 This is the delayed start of the one o'clock hearing on Thursday, May 20th, and I'm Tim Brigham, the chair of the House Energy and Technology Committee. We are very pleased today to have a group of Dartmouth students who I had the fortune of meeting. Gosh, I can't remember how long ago it was now, but it was many months ago. And they had approached me with a question about a public policy class that they were taking and were there any research projects of interest to this committee that they might be able to dig into. We talked about a number of issues in particular that this committee has been interested in broadband issues and also being the energy committee talking about some of the convergence between broadband expansion in the state and also how that's of interest to energy utilities, electric utilities essentially in the state. And they have produced a paper, a research paper where they've looked at some of the things going on in a number of states. I believe that paper is posted to our website today. It's called Expanding Rural Broadband Access in Vermont. And I want to welcome the three students who worked on this to our committee today. Monisha, Ian, and Miles. And I understand that in taking us through some of the findings in your paper, you're going to share a PowerPoint presentation. So I'm not sure which one of you is going to do that. But I'm going to hand the mic over to you. And thank you very much for being here today. If you can expand that a little bit, Ian, that would be great. But can everyone see that? Yeah, can you put it on and present it? Yeah, it looks like you're going to. Yeah, perfect. Terrific. Thank you. Hello, I wanted to take a minute to thank you all for having us today. We're really excited to be here. And we've learned a lot throughout the course of this project. So as Representative Briglin has mentioned, we've researched and compiled about a 30 page report that's available, I think, on the Vermont state website as well as the Dartmouth Rockefeller Center website. It's just sort of a compilation of all of our research, our background studies, and case studies that we want to interview that we did for this specific project. So we are a team of students at the class of 1964 Policy Research Shop at Dartmouth College, and we wanted to give you an overview of our report today focused on expanding rural broadband access in Vermont. As mentioned, hi, I'm Monisha. I'm Ian. And I'm Miles. Good, so just right off the bat in this presentation and in the report, we talk a lot about broadband and just so we're all on the same page. Broadband, we're using the FCC's definition, which is internet speeds of 25 megabits per second, download speeds in three megabits per second, upload speeds. And that's sort of the baseline, but we're seeing increasingly demand and then necessity for higher speed rates. And so, you know, overall in Vermont, we have a, you know, serious problem of lack of rural internet access. So Vermont's a largely rural state with about 60% of its population in rural areas. And over 22% of Vermont lacks home broadband access. And that's concentrated, particularly in those rural areas. And, you know, we've seen it a lot in the past year with work from home, remote learning, and those sorts of things. But there's also, you know, a lot of other important reasons why broadband is a necessity. You know, for example, in those rural areas, having access to telehealth is, you know, a really important issue, as well as there's, you know, very important energy implications because some stuff we'll get into later. But the ability for broadband to allow for sort of more efficient energy use. And one potential solution of offering this broadband in rural parts of Vermont is through electric utilities cooperatives, which are member-owned in the state and provide electric services to their members. Across the country, there are about 900 electric utilities cooperatives. And many of them are already offering internet services or are looking into offering it in the future. In the map on the right, you can see that the areas in gray are areas with electric cooperatives that are offering broadband services. And the areas in blue are otherwise electric cooperative areas that are not offering broadband currently. There's an interest in ensuring broadband access for consumers of cooperative electric services because it provides another service to their members in rural areas. And it also, as Miles did, creates a more efficient system that allows the electric cooperatives to have a more efficient infrastructure and save costs. There are two cooperatives in Vermont currently, Washington Electric Cooperative and Vermont Electric Cooperative. So why does this convergence matter? First of all, broadband allows for more efficient metering and better use tactics from the electric grid and from those electricity providers. And that's going to allow to reduce and keep costs down for producers. And that can be used to pass on that reduction or prevention of an increase in costs to consumers. So there's a benefit to both sides there as well as there's a climate benefit associated with reduced energy use through more efficient energy. Furthermore, there's also a significant benefit in terms of the infrastructure side of this. So in rural areas, it's timely and inefficient to go send multiple trucks out to service the same area. And we can send one truck to service both cables that will reduce the costs of broadband expansion. And that's really key because right now one of the biggest barriers to providing broadband for rural areas is the fact that they have low population density. And that low population density means that it's not economically viable in many areas with