Traverse City Light & Power (TCL&P) board members gave the green light this week to two long-discussed major infrastructure projects, including pursuing a citywide fiber network and converting the utility’s analog meters to smart meters. The projects combined could total more than $14 million and are targeted to roll out over the next two years.

Citywide Fiber Network
Following more than a year of analysis and discussion, TCL&P board members voted unanimously Tuesday to amend their six-year capital improvement plan (CIP) to include the construction of a citywide fiber network.

The project will entail TCL&P building 184 miles of fiber over a two-year period, bringing 1-gigabit-per-second Internet service capability to nearly 10,800 residential and commercial customers throughout the utility’s service area. Board members decided Tuesday to have TCL&P construct, own and operate the network, but contract with an outside Internet service provider (ISP) to provide services. “This option does not preclude us from bidding it out to multiple ISPs or an exclusive ISP,” noted Chair Jan Geht. “It merely says we’re not going to be the ISP.”

While becoming an ISP would offer TCL&P more long-term revenue potential, according to a study from consulting firm Conexon, it would also require more upfront investment, as well as expanding TCL&P staff and internal resources. The move would likely require TCL&P to spin off a new Internet services division of the utility, significantly broadening its mission and scope. Several board members expressed wariness about undertaking such an expansion. “Jumping into a new industry when you have no experience in that industry is just…not a good way to go,” said Vice-Chair Jeff Palisin. “If down the road it makes sense to get into it, then we can really do our due diligence in getting into a new business.”

The project is expected to cost TCL&P over $10 million upfront, though the utility is anticipated to recoup that investment through an ISP contract. TCL&P Executive Director Tim Arends cautioned board members and the public that the soonest deployment of the fiber network would likely occur is “late fall of 2018 or spring 2019.” That’s because Traverse City’s planning and city commissions must still sign off on the amended CIP, followed by what will likely be a several-month process to solicit and review bids, finalize a contract and go through a city bonding process before network construction begins.

Still, both business and technology representatives in the audience at Tuesday’s meeting and TCL&P board members expressed enthusiasm about the fiber project finally moving ahead. “There are lost opportunity costs every day that this isn’t available to the community,” said board member and City Commissioner Tim Werner. “The faster it can be rolled out, the more value it has.”

Smart Meters
TCL&P board members also voted this week to award a $3.5 million contract to power management company Eaton to convert all of the utility’s analog meters to smart meters.

The move will allow TCL&P to wirelessly read customers’ meters, connect and disconnect power remotely, and charge peak pricing based on grid demand. The new advanced metering infrastructure (AMI) system can help prevent outages by immediately alerting staff to energy spikes or malfunctioning equipment before those issues cause power interruptions; it can also provide consumers the ability to log online and track their daily energy usage, according to TCL&P staff.

Total project costs – including hardware and fiber to facilitate the AMI – are estimated at $4.1 million for TCL&P. However, those costs may be reduced if Traverse City commissioners authorize the city to join in the project, converting not just TCL&P’s electric meters but the city’s water and sewer meters over to AMI. The overall project would near $6 million for both entities combined, with costs shared proportionally between TCL&P and the city. City Manager Marty Colburn indicated he expects city commissioners will support the project, with the city having six months to approve joining in on the contract.

Arends says TCL&P will begin conversion of its meters this summer, with full deployment expected to be completed in under two years.

In other TCL&P news…
TCL&P board members voted unanimously to pursue a power purchase agreement with Heritage Sustainable Energy from a planned solar array on M-72 near the utility’s former wind turbine. Under the proposed terms, TCL&P and Heritage would enter into a 20-year agreement at a rate of 11.25 cents per kilowatt hour, with TCL&P receiving all renewable energy credits and capacity for the purchased solar power. Members of Traverse City’s “Green Team” will also consider buying power from the array as part of the city’s commitment to have 100 percent of city operations be powered by renewable energy sources by 2020.

Board members also approved the $275,000 purchase of property at 1125 Hastings Street next to TCL&P for the purpose of expanding the utility’s service center campus, as well as housing substation inventory and equipment. The 11,690 square-foot site will offer a centralized location for utility equipment, eliminate the need to purchase five substation sheds, and offer storage space for fiber and decorative lighting that is now stored in an outdoor yard.

Finally, TCL&P and Grand Traverse County worked out an agreement this week for the utility to access its data from county servers, thus avoiding potential litigation. After Arends and County Administrator Tom Menzel met Monday to discuss TCL&P’s requests to access its data, Menzel sent a memo confirming the county’s willingness to coordinate the transfer of information and to also work with TCL&P to provide access for running fiber in the Governmental Center for one of the utility’s clients. Menzel expressed his desire for county, city and TCL&P officials to maintain a good working relationship to “benefit the taxpayers of this community.”