Tag Archives: utility

Court Hands Setback to Attempt at Ousting Utility Commissioners

A unanimous ruling by the state Court of Appeals has provided a serious setback to efforts to remove three Powell-Clinch Utility commissioners from office, reports the News Sentinel.
Judges opined that the commissioners can’t be removed from office for allegedly running a loose fiscal ship before a state law was amended in 2009 making that an ouster offense. That amendment made failure to fulfill fiduciary duties — even without “knowing or willful conduct” — a valid reason to toss commissioners out of office.
The Court of Appeals called the effort to oust on the basis of that amendment “an impermissible retrospective application of law.” The case was sent back to a Davidson County chancellor for further proceedings.
The ouster effort by the state’s Utility Management Review Board began two years ago and was sparked by a state comptroller’s investigative audit.

Car in Governor’s Entourage Bangs Security Gate

NASHVILLE, Tenn. (AP) — One of the sport utility vehicles assigned to the governor’s office is getting more than $10,000 in repairs after getting caught on a security gate at the state Capitol.
Surveillance video obtained by The Tennessean (http://tnne.ws/10vdZ1u ) shows the vehicle carrying Gov. Bill Haslam passing safely through the gate, but a GMC Denali trailing the governor’s car didn’t make it. Security pillars rose up from the pavement, lifting the SUV slightly off the ground and making it swerve.
The accident on May 7 damaged the rear suspension of the Denali, but caused no injuries.
The governor’s entourage was returning to the Capitol after a bill-signing ceremony in Clarksville and a speech at a bookstore in Nashville.

Haslam Bill to Help For-Profit Utilities Gets Final Approval

A Haslam administration initiative that could result in annual rate increases for local customers of for-profit utilities like Tennessee American Water and Chattanooga Gas is on its way to the governor, reports the Chattanooga TFP.
Senators gave final approval to the bill Monday on a 29-1 vote. The House passed the bill last month.
….Majority Leader Mark Norris, R-Collierville, called Republican Gov. Bill Haslam’s utility bill (SB197) a “continuing part of the administration’s top-to-bottom reforms.”
The legislation has drawn concerns from State Attorney General Bob Cooper’s office that the Tennessee Regulatory Authority would no longer effectively protect consumers from monopolies.
Among other things, the bill would allow the TRA to approve “trackers” for companies that allow them to pass along some costs, such as fuel, automatically on to consumers.
The bill also authorizes the TRA to approve “alternative methods” for utility rate reviews and cost recoveries instead of full-blown rate cases.
In a rate case, cities, businesses or the attorney general’s Consumer Advocate Division can intervene if they believe the hikes go beyond a utility’s legal ability to earn a reasonable profit.
Cooper’s office said in a memo that utilities had overstated their rate requests by as much as 60 percent over the past 10 years. The office said the rate cases protect consumers against unwarranted increases.
“What this does in our opinion is make it more likely that rates will increase for business and households,” Assistant Attorney General Vance Broemel told a House panel last month.

AG: Haslam Bill Makes It Easier for Utilities to Raise Rates

Attorney General Bob Cooper’s office warned Wednesday that Gov. Bill Haslam’s plan to streamline rate setting for utilities shifts their “business risks” onto households and businesses, effectively making them guarantee the monopolies’ profits, reports Andy Sher.
“What this does in our opinion is make it more likely that rates will increase for business and households,” Assistant Attorney General Vance Broemel told House Business and Utilities Committee members Wednesday.
Broemel is the chief attorney in the attorney general’s Consumer Advocate Division, which often intervenes in rate hearings on increases sought by utilities.
But Tennessee Regulatory Chairman Jim Allison sought to assure lawmakers, saying similar changes have been put into place in states like Georgia. Tens of thousands of customers served by companies like Tennessee American Water and Chattanooga Gas need not be fearful, he said.
“The attorney general is focused in a very narrow sense on the rate of return” for utilities, Allison said. “But what they’ve missed is before TRA will allow anyone to enter into one of these, we have to go into a process to establish that this is in the public interest.”
The panel approved the administration bill, sponsored by House Majority Leader Gerald McCormick, R-Chattanooga, on a voice vote.
Haslam’s bill, developed in conjunction with the governor’s recently reshaped TRA, creates a new regulatory framework for dozens of investor-owned utilities.
It won’t apply to public power distributors or AT&T and some other telecommunications companies under “market regulation.” The bill also cuts regulatory fees paid to the state by some companies, including AT&T, while increasing them for others like the water and gas utilities.
Lowered fees will reduce TRA’s revenues for operations by an estimated $1.1 million annually and result in staff reductions, according to a fiscal note on the bill.
The bill creates “alternative regulatory” methods that can be used instead of full-blown rate hearings utilities now must go through. But it keeps such hearings for utilities that wish to continue them.