the upfront costs of installing infrastructure to meet those back over time. So by tying these two services together, we have the potential to lower that break-even point and make it more viable. And this is furthermore another part of this is the fact that utility providers already possess assets like the poles and electricity that are already needed for this service. So that can further reduce the costs. There are some concerns, though. Number one is that electricity is a heavily regulated industry and that while there are these long-term benefits associated with tying broadband to electricity, in the short term, these are large costs that aren't going to see direct benefits to the energy consumers. And the other thing that came up again and again in the interviews we conducted with experts is that while they sound similar in practice, broadband and the electric grid are actually quite different in terms of the sort of infrastructure and technical knowledge aspect. And that's something that makes it a lot more difficult in practice and is sort of deterring the providers from wanting to get into this. In our report, we provided a pure state comparison with four pure states. We identified these states by three factors. Like Vermont, all four states were ranking in the top 10 in the country in terms of the percentage of their population living in rural areas. We also looked for states that had highly available broadband, especially in rural areas relative to other states. And third and finally, a presence of cooperatives that are offering these broadband services. The four states that we found were New Hampshire, North Dakota, South Dakota and Alabama. And while we went into all four states in our report today in our presentation, we'll be focusing on South Dakota. Yeah. So South Dakota is a very rural state yet it has some of the best broadband access in the nation in these rural areas. So about 75% of people in rural areas have broadband compared to 60%, which is the national average. And I think one of the really interesting aspects is through all the sort of different entities in this space, there's a long history of cooperation rather than competition. So there's sort of two key groups. One is the South Dakota Telecommunications Association, and the other is the South Dakota Network Communications. And so these are sort of large groups of smaller providers like cooperatives, some tribal providers and municipal providers that work together. And this allows these providers to sort of have their own regional service areas yet rely on some of the same infrastructure. So SDN communications is sort of like an interstate highway almost for broadband, where it's some large, a large system of wiring of fiber optic cables that sort of go across the state and connect to all these different smaller networks. And that sort of, and it's owned by 17 different smaller providers. So that allows for sort of cost savings and coordination. Additionally, the states also done a really impressive job of using sort of federal funding to take advantage of different programs and expand broadband. So we go into a bunch of different numbers in the report, but some of the ways that they've done this is by having sort of some assistance from the state. So the Economic Office writes letters of support for these grants, and they issued their first ever state broadband report to get more points on some of the USDA reconnect funding grant applications. And these federal funds have allowed areas that would not be feasible to otherwise service to get broadband access. So there's one area that we came across in our case study that has about 70 people, about 70 different subscribers living in an area of about 150 miles of wiring. And so normally that would not be, you know, even for a non-profit cooperative, not be viable because the break-even point is about 12 subscribers per mile. With these federal funds, they've been able to service that area with less than one subscriber per mile, which I think is pretty incredible. And, you know, finally, the state has made a really large funding commitment to rural broadband. So the governor just announced a program to spend about a hundred million dollars between state funding, some money from the CARES Act, and some public-private partnerships. And they're anticipating about five to one returns, but that's obviously over a long-term period. So it's a pretty significant upfront cost from a state that's not necessarily known for, you know, big government spending. From all these case studies, including the South Dakota case study that you just heard, we identified in our report some key steps to improving rural broadband in Vermont, the first of which is encouraging cross-sector collaboration, including and especially collaboration between the state government and providers such as cooperatives. The second is to deal with potential changes to the regulatory framework to make it easier for groups for non-traditional internet service providers to enter into the internet service provider space. And the third is to figure out a means of addressing some of the fiscal challenges, whether that be through regulatory changes or through fiscal support for these non-traditional service providers. So to briefly delve a little bit further into our first takeaway, which is related to cross-sector collaboration, what we found is a key theme throughout the case studies and our own interviews that we did in ground research within the state of Vermont is a hesitancy among individual actors to sort of take the risk and investment associated from either moving away from the electric utility sector into the broadband sector or sort of this convergence or just making any sort of risk or