PUB, CITY, FACE DILEMMA: WHAT TO DO WITH $90 MILLION

By Juan Montoya
Some local Brownsville Public Utility Board customers were surprised to find that they had received a $50 "rebate" on their January utility bill.
They considered it a nice belated Christmas present from their local utility.
But what they don't know – and for that matter no one is confirming – is that there is a pile of cash that is climbing toward $90 million in the coffers of the PUB that was supposed to fund the bonds the utility was going to issue for the construction of the $500 million Brownsville-Tenaska gas-powered plant that would generate 800 MWs of electricity.

PUB was to contribute $325 million and receive 200 MWs. Tenaska would keep the remaining 600 MW to sell on the grid.

As a result, a hoard of loot has been piling up since January 2013 after the city commission approved an ordinance that allowed the PUB board to set utility rates upwards.
In the week between Dec. 11-17, 2012, a unanimous city commission board rammed through two public hearings at two special meetings and passed two ordinances that resulted in adoption of upwards rate hikes in utilities that totaled:

- A36 percent increase in electric rates over the next three years
- A 20 percent increase in water rates over the same period
-And a 6 percent hike in waste water costs over two years.
-Under the plan approved by both bodies  (COB and PUB), electric rates alone went up by 14 percent by October 2013 and another 22 percent by October 2016.

We had posted before that Fitch Rating had said in their May 2016 report that PUB reserved $19 million into an equity reserve in fiscals 2014 and 2015, and budgeted another $10 million deposit in fiscal 2016. In other words, the rate payers had given PUB and extra $30 million so far and the PUB "may" move to adjust the fuel factor to lower their bills by $15 million sometime in 2016.

But now sources in the city administration say that the real amount of money collected by PUB as a result of the rate increases is fast approaching $90 million.

We thought these numbers were staggering considering that PUB has approximately 47,000 customers and that total revenues of the combined system are comprised of approximately 78 percent electric, 11 percent water, and 11 percent wastewater. So we drafted a public information request Dec. 9 and sought more specific information.

Dear Ms. Tello, please consider this a formal public information request for the following:

1. The total amount paid to legal counsel firm Treviño and Boden during the time it has been representing PUB.

2.The total amount collected by PUB from ratepayers as a result of the utility rate hikes put into effect to pay for power plant approved by the PUB board and the City of Brownsville Commission on December 2012.

3. What the PUB has done with the amount collected (in request #2)?

4. A copy of the Memorandum of Understanding (MOU) between Tenaska and the PUB.

We included the legal counsel because it was they who drafted the MOU between Tenaska and PUB. Eddie Treviño is now the Cameron County Judge. In fact, Tenaska drafted a letter to the county which asked that their application for tax abatements for the plant be withdrawn because they had no firm date on when they were going to start construction on the plant. The Fitch report states that the MOU contains a clause where PUB allows Tenaska to delay the construction of the plant until the private company finds customers for the remaining 600 MWs. Fitch states that PUB-Tenaska has set a tentative date sometime in 2018 for the bond issue.

The 10 working days PUB had to answer our request for public information ended on Dec. 23 and so far, we have not received an answer as required by the Texas Public Information Act. In the past, PUB (and Treviño in particular) have resisted releasing information on the MOU stating that given the competitive nature of the energy business, it would harm both PUB and Tenaska. The plant was supposed to have been built by 2016, this year.

But now that the plant is three years behind schedule and there is a glut of electricity on the open market, what is PUB (and the city) going to do with the $90 million? Can they legally use it for other purposes other than what was stated on the record? Will it give the money back to the ratepayers? At $50 rebate increments it would take years before they saw the money. And will the utility set the rates to what they were before January 2013?

We are still awaiting a response from the PUB as is the city commission.