Knowledge is power, the saying goes. But for electric utilities seeking to bolster reliability, the sentiment may be doubly true.

In 2012, a strong storm ripped through the service territory of the Electric Power Board (EPB) of Chattanooga, causing about 30,000 customers to lose power. But an additional 50,000 customers might have been in the dark, the utility said, were it not for its fiber-optic network that allowed for a faster and more flexible response to the crisis.

Running fiber is expensive and, arguably, EPB's system was only possible because a $111.5 million grant from the U.S. Department of Energy made up half the investment. But in the wake of the storm, the utility estimated savings of $1.4 million in a single day.

The value of fiber

"The reliability question underlies everything," Ben Kellison, director of grid research for GTM Research, told Utility Dive. "How much is reliability worth?"

That value is actually spread across a wide range of points, Kellison said. In an outage situation, keeping more lights on means the utility can keep selling power. Better information means fewer truck rolls to physically check the system. Less downtime keeps your customers happy and can ease costs on commercial and industrial users who may be considering paying for reliability solutions themselves.

In areas that already have strong telecommunications systems, this is less of an issue. But in some rural areas, often served by municipal utilities or coops, there is a real need for faster networks and better information. Investing in network improvements can be expensive for utilities, but "the value can be quite significant," Kellison said. "It depends on what your starting point is and what your customer mix is."

Municipalities can also tout the investments as an economic development tool, he added, as reliability comparisons to other areas can be used attract investment.

"Service in larger cities tends to be at least competitive," Kellison said of telecommunications systems. "But for someone who is in western Kansas, those opportunities may not exist and no one wants to provide them. In low population areas there hasn't been a lot of concern and there's not a lot of revenue to be garnered."

The final value proposition of EPB's fiber-optic network is that the utility can now provide fast internet connections to its customers, generating not just reliability but revenue. Within the utility's service territory, residents are getting some of the fastest speeds available. And this has neighboring municipalities asking to tap in. Therein lies the problem.

Many utilities prohibited from broadband build-out

A state law restricts the utility from expanding its internet service outside the service territory, which would bring it into competition with more traditional telecom providers. And Tennessee isn't the only state with concerns about keeping electric utilities from competing with cable and internet providers.

"There are 19 states where this type of build out and service would not be allowed," Richelle Elberg, a senior research analyst with Navigant Research, told Utility Dive. In some locales, the cable industry has filed lawsuits against would-be providers.

Ultimately, however, "this is a battle that's going to be won in the marketplace," Elberg said. "You will see more legal battles related to this."

The data has shown EPB is seeing $5 million a year in savings, according to Elberg. Despite that value, the cost and specifics make a utility installing its own fiber network somewhat of a rarity. Elberg said about 150 utilities have taken the step, a number both modest and one she found surprisingly high. 

"It's really rare for a utility to deploy fiber," Elberg said. "It's awfully hard to make the case that fiber to the meter is cost effective if you can't provide those large consumer services. […] They have to have the consumer side to make it work."

Could public utilities build broadband networks?

Chattanooga’s EPB may be a rare case. The utility serves about 170,000, which puts it on the upper end of the sweet spot where such an investment is possible, Kellison said.

Approximately 75% of U.S. power consumers are in the service territory of an investor-owned utility, which are precluded from providing telecom services. And about half of the remaining customers are already in areas with competitive broadband service, or their utilities are simply too small to take on such a project.

But there is potential for this kind of build-out in relatively rural areas that have mid-sized municipal or cooperative utilities.

"It's been a good deal for Chattanooga, but I'm not sure that's going to be replicated in a whole lot of other places, just based on the regulatory and cost structure," Kellison said. "But, conceivably, that could change."