Electricity rates and the funding of municipal broadband networks: An empirical analysis

Most Government-Owned Broadband Networks (“GONs”) are funded by city finances in some way, in some cases by shifting costs to a municipally-operated electric utility. This shift of broadband costs to the electric utility is expected to increase electricity rates, while other funding arrangements are not expected to affect electricity rates of the municipal utilities. In this article, a statistical analysis is conducted on the municipal electric utility rates of four Tennessee cities that constructed GONs in or around 2008. Using electric utility data from the Energy Information Administration, the analysis starkly reveals sizable electric utility rates increases for residential and commercial customers when the utility-funded model is used, but not for alternative funding arrangements. •Government-Owned Broadband Networks (“GONs”) are sometimes funded by shifting costs to a municipal electric utility.•This shift of broadband costs to the electric utility is expected to increase electricity rates.•The effect of funding method on electricity rates is analyzed using a Difference-in-Differences estimator.•The analysis reveals sizable electric utility rates increases when the utility-funded model is used.