The general assumption has been that the parish is broke but the city is doing fine. When you dig into the latest budget, a more troubling reality emerges.
LUS shrinks revenue forecasts to reflect diminishing demand
The gist: Flattening energy demand has taken a toll on LUS sales. While electric revenues are growing, they are falling short of budgeted projections each year. For the upcoming fiscal year, LUS cut $10 million from last year’s projected revenue, a belt-tightening figure when compared to historic estimates.
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4 min read
Electrical demand has been sluggish. And that accounts for most of the diminished outlook. In the proposed 2019/2020 budget, LUS projects $101 million in base rate revenue — retail sales, excluding fuel — on $253 million in revenues for the entire utilities system, including wastewater and water services. This year’s adopted budget, reflecting fiscal year 2019, projected $108 million in electric sales on $241 million in total utilities operating revenue.
LUS revenues missed on budget projections each of the last three years. While electric sales have increased year-over-year, they’ve fallen as much as $10 million short of estimated revenues in each of the last three budgets. To an extent, next year’s diminished projections hew closer to the system’s actual performance but still reflect an expectation of growth, albeit slower:
| Year | Total Projected | Total Actual | Elec. Sales Proj. | Elec. Sales Act. |
| 2016 | $240 million | $220 million | $92 million | $84 million |
| 2017 | $244 million | $225 million | $97 million | $87 million |
| 2018 | $246 million | $232 million | $107 million | $95 million |
| 2019* | $253 million | n/a | $108 million | n/a |
| 2020* | $241 million | n/a | $101 million | n/a |
*Only projected revenues are available.
Interim LUS Director Jeff Stewart says the trend is concerning, but notes the system is still adding customers. But these new customers, he says, are using less energy per person. That means diminishing returns as LUS grows its customer base through city annexations, franchise agreements with Broussard and Youngsville, and an acquisition deal with Slemco.
“We’re adding customers, but they’re more efficient customers,” Stewart tells me.
LUS raised electric rates in 2016. A 9% total increase was phased in over the last few years to pay for a $240 million bond package that included $120 million for a new natural gas power generator. The plan was scuttled after public pushback, and LUS reduced its bond request to $70 million, throwing out plans for the new generator. The rate increases have remained in place. LUS moved forward with work on new wastewater treatment facilities, sewer line upgrades in the urban core, and has submitted work orders to outfit 18,000 city lights with LEDs, a $7 million project.
Energy efficient appliances and consumer habits have taken a bite out of power company revenues nationwide. The U.S. Energy Information Agency forecasts that trend to continue, projecting flattened electricity demand decades into the foreseeable future
If you can’t sell more of it, what do you do? Stewart tells me LUS is exploring EV charging as a potential revenue stream. Air conditioners, he says, were the 20th century innovation that drove electric revenues. Some 10 million electric vehicles are expected to hit American streets by 2025, offering one consumer sector that could increase electric demand and, in turn, drive sales for power companies.
Why this matters: LUS has major upgrades in the not-so-distant future. Remember that whole business with Jim Bernhard? Paying for those upgrades was a big part of his sales pitch. Most of Lafayette’s power capacity comes from a coal plant, which is routinely on the cusp of regulatory shutdown, depending on who occupies the White House. (Most of the time, LUS buys the power you use in your house from a grid market.) Outside of the looming need for investing in power generation, the system is a capital-intensive enterprise. Historically, the electric system has subsidized water and wastewater operation. A budget crunch on the electric side presents a major challenge for the system’s long-term financial health and could even put its contribution to the city’s budget, roughly $23 million every year, at risk.
Robideaux proposes moving city road dollars to regional stormwater diversion
The gist: In his outgoing budget, Mayor-President Joel Robideaux proposes moving $7.5 million in current bond dollars to pay for drainage.
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3 min read
Press association attorney: Yes, council members likely violated Open Meetings Law
The AG was never asked to look into the council’s discussions and won’t take legal action, thus the impact of the potential violation remains thoroughly political.
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9 min read
Explaining the hullabaloo around LUS Fiber and why it matters
LUS Fiber has recently been accused of receiving millions in illegal subsidies from LUS. This is a complex issue with a lot at stake. An explainer is in order.
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9 min read
The Vermilion River was lowered ahead of Barry. It looks like that worked.
The gist: Pumps that feed fresh water into the Vermilion River were stopped days ahead of Tropical Storm Barry’s landfall. Combined with a lucky north wind, ad hoc flood control efforts lowered the Vermilion by more than a foot, potentially avoiding major flood damage along the bayou.
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3 min read
The river sat 18” lower than normal when the rains started. Consequently, the river’s crest — the flood height, essentially — was close to 2 feet lower than projected ahead of the storm. You can thank the wind and the folks at the Teche-Vermilion Fresh Water District for that, according to regional officials and local advocates. Harold Schoeffler, a Sierra Club advocate who has pushed regional politicos to get the Vermilion River dredged, lobbied the freshwater district to step in and stop the pumps. On July 8, the district followed through, a step it normally takes ahead of major storms, but not with this much forewarning.
