Voting for the La Plata Electric Association franchise agreement makes sense for city residents.
The proposed LPEA agreement, would cost the average residential customer 12 cents per day, $3.64 per month, to rent the city’s streets and alleys to deliver their electricity. Members would pay the charge only on energy consumption, not the base rate. There would be no “hidden” sales tax on the fee. Nor would it be a “double tax,” because the fee would address specific city services that apply uniquely to the utility and not to sales by other businesses.
Utilities across the country enter into franchise agreements with cities to secure easy access to utility customers through publicly owned and maintained rights of way. Whether or not it is itemized on the bill, the cost is passed on to the consumer.
Durango and the local power company, La Plata Electric or its predecessor, have had such agreements at least since the 1950s, until the voters narrowly rejected the proposed renewal in April. Without a new agreement, the city budget has a deficit approaching $1 million per year. When the city manager explained this in public meetings after the April election, participants overwhelmingly rejected the idea of budget cuts in favor of bringing the agreement back for a second vote, together with a clear explanation of why voters should approve it.
This is what the proposed franchise agreement entails.
First, it is a long-term contract to facilitate reliable access of the utility to members in the city, ensuring administrative efficiency through joint planning and regular communications. Its 20-year duration allows LPEA to plan and finance long-term capital projects; it provides the city with a stable revenue stream – unlike sales taxes, which plunge during recessions – to support essential infrastructure maintenance.
Second, the agreement supports the city’s 2007 Comprehensive Plan sustainability goals. Specifically, it commits LPEA to accept renewable energy generated within the city, to report annually on its energy efficiency and renewable energy initiatives, and to work with the city toward a system of “remote net metering” that would allow community solar gardens. LPEA members in the city then could buy solar panels located elsewhere to offset the electricity use in their homes or businesses.
Third, the 4.67 percent franchise fee would be based only on electricity use, not LPEA’s base charge, providing a small additional incentive for energy conservation and a larger one in the case of members using net-metered renewable energy. The annual revenue from the agreement would go into the city’s general fund, where it would offset about one fourth of the cost of maintenance and improvements of city streets, alleys and sidewalks.
Fourth, without that revenue, the City Council would have two choices: to defer maintenance the streets, alleys and sidewalks – an unsustainable choice in the long term – or to cut other services and staff positions such as police officers, street crews, park and recreation personnel and library staff. Such cuts would come on top of the $5 million dollars in budget cuts and the loss of 37 employees the city suffered in 2009-10.
City services provided through the general fund support the common good of all residents, regardless of income level. They include police and fire protection, parks and recreation and safe streets. The general fund also provides such items as a nearly $200,000 block grant distributed according to recommendations from United Way, discounted services and youth scholarships for recreational programs, and free Internet and other informational series offered by the Durango Public Library. Loss of franchise fee revenue would expose all these programs to potential cuts, including at least 10 employees – reducing staffing to below recession level.
The LPEA franchise fee is a case where relationship between revenue and city services is transparent. If the franchise fee doesn’t support infrastructure maintenance, other city programs will bear the brunt.
We urge everyone to vote to restore the LPEA franchise agreement. It provides a solid foundation for long-term cooperation and efficient partnership between the city and LPEA. It advances the city’s sustainability goals. It provides direct support to maintain the city streets and alleys through which LPEA members get their electricity. And, without it, loss of the franchise fee revenue will result in another round of cuts in city services and layoffs of employees who provide them.
We get what we pay for. The LPEA franchise agreement makes cents for Durango.