investment associated in general. Naturally, there's a lot of money that would go into this, a lot of resources as well as personnel, so it makes sense that individual actors are worried to go into this kind of project by themselves. However, what we do see as a possibility is leveraging the unique strengths and weaknesses of various actors across the state to create the outcome that we're looking for. So if we look to the map on the right, we see Green Mountain Power in Light Green kind of has a really broad reach across Vermont. It has infrastructure for telephone poles and all of those locations and it has a lot of capability and reach that can become really useful in a project like broadband expansion versus when we look at something like the electric cooperatives which are concentrated in the dark green and the dark gray on this map, we see a lot of community buy-in as their owned by their members and that's really powerful and kind of propelling forward projects that people are truly invested in versus when you look at the communication union districts, they have what we've mentioned as the non-profit advantage as a legal governmental entity. They don't have to render the same type of profit that a private investor owned utility like Green Mountain Power has to do. Working at these unique strengths and accounting for the weaknesses can allow these actors to work together in a really powerful way and encouraging this cross sector collaboration can be key sort of improving broadband access across the board in Vermont. However, this is also dependent on improvements to move the legal landscape as well as various funding paths. So when we look a little bit towards the state of this legal landscape and looking to various regulatory challenges and solutions, we can learn a lot from various adaptations that our states that we looked at in the case studies have made. For example, one of the main barriers that we see in Vermont is regulations against cross subsidies for non-electric services. For example, this prevents things like cooperatives and other actors from subsidizing broadband activities which can prevent them from moving into the sector as a whole. This regulation is very effective for preventing potential upward rate pressure. However, in the long term, lifting this ban against cross subsidies can have a long term benefit to both the electric utility sector and the broadband sector that can lower rates across the board. Another concern that we found among actors when we were interviewing key players in these Vermont sectors was concerns about right of way policy. So various land ownership regulations and management concerns were incredibly confusing to a lot of the actors, but in addition to that added a layer of complexity that created really tangible concerns for who owns what when it comes to telecommunications infrastructure. So as potential next steps on how to address this, we could potentially amend cooperative chargers just to support to require support for broadband expansion, sort of in the way that when there was demand for electricity in rural areas, cooperative swarms, we can amend the chargers to kind of address the same need for broadband in these areas. While this might create a short term upward pressure on rates, this has the same long term additive benefit that's been discussed, and we could potentially mitigate that short term upward pressure through the expanded subsidies. Furthermore, we could also allow utility providers to cover costs of make ready improvements, which are just minor adjustments to infrastructure. This would enable the internet service providers to put fiber on existing polls, allowing the ISPs to bear the cost of installations, but actors like Green Mountain Power or the Cooperatives to cover the upfront costs, which would then allow the ISPs to build out networks in these more rural areas. Green Mountain Power has actually already petitioned the public utilities commission for this change, making this one that could be making this a change that could be potentially very beneficial. There are also fiscal concerns that need to be dealt with in order to expand broadband access in rural Vermont, the first of which is dealing with the low profit margin. There is already a low profit margin for traditional internet service providers where they usually do not go into areas with less than 20 to 30 subscribers per mile. Nonprofits such as CUDs or cooperatives have an advantage because they don't need to maintain the same profit margin as traditional ISPs, yet even then they're limited by the costs of infrastructure in the lack of guaranteed territory, meaning that in order to break even, they often need to have a bare minimum of, as Miles said earlier, about 12 subscribers per mile. There are also large upfront investments that are needed, as well as new technical expertise that needs to be brought on, and that needs to happen before in order to build out the infrastructure, and any recouping of those investments only happens after the infrastructure has been built. Some ways to deal with this problem are through federal funding programs, such as those through the Federal Communications Commission and the Department of Agriculture. There are some problems with this, including an award from 2010 to Vermont Telephone that provided federal funding for a large service area in Vermont and has since prevented federal funding in that service area in that protected area. This has been a major barrier to federal funding for broadband in Vermont since, but there are other opportunities that seem likely to increase in the future, but it's still important to address these concerns. There's also the potential of expanding state programs like Act 79 to