Citizens are denied the opportunity to vote on an important issue relating
to the future costs of operating the City.
This column presents a conservative viewpoint about items of interest in our community and our lives. Focus is on items impacting your pocket book, your personal freedoms, and your rights. I hope you will read the column regularly and it occasionally influences your opinions and actions. Now, on to the subject of the week:
"The Marianna City Commissioners have voted to renew the Florida Public Utilities ten year franchise instead of having option to purchase the utility decided by a referendum of the citizens in the city."
In my opinion, the actions of the Marianna City Commissioners and their special advisory committee resulted in a disservice to the citizens of Marianna in the matter of the Florida Public Utilities franchise renewal. The residents of Marianna are now forced to buy their electric power from FPU for atleast another decade, and probably for generations to come. This was an important issue which related to the very serious infrastructure problems the city will face in the coming months and years. The opportunity to create an electric utility as a partial solution has now been lost.
Why did I favor creating a municipal utility in this instance? What additional evaluations and considerations should have been made before making this decision? I will attempt to answer these questions.
Issue: 1. Control over management and operating procedures
I had much rather have the decisions relating to my electric bill, deposit requirements, collection procedures, and future rates made by local citizens who I can talk to, and who I can vote for or against in elections….than have those decisions made by some executive in South Florida, or even worse by a political appointee made by the Governor in response to the political donations made by Utilities who use this influence to control the Public Service Commission. The existing system is flawed and corrupt. We could have regained some local control over our destiny.
Issue: 2. Demonstrated Personality of FPU
Through the actions taken by the management of FPU during the past two years, I feel they have demonstrated a total corporate focus on profitability with little regard to the needs of the communities and residents they serve. Specifically, the approaches taken by FPU in the following instances demonstrate to me a lack of concern for their customers, or a pervasive ineptness in management…or both.
● Security Deposits: The manner in which the arbitrary, sudden decision to require virtually every resident customer to double their outstanding security deposit to the company was implemented in a cruel, harsh manner. This demand should have been only for clients with demonstrated bad credit and payment performance. If it had to be done to virtually everyone, then they should have provided an option to pay an overcharge over a six month period to create the extra deposit. The manner in which they accomplished this change was an abuse of their monopolistic position.
● Fuel Adjustment Charges: As part of the seven rate increases which have moved the rates in Marianna to among the highest charges in the state, FPU used as justification before the Public Service Commission the need for increases to cover projected fuel increase add-ons charged to them by Gulf Power. FPU pushed these allowances to the maximum levels allowed with no regard to the struggling families that would be impacted. I understand that this overcharge has created a reserve fund which now must be adjusted downward. In the meantime, many residents have lost control over money desperately needed for their families.
● Manner of Installing Rate Increases: At the beginning of 2008 as a result of their new contract with Gulf Power, FPU installed rate increases which effectively doubled the monthly electric bills for its customers. For many families in Marianna this created a tremendous hardship. Some found themselves deciding between medicine and food vs. paying their electric bill. These increases could have been installed in a much more humane manner, with the increase being added over a period of time, and special accommodations being made to those with demonstrated problems created by this change to their budget. Instead, it was "Pay within fifteen days or be cut off", and then pay a huge reconnection fee. Again, they abused their monopolistic advantage.
● Negotiating An Ill Conceived Contract With Gulf Power: "It is by far the worse contract with a producer I have ever seen a utility enter into", was the description used by the City’s consultant, Bill Herrington. The contract has no "peak demand" cost reductions, and absolutely requires FPU to purchase the amount of power used the previous year, plus 4%. This means that even if customers engage in wonderful conservation procedures and greatly reduce the power used….FPU still has to pay for it! Using fewer kilowatt hours actually increases the cost per KWH for FPU. This demonstrates a lack of understanding on the part of FPU management, or a lack of caring since they know the PSC will allow them to pass their costs on to the consumer.
● Miss-billing approximately $300,000 over the past five years, which gave the county all of the franchise fee funds that were supposed to go to the City from Family Dollar, since the industrial park where Family Dollar is located was annexed by the city as part of the project to create the park. Again, this demonstrates a lack of professionalism.
Issue 3: The Need for Revenues:
For me, this is perhaps the most critical part of the decision. During the evaluations, a clear financial picture of what profits are being generated for FPU from Marianna operations could never be determined. From my years of industrial experience, I know FPU is certainly engaging in "creative accounting" which will hold their tax payments on profits to a minimum.
FPU recently declared a $3.7 Million dollar dividend to shareholders. They have many reserves and funds set aside for contingencies, they operate an expensive headquarters in South Florida which absorbs profits, they make significant political donations, they pay federal taxes on their profits…all of these items would not be a factor in the cost structure of a municipal utility, and are indications of significant profitability and cash flow.
Additionally, Marianna currently pays an annual electric bill which approaches $1 Million dollars. If they owned the utility, they would effectively only be paying wholesale cost for the power used.
I intuitively feel the annual profit potential for the city if it operated the utility would be close to $1,000,000 per year….much higher than the figures used by the consultants. Marianna desperately needs those added revenues.
Issue 4: Marianna is approaching a crisis
Marianna is in a "no-growth" situation. The majority of new homes and commercial buildings in the area are being built outside the city boundaries. The affluent new home builders are locating in unincorporated areas. Simultaneously, businesses are building East of the Chipola and in Malloyville at the interstate.
As a result of the lack of new construction, the average value of homes and structures inside the city are diminishing. The families living in the city, when taken as an average, demonstrate a declining average gross income level per household. This condition can be expected to worsen over the next twenty years. Meanwhile, the City faces a whopping $30 million dollar need for replacing a leaking city water system, leaking sewer systems, inadequate storm water drainage, and streets full of pot holes and cracks.
The City is facing the dilemma of an increasing demand for revenues in the face of a declining ability to pay by the residents. As fees and taxes are raised in attempts to deal with these problems…more people will move out of the city to escape the higher cost of living in the city, the tax base and potential fee payers will continue to shrink, and conditions will worsen.
This electrical utility purchase and the potential revenues which it could have brought, would have gone a long way towards resolving this problem. Now, the commissioners and the residents are faced with only increased taxation and increased fees as a means for dealing with these growing problems. I see this FPU decision as a critical error for our city. I only wish I did not own two homes inside the city limits of Marianna.
In last week’s column I stated that I hoped our commissioners had "cahoonas" large enough to make this decision…..I guess they didn’t.
Rudiments: Odds and Ends Worth Mentioning-
● You just lost another of your personal freedoms of choice. Governor Crist signed into law a new version of the state seat belt requirements. After June 30 you can be stopped if a cop observes anyone riding in a front seat unbelted. The fines will range from $93 to $119 state wide. Based on the number of fines given last year under the old law, I would estimate this new version will enable the state to reap approximately $20,000,000 from the traveling public. Public safety or budget shortfall…which do you think really motivates the Tallahassee bunch and the Governor in this matter? If they were really interested in safety and not revenues, they might have discussed the motorcycle helmet regulations. In my opinion, the real role of Big Brother in this instance should be to educate the public as to why they should buckle up…..and then leave the choice up to the individual.
● Even though you are only poking around city streets at 35 MPH, the city boys are trying to get in on the action, so they are putting on a big "Safety" campaign in Marianna and Cottondale. Click it or feed the kitty!
● Also, the legislature raised your taxes last week. They call them "fees" but they are really taxes. They raised almost every one of the hundreds of fees they collect from us. The new rates will cost each of us another $100 or so each year.
● The "crats" in Tallahassee are playing the same old games - cut education, parks, and similar items which will make the public mad. Meanwhile, ignore the thousands of unnecessary bureaucrats filling those government skyscrapers in Tallahassee. Clint Cox stated it well last week when he noted the logic of building unnecessary sidewalks while we eliminate teaching jobs.
● Definition of Politics = "The conduct of public affairs, for private advantage".
● Stick your head out of your car window as you drive by a government building and yell "I’m mad as hell and I’m not going to take it any more!! ...and you will be "Getting It Right."
Note: The opinions stated in this column are solely those of the author and do not necessarily represent those of Hatcher Publications.
to the future costs of operating the City.
This column presents a conservative viewpoint about items of interest in our community and our lives. Focus is on items impacting your pocket book, your personal freedoms, and your rights. I hope you will read the column regularly and it occasionally influences your opinions and actions. Now, on to the subject of the week:
"The Marianna City Commissioners have voted to renew the Florida Public Utilities ten year franchise instead of having option to purchase the utility decided by a referendum of the citizens in the city."
In my opinion, the actions of the Marianna City Commissioners and their special advisory committee resulted in a disservice to the citizens of Marianna in the matter of the Florida Public Utilities franchise renewal. The residents of Marianna are now forced to buy their electric power from FPU for atleast another decade, and probably for generations to come. This was an important issue which related to the very serious infrastructure problems the city will face in the coming months and years. The opportunity to create an electric utility as a partial solution has now been lost.
Why did I favor creating a municipal utility in this instance? What additional evaluations and considerations should have been made before making this decision? I will attempt to answer these questions.
Issue: 1. Control over management and operating procedures
I had much rather have the decisions relating to my electric bill, deposit requirements, collection procedures, and future rates made by local citizens who I can talk to, and who I can vote for or against in elections….than have those decisions made by some executive in South Florida, or even worse by a political appointee made by the Governor in response to the political donations made by Utilities who use this influence to control the Public Service Commission. The existing system is flawed and corrupt. We could have regained some local control over our destiny.
Issue: 2. Demonstrated Personality of FPU
Through the actions taken by the management of FPU during the past two years, I feel they have demonstrated a total corporate focus on profitability with little regard to the needs of the communities and residents they serve. Specifically, the approaches taken by FPU in the following instances demonstrate to me a lack of concern for their customers, or a pervasive ineptness in management…or both.
● Security Deposits: The manner in which the arbitrary, sudden decision to require virtually every resident customer to double their outstanding security deposit to the company was implemented in a cruel, harsh manner. This demand should have been only for clients with demonstrated bad credit and payment performance. If it had to be done to virtually everyone, then they should have provided an option to pay an overcharge over a six month period to create the extra deposit. The manner in which they accomplished this change was an abuse of their monopolistic position.
● Fuel Adjustment Charges: As part of the seven rate increases which have moved the rates in Marianna to among the highest charges in the state, FPU used as justification before the Public Service Commission the need for increases to cover projected fuel increase add-ons charged to them by Gulf Power. FPU pushed these allowances to the maximum levels allowed with no regard to the struggling families that would be impacted. I understand that this overcharge has created a reserve fund which now must be adjusted downward. In the meantime, many residents have lost control over money desperately needed for their families.
● Manner of Installing Rate Increases: At the beginning of 2008 as a result of their new contract with Gulf Power, FPU installed rate increases which effectively doubled the monthly electric bills for its customers. For many families in Marianna this created a tremendous hardship. Some found themselves deciding between medicine and food vs. paying their electric bill. These increases could have been installed in a much more humane manner, with the increase being added over a period of time, and special accommodations being made to those with demonstrated problems created by this change to their budget. Instead, it was "Pay within fifteen days or be cut off", and then pay a huge reconnection fee. Again, they abused their monopolistic advantage.
● Negotiating An Ill Conceived Contract With Gulf Power: "It is by far the worse contract with a producer I have ever seen a utility enter into", was the description used by the City’s consultant, Bill Herrington. The contract has no "peak demand" cost reductions, and absolutely requires FPU to purchase the amount of power used the previous year, plus 4%. This means that even if customers engage in wonderful conservation procedures and greatly reduce the power used….FPU still has to pay for it! Using fewer kilowatt hours actually increases the cost per KWH for FPU. This demonstrates a lack of understanding on the part of FPU management, or a lack of caring since they know the PSC will allow them to pass their costs on to the consumer.
● Miss-billing approximately $300,000 over the past five years, which gave the county all of the franchise fee funds that were supposed to go to the City from Family Dollar, since the industrial park where Family Dollar is located was annexed by the city as part of the project to create the park. Again, this demonstrates a lack of professionalism.
Issue 3: The Need for Revenues:
For me, this is perhaps the most critical part of the decision. During the evaluations, a clear financial picture of what profits are being generated for FPU from Marianna operations could never be determined. From my years of industrial experience, I know FPU is certainly engaging in "creative accounting" which will hold their tax payments on profits to a minimum.
FPU recently declared a $3.7 Million dollar dividend to shareholders. They have many reserves and funds set aside for contingencies, they operate an expensive headquarters in South Florida which absorbs profits, they make significant political donations, they pay federal taxes on their profits…all of these items would not be a factor in the cost structure of a municipal utility, and are indications of significant profitability and cash flow.
Additionally, Marianna currently pays an annual electric bill which approaches $1 Million dollars. If they owned the utility, they would effectively only be paying wholesale cost for the power used.
I intuitively feel the annual profit potential for the city if it operated the utility would be close to $1,000,000 per year….much higher than the figures used by the consultants. Marianna desperately needs those added revenues.
Issue 4: Marianna is approaching a crisis
Marianna is in a "no-growth" situation. The majority of new homes and commercial buildings in the area are being built outside the city boundaries. The affluent new home builders are locating in unincorporated areas. Simultaneously, businesses are building East of the Chipola and in Malloyville at the interstate.
As a result of the lack of new construction, the average value of homes and structures inside the city are diminishing. The families living in the city, when taken as an average, demonstrate a declining average gross income level per household. This condition can be expected to worsen over the next twenty years. Meanwhile, the City faces a whopping $30 million dollar need for replacing a leaking city water system, leaking sewer systems, inadequate storm water drainage, and streets full of pot holes and cracks.
The City is facing the dilemma of an increasing demand for revenues in the face of a declining ability to pay by the residents. As fees and taxes are raised in attempts to deal with these problems…more people will move out of the city to escape the higher cost of living in the city, the tax base and potential fee payers will continue to shrink, and conditions will worsen.
This electrical utility purchase and the potential revenues which it could have brought, would have gone a long way towards resolving this problem. Now, the commissioners and the residents are faced with only increased taxation and increased fees as a means for dealing with these growing problems. I see this FPU decision as a critical error for our city. I only wish I did not own two homes inside the city limits of Marianna.
In last week’s column I stated that I hoped our commissioners had "cahoonas" large enough to make this decision…..I guess they didn’t.
Rudiments: Odds and Ends Worth Mentioning-
● You just lost another of your personal freedoms of choice. Governor Crist signed into law a new version of the state seat belt requirements. After June 30 you can be stopped if a cop observes anyone riding in a front seat unbelted. The fines will range from $93 to $119 state wide. Based on the number of fines given last year under the old law, I would estimate this new version will enable the state to reap approximately $20,000,000 from the traveling public. Public safety or budget shortfall…which do you think really motivates the Tallahassee bunch and the Governor in this matter? If they were really interested in safety and not revenues, they might have discussed the motorcycle helmet regulations. In my opinion, the real role of Big Brother in this instance should be to educate the public as to why they should buckle up…..and then leave the choice up to the individual.
● Even though you are only poking around city streets at 35 MPH, the city boys are trying to get in on the action, so they are putting on a big "Safety" campaign in Marianna and Cottondale. Click it or feed the kitty!
● Also, the legislature raised your taxes last week. They call them "fees" but they are really taxes. They raised almost every one of the hundreds of fees they collect from us. The new rates will cost each of us another $100 or so each year.
● The "crats" in Tallahassee are playing the same old games - cut education, parks, and similar items which will make the public mad. Meanwhile, ignore the thousands of unnecessary bureaucrats filling those government skyscrapers in Tallahassee. Clint Cox stated it well last week when he noted the logic of building unnecessary sidewalks while we eliminate teaching jobs.
● Definition of Politics = "The conduct of public affairs, for private advantage".
● Stick your head out of your car window as you drive by a government building and yell "I’m mad as hell and I’m not going to take it any more!! ...and you will be "Getting It Right."
Note: The opinions stated in this column are solely those of the author and do not necessarily represent those of Hatcher Publications.
No comments:
Post a Comment