See also The Tennessean report. An excerpt:
In his Tuesday letter to the House Business and Utilities Committee, the attorney general said the bill would effectively shift the utilities’ “business risks to Tennessee households and businesses,” ensuring that the companies make “monopoly profits” regardless of how well they are managed.
“Furthermore, under the proposed annual rate review mechanism, utility customers who have enjoyed rate stability under the current system can expect yearly rate increases in many cases,” Cooper wrote.
Despite Cooper’s warning, the bill was cleared by the committee Wednesday on a voice vote and was sent to the House Finance Committee. The companion Senate bill has yet to see any movement, the attorney general’s office said Thursday
.

Comptroller Questions Easter Egg Bonuses, Other Utility District Doings

News release from state comptroller’s office:
Around Easter, some employees at the Lincoln County Board of Public Utilities received Easter eggs with notes inside, informing them that they would be receiving special bonuses. Bonuses were also routinely doled out around other holidays such as Thanksgiving, Christmas and the Fourth of July – or, for some of the more favored employees – almost weekly.
The problem? The utility’s former superintendent didn’t have board approval to distribute nearly $300,000 in ratepayer money for bonuses from 2008 through 2011. And that was just one of many issues investigators from the Comptroller’s office found during a recent review of the utility’s practices.
Employees sometimes received bonuses for doing routine parts of their jobs, such as reporting water theft or scouting possible water intake sites along the river. Some employees received overtime pay even when they didn’t work extra hours. Employees also received bonuses through random drawings and marble handouts. One employee received a bonus for “adultery watch,” which apparently involved monitoring another employee during work hours.
Findings of the investigation, which were released today, document that the former superintendent also gave more than $13,000 in water adjustments – essentially, discounts on water bills and new water taps – to utility board members, employees and some customers. Nearly $4,000 of those adjustments were granted to volunteer firefighters who attended annual dinners held to foster good will between the utility and local fire departments. The rest of the adjustments were given at the former superintendent’s discretion.
The investigation also revealed that board members were overpaid more than $12,000 for attending board meetings, work sessions and “road trips.” And the former superintendent and former office manager made more than $10,000 worth of questionable credit card charges to the district, including more than $5,000 for meals for employees who were not traveling or conducting official business.
“Ratepayer money is public money, just as taxpayer money is,” Comptroller Justin P. Wilson said. “It is inexcusable for public officials to distribute or spend public money for unauthorized bonuses, water bill discounts or travel and purchases that do not serve work-related purposes. I hope the Lincoln County Board of Public Utilities will take appropriate steps to ensure that these types of abuses don’t occur in the future.”
To view the Comptroller’s report online, go to: http://comptroller.tn.gov/la/SpecialReports.asp
To view scanned images and photographs related to the investigation, go to: http://www.comptroller.tn.gov/repository/CA/2012/lcbpupictures.pdf

News Notes on TN Legislative Ideas as the 2013 Session Gets Underway

Local Option Gas Tax?
Tri-Cities officials are asking area state legislators to authorize a local option gas tax of up to five cents per gallon as a means to improve roads, reports the Bristol Herald Courier.
Friday’s annual wish list presentation from Bristol, Kingsport and Johnson City leaders to representatives and senators headed to Nashville… includes a variety of policy objectives, but the gas tax was an eye-opener to one Bristol lawmaker.
“I just can’t see that working in today’s current economic environment,” said State Rep. Jon Lundberg, R-Bristol, one of the lawmakers at the meeting at the Millennium Centre.
“We are a pay as you go state when it comes to roads and bridges and so far, that has worked, so I can’t see a tax increase going anywhere fast.”
Kingsport Mayor Dennis Phillips handled the transportation segment of the presentations given to legislators and said the consensus of the three-city committee was to have a gas tax option ready to use for an ever-growing list of road construction needs.
“If we are not going to raise taxes or sell bonds somewhere down the road (to improve roads), we are going to have a big problem,” Phillips said. “I think this is really the year to look seriously at that local option so that we can get some help. I personally feel that if there was (no press coverage) and you raised taxes five cents on gasoline no one would know it. Three weeks ago, gas went up 13 cents in one day. The way prices are fluctuating, I think we are missing a prime opportunity not to address that option.”

