In the next couple of years, LUS has to make a series of huge decisions. But the issues that matter are getting drowned out by the political theater that’s been drummed up around potentially illegal payments from LUS to LUS Fiber. Lafayette can’t afford to get distracted.
The gist: NewGen Strategies & Solutions, LUS’s consulting engineer, fired back at Mayor-President Josh Guillory, saying in a July 2 letter obtained by The Current that his decision to publicly lay out a case for firing the longtime consultant was malicious and politically motivated.
Since launching 2008, LUS Fiber has missed its financial projections by $70 million. That puts it in a vulnerable position.
The gist: Two familiar faces, Jeff Stewart and Teles Fremin, returned to work this week at LUS and LUS Fiber, respectively, after being cleared of wrongdoing in connection with the Guillory administration’s allegations of a criminal coverup at the entities. Questions remain about the status of any criminal investigation and the agencies’ leadership.
Get caught up, quickly: Mayor-President Josh Guillory dropped a bombshell on local radio just a month into his administration, claiming that Lafayette City Police had “raided” LUS last year under Joel Robideaux’s administration. Guillory told the station he had put four unnamed employees on paid leave and would ask Louisiana State Police to initiate a criminal probe. The “raid” was apparently linked to Robideaux’s ongoing internal investigation into questionable payments from LUS and LCG to Fiber; the Public Service Commission, which has limited oversight of Fiber, confirms it is reviewing what Robideaux turned over late last year for possible violations of the Fair Competition Act.
There was no raid. “I saw no findings of a raid,” Cpl. Bridgette Dugas, public information officer with Lafayette Police, told The Acadiana Advocate a week after Guillory made those comments.
Based on information from a “whistle blower complaint,” LCG accused the four employees, whose names were redacted, of having information about the destruction of records and an “attempt to cover up a crime,” according to the letter to state police. The Current has not named Stewart and Fremin until now, only after multiple sources confirmed they had returned from leave and were cleared of suspicion — before any criminal probe by an outside agency has even commenced.
A void in experience at both LUS and Fiber. Stewart and Fremin were replaced as interim directors of their respective entities late last year when Robideaux named his CAO, Lowell Duhon, to the interim post at LUS and moved Kayla Miles Brooks into the top position at Fiber. Public records obtained by The Current confirm that NewGen, LUS’s consulting engineer who last year deemed Duhon and Brooks unqualified for the interim jobs, is scheduled to be in Lafayette this week for a site visit as part of its annual review of the public utility.
Both Stewart and Fremin have been with LUS for nearly two decades. NewGen met with Guillory in January, reminding the mayor-president in a follow-up email on Feb. 1 that LUS has been without a permanent director for 18 months, suggesting ongoing discomfort with the lack of permanent leadership.
The Feb. 6 letter to state police, written by City-Parish Attorney Greg Logan and widely released to local media, specifically names only one person, former LUS Director Terry Huval, while redacting the names of the current employees. The central allegation stems from 2011 emails alleged to be missing from an eight-year count of Huval’s email records, suggesting the destruction of computer files and email archives (along with “possible manipulation of accounting or public finance records.”)
“It appears that there was somewhere between 15,000 and 20,000 of Terry Huval’s e-mails deleted for the 2011 time period,” Logan writes.
He goes on to say, “We believe certain individuals at LUS & LUS Fiber are guilty of injuring public records … theft … malfeasance … and/or criminal mischief.”
In confirming Monday that two of the four employees had returned to their jobs, LCG spokesman Jamie Angelle declined to comment on what he described as an “ongoing investigation.”
State police confirms it is not looking into the matter. “Everything is in the hands of the DA at this point, so we are on hold,” says PIO Thomas Gossen.
District Attorney Keith Stutes notified the administration on Feb. 7 that he considered Logan’s letter a complaint and requested a wide range of documentation, including audits and internal investigations into former or current employees.
“I have received, preliminarily, some of the information I requested,” Stutes says. “At this point, it’s a review process; it’s still under examination.”
The gist: The Guillory administration’s push to consolidate IT groups under one roof may move all of LUS Fiber, not just its IT personnel, under the authority of a new Department of Innovation. This would be a bigger shakeup of the telecom and its former sister department LUS than previously suggested by the administration in meetings and in the press.
The Department of Innovation is proposed to “streamline” technology operations within city-parish government. In interviews, Mayor-President Josh Guillory has hinted at a major shakeup of LUS and LUS Fiber, taking the view that costs can be cut and operations made more seamless if reorganized. The Department of Innovation would house all of the administration’s technology initiatives, including the Digital 311 project launched by former M-P Joel Robideaux’s administration and a broader slate of Smart City programs imagined in a 2018 consultant-guided strategic plan.
An LCG spokesman confirms in an interview the possibility that all of Fiber is subject to reorganization but says it is “not set in stone.”
A wholesale move of Fiber has not been previously discussed publicly. The administration met with council members in late January to brief them on the planned reorganization — then putatively limited to just IT groups at LUS and Fiber — but council members Nanette Cook and Liz Hebert say they did not walk away with the understanding that moving all of Fiber into the Department of Innovation was on the table. A slide deck produced for those meetings hints at the need for LUS and Fiber to adopt “business focused” leadership, as opposed to “engineering focused” leadership, but doesn’t make clear to what extent Fiber’s chain of command or organization will change.
“Let’s wait till they get their director[s] before we start pulling it apart,” Cook says of the reorganization in general, which she warmed up to after her briefing last month. She says the administration’s view is that the departments need to be set up before new directors are recruited. Fiber and LUS are both headed by interim appointees deemed unqualified by LUS’s consulting engineer of record, NewGen Strategies and Solutions. LUS has been without a permanent director for more than 18 months; NewGen reminded the administration of the long absence of steady leadership at the beginning of Guillory’s term, according to emails obtained by The Current in a public records request. NewGen is in town this week to make a site visit as part of its annual engineering report.
If Fiber were to become part of the Department of Innovation, it would no longer have an independent director and would instead report to current LCG Chief Information Officer Randy Gray. This would balloon the operations under Gray’s control from an Information Systems & Technology budget of $6 million to a combined budget of more than $50 million. Most of that budget, $42 million, would come from Fiber. CAO Cydra Wingerter has previously said combining just the IT staff for LUS, Fiber and IS&T would save approximately $500,000 annually. LCG has contracts worth more than $1 million with private consultant KPMG to build out its Digital 311 system — a website where residents can report non-emergency problems to the police, Public Works and other departments — and develop other Smart Cities projects.
While the reorg plan was called “preliminary,” internal emails reveal that it was set on a fast track. Interim LUS Director Lowell Duhon referred to a “tight timeline” for the reorganization in email threads with LUS Fiber interim Director Kayla Miles Brooks, LCG CIO Gray, CAO Wingerter and others. Wingerter, Gray and Brooks have spearheaded the effort — pointedly, no long-serving or more senior LUS or Fiber staff have been involved — with Duhon promising his support in seeing the shakeup through and noting some resistance among longtime LUS staff, who bristled at being left out of the plans.
I spoke with [Former Interim LUS Director] Jeff [Stewart] tonight about me asking you to consider including someone from IS&T @ LUS in on the planning, but that you were concerned about it delaying the already tight schedule.— Interim LUS Director Lowell Duhon’s Jan. 14 email to Gray, Wingerter and Brooks
Stewart was among four top-level LUS and Fiber staffers placed on administrative leave in early February after the administration claimed it had uncovered evidence of an attempt to hide email records connected to a pattern of “questionable” payments made by LUS to LUS Fiber, in possible violation of state law. This week, Stewart and former LUS Fiber interim Director Teles Fremin were cleared of wrongdoing and returned to work, according to multiple sources. The administration has kept the names of the employees confidential but did confirm that two returned to work Monday.
“You’re going to have a select group of individuals who disagree,” LCG Communications Director Jamie Angelle says in an interview. Defending the closed loop of decision makers, Angelle points out that LCG has more than 2,000 employees, and that the mayor-president can’t be expected to consult each of them to make big decisions. The apparent urgency behind the reorganization plan was motivated by a desire to realize the benefits sooner than later, Angelle say, not any “ulterior motive.”
Publicly, Guillory and Duhon downplayed how advanced plans were, telling The Acadiana Advocate in January that LUS insiders alerting the newspaper to the IT reorganization, and opposing it, were making assumptions about an idea in its infancy.
“When I say we’re in the beginning phases of even thinking about a possible reorganization for efficiency …” Guillory told The Advocate on Jan. 22, just days after an ordinance was drafted and distributed for discussion internally. “If the beginning has a beginning, that’s where we are.”
An assistant city-parish attorney noted some legal obstacles created by the charter amendments. Attorney Mike Hebert, who wrote the draft ordinance, dated January 17, flagged provisions in the new charter requiring LUS and LUS Fiber to be overseen exclusively by the City Council. But the reorganization plan, according to the draft ordinance, would place all of Fiber under a Department of Innovation overseen by the Parish Council, too. That department would also house all of IS&T — essentially LCG’s IT office — and peel IT staff away from LUS to make a robust innovation division charged with “streamlining” technology services within LCG.
“The proposed reorganization moves a department of LCG [LUS Fiber] governed only by the City Council into a department that will consist of city and parish functions and will be headed by appointees who presumably will be funded jointly by the City and Parish,” Hebert wrote in an email to Gray, Wingerter, Brooks and the mayor-president.
For most of its existence, Fiber was a division of LUS. It was split off into its own department by former Mayor-President Joel Robideaux and the previous council in 2018. That decision was partially influenced by the then-brewing controversy around payments for services LUS and other LCG divisions made to LUS Fiber that may have violated a state law created to prevent LCG funds from propping up the municipal telecom. Robideaux reported his findings to the Public Service Commission, which has limited oversight on Fiber. Robideaux and the council agreed that Fiber needed its own leadership to thrive.
This reorganization would pull Fiber back into the fold of another entity, LCG, to which it sells services. On its face, that contradicts part of the original justification for breaking Fiber out on its own, laid out by Robideaux last year. The lingering controversy has been leveraged by Guillory to gather support for the reorganization generally. The mayor-president himself has consistently messaged that LUS in particular needs to be reined in, saying in a recent interview that the utility system is not a “sovereign state.”
Efforts to save hundreds of thousands of dollars by consolidating IT departments could create risks that cost Lafayette millions of dollars. We need experienced leadership in place first before considering this proposal.
The gist: Mayor-President Josh Guillory intends to stick with interim directors at LUS and LUS Fiber for several more months while moving to combine their IT personnel with LCG’s IT department. Both interim appointments, made by the last administration, were said to be “short-term” and of questionable qualifications. The reorganization has met some resistance.
The main pitch is cost savings. Pooling personnel could save $500,000 a year on IT services, according to Chief Administrative Officer Cydra Wingerter. This would primarily be achieved by using the consolidation to staff currently vacant positions, in a combined innovation group overseen by LCG Chief Information Officer Randy Gray. All 31 employees in the LUS network engineering division would come under Gray’s supervision.
“The next director is going to be in a better position,” Wingerter says. “It’s going to produce incredible savings across the board.”
Interim directors for LUS and LUS Fiber will remain in place for “several months,” Wingerter confirms. Lowell Duhon and Kayla Miles were installed over LUS and Fiber, respectively, by former Mayor-President Joel Robideaux to oversee an inquiry he launched into questionable payments made over the years by LUS and consolidated government to Fiber. Those payments allegedly amounted to millions in illegal subsidies to the municipal telecom. Both Duhon and Miles have remained in their positions despite the apparent wrap up of that investigation late last year. The findings were reported to the Public Service Commission, which has some oversight over Fiber, at the end of 2019.
The administration has been courting council members this week. Both parish and city council members would need to vote on a joint ordinance to approve the reorganization, just as they did with the administration’s successful bid to split up the Public Works Department. Administration officials met with City Councilwoman Liz Hebert and Parish Councilman Bryan Tabor Wednesday, rolling out a slide deck presentation to talk them through the plan.
“I feel like it’s moving too fast,” Hebert says. “If it’s a great idea now, it’ll be a great idea when the [LUS] investigation is over.” Hebert says she wants to wait for permanent directors to be appointed and for an independent, forensic audit of LUS and Fiber’s finances to be completed.
There is some concern about how the combined IT group would be budgeted and how it would affect the day-to-day work of LUS network engineers. It’s unclear how costs would be allocated between city and parish dollars and those of LUS ratepayers. LUS is self-funded by its utility sales, and annually contributes millions to the city general fund each year. Conceivably, the CIO would have control over the LUS network budget, which would in turn impact utility operations. The IT groups for LUS and LCG have roughly similar personnel costs, around $2.5 million.
Saving money may not be the right objective. Independent IT Consultant Doug Menefee believes LCG’s IT department is underfunded and understaffed. He argues that a reorganization could make sense, if the net effect is to improve the resources available for cybersecurity in particular. Cyberattacks hampered services in the city of New Orleans and the Louisiana Department of Motor Vehicles last year. He warns that saving money should not be the prime objective.
“Consolidation shouldn’t come from cost savings but from efficient use of talent,” Menefee says, noting IT talent can be tough to find. There’s usefulness, he argues, in having a “single throat to choke” and in pooling skills. LUS may have resources that LCG’s IT group could benefit from.
LUS advocates say this is a bad idea altogether. Former LUS top manager Andrew Duhon circulated an email to council members arguing that the plan puts LUS operations at risk. Duhon supervised the divisions targeted by the reorg. LUS network engineers are integrated into the utility’s everyday work, he says, including its power grid, cybersecurity systems, customer service applications and more.
A “whistleblower” letter called the reorganization a “power grab” to prop up the city’s 311 initiative. The anonymous letter, sent around to media outlets on Jan. 21, prompted Guillory to dismiss the concerns, saying the plan was at the “beginning of the beginning.” Claiming to be an LUS employee, the tipster said there is no reason to “move control” for the sake of collaboration.
LUS staff have reportedly been kept out of the loop. In his letter, the former CFO claims LUS staff members have been blocked out of the proposal’s development, which Wingerter denies. Asked to name specific LUS employees, she declined, citing only the interim director.
“Since LUS and LUS Fiber lack permanent directors, there is no real advocate for LUS,” Andrew Duhon writes in his letter to council members.
Lowell Duhon took a considerable pay bump when Robideaux made him interim LUS director. He served as Robideaux’s CAO for all but the last few months of Robideaux’s term, until he was moved to LUS to oversee the investigation, boosting his annual pay from $125,000 to $250,000. That substantial raise garnered suspicion that Robideaux’s motives for the appointments were a kind of patronage. Robideaux tied the leadership shuffle to a request by the PSC, which the PSC subsequently denied.
Consultants have questioned both Duhon’s and Miles’ qualifications. NewGen Strategies and Solutions, the consulting engineer required by LUS’ bond contracts, found both Duhon and Miles “lacking” in the appropriate experience to manage the day-to-day affairs of LUS and Fiber. The firm voiced those concerns in a letter sent to Robideaux in November. Robideaux mollified the consultant’s concern by insisting the appointments would be “short-term” until qualified directors could be appointed by a new administration in early 2020.
Wingerter says the inquiry is still going. And she notes that the administration and consulting engineer have a “difference of opinion” about Lowell Duhon’s and Miles’ qualifications. She said new questionable charges have surfaced but declined to go into details. Lowell Duhon’s role, however, is not limited to the apparently ongoing investigation, she says, adding that the former CAO oversees customer service, finance and other LUS activities.
“He was the boss of the previous directors,” Wingerter says, defending Lowell Duhon’s fitness to run LUS.
LUS and Fiber both face a great deal of uncertainty in 2020. LUS is in the middle of a power planning process, set to wrap up this year, that could lead to a decision to retire and replace the coal-fired power plant that accounts for half the system’s electricity generating capacity. Fiber’s fate is largely in the hands of the PSC, which is purportedly reviewing the results of Robideaux’s 2019 investigation.
The gist: From the jump, the new mayor-president is moving on his campaign promises. He’s got big plans to streamline consolidated government in the face of mounting financial pressure on both the city and parish budgets. Now sworn in, along with two brand new councils, Josh Guillory promises he can do more with less.
“We face a host of challenging conversations, and we are ready,” Guillory said Monday in his inauguration remarks. He framed 2020 as a pivotal year for Lafayette Parish, saying its “future as a family-friendly, business-friendly place hangs in the balance.”
It all starts with restructuring the Public Works Department. He proposed splitting transportation and drainage off from the agency into two separate departments, each with appointed directors of their own. Guillory argues that siloing the divisions will force focus on common sore spots for the public: traffic and stormwater management. Exactly how the reorganization will work in practice remains unclear, particularly when it comes to areas where the departments would overlap. Still, the proposal moved ahead and will be up for final adoption later this month.
“I haven’t had time to study the details on how this might play out,” interim Public Works Director Chad Nepveaux, appointed this week, said in responding to questions from newly seated council members. The plan eliminates four currently vacant positions — two mechanic and two environmental inspectors — and would zero out the associate director position currently held by Terry Cordick, who will retire later this year. Guillory said the savings realized from removing those positions from the budget would free up, at minimum, $67,000 for other purposes despite the added expense of new directors. Here are the proposed new salaries:
- Transportation Director: $120,000
- Drainage Director: $108,000
- Public Works Director: $125,000
It does appear that Public Works could benefit from reorganization. Whether this particular proposal addresses the right problems within public works – including millions in infrastructure maintenance backlogs for drainage, roads and public buildings — is a separate question. One criticism of the proposal is that the most pressing issue facing the department is a lack of resources and manpower to address regular maintenance. Another is that the department is already top heavy and suffers from poor cooperation among its divisions.
“If the system was what it should be, there wouldn’t be much of an outcry,” Pam Granger, Youngsville’s city engineer, tells The Current. She sits on a transition committee convened to review Public Works and recommend changes. That committee did not produce or review the proposal introduced Tuesday night. Councilwoman Liz Hebert tells The Current she supports the administration’s proposal, but adds that she believes constituents would like to see more “boots on the ground” to shave delays on service requests; Guillory insists that the restructuring will not worsen service.
Work has also begun on reviewing the Unified Development Code. On Monday, Guillory doubled down on his campaign promise to “repeal and replace” the UDC — which centralizes a number of zoning and building regulations into one place — with something more business friendly, promising to loosen regulations and tinker with processes critics say have slowed down permitting and increased costs for development. A 40-person committee, which includes many vocal critics of the UDC alongside campaign supporters of former Planning Director Carlee Alm-LaBar, Guillory’s opponent during the election, met in late December to start work. Alm-LaBar played a key role in developing the UDC while serving under the administration of Joey Durel. How much of the existing regulations remain will determine whether the UDC is truly replaced or merely tweaked.
Guillory has also promised to pursue an independent audit of LUS. Linking the effort to the internal investigation carried out by Mayor-President Joel Robideaux in the latter half of 2019, Guillory committed to further vetting LUS’s financial practices. Robideaux’s inquiry surfaced accusations that LUS made millions in improper payments to LUS Fiber in an attempt to prop up the municipal telecom. Just before leaving office, Robideaux suggested Fiber’s business model isn’t working. The results of the inquiry are now in the hands of the Public Service Commission, which has limited regulatory oversight over Fiber.
Lowell Duhon and Kayla Miles will remain interim directors of LUS and LUS Fiber. Robideaux appointed Duhon, then his chief administrative officer, and Miles to those positions to carry out the inquiry, at one time inaccurately claiming the leadership shakeup was linked to requests by the PSC. Questions have been raised about Duhon’s and Miles’s qualifications, along with the pay increases that accompanied the appointments. Robideaux’s rebutted concerns of LUS’s consulting engineer, retained as a bond-holder requirement, about the appointments by arguing that they were temporary and meant only for the purposes of the review. The review wrapped with the release of his report in December.
What to watch for: How the new administration works with the new councils. Robideaux was widely criticized for poor communication of his initiatives, which ultimately soured his relationship with the council and other parish elected officials.
The gist: This is it — barring any special meetings — the last-ever meeting of the Lafayette City-Parish Council. Wasting no political opportunity, the agenda is chocked full of hot-button items.
Six new taxing districts. With the EDDs likely to be the biggest showdown of the bunch, the council will take up separate votes on these new sales and hotel taxes to raise money for development around the Northgate Mall, Acadiana Mall, the University Avenue corridor, and Downtown, as well as redevelopment projects at the Holy Rosary Institute and the former Trappey’s canning plant. Incoming Mayor-President Josh Guillory just announced publicly opposition to the districts and urged the council to punt them to next year. Here’s an explainer on the ins and outs.
Robideaux’s report on LUS/Fiber. Outgoing Mayor-President Joel Robideaux will wrap up an eight-month investigation into “questionable” payments between consolidated government agencies and LUS Fiber. Along the way, Robideaux has suggested impropriety on the part of retired LUS Director Terry Huval, namely that millions were spent unlawfully under his watch to prop the municipal telecom up. The Louisiana Public Service Commission has distanced itself from the inquiry despite Robideaux’s insistence that it began with a PSC request.
New funding agreement for city prisoners. The administration is moving money around — including selling a parking lot — to pay in part for a $1.25 million intergovernmental agreement to house city prisoners at the parish correctional center. Three separate ordinances cover a fund balance transfer, the parking lot sale and execution of the IGA, which stipulates that the money go to capital improvements at the jail. Note: This doesn’t address the funding dispute between the sheriff and parish government.
Restoring funding to the juvenile assessment center. Sheriff Mark Garber shuttered the juvenile assessment center, among other so-called diversion programs, citing budget problems. An ordinance by Councilman Kenneth Boudreaux, who works under contract for LPSO and has taken criticism for a conflict of interest, would restore $600,000 to JAC by transferring some fund balance out of the juvenile detention center.
5% pay raises for City Court employees. This is the last of a batch of pay raises for public employees passed recently. It adds another $55,000 in personnel costs to the city budget, which is facing more and more financial pressure. The council has adopted millions in increased salaries for the police department and other public employees.
The gist: Challenged by the council to be more transparent, Mayor-President Joel Robideaux delivered to the Lafayette Public Utilities Authority potentially damaging comments gathered by the administration during its investigation of payments by LUS to LUS Fiber.
Get caught up, quickly. LUS and LUS Fiber have been under fire for a pair of potential violations of a state law that prohibits government dollars from propping up the municipal telecom. The most recent of the two, $8 million paid over eight years for a power outage monitoring system, was self-reported by Robideaux in July. In a press release distributed Oct. 11, Robideaux announced he was removing LUS and Fiber’s interim directors, claiming the swap was made to “facilitate an internal review on behalf of the Public Service Commission,” and connected the review to the power outage monitoring payments. The PSC denies any involvement and has distanced itself from Robideaux’s attempts to link his efforts to its limited oversight. Robideaux named his chief administrative officer, Lowell Duhon, to oversee LUS, and Kayla Miles Brooks, Fiber’s business administrator, as LUS Fiber’s interim director, replacing Jeff Stewart and Teles Fremin, respectively. LUS’s consulting engineer has deemed Duhon and Brooks unqualified for the posts.
Once closely held and secretive, the review was center stage at a special joint meeting of the council and the LPUA. Lafayette Public Utilities Authority Chairman Bruce Conque requested the meeting after a pointedly challenging email to Robideaux from Councilman Jay Castille, a frequent critic. “I think everyone agrees that if there was a violation of the law, that would be a very serious allegation,” Castille wrote the mayor on Nov. 13. “I think all anyone wants is a ‘comprehensive, complete and honest analysis.’ But the way you have handled this entire matter makes many doubt your sincerity.”
Castille, who declined to comment for this story, had also called the mayor to task for being untruthful about the Public Service Commission’s role in the ongoing review; Robideaux has said, and repeated Tuesday, that Public Service Commissioner Craig Greene asked for a wider inquiry of the relationships between LUS, LCG and Fiber. Greene’s office denies it played any role. The Lafayette Public Utilities Authority, a subcommittee of the council, regulates LUS, and the PSC has limited oversight over LUS and Fiber, ensuring they comply with provisions of the Local Government Fair Competition Act.
Robideaux’s presentation came on the heels of a press conference called abruptly last week by former LUS/LUS Fiber Director Terry Huval, in which Huval defended the power outage monitoring system’s pricing and usefulness.
In his remarks, Robideaux responded to criticism with what may be the most damaging information to date. He released emails and anonymous comments gathered in interviews recorded under attorney-client privilege during the investigation into the power outage payments to LUS Fiber. The complete context of the comments isn’t clear, and Robideaux seemed to attempt to attribute the statements to eight people interviewed, including LUS’s and Fiber’s former interim directors, an LCG accountant, an auditor and two attorneys who work on LUS matters. (You can view his full presentation and comments here.)
“In my opinion, I’ve always thought it was kind of a stretch … as someone who works in the industry, that’s why we are eliminating it, to be honest with you,” said one interviewee. And another: “We need to let it fall off the books because we’re not seeing the justification.”
Huval continues to stand by the POMS decision. “Last week, I explained how we incorporated the beneficial use of technology on the LUS system that resulted in significantly reduced electric outage durations, while still maintaining the lowest rates in the state,” Huval wrote in response to a request for comment. “During the implementation of such technological upgrades, I did not receive any indication by LUS staff or consultants that any of these initiatives were not cost effective. LUS customers are receiving the best service ever because of initiatives such as these.” (View Huval’s presentation here.)
Why this matters: Robideaux presented what may be the most compelling evidence to date that some LUS insiders suspected the power outage monitoring payments were a way to prop the fiber division up at a time it desperately needed cash flow. Should a new PSC audit determine the service was mispriced or unnecessary, the money may have to be paid back to LUS with interest, delivering a financial blow that could jeopardize the future of LUS Fiber. Robideaux is expected to give the LPUA an update by mid-December and complete the review by the end of the year.
The gist: For the first time in its history, Lafayette’s publicly owned utility opened its doors to public involvement in how it plans for the city’s power needs, a process called an integrated resource plan, or IRP. A big decision before LUS and its customer-owners: what to do with its coal-fired power plant.
We own a coal plant? Yes, you do. Well, technically you co-own it with CLECO. The plant, called Rodemacher 2, is located in central Louisiana and accounts for 265 megawatts of the LUS power portfolio. The plant was built in the 1980s and has taken on millions in upgrades to keep pace with regulatory changes.
“I think the unit will be converted to natural gas or retired,” LUS Power Manager Jeff Stewart said at a Tuesday public hearing to a crowd of two dozen attendees, including several renewable energy and environmental advocates who have criticized the system’s lack of public involvement and continued investment in its coal plan.
Consultants estimate $43 million in new upgrades are needed. The investment would update the aging coal plant to comply with federal environmental regulations governing water discharges and emissions. Michael Borgstadt of Burns and McDonnell, the consulting engineer guiding the IRP process, said new revisions to those rules were released in early November, which could affect the price tag. How much, exactly, is unknown, though he said costs shouldn’t vary greatly from those currently anticipated.
LUS still owes $50 million on compliance investments made in 2012. The system issued bonds to pay for upgrades on Rodemacher needed to comply with emission standards issued by the Obama administration. At the time, critics called for the system to be retired or converted to cleaner-burning natural gas. LUS opted to stick with coal, but natural gas prices bottomed out in the fracking boom. The system now faces more costs to keep the unit in compliance while natural gas prices remain historically cheap.
“We have an opportunity to make decisions that have a positive impact,” said Laura McColm, a Lafayette resident and LUS customer, at the Tuesday hearing. McColm, like other attendees, urged LUS and its consultants to consider the costs associated with pollution and be wary of making big, risky investments that cost ratepayers for years. By and large, participants were upbeat about the chance to give feedback and engaged in a lively discussion with Stewart and the consultants on hand.
A 2016 IRP resulted in plans to build new power generation that was later scuttled. LUS then took criticism for a lack of transparency in conducting the power plan — also led by Burns and McDonnell — which ultimately resulted in a $120 million plan to build new power supply powered by natural gas. Rates were raised 9% to pay for a $250 million bond sale that included the new power plants, but the City-Parish Council voted not to go forward with the plan.
With power planning, LUS is shooting at a moving target. Market conditions in the power industry are in turmoil because of constant regulatory changes, new technologies and shifting fuel costs. The Obama- era Clean Power Plan likely would have forced the retirement of the coal plant, Stewart tells me, but current rules have eased the pressure on coal plants broadly. Still, coal is on its way out.
“We’ve known for years that coal would be a target,” Stewart says. “[Rodemacher] could be a good retirement in terms of economics.”
What to watch for: More opportunities for public input. Stewart expects another hearing by spring of next year. LUS has made available other channels to give feedback on the IRP. The plan is set to wrap up by summer of next year. It will be up to LUS and the City Council — which is replacing the Lafayette Public Utilities Authority as LUS’s regulator — to decide what to do with the results. Ratepayers can submit feedback by email to IRPfeedback@lus.org. The deadline for public comment on this phase is December 15, 2019.
The gist: Changes to LUS and LUS Fiber leadership, announced suddenly the night before October’s primary, were said by the Robideaux administration to be tied to an ongoing internal review of transactions between the systems that was requested by the Louisiana Public Service Commission. PSC representatives, however, contradict that assertion — saying no such internal review was asked for, and the leadership change is not related to any request from the commission.
Get caught up, quickly. LUS and its sister company LUS Fiber have been under fire for a pair of potential violations of a state law that prohibits government dollars from propping up the municipal telecom. The most recent of the two, $8 million paid over eight years for a power outage monitoring system, was self-reported by Mayor-President Joel Robideaux in July. In a press release distributed Oct. 11, Robideaux announced he was removing LUS and Fiber’s interim directors, claiming the swap was made to “facilitate an internal review on behalf of the Public Service Commission” and linked the review to the power outage monitoring payments. Robideaux named his chief administrative officer, Lowell Duhon, to oversee LUS, and Kayla Miles, Fiber’s business administrator, as LUS Fiber’s interim director, replacing Jeff Stewart and Teles Fremin, respectively.
“Subsequent to the self-reports, the PSC requested that a more in-depth and internally unbiased review of all LUS Fiber inter-agency transactions be performed, necessitating the staff changes,” Robideaux wrote in his October press release, suggesting that the PSC itself had requested the leadership changes or supported the decision.
There is no written record of such requests from the PSC. Requests for management changes “would absolutely be in writing,” commission spokesman Colby Cook says. “We rarely make those kinds of recommendations. It’s a financial audit.”
PSC Executive Secretary Brandon Frey confirms the commission has not asked for an internal review of inter-agency transactions. “There is nothing pending on anything like that,” he says.
To date, the PSC has investigated only one self-reported violation from 2018. Robideaux’s July letter concerning the power outage monitoring system triggered no new review or request from the PSC, according to PSC staff. The last formal correspondence between the administration and the PSC was a June audit report concerning the 2018 discovery of payments from LUS to Fiber for services to sewer lift stations and some electric system components that were never connected. After a comprehensive review of inter-system transactions, the PSC found that besides the $1.7 million in sewer and electric payments paid out over several years, which Fiber reimbursed, the system was in compliance with state law and PSC rules, according to the report.
The June report raised concerns about having a single director run both Fiber and LUS. Longtime Director Terry Huval ran both LUS and LUS Fiber, an arrangement PSC staff wrote “may have weakened the strength of internal controls.” That concern was moot by the time the audit was concluded, as two different interim directors were already in place by the end of 2018.
Robideaux took widespread criticism for a bid to privatize management of LUS. The deal, first revealed by The Current in the spring of 2018, would have sold management rights to private equity firm Bernhard Capital Partners and at one time potentially included Fiber. Huval retired early from a previously announced decision to step down amid the controversy. The episode pitted Huval against his former boss, as the retired director publicly opposed the Bernhard deal. Later that fall, the City-Parish Council and the mayor-president agreed to divide LUS and Fiber into separate divisions. Robideaux appointed Stewart and Fremin to their interim posts, which they held without incident until October’s shakeup.
The self-reports have figured in political campaign materials. The Lafayette Parish Republican Executive Committee, whose Facebook page is run by Robideaux’s political consultant Joe Castille, used these transactions as a wedge issue against Councilman Bruce Conque, who lost his re-election bid to Andy Naquin, and mayor-president candidate Carlee Alm-LaBar.
(Disclosure: Alm-LaBar gave seed money to The Current in 2018; view our list of donors here.)
The administration has yet to officially respond to the June report from the PSC. Within a month of receiving the June audit, however, Robideaux claimed to have found the second potential violation of the act and said he hand-delivered a letter outlining those findings to the PSC, writing to the PSC that LUS may have made illegal payments totaling $8 million to LUS Fiber over an eight-year period. He actually hand-delivered the letter to Public Service Commissioner Craig Greene, when he visited the commissioner to discuss the June report.
“[Commissioner Greene] hasn’t had any more conversations other than when Mayor Robideaux had given us the letter, and we said we’ll get this to our staff. We gave no formal recommendation as to what they should do with [it],” says David Zito, Greene’s chief of staff. “None of the commissioners have approached us, and we have not approached any of the other commissioners about it.”
The legality of cross-subsidization between LUS and Fiber is regularly tested in annual attest audits, and interagency transactions are run through LCG’s finance department. In his letter, Robideaux, an accountant, took issue with the accounting method used to price the cost of power outage monitoring system, saying the approach likely violated state law. An audit conducted by LUS Fiber’s independent auditors in 2012 and a PSC audit for 2011 and 2012 did not take issue with the payment computations, which were based on the annual estimated savings from power outages. That means numerous oversight mechanisms, including Robideaux’s own administration, would have failed to detect any problems.
Robideaux has not asked the PSC to audit that issue, yet he references it as one of two self-reported findings to justify the leadership changes.
“We are committed to providing the most complete and unbiased report possible to the PSC, and the need for fresh sets of eyes is what prompted the naming of new interim directors at LUS and LUS Fiber,” LCG spokeswoman Cydra Wingerter writes in an emailed response to questions about the management changes sent this week. “The outcome of this in-depth, internal review will be formally provided to the PSC, and it is expected that a decision will be made as to whether the findings will be included in the initial self-report or taken up separately.”
Robideaux told commissioners in the July letter that Fiber’s annual attest audit began in May 2019 and would be filed with the commission by August. As of Tuesday, the attest audit had not been turned over to the PSC, its records show.
“There’s nothing pending at the commission involving the July letter,” says the PSC’s Frey. “I don’t think there’s been any request from them to open up an audit.”