Demands, problems with infrastructure hinder development

By Sun Advocate

A failed attempt to attract a metal processing facility to Carbon County may be part of what spawns 2006 legislation to help resolve the lack of infrastructure needed to bring business to rural Utah.
Several years ago, Carbon’s economic development department was approached by a company looking to locate a steel recycling/processing facility in an area with the infrastructure necessary to support the plant. The proposed facility was similar to the Necor Steel plant north of Brigham City.
Carbon economic director Delynn Fielding said things were going well until one missing part of the necessary infrastructure for the plant kept the project, which would have provided several dozen jobs in the county, from happening.
“We had a great location all lined up for them to buy. We had the transportation problems associated with moving the product solved and most everything else looked good,” said Fielding. “Then Utah Power & Light told us that they did not have the ability to supply the power needed to run such a plant in that area.”
The facility would have needed 35 megawatts of power for the metal melt down process.
However, the power needed to operate the project was not available despite the fact that five generation plants in Carbon and Emery counties supply electricity to the Wasatch Front.
But Fielding pointed out that the situation had to do more with infrastructure to supply power in an area than with what can be produced nearby.
Counties from Beaver through the middle of the state to Uintah face similar problems at times. They all have to deal with a potential projects that need large amounts of electricity, broad band communications and natural gas.
The situation has been brought about to some degree by the fact that the Utah Public Service Commission has kept rates down in the state.
“We have been riding the horse, but not feeding it,” pointed out Fielding. “The rates we have here for electrical power from Utah Power are some of the lowest in the west. The PSC has done a stellar job keeping those rates low, but that has also created a situation where the infrastructure to supply more power when needed for projects like we were looking at doesn’t exist.”
In the 1920’s the federal and state governments came up with a plan to provide electrical and telephone service for almost all parts of the country. The plan was called Universal Service and it provided a fund so that small communities could get service that the few residents of a town would not be able to pay for themselves.
“It was to the advantage of the country that a small town in Utah could call New York and visa versa, yet the 100 residents of that small town couldn’t have afforded the infrastructure (the line run) to their town. What the economic development people in these counties are looking for now is a fund to help us do that same thing, just in a different era.”
The situation with enough electricity to run ever increasingly dependent busineses is just part of the problem. While almost everyone has regular telephone service in the state, even if they are in a very small community, other services for communications come at a very high cost. Broadband service, which is required by many of the businesses that would like to locate in rural Utah, is expensive if they decide to locate off the Wasatch Front.
“In Carbon County broadband costs three times as much as it does in Salt Lake,” said Fielding. “That is definitely a disadvantage when we go after businesses that need that kind of infrastructure.”
The proposed legislation to fix some of these problems is called the Rural Infrastructure Fund. Some of the the problems with creating an atmosphere for this to happen can be cleared up by the PSC. But some of the rudimentary roots of this problem can only be addressed by the legislature.
According to Mike McCandless, the economic development director for Emery County, some progress is already being made in these areas. In a recent email to Fielding he pointed out that Representative Jim Gowans from Tooele is willing to carry a bill to help on the development of DSL in rural Utah.
McCandless also says that progress is being made at the PSC level as well as in his dealings with the utility providers.
For instance, Questar has presented the concept of eliminating certain charges in rural areas and including the remaining costs into the statewide ratebase as a ‘de minimus’ charge. This will allow for all of the remaining communities with these added charges to be competitive with non affected communities.
In terms of telecommunications McCandless says they have begun discussing the effect of T1 rates on the economies of rural Utah. A proposed legislative change to the definition of basic telephone service would significantly help by making high speed connectivity available statewide and by expanding competition.
In the electrical area there is research being done regarding policies relating to the development of costs for urban and rural line extension projects. In addition it is also being determined if there is an actual deficiency in the process that harms rural areas, or if the perception is incorrect. In addition Utah power is researching if they have conducted benchmark studies to compare the line extension policy of other utilities throughout the nation.
The work on these and other items will continue. It is doubtful that all the issues can be settled in one session of the legislature and it may not even happen at all this year. but the Rural Infrastructure Fund could become a reality at some point, which would aide in securing economic growth for the rural parts of the state.