Insurance Coverage for Oral Chemotherapy?
Tennessee’s cancer-fighting advocates want to hang onto funding for screening and smoking cessation, do a better job educating residents and – after a crushing defeat on this last year – force insurers to cover oral chemotherapy at the same rate as intravenous treatments, reports The Tennessean.
What’s not on their list is raising the cigarette tax, the nation’s sixth-lowest, an effort shown to discourage smoking, raise revenue and, ultimately, save on healthcare costs. That effort failed last year too, said Nancy Hauskins DuBois, an advocacy specialist for the American Cancer Society, so her group is putting it on snooze and waiting for a better time.
…Tennessee is making slight gains against the nation in its cancer fight, moving from fifth in the nation for deaths three years ago to sixth today, U.S. Centers for Disease and Prevention statistics show.
At the same time, it moved from 22nd to 16th for diagnosed incidents of cancer, but that’s not a bad thing, said Dr. Ingrid M. Meszoely, a Vanderbilt University surgeon and co-chair of the Tennessee Cancer Coalition.

Elect Utility District Boards?
Most utility district boards in Tennessee are appointed by county mayors or other local officials, but a dispute over the DeKalb Utility District’s expansion plans has triggered a call for having the boards elected by ratepayers, reports The Tennessean.
But efforts allowing ratepayers to elect utility board members elsewhere in Tennessee have failed in the General Assembly, in part because of opposition from a powerful association representing rural utilities, the Tennessee Association of Utility Districts (TAUD).
Some lawmakers hope to try again this year.
“The customers of the utility districts have no say in who is on their board,” said state Sen. Joey Hensley, R-Hohenwald. “The board controls the rates, controls a lot of issues.”
As a House member for the past decade, Hensley has sponsored legislation allowing direct elections of utility commissioners in Lawrence County. Those efforts have failed. But Hensley, elected to the Senate in November, said he’ll try again this year.
The issue of direct elections for Tennessee’s 180 utility districts, many in rural areas, would add accountability to the boards and better protect ratepayers, say advocates for the change.

Bill Limits Spur Knox Discussion
The Knox County legislative delegation is weighing the impact of state Speaker Beth Harwell’s move to impose limits on bill introductions, with one new House member reporting he’s already being contacted by lobbyists on the matter, reports Georgiana Vines.
Roger Kane, the Republican elected in November to the new 89th District in Northwest Knox County, said four lobbyists have contacted him about sponsoring legislation and one wants him to sponsor two bills.
If Harwell’s 10-bill limit proposal were to be adopted, “that would be half my slots,” he said. “In principle, it sounds good,” he said. “It has caused some things to change. Typically, freshmen were given some ramp-up time. (Now) the freshmen have become of a little more value.”
However, he said he doesn’t want constituencies to be without an opportunity to have bills introduced late in the session, so he hasn’t yet “developed an opinion” on Harwell’s proposal.
Rep. Bill Dunn, a Republican who represents the 16th District, said he has favored limiting bills for several years. He said he has discussed with Harwell having a limit of seven “active” bills at any one time, and if one passes or fails, then another could be introduced.
“What the speaker is doing is a step in the right direction,” he said.
State Rep. Harry Brooks, a Republican representing the 19th District, and Rep. Joe Armstrong, a Democrat representing the 15th District, said some legislators may already have commitments that end up surpassing 10 bills.
“Put the rule in, but make it effective for a second session and here on out,” Armstrong said.

Utility Districts Paying Too Much in Bond Fees?

The Tennessean reports that some Tennessee utility districts representing thousands of water and gas ratepayers, mostly in rural parts of the state, may be paying more than necessary because of the way their bond deals are being structured.
The landscape of Tennessee’s lucrative utility district bond market was significantly altered in 2009 when a nonprofit organization created to educate and advocate for rural utility districts began offering them financial advice with the bulk of the multimillion-dollar business going to a single underwriting firm.
The politically powerful and influential Tennessee Association of Utility Districts, which has 180 member utility districts, has earned $519,323 in fees through its affiliates since it began selling financial advice on bond issues, though neither of its employees has a background in investment banking.
With a TAUD affiliate as the adviser, almost all of the underwriting work has gone to Nashville-based Wiley Brothers, who quickly elbowed past larger competitors to dominate bond deals for rural utilities in Tennessee.
Regulators and municipal finance experts say the types of noncompetitive deals being done tend to come with higher interest rates and fees. And each of the 33 deals involving the TAUD did not follow normal industry practices in disclosures to investors.
…The Tennessean reviewed all 33 bond issuances in which the TAUD subsidiary or an earlier affiliate acted as financial adviser over the last three years and found that in each case, the utility districts sold their bonds at negotiated sales, instead of competitive sales. Competitive sales involve getting bids from multiple underwriting firms and awarding the work to the firm that offers the lowest interest rate. The SEC says competitive sales bring lower interest rates, which means the utility district needs to raise less revenue from ratepayers’ water bills to pay back the bonds.
Additionally, the newspaper reviewed official statements filed with the U.S. Securities and Exchange Commission and found that the legally required documents meant to provide investors with details of the bond issue did not disclose that a TAUD organization was paid out of bond proceeds.

