Kenneth Boudreaux

LUS rate reduction and refund shelved

The gist: The LPUA deferred indefinitely a pair of proposals to reduce utility rates and return money raised for a $240 million bond sale that never happened.

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Some background. Rates were raised 8 percent beginning in 2016 with a $240 million bond issuance in mind. That package included a controversial power plant, and after some pushback, the bond ask was reduced to $70 million in February 2018. At the last minute — literally the day of the bond commission meeting in April — Robideaux pulled the $70 million bond request, orphaning the rates. That was days before he signed a letter of intent with NextGEN Utility Systems to consider privatizing manage of LUS. Settling the issue was delayed during the ensuing controversy.

LUS says the money has been put to good use. In a bond scenario, the money raised would go to pay the interest on the bond. Since there’s no bond, LUS has essentially used the money on a pay-as-you-go basis, moving forward on projects included in the $70 million package. Some major projects include $48 million for electric system upgrades and $41 million in sewer treatment work. Interim LUS Director Jeff Stewart tells me about $15 million was diverted to those work orders.

“The last thing I want to do is scale back a rate and then come back to raise the rate to meet unexpected needs,” Councilman Bruce Conque says.

Word is bond. Councilman Kenneth Boudreaux, who authored the ordinances, argues that good use doesn’t matter. The money was raised for bonds, and the ratepayers should expect that the money be used for that purpose. “I personally believe we have misled the people, and we’re gaining from it,” he said at the council meeting Tuesday night.

LUS disconnects 1,900 customers each month for delinquent payment. Boudreaux brought that figure forward to warn that even a small rate increase can have dramatic effects on low-income families.

“We boast about how good our rates are, but we still have a large population that struggles to pay those rates each month,” Boudreaux tells me.

What to watch for: If and when a bond is ultimately issued. The administration intends to go forward with a $70 million bond sale, now that the NextGEN episode is over. With cash in hand, LUS can continue ongoing projects but can’t necessarily complete them without the added capital.

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