Local radio fixture Bernadette Lee grilled the mayor-president late last week about the Bernhard/NextGEN deal, trying to pin down his position on the controversial bid to privatize management of LUS. Typically evasive, Joel Robideaux squirmed under Lee’s inquisition, not voicing full-throated support for the $324 million proposal NextGEN presented this month — even as the council formally resolved that Robideaux make his intentions on the deal known — but not letting go of the prospect either, even as public sentiment continues to sour.
“This is not popular. Is that not resonating with you?” Lee pressed. “I don’t believe the people have all the facts,” Robideaux replied.
Lee scolded Robideaux for underestimating the public’s level of education on the NextGEN deal, a complicated and murky issue if there ever was one. (It’s never good politics to say the public isn’t informed.) Robideaux’s public testimony, rare as it may be, served to muddy the waters more.
If the public doesn’t have all the facts, it’s in part because he’s not providing them. The bottom line is Robideaux’s account raises some red flags. Here are a few of the big ones.
Bernhard/NextGEN was just another suitor for LUS like any other, except the firm brought a better idea.
The background narrative Robideaux weaves is understandably brief, but it nevertheless paints a different picture of his talks with Bernhard than does the record. In short, Bernhard and Robideaux have had more substantial exchanges than he lets on. Robideaux signed a non-disclosure agreement with Bernhard in April 2017, and records indicate his conversations with the private equity firm began in 2016. By contrast, there’s no record of NDAs with Entergy or CLECO. To boot, the administration supplied Bernhard with LUS and LUS Fiber information long before Robideaux signed a letter of intent in April 2018 authorizing Bernhard/NextGEN to study LUS more deeply. Bernhard had much easier access to those public records than the rest of the public does. Not long after signing the NDA, an internal assessment by LUS’s engineering consultant was completed, modeling a franchise agreement with an unnamed potential suitor for LUS and LUS Fiber. Things were clearly in motion with NextGEN long before 2018.
Look, it may well be that Robideaux wasn’t on the monorail with Bernhard until 2018, but the relationship until that point was more than casual. It was legally bound.
A deal with NextGEN would avoid looming rate increases needed to pay for $240 million in LUS capital improvements.
Robideaux here suggests the NextGEN deal is a chance to avoid a rate hike that’s actually been on bills for two years. To finance the $240 million bond, LUS began an 8 percent rate hike in 2016. Remember the solar tax controversy? That was part of the same package.
About half the bond package ($120 million) would have paid for building a new natural gas plant to replace power production capacity lost from the anticipated retirement of the coal-fired Rodemacher II plant, which back then faced tightening restrictions from the Obama-era Clean Power Plan. Rodemacher accounts for around half of LUS’s power capacity, and the shortfall would have created problems for the system. The council approved the rate hikes unanimously, green-lighting LUS’s pursuit of a controversial new generator, but LUS delayed the plan after Trump took office and set about easing regulations. In March 2017, a month before signing the NDA with Bernhard, Robideaux denied LUS’s request to contract an engineering firm to begin designs for the plant — the same engineering firm that recommended the plant, by the way.
At the February 2018 meeting Robideaux references in the KPEL interview, the LPUA reduced the authorized bond request to $70 million, but customers kept paying — and are still paying — the 8 percent rate increase. Conveniently, NextGEN promised in its proposal to reduce rates by 10 percent over the next three years. With rates inflated, NextGEN isn’t exactly cutting into the bone.
Lafayette doesn’t currently have local power generation.
Robideaux parallels a piece of NextGEN’s pitch here. In two presentations this month, company founder Jim Bernhard himself hammered the point that 94 percent of Lafayette’s power generation is contracted and not locally produced. The contention accomplishes two rhetorical goals: It “debunks” public discomfort with the idea of private management of LUS by pointing out that LUS already pays others to manage its assets, and it foments uncertainty about Lafayette’s power production. Put simply, the implication is that if LUS doesn’t produce its own energy, customers are at risk. The implication is pretty misleading.
The truth is LUS has two natural gas plant sites, built in the early 2000s and located in Lafayette, but they’re not often used. It’s cheaper for LUS to buy energy at market than it is to kick on its local generation. That’s a result of cheap wind and solar energy coming online — LUS just contracted to buy some wind capacity this year, in fact — and a glut of more advanced natural gas generation flooding the market in recent years.
Having two virtually unused power plants is expensive and untenable for the long term. In fact, LUS recently retired an old natural gas plant for exactly that reason. For the time being, LUS spends millions to keep its two remaining natural gas plants on hand, in part to the satisfy capacity requirements associated with joining MISO, the market where LUS buys all that excess energy. But it’s nevertheless still cheaper for LUS to buy from MISO. LUS faces some tough choices over the long haul that will be difficult to make in a helter skelter regulatory climate. That's pretty much always been the case.
The LUS buck stops with Robideaux. He should have a better grasp on that nuance.
Local generation is, in fact, an issue but not in the way Bernhard and Robideaux have laid out. The LUS buck stops with Robideaux. He should have a better grasp on that nuance.
The NextGEN deal would provide $140 million that we could spend on drainage.
This is not the first time Robideaux used Lafayette’s existential fear of flooding to achieve a policy goal. Remember the CREATE tax rededication? A vote against CREATE was a vote against drainage.
Beyond politics, what’s disturbing here is that Robideaux has it in his mind that the $140 million in cash offered by NextGEN could pay for projects outside the city of Lafayette. That goes for any expenditure, not just drainage. Remember, LUS is owned by the city of Lafayette, not LCG. The parish should have no vested claim here, even if a fix for drainage is compelling. (A fix is compelling, by the way. It could cost as much as $875 million to shore up parish drainage.)
Yes, the 2016 flood did have impacts within city limits, but the vast majority of the drainage infrastructure needs are outside the city of Lafayette. Robideaux’s drainage cleanup initiative, the one funded along with CREATE, primarily attacks clogged drainage channels in the parish. Nearly half of the top tier projects are in Youngsville, according to The Daily Advertiser. When I asked the administration earlier this year why so few projects were in the city, officials responded that the city’s mostly concrete lined channels are in pretty good shape.
More important, the City-Parish Charter requires that money made from selling or leasing LUS should be spent on capital improvements in the city of Lafayette. Robideaux should not be able to spend a dime earned privatizing LUS on parish concerns, according to the charter. There is a catch, however. NextGEN’s proposal is framed as a cooperative endeavor agreement, not a sale or lease. That could potentially circumvent the charter restrictions on selling or leasing LUS. Even if it’s legal, that won’t make it right.
We reached out to the administration for comment, but the mayor-president’s spokeswoman was unable to provide a response before press time.