Senate hearing set for 1 p.m. Tuesday
ANNAPOLIS — Eastern Shore residents with slim access to reliable, high-speed internet are crossing their fingers as lawmakers prepare for a Tuesday, Feb. 25, hearing to debate whether Maryland should give Choptank Electric Cooperative the go-ahead to roll out broadband to its rural customers.
While many are in favor of Senate bill 540 — or “The Rural Broadband for the Eastern Shore Act of 2020” — lawmakers are expected to hear some pushback on the bill during a hearing before the Senate Finance Committee, scheduled for 1 p.m. Tuesday.
The opposition stems from some of the potential risks involved in the bill’s main objective: pulling Choptank Electric from the Public Service Commission’s regulatory grip and making it member-regulated — which Choptank says would relieve some of the economic hurdles that prevent the company from being able to extend the internet service across the Shore.
While member-regulation of co-ops is not a new approach to equipping rural areas with broadband, it is “outside-of-the-box, forward thinking,” as Sen. Steve Hershey, R-36-Upper Shore, who introduced the bill, said during a Jan. 24 Eastern Shore Delegation meeting with Choptank in Annapolis.
Although Hershey acknowledged co-op deregulation isn’t risk-free, he said it’s “not a novel concept” either — adding, “There are only two or three (states) left that do require member-regulated co-ops to be regulated by a public service commission.”
Once everybody gets past the fact that the ideas in the bill have been realized through co-ops in other states, the bill should get through the state legislature, Hershey said.
Among the concerns people have raised surrounding the idea are that deregulating Choptank would give it too much freedom to raise rates; Choptank would overrun other service providers in the area; and taking on broadband is “too big of a risk for the financial health” of Choptank, said Sarah Dahl, general counsel for Choptank Electric.
Dahl said during the Jan. 24 meeting with lawmakers that Choptank recognizes removing regulation is “always a risk,” but assured the company takes it “very seriously.”
“In this case, the risk is mitigated by the cooperative’s not-for-profit model, in which any excess revenue is returned to the members,” she said, adding that the risks are reduced further by the fact that members of the Choptank Board of Directors are elected every three years by its customers.
Dahl also said there is a provision in the bill that would allow Choptank’s customers to vote the company back under PSC regulation if they are not happy with its actions or performance.
As for the risk that Choptank could raise rates for its services without being checked, Hershey said to the delegation, “There’s no reason for (Choptank’s) board to want to raise the rates, just like there’s no reason we want to sit here in Annapolis and raise taxes and go back to our district and hope that we get reelected.”
Addressing the potential for Choptank to overrun or take advantage of its competitors, Hershey said other internet service providers in the area already have had an opportunity to extend broadband to the Shore’s underserved rural areas.
“I’ve talked to Verizon, Comcast. I’ve talked to people at Atlantic Broadband, and I said, ‘You know what, guys? You haven’t done it,’ he said. “I think we are at this position now that we have to take a step forward to say, ‘Something has to be done to get broadband into these rural areas.’ It hasn’t been done yet.
“Talking to these other companies, they’ll do it. But the price tag is enormous. Choptank wants to do what’s best for their members,” Hershey said.
Del. Sheree Sample-Hughes, D-37A-Dorchester, also spoke in favor of the legislation during the Jan. 24 meeting, defending Choptank’s reliable reputation within the communities it serves.
“Choptank’s been in business for 80 years,” Sample-Hughes said. “The citizens rely and depend on it, and they have the (board) members that are elected to be the face in their community. You can’t get any more accountable than that.
“If something goes wrong, they’re gonna hear about it from their neighbor.”
If the bill is approved, Choptank President and CEO Mike Malandro said Jan. 24 his company is prepared to launch installation efforts simultaneously at select starting points across the Shore’s nine counties in 2021.
Installation efforts would be in “full swing” by 2022, with between 50 and 100 residents getting hooked up to the service each week, Malandro said.