On Budget-busting fire hydrants and utility districts’ power

The town of Elkton, population about 600, has 42 fire hydrants and pays the local utility district $24.50 per month per hydrant to have them connected to the water system. The Tennessean cites the situation as an example of problems with Tennessee’s utility districts.
Mayor Carolyn Thompson doesn’t think the amount … is fair and is fighting back. She refused to pay the full amount for three months, and the South Giles Utility District threatened to turn off the city’s water.
The dispute highlights an ongoing issue with the more than 180 utility districts across Tennessee. There is often little transparency and accountability for how the districts operate. Water rates and activation fees vary widely from district to district.
The same goes for the fees utilities charge municipalities and others for the use of fire hydrants. Some utilities don’t charge anything. Others pay just a few dollars a month. For some cities, the bill can add up to a huge chunk of the budget.
“I feel that I have a fiscal responsibility to this city to manage the financial situation here to the very best of my ability,” the mayor said.
“We really have cut our budget to the absolute core, and we are still struggling. It is hard on us.”
South Giles Utility District officials say they are simply running a business and need the fee to help offset the cost of the very improvements — such as larger diameter pipes — that make using fire hydrants viable.
…Elkton pays $12,348 a year for its 42 fire hydrants, regardless of how often or how much water is used. That’s nearly as much as the entire yearly $12,650 budget for the volunteer fire department, records show.
By contrast, Pulaski in Giles County pays a flat $1,033 a year for nearly 500 hydrants. The city of Tullahoma in Franklin and Coffee counties pays about $11.20 a month for each of its 1,024 fire hydrants. And Columbia in Maury County is not charged anything for its hydrants. These cities are all are served by separate utility districts.

Audit Finds Oak Ridge Utility Manger Helped Himself

News release from state comptroller’s office:
The Oak Ridge Utility District’s general manager used his position for personal benefit on more than one occasion, an investigation by the Comptroller’s Division of Municipal Audit has revealed.
Also, the district paid travel expenses for two employees and their spouses to go on a trip to Rome, although they performed no work-related duties during that trip.
The general manager bought a damaged skid steer, a machine which had been used by the district for loading and digging. After he bought parts to repair the skid steer, he then ordered the district’s mechanic to repair the machine at the district’s shop, using district tools and materials, before taking the equipment home for his personal use.
The district also paid $463 to add a subscription to XM satellite radio in a Chevrolet Tahoe purchased for the general manager’s use. The $38,820 vehicle’s amenities included an off-road package, heated leather seats and a premium sound system – all of which were required to meet the district’s minimum bid specifications for the vehicle.
Investigators determined that two district employees and their spouses went on a three-day trip to Rome at the district’s expense. The trip was organized in conjunction with the East Tennessee Natural Gas Homebuilders program, a promotional effort intended to encourage homebuilders to provide natural gas hookups in the homes they build. Investigators could determine no business purpose for utility district employees to travel to Rome three days before a homebuilders’ trip was set to begin, much less accompany the homebuilders on a Mediterranean cruise.
“It is important for utility district officials to remember that the money they receive from customers is still public money,” Comptroller Justin P. Wilson said. “Therefore, it should be treated as such. Using district funds for personal gain is certainly no way for district officials to endear themselves to their ratepayers.”
To view the report online, go to: http://www.comptroller1.state.tn.us/Repository/MA/Investigative/oakridgeud.pdf

Former Utility Executive Indicted on Theft Charge

CLINTON, Tenn. (AP) — An Anderson County grand jury has indicted the former interim president of a utility district on a felony theft charge.
A charge of theft over $1,000 was returned Dec. 6 against 60-year-old Richard McIntosh. He posted a $25,000 bond and was released from the Anderson County Jail, according to The Knoxville News Sentinel (http://bit.ly/sn02Ei).
McIntosh headed the Powell-Clinch Valley Utility District between May 2010 and February 2011.
A state audit alleged McIntosh used more than $95,000 in utility funds to pay for such personal expenses as an oral surgeon’s bill.
The utility district said its own investigation in November found no wrongdoing.
McIntosh remains a vice president of the utility, which is a gas distributor.
Prosecutor Dave Clark said there’s an ongoing investigation into district operations.