We need a public util­ity au­thor­ity

The Covington News - - Opinion -

The pro­posal by Cov­ing­ton Mayor Ron­nie John­ston to give se­nior cit­i­zens a dis­count on elec­tric and gas rates is a com­pas­sion­ate and well-in­ten­tioned move. How­ever, it is also a bad idea.

The city al­ready spends more to buy and de­liver electricity to res­i­den­tial cus­tomers than it re­cov­ers in rates. Gov­ern­ment should not be in the busi­ness of sub­si­diz­ing a com­mod­ity pur­chased by con­sumers.

When my wife, Kim, ran for mayor in 2007, we stud­ied ev­ery as­pect of the city’s bud­get and op­er­a­tions to build her cam­paign plat­form. We found Cov­ing­ton charged the high­est sum­mer elec­tric rates of any provider in the state from 2003 to 2007, based on the Res­i­den­tial Rate Sur­vey pub­lished by the Ge­or­gia Public Ser­vice Com­mis­sion.

As then-mayor Sam Ram­sey ex­plained, the city’s rates were driven by the cost to pur­chase power. More to the point, Cov­ing­ton had not planned for New­ton County’s ram­pant growth in the late 90s and most of the 2000s. Lack­ing ad­e­quate base power, the city was forced dur­ing peak sum­mer months to buy 30 per­cent of its electricity on the open mar­ket at spot prices. Rates re- flected that harsh re­al­ity.

In of­fice, Kim ad­dressed the sit­u­a­tion by se­cur­ing ad­di­tional short and long-term ca­pac­ity. As a re­sult, Cov­ing­ton went from rank­ing 94th out of 95 sup­pli­ers in the 2007 sum­mer rate sur­vey to be­ing 37th best in 2011. Over that same pe­riod, the city’s rates im­proved from be­ing 22.6 per­cent higher than the state av­er­age to be­ing 1.2 per­cent be­low av­er­age. Work­ing with City Man­ager Steve Hor­ton, Util­i­ties Di­rec­tor Bill Meacham and city staff, Kim’s ad­min­is­tra­tion low­ered elec­tric rates the re­spon­si­ble way — by re­duc­ing the cost to buy and de­liver electricity.

Mayor John­ston means well, and com­pas­sion has a place in gov­ern­ment. But sell­ing a prod­uct be­low cost is bad busi­ness. In 2010, the coun­cil was ad­vised by the city’s rate con­sul­tant to in­crease res­i­den­tial rates and lower those charged to com­mer­cial cus­tomers. The con­sul­tant showed resi- dents were get­ting electricity be­low cost, while busi­nesses paid 28 to 36 per­cent more than the city’s ac­tual cost of power. The coun­cil lacked the po­lit­i­cal will to do the right thing then. There is ev­ery rea­son to ex­pect them to fol­low the mayor’s lead this time, which will make the im­bal­ance even worse.

That’s the prob­lem. Men and women whose place in of­fice de­pends on the vot­ers should not set those prices those vot­ers pay for a ne­ces­si­ties of life. It’s ask­ing too much of an elected coun­cil to make fair, sound busi­ness de­ci­sions when votes are at stake.

It’s not fair that small busi­ness own­ers are over­bur­dened to sub­si­dize res­i­den­tial con­sumers. Also, it’s not good lead­er­ship to cre­ate an un­bal­anced rev­enue struc­ture where ba­sic city ser­vices are in­creas­ingly sub­si­dized by rates and taxes paid by busi­ness. Short-term re­lief feels good, but overde­pen­dence on in­dus­try and small busi­ness even­tu­ally drives them away and leaves res­i­dents fac­ing sud­den, un­man­age­able in­creases in util­ity rates and/or taxes.

The coun­cil should leave the mayor’s pro­posal tabled. They should also ex­plore re­mov­ing the run­ning of the elec­tric and gas util­i­ties from the po­lit­i­cal arena. Those util­i­ties gen­er­ate $60 mil­lion a year in rev­enue. That’s a large busi­ness to be di­rected by a board of six elected men and women with no qual­i­fy­ing re­quire­ments re­lated to busi­ness ex­pe­ri­ence or tech­ni­cal ex­per­tise.

Rather than the coun­cil hav­ing full say over all util­ity mat­ters, the city should ex­plore set­ting up a gas and elec­tric au­thor­ity with an ap­pointed board sim­i­lar to the New­ton County Water and Sew­er­age Au­thor­ity. Such a board, with tech­ni­cal and busi­ness ex­per­tise and an ab­sence of po­lit­i­cal in­ter­ests, is best po­si­tioned to set long-range plans to pre­vent an­other sit­u­a­tion like the rate in­creases of the mid-2000s.

An au­thor­ity is also more suited to mak­ing fair, re­spon­si­ble pric­ing de­ci­sions. It won’t be easy to tran­si­tion, since the city is de­pen­dent on prof­its from gas and electricity to cover such ba­sic ser­vices like public safety. With care­ful plan­ning and con­sul­ta­tion, it should be pos­si­ble to es­tab­lish a model for an au­thor­ity that re­turns the nec­es­sary profit, while do­ing so in a bal­anced and re­spon­si­ble man­ner.

That is where I would urge our Mayor and coun­cil to fo­cus.

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