provide fiscal support for nontraditional ISPs, and cooperatives can also issue bonds or work with municipalities to raise funds for this expansion. Again, we really wanted to thank you all for taking the time to listen to us today, and if I can't imagine how busy you all are, but if you have the time, we do encourage you to read our report. We do delve a lot further into the overview that we presented today, but to sum up, we were able to touch upon the insufficient internet connectivity that's present in a lot of rural areas in Vermont, and then also address the realities of a convergence between the electric utilities and the broadband service sectors, which have both positive and negative outcomes. We're able to do this through four case studies that led us to the key conclusions related to cross-sector collaboration and regulatory and fiscal solutions. Thank you so much again, and we're happy to take any questions you have now. That was outstanding. Thank you, Manisha, Ian, and Miles. That was great, and we just passed a bill yesterday that I'm happy to say incorporated some of these ideas, so I feel like you were working in parallel with us. Ian, if you don't mind taking the slideshow down, then I'll see each other. That's great, perfect. I do have a question, but I'm going to hold on to that question and first defer to members of my committee who have questions. First, Representative Sebelia, and then Representative Rogers. This is excellent. Thank you so much, and thank you, Mr. Chair, for ensuring that we were able to see this work before we adjourned. I have one question, something that caught my ear actually listening to you, and then I went back in and I've been looking and can't quite find the reference. So you talked about the South Dakota investment and the return of five to one on that. Can you and I couldn't quite put my finger on the reference. Could any of you speak a bit more to that? Yeah, so I believe that that's the, like just the long-term economic sort of projection that they're anticipating in terms of from the sort of added value of the broadband investments in the long term. So like an added property value? I think that's sort of total economic output that they're anticipating from all the different things. I can try to find the exact wording of that. That'd be awesome. If you do, if you can, you know, forward it into our committee assistant, I would be really interested in looking at that. Thank you, Mr. Chair. Representative Rogers and then Representative Yantacha. Thanks for being here. I also had a question about the South Dakota example. Do you, I don't know if it was within the scope of what you looked at, but did you delve into kind of the nuts and bolts of, you know, what type of, what technology of internet service was being provided and how they actually went about that? Like fiber, DSL. Yeah, I mean the biggest one is fiber because it's, right, future proof and, you know, a lot of the other kinds of, you know, DSL or other satellite, anything like that. Just don't offer the connectivity speeds feasibly to like be a worthwhile investment. So, you know, a lot of experts are anticipating that the definition of broadband is going to increase in the next couple of years and that within, like, especially if we keep moving in a direction of, you know, everyone in your family is taking four Zoom calls a day that most, you know, gigabit download speeds might be the standard soon. So, I think anything sort of other than fiber is generally probably not worth it. And that's what most of these expansions in South Dakota are, like the Dakota Carrier Network is basically this, like, big fiber highway. It's like the way the experts there told me to think about it, like an interstate highway literally of fiber that like is running across the state now. Representative Ian Tuchka. I'd like to add my thanks for a great presentation. I think you guys did a lot of good work there. Definitely deserving of some academic credit. I managed to get through about half of it reading before your presentation. And one thing, I just want to clarify, SDN and SDTA, the South Dakota Network Communications and South Dakota Telecommunication agencies or whatever it is. Those are telecoms, right? They aren't utilities, electric utilities. Yeah, that's correct. So, I think that some of the other case studies are actually cooperatives that are electric utilities cooperatives. These, we sort of still looked at because they have kind of a, obviously there's a difference, but they do sort of follow a similar model and path for cooperation that we think Vermont could use. But that's correct there. In that case, they were existing telecommunications cooperatives. Okay, thanks. And I think the work that we're doing, I think reflects the same sort of ideas that were presented in your paper, as Chair Briglin said, that we're working with more federal funds, which I think South Dakota took advantage of. And we're trying to integrate a number of different entities and helping to build this out. So, I hope the model is as successful as South Dakota's was. And more so because we want to get to 100%. If I can jump in really quickly, I think one example of a case study we did that was specifically electric cooperatives and very recent was New Hampshire Electric Cooperative, which I think is their main electric cooperative, just piloted broadband projects for I think it was 900 citizens across like four or five towns. And they were able to run fiber through their cooperative directly to households across New Hampshire, which was really interesting because they are specifically an electric cooperatives and they had to amend their charters about two or three times just to get to that place. And