Members of the Board of Public Utilities and Department of Public Utilities staff listen to County Council suggest forming a joint effort to review the utilities department’s finances. The idea received strong support. Photo by Kirsten Laskey/ladailypost.com
During the Tuesday night Los Alamos County Council special session, the Council pitched its idea to facilitate a joint effort between the Council, the Department of Public Utilities (DPU) and the Board of Public Utilities (BPU) to do an independent review of DPU’s major financial issues.
The idea received strong support from both sides. BPU Chair Jeff Johnson fully endorsed the joint effort. He added during the next BPU meeting, he would ask for volunteers to participate in the review. “These kind of exchanges are valuable,” Johnson said.
Councilor Chris Chandler said, “I think it’s a great idea. The review should look at the underlying premises for how the department has been doing business. Are reserve policies, how we fund capital projects and rate-setting practices still valid? Let’s shake it up.”
Councilor Rick Reiss originally proposed the idea. During the special session, he suggested the assessment be four months long. When asked what exactly would be the form this joint effort, Reiss said at the first meeting the group would identify the scope and other variables.
In addition to the assessment, the gas rate was discussed in length and Council expressed its desire to have more knowledge and more say in the rate.
Currently, the gas rate is proposed to be lowered. Johnson explained last September, the Council approved a pass through rate, which means whatever rate DPU paid for the gas, that cost is passed on to the customer. Additionally, the fixed rate for gas was lowered. Johnson said that DPU felt its large cash reserve was no longer needed. Another decrease in the gas rate is expected to go to BPU for consideration in either July or August, he said.
Izraelevitz said, “There are two things that never before happened in the history of the world. One is no one has ever washed a rented car and I don’t know of any utility that has lowered its rates twice so I think we should take a moment and celebrate that.”
In his feedback to BPU regarding gas rates, Izraelevitz said he would like to revisit the removal of the reporting requirement and the sunset clause, which is an expiration date that once reached would require the rate be returned to County Council for approval.
He noted it is part of Council’s oversight and looking at the gas sunset clause could give an opportunity to address the maximum rate for gas.
What would be a real gift, Vice Chair Susan O’Leary said, would be gaining clarity for both the board and Council.
“I think that the lack of clarity in the charter and the ordinances that we have about roles and responsibilities creates these kinds of dynamics … a lack of clear direction in our legislation to let us know where the buck stops with each of us. We all want to do our best for our community and we want to make sure that something that is as central as a bill that comes to everyone’s home every month that we’re all doing what we’re supposed to do. If we could anything structurally, it would be to create clarity about what the Council would like to see so the board could understand,” she said.
O’Leary added, “My personal feeling is that Council should review all rates routinely … in order for us to do our oversight, we need to have a mechanism that ensures rates are going to come to Council. … We need a management structure, a mechanism, a systematic approach to make sure the Council can review rates say every three years.” “I think we can do this,” she said, “and clarifying this would be such a gift to our community, and to future boards and to future Councils.”
Chandler also felt the gas rate, particularly the pass through rate, needed to reviewed.
She pointed to an article in the Journal regarding PNM, a private utility company in New Mexico. While she noted that PNM is private whereas DPU is a public utility, the article did point out issues she felt were similar to what is being discussed locally, one being pass through rates. According to the article, “there is a disagreement about whether pass throughs are consumer friendly; on one side they talk about the lack of transparency, the ability of the utility company to pass on large increases without any public hearings in front of the PRC (Public Regulations Commission) and should there be some checks on that ability,” Chandler said.
She added, “I wanted to underscore that there are public policy issues associated with even something as simple sounding as ‘this is just a cost pass through.’ Looking at the ordinance, it really is not just a pass through,” she said.
Deputy Utility Manager Bob Westervelt said, “The cost we are passing through is the pass through component of the gas is the actual dollar amount that we are paying for the gas that we are providing to the customers. We do forecast for a month in advance … the next month we make a correction if our projection was off … we estimate the coming month, make corrections to the prior month and that is what is charged to the customers but it always within a month of the actual amount we paid for the gas.”
Johnson asked what the concern was regarding the gas rate. He said, “There was reporting previously … and there was a sunset. So I guess on reporting and the sunset, none of other rates have reporting or sunsets so what’s special about this versus the other rates?”
Chandler said, “All the other rates go through Council … these are implemented on a monthly basis without the Council ever seeing them. There is no way for Council to suspend this rate.”
