of a fully funded pension with pretty minor impact if any impact on needing to increase that administrative expense. Any questions from the committee? I should also just mention, Chair Cummins that we opened in July a targeted examination on Blue Cross Blue Shield. So I mentioned every five years we do a full investigation or examination of the company. In July, we opened a targeted examination just on the pension issue. We wanted to look at the corporate governance around the decision-making on the pension. When were those decisions made? Who made them? Were they appropriate? Like I said, we're not the regulator of the pension or the federal DOL is but we still regulate them as a company and we wanna make sure they followed good corporate governance practices. So that's something that we're right in the middle of still that's ongoing but just wanted to make sure the committee knew that that was a step that we took and felt was appropriate. You're investigating just to make sure everything went according to Hoyle. All right, I'm not seeing any questions. So thank you. If that question comes up, I think we have an answer. All right, thank you for taking time to be with us. Now you can go back and count COVID spreader events. Well, I appreciate it. And it's good to see everyone and everyone's doing well and staying safe. Keep them out of Washington County. You're one of the few public servants I've seen who's clean shaven. What's your- It's true. Everybody else is starting to look like Santa Claus. So I've gotten down to one day a week. It's usually Friday morning before the press conference but I thought I should shave today for you all. I appreciate it. Okay, we will see you. Thank you. Committee. The agenda is up. We've got some more people to come in and talk to us. I think they may be talking more about the wireless. Is that right, Randy? Or that option? We're talking about the wireless and also in general terms about the state of our telecommunications planning. Okay. All right. And of course we will ask them about the things that we heard today. Yes. Yeah, today was actually very good. I will get a list of faith this evening with just some additional questions that she can pass out if need be just the general areas of inquiry that we might have. Okay, that sounds good. I have moved on the request of the chair of Natural Resources, the Act 250 bill up. They would like to have it back ASAP, like by Friday. All I said is I would try. But we have, I think the question about the bill back is the only one that there seem to be any questions on. I don't think anyone cares about putting driveway footage or road footage on the septic permit. Well, I do, but I don't know as it's a subject for this committee, but I have concerns about the bill in general, but I think a lot of people related to this committee. Yeah, and I am trying to, because I don't know enough to get in the middle of it. Apparently there's discussions, but I will try and get that out on Wednesday, but if something important comes up, we won't. Where's Thursday? Well, there it goes. Renters rebate again. We've got all the advocates coming in. Senator McDonald, I know you had a concern about a dedicated funding source, but I think what we heard the other day is that renters rebate went to the general fund and has been there for several years. It doesn't have a dedicated funding source. It's kind of been being dealt with now more as a grant for people of certain incomes that rent for more of a renters grant or renters and not tied directly to the property tax. And I think- So does the proposal propose to send more money to renters who have been not treated nearly as equitably in recent years as homeowners? I think we will leave that to the experts tomorrow who work with the renters. Just if more money is going to be appropriated- Sounds, yeah. And I did alert the chair of appropriations that we were taking it up in case that would cause her to hyperventilate and it didn't. So we can go forward with it without getting a major that I know of, but at least I didn't form them. That one is coming up. The dental insurance we have not done well at finding a dentist probably because they're working. Blue Cross Blue Shield says it really doesn't do dental insurance. So we have the general counsel from Northeast Delta Dental coming in. I know this was a real issue in New Hampshire, in Rhode Island, where one company had two thirds of the market. And they therefore pretty much could say you do, if you want to carry our insurance, we're only going to cover fillings and yada yada, but you will, and at that point it was mostly cosmetics, but you will do whitening and you will do cappings and you will do this for, for this price. And the dentist were saying, well, that's how we make our money. And so, and it wasn't that big an issue here, but apparently it's made its way up. It was a good eight years ago. I haven't been to, and coil since maybe 2012 or 13, and it was one of their model bills. So that's coming back. If we, I'd like to get that one out. And then I'm starting to get things, but we have put 674, which is the age bill on the farmers and current use in the house sites and cabins and how much you have to take out if you put up a couple cabins for folks to do farm visits on. There's a couple of folks that are kind of hanging in the middle there, they're like that done. Friday, we are still holding open. So unless something emergency shows up or we don't get through the agenda, I think Friday, we will have off at this point. No guarantees, but yes, I don't book into an expensive spa for Friday afternoon. Wearing your mask. I think that's it. Anybody wants anything added, subtracted, let me know. Okay, have a good rest of the day. I hope some of you have got some, we don't. Ending live stream now. Okay.