a lot of it was due to the urgency created by the pandemic. So it's definitely very exciting to see where states are headed in this case in particular. All right, I saw that. And I also saw that they established communication union districts as well, which modeled after Vermont's to learn from Vermont. I'm going to call on Representative Pat next, and I'm going to warn our witnesses that Representative Pat is the former managing director, executive director. I can't remember what his title was of one of Vermont's electric co-ops so so caution to you. I just really I would be happy to talk with you folks. I don't want to take up time now, but we're happy to talk with you folks separately at some other time about both the similarities and the differences between the co-ops and their history and the regulatory structure in Vermont versus New Hampshire and South Dakota because they're quite different. And in New Hampshire's cases, you probably know that co-op is really huge, both in territory as well as members compared to the two co-ops in Vermont. So I don't want I don't want to get into that now, but if you're interested, I'd be happy to talk with you further. We could set up a separate Zoom meeting. That's great. So I will tell you that my question already got stolen, so I can't even ask it now. Unfortunately, I do want to share with you to geek out a little bit on the statistics. As as our student witnesses probably know, there was a significant amount of federal stimulus that was that has come out in the last couple months and that Vermont is going to take pretty active use of for broadband. There was treasury guidance that came out as to how that money could be used, and it's very relevant to some of the things in your report. But just statistically, I thought this would be interesting to the committee. In that report, it says that prior to the pandemic, in the fourth quarter of 2019, the average ISP subscriber, and this was done at a massive survey, used about 344 gigabits per month. And in the fourth quarter of 2020, when we're well into the pandemic, and I'm guessing this actually is going to continue because so many more people are working at home now, but that that amount increased by about 40% over that year. And it kind of goes to how the need for speed has massively increased in the last year. Because, you know, as you mentioned at the top of your report, so many more people are working from home, getting health care from home, being educated from home, those types of things. So, you know, your point about the likelihood that the FCC would increase the definition of broadband from 25 three to something higher, probably 100 over 100. I think it's quite likely in the next year. So I'm going to bring this discussion to a close, really appreciate the work that you've done, and sharing it with us. And, you know, if you continue to be interested in these issues, to stay in touch with me, to take Representative Pat up on his invitation, he has encyclopedic knowledge of how electric co-ops work and actually just the electric world works in Vermont. So again, on behalf of my committee, thank you for presenting us with this information. And we posted it to our website. So appreciate you being here. Thank you so much for having us. If you guys have any questions for us, I think Representative Briglin has our contact information. And we definitely learned a lot through this process. Thank you. Great. Thank you. And good luck to the rest of the academic year. For representatives on the committee, our academic year is almost over. And we have hopefully another, I don't know what, 36 hours to go here. And we have one bill left to see itself through. And this is a bill that Representative Sims reported back in March. It's miscellaneous energy bill that we talked about yesterday and took some testimony on. That bill is going to be up for action tomorrow on the floor. The Houseways and Means Committee took a fair amount of testimony this morning on this actually. I'm just talking about some of the new tax things that are in there. They took a straw poll in support of the bill. And I believe that vote was unanimous. I think it was 10-0-1. But it was interesting discussion if anybody wants to tie into that. I think it was this morning at 8.45. So what I am hopeful we can do in the next 20 minutes, maybe it doesn't even take that long. But I'm in hopes that we can have some committee discussion. Any advice for Representative Sims as she's the reporter of the bill? And I would like us to take a straw poll to give an indication as to where our committee is in support of concurring with the Senate proposals of amendment. Representative Sims, I'm not sure. Oh, I see Representative Pat's hand up. I also want to ask Representative Sims, which is anything she wants to share with the committee. But go ahead, Elmer. Actually, my hand was up from before, but I was about to put it up. Couple things. First of all, based on the discussion and testimony we already had, I would support concurring. I'm just curious whether I'm assuming the bill probably passed the Senate with what I think was a one-sentence amendment from Senator Purchlick clarifying that regarding storage, we're talking about electric storage and not other types of fuel storage. So that amendment was not made, and I don't know why. It was in the calendar, but the bill ultimately wasn't amended with that. Catherine, I don't know if you heard why that happened or why they dropped it. I heard some mention when Senator Pearson introduced the bill that there was not consensus on that language from Senator Purchlick, whereas the rest of the tax stuff really represents a consensus of the myriad stakeholders that are involved in this important