By Dallas Braun, General Manager
Nothing stays the same.” This statement couldn’t be more descriptive of the past year for Thumb Electric Cooperative (TEC) and its future path.
In 2021, 84 years after TEC began the mission of providing much-needed electric service to the sparsely populated rural areas of the Thumb, we started to lay the groundwork for a similar mission. The mission this time is to provide much-needed fiber internet service to those same sparsely populated areas by building a projected $80 million fiber network infrastructure that will be the super highway of the internet for future generations. The project will consist of 1,500 miles of overhead fiber attached to TEC’s existing electric poles to serve TEC members and others who live near our electric infrastructure. Another 600 miles of underground fiber will be installed to provide fiber internet service outside of TEC’s current footprint. The project is currently on a five-year completion schedule but could be shortened if additional funding opportunities arise. LeCom, our fiber construction contractor, started the project in the Tuscola County area
While our TEC Fiber plans were being designed and planned, an opportunity to enhance this plan presented itself. In March, preliminary discussions to acquire Air Advantage, an internet service provider, began. After eight months of due diligence with attorneys, tax specialists, auditors, business merger & acquisition consultants, and more, TEC entered into an agreement with Air Advantage to purchase their wireless and fiber internet business and that transaction was completed on December 9th. Air Advantage has been in the internet business since 2002 and provides service to over 5,500 accounts. This additional revenue will help the cash flow of the TEC Fiber project, and reduce it from the original eight-year plan to the current five-year plan. The Air Advantage acquisition brings an experienced workforce of 30 employees on board to maintain the current wireless system and assist in deploying the new TEC Fiber service. The acquisition of Air Advantage, which also includes a 600-mile fiber network, will result in an approximate $6 million reduction in the TEC Fiber infrastructure project. TEC’s current subsidiary, Thumb Energy Services Corporation (TESC), will become the holding company of Air Advantage, TEC’s new subsidiary.
As we evaluated the needs of our members and others in the community, it became apparent that having fiber internet service was not only seen as a priority but a necessity for the community. It made sense that TEC resources should be prioritized toward the mission of providing this fiber internet service. With that, we began investigating the possible sale of our subsidiary propane business. TEC began offering propane services to members in 1997 by forming a partnership with Cass City Oil & Gas. The partnership lasted a few years until both parties went separate ways, continuing to offer competing services
in the area. TEC’s propane business has operated as a for-profit business through the cooperative’s subsidiary, TESC. The propane business has been a good investment for the cooperative for the past 24 years, and providing another propane service option for our members and non-members alike made sense. What did not make sense, as we evaluated the current needs of our members, was to continue to spend the time and money on offering propane service in a highly competitive market where it is readily available by other providers. Rather, it seemed to make more sense to spend those resources on a fiber internet service that is NOT readily offered by others.
We began reaching out to a few select propane businesses to gauge the interest in a possible sale. We wanted to make sure the potential buyer was local, would place a high value on the customer service provided, and would continue to offer the metered propane service that the majority of our propane customers have. After entertaining three other offers, we continued serious discussions with a company that met those requirements. That company was none other than Cass City Oil & Gas. After about six months of discussion, a purchase agreement was signed, and as of the time of this writing, the final closing of the transaction is expected to occur on December 29, 2021. Cass City Oil & Gas will purchase all propane-related assets. TEC will retain the TESC subsidiary. TESC propane customers can expect very little disruption as this sale is finalized and the business is transitioned over.
While “nothing stays the same,” one thing that does stay the same is our service and commitment to TEC members. We will continue to keep you updated as things progress.
As always, if you have any questions or concerns regarding your cooperative, please give us a call.