Empire Electric Association is negotiating a deal to sell its share of the fiber-optics highway stretching from Albuquerque to Grand Junction to REANET, its Durango-based telecommunications company.

Neal Stephens, Empire’s general manager, said that Empire’s board of directors passed a resolution at the last board meeting to authorize the negotiation.

Stephens now needs to convince Pathnet, the largest partner in the project’s dark-fiber agreement, to allow the electric cooperative to transfer all rights, title and interest to REANET. Currently, REANET is not a partner in the agreement.

Pathnet, Tri-State Generation and Transmission Association, and four rural electric cooperatives partnered on Aug. 5, 1999 to build the fiber-optics highway. Of the 144 fibers in the highway, 108 were pooled between the companies to lease to telecommunications companies.

The 36 fibers retained were divided among Pathnet, Tri-State, Empire Electric Association, La Plata Electric Association, Delta Montrose Electric Association, and San Miguel Power Association.

"It was always the intent to do that (transfer ownership to REANET). That has never been something we haven’t wanted to do," explained Stephens. "Tri-State has given us the permission to do that. We are merely waiting on Pathnet."

Whatever deal is negotiated, Stephens said it would be identical to the one negotiated by LPEA, which owns half of REANET with Empire.

Stephens said that Delta Montrose, LPEA, and Empire are all seeking to transfer a total of 6.75 fibers to REANET. REANET is owned jointly by LPEA and Empire, who would be compensated for the sale.

Pathnet, the company responsible for building the Albuquerque-Grand Junction line, has opposed the transfer for the past year.

The highway is expected to be in use, or lit, by Feb. 15, 2001.

This year, REANET is expected to record a loss of $3.2 million. Both La Plata and Empire have had to share the liability of the loss. Stephens said the company expects to lose an additional $3 million in 2001.

"When we started REANET, we figured there would be about three years of losses before we started making a profit," explained Stephens. "So far everything has been about on budget at REANET."

For most of the year, the two electric cooperatives have been actively pursuing a buyer for REANET. Transferring ownership of fiber to the company, a significant asset, may be one way to encourage a sale.

"There are a number of ways to get equity into REANET. One of the things that we’re looking at is either other companies just investing in REANET, like Delta Montrose, or we’re looking at selling some of our common shares," explained Stephens.

Other companies, such as Fone.Net, lease access to the fiber from Pathnet in order to provide telecommunications services to customers. If the transfer occurs, Stephens said REANET could lease access to its fibers as well.

"They feel like in the long run, you can provide cheaper telecommunications services and you can compete better in the market by being facilities-based rather than leasing from others," said Stephens.

Stephens said Empire hoped to negotiate a deal by the next fiscal quarter.

Dallas Parga, general manager of Fone.Net, an independent telecommunications company based in Cortez, said that if Empire had decided to put the fiber on the general market, Fone.Net would have put in a bid.

"Obviously if you own the network you have an advantage," said Parga, who was quick to acknowledge that along with ownership comes an expensive maintenance and lighting bill.

Fone.Net recently signed a contract with Pathnet to lease fiber capacity for high-bandwidth services, and will be vying with other companies to provide services. Parga said Fone.Net customers would notice a faster, more efficient service almost immediately when the fiber is lit this winter.