issue. Okay. Great. Any committee discussion or questions that people have? Again, I feel like I've listened to a lot of testimony online about this in the last 36 hours. Mike, Representative Natashka? Yeah, since that was brought up, that makes me be a little bit concerned that that definition of energy storage facility could pertain to fossil fuel storage. And I don't think we really want that to apply to that. Yeah, I agree. That is certainly not the intent of the bill. And the other thing that I would say is that much of this storage language is requiring a rulemaking process. So there's certainly an opportunity for that to be clarified in the rulemaking process. But yeah, so I'm not sure what the circumstance was of that process. I don't know of how... Well, actually, I'm going to get over my skis pretty quickly on that question. So I want to say more. So in the limited time that we have, assuming that we're going to adjourn tomorrow and on Saturday, we will be hard pressed to propose an amendment to this amendment. Yeah, I think that train has left the station. I certainly think that it is possible to work on this issue again unless the PUC closes that door in the rulemaking they do in the next six months to get some consensus on that issue. And is it the PUC that's going through rulemaking or department? PUC. PUC, okay. So what is the timeframe for their rulemaking? I don't know that off the top of my head. I think that they have a rulemaking, actually it's open right now. On this, on energy storage facilities? I don't have the answer for you off the top of my head, Mike. I have to look. Okay. Well, I guess just to finish up my comment, we can always come back to this next year if we think that needs to be more restrictive. Absolutely. Any other thoughts or questions from members? You know, as we talked about yesterday, I think the changes to this bill in the work that we did are de minimis. I mean, there are, you know, I think that 30 day deadline for the PUC to issue a CPG or it being deemed having been, having been issued, that was stretched out to 45 days. I think there are a couple other definitional things that really were de minimis. I think that the real change here is the, is the clarification on the battery storage taxation. I'm sorry, Representative Sims. Yeah, thanks. Just getting a little bit more info from Senator Pearson. That sounds like Department of Public Service couldn't agree to that language on the amendment and the amendment doesn't maybe really fully address the issue. So it sounds like really something to probably continue to look into next year. In terms of the additions to the Senate, you know, glad that we got to hear from VEC and Rev yesterday and the ways and means was able to take more testimony. I think it seems clear to me that, you know, our companies want to pay taxes on energy, large energy storage facilities and this provides them with really important like clarity and I think as Ann Margolis said, like rules of the road that this is an opportunity to provide, you know, clear formula for how state and municipalities value and tax storage based on the energy storage capacity. And, you know, we certainly didn't have a tremendous amount of time to process all this, but I think they're they're good additions and would like to see us move forward with supporting the amendment. And I would also say something that I had forgotten because of kind of the flurry of activity on this bill in our committee in the last day or two was that we did take testimony kind of at the end there where there was interest in multiple stakeholders in taking this type of action. But I think there was also an acknowledgement in our committee with crossover kind of looming that we were not going to get to this issue in time to get it into our bill before we pushed it over to the Senate. So I as much as I would have liked to have had this two weeks ago to chew on it a little bit, I appreciate that the Senate did put this in because I think it was something that was sought by, you know, everybody involved here from the regulatory to the Department of Tax as well as, you know, the folks who are who are going to be putting these these types of facilities in place. So if there are any other questions or oh, I'm sorry, Catherine should I hand up still? Sorry, Mrs. Dribbling in here. Also hearing that, you know, that section around the definition around energy storage in the aggregator piece is yes, maybe it might be open to fossil fuel, you know, energy storage facilities that are capturing energy produced by fossil fuels, but all that really means is that they're subject to a CPG. And, you know, that's probably not not the end of the world. So maybe just a little additional sort of context about what that would mean. Yeah. Good point. I would like to simply do a straw poll of folks. I don't think we need to take a formal vote. And I think I can see everybody except Representative Sherman if Heidi is still here. But I'm just going to ask, okay, I'm just going to ask for hands for those who would support concurring with the Senate proposal of amendment. Great. And I saw that as unanimous with one absentee. Mike, did your hand go up there? Are you good? I was raising my hand. You're putting your digital hand up. I got you. Good. Excellent. Okay, well, I'm going to adjourn our committee now and give you 15 minutes for lunch and appreciate your attention and questions and stay tuned for what we might have on the calendar for tomorrow as well. And Representative Sims, we are right behind you as you are offering up your report tomorrow. Fortunately, I believe Representative Elder from Ways and Means will also be there with us so that I can yield all tax related questions.