Financial Accountability for Broadband and Electric Associations

By Matthew Nicaud
October 28, 2021

In 2019, the Mississippi legislature passed the Broadband Enabling Act. This legislation gave Electric Power Associations (EPAs) the legal permission to use their existing infrastructure to bring broadband service to their ratepayers. While this has seen some success in expanding broadband access in the state, some key accountability reforms could cause better outcomes.

To grasp how broadband services are being brought to citizens via the EPAs, it is important to understand how they are structured. Most of the EPAs in Mississippi were founded in the 1930s and 1940s to bring electricity to rural areas. These entities are non-profit organizations operating under the direction of elected board members. They are also known as “electric cooperatives” or “electric co-ops.” They have a monopoly over their service areas, and the costs of operation determine the electricity rates that members pay.

This provides the context for the broadband rollouts authorized by the Broadband Enabling Act. Before the Act, EPAs were not permitted by law to operate as broadband service providers for their members. In the wake of the law’s passage, several of the state’s EPAs began conducting feasibility studies to determine the cost of broadband integration and the effects of such integration on electricity rates.

Upon review of the cost, some of the EPAs opted not to integrate broadband operations directly within their organizations, many due to cost concerns. Instead, some EPAs opted to enter into collaborative agreements with private sector internet service providers that permitted the use of electrical infrastructure for broadband deployment.

However, some EPAs did decide to become internet service providers for those in their services areas. The funding for these operations has been provided through a combination of federal, state, and local grants, along with the revenues generated from the electricity rates themselves.

Because individuals within an EPA’s service territory are subject to potential rate increases because of broadband network operation costs, accountability is important. Unlike a typical free-market context in which there is the element of consumer choice, electricity is different. In Mississippi, the government permits consumers to acquire electricity only from the entity that has been granted that particular service territory.

Thus, in the case of EPAs operating as electricity providers and internet service providers, mismanagement of the EPA’s broadband program can lead to increased costs for electrical consumers if a broadband program cannot sufficiently pay for itself.

This establishes the necessity that EPAs are accountable in the way they finance these broadband operations. While EPAs are required to regularly report to the state’s Public Service Commission regarding the legal compliance and financial records of electrical operations, the law is less clear on the extent of oversight for broadband services. Broadband service is not quite the same.

The Broadband Enabling Act does require an annual compliance audit for broadband-offering EPAs. However, financial and performance audits are not currently required by law. This presents potential issues for the citizens in the service territories of these electrical cooperatives. An EPA might be technically in compliance with the law, but that does not fully account for the finances of the broadband program that could ultimately lead to higher rates for those in the service territory.

In order to see a more financially sustainable future for the citizens who live in service territories under EPAs providing broadband, the state should consider enacting broadband financial auditing policies that will ensure more accountability. Such reforms would help ensure that mismanagement does not lead to electrical consumers paying for unreasonable utility bill increases because of EPA broadband buildouts. Broadband growth has immense potential for Mississippians, and the state should ensure that this growth through EPAs does not lead to unreasonable increases when it’s time to pay the electric bill.


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