By PAUL D. SMITH
Former member, Los Alamos County Board of Public Utilities
Voting yes or no on revision of Charter Article V, Utilities is a question of relative risk.
Advocates for the revision, which substantially increases political control by the County Council over the Board of Public Utilities, cite legal opinions that Los Alamos County and its taxpayers are ultimately liable for acts of malfeasance by both the Board of Public Utilities and the Department of Public Utilities.
Frightening hypothetical situations ranging from default on bonds issued by the Department of Public Utilities to rogue Utilities Managers unchecked by the Board of Public Utilities to gigantic fines levied in response to some egregious environmental violation have been floated as likely ways in which Los Alamos County is at risk of financial ruin by an insufficiently controlled Department of Public Utilities. No case history examples of such threats to Los Alamos County have been provided.
Opponents of the revision caution that increasing County Council political control over the Board of Public Utilities increases risk of money being transferred from the Department of Public Utilities to the county’s general fund. Elected officials, who find raising property taxes a difficult and unappealing proposition, can find such a diversion a tempting alternative. Recall that with the exception of occasional small grants, the Department of Public Utilities is funded entirely by its customers’ utility bill payments. Except for paying its own utility bills, Los Alamos County passes no tax money to the Department of Public Utilities.
Examples in New Mexico of attempted and actual diversions of utility money to general funds are real. In 1997, the Los Alamos County Council initiated a review of the Charter mandated profit transfer from utilities to the general fund in hopes of increasing the amount. The Council and the Board of Public Utilities openly negotiated an agreement that this transfer be 5 percent of total gas and electric retail revenues. In 2010, the Farmington City Council authorized what was euphemistically called a dividend of $5.8 million from the Farmington Electric Utility System to the city’s general fund. In 2011, the Santa Fe City Council by ordinance authorized an annual transfer of up to $1.7M ($4.0 million proposed initially) from its utilities enterprise funds to the city’s general fund.
In my opinion, risks associated with approval of the proposed revision of Article V of the Charter are far more real than the risks of leaving Article V as it is. Sadly, with tunnel vision focus on “getting utilities under control”, committees appointed to review Article V declined to examine the substantive Charter issue of the profit transfer from utilities to the general fund. The approved 2014 Department of Public Utilities budget included $806,974 for this so-called profit transfer, all of which is, of course, paid for by utility customers.
Vote no this time, and hope for a debate on sound funding practice instead of political control next time.
