Plaquemine 2009: Restructuring utility department top priority

Restructuring the operations of City Light & Water is the top priority for Plaquemine City officials this year, says Mayor Mark A. “Tony” Gulotta.

“We’re looking at it top to bottom,” Gulotta said. “We will change the way we’re selling electricity to the citizens out there. We need more flexibility.”

City Light is still using a formula for electricity charges that was developed in a rate study conducted in the 1980s, the mayor said.

The basic rate if 7.8 cents per kilowatt hour, 3.5 cents of which is used to run the utility system and contribute to running city government. The rate is based on  prices for the natural gas used to produce the electricity at $4.50 per thousand cubic feet (mcf).

Natural gas prices have not been that low since 2002, Gulotta said. Late last month, they were at $5.60 per mcf; they soared as high as $13 per mcf last summer, producing record bills when the fuel adjustment was added to heavy summer use.

“This summer was pretty ugly,” the mayor said. The high bills became an issue in his re-election campaign.

Entergy, the private company, that has customers in Iberville Parish, decided in June spread the high fuel adjustment charges over four months, he said.

“Under our current pricing structure, we have to bill,” Gulotta said, wanting the flexibility to follow Entergy’s averaging plan to ease the shock of the summer bills.

City official might also look at restructuring “the way we sell utilities out there,” he said. For example, he said currently residential customers pay the same rate for electricity, regardless of the amount they use. The billing could be restructured so there was one rate for the first 1,000 kilowatts of use and a price break for the use after that.

City officials are looking at appointing a community advisory panel (CAP).

“It was suggested by some of the council members just to get some outside eyes to look in,” Gulotta said.

He said the officials need to do a better job of how the city is using the profits from City Light, which supports Plaquemine’s general government with some $1.2 million a year. That money helps support the police department, which costs $2 million a year to run and the fire department, which costs a million, among other things, Gulotta said.

And, he also plans a campaign to educate customers on how much electricity they really use.

“People understand gasoline. They know what a gallon of gas will do,” Gulotta said, adding that they also should understand how much a kilowatt hour would do.

City officials are considering a “smart metering system,” which uses cell phone technology that can read all City Light’s 15,000 meters in a day.

It would cost an estimated $1.5 million to $2 million to put the system in, versus $180,000 a year for meter readers, their trucks and other equipment.

“They claim they’re a whole lot more accurate,” the mayor said. “They can send you a print-out of how much you use every 10 minutes. You can access your account from the internet.”

People who did that “wouldn’t have sticker shock” over their air conditioning bills when the temperature hits 95 degrees in the summer.

Should the city stay in the utilities business is another question city officials will explore.

“We will look at that,” he said. “That sounds radical. If Entergy wants to buy our system, what is our system worth?”

Then again, he said, city officials – and citizens – would have to consider whether they wanted to pass additional taxes or to cut city services.

“We’re not talking about cutting one or two positions,” Gulotta said. “We’re talking about massive cuts.”

The mayor said the city would give up other advantages if it sold the electrical system to Entergy or another company.

After Hurricane Gustav, the worst storm in recorded local history, the city was restoring customers within 24 hours and had most customers back on within a week – days sooner than Entergy customers in the area, Gulotta said.

“You can’t vote them out of office,” he said of Entergy officials. For the public system, “there is a face on energy customers.”

Starting with this year’s budget, the city is looking at what the utility system is really costing, and what does not belong in the budget.

“We’ve been treating it just like when I was elected for the first time,” the mayor said. He was sworn in for his fifth term in ceremonies Tuesday night.

For starters, he said, he and the Board of Selectmen hope to cut the $500,000 utility bill the city pays annually for the operation of its government facilities.

“We’re serious about cutting 20 percent over two years,” Gulotta said. “I think we can accomplish that without really sacrificing a whole lot.”