Voter power

Local energy co-op La Plata Electric Association is seeking to renew its franchise agreement with the City of Durango. Property owners who are registered voters in city limits are being asked to vote on the contract renewal by April 3. Opponents say the fee associated with the agreement and other details are not clear in the ballot language. But proponents say the contract is necessary and fear losing the $900,000 it would generate annually for the city’s coffers./ Photo by Steve Eginiore

Durango property owners to decide fate of LPEA agreement

by Tracy Chamberlin

The April ballot has only one item on it: Whether or not to approve La Plata Electric Association’s new franchise agreement with the city.

If voters approve the 20-page document, it will change the co-op’s approach to long-term planning and some procedural steps required for basic upkeep and maintenance. If voters reject it, they will still get power. They will still have the same access to renewable energies. They will still have the same power company.

But for Durango, the outcome of the vote means something very different.

“The biggest impact is going to be with the city,” said Greg Munro, CEO for La Plata Electric Association.
The agreement requires LPEA to pay Durango a 4.67 percent franchise fee on gross revenues, something that was also included in the previous contract between the city and the co-op. The fee is in addition to a 3 percent city tax added to the bill’s bottom line.

This fee is expected to bring in approximately $900,000 that would go directly into the city’s general fund and could be used for a variety of purposes. The concern is that these monies have already been allocated in the 2012 budget.

If voters decide to reject the franchise agreement, the city will be forced to revisit the budget, and something would likely have to be cut.
“This would set us back a couple of years,” City Councilor Dick White said.

When development of the agreement began last year, council members discussed changing the fee language.

Specifically, they considered applying it to electricity usage versus gross revenues. But the council chose to continue with the same verbiage and fee percentages that were part of the previous agreement.

“We chose to leave that sleeping dog lie,” White said.

According to City Manager Ron LeBlanc the franchise fee has not changed in 50 years. Both the amount of the fee and the way it’s calculated remain the same. And if voters approve the ballot measure, it will stay that way for at least another 20 years.
Recently, however, concerns have been raised.

The ballot language was voted upon by the City Council on Feb. 21. City Councilor Paul Broderick said he chose to vote against the ballot measure because of its language, which does not specifically mention the franchise fee or the 20-year term.

“In my mind the real issue here is not whether there’s a fee or not,” Broderick said, “it’s how that information is being presented to voters.”
A vote for or against the ordinance is a vote for or against the contract. But not everyone gets to make that decision.

Under the current city charter, only property owners who are registered to vote received a ballot – less than one third of registered voters within city limits.

“The voting pool was a surprise, frankly to all of us,” White said.

It wasn’t until late in the game that City Council realized exactly who would be voting in this special municipal election. And the charter can only be changed by voters.

White and Broderick would have considered supporting a change to the city charter that would allow renters to participate in a vote like the franchise agreement. But the clock was ticking.

“We negotiated for over a year, and we believe it’s a good agreement for all of us,” Munro said.

The 20-year term of the agreement is the same as the previous one, guaranteeing that the city has a power provider and LPEA has a market to provide it to for the next two decades. This security could allow both parties to plan for the long term.

If not passed, the city would have to turn to the open market for power and the co-op would lose leverage in negotiations with lenders and suppliers, possibly resulting in higher interest rates.

“It takes the risk away from our lenders,” Munro said.

The agreement also grants the city manager access to many of LPEA’s facilities and files. As the official city representative, the manager has the authority to investigate customer complaints in “respect to the quality and price of electric service,” according to the agreement.

The contract also requires LPEA to get approval for large construction projects and to comply with climate and pollution laws. Additional language allows LPEA to repair and upkeep facilities and equipment with more flexibility.

If voters chose to reject the ballot measure, tasks such as tree-trimming around power lines or maintaining underground equipment could require the added step of city approval.

“It might get a little more complicated,” Munro said.

He added, however, that it would not preclude LPEA from getting the job done.

The agreement also calls on LPEA to do its best to keep up with technological advances. “Especially where such advances relate to the increased and more efficient use of renewably generated electric power,” the contract reads.

One section of the contract addresses renewable energies and allows LPEA to adapt to the changing energy market.
“It’s one of the really innovative features of this franchise,” LeBlanc said.

The co-op is also prohibited from standing in the way of the city and its residents from generating their own power through alternatives sources. Munro said the current renewable energy programs will remain in place.

White said he thinks the agreement would serve the city residents. However, Broderick is unsure if it’s important to have one.

Regardless of what voters decide, they have until April 3 to make their decision and check one of two boxes: “For the Ordinance” or “Against the Ordinance.”

For additional information, visit http://www.durangogov.org or www.lpea.com.

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