“It wasn’t something we haven’t always done in the past,” Teche-Vermilion Executive Director Donald Sagrera tells me. “It’s just that this time we had the warning.”
It’s tough to say how much damage was prevented. Flooding is localized and hydrology can be complicated. Sagrera gives much more credit to the wind than the intervention, but Acadiana Planning Commission Chairman and St. Landry Parish President Bill Fontenot, who had a hand in authorizing the move, says stopping the pumps likely made a big difference for homes along the bayou.
“The stages would have been higher,” Fontenot says of conditions if the freshwater district had not moved. “I think overall the elevations in the system would have been higher. As much as a foot. That could have impacted who knows how many homes and how much property damage.”
What difference does a foot make? If you’re along the river, a lot. It only takes a couple of inches to ruin a home. And to be sure, homes still flooded in areas around Lafayette Parish. Whether dredging the Vermilion, thereby lowering the river long term, is the right solution is a question Fontenot believes ought to be studied. Widening the channel could have unintended consequences that worsen flooding in other areas. “It’s a lot more complicated,” Fontenot tells me.
Flooding here and flooding there. How to manage stormwater will vary by address. While lowering the Vermilion impacts the water level of upland coulees and ditches, it’s not a slam dunk that fixing the Vermilion will save homes that flood from overtopped coulees. There’s even some question whether dredging the Vermilion would prevent flooding whatsoever, given the sheer volume of water entering drainage systems from intensifying rainfall and development runoff.
“There’s no the drainage problem. There are several,” UL geosciences professor Gary Kinsland tells me. Kinsland has studied the Vermilion for years, authoring a paper on the impact of urbanization. Kinsland calls the preventative measures taken by the fresh water district a “no-brainer,” but warns against angling for a singular solution. “There is no silver bullet,” he says.
Why this matters. Stormwater management is everything in Lafayette now, and we’re facing down an election season. While we’ve begun to address the problem regionally, the anxieties created by the floods of 2016 reopen with each looming storm. How to fix the problem will frame much of this year’s political debates, and tackling the Vermilion is a big part of that discussion.
Totally chill, Todd Barry
The veteran comic and actor — known for spots on Bob’s Burgers, Chapelle’s Show and appearances on Letterman, Conan and more — rolls through Lafayette this Saturday. Contributor (and giddy Todd Barry fan) Matt Sigur spoke with Barry ahead of his show.
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4 min read
What does a parish government do, anyway?
With the parish playing second-fiddle for so long, the separation of the councils provides an opportunity for Lafayette to consider the role of parish government moving forward.
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5 min read
Your guide to the Haze Craze at Gulf Brew 2019
This year it’s all about the haze. Juicy IPAs, sometimes called hazy IPAs, are the obvious trend across Gulf Brew’s offerings. The fruity, bitter, potent brews are great summer options for hops lovers.
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4 min read
Controversy over LUS payments underscores Fiber’s financial challenges ahead
The gist: Last week, the mayor-president alleged that LUS Fiber charged LUS millions in fraudulent payments for a power outage monitoring system that wasn’t useful. He asked for the Public Service Commission to investigate, swirling controversy around Fiber and its former director. Regardless of the episode’s outcome, it’s clear Fiber faces significant financial risk moving forward.
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JCPenney sells Acadiana Mall space but expected to remain a tenant
The gist: The Acadiana Advocate reported this week that troubled retailer JCPenney has sold its building at the Acadiana Mall but is expected to stay in the mall.
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3 min read
FCC action threatens future of AOC Community Media
The gist: On Thursday, the Federal Communications Commission voted to change the way franchise fees work, threatening to eliminate up to two-thirds of AOC Community Media’s annual funding.
Franchise fees are what cable companies pay to use the public’s rights of way. Typically cable companies pay 5% of their gross cable revenue to local franchising authorities.
Franchise fees account for about two-thirds of the public access media organization’s annual budget, which is a hair under $900,000. The other third comes primarily from contracts it has with LCG to record and webcast council meetings and other events.
Changes would threaten that revenue for AOC. The changes will allow cable companies to count a variety of in-kind contributions against that 5% franchise fee, rather than pay the entire fee in cash. Contributions could include courtesy equipment, network capacity, channels, grants, sponsorships, specially created programming, local retail facilities, and free advertising, according to the The Internet and Television Association, a trade organization that represents cable companies and supports the new rules.
Full disclosure: AOC Community serves as The Current’s fiscal sponsor for tax-exempt contributions.
The budgets of the city and parish of Lafayette could also take a haircut. Only one-third of the franchise fee revenue goes to AOC, with the rest split between the city and parish general funds. In other words, LCG could lose $1.8 million in general fund revenues.
Th next step will likely be the courts. Local public access channels and city officials have already started to band together in opposition, with more than 200 mayors voting in opposition of these new rules. Assuming it passes, it will almost certainly be challenged in court.
If this rule survives legal challenge, AOC could be significantly diminished. According to AOC Executive Director Ed Bowie, some version of his organization should be able to continue operations, but it will obviously have to be at a reduced scale if it loses two-thirds of its revenue.
The legal process could take a year or two to work through the courts. So even if this rule passes the FCC, it should be a while before its impacts are felt.