COMMISSIONERS' QUERIES OF PUB RATES A MITE LATE

By Juan Montoya
During the last meeting where financial advisers Hinojosa and Estrada were enticing the city commissioners with a refinancing scheme of their outstanding bond debt, several commissioners expressed concern about the rates at the city's utility.
If ever the American idiom of "closing the barn door after the horse has bolted" applied to a city meeting, this was the one.
New commissioner Cesar De Leon told the commission that everywhere he went he was facing questions about the high (and rising) utility rates charged by the city Public Utility Board.
And commissioner John Villarreal also complained that the PUB's impact rates were hurting small developers who had to pay between $3,000 to $4,000 for each unit in a multi-dwelling or apartment complex.
De Leon said that while it was fine to speak to the subject dispassionately during city meetings, the commissioners had to go out in the community and face the indignation of their constituents over the rising rates.
Either de Leon didn't know it, or perhaps he did and is trying to find a way out, but planned increases of PUB electric and water rates are programmed to keep rising and never coming down because the payment of the $325 million in bonds to pay for the Tenaska power plant is pegged to the increases.

Some critics contend that with at least two 500-plus megawatt power plants under construction in the valley, the Tenaska plant will be redundant by the time it comes on line and the company cannot sell the 600 other MWs aside from the 200 that belong to the city. Don't hold your breath. Too many people are going to get rich off this scheme. The ratepayers will, of course foot the bill.
Hinojosa and Estrada could have told the commissioners this. In fact, they could have told them that even the millions collected from utility reconnections for those who can;t pay their bills on time are figured into the utility's assets.
What the city could do, is stop taking the annual $7 million cash transfers from the PUB and use it to lessen the rate fatigue of city residents. Or perhaps they could stop having PUB provide more than $4 million annually in utility services to the city for free.
They might even consider stopping taking the occasional double dip (as they did in 2010 and 2011). Nah!

















Let's face it. Making city budgets balance is a lot easier if you can tap the PUB for $10 million each year instead of living within your means.
And as far as Villarreal's question about the PUB impact rate, well, that battle has been fought over and over and over.
For decades, the rate payers (again!) have been saddled with paying the difference between impact rates recommended by costly (and mandated) feasibility studies only to have some city commissioners buckle under large developers and lower it below the recommendations.
The most memorable was the trench warfare between former Mayor Pat Ahumada and city commissioner Ernie Hernandez. In a nutshell, almost $1 million was spent on at least two or three studies and the impact fees were raised, lowered, and then raised again. The current impact fee form connection to the PUB were a compromise: lower than the studied recommended and higher than the developers wanted. The rate payers picked up the difference (again!).
The commissioners approved the Hinojosa Estrada/PUB plan of refinancing bonds issued in 2007 and 2012 at a netter interest rate for the city. The principal owed by PUB ratepayers remains the same, the debt is simply lowered in the outstanding debt, and Messrs. Estrada and Hinoojosa make a nice percentage of change in the bargain.
All this is predicated on bond ratings, the utility rates remaining high (and rising), and the impact fees staying right where they are.
Lower utility rates? Forgetaboutit!