Rural Broadband Stimulus Project in New Mexico Threatened, Saved

A last mile broadband project in Taos, New Mexico, encountered a temporary snag and appears to be back on track. The situation highlights the potential conflict created between federal and state entities. State officials acted to show their support and now expect the project to continue.

Kit Carson Electric Cooperative (KCEC) was awarded a $45 million grant and an accompanying $19 million loan from the American Recovery and Reinvestment (ARRA) stimulus funding. The project is expected to span about 3,000 square miles of New Mexico and will include smart grid technology in addition to high speed broadband to rural communities. From a story on the USDA website:

The Kit Carson Electric Cooperative (KCEC) “fiber-tohome” project will allow greater bandwidth, providing the quality necessary for applications such as telemedicine, teleconferencing and video sharing for education, business and entertainment. Once completed, the co-op’s project will make broadband service available to 29 communities, reaching about 20,500 households, 3,600 businesses and 183 community institutions, including hospitals, schools and other government facilities. Two Native American pueblos will also receive broadband service once the project is complete.

In September, 2011, the New Mexico Public Regulation Commission (PRC) included as part of a rate order that KCEC spin off its broadband business into an independent company.  J.R. Logan covered the story in the Taos News:

The PRC's original order stated that Kit Carson must create a separate Internet subsidiary to protect electric ratepayers from potential losses, or explain why such a separation was not feasible.

According to the article, KCEC received communication from the RUS looking for clarification on whether or not the order was entered and would be followed. The RUS wanted a definitive answer because divestiture would violate the terms of the agreement between KCEC and the RUS. The entire project was in jeopardy.

RUS Logo

According to another Logan article, feds froze funding last week for the project, which began construction in July. One hundred jobs halted immediately. With the potential loss of an additional 300 future jobs, the state PRC chose to act right away.

Jackie Jadrnak covered an October 16 hearing of the PRC for the ABQJournal North. The commission decided unanimously to remove the requirement for the spin off, hoping to save the project and get the money flowing again.

New Mexico’s utility regulators today removed an obstacle that had blocked funding for a just-started $64 million broadband project in northern New Mexico.

“We’re going to put this to rest,” Commissioner Patrick Lyons of the Public Regulation Commission told a crowd of people, who overflowed the hearing room into the hallway and lobby and cheered the commission’s actions. “We need to send the RUS (Rural Utilities Service) a message that we support this.”

If the project had been scrapped, the coop would likely have had to reimburse the $12 million already spent on the project. The project status looks to be restored and the community appears to be moving beyond this bump in the road.