At Monday night’s meeting, the Electric City Power Board approved resolutions to have city staff develop a city strategy to potentially exit from the electric power business, and for the ECP executive director to approach customers about their willingness to move pricing of their contracts with ECP to cost plus. A major element of the city staff work will be done by our new city attorney in assessing individual contracts and exposures to litigation against the city from ECP customers and from SME. I cover what I believe are premises that should exist to actions by the city, the suggested action course to shut down ECP, and the correction of misconceptions as to the risks presented by the potential for customer and SME litigation, in the attached material, and so I won’t belabor them now.
Suffice it to say, however, that the current parallel track action course to “explore” shutdown and increased pricing is both a trap and an implicit acceptance of the assumption that the city has the authority to continue in its misguided and illegal operation of ECP. This, while ECP loses additional taxpayer money ($234,674 in the first three months of this calendar year) in violation of ECP’s founding ordinance in the meantime, and with the same individuals in charge who were and are in charge while these losses occurred and continue to occur. A trap, because it continues the never ending saga with no decision ever being made to terminate ECP, while giving cover to the city while the losses continue. A mistake, in its implicit premise that to make a decision to shut down ECP there must be assurance of zero risk of litigation in doing so. It is interesting though that suddenly, at this late hour, ECP is going to approach customers to obtain price increases to stanch the losses. A part of the suggested solution of cost plus, incidentally, would come by increasing pricing of power that the city itself purchases from ECP, resulting in the passing on of the burden of ECP losses even more directly to the taxpayers.
I addressed his honor, the mayor, as ECP Board Chair, and suggested others (by inference, the city attorney) could elect to respond on the issue as well, of the basis under which the city continues operating ECP in violation of the law while losses continue to mount. The mayor simply would not answer the question, other than to say that it would take time to exit the business. However, as City Attorney Santoro correctly was quoted in the Great Falls Tribune as stating, the resolutions passed do not even place us in the position of having made a decision to do so.
So, another jovial meeting of city government and staff, while the taxpayers continue to lose money in the interest of the few businesses that have benefited from subsidized pricing that in large measure resulted in the losses ECP has sustained.
Monday, May 10, 2010
Last week, Larry Rezentes, a CPA and watchdog for the ECP boondoggle, wrote the mayor and city commissioners in anticipation of the May 3 ECP board meeting. Below is his analysis of the resolution reached at that meeting to potentially exit the power business. Included is